Class 12 Business Studies: CBSE Marking Scheme (2024-25) | Business Studies (BST) Class 12 - Commerce PDF Download

 Page 1


1 
BUSINESS STUDIES (054) 
 Class XII (2024-25) 
MARKING SCHEME 
Q.NO. ANSWER MARKS 
1. A. Management as science 1 
2. D. Assignment of duties 1 
3. C. Both Assertion (A) and Reason (R) are  true, but Reason (R) is not the 
correct explanation of the Assertion. 
1 
4. D. Statement II is true, Statement I is false 1 
5. A. Competitive spirit among the existing staff  1 
6. D. Economic and technological environment     1 
7. C. Buy only standardised products  
For Visually Impaired Candidates: 
C. Buy only standardised products 
1 
 
1 
8. D. Assertion (A) is false, Reason (R) is true 1 
9. C. Training and development, performance appraisal, promotion and career 
planning, compensation  
1 
10. B. controlling helps in ensuring order and discipline 1 
11. D. Size of the assets, Profitability and competitiveness are not affected by 
capital budgeting decisions. 
1 
12. D. More than ?1 crore and not more than ?10 crore 1 
13. A. (a)-(iii), (b)-(ii), (c)-(i), (d)-(iv) 1 
14. C. Grading 1 
15. C. Induction training 1 
16. D. The provisions of the Consumer Protection Act came into force from 
1981. 
1 
17. C. Pricing decision 1 
18. D. (a), (c) and (e) 1 
19. A. Right to be informed 1 
20. A. Both the statements are true. 1 
21. (A) 
 
 
 
 
 
 
 
 
 
21. (B) 
Single Use plans- A single-use plan is developed for a one-time event or 
project. Such a course of action is not likely to be repeated in future, i.e., they 
are for non-recurring situations.The duration of this plan may depend upon 
the type of the project. It may span a week or a month or a day. 
Standing plans-A standing plan is used for activities that occur regularly 
over a period of time. It is designed to ensure that internal operations of an 
organisation run smoothly. Such a plan greatly enhances efficiency in routine 
decision-making. It is usually developed once but is modified from time to 
time to meet business needs as required. 
OR 
Planning  reduces creativity- Planning is an activity which is done by the 
top management. Usually the rest of the members just implement these 
1 ½  
 
 
 
 
1 ½  
 
 
 
 
 
1 ½  
Page 2


1 
BUSINESS STUDIES (054) 
 Class XII (2024-25) 
MARKING SCHEME 
Q.NO. ANSWER MARKS 
1. A. Management as science 1 
2. D. Assignment of duties 1 
3. C. Both Assertion (A) and Reason (R) are  true, but Reason (R) is not the 
correct explanation of the Assertion. 
1 
4. D. Statement II is true, Statement I is false 1 
5. A. Competitive spirit among the existing staff  1 
6. D. Economic and technological environment     1 
7. C. Buy only standardised products  
For Visually Impaired Candidates: 
C. Buy only standardised products 
1 
 
1 
8. D. Assertion (A) is false, Reason (R) is true 1 
9. C. Training and development, performance appraisal, promotion and career 
planning, compensation  
1 
10. B. controlling helps in ensuring order and discipline 1 
11. D. Size of the assets, Profitability and competitiveness are not affected by 
capital budgeting decisions. 
1 
12. D. More than ?1 crore and not more than ?10 crore 1 
13. A. (a)-(iii), (b)-(ii), (c)-(i), (d)-(iv) 1 
14. C. Grading 1 
15. C. Induction training 1 
16. D. The provisions of the Consumer Protection Act came into force from 
1981. 
1 
17. C. Pricing decision 1 
18. D. (a), (c) and (e) 1 
19. A. Right to be informed 1 
20. A. Both the statements are true. 1 
21. (A) 
 
 
 
 
 
 
 
 
 
21. (B) 
Single Use plans- A single-use plan is developed for a one-time event or 
project. Such a course of action is not likely to be repeated in future, i.e., they 
are for non-recurring situations.The duration of this plan may depend upon 
the type of the project. It may span a week or a month or a day. 
Standing plans-A standing plan is used for activities that occur regularly 
over a period of time. It is designed to ensure that internal operations of an 
organisation run smoothly. Such a plan greatly enhances efficiency in routine 
decision-making. It is usually developed once but is modified from time to 
time to meet business needs as required. 
OR 
Planning  reduces creativity- Planning is an activity which is done by the 
top management. Usually the rest of the members just implement these 
1 ½  
 
 
 
 
1 ½  
 
 
 
 
 
1 ½  
2 
plans. As a consequence, middle management and other decision makers 
are neither allowed to deviate from plans nor are they permitted to act on 
their own.Thus, planning in a way reduces creativity since people tend to 
think along the same lines as others. 
 
