Students can access the CBSE Sample Papers for Class 12 Business Studies with Solutions and marking scheme Term 2 Set 7 will help students in understanding the difficulty level of the exam.
CBSE Sample Papers for Class 12 Business Studies Term 2 Set 7 with Solutions
Time allowed: 2 Hours
Maximum Marks: 40
- This is a Subjective Question Paper containing 12 questions.
- This paper contains 4 questions of 2 marks each, 4 questions of 3 marks each and 4 questions of 5 marks each.
- 2 marks questions are Short Answer Type Questions and are to be answered in 30-50 words.
- 3 marks questions are Short Answer Type Questions and are to be answered in 50-80 words.
- 5 marks questions are Long Answer Type Questions and are to be answered in 80-120 words.
- This question paper contains Case/Source Based Questions.
Scientific Equipments Ltd, a laboratory equipment manufacturer, adopted several ways of training to improve the quality and quantity of output and provide job satisfaction.
(A) Mr. Anthony was provided a dummy model of machinery to do practice on it.
(B) Ms. Ghosh was shifted from purchase department to production department for a short interval of time.
Identify which techniques of training were used and for whom by Scientific Equipments Ltd. Classify them as On-the-job training and OfF-the-job training. (2)
(A) The technique of training used is vestibule training. This is an off the job training.
(B)The technique of training used is Job rotation. This is an on-the-job training.
Filling vacancies from within the organisation has some advantages as well as limitations”. Explain. (2)
Filling up vacancies within the organisation are internal sources of recruitment. When need of human resources arises in the organisation, it is said that, ‘Best employees can be found within the organisation.”
The advantages of internal sources of recruitment are as follows: (any one)
- Sense of security: It creates a sense of security among employees where they are motivated to work and perform effectively.
- Motivates efficiency: It facilitates better utilisation of skills, experience and qualifications of existing employees.
- No induction training: People within the organisation are familiar with the job, people and the workplace and do not need induction training.
The limitations of internal sources of recruitment are: (any one)
(1) Limited choices: This method limits the choice of selection to few candidates within the enterprise instead of a more diverse workforce thereby keeping a large pool of potential employees in the market untapped.
(2) Encourages favouritism and nepotism: There may be biasness or partiality in promoting or transferring employees from within an organisation which in turn could reduce the morale of employees to work hard.
(3) Leads to lethargy: It creates lethargy among employees who get a feeling of promotion and recognition and affects their performance that restricts new and innovative ideas.
Subodh started a confectionery business. His business was doing welL He ensured the quality and taste of his items was good and the standards were regularly maintained. He focused on home delivery of his products packed in very attractive packaging. The products were always delivered on time and he had a satisfied customers following. Unfortunately, he met with an accident and was not able to look after his business for three months. In his absence, his business was looked after by his cousin, Rajat. When he resumed his work after three months, he noticed that his sale has dropped and there were lot of complaints from the customers. All this happened because most of his previous staff has left as Rajat was very strict and rude to the staff. In context of the above case, list any two aspect about his business that Subodh was controlling in order to make it successful (2)
The two aspects about his business that Subodh was controlling in order to make it successful are:
- The quality and taste of his items was good and standards were regularly maintained.
- The products were always delivered on time.
Mr. Shyam is into transport business. His buses are hired by schools for transportation of students. He is willing to expand and diversify his business to inter-state transportation purposes. State any two factors that will affect his fixed capital requirements. (2)
The factors affecting fixed capital requirements are: (any two)
- Scale of operations
- Financing alternatives
- Growth prospects
- Nature of Business
“Directing is not required at all levels in management of an organisation”. Do you agree? Give two reasons in support of your answer. (3)
No, I do not agree with this statement. Directing is required of management. The reasons are:
(1) Directing at all levels helps to initiate action by people in the organisation towards the attainment of desired objectives. For example, if a supervisor guides his subordinates and clarifies their doubts in performing a task, it will help the worker to achieve work targets given to him.
(2) Directing guides employees to fully realise their potential and capabilities by motivating and providing effective leadership. A good leader can always identify the potential of his employees and motivate them to extract work up to their full potential
(3) Effective directing helps to bring stability and balance in the organisation since it fosters cooperation and commitment among the people and helps to achieve balance among various groups, activities and the departments.
“Directing is key managerial function performed by every manager”. Explain. Also state two characteristics of directing.
Define leadership as an element of Directing. Enumerate any two styles of Leadership. (3)
Directing refers to the process of instructing, guiding, counselling, motivating and leading people in the organisation to achieve its objectives. It is not a mere issue of communication but encompasses many elements like supervision, motivation and leadership. It is one of the key managerial functions performed by every manager. Directing is a managerial process which takes place throughout the life of an organisation.
The main characteristics of directing are:
(1) Directing initiates action: Directing is a key managerial function. A manager has to perform this function along with planning, organising, staffing and controlling while discharging his duties in the organisation. While other functions prepare a setting for action, directing initiates action in the organisation.
(2) Directing takes place at every level of management: Every manager, from top executive to supervisor performs the function of directing. The directing takes place wherever superior – subordinate relations exist
Leadership indicates the ability of an individual to maintain good interpersonal relations with followers and motivate them to contribute for achieving organisational objectives. The styles of leadership are: (any two)
- Autocratic or Authoritarian leader gives orders and expects his subordinates to obey those orders.
- Democratic or Participative leaders will develop action plans and make decisions in consultation with their subordinates.
- Laissez faire or Free-rein leader does not believe in the use of power unless it is absolutely essential.
“Pranshu” is a established brand name in air coolers. The company enjoys a substantial market share and also has a loyal customer following. However, recently they had been facing problems as they are unable to meet the sales targets. This is due to the entry of new competitors in the market with latest technology and lower pricing that is causing problems to the company. The company plans to revamp their control systems and take other steps necessary to rectify the problems being faced by it.
(A) Identify the benefits the company will derive from a good control system.
(B) Explain any two limitations of controlling.
(C) Specify the steps in the control process that the company should follow to remove the problems it is facing. (3)
(A) With a good control system, the company can utilise human and physical resources optimally to avoid wastage and spoilage. Controlling also identifies shortcomings of the earlier plans and the new plans changing in the company to achieving their organisational goal of enjoying favourable market share as well as customer loyalty.
(B) The limitations of controlling are as follows: (any two)
(1) Difficulty in setting quantitative standards: Control system loses some of its effectiveness when standards cannot be defined in quantitative terms. Employee morale, job satisfaction and human behaviour are such areas where this problem might arise.
(2) Little control on external factors: Generally an enterprise cannot control external factors such as government policies, technological changes etc
(3) Resistance from employees: Control is often resisted by employees. They see it as a restriction on their freedom.
(4) Costly affair: Control is a costly affair as it involves a lot of expenditure, time and effort Managers must ensