Class 12 Business Studies: CBSE Sample Question Papers- Term I (2021-22)- 2 | Sample Papers for Class 12 Commerce PDF Download

General instructions: 

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

Q.1: The process of coordinating the activities of an organization begins at which stage?
(a) Planning
(b) Staffing
(c) Directing
(d) Controlling

Correct Answer is Option (a)

The process of coordinating the activities of an organisation begins at the planning stage itself. Top management plans for the entire organisation. According to these plans the organisational structure is developed and staffed. In order to ensure that these plans are executed according to plans directing is required. Any discrepancies between actual and realised activities are then taken care of at the stage of controlling.

Q.2: Which of the following is related to principle of Unity of Direction?
(a) One head and one plan 
(b) One head and two plans 
(c) Two heads and one plan 
(d) Two heads and Two plans

Correct Answer is Option (a)
All the units of an organisation should be moving towards the same objectives through coordinated and focussed efforts. Each group of activities having the same objective must have one head and one plan. This ensures unity of action and coordination. This ensures unity of action and coordination.

Q.3: “Due to enforcement of Euro-IV emission norms, an automobile company had to phase out one of its model.” Identify the dimension of environment highlighted in the given statement.
(a) Technological 
(b) Political 
(c) Legal 
(d) Economic 

Correct Answer is Option (c)
Legal environment consists of legislation that is passed by the Parliament and state legislatures. Legal environment consists of the legal framework within which business has to function, including legislation passed by the government, administration orders, court judgement, etc.

Q.4: Planning is:
(a) Continuous 
(b) Backward looking 
(c) A physical exercise 
(d) None of these

Correct Answer is Option (a)
Plans are prepared for a specific period of time, may be for a month, a quarter, or a year. At the end of that period there is need for a new plan to be drawn on the basis of new requirements and future conditions. Hence, planning is a continuous process. Continuity of planning is related with the planning cycle. It means that a plan is framed, it is implemented, and is followed by another plan, and so on.

Q.5: _______implies being answerable for the final outcome
(a) Accountability 
(b) Authority 
(c) Responsibility 
(d) None of these

Correct Answer is Option (a)
Accountability implies being answerable for the final outcome. Once authority has been delegated and responsibility accepted, one cannot deny accountability. It cannot be delegated and flows upwards, i.e., a subordinate will be accountable to a superior for satisfactory performance of work. It indicates that the manager has to ensure the proper discharge of duties by his subordinates.

Q.6: Which of the following gives shape to the organisation structure? 
(a) Extent of delegation 
(b) Employee strength 
(c) Span of management 
(d) None of the above

Correct Answer is Option (c)
The span of management, to a large extent, gives shape to the organizational structure. Span of management refers to the number of subordinates that can be effectively managed by a superior. This determines the level of management in the structure.

Q.7: Which of the following statement is correct with respect to advertising?
(a) Advertising is a personal form of communication 
(b) Advertising is very flexible. 
(c) Advertising is a very economical mode of communication if large number of people are to be reached. 
(d) All of the above

Correct Answer is Option (c)
Advertising is a medium through which a large number of people can be reached over a vast geographical area. For example, an advertisement message placed in a national daily reaches lakh of its subscribers. Advertising is a very economical mode of communication if large number of people are to be reached. Because of its wide reach, the overall cost of advertising gets spread over numerous communication links established. As a result, the per-unit cost of reach comes low.

Q.8: Which of the following function of management allows a business enterprise to add more job positions, departments and even diversify their product lines.
(a) Planning 
(b) Controlling 
(c) Organising 
(d) Staffing

Correct Answer is Option (c)
Organising involves the grouping of the required tasks into manageable departments or work units and the establishment of authority and reporting relationships within the organisational hierarchy. Proper organisational techniques help in the accomplishment of work and promote both the efficiency of operations and the effectiveness of results.

Q.9: “The enterprises that continuously monitor their environment and adopt suitable business practices are the ones which not only improve their present performance but also continue to succeed in the market for a longer period, is one of the importance of the business environment”. Identify the importance. 
(a) It helps in improving performance. 
(b) It helps in assisting in planning and policy formulation. 
(c) It helps in tapping useful resources. 
(d) It helps in coping with rapid changes.

Correct Answer is Option (a)
Business environment makes a difference in the performance of an enterprise. Many studies reveal that the future of an enterprise is closely bound up with what is happening in the environment. And, the enterprises that continuously monitor their environment and adopt suitable business practices are the ones which not only improve their present performance but also continue to succeed in the market for a longer period.

Q.10: The company “Refresho” has plans of expansion. Their objective is to increase their capacity so that they can employ 800 more professionals. Their target time is six months. The objective of the current year has also been clearly stated which is to increase capacity by 1500-2000 more professionals.
Identify the feature of planning highlighted in the above case?
(a) Planning focuses on achieving objectives.
(b) Planning is pervasive.
(c) Planning is continuous.
(d) Planning is futuristic.

Correct Answer is Option (a)
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.

Q.11: Which of the following importance of decentralization is highlighted in the below mentioned lines? “In decentralization, there are less chances of information getting distorted because it doesn’t have to go through long channels.”
(a) Facilitates growth 
(b) Quick decision making 
(c) Relief to top management 
(d) Better control

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

Q.12: ______ involves putting identification marks on the package.
(a) Packaging 
(b) Labelling 
(c) Branding 
(d) None of these

Correct Answer is Option (b)
Labelling to designing and development the label to be put on the package.

Q.13: When decisions taken by the lower levels are numerous as well as important an organisation can be regarded as greatly __________.
(a) Decentralised
(b) Centralised
(c) Both (A) and (B)
(d) None of these

Correct Answer is Option (a)
Decision making authority is shared with lower levels and is consequently placed nearest to the points of action. In other words, decision making authority is pushed down the chain of command. When decisions taken by the lower levels are numerous as well as important an organisation can be regarded as greatly decentralised.

Q.14: Which of the following is not a benefit of organising?
(a) Clarity in working relationship 
(b) Adaptation to change 
(c) Expansion and growth
(d) Establishing authority and reporting relationships

Correct Answer is Option (d)
Establishing authority and reporting relationships is a step in the process of organizing and not the benefit of organizing. Merely allocating work is not enough. Each individual should also know who he has to take orders from and to whom he is accountable. The establishment of such clear relationships helps to create a hierarchal structure and helps in coordination amongst various departments.

Q.15: Planning is deciding in advance:
(a) What to do 
(b) How to do
(c) Both (A) and (B) 
(d) All of the above

Correct Answer is Option (c)
Planning is deciding in advance what to do and how to do. It is one of the basic managerial functions. Before doing something, the manager must formulate an idea of how to work on a particular task. By stating in advance how work is to be done planning provides direction for action.

Q.16: “It is very difficult to predict future happenings, especially when environment changes are taking place too frequently Business environment”.  This feature of business environment states that it is largely ____________.
(a) Uncertain 
(b) Predictable 
(c) Determinate 
(d) None of these

Correct Answer is Option (a)
Business environment is largely uncertain as it is very difficult to predict future happenings, especially when environment changes are taking place too frequently as in the case of information technology or fashion industries.

Q.17: Functional foremanship is an extension of the principle of___________.
(a) Division of work 
(b) Unity of direction 
(c) Equity 
(d) All of the above

Correct Answer is Option (a)
In the factory system, the foreman represents the managerial figure with whom the workers are in face-to-face contact on a daily basis. Taylor advocated separation of planning and execution functions. This concept was extended to the lowest level of the shop floor. Functional foremanship is an extension of the principle of division of work and specialisation to the shop floor. Each worker will have to take orders from these eight foremen in the related process or function of production.

Q.18: According to Fayol, scalar chain should not be violated in the normal course of ____________ communication
(a) Informal 
(b) Formal 
(c) General 
(d) Specific

Correct Answer is Option (b)
An organisation consists of superiors and subordinates. The formal lines of authority from highest to lowest ranks are known as scalar chain. According to Fayol, this chain should not be violated in the normal course of formal communication. However, if there is an emergency then one subordinate can directly contact another subordinate through ‘Gang Plank’. This is a shorter route and has been provided so that communication is not delayed.

Q.19: ‘The current government initiated Make in India Programme which is good for the manufacturing sector.’ Out of the following, identify the component of Business Environment quoted in the above lines.
(a) Economic 
(b) Political 
(c) Legal 
(d) Technological 

Correct Answer is Option (b)
Political Environment consists of forces such as political stability and peace in the country and attitude of the ruling party and its representatives towards business. These forces significantly affect the functioning of business.

Q.20: “Competition in the market can also upset financial plans, sales targets may have to be revised and, accordingly, cash budgets also need to be modified since they are based on sales figures.” Identify the limitation of planning highlighted in the above case?
(a) Planning leads to rigidity. 
(b) Planning reduces creativity. 
(c) Planning may not work in a dynamic environment. 
(d) Planning is a mental exercise.

Correct Answer is Option (c)
The business environment is dynamic, nothing is constant. The environment consists of a number of dimensions, economic, political, physical, legal and social dimensions. The organisation has to constantly adapt itself to changes. It becomes difficult to accurately assess future trends in the environment if economic policies are modified or political conditions in the country are not stable or there is a natural calamity. Competition in the market can also upset financial plans, sales targets may have to be revised and, accordingly, cash budgets also need to be modified since they are based on sales figures.

Q.21: Which type of organisational structures is the most suitable for those business enterprises where a large variety of products are manufactured?
(a) Functional 
(b) Divisional 
(c) Both (A) and (B) 
(d) None of these

Correct Answer is Option (b)
In a divisional structure, the organisation structure comprises of separate business units or divisions. Each unit has a divisional manager responsible for performance and who has authority over the unit. Generally, manpower is grouped on the basis of different products manufactured. Divisional structure is suitable for those business enterprises where a large variety of products are manufactured using different productive resources. When an organisation grows and needs to add more employees, create more departments and introduce new levels of management, it will decide to adopt a divisional structure.

Q.22: “The extent of delegated authority also decides the power that each job position enjoys in the organisation.” Identify the importance of delegation highlighted in the above case?
(a) Employee development 
(b) Motivation of employees 
(c) Basis of management hierarchy 
(d) Better coordination

Correct Answer is Option (c)
Delegation of authority establishes superior-subordinate relationships, which are the basis of hierarchy of management. It is the degree and flow of authority which determines who has to report to whom. The extent of delegated authority also decides the power that each job position enjoys in the organisation.

Q.23: Traditionally, marketing has been described in terms of its:
(a) Functions 
(b) Activities 
(c) Both (A) and (B) 
(d) None of these

Correct Answer is Option (c)
Traditionally, marketing has been described in terms of its functions or activities. In this respect, marketing has been referred to as performance of business activities that direct the flow of goods and services from producers to consumers. Most of the manufacturing firms do not produce goods for their own consumption but for the consumption or use by others. Therefore, to move the goods and services from the producer to consumers, a number of activities, such as product designing or merchandising, packaging, warehousing, transportation, branding, selling, advertising and pricing are required. All these activities are referred to as marketing activities.

Q.24: An IT company currently employing 5,000 people, plans to expand its business through diversification. It aims to become a global leader. To achieve this goal, it has started shifting to a decentralized management system from a centralized one. Thus, ______. function of management is being performed by the company to become a decentralised company.
(a) Directing 
(b) Staffing 
(c) Organising 
(d) Planning 

Correct Answer is Option (c)
Organising facilitates growth and diversification of activities through clear division of work. It helps in developing a proper organisation structure and the extent and nature of decentralisation can be determined. Organising initiates implementation of plans by clarifying jobs and working relationships and effectively deploying resources for attainment of identified and desired results (goals).