Planning leads to rigidity-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. Following a pre-decided plan, when circumstances 
have changed, may not turn out to be in the organisation's interest. 
 
 
 
 
 
 
1 ½  
 
22. (A) 
 
 
 
 
 
 
 
 
22. (B) 
Leadership is the process of influencing the behaviour of people by making 
them strive voluntarily towards achievement of organisational goals. 
Two situations in which Autocratic leadership is most effective: 
• This leadership style is effective in getting productivity in many 
situations like in a factory where the supervisor is responsible for 
production on time and the supervisor has to ensure labour 
productivity.  
• Quick decision-making is facilitated. 
OR 
Communication is the process of exchange of information between two or 
more persons to reach common understanding. 
Meaning of formal communication: 
Formal communication flows through official channels designed in the 
organisation chart.  
Meaning of Informal communication: 
Communication that takes place without following the formal lines of 
communication is said to be informal communication.  
 1 
 
 
 
1 
 
 
1 
 
1 
 
 
1 
 
 
1 
23. Calculation of Return on Investment (ROI) 
 ROI= Earnings before interest and tax  x100 
                      Total investment  
  ROI =  1500000     x100 
              3000000  
           =50%    
Calculation of Interest Coverage Ratio (ICR)     
 Interest coverage ratio = Earnings before interest and tax 
                                                   Interest 
       ICR =   1500000 
                    120000 
                =12.5 times 
 
½  
 
½  
 
½  
 
½  
 
½  
 
½  
  
24. (I) Business Environment means the sum total of all individuals, institutions 
and other forces that are outside the control of a business enterprise but that 
may affect its performance.  
(II) It enables the firm to identify opportunities and getting the first 
mover advantage: Opportunities refer to the positive external trends or 
changes that will help a firm to improve its performance. Environment 
provides numerous opportunities for business success. Early identification of 
opportunities helps an enterprise to be the first to exploit them instead of 
losing them to competitors 
1 
 
 
½ + 1 ½  
 
Page 3


1 
BUSINESS STUDIES (054) 
 Class XII (2024-25) 
MARKING SCHEME 
Q.NO. ANSWER MARKS 
1. A. Management as science 1 
2. D. Assignment of duties 1 
3. C. Both Assertion (A) and Reason (R) are  true, but Reason (R) is not the 
correct explanation of the Assertion. 
1 
4. D. Statement II is true, Statement I is false 1 
5. A. Competitive spirit among the existing staff  1 
6. D. Economic and technological environment     1 
7. C. Buy only standardised products  
For Visually Impaired Candidates: 
C. Buy only standardised products 
1 
 
1 
8. D. Assertion (A) is false, Reason (R) is true 1 
9. C. Training and development, performance appraisal, promotion and career 
planning, compensation  
1 
10. B. controlling helps in ensuring order and discipline 1 
11. D. Size of the assets, Profitability and competitiveness are not affected by 
capital budgeting decisions. 
1 
12. D. More than ?1 crore and not more than ?10 crore 1 
13. A. (a)-(iii), (b)-(ii), (c)-(i), (d)-(iv) 1 
14. C. Grading 1 
15. C. Induction training 1 
16. D. The provisions of the Consumer Protection Act came into force from 
1981. 
1 
17. C. Pricing decision 1 
18. D. (a), (c) and (e) 1 
19. A. Right to be informed 1 
20. A. Both the statements are true. 1 
21. (A) 
 
 
 
 
 
 
 
 
 
