CBSE Sample Papers for Class 12 Business Studies Paper 5 are part of CBSE Sample Papers for Class 12 Business Studies Here we have given CBSE Sample Papers for Class 12 Business Studies Paper 5.

CBSE Sample Papers for Class 12 Business Studies Paper 5

Board CBSE
Class XII
Subject Business Studies
Sample Paper Set Paper 5
Category CBSE Sample Papers

Students who are going to appear for CBSE Class 12 Examinations are advised to practice the CBSE sample papers given here which is designed as per the latest Syllabus and marking scheme as prescribed by the CBSE is given here. Paper 5 of Solved CBSE Sample Papers for Class 12 Business Studies is given below with free PDF download solutions.

Time: 3 Hours
Maximum Marks: 80

General Instructions

(i) Answer to questions carrying 1 mark may be from one word to one sentence.
(ii) Answer to questions carrying 3 marks may have about 50 to 75 words.
(iii) Answer to questions carrying 4 – 5 marks may have about 150 words.
(iv) Answer to questions carrying 6 marks may have about 200 words.
(v) Attempt all the parts of a question together.

Question 1:
The marketing manager of Illuminate Ltd, an organisation manufacturing generators has been asked to achieve a target sale of 100 generators per day. He delegates the task to 15 sales managers and 5 subordinates working under him. Identify the concept used in the above case.

Question 2:
Enumerate any two basis of departmentation in an organisation.

Question 3:
Write a limitation of demonetisation.

Question 4:
Economic environment is affected by many factors one of such factors is the general inflation rate preveiling in the country. How does the inflation rates affect the business firms?

Question 5:
“No smoking in the factory.” This statement is an example of which type of plan?

Question 6:
‘Global Diva’ is a company manufacturing high-end women accessories. The company received an order from Zing Chau Ltd, Korea. The order was in Korean language. The company got it translated and as per the translation, executed the order. However, Zing Chau Ltd refused to take delivery because the goods were not as per their specification stated in the order. Identify the barrier of communication from the above passage.

Question 7:
Identify the type of suitable organisation structure for a large scale organisation having diversified activities requiring high degree of specialisation in operations.

Question 8:
Which component of capital structure determines the overall financial risk in an organisation?

Question 9:
Mr Mukesh is a sales representative in a popular DTH company, he is required to personally assist and persuade the prospective buyers to buy the product.
Mr Mukesh is involved in which element of the promotion mix. Give any two features of that element as well.

Question 10:
Values are desirable for moral connections that are to be followed for ethical business practices. At the same time, techniques are the methods or procedures to achieve organisational goals. Then apart from values and techniques, why are the principles of management needed?

Question 11:
Explain how controlling helps in

  1. accomplishing organisational goals.
  2. judging accuracy of standards.

Question 12:
Dividends declared by the companies are taken as a positive note by the investors. Stock markets react positively to such decisions and share prices tend to show an upward trend. But, at the same time, it is restricted to certain extent by the Companies Act as well as the financial condition of the concern. Franco, the financial manager of Sunlight Ltd declared in the Annual General Meeting (AGM) that “It is costly to reinvest the retained earnings.” After considering his statement, what decision is taken by the board?

Question 13:
‘Decor Home’ is a furniture manufacturing company. The company has been able to earn substantial profit, yet they did not share their profits with the workers. This led to growing unrest among them leading to fall in productivity and also the quality of their work. Due to this, the company started facing the problem of falling revenues. Their HR manager Mr Dinesh advised the management to follow the principle of ‘Mental revolution’. Is the advice of HR manager appropriate? Elucidate.

Question 14:
ITC Ltd is a multi national company engaged in the business of FMCG goods, Mr Anil is currently working in it as the head of its cosmetic products segment. What kind of organisational structure is being followed in ITC Ltd? Mention any three advantages of such structure.

Question 15:
“Bending the customer according to the product” and “developing the product according to customer needs” are the two important concepts of marketing management. Identify these concepts and differentiate between the two.

Question 16:
“It can be said that management has some characteristics of profession, but it is still not a full fledged profession.” Comment whether this statement is true or false. Also give three reasons in support of your answer.

Question 17:
Mr Adarsh is a social activist. He was concerned with the pollution caused by the use of polythene bags. These bags are non-biodegradable and are a great threat for the water bodies and also adversely affect the quality of soil. To ban the use of these bags he filed a writ petition in the court. The court also identified the threats caused by these bags and passed an order banning the use of these bags on the following grounds:
(i) These bags are creating many environmental problems which affect the life of people in general.
(ii) Society in general is more concerned about quality of life.
(iii) The government decided to give subsidy to jute industry to promote this business.
(iv) Innovative techniques are being developed to manufacture jute bags at low rates.
Identify the different dimensions of business environment by quoting the lines from the above particulars.

