Class 12 Entrepreneurship Previous Year Paper - 3 | Entrepreneurship Class 12 - Commerce PDF Download

 Page 1


Page 1 of 9 
 
ENTREPRENEURSHIP 
       QUESTION PAPER 
 
S.No Questions and Answers Marks 
1 
 
Ans 
What do you mean by reorder point? 
 
It is a level at which a new order must be placed so that the inventory is renewed 
before the stock reaches zero level. 
1 
2 
 
 
Ans 
Here a private company takes over a public company. Identify the type of 
acquisition. 
 
Reverse acquisition. 
1 
3 
 
Ans 
Define the term environmental scanning. 
 
Environmental scanning refers to careful monitoring of an organisations internal 
and external environments for detecting early signs of opportunities and threats that 
may influence its current and future plans. 
1 
4 
 
 
Ans 
A salesman approaches you to promote the sales of a water purifier. Which 
communication tool is the marketer using by sending a salesman at your doorstep. 
 
Personal Selling. 
1 
5 
 
 
 
Ans 
Hari is an entrepreneur who wants to start an amusement park in Indore. He knows 
that he needs a huge amount of initial capital. According to you, which of the 
specialized financial institution will be more suitable to him? 
 
Tourism Finance Corporation of India (TFCI) 
1 
6 
 
Ans 
Give the meaning of „routing? and „scheduling? as elements of operational plan. 
 
Routing is a process concerned with determining exact route or path a 
product/service has to follow right from raw material till its transformation into 
finished product. 
Scheduling means fixation of time, date, day when each operation is to be 
commenced and completed. 
1+1=2 
7 
 
 
 
Ans 
Mr. Parthiv is a readymade garments manufacturer. His annual usage rate is 225 
Pcs. The cost of placing each order is 8/- and the carrying cost is 4/- per unit. 
Calculate the Economic Order Quantity (EOQ). 
 
D=225 
P=8 
C=4  
?? OQ =  2PD/C 
                    
=          2×8×225 
                  4   
           =   900   =  30 units. 
( ½mark for formula ,½mark answer, 1 mark for steps)  
1+1=2 
Page 2


Page 1 of 9 
 
ENTREPRENEURSHIP 
       QUESTION PAPER 
 
S.No Questions and Answers Marks 
1 
 
Ans 
What do you mean by reorder point? 
 
It is a level at which a new order must be placed so that the inventory is renewed 
before the stock reaches zero level. 
1 
2 
 
 
Ans 
Here a private company takes over a public company. Identify the type of 
acquisition. 
 
Reverse acquisition. 
1 
3 
 
Ans 
Define the term environmental scanning. 
 
Environmental scanning refers to careful monitoring of an organisations internal 
and external environments for detecting early signs of opportunities and threats that 
may influence its current and future plans. 
1 
4 
 
 
Ans 
A salesman approaches you to promote the sales of a water purifier. Which 
communication tool is the marketer using by sending a salesman at your doorstep. 
 
Personal Selling. 
1 
5 
 
 
 
Ans 
Hari is an entrepreneur who wants to start an amusement park in Indore. He knows 
that he needs a huge amount of initial capital. According to you, which of the 
specialized financial institution will be more suitable to him? 
 
Tourism Finance Corporation of India (TFCI) 
1 
6 
 
Ans 
Give the meaning of „routing? and „scheduling? as elements of operational plan. 
 
Routing is a process concerned with determining exact route or path a 
product/service has to follow right from raw material till its transformation into 
finished product. 
Scheduling means fixation of time, date, day when each operation is to be 
commenced and completed. 
1+1=2 
7 
 
 
 
Ans 
Mr. Parthiv is a readymade garments manufacturer. His annual usage rate is 225 
Pcs. The cost of placing each order is 8/- and the carrying cost is 4/- per unit. 
Calculate the Economic Order Quantity (EOQ). 
 
D=225 
P=8 
C=4  
?? OQ =  2PD/C 
                    
=          2×8×225 
                  4   
           =   900   =  30 units. 
( ½mark for formula ,½mark answer, 1 mark for steps)  
1+1=2 
Page 2 of 9 
 
8 
 
Ans 
State any two utilities created by business activities. 
 
Form utility- Changing the form of raw material into finished product creates form 
utility. 
Place utility- From the place of production, transporting goods to the place of 
consumption results in place utility. 
 
1+1=2 
9 
 
 
 
 
 
 
Ans 
Mohan was a famous fashion designer. He was in the habit of observing the dresses 
worn by the people. For this he would regularly visit malls, restaurants, parks, trade 
fairs etc. This helped him in understanding the market and designing the garments 
in accordance with the market demands. Identify and explain the way in which 
Mohan spotted this trend. Explain  one more way through which Mohan can spot 
the trends. 
 
Watch trend – Watching and observing the customers in the market place. If 
customers are teenagers, in local mall. If business class people, in restaurants or 
office. Thus, Mohan observed different ways of dressing of people. 
 
The other way Mohan could spot trend is: ( Any one) 
Read Trend -  Entrepreneurs regularly read the leading publications and websites 
affecting their business. 
Talk Trend  - Talking to people in specific industry?s trade association and online 
and offline. 
Think Trend –They collect what they read, hear and observe and start to make 
connections that will lead to business boosting insights. 
1+1=2 
10 
 
 
 
Ans 
ABC Company, manufacturing shoes, has taken over XYZ Company which also 
manufactures shoes at small scale. What do you think will be the reason for this 
kind of takeover? 
 
Following can be the reasons for the take over: 
a. ABC Company may have decided to expand in terms of its production and 
wanted to raise its sales and turnover. 
b. ABC Company may have decided to expand its area of sales and so may be 
desirous to take over the marketing area of XYZ Company. 
1+1=2 
11 
 
 
 
 
 
 
 
 
Ans 
Mahesh started a school bag business with his brother. Both were very excited 
about the new venture. With meticulous planning and a lot of hard work they were 
able to sell 1000 bags in the first year. But they did not earn any profit. Both were 
happy because they were not at loss and revenue generated was equal to the cost. 
Now they were moving towards earning profit in the second year. 
a. Identify the component of the financial plan discussed above. 
b. By giving any four points state how this component is useful for the 
entrepreneur. 
 
a. Break-even point – It is that level of volume of production at which firm 
neither makes  a profit nor loss. 
b. BEP is useful to an entrepreneur as it helps in assessing: 
1. The minimum level of output to be produced. 
2. The effect of change in quantity of output upon the profits. 
3. The selling price of the product. 
1+2=3 
 
Page 3


Page 1 of 9 
 
ENTREPRENEURSHIP 
       QUESTION PAPER 
 
S.No Questions and Answers Marks 
1 
 
Ans 
What do you mean by reorder point? 
 
It is a level at which a new order must be placed so that the inventory is renewed 
before the stock reaches zero level. 
1 
2 
 
 
Ans 
Here a private company takes over a public company. Identify the type of 
acquisition. 
 
Reverse acquisition. 
1 
3 
 
Ans 
Define the term environmental scanning. 
 
Environmental scanning refers to careful monitoring of an organisations internal 
and external environments for detecting early signs of opportunities and threats that 
may influence its current and future plans. 
1 
4 
 
 
Ans 
A salesman approaches you to promote the sales of a water purifier. Which 
communication tool is the marketer using by sending a salesman at your doorstep. 
 
Personal Selling. 
1 
5 
 
 
 
Ans 
Hari is an entrepreneur who wants to start an amusement park in Indore. He knows 
that he needs a huge amount of initial capital. According to you, which of the 
specialized financial institution will be more suitable to him? 
 
Tourism Finance Corporation of India (TFCI) 
1 
6 
 
Ans 
Give the meaning of „routing? and „scheduling? as elements of operational plan. 
 
Routing is a process concerned with determining exact route or path a 
product/service has to follow right from raw material till its transformation into 
finished product. 
Scheduling means fixation of time, date, day when each operation is to be 
commenced and completed. 
1+1=2 
7 
 
 
 
Ans 
Mr. Parthiv is a readymade garments manufacturer. His annual usage rate is 225 
Pcs. The cost of placing each order is 8/- and the carrying cost is 4/- per unit. 
Calculate the Economic Order Quantity (EOQ). 
 
D=225 
P=8 
C=4  
?? OQ =  2PD/C 
                    
=          2×8×225 
                  4   
           =   900   =  30 units. 
( ½mark for formula ,½mark answer, 1 mark for steps)  
1+1=2 
Page 2 of 9 
 
8 
 
Ans 
State any two utilities created by business activities. 
 
Form utility- Changing the form of raw material into finished product creates form 
utility. 
Place utility- From the place of production, transporting goods to the place of 
consumption results in place utility. 
 
1+1=2 
9 
 
 
 
 
 
 
Ans 
Mohan was a famous fashion designer. He was in the habit of observing the dresses 
worn by the people. For this he would regularly visit malls, restaurants, parks, trade 
fairs etc. This helped him in understanding the market and designing the garments 
in accordance with the market demands. Identify and explain the way in which 
Mohan spotted this trend. Explain  one more way through which Mohan can spot 
the trends. 
 
Watch trend – Watching and observing the customers in the market place. If 
customers are teenagers, in local mall. If business class people, in restaurants or 
office. Thus, Mohan observed different ways of dressing of people. 
 
The other way Mohan could spot trend is: ( Any one) 
Read Trend -  Entrepreneurs regularly read the leading publications and websites 
affecting their business. 
Talk Trend  - Talking to people in specific industry?s trade association and online 
and offline. 
Think Trend –They collect what they read, hear and observe and start to make 
connections that will lead to business boosting insights. 
1+1=2 
10 
 
 
 
Ans 
ABC Company, manufacturing shoes, has taken over XYZ Company which also 
manufactures shoes at small scale. What do you think will be the reason for this 
kind of takeover? 
 
Following can be the reasons for the take over: 
a. ABC Company may have decided to expand in terms of its production and 
wanted to raise its sales and turnover. 
b. ABC Company may have decided to expand its area of sales and so may be 
desirous to take over the marketing area of XYZ Company. 
1+1=2 
11 
 
 
 
 
 
 
 
 
Ans 
Mahesh started a school bag business with his brother. Both were very excited 
about the new venture. With meticulous planning and a lot of hard work they were 
able to sell 1000 bags in the first year. But they did not earn any profit. Both were 
happy because they were not at loss and revenue generated was equal to the cost. 
Now they were moving towards earning profit in the second year. 
a. Identify the component of the financial plan discussed above. 
b. By giving any four points state how this component is useful for the 
entrepreneur. 
 
a. Break-even point – It is that level of volume of production at which firm 
neither makes  a profit nor loss. 
b. BEP is useful to an entrepreneur as it helps in assessing: 
1. The minimum level of output to be produced. 
2. The effect of change in quantity of output upon the profits. 
3. The selling price of the product. 
1+2=3 
 
Page 3 of 9 
 
4. The profitable options in line of production. 
(Note:  ½ mark for each point for usefulness of BEP.) 
12 
 
 
 
 
 
 
 
Ans 
Lately many companies have planned for significant investment in organised 
retailing in India. Several factors have prompted their decisions in this regard. 
Customer income is rising. People have developed a taste for better quality products 
even though they may have to pay more. The government permitted cent percent 
foreign direct investment in some sectors of retailing.  
Identify and explain the various factors according to PESTEL model from the 
above para. 
 
Economic –  It includes rise in customer income, interest rates, inflation, business 
cycle, unemployment, energy, availability and cost. 
Social – People taste for better quality products, population demographics social 
mobility, lifestyle changes levels of education, attitude to work and leisure. 
Political –  It includes the government permission for foreign direct investment in 
some sectors, taxation policy, government stability, foreign trade regulations. 
 
1+1+1=3 
13 
 
Ans 
What is  merger? Explain any two types of merger with example. 
 
A merger is combination of two companies into one larger company. In merger, the 
acquiring company takes over the assets and liabilities of the merged company. 
Types of merger (Any 2) 
1. Conglomerate: A merger between firms that are involved in totally unrelated 
business activities. There are two types of conglomerate mergers: pure and mixed. 
Eg- A leading manufacturer of athletic shoes merges with a soft drink firm. 
2. Horizontal merger: A merger occurring between companies in the same industry. 
Eg- A merger  between Coca-cola and the Pepsi beverage division. 
3. Vertical merger: A merger between two companies producing different goods or 
services for one specific finished product. Eg-An automobile company joining 
hands with a parts supplier. 
4. Market extension merger: It takes place between two companies that deal in same 
products but in separate markets. 
 
1+1+1=3 
14 
 
 
 
 
 
 
 
 
 
Ans 
Mr. Siraj retired as CEO of a well reputed IT company after having worked for 40 
years in USA. He returned to India with a desire to encourage entrepreneurial 
ventures in IT sector. He was approached by Nitin, a budding entrepreneur in IT 
sector whose venture was in a start up stage and was falling short of funds. Apart 
from investing funds, Mr. Siraj also provided proactive advice, guidance and 
industry connection, mentoring and thus simultaneously helping them in raising 
returns in investment. 
a. Identify and explain the source of raising finance used by Nitin. 
b. State and explain the features of this form of business organization. 
 
a. Angel investor – is an affluent individual who provides capital for a Business 
start-ups and early stage companies using a high-risk, high-return matrix usually in 
exchange for convertible debt or ownership equity. 
b.Features of angel investors: 
1. As angel investors bear extremely high risk and are usually subject to dilution 
from future investment rounds. They expect high rate of returns. 
1+2=3 
Page 4


Page 1 of 9 
 
ENTREPRENEURSHIP 
       QUESTION PAPER 
 
S.No Questions and Answers Marks 
1 
 
Ans 
What do you mean by reorder point? 
 
It is a level at which a new order must be placed so that the inventory is renewed 
before the stock reaches zero level. 
1 
2 
 
 
Ans 
Here a private company takes over a public company. Identify the type of 
acquisition. 
 
Reverse acquisition. 
1 
3 
 
Ans 
Define the term environmental scanning. 
 
Environmental scanning refers to careful monitoring of an organisations internal 
and external environments for detecting early signs of opportunities and threats that 
may influence its current and future plans. 
1 
4 
 
 
Ans 
A salesman approaches you to promote the sales of a water purifier. Which 
communication tool is the marketer using by sending a salesman at your doorstep. 
 
Personal Selling. 
1 
5 
 
 
 
Ans 
Hari is an entrepreneur who wants to start an amusement park in Indore. He knows 
that he needs a huge amount of initial capital. According to you, which of the 
specialized financial institution will be more suitable to him? 
 
Tourism Finance Corporation of India (TFCI) 
1 
6 
 
Ans 
Give the meaning of „routing? and „scheduling? as elements of operational plan. 
 
Routing is a process concerned with determining exact route or path a 
product/service has to follow right from raw material till its transformation into 
finished product. 
Scheduling means fixation of time, date, day when each operation is to be 
commenced and completed. 
1+1=2 
7 
 
 
 
Ans 
Mr. Parthiv is a readymade garments manufacturer. His annual usage rate is 225 
Pcs. The cost of placing each order is 8/- and the carrying cost is 4/- per unit. 
Calculate the Economic Order Quantity (EOQ). 
 
D=225 
P=8 
C=4  
?? OQ =  2PD/C 
                    
=          2×8×225 
                  4   
           =   900   =  30 units. 
( ½mark for formula ,½mark answer, 1 mark for steps)  
1+1=2 
Page 2 of 9 
 
8 
 
Ans 
State any two utilities created by business activities. 
 
Form utility- Changing the form of raw material into finished product creates form 
utility. 
Place utility- From the place of production, transporting goods to the place of 
consumption results in place utility. 
 
1+1=2 
9 
 
 
 
 
 
 
Ans 
Mohan was a famous fashion designer. He was in the habit of observing the dresses 
worn by the people. For this he would regularly visit malls, restaurants, parks, trade 
fairs etc. This helped him in understanding the market and designing the garments 
in accordance with the market demands. Identify and explain the way in which 
Mohan spotted this trend. Explain  one more way through which Mohan can spot 
the trends. 
 
Watch trend – Watching and observing the customers in the market place. If 
customers are teenagers, in local mall. If business class people, in restaurants or 
office. Thus, Mohan observed different ways of dressing of people. 
 
The other way Mohan could spot trend is: ( Any one) 
Read Trend -  Entrepreneurs regularly read the leading publications and websites 
affecting their business. 
Talk Trend  - Talking to people in specific industry?s trade association and online 
and offline. 
Think Trend –They collect what they read, hear and observe and start to make 
connections that will lead to business boosting insights. 
1+1=2 
10 
 
 
 
Ans 
ABC Company, manufacturing shoes, has taken over XYZ Company which also 
manufactures shoes at small scale. What do you think will be the reason for this 
kind of takeover? 
 