21. (B) 
Single Use plans- A single-use plan is developed for a one-time event or 
project. Such a course of action is not likely to be repeated in future, i.e., they 
are for non-recurring situations.The duration of this plan may depend upon 
the type of the project. It may span a week or a month or a day. 
Standing plans-A standing plan is used for activities that occur regularly 
over a period of time. It is designed to ensure that internal operations of an 
organisation run smoothly. Such a plan greatly enhances efficiency in routine 
decision-making. It is usually developed once but is modified from time to 
time to meet business needs as required. 
OR 
Planning  reduces creativity- Planning is an activity which is done by the 
top management. Usually the rest of the members just implement these 
1 ½  
 
 
 
 
1 ½  
 
 
 
 
 
1 ½  
2 
plans. As a consequence, middle management and other decision makers 
are neither allowed to deviate from plans nor are they permitted to act on 
their own.Thus, planning in a way reduces creativity since people tend to 
think along the same lines as others. 
 
Planning leads to rigidity-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. Following a pre-decided plan, when circumstances 
have changed, may not turn out to be in the organisation's interest. 
 
 
 
 
 
 
1 ½  
 
22. (A) 
 
 
 
 
 
 
 
 
22. (B) 
Leadership is the process of influencing the behaviour of people by making 
them strive voluntarily towards achievement of organisational goals. 
Two situations in which Autocratic leadership is most effective: 
• This leadership style is effective in getting productivity in many 
situations like in a factory where the supervisor is responsible for 
production on time and the supervisor has to ensure labour 
productivity.  
• Quick decision-making is facilitated. 
OR 
Communication is the process of exchange of information between two or 
more persons to reach common understanding. 
Meaning of formal communication: 
Formal communication flows through official channels designed in the 
organisation chart.  
Meaning of Informal communication: 
Communication that takes place without following the formal lines of 
communication is said to be informal communication.  
 1 
 
 
 
1 
 
 
1 
 
1 
 
 
1 
 
 
1 
23. Calculation of Return on Investment (ROI) 
 ROI= Earnings before interest and tax  x100 
                      Total investment  
  ROI =  1500000     x100 
              3000000  
           =50%    
Calculation of Interest Coverage Ratio (ICR)     
 Interest coverage ratio = Earnings before interest and tax 
                                                   Interest 
       ICR =   1500000 
                    120000 
                =12.5 times 
 
½  
 
½  
 
½  
 
½  
 
½  
 
½  
  
24. (I) Business Environment means the sum total of all individuals, institutions 
and other forces that are outside the control of a business enterprise but that 
may affect its performance.  
(II) It enables the firm to identify opportunities and getting the first 
mover advantage: Opportunities refer to the positive external trends or 
changes that will help a firm to improve its performance. Environment 
provides numerous opportunities for business success. Early identification of 
opportunities helps an enterprise to be the first to exploit them instead of 
losing them to competitors 
1 
 
 
½ + 1 ½  
 
3 
25. (I) Management is an intangible force: Management is an intangible force 
that cannot be seen but its presence can be felt in the way the organisation 
functions. The effect of management is noticeable in an organisation where 
targets are met according to plans, employees are happy and satisfied, and 
there is orderliness instead of chaos. 
(II) Importance of management: (Any three) 
• Management helps in achieving group goals: Management is 
required not for itself but for achieving the goals of the organisation. 
The task of a manager is to give a common direction to the individual 
effort in achieving the overall goal of the organisation.  
• Management increases efficiency: The aim of a manager is to 
reduce costs and increase productivity through better planning, 
organising, directing, staffing and controlling the activities of the 
organisation. 
• Management creates a dynamic organisation: All organisations 
have to function in an environment which is constantly changing. It is 
generally seen that individuals in an organisation resist change as it 
often means moving from a familiar, secure environment into a newer 
and more challenging one. Management helps people adapt to these 
changes so that the organisation is able to maintain its competitive 
edge.  
• Management helps in achieving personal objectives: A manager 
motivates and leads his team in such a manner that individual 
members are able to achieve personal goals while contributing to the 
overall organisational objective. 
• Management helps in the development of society: An  organisation 
has multiple objectives to serve the purpose of the different groups 
that constitute it. In the process of fulfilling all these, management 
helps in the development of the organisation and through that it helps 
in the development of society.  
½ + ½  
 
 
 
 
 
1 x 3 
 
 
 
 
 