Question 18:
Mr Daksh Mudgal, who is a vegetarian, went to a newly opened snacks corner. He asked the waiter for a menu but the waiter informed him that the menu cards are in printing. Then Mr Mudgal specifically asked for the options available for vegetarians. The waiter informed him about the available options and Mr Mudgal chose a particular sandwich. He again specifically asked the waiter if the sandwich, was veg, to which the waiter replied affirmatively. While eating, he found that the snack had non-vegetarian content. The packaging of the product did not display that the product had non-vegetarian content

  1. What values are affected by this?
  2. Will Mr Daksh Mudgal be able to claim compensation? Which right of the consumer is violated here?

Question 19:
“Marketing plays an important role not only in the growth of a firm but also in the development of an economy.” Discuss.

Question 20:
Define stock exchange and explain two features of stock exchange.

Question 21:
Blue Pharmacy is a company engaged in the production of life-saving drugs. The company has no internal system of performance appraisal and for the past two years, it has not declared any incentives or bonus to its employees, inspite of enormous profits. One of its employee, Mr Sangeet has discovered a new medication for ‘dengue’ during in-house research. The company has got patent on it in its own name and no reward or compensation was given to Sangeet. All these factors have de-motivated the employees and the company is started facing the problem of high employee turn over rate, increased absenteeism, falling levels of productivity, etc.
Due to a combined result of all these factors, Blue Pharmacy was not able to meet its organisational objectives.

  1.  Design a control plan, suggesting measures to Blue Pharmacy to be able to achieve its objectives.
  2. After controlling these factors, what values are being satisfied?

Question 22:
Staffing is one of the most complex and crucial step which ensures success of any business organisation. Staffing requires a lot of time and efforts. Briefly explain first five steps involved in the process of staffing.

Question 23:
The role of financial management cannot be under estimated, since it has a direct bearing on the financial health of a business. The importance of financial decisions can be judged by the fact, that almost all items of financial statements are affected by them. In the light of the above, explain the functions of financial management.

Question 24:
Ela is running a successful business of providing high-end beauty services to the upper section of society. Her parlour boasts of innovative beauty products. She has an in-house training programme for new employees. Also, she believes in high standards of performance and shares her profits with her employees. She also gives them yearly bonus and salary hikes. But still she feels that her employees are not as motivated as she wants them to be.

  1. Are financial incentives the only way to motivate employees?
  2. What are non-monetary incentives?
  3. State any four non-monetary incentives which contribute to the performance of employees.

Question 25:
The first step in the process of planning is setting objectives. After that development of premises is done. Then various alternatives are identified. Explain the further process (steps) required to complete the process.


Answer 1:
Decentralisation of authority as manager delegates the authority throughout the levels of an organisation.

Answer 2:
The two basis of departmentation in an organisation are enumerated below:

  1. Territories (North, South, East, West)
  2. Products (appliances, clothes, cosmetics, etc)

Answer 3:
Demonetisation of the currency has caused huge inconvenience to the people. Cash crunch is a major problem due to the unavailability of small currency denominations.

Answer 4:
Increase in inflation rates directly affects the economic environment as it increases the cost of production, due to which profits of business firms are adversely affected.

Answer 5:
It is an example of rule.

Answer 6:
The barrier of communication identified in the above passage is faulty translation, which is a form of semantic barrier.

Answer 7:
Divisional structure is suitable for a large scale organisation having diversified activities requiring high degree of specialisation in operations.

Answer 8:
Debt determines the overall financial risk in an organisation’s capital structure.

Answer 9:
Mr Mukesh is involved in personal selling.
Following are the two features of personal selling:

  1. Face-to-face Dialogue In personal selling, a direct face-to-face dialogue takes place that involves an interactive relationship between the seller and the buyer.
  2. Development of Relationship Personal selling allows a salesperson to develop personal relationship with the prospective customers, which may facilitate in making sales.

Answer 10:
Management principles are essential for the successful running of business organisation. Its significance or need can be enumerated with the help of the points given below:

  1. Optimum Utilisation of Resources Several principles of management, such as unity of direction, division of labour, etc help in optimum utilisation of resources.
  2.  Scientific Decisions The knowledge of management principles enables managers to learn about the
    cause and effect relationship between variables operating in the organisation. This helps them to develop a scientific approach to solve problems.

Answer 11:
(i) Accomplishing Organisational Goals The controlling function measures the accomplishment against the standards and corrects deviations. This helps in ensuring that organisation is moving on the right , track to achieve organisational goals.
(ii) Judging Accuracy of Standards A sound controlling system helps the management to verify whether the standards set are accurate and relevant or not. It keeps a careful check on the changes, which are taking place in the organisation.