Q.25: India has launched its most advanced Geo-imaging satellite which will allow better monitoring of the subcontinent, including its borders with neighbouring countries, by imaging the country 4-5 times a day. The satellite is capable of near real time monitoring of floods and cyclones. The factor constituting the Business Environment  being discussed above is:
(a) Social environment 
(b) Economic environment 
(c) Technological environment 
(d) Political environment 

Correct Answer is Option (c)
Technological environment includes forces relating to scientific improvements and innovations which provide new ways of producing goods and services and new methods and techniques of operating a business. For example, recent technological, advances in computers and electronics have modified the ways in which companies advertise their products. It is common now to see computerised information kiosks, and World Wide Web multimedia pages highlighting the virtues of products.

Q.26: Which step in the process of planning will precede the step in which the manager is required to make certain assumptions about the future, which are the base material upon which the plans are drawn. 
(a) Implementing the plan
(b) Identifying alternative courses of action 
(c) Setting objectives
(d) Selecting an alternative.

Correct Answer is Option (c)
The step before developing premises is setting objectives. Every organisation must have certain objectives. Objectives may be set for the entire organisation and each department or unit within the organisation. Objectives or goals specify what the organisation wants to achieve. It could mean an increase in sales by 20% which could be objective of the entire organisation. Objectives should be stated clearly for all departments, units and employees. They give direction to all departments. Departments/units then need to set their own objectives within the broad framework of the organisation’s philosophy.

Q.27: “Availability and affordability of the product were considered to be the key to the success of a firm.” Identify the concept of marketing management highlighted by this statement. 
(a) Production concept

(b) Product Concept 
(c) Societal concept
(d) Marketing Concept 

Correct Answer is Option (a)
During the earlier days of industrial revolution, the demand for industrial goods started picking up but the number of producers were limited. As a result, the demand exceeded the supply. Selling was no problem. Anybody who could produce the goods was able to sell. The focus of business activities was, therefore, on production of goods. It was believed that profits could be maximised by producing at large scale, thereby reducing the average cost of production. Thus, availability and affordability of the product were considered to be the key to the success of a firm. Therefore, greater emphasis was placed on improving the production and distribution efficiency of the firms.

Q.28: Aiming to revive Jammu and Kashmir’s attraction as a top location for film shooting the J&K film policy, 2021 offers a host of  incentives to the filmmakers, such as subsidies and low long term interest rates, for films with patriotic and certain other themes shot in J&K,  for giving work opportunities to local artistes, etc.  This will have an impact on business enterprises in the state. Which component of business environment is highlighted above:
(a) Specific and general forces 
(b) Technological environment 
(c) Economic environment 
(d) Totality of external forces 

Correct Answer is Option (c)
Interest rates, inflation rates, changes in disposable income of people, stock market indices and the value of rupee are some of the economic factors that can affect management practices in a business enterprise. Short and long term interest rates significantly affect the demand for product and services.

Q.29: The Topper group is looking to make a foray into manufacturing of semiconductors and it has set up a business to seize the business opportunity and add to its prospects in the long run. The company has already pivoted into a number of new projects like electronics, 5G network equipment, as well as semiconductors. Which economic objective of management does the business seek to fulfill?
(a) Survival 
(b) Growth 
(c) Profit 
(d) Efficiency 

Correct Answer is Option (b)
A business needs to add to its prospects in the long run, for this it is important for the business to grow. To remain in the industry, management must exploit fully the growth potential of the organisation. Growth of a business can be measured in terms of sales volume increase in the number of employees, the number of products or the increase in capital investment, etc. There can be other indicators of growth.

Q.30: Product cost sets the lower limits of the price, the utility provided by the product and the intensity of demand of the buyers sets the upper limit. So, in case of inelastic demand, total revenue ______ when price increases
(a) Rises 
(b) Falls 
(c) Constant 
(d) Both (A) and (B)  

Correct Answer is Option (a)
The price of a product is affected by the elasticity of demand of the product. The demand is said to be elastic if a relatively small change in price results in large change in the quantity demanded. Here numerically, the price elasticity is greater than one. In the case of inelastic demand, the total revenue increases when the price is increased and goes down when the price is reduced. If the demand of a product is inelastic, the firm is in a better position to fix higher prices.

Q.31: “A manager in a conscious manner has to ensure that even where members of a department willingly cooperate, coordination gives direction to the willing spirit.” The characteristic of coordination being highlighted above is : 
(a) Coordination is the responsibility of all managers. 
(b) Coordination is a deliberate function. 
(c) Coordination integrates group efforts. 
(d) Coordination is a continuous process.

Correct Answer is Option (b)
A manager has to coordinate the efforts of different people in a conscious and deliberate manner. Even where members of a department willingly cooperate and work, coordination gives a direction to that willing spirit. Cooperation in the absence of coordination may lead to waste effort and coordination without cooperation may lead to dissatisfaction among employees.

Q.32: For the following two statements choose the correct option: 
Statement I:  Accountability can be delegated 
Statement II: Responsibility can be delegated completely 
Choose the correct option from the options given below: 
(a) Statement I is correct and II is wrong 
(b) Statement II is correct and I is wrong 
(c) Both the statements are correct 
(d) Both the statements are incorrect 

Correct Answer is Option (d)
Accountability implies being answerable for the final outcome. Once authority has been delegated and responsibility accepted, one cannot deny accountability. It cannot be delegated and flows upwards, i.e., a subordinate will be accountable to a superior for satisfactory performance of work. It indicates that the manager has to ensure the proper discharge of duties by his subordinates.  Responsibility is the obligation of a subordinate to properly perform the assigned duty. It arises from a superior–subordinate relationship because the subordinate is bound to perform the duty assigned to him by his superior. Thus, responsibility flows upwards, i.e., a subordinate will always be responsible to his superior. Thus, for effective delegation, the authority granted must be commensurate with the assigned responsibility.

