Nature and Purpose of Business: Case Based Type Questions | Business Studies (BST) Class 11 - Commerce PDF Download

Read the following passage and answer the questions given below
Saransh and Vishal have their pharmaceutical factory in Jaipur. Their main focus is providing quality products at reasonable prices. They procure the services of a renowned medicine specialist Mr. Andrews from Germany who gives them feedback about the quality of their products. Because of increasing competition with foreign

Pharmaceutical Companies, their market share is decreasing and they are suffering huge  losses.
To ensure their existence  in the market, their management is concentrating on full usage of machines, and reducing wastage, and effective promotion of their products to increase the sales.
Question 1: ”Mr. Andrews from Germany who gives them feedback about the quality of their ........”Identify the economic activity Mr. Andrews performs.
(a) Business
(b) Profession
(c) Employment
(d) Partnership

Correct Answer is Option (b)
A profession is an occupation founded upon specialized educational training, the purpose of which is to supply disinterested objective counsel and service to others, for a direct and definite compensation, wholly apart from expectation of other business gain. A profession is not a trade and not an industry.

Question 2: “Because of increasing competition with foreign Pharmaceutical Companies, their market share is decreasing...” Name the type of risk related to the above-stated line.
(a) Speculative risk
(b) Foreign risk
(c) Pure risk
(d) All of the above

Correct Answer is Option (a)
Speculative risk is a category of risk that, when undertaken, results in an uncertain degree of gain or loss. In particular, speculative risk is the possibility that an investment will not appreciate in value. Speculative risks are made as conscious choices and are not just a result of uncontrollable circumstances.

Question 3: Pharmaceutical industry is an example of which of the following types of secondary industries?
(a) Genetic
(b) Analytical
(c) Synthetic
(d) Processing

Correct Answer is Option (d)
Secondary: Industries which are essentially manufacturing or assembling industries. It receives raw materials from primary industries and processes them to commodities for the customers. Example: Food manufacturing, Textile manufacturing etc.

Question 4: Match the different manufacturing industries with their suitable examples.

(a) 1. (i), 2. (iii), 3. (iv), 4. (ii)
(b) 1. (iii), 2. (i), 3. (iv), 4. (ii)
(c) 1. (iv), 2. (i), 3. (iii), 4. (ii)
(d) 1. (iii), 2. (i), 3. (ii), 4. (iv)

Correct Answer is Option (b)

1. Analytical industry is the industry which analysis and separates different elements from the same materials.
2. Synthetic industries are those industries that combine various ingredients and make a new product like Cement, fragrance and plastics.
3. The process industries are those industries where the primary production processes are either continuous, or occur on a batch of materials that is indistinguishable.
4. Assembling industry: These industries are engaged in bringing together various components or parts of bicycles, television, radio and these are some examples of assembling industries.

Question 5: ”To ensure their existence in the market, their management is concentrating...” Which economic objective is indicated in this statement?
(a) Survival
(b) Profit  
(c) Growth
(d) Diversification

Correct Answer is Option (a)
Business survival refers to keeping the business operating for a certain amount of time. Most businesses initially aim to survive their first year. Profit refers to any money left over after all costs have been taken away from any revenue made by a business.

Read the following passage and answer the questions given below.
Oorza Limited is the manufacturer and trader of electrical goods.  The company’s efficient management team, and effective marketing strategies have enabled it to carve a niche in the industry, allowing it to stand out. But, over the past few years, its profit margins and customer loyalty  have been going down. After analysis of the reasons for lowering performance,  the company executives suggested how CSR can improve profits. They understand that CSR can promote respect for their company in the marketplace which can result in higher sales, and enhance employee loyalty. Also, CSR activities focusing on sustainability issues may lower costs and improve efficiency as well. The company followed the CSR initiatives and is able to regain its market position and increase its goodwill.

Question 6: Which objective will be fulfilled by the company through CSR?
(a) Economic
(b) Social
(c) Legal
(d) Personal

Correct Answer is Option (b)
Corporate Social Responsibility is a management concept whereby companies integrate social and environmental concerns in their business operations and interactions with their stakeholders.

Question 7: Identify which of these is not a role of profit as stated above.
(a) Survival of business
(b) Enhancing goodwill
(c) Increasing efficiency
(d) Enhancing customer loyalty

Correct Answer is Option (d)
Customer loyalty is an ongoing positive relationship between a customer and a business. It's what drives repeat purchases and prompts existing customers to choose your company over a competitor offering similar benefits.

Question 8: Match the following services to trade with the hindrances which they remove.

(a) 1. (iv), 2. (iii), 3. (ii), 4. (i)
(b) 1. (iii), 2. (ii), 3. (iv), 4. (i)
(c) 1. (iii), 2. (iv), 3. (ii), 4. (i)
(d) 1. (iii), 2. (iv), 3. (i), 4. (ii)

Correct Answer is Option (c)
Traders act as link between consumers and producers. Traders remove hindrance of persons by making goods available to consumer from producers.

Question 9: Identify the term which is related to uncertainties about the returns and chances of losses in the business.
(a) Risk 
(b) Market trend 
(c) Natural calamities
(d) Market standing

Correct Answer is Option (a)
Business risk is the exposure a company or organization has to factor(s) that will lower its profits or lead it to fail. Anything that threatens a company's ability to achieve its financial goals is considered a business risk. There are many factors that can converge to create business risk.

Question 10: ”...may lower costs and improve efficiency as well.” If the company is able to achieve it, which business objectives are accomplished by the company?
(a) Profit maximization
(b) Social responsibility
(c) Growth and expansion
(d) All of the above

Correct Answer is Option (a)
Profit maximisation is a process business firms undergo to ensure the best output and price levels are achieved in order to maximise its returns. Influential factors such as sale price, production cost and output levels are adjusted by the firm as a way of realising its profit goals.