 
26. (A) 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Selection tests (Any four): 
• Intelligence Tests: This is one of the important psychological tests used 
to measure the level of intelligence quotient of an individual. It is an 
indicator of a person’s learning ability or the ability to make decisions 
and judgments.  
• Aptitude Test: It is a measure of an individual's potential for learning 
new skills. It indicates the person’s capacity to develop. 
• Personality Tests: Personality tests provide clues to a person’s 
emotions, her reactions, maturity and value system etc. These tests 
probe the overall personality. Hence, these are difficult to design and 
implement. 
• Trade Test: These tests measure the existing skills of the individual. 
They measure the level of knowledge and proficiency in the area of 
professions or technical training. The difference between aptitude test 
and trade test is that the former measures the potential to acquire 
skills and the later the actual skills possessed.  
 
 
1X4=4 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Page 4


1 
BUSINESS STUDIES (054) 
 Class XII (2024-25) 
MARKING SCHEME 
Q.NO. ANSWER MARKS 
1. A. Management as science 1 
2. D. Assignment of duties 1 
3. C. Both Assertion (A) and Reason (R) are  true, but Reason (R) is not the 
correct explanation of the Assertion. 
1 
4. D. Statement II is true, Statement I is false 1 
5. A. Competitive spirit among the existing staff  1 
6. D. Economic and technological environment     1 
7. C. Buy only standardised products  
For Visually Impaired Candidates: 
C. Buy only standardised products 
1 
 
1 
8. D. Assertion (A) is false, Reason (R) is true 1 
9. C. Training and development, performance appraisal, promotion and career 
planning, compensation  
1 
10. B. controlling helps in ensuring order and discipline 1 
11. D. Size of the assets, Profitability and competitiveness are not affected by 
capital budgeting decisions. 
1 
12. D. More than ?1 crore and not more than ?10 crore 1 
13. A. (a)-(iii), (b)-(ii), (c)-(i), (d)-(iv) 1 
14. C. Grading 1 
15. C. Induction training 1 
16. D. The provisions of the Consumer Protection Act came into force from 
1981. 
1 
17. C. Pricing decision 1 
18. D. (a), (c) and (e) 1 
19. A. Right to be informed 1 
20. A. Both the statements are true. 1 
21. (A) 
 
 
 
 
 
 
 
 
 
21. (B) 
Single Use plans- A single-use plan is developed for a one-time event or 
project. Such a course of action is not likely to be repeated in future, i.e., they 
are for non-recurring situations.The duration of this plan may depend upon 
the type of the project. It may span a week or a month or a day. 
Standing plans-A standing plan is used for activities that occur regularly 
over a period of time. It is designed to ensure that internal operations of an 
organisation run smoothly. Such a plan greatly enhances efficiency in routine 
decision-making. It is usually developed once but is modified from time to 
time to meet business needs as required. 
OR 
Planning  reduces creativity- Planning is an activity which is done by the 
top management. Usually the rest of the members just implement these 
1 ½  
 
 
 
 
1 ½  
 
 
 
 
 
1 ½  
2 
plans. As a consequence, middle management and other decision makers 
are neither allowed to deviate from plans nor are they permitted to act on 
their own.Thus, planning in a way reduces creativity since people tend to 
think along the same lines as others. 
 
Planning leads to rigidity-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. Following a pre-decided plan, when circumstances 
have changed, may not turn out to be in the organisation's interest. 
 
 
 
 
 
 
1 ½  
 
22. (A) 
 
 
 
 
 
 
 
 
22. (B) 
Leadership is the process of influencing the behaviour of people by making 
them strive voluntarily towards achievement of organisational goals. 
Two situations in which Autocratic leadership is most effective: 
• This leadership style is effective in getting productivity in many 
situations like in a factory where the supervisor is responsible for 
production on time and the supervisor has to ensure labour 
productivity.  
• Quick decision-making is facilitated. 
OR 
Communication is the process of exchange of information between two or 
more persons to reach common understanding. 
Meaning of formal communication: 
Formal communication flows through official channels designed in the 
organisation chart.  
Meaning of Informal communication: 
Communication that takes place without following the formal lines of 
communication is said to be informal communication.  
 1 
 
 
 