Q.33: The CEO of Radhe Cycles Pvt Ltd. Mr. Kumar wants to get maximum output from the employees at a competitive cost. On the other hand Ramakaant, an employee of the company wants to get the maximum salary while working the least. The Principle of management given by Fayol being violated by Ramakaant is ____________. 
(a) Remuneration 
(b) Equity 
(c) Discipline  
(d) Subordination of individual interest to general interest. 

Correct Answer is Option (d)
The interests of an organisation should take priority over the interests of any one individual employee according to Fayol. Every worker has some individual interest for working in a company. The company has its own objectives. For example, the company would want to get maximum output from its employees at a competitive cost (salary). On the other hand, an employee may want to get maximum salary while working the least.

Q.34: Arrange the following steps in the process of organising in the correct sequence: 
(A) Assignment of duties 
(B) Departmentalisation 
(C) Identification and division of work 
(D) Establishing reporting relationship 
Choose the correct option: 
(a) (A) ; (B) ; (D) ; (C) 
(b) (C) ; (B) ; (A) ; (D) 
(c) (C) ; (B) ; (D) ; (A) 
(d) (B) ; (C) ; (A) ; (D)

Correct Answer is Option (b)
Organising involves a series of steps that need to be taken in order to achieve the desired goal. The first step in the process of organising involves identifying and dividing the work that has to be done in accordance with previously determined plans. Once work has been divided into small and manageable activities then those activities which are similar in nature are grouped together.  It is necessary to define the work of different job positions and accordingly allocate work to various employees.  Merely allocating work is not enough. Each individual should also know who he has to take orders from and to whom he is accountable. The establishment of such clear relationships helps to create a hierarchal structure and helps in coordination amongst various departments.

Q.35: The production department at Karishmaa Ltd, a firm manufacturing readymade garments for men has an objective to increase production by 10% but the Sales department does not approve of the increase in production, till changes are brought about in the product to incorporate latest fashion. These kinds of conflicts bring to light the following importance of the force that can help to accomplish the linking of activities of various departments: 
(a) Growth in size
(b) Functional differentiation. 
(c) Specialization
(d) Efficiency 

Correct Answer is Option (b)
Functions of an organisation are divided into departments, divisions and sections. In an organisation there may be separate departments of finance, production, marketing or human resources. All these departments may have their own objectives, policies and their own style of working. For example, the marketing department’s objective may be to increase sales by 10 per cent by offering discounts. But, the finance department may not approve of such discounts as it means loss of revenue. These kinds of conflict arise in organisations because each unit/department is performing activities in isolation from others and barriers between departments are becoming more rigid.

Q.36: Planning requires logical and systematic thinking rather than guess work. The feature of planning being referred to in the above statement is: 
(a) Planning is a continuous process 
(b) Planning is futuristic 
(c) Planning is pervasive 
(d) Planning is a mental exercise 

Correct Answer is Option (d)

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 guess work or wishful thinking. In other words, thinking for planning must be orderly and based on the analysis of facts and forecasts.

Q.37: Silico Ltd. has appointed the former Consulting executive of Shri Shakti Ltd. Rajan Bahl as its Vice President. What will be his basic task? 
(a) To integrate diverse elements and coordinate activities of different departments. 
(b) To carry out plans formulated by top managers. 
(c) To oversee the efforts of the workforce. 
(d) Help to maintain quality of output.

Correct Answer is Option (a)
Top Management consists of the senior-most executives of the organisation by whatever name they are called. They are usually referred to as the chairman, the chief executive officer, chief operating officer, president and vice-president. Top management is a team consisting of managers from different functional levels, heading finance, marketing etc. For example chief finance officer, vice president (marketing). Their basic task is to integrate diverse elements and coordinate the activities of different departments according to the overall objectives of the organisation.

Q.38: The marketing management philosophy which is based on the premise that any activity which satisfies human needs but does not pay attention to the ethical and ecological aspects of marketing cannot be justified is known as:
(a) Marketing concept 
(b) Societal marketing concept 
(c) Production concept 
(d) Product concept 

Correct Answer is Option (b)
The societal marketing concept holds that the task of any organisation is to identify the needs and wants of the target market and deliver the desired satisfaction in an effective and efficient manner so that the longterm well-being of the consumers and the society is taken care of. Thus, the societal marketing concept is the extension of the marketing concept as supplemented by the concern for the long-term welfare of the society. Apart from the customer satisfaction, it pays attention to the social, ethical and ecological aspects of marketing. There are large number of such issues that need to be attended.

Q.39: Ravi joined a marketing firm as a Sales manager. On his first day in the company, during the orientation programme, the CEO of the company told Ravi that he will have to simultaneously perform the functions of management (planning, organising, staffing, directing, controlling) all the time. Which characteristic of management was the CEO referring to? 
(a) Management is a continuous process
(b) Management is all pervasive 
(c) Management is multidimensional
(d) Management is goal oriented

Correct Answer is Option (a) 
The process of management is a series of continuous, composite, but separate functions (planning, organising, directing, staffing and controlling). These functions are simultaneously performed by all managers all the time. The task of a manager consists of an ongoing series of functions.

Q.40: Unlike professions such as medicine or law which require a practising doctor or lawyer to possess valid degrees, nowhere in the world is it mandatory for a manager to possess any such professional degree. Identify the characteristic of the profession being discussed above which is not being strictly met by management. 
(a) Well defined body of knowledge
(b) Restricted Entry 
(c) Professional Association
(d) Ethical code of conduct 

Correct Answer is Option (b)
The entry to a profession is restricted through an examination or through acquiring an educational degree. For example, to become a chartered accountant in India a candidate has to clear a specified examination conducted by the Institute of Chartered Accountants of India.