Following can be the reasons for the take over: 
a. ABC Company may have decided to expand in terms of its production and 
wanted to raise its sales and turnover. 
b. ABC Company may have decided to expand its area of sales and so may be 
desirous to take over the marketing area of XYZ Company. 
1+1=2 
11 
 
 
 
 
 
 
 
 
Ans 
Mahesh started a school bag business with his brother. Both were very excited 
about the new venture. With meticulous planning and a lot of hard work they were 
able to sell 1000 bags in the first year. But they did not earn any profit. Both were 
happy because they were not at loss and revenue generated was equal to the cost. 
Now they were moving towards earning profit in the second year. 
a. Identify the component of the financial plan discussed above. 
b. By giving any four points state how this component is useful for the 
entrepreneur. 
 
a. Break-even point – It is that level of volume of production at which firm 
neither makes  a profit nor loss. 
b. BEP is useful to an entrepreneur as it helps in assessing: 
1. The minimum level of output to be produced. 
2. The effect of change in quantity of output upon the profits. 
3. The selling price of the product. 
1+2=3 
 
Page 3 of 9 
 
4. The profitable options in line of production. 
(Note:  ½ mark for each point for usefulness of BEP.) 
12 
 
 
 
 
 
 
 
Ans 
Lately many companies have planned for significant investment in organised 
retailing in India. Several factors have prompted their decisions in this regard. 
Customer income is rising. People have developed a taste for better quality products 
even though they may have to pay more. The government permitted cent percent 
foreign direct investment in some sectors of retailing.  
Identify and explain the various factors according to PESTEL model from the 
above para. 
 
Economic –  It includes rise in customer income, interest rates, inflation, business 
cycle, unemployment, energy, availability and cost. 
Social – People taste for better quality products, population demographics social 
mobility, lifestyle changes levels of education, attitude to work and leisure. 
Political –  It includes the government permission for foreign direct investment in 
some sectors, taxation policy, government stability, foreign trade regulations. 
 
1+1+1=3 
13 
 
Ans 
What is  merger? Explain any two types of merger with example. 
 
A merger is combination of two companies into one larger company. In merger, the 
acquiring company takes over the assets and liabilities of the merged company. 
Types of merger (Any 2) 
1. Conglomerate: A merger between firms that are involved in totally unrelated 
business activities. There are two types of conglomerate mergers: pure and mixed. 
Eg- A leading manufacturer of athletic shoes merges with a soft drink firm. 
2. Horizontal merger: A merger occurring between companies in the same industry. 
Eg- A merger  between Coca-cola and the Pepsi beverage division. 
3. Vertical merger: A merger between two companies producing different goods or 
services for one specific finished product. Eg-An automobile company joining 
hands with a parts supplier. 
4. Market extension merger: It takes place between two companies that deal in same 
products but in separate markets. 
 
1+1+1=3 
14 
 
 
 
 
 
 
 
 
 
Ans 
Mr. Siraj retired as CEO of a well reputed IT company after having worked for 40 
years in USA. He returned to India with a desire to encourage entrepreneurial 
ventures in IT sector. He was approached by Nitin, a budding entrepreneur in IT 
sector whose venture was in a start up stage and was falling short of funds. Apart 
from investing funds, Mr. Siraj also provided proactive advice, guidance and 
industry connection, mentoring and thus simultaneously helping them in raising 
returns in investment. 
a. Identify and explain the source of raising finance used by Nitin. 
b. State and explain the features of this form of business organization. 
 
a. Angel investor – is an affluent individual who provides capital for a Business 
start-ups and early stage companies using a high-risk, high-return matrix usually in 
exchange for convertible debt or ownership equity. 
b.Features of angel investors: 
1. As angel investors bear extremely high risk and are usually subject to dilution 
from future investment rounds. They expect high rate of returns. 
1+2=3 
Page 4 of 9 
 
2. They are current or retired executives, business owners or high net worth 
individuals who have the knowledge, expertise and funds that help start-ups. 
3.They provide guidance, proactive advice, and mentoring start-ups. 
4. Their objective is to create great companies by providing value creation, 
simultaneously helping investors realize a high return on investments. 
(Note: ½ mark for each point in features.) 
15 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Ans 
Suhana is running a Beauty parlor and had varying number of customers during 6 
weeks. This information and the average billing amount are in the following table. 
From the given information: 
Weeks  No. of customers Average amount billed 
 ( ) 
Week 1  20 115 
Week 2 20 110 
Week 3 6 165 
Week 4 21 210 
Week 5 23 100 
Week 6 20 160 
Calculate:  
a. Unit Price 
b. Unit Cost ( if the cost of goods sold or variable cost is 60% of Sale Price) 
c. Gross Margin per unit of sale. 
 
Weeks 
 
No. of customers Average amount 
billed 
 ( ) 
Total amount 
billed 
              ( ) 
Week 1  20 115 2300 
Week 2 20 110 2200 
Week 3 6 165 990 
Week 4 21 210 4410 
Week 5 23 100 2300 
Week 6 20 160 3200 
 110  15400 
 
a.Unit Price = Total bill amount  = 15400 =  140 
            No. of customers       110 
 
b. Unit Cost = 140 × 60 =  84 ( cost of goods sold or variable cost is 60% of the sale    
                                   100                 price) 
c. Gross Margin Per unit of Sale  = Unit Price – Unit Cost  
                                                     = 140 - 84 = 56 per  customer.             
 
(Note: Formula ¼  mrk , steps ¼ mark , answer ½ mark) 
 
1+1+1=3 
16 
 
 
 
 
Pearlview Ltd., a multinational restaurant chain company, gives an exclusive right 
to four Indian companies to set up the restaurants in metropolitan cities in India in 
return for their payments and royalties and conformance to standard operating 
procedures. Indian companies decided to employ local workers and to distribute left 
over food amongst the needy as a provision in the agreement with Pearlview Ltd. 
½+2+½=3 
Page 5


Page 1 of 9 
 
ENTREPRENEURSHIP 
       QUESTION PAPER 
 
S.No Questions and Answers Marks 
1 
 
Ans 
What do you mean by reorder point? 
 
It is a level at which a new order must be placed so that the inventory is renewed 
before the stock reaches zero level. 
1 
2 
 
 
Ans 
Here a private company takes over a public company. Identify the type of 
acquisition. 
 
Reverse acquisition. 
1 
3 
 
Ans 
Define the term environmental scanning. 
 
Environmental scanning refers to careful monitoring of an organisations internal 
and external environments for detecting early signs of opportunities and threats that 
may influence its current and future plans. 
1 
4 
 
 
Ans 
A salesman approaches you to promote the sales of a water purifier. Which 
communication tool is the marketer using by sending a salesman at your doorstep. 
 
Personal Selling. 
1 
5 
 
 
 
Ans 
Hari is an entrepreneur who wants to start an amusement park in Indore. He knows 
that he needs a huge amount of initial capital. According to you, which of the 
specialized financial institution will be more suitable to him? 
 
Tourism Finance Corporation of India (TFCI) 
1 
6 
 
Ans 
Give the meaning of „routing? and „scheduling? as elements of operational plan. 
 
Routing is a process concerned with determining exact route or path a 
product/service has to follow right from raw material till its transformation into 
finished product. 
Scheduling means fixation of time, date, day when each operation is to be 
commenced and completed. 
1+1=2 
7 
 
 
 
Ans 
Mr. Parthiv is a readymade garments manufacturer. His annual usage rate is 225 
Pcs. The cost of placing each order is 8/- and the carrying cost is 4/- per unit. 
Calculate the Economic Order Quantity (EOQ). 
 
D=225 
P=8 
C=4  
?? OQ =  2PD/C 
                    
=          2×8×225 
                  4   
           =   900   =  30 units. 
( ½mark for formula ,½mark answer, 1 mark for steps)  
1+1=2 
Page 2 of 9 
 
8 
 
Ans 
State any two utilities created by business activities. 
 
Form utility- Changing the form of raw material into finished product creates form 
utility. 
Place utility- From the place of production, transporting goods to the place of 
consumption results in place utility. 
 
1+1=2 
9 
 
 
 
 
 
 
Ans 
Mohan was a famous fashion designer. He was in the habit of observing the dresses 
worn by the people. For this he would regularly visit malls, restaurants, parks, trade 
fairs etc. This helped him in understanding the market and designing the garments 
in accordance with the market demands. Identify and explain the way in which 
Mohan spotted this trend. Explain  one more way through which Mohan can spot 
the trends. 
 
Watch trend – Watching and observing the customers in the market place. If 
customers are teenagers, in local mall. If business class people, in restaurants or 
office. Thus, Mohan observed different ways of dressing of people. 
 
The other way Mohan could spot trend is: ( Any one) 
Read Trend -  Entrepreneurs regularly read the leading publications and websites 
affecting their business. 
Talk Trend  - Talking to people in specific industry?s trade association and online 
and offline. 
Think Trend –They collect what they read, hear and observe and start to make 
connections that will lead to business boosting insights. 
1+1=2 
10 
 
 
 
Ans 
ABC Company, manufacturing shoes, has taken over XYZ Company which also 
manufactures shoes at small scale. What do you think will be the reason for this 
kind of takeover? 
 