1 
 
 
1 
 
1 
 
 
1 
 
 
1 
23. Calculation of Return on Investment (ROI) 
 ROI= Earnings before interest and tax  x100 
                      Total investment  
  ROI =  1500000     x100 
              3000000  
           =50%    
Calculation of Interest Coverage Ratio (ICR)     
 Interest coverage ratio = Earnings before interest and tax 
                                                   Interest 
       ICR =   1500000 
                    120000 
                =12.5 times 
 
½  
 
½  
 
½  
 
½  
 
½  
 
½  
  
24. (I) Business Environment means the sum total of all individuals, institutions 
and other forces that are outside the control of a business enterprise but that 
may affect its performance.  
(II) It enables the firm to identify opportunities and getting the first 
mover advantage: Opportunities refer to the positive external trends or 
changes that will help a firm to improve its performance. Environment 
provides numerous opportunities for business success. Early identification of 
opportunities helps an enterprise to be the first to exploit them instead of 
losing them to competitors 
1 
 
 
½ + 1 ½  
 
3 
25. (I) Management is an intangible force: Management is an intangible force 
that cannot be seen but its presence can be felt in the way the organisation 
functions. The effect of management is noticeable in an organisation where 
targets are met according to plans, employees are happy and satisfied, and 
there is orderliness instead of chaos. 
(II) Importance of management: (Any three) 
• Management helps in achieving group goals: Management is 
required not for itself but for achieving the goals of the organisation. 
The task of a manager is to give a common direction to the individual 
effort in achieving the overall goal of the organisation.  
• Management increases efficiency: The aim of a manager is to 
reduce costs and increase productivity through better planning, 
organising, directing, staffing and controlling the activities of the 
organisation. 
• Management creates a dynamic organisation: All organisations 
have to function in an environment which is constantly changing. It is 
generally seen that individuals in an organisation resist change as it 
often means moving from a familiar, secure environment into a newer 
and more challenging one. Management helps people adapt to these 
changes so that the organisation is able to maintain its competitive 
edge.  
• Management helps in achieving personal objectives: A manager 
motivates and leads his team in such a manner that individual 
members are able to achieve personal goals while contributing to the 
overall organisational objective. 
• Management helps in the development of society: An  organisation 
has multiple objectives to serve the purpose of the different groups 
that constitute it. In the process of fulfilling all these, management 
helps in the development of the organisation and through that it helps 
in the development of society.  
½ + ½  
 
 
 
 
 
1 x 3 
 
 
 
 
 
 
26. (A) 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Selection tests (Any four): 
• Intelligence Tests: This is one of the important psychological tests used 
to measure the level of intelligence quotient of an individual. It is an 
indicator of a person’s learning ability or the ability to make decisions 
and judgments.  
• Aptitude Test: It is a measure of an individual's potential for learning 
new skills. It indicates the person’s capacity to develop. 
• Personality Tests: Personality tests provide clues to a person’s 
emotions, her reactions, maturity and value system etc. These tests 
probe the overall personality. Hence, these are difficult to design and 
implement. 
• Trade Test: These tests measure the existing skills of the individual. 
They measure the level of knowledge and proficiency in the area of 
professions or technical training. The difference between aptitude test 
and trade test is that the former measures the potential to acquire 
skills and the later the actual skills possessed.  
 
 
1X4=4 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
4 
 
 
 
 
26. (B) 
• Interest Tests: Every individual has a fascination for some job more 
than the other. Interest tests are used to know the pattern of interests 
or involvement of a person. 
OR 
Benefit of training to workers: 
• Improved skills and knowledge due to training lead to better careers for 
the individual. 
• Increased performance by the individual helps him to earn more. 
• Training makes the employee more efficient to handle machines. Thus, 
less prone to accidents.  
• Training increases the satisfaction and morale of employees. 
 