Q.41: “Following a pre-decided plan, when circumstances have changed, may not turn out to be in the organisation’s interest.” The limitation of planning being referred to in the above statement is ____________. 
(a) Planning does not guarantee success 
(b) Planning may not work in  a dynamic environment 
(c) Planning leads to rigidity 
(d) Planning is a time consuming process. 

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

Q.42: The technique of Scientific Management given by Taylor, which aims to establish interchangeability of manufactured parts and products is ____________.
(a) Method Study 
(b) Motion study 
(c) Standardization  
(d) Differential Piece wage system. 

Correct Answer is Option (c)
Standardisation refers to the process of setting standards for every business activity; it can be standardisation of process, raw material, time, product, machinery, methods or working conditions. These standards are the benchmarks, which must be adhered to during the production. The objective of standardisation is to establish interchange ability of manufactured parts and products.

Q.43: For the following two statements choose the correct option: 
Statement I:  Advertising is an impersonal form of communication 
Statement II: Advertising lacks direct feedback 
Choose the correct option from the options given below: 
(a) Statement I is correct and II is wrong 
(b) Statement II is correct and I is wrong 
(c) Both the statements are correct 
(d) Both the statements are incorrect

Correct Answer is Option (c)
Advertising is perhaps the most commonly used tool of promotion. It is an impersonal form of communication, which is paid for by the marketers (sponsors) to promote some goods or service. The most common modes of advertising are ‘newspapers’, ‘magazines’, ‘television’, and ‘radio’. Advertising lacks feedback. The evaluation of the effectiveness of advertising message is very difficult as there is no immediate and accurate feedback mechanism of the message that is delivered.

Q.44: KTX Group is rolling out an initiative to help create wealth for its employees through the implementation of Employee Stock option. Through motivation and leadership the management will help individuals to develop team spirit, cooperation and commitment to the success of the group. The following importance of management is highlighted above: 
(a) Management helps in achieving personal objectives 
(b) Management helps in the development of society  
(c) Management creates a dynamic organisation  
(d) Management increases efficiency 

Correct Answer is Option (a)
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. Through motivation and leadership the management helps individuals to develop team spirit, cooperation and commitment to group success.

Q.45: If there is a plan to increase production then more labour, more machinery will be required. This step in the process of planning will involve organising for labour and purchase of machinery. Identify the step in the planning process being discussed above.
(a) Identifying alternative courses of action
(b) Setting objectives
(c) Selecting an alternative
(d) Implementing the plan

Correct Answer is Option (d) 
This is the step where other managerial functions also come into the picture. The step is concerned with putting the plan into action, i.e., doing what is required. For example, if there is a plan to increase production then more labour, more machinery will be required. This step would also involve organising for labour and purchase of machinery.

Q.46: Taylor proposed eight specialists from whom each worker will have to take orders from as part of the technique of Functional Foremanship specified by him. Those with technical, mastery, intelligence and grit may be given ____________ work. Those with energy and good health may be assigned ____________ work.
(a) Planning, Execution 
(b) Execution, Planning 
(c) Production, Planning 
(d) Implementation, Production

Correct Answer is Option (a) 
In the factory system, the foreman represents the managerial figure with whom the workers are in face-to-face contact on a daily basis. Taylor advocated separation of planning and execution functions. This concept was extended to the lowest level of the shop floor. It was known as functional foremanship. those with technical mastery, intelligence and grit may be given planning work. Those with energy and good health may be assigned execution work.

Q.47: A person feeling hungry may get food by offering to give money or some other product or service in return to someone who is willing to accept the same for food. The important feature of marketing illustrated above is: 
(a) Exchange mechanism 
(b) Customer value 
(c) Creating a market offering 
(d) Needs and wants 

Correct Answer is Option (a)
The process of marketing works through the exchange mechanism. The individuals (buyers and sellers) obtain what they need and want through the process of exchange. Exchange refers to the process through which two or more parties come together to obtain the desired product or service from someone, offering the same by giving something in return. For example, a person feeling hungry may get food by offering to give money or some other product or service in return to someone who is willing to accept the same for food.

Q.48: Assertion: (A) Planning is futuristic 
Reason: (R) Planning is concerned with the future which is certain and does not require forecast 
(a) Both (A) and ( R ) are correct 
(b) (A) is correct ( R) is incorrect 
(c) Both (A) and ( R) are correct, and R is the correct explanation of  R 
(d) Both (A) and ( R) are correct, and R is  not the correct explanation of R 

Correct Answer is Option (b)
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. Planning is certainly important as it tells us where to go, it provides direction and reduces the risk of uncertainty by preparing forecasts.

Q.49: Read the following text and answer question on the basis of the same.
BBS international school is looking forward to celebrate his annual sports day in school in the coming month. It is an occasion where pupils, teachers, and parents come together for a day of competitive sport. The principal and the sports teachers have started planning different races, dances and events and also started assigning the duties and responsibilities to various staff members and students accordingly. The work was identified and divided in accordance with previously determined plans. Different departments and committees were formed to look into and to organize different activities of sports day such as welcoming of parents, handing out refreshments, overseeing races, blowing whistles, or awarding medals and prizes etc. All the decision-making authority is retained by the Principal. She ensures that there should be proper usage of all material, financial and human resources. The responsibility of refreshment was given to Mr. Gopal, who was an art teacher in school. Mr. Gopal calculated the number of students, staff and parents and came to the conclusion that minimum 1400 audience will be gathered on the sports day. Accordingly, he decided to order 1500 snack boxes. He gave the order to the local bakery shop and made payment for 700 boxes in advance. On the day of the sports day only 500 snack boxes were delivered. The distribution and counting of medals were assigned to Ms. Ruchi. But Ms. Ruchi was ignoring her responsibilities. So, the Principal decided to appoint Ms. Salma to work with Ms. Ruchi. Ruchi did not like to work with Ms. Salma. Most of the times, Principal noticed the tension developing between the two. However, she didn’t want to get involved in their personal issues as long as the work was completed effectively and efficiently by them. One day, the tension between them reached the heights and Ms. Ruchi complained to Principal stating that her duties were being largely taken over by Ms. Salma.  Principal issued the order stating the clear allocation of the jobs and related duties between the two. She further clarified the working relationship between them by specifying who will take reasonability of which events as the school has planned many events for the sports day. This helped in reducing the workload, enhancing productivity and removing ambiguity.
Which of the following importance of organizing is highlighted in the below mentioned lines: “She further clarified the working relationship between them by specifying who will take reasonability of which events as the school has planned many events for the sports day”.
(a) Optimum utilisation of resources 
(b) Adaptation to change 
(c) Effective administration 
(d) Clarity in working relationships

Correct Answer is Option (d)
The establishment of working relationships clarifies lines of communication and specifies who is to report to whom. This removes ambiguity in transfer of information and instructions. It helps in creating a hierarchical order thereby enabling the fixation of responsibility and specification of the extent of authority to be exercised by an individual.

Q.50: Read the following text and answer question on the basis of the same.
BBS international school is looking forward to celebrate his annual sports day in school in the coming month. It is an occasion where pupils, teachers, and parents come together for a day of competitive sport. The principal and the sports teachers have started planning different races, dances and events and also started assigning the duties and responsibilities to various staff members and students accordingly. The work was identified and divided in accordance with previously determined plans. Different departments and committees were formed to look into and to organize different activities of sports day such as welcoming of parents, handing out refreshments, overseeing races, blowing whistles, or awarding medals and prizes etc. All the decision-making authority is retained by the Principal. She ensures that there should be proper usage of all material, financial and human resources. The responsibility of refreshment was given to Mr. Gopal, who was an art teacher in school. Mr. Gopal calculated the number of students, staff and parents and came to the conclusion that minimum 1400 audience will be gathered on the sports day. Accordingly, he decided to order 1500 snack boxes. He gave the order to the local bakery shop and made payment for 700 boxes in advance. On the day of the sports day only 500 snack boxes were delivered. The distribution and counting of medals were assigned to Ms. Ruchi. But Ms. Ruchi was ignoring her responsibilities. So, the Principal decided to appoint Ms. Salma to work with Ms. Ruchi. Ruchi did not like to work with Ms. Salma. Most of the times, Principal noticed the tension developing between the two. However, she didn’t want to get involved in their personal issues as long as the work was completed effectively and efficiently by them. One day, the tension between them reached the heights and Ms. Ruchi complained to Principal stating that her duties were being largely taken over by Ms. Salma.  Principal issued the order stating the clear allocation of the jobs and related duties between the two. She further clarified the working relationship between them by specifying who will take reasonability of which events as the school has planned many events for the sports day. This helped in reducing the workload, enhancing productivity and removing ambiguity.
Which of the following concept of organization is described in the below mentioned lines: “All the decision-making authority is retained by the Principal.”
(a) Centralization
(b) Decentralization
(c) Authority
(d) Responsibility

Correct Answer is Option (a)
An organisation is centralised when decision-making authority is retained by higher management. Complete centralisation would imply concentration of all decision-making functions at the apex of the management hierarchy. Such a scenario would obviate the need for a management hierarchy.

Q.51: Read the following text and answer question on the basis of the same.
BBS international school is looking forward to celebrate his annual sports day in school in the coming month. It is an occasion where pupils, teachers, and parents come together for a day of competitive sport. The principal and the sports teachers have started planning different races, dances and events and also started assigning the duties and responsibilities to various staff members and students accordingly. The work was identified and divided in accordance with previously determined plans. Different departments and committees were formed to look into and to organize different activities of sports day such as welcoming of parents, handing out refreshments, overseeing races, blowing whistles, or awarding medals and prizes etc. All the decision-making authority is retained by the Principal. She ensures that there should be proper usage of all material, financial and human resources. The responsibility of refreshment was given to Mr. Gopal, who was an art teacher in school. Mr. Gopal calculated the number of students, staff and parents and came to the conclusion that minimum 1400 audience will be gathered on the sports day. Accordingly, he decided to order 1500 snack boxes. He gave the order to the local bakery shop and made payment for 700 boxes in advance. On the day of the sports day only 500 snack boxes were delivered. The distribution and counting of medals were assigned to Ms. Ruchi. But Ms. Ruchi was ignoring her responsibilities. So, the Principal decided to appoint Ms. Salma to work with Ms. Ruchi. Ruchi did not like to work with Ms. Salma. Most of the times, Principal noticed the tension developing between the two. However, she didn’t want to get involved in their personal issues as long as the work was completed effectively and efficiently by them. One day, the tension between them reached the heights and Ms. Ruchi complained to Principal stating that her duties were being largely taken over by Ms. Salma.  Principal issued the order stating the clear allocation of the jobs and related duties between the two. She further clarified the working relationship between them by specifying who will take reasonability of which events as the school has planned many events for the sports day. This helped in reducing the workload, enhancing productivity and removing ambiguity.
Which of the following elements of delegation is being described in the below mentioned lines with respect to Mr. Gopal: “He decided to order 1500 snack boxes. He gave the order to the local bakery shop and made payment for 700 boxes in advance. On the day of the sports day only 500 snack boxes were delivered”.
(a) Authority and Responsibility
(b) Accountability and Responsibility
(c) Authority and Accountability
(d) None of these

Correct Answer is Option (b)
Responsibility is the obligation of a subordinate to properly perform the assigned duty. It arises from a superior–subordinate relationship because the subordinate is bound to perform the duty assigned to him by his superior. Thus, responsibility flows upwards, i.e., a subordinate will always be responsible to his superior. Delegation of authority, undoubtedly empowers an employee to act for his superior but the superior would still be accountable for the outcome. Accountability implies being answerable for the final outcome. Once authority has been delegated and responsibility accepted, one cannot deny accountability. It cannot be delegated and flows upwards, i.e., a subordinate will be accountable to a superior for satisfactory performance of work. In the above case, Mr. Gopal was both accountable and responsible in performing his duties.