Answer 12:
Company’s net earnings are divided into two parts: retained earnings and dividend. If the company has profitable investment options then, it would like to retain the earnings and reinvest rather than distribute it as dividend. But in the given case, the condition is not favourable for reinvesting. Thus, the board may take the residual decision which means will pay dividends as the reinvestment is not profitable.

Answer 13:
Yes, the advice of the HR manager is appropriate.
The basic idea behind the principles of scientific management is to change the mindset or outlook of the workers and the management towards each other. Taylor called it ‘mental revolution’.

Mental revolution insists on the following:

  1. Change in mental attitude of workers and management towards each other.
  2. Co-operation between workers and management.

Mental revolution can also be stated as ’bilateral mental revolution’. It requires that management should create suitable working conditions and provide an opportunity to workers to participate in the management and should be entitled to share surplus generated in the business.

Answer 14:
ITC Ltd is divided into various segments based on the products in which it deals, therefore it can be said that divisional structure of management is being followed in ITC Ltd. following are the main advantages of divisional structure:

  1. It helps managers to develop varied skills related to a product and facilitates managerial development.
  2. In divisional structure, fixation of accountability and responsibility is easy.
  3. With more initiative and flexibility, decisions are taken much faster in divisional structure.

Answer 15:
(i) Bending the Customer According to the Product This statement is related with the selling concept.
(ii) Developing the Product According to Customer Needs This statement is related with the marketing concept.

Difference between selling concept and marketing concept are :

Basis Selling Concept Marketing Concept
Focus It focuses on the product. If focuses on consumer satisfaction.
Planning It has a short-term business planning. It has a long-term business planning.

Answer 16:
On studying management as a profession, it can be said that management is not a full fledged profession but only a developing profession, therefore the said statement is true.
Following are the three main reasons in support of the said statement:

  1. Like profession, management has a well defined body of knowledge which can be acquired through courses like MBA, BBA, etc.
  2. Entry into the profession of management is not restricted through any examination or degree.
  3. Unlike other professions, membership of any professional association is not mandatory for managers.

Answer 17:
(i) “The Court passed an order to ban polythene bags.” The quoted line is depicting the legal environment. Business has to function within the framework of laws and regulations of the country. Legal environment exercises significant influence on business activities.
(ii) “Polythene bags are creating many environmental problems which affect the life of people in general and society in general is more concerned about quality of life.” These quoted lines are depicting the social environment, which consists of all the social and cultural forces within which business firms operate.
(iii) “The Government decided to give subsidy to jute industry to promote this business.” The quoted line is depicting the political environment, which is concerned with the forces related with political stability and political conditions that have strong impact on business.
(iv) “Innovative techniques are being developed to manufacture jute bags at low rates.” The quoted line is
depicting the technological environment. It includes forces relating to scientific improvements and innovations which provide new ways of producing goods and services.

Answer 18:
(i) Honesty and responsible behaviour are the two values that affected by this, as complete information about the product is not provided.
(ii) In the given case, there is a violation of the consumer right, ‘Right to Information’. According to the Amendment of the Regulations in Weight and Measurement Act, 2000, every product should bear a green dot for veg ingredients and brown for non-veg ingredients. This statutory provision was not fulfilled by the snack corner.
Hence, Mr Daksh Mudgal can claim compensation.

Answer 19:
The process of marketing plays an important role in a firm and in the economy, as explained below :

Role in a Firm
Marketing emphasises customer satisfaction as the key to survival and growth of an organisation. It helps to focus the activities of the organisation on fulfilling the needs and wants of consumers, by designing the product according to them. This helps to develop brand loyalty and bring prosperity for the firm.

Role in the Economy
Marketing acts as a catalyst in economic development of a country and helps in raising living standard of the people. Marketing inspires people to undertake various activities and to set-up enterprises for producing goods that are demanded in the market and ensure smooth flow of goods through efficient distribution system. It helps to establish linkages between the business, accelerating economic activity, leading to higher incomes, more consumption, increased savings and investment.

Answer 20:
According to Pyle, “Stock exchanges are market places where securities that have been listed there on, may be bought and sold for either investment or speculation.’’
Following are the two features of stock exchange:

  1.  Organised Market Stock exchange is an organised market. Every stock exchange has a management committee which has all the rights related to management and control of exchange.
    All the transactions taking place in the stock exchange are done as per the prescribed procedure under the guidance of management committee.
  2. Dealing in Securities Issued by Various Concerns Only those securities are traded in the stock
    exchange which are listed there. After fulfilling certain terms and conditions, a company can get its securities listed on stock exchange.

Answer 21:
(i) Under such circumstances, Blue Pharmacy should implement a control plan covering following points:

  • Performance based appraisal system should be introduced.
  • Employees like Mr Sangeet should be given due acknowledgment for their achievements.
  • Proper communication of tasks should be made and feedback should be collected from time to time.

(ii) Following values are satisfied :

  • Orderliness
  • Discipline
  • Flonesty
  • Commitment and hardwork

Answer 22:
First five steps in the process of staffing are as follows:
(i) Estimating Manpower Requirements It refers to finding out the number of persons or employees and type of employees needed in the organisation in the near future. As both overstaffing and understaffing are undesirable, the manager tries to find out the manpower requirement by equating work load analysis to workforce analysis.
(ii) Recruitment It refers to the process of inducing people to apply for the job in the organisation. After assessing the number and type of required employees, the manager tries to get greater number of applicants for the job, so that the organisation can select better candidates.
(iii) Selection It refers to the choosing of most suitable candidate to fill the vacant job position. Selection is done through a process, which involves tests, interviews, etc.
(iv) Placement and Orientation In this step, employee occupies the position or is placed, for which he/she has been selected. After this a brief presentation about the company is given and employee is introduced to his superiors, subordinates and colleagues.
(v) Training and Development In this step, training is imparted to the selected candidate, by which he/she can enhance his/her skills, knowledge and through this, one can also explore the opportunities for future growth.

Answer 23:
The functions of financial management relate to three major decisions which every finance manager has to take.
CBSE Sample Papers for Class 12 Business Studies Paper 5 img23

The three essential functions of financial management are:

(i) Investment Decision This decision relates to careful selection of assets in which funds will be invested by the firms. A firm has many options to invest their funds but firm has to select the most appropriate investment which will bring maximum benefit for the firm and deciding or selecting most appropriate proposal is investment decision.

(ii) Financing Decision Finance manager has to take this decision by deciding the source of finance. A company can raise finance from various sources, i.e. by issue of shares, debentures or by taking loans and advances. Deciding how much to raise from which source is the concern of financing decision.
The main sources of finance can be divided into two categories which are given below :
(a) Owner’s fund
(b) Borrowed fund

(iii) Dividend Decision This decision is concerned with distribution of surplus funds. The profit of the firm is distributed among various parties, such as creditors, employees, debenture holders, shareholders, etc. The surplus profit is either distributed to equity shareholders in the form of dividend or kept aside in the form of retained earnings. Under dividend decision, the finance manager decides, how much to be distributed in the form of dividend and how much to keep aside as retained earnings.

Answer 24:
(i) No, financial incentives are not the only way to motivate employees. Employees can also be motivated with the help of non-monetary incentives.
(ii) Non-monetary Incentives These are not directly related with money. These incentives help in the satisfaction of top hierarchy needs like respect, self-actualisation, etc.
(iii) Following are the four important types of non-monetary incentives:

(a) Status
It means the position or rank of a person in the organisation. It can be high or low. The rank of an employee is directly linked with his authority, responsibility and other facilities (e.g. A separate cabin, costly furniture, car, peon, PA, etc). Everybody has a wish for a higher status. Therefore, the employees can be motivated by raising their rank or position. The attainment of a higher status fulfils the psychological, social and esteem needs.
(b) Career Advancement Opportunity Every employee of the organisation wants to advance in his life. Promotion is an important example of advancement. When the avenues for promotion are available, the employees certainly get motivated.
(c) Employee Recognition Programmes Every employee wishes to be considered as an important part of the organisation. It means that he should have his own identity and he should appear to be distinctive. The manager should distribute work among the employees in such a manner which gives a feeling to every employee that his work is special and he alone is capable of doing it. By getting such kind of importance, they are motivated and work harder in a more responsible manner.
(d) Employee Participation Employees get encouraged if they are allowed to participate in managerial
works. Therefore, they offer their full cooperation in making successful the policies prepared with their help.

Answer 25:
The first step in the process of planning is setting objectives. After that development of premises is done.
Then various alternatives are identified. After this, the following steps are followed to complete the process of planning:

(i) Evaluating Alternative Courses After making the list of various alternates alongwith the assumptions supporting them, the manager starts evaluating each and every alternative and note down the positive and negative aspects of each alternative. After this, the manager starts eliminating the negative aspects and the one with maximum positive aspects is selected as the best alternative.
(ii) Selecting an Alternative This is the most crucial point of decision-making. The best plan has to be adopted and implemented. The ideal plan, of course, would be the most feasible, profitable and with least negative consequences.
(iii) Implementing the Plan This is the step where other managerial functions also come into the picture. This step is concerned with putting the plan into action, i.e. doing what is required, e.g. If there is a plan to increase production, then more labour and machinery will be required. This step executes the main plan.
(iv) Follow up Action To see whether plans are being implemented and activities are performed according to schedule, is also a part of the planning process. Monitoring the plans is equally important to ensure that objectives are achieved properly.

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