 
 
 
 
1 
 
1 
1 
 
1 
27. (I) Esteem Needs 
(II) 
• Employee Recognition programmes: Recognition means 
acknowledgment with a show of appreciation. When such 
appreciation is given to the work performed by employees, they feel 
motivated to perform/work at a higher level.  
• Employee Participation:It means involving employees in decision 
making of the issues related to them. In many companies, these 
programmes are in practice in the form of joint management 
committees, work committees, canteen committees etc. 
1 
 
 
½ + 1   
 
 
 
½ + 1  
 
28.(A) 
 
 
 
 
 
 
 
 
 
 
28.(B) 
Plans are prepared for the future and are based on forecasts about future 
conditions. Therefore, planning involves looking ahead and is called a 
forward-looking function. 
On the contrary, controlling is like a postmortem of past activities to find out 
deviations from the standards. In that sense, controlling is a backward 
looking function.  
However, planning is guided by past experiences and the corrective action 
initiated by the control function aims to improve future performance. Thus, 
planning and controlling are both backward-looking as well as a 
forward-looking function.  
OR 
• Measurement of Actual Performance: Once performance standards 
are set, the next step is measurement of actual performance. 
Performance should be measured in an objective and reliable manner. 
There are several techniques for measurement of performance. These 
include personal observation, sample checking, performance reports. 
• Comparing Actual Performance with Standards: This step involves 
comparison of actual performance with the standard. Such comparison 
will reveal the deviation between actual and desired results. Comparison 
becomes easier when standards are set in quantitative terms. 
4 
 
 
 
 
 
 
 
 
 
 
 
½ + 1½  
 
 
 
 
½ + 1½ 
 
29. 
 
 Features of Planning 
(1)  Planning focuses on achieving objectives: Organisations are set up 
with a general purpose in view. Specific goals are set out in the plans 
along with the activities to be undertaken to achieve the goals. Thus, 
planning is purposeful. Planning has no meaning unless it contributes to 
the achievement of predetermined organisational goals. 
 
 
1 
 
 
 
 
Page 5


1 
BUSINESS STUDIES (054) 
 Class XII (2024-25) 
MARKING SCHEME 
Q.NO. ANSWER MARKS 
1. A. Management as science 1 
2. D. Assignment of duties 1 
3. C. Both Assertion (A) and Reason (R) are  true, but Reason (R) is not the 
correct explanation of the Assertion. 
1 
4. D. Statement II is true, Statement I is false 1 
5. A. Competitive spirit among the existing staff  1 
6. D. Economic and technological environment     1 
7. C. Buy only standardised products  
For Visually Impaired Candidates: 
C. Buy only standardised products 
1 
 
1 
8. D. Assertion (A) is false, Reason (R) is true 1 
9. C. Training and development, performance appraisal, promotion and career 
planning, compensation  
1 
10. B. controlling helps in ensuring order and discipline 1 
11. D. Size of the assets, Profitability and competitiveness are not affected by 
capital budgeting decisions. 
1 
12. D. More than ?1 crore and not more than ?10 crore 1 
13. A. (a)-(iii), (b)-(ii), (c)-(i), (d)-(iv) 1 
14. C. Grading 1 
15. C. Induction training 1 
16. D. The provisions of the Consumer Protection Act came into force from 
1981. 
1 
17. C. Pricing decision 1 
18. D. (a), (c) and (e) 1 
19. A. Right to be informed 1 
20. A. Both the statements are true. 1 
21. (A) 
 
 
 
 
 
 
 
 
 
21. (B) 
Single Use plans- A single-use plan is developed for a one-time event or 
project. Such a course of action is not likely to be repeated in future, i.e., they 
are for non-recurring situations.The duration of this plan may depend upon 
the type of the project. It may span a week or a month or a day. 
Standing plans-A standing plan is used for activities that occur regularly 
over a period of time. It is designed to ensure that internal operations of an 
organisation run smoothly. Such a plan greatly enhances efficiency in routine 
decision-making. It is usually developed once but is modified from time to 
time to meet business needs as required. 
OR 
Planning  reduces creativity- Planning is an activity which is done by the 
top management. Usually the rest of the members just implement these 
1 ½  
 
 
 
 
1 ½  
 
 
 
 
 
1 ½  
2 
plans. As a consequence, middle management and other decision makers 
are neither allowed to deviate from plans nor are they permitted to act on 
their own.Thus, planning in a way reduces creativity since people tend to 
think along the same lines as others. 
 
Planning leads to rigidity-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. Following a pre-decided plan, when circumstances 
have changed, may not turn out to be in the organisation's interest. 
 