Q.52: Read the following text and answer question on the basis of the same.
BBS international school is looking forward to celebrate his annual sports day in school in the coming month. It is an occasion where pupils, teachers, and parents come together for a day of competitive sport. The principal and the sports teachers have started planning different races, dances and events and also started assigning the duties and responsibilities to various staff members and students accordingly. The work was identified and divided in accordance with previously determined plans. Different departments and committees were formed to look into and to organize different activities of sports day such as welcoming of parents, handing out refreshments, overseeing races, blowing whistles, or awarding medals and prizes etc. All the decision-making authority is retained by the Principal. She ensures that there should be proper usage of all material, financial and human resources. The responsibility of refreshment was given to Mr. Gopal, who was an art teacher in school. Mr. Gopal calculated the number of students, staff and parents and came to the conclusion that minimum 1400 audience will be gathered on the sports day. Accordingly, he decided to order 1500 snack boxes. He gave the order to the local bakery shop and made payment for 700 boxes in advance. On the day of the sports day only 500 snack boxes were delivered. The distribution and counting of medals were assigned to Ms. Ruchi. But Ms. Ruchi was ignoring her responsibilities. So, the Principal decided to appoint Ms. Salma to work with Ms. Ruchi. Ruchi did not like to work with Ms. Salma. Most of the times, Principal noticed the tension developing between the two. However, she didn’t want to get involved in their personal issues as long as the work was completed effectively and efficiently by them. One day, the tension between them reached the heights and Ms. Ruchi complained to Principal stating that her duties were being largely taken over by Ms. Salma.  Principal issued the order stating the clear allocation of the jobs and related duties between the two. She further clarified the working relationship between them by specifying who will take reasonability of which events as the school has planned many events for the sports day. This helped in reducing the workload, enhancing productivity and removing ambiguity.
Which of the following step in the process of organizing is highlighted in the line: “The work was identified and divided in accordance with previously determined plans.”
(a) Identification and division of work
(b) Departmentalisation
(c) Assignment of duties
(d) Establishing authority and reporting relationships

Correct Answer is Option (a)
The first step in the process of organising involves identifying and dividing the work that has to be done in accordance with previously determined plans. The work is divided into manageable activities so that duplication can be avoided and the burden of work can be shared among the employees.

Q.53: Read the following text and answer question on the basis of the same.
BBS international school is looking forward to celebrate his annual sports day in school in the coming month. It is an occasion where pupils, teachers, and parents come together for a day of competitive sport. The principal and the sports teachers have started planning different races, dances and events and also started assigning the duties and responsibilities to various staff members and students accordingly. The work was identified and divided in accordance with previously determined plans. Different departments and committees were formed to look into and to organize different activities of sports day such as welcoming of parents, handing out refreshments, overseeing races, blowing whistles, or awarding medals and prizes etc. All the decision-making authority is retained by the Principal. She ensures that there should be proper usage of all material, financial and human resources. The responsibility of refreshment was given to Mr. Gopal, who was an art teacher in school. Mr. Gopal calculated the number of students, staff and parents and came to the conclusion that minimum 1400 audience will be gathered on the sports day. Accordingly, he decided to order 1500 snack boxes. He gave the order to the local bakery shop and made payment for 700 boxes in advance. On the day of the sports day only 500 snack boxes were delivered. The distribution and counting of medals were assigned to Ms. Ruchi. But Ms. Ruchi was ignoring her responsibilities. So, the Principal decided to appoint Ms. Salma to work with Ms. Ruchi. Ruchi did not like to work with Ms. Salma. Most of the times, Principal noticed the tension developing between the two. However, she didn’t want to get involved in their personal issues as long as the work was completed effectively and efficiently by them. One day, the tension between them reached the heights and Ms. Ruchi complained to Principal stating that her duties were being largely taken over by Ms. Salma.  Principal issued the order stating the clear allocation of the jobs and related duties between the two. She further clarified the working relationship between them by specifying who will take reasonability of which events as the school has planned many events for the sports day. This helped in reducing the workload, enhancing productivity and removing ambiguity.
Which step was succeeded in the process of organizing after the work was identified and divided in accordance with previously determined plans?
(a) Identification and division of work
(b) Departmentalisation
(c) Assignment of duties
(d) Establishing authority and reporting relationships

Correct Answer is Option (b)
Once work has been divided into small and manageable activities then those activities which are similar in nature are grouped together. Such sets facilitate specialisation. This grouping process is called departmentalisation. Departments can be created using several criteria as a basis. Examples of some of the most popularly used basis are territory (north, south, west, etc.) and products (appliances, clothes, cosmetics etc).