Following can be the reasons for the take over: 
a. ABC Company may have decided to expand in terms of its production and 
wanted to raise its sales and turnover. 
b. ABC Company may have decided to expand its area of sales and so may be 
desirous to take over the marketing area of XYZ Company. 
1+1=2 
11 
 
 
 
 
 
 
 
 
Ans 
Mahesh started a school bag business with his brother. Both were very excited 
about the new venture. With meticulous planning and a lot of hard work they were 
able to sell 1000 bags in the first year. But they did not earn any profit. Both were 
happy because they were not at loss and revenue generated was equal to the cost. 
Now they were moving towards earning profit in the second year. 
a. Identify the component of the financial plan discussed above. 
b. By giving any four points state how this component is useful for the 
entrepreneur. 
 
a. Break-even point – It is that level of volume of production at which firm 
neither makes  a profit nor loss. 
b. BEP is useful to an entrepreneur as it helps in assessing: 
1. The minimum level of output to be produced. 
2. The effect of change in quantity of output upon the profits. 
3. The selling price of the product. 
1+2=3 
 
Page 3 of 9 
 
4. The profitable options in line of production. 
(Note:  ½ mark for each point for usefulness of BEP.) 
12 
 
 
 
 
 
 
 
Ans 
Lately many companies have planned for significant investment in organised 
retailing in India. Several factors have prompted their decisions in this regard. 
Customer income is rising. People have developed a taste for better quality products 
even though they may have to pay more. The government permitted cent percent 
foreign direct investment in some sectors of retailing.  
Identify and explain the various factors according to PESTEL model from the 
above para. 
 
Economic –  It includes rise in customer income, interest rates, inflation, business 
cycle, unemployment, energy, availability and cost. 
Social – People taste for better quality products, population demographics social 
mobility, lifestyle changes levels of education, attitude to work and leisure. 
Political –  It includes the government permission for foreign direct investment in 
some sectors, taxation policy, government stability, foreign trade regulations. 
 
1+1+1=3 
13 
 
Ans 
What is  merger? Explain any two types of merger with example. 
 
A merger is combination of two companies into one larger company. In merger, the 
acquiring company takes over the assets and liabilities of the merged company. 
Types of merger (Any 2) 
1. Conglomerate: A merger between firms that are involved in totally unrelated 
business activities. There are two types of conglomerate mergers: pure and mixed. 
Eg- A leading manufacturer of athletic shoes merges with a soft drink firm. 
2. Horizontal merger: A merger occurring between companies in the same industry. 
Eg- A merger  between Coca-cola and the Pepsi beverage division. 
3. Vertical merger: A merger between two companies producing different goods or 
services for one specific finished product. Eg-An automobile company joining 
hands with a parts supplier. 
4. Market extension merger: It takes place between two companies that deal in same 
products but in separate markets. 
 
1+1+1=3 
14 
 
 
 
 
 
 
 
 
 
Ans 
Mr. Siraj retired as CEO of a well reputed IT company after having worked for 40 
years in USA. He returned to India with a desire to encourage entrepreneurial 
ventures in IT sector. He was approached by Nitin, a budding entrepreneur in IT 
sector whose venture was in a start up stage and was falling short of funds. Apart 
from investing funds, Mr. Siraj also provided proactive advice, guidance and 
industry connection, mentoring and thus simultaneously helping them in raising 
returns in investment. 
a. Identify and explain the source of raising finance used by Nitin. 
b. State and explain the features of this form of business organization. 
 
a. Angel investor – is an affluent individual who provides capital for a Business 
start-ups and early stage companies using a high-risk, high-return matrix usually in 
exchange for convertible debt or ownership equity. 
b.Features of angel investors: 
1. As angel investors bear extremely high risk and are usually subject to dilution 
from future investment rounds. They expect high rate of returns. 
1+2=3 
Page 4 of 9 
 
2. They are current or retired executives, business owners or high net worth 
individuals who have the knowledge, expertise and funds that help start-ups. 
3.They provide guidance, proactive advice, and mentoring start-ups. 
4. Their objective is to create great companies by providing value creation, 
simultaneously helping investors realize a high return on investments. 
(Note: ½ mark for each point in features.) 
15 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Ans 
Suhana is running a Beauty parlor and had varying number of customers during 6 
weeks. This information and the average billing amount are in the following table. 
From the given information: 
Weeks  No. of customers Average amount billed 
 ( ) 
Week 1  20 115 
Week 2 20 110 
Week 3 6 165 
Week 4 21 210 
Week 5 23 100 
Week 6 20 160 
Calculate:  
a. Unit Price 
b. Unit Cost ( if the cost of goods sold or variable cost is 60% of Sale Price) 
c. Gross Margin per unit of sale. 
 