 
 
 
 
 
1 ½  
 
22. (A) 
 
 
 
 
 
 
 
 
22. (B) 
Leadership is the process of influencing the behaviour of people by making 
them strive voluntarily towards achievement of organisational goals. 
Two situations in which Autocratic leadership is most effective: 
• This leadership style is effective in getting productivity in many 
situations like in a factory where the supervisor is responsible for 
production on time and the supervisor has to ensure labour 
productivity.  
• Quick decision-making is facilitated. 
OR 
Communication is the process of exchange of information between two or 
more persons to reach common understanding. 
Meaning of formal communication: 
Formal communication flows through official channels designed in the 
organisation chart.  
Meaning of Informal communication: 
Communication that takes place without following the formal lines of 
communication is said to be informal communication.  
 1 
 
 
 
1 
 
 
1 
 
1 
 
 
1 
 
 
1 
23. Calculation of Return on Investment (ROI) 
 ROI= Earnings before interest and tax  x100 
                      Total investment  
  ROI =  1500000     x100 
              3000000  
           =50%    
Calculation of Interest Coverage Ratio (ICR)     
 Interest coverage ratio = Earnings before interest and tax 
                                                   Interest 
       ICR =   1500000 
                    120000 
                =12.5 times 
 
½  
 
½  
 
½  
 
½  
 
½  
 
½  
  
24. (I) Business Environment means the sum total of all individuals, institutions 
and other forces that are outside the control of a business enterprise but that 
may affect its performance.  
(II) It enables the firm to identify opportunities and getting the first 
mover advantage: Opportunities refer to the positive external trends or 
changes that will help a firm to improve its performance. Environment 
provides numerous opportunities for business success. Early identification of 
opportunities helps an enterprise to be the first to exploit them instead of 
losing them to competitors 
1 
 
 
½ + 1 ½  
 
3 
25. (I) Management is an intangible force: Management is an intangible force 
that cannot be seen but its presence can be felt in the way the organisation 
functions. The effect of management is noticeable in an organisation where 
targets are met according to plans, employees are happy and satisfied, and 
there is orderliness instead of chaos. 
(II) Importance of management: (Any three) 
• Management helps in achieving group goals: Management is 
required not for itself but for achieving the goals of the organisation. 
The task of a manager is to give a common direction to the individual 
effort in achieving the overall goal of the organisation.  
• Management increases efficiency: The aim of a manager is to 
reduce costs and increase productivity through better planning, 
organising, directing, staffing and controlling the activities of the 
organisation. 
• Management creates a dynamic organisation: All organisations 
have to function in an environment which is constantly changing. It is 
generally seen that individuals in an organisation resist change as it 
often means moving from a familiar, secure environment into a newer 
and more challenging one. Management helps people adapt to these 
changes so that the organisation is able to maintain its competitive 
edge.  
• Management helps in achieving personal objectives: A manager 
motivates and leads his team in such a manner that individual 
members are able to achieve personal goals while contributing to the 
overall organisational objective. 
• Management helps in the development of society: An  organisation 
has multiple objectives to serve the purpose of the different groups 
that constitute it. In the process of fulfilling all these, management 
helps in the development of the organisation and through that it helps 
in the development of society.  
½ + ½  
 
 
 
 
 
1 x 3 
 
 
 
 
 
 
26. (A) 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Selection tests (Any four): 
• Intelligence Tests: This is one of the important psychological tests used 
to measure the level of intelligence quotient of an individual. It is an 
indicator of a person’s learning ability or the ability to make decisions 
and judgments.  
• Aptitude Test: It is a measure of an individual's potential for learning 
new skills. It indicates the person’s capacity to develop. 
• Personality Tests: Personality tests provide clues to a person’s 
emotions, her reactions, maturity and value system etc. These tests 
probe the overall personality. Hence, these are difficult to design and 
implement. 
• Trade Test: These tests measure the existing skills of the individual. 
They measure the level of knowledge and proficiency in the area of 
professions or technical training. The difference between aptitude test 
and trade test is that the former measures the potential to acquire 
skills and the later the actual skills possessed.  
 
 
1X4=4 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
4 
 
 
 
 
26. (B) 
• Interest Tests: Every individual has a fascination for some job more 
than the other. Interest tests are used to know the pattern of interests 
or involvement of a person. 
OR 
Benefit of training to workers: 
• Improved skills and knowledge due to training lead to better careers for 
the individual. 
• Increased performance by the individual helps him to earn more. 
• Training makes the employee more efficient to handle machines. Thus, 
less prone to accidents.  
• Training increases the satisfaction and morale of employees. 
 