Q.54: Read the following text and answer question on the basis of the same.
BBS international school is looking forward to celebrate his annual sports day in school in the coming month. It is an occasion where pupils, teachers, and parents come together for a day of competitive sport. The principal and the sports teachers have started planning different races, dances and events and also started assigning the duties and responsibilities to various staff members and students accordingly. The work was identified and divided in accordance with previously determined plans. Different departments and committees were formed to look into and to organize different activities of sports day such as welcoming of parents, handing out refreshments, overseeing races, blowing whistles, or awarding medals and prizes etc. All the decision-making authority is retained by the Principal. She ensures that there should be proper usage of all material, financial and human resources. The responsibility of refreshment was given to Mr. Gopal, who was an art teacher in school. Mr. Gopal calculated the number of students, staff and parents and came to the conclusion that minimum 1400 audience will be gathered on the sports day. Accordingly, he decided to order 1500 snack boxes. He gave the order to the local bakery shop and made payment for 700 boxes in advance. On the day of the sports day only 500 snack boxes were delivered. The distribution and counting of medals were assigned to Ms. Ruchi. But Ms. Ruchi was ignoring her responsibilities. So, the Principal decided to appoint Ms. Salma to work with Ms. Ruchi. Ruchi did not like to work with Ms. Salma. Most of the times, Principal noticed the tension developing between the two. However, she didn’t want to get involved in their personal issues as long as the work was completed effectively and efficiently by them. One day, the tension between them reached the heights and Ms. Ruchi complained to Principal stating that her duties were being largely taken over by Ms. Salma.  Principal issued the order stating the clear allocation of the jobs and related duties between the two. She further clarified the working relationship between them by specifying who will take reasonability of which events as the school has planned many events for the sports day. This helped in reducing the workload, enhancing productivity and removing ambiguity.
Which of the following importance of organization is described in the below mentioned lines: “She ensures that there should be proper usage of all material, financial and human resources.”
(a) Benefits of specialisation
(b) Optimum utilisation of resources 
(c) Adaptation to change
(d) Clarity in working relationships

Correct Answer is Option (b)
Organising leads to the proper usage of all material, financial and human resources. The proper assignment of jobs avoids overlapping of work and also makes possible the best use of resources. Avoidance of duplication of work helps in preventing confusion and minimising the wastage of resources and efforts.

Q.55: Airline companies have Internet and World Wide Web pages where customers can look for flight times, destinations and fares and book their tickets online. In addition, continuing innovations in different scientific and engineering fields such as lasers, robotics, biotechnology, food preservatives, medicine, telecommunication and synthetic fuels have provided numerous opportunities and threats for many different enterprises.

Which of the following dimensions of business environment is discussed in the above text?
(a) Social
(b) Political
(c) Legal
(d) Technological

Correct Answer is Option (d)
Technological environment includes forces relating to scientific improvements and innovations which provide new ways of producing goods and services and new methods and techniques of operating a business. For example, recent technological, advances in computers and electronics have modified the ways in which companies advertise their products. It is common now to see computerised information kiosks, and World Wide Web multimedia pages highlighting the virtues of products.

Q.56: Samay wanted to purchase a car with the latest standards and possessing features to minimize pollution. He saw an advertisement and subsequently visited the showroom of the company where the car was displayed. In his discussion, the marketing manager told Samay that the company is providing credit facilities, maintenance services and many other useful services on account of which the company is experiencing repeat sales and has been able to develop brand loyalty. Thus, ...................... marketing function is being discussed between the marketing manager and Samay.
(a) Branding 
(b) Customer support service 
(c) Promotion 
(d) Physical distribution

Correct Answer is Option (b)
A very important function of the marketing management relates to developing customer support services such as after sales services, handling customer complaints and adjustments, procuring credit services, maintenance services, technical services and consumer information. All these services aim at providing maximum satisfaction to the customers, which is the key to marketing success in modern days.

Q.57: Rohan is manufacturing lunch boxes for school going children. To maximize the profits, he decided to improve their quality and added a hot case to the boxes. As a result of this improvement in the product, its sale increased gradually. Which of the following marketing philosophy was involved?
(a) Product 
(b) Prize 
(c) Standard 
(d) None of these

Correct Answer is Option (a)
Product improvement became the key to profit maximisation of a firm, under the concept of product orientation. With the increase in the supply of the products, customers started looking for products which were superior in quality, performance and features. Therefore, the emphasis of the firms shifted from quantity of production to quality of products.

Q.58: Mehta and Mehta Company has recently entered into the textile industry. Before setting objectives of the company and deciding what to do, the top management started recruiting the required staff and land up in recruiting more staff than what it is required in the company.
Which of the following feature of planning is ignored by Mehta and Mehta company in the above case?
(a) Planning is pervasive.
(b) Planning focuses on achieving objectives.
(c) Planning is a primary function of management.
(d) Planning is continuous.

Correct Answer is Option (c)
Planning lays down the base for other functions of management. All other managerial functions are performed within the framework of the plans drawn. Thus, planning precedes other functions. This is also referred to as the primacy of planning. The various functions of management are interrelated and equally important. However, planning provides the basis of all other functions.

Q.59: Shashi joined ‘Fashion Ltd.’ as Head of Production Department and realized that company was not performing well. She developed the best method using several parameters right from deciding the sequence of operations, place of men, machines and raw materials till the delivery of the product to the customers. Identify the technique of scientific management being followed by Shashi.
(a) Motion study 
(b) Fatigue study 
(c) Method study 
(d) Time study

Correct Answer is Option (c)
The objective of method study is to find out one best way of doing the job. To conduct this study, process chart and operation research techniques are used. The main objective of this study is to minimise the cost of production and maximise the quality and level of consumer satisfaction.

Q.60: Mahesh is the owner of a shoes company. The company was doing good and the size of the company has increased in two years span of time. The company has established a goodwill in a market and earning good profits. However, he takes all the important decisions on his own. The concentration of decision-making authority lies upon him. Even though the size of the organisation has increased yet he never considers the ideas and suggestions of his employees. He does not give any decision making authority to his employees. Which principle of Fayol has been violated by Mahesh in the above case?
(a) Centralisation and Decentralisation 
(b) Remuneration of Employees 
(c) Unity of Direction 
(d) Unity of Command

Correct Answer is Option (a)
The concentration of decision-making authority is called centralisation whereas its dispersal among more than one person is known  as decentralisation. According to Fayol, “There is a need to balance subordinate involvement through decentralisation with managers’ retention of final authority through centralisation.” The degree of centralisation will depend upon the circumstances in which the company is working. In general large organisations have more decentralisation than small organisations.