Weeks 
 
No. of customers Average amount 
billed 
 ( ) 
Total amount 
billed 
              ( ) 
Week 1  20 115 2300 
Week 2 20 110 2200 
Week 3 6 165 990 
Week 4 21 210 4410 
Week 5 23 100 2300 
Week 6 20 160 3200 
 110  15400 
 
a.Unit Price = Total bill amount  = 15400 =  140 
            No. of customers       110 
 
b. Unit Cost = 140 × 60 =  84 ( cost of goods sold or variable cost is 60% of the sale    
                                   100                 price) 
c. Gross Margin Per unit of Sale  = Unit Price – Unit Cost  
                                                     = 140 - 84 = 56 per  customer.             
 
(Note: Formula ¼  mrk , steps ¼ mark , answer ½ mark) 
 
1+1+1=3 
16 
 
 
 
 
Pearlview Ltd., a multinational restaurant chain company, gives an exclusive right 
to four Indian companies to set up the restaurants in metropolitan cities in India in 
return for their payments and royalties and conformance to standard operating 
procedures. Indian companies decided to employ local workers and to distribute left 
over food amongst the needy as a provision in the agreement with Pearlview Ltd. 
½+2+½=3 
Page 5 of 9 
 
 
 
 
 
 
 
Ans 
(a) Identify and give the meaning of the concept discussed in the above para. 
(b) List the main ingredients of the agreement that Pearlview Ltd. will enter into 
with the Indian companies. 
(c) Also, identify any one value which the Indian companies want to 
communicate to the society. 
 
a. Franchising – Franchising is an agreement whereby the manufacturer or sole 
distributor of a trademarked product or service gives exclusive rights of 
local distribution to independent retailers in return for their payment of 
royalties and conformance to standard operating procedures. 
 
b. Main ingredients of contract: 
1. Contract explanation: It is the part of the agreement that outlines the 
type of relationship a franchisee is entering into with the franchisor. 
2. Operations Manual : It is the section  of the agreement that details the 
guidelines that the franchisee must legally follow in operating the 
business as outlined by the franchisor. 
3. Proprietary Statements: Proprietary statements outline how franchise 
name is to be used, as well as marketing and advertising procedures in 
place that the franchisee will be required to follow. 
4. Ongoing Site Maintenance : It is another item that is outlined in the 
agreement. Included are the types and timeframes regarding various 
maintenance items and upgrades that must be made. 
 
c. Charity, Concern for underprivileged (any one) 
 
17 
 
 
Ans 
“Sensitivity to environment factors is essential for an entrepreneur”. In the light of 
above statement explain the importance of environmental scanning. 
 
Importance to environmental scanning: (Any 3) 
a. Identification of opportunities to get first mover advantage: By keeping in touch 
with the changes in the external environment, an enterprise can identify 
opportunities and find strategies to capitalize on the opportunities at the earliest. 
b. Formulation of strategies and policies: It helps in identifying threats and 
opportunities in the market. 
c. Tapping useful resources: If company has a thorough knowledge of external 
environment, it can tap raw materials, technology and even financial resources from 
the market at right price at the right time. 
d. Better performance: Proper understanding of the environment helps to take 
timely decisions and improvement in performance. 
e. Image building: If a company is sensitive to the external environment, it will 
come out with new product and services to meet customers demand. This would 
build the image and reputation of the firm. 
1+1+1=3 
18 
 
 
Ans 
Before operationalization of a Hindu Undivided Family Business, its Karta has to 
fulfill certain legal formalities. Explain any four such legal formalities. 
 
Legal formalities involved: 
1. Capital and members: For an HUF to be created the major requirements is the 
capital and persons. Capital in the form of ancestral property, assets gifted by 
relatives and friends, or received by will. The minimum number of members 
1+1+1+1=4