 
 
 
 
1 
 
1 
1 
 
1 
27. (I) Esteem Needs 
(II) 
• Employee Recognition programmes: Recognition means 
acknowledgment with a show of appreciation. When such 
appreciation is given to the work performed by employees, they feel 
motivated to perform/work at a higher level.  
• Employee Participation:It means involving employees in decision 
making of the issues related to them. In many companies, these 
programmes are in practice in the form of joint management 
committees, work committees, canteen committees etc. 
1 
 
 
½ + 1   
 
 
 
½ + 1  
 
28.(A) 
 
 
 
 
 
 
 
 
 
 
28.(B) 
Plans are prepared for the future and are based on forecasts about future 
conditions. Therefore, planning involves looking ahead and is called a 
forward-looking function. 
On the contrary, controlling is like a postmortem of past activities to find out 
deviations from the standards. In that sense, controlling is a backward 
looking function.  
However, planning is guided by past experiences and the corrective action 
initiated by the control function aims to improve future performance. Thus, 
planning and controlling are both backward-looking as well as a 
forward-looking function.  
OR 
• Measurement of Actual Performance: Once performance standards 
are set, the next step is measurement of actual performance. 
Performance should be measured in an objective and reliable manner. 
There are several techniques for measurement of performance. These 
include personal observation, sample checking, performance reports. 
• Comparing Actual Performance with Standards: This step involves 
comparison of actual performance with the standard. Such comparison 
will reveal the deviation between actual and desired results. Comparison 
becomes easier when standards are set in quantitative terms. 
4 
 
 
 
 
 
 
 
 
 
 
 
½ + 1½  
 
 
 
 
½ + 1½ 
 
29. 
 
 Features of Planning 
(1)  Planning focuses on achieving objectives: Organisations are set up 
with a general purpose in view. Specific goals are set out in the plans 
along with the activities to be undertaken to achieve the goals. Thus, 
planning is purposeful. Planning has no meaning unless it contributes to 
the achievement of predetermined organisational goals. 
 
 
1 
 
 
 
 
5 
(2)  Planning is futuristic: Planning essentially involves looking ahead and 
preparing for the future. The purpose of planning is to meet future events 
effectively to the best advantage of an organisation. It implies peeping 
into the future, analysing it and predicting it. Planning is, therefore, 
regarded as a forward looking function based on forecasting. 
(3)  Planning involves decision making: Planning essentially involves 
choice from among various alternatives and activities. The need for 
planning arises only when alternatives are available. In actual practice, 
planning presupposes the existence of alternatives. Planning, thus, 
involves thorough examination and evaluation of each alternative and 
choosing the most appropriate one.  
(4)  Planning is a mental exercise:Planning requires application of the mind 
involving foresight, intelligent imagination and sound judgement. It is 
basically an intellectual activity of thinking rather than doing, because 
planning determines the action to be taken. However, planning requires 
logical and systematic thinking rather than guesswork or wishful thinking. 
1 
 
 
 
 
 
1 
 
 
 
 
1 
 
 
30. Following are the differences between advertising and personal selling  
(any four): 
S.No. Advertising  Personal Selling  
1. Advertising is an impersonal form 
of communication 
Personal selling is a 
personal form of 
communication. 
2. Advertising involves transmission 
of standardised messages, i.e., 
the same message is sent.  
In personal selling, the sales 
talk is adjusted keeping view 
of the customer's 
background and needs. 
3. Advertising is inflexible as the 
message can’ t be adjusted to the 
needs of the buyer.  
Personal selling is highly 
flexible. as the message can 
be adjusted. 
4. It reaches masses, i.e., a large 
number of people can be 
approached. 
Only a limited number of 
people can be contacted 
because of time and cost 
considerations. 
5. In advertising the cost per person 
reached is very low.  
The cost per person is quite 
high in the case of personal 
selling.  
6. Advertising can cover the market 
in a short time.  
Personal selling efforts take 
a lot of time to cover the 
entire market.  
7. Advertising makes use of mass 
media such television, radio, 
newspaper, and magazines.  
Personal selling makes use 
of sales staff, which has 
limited reach. 
1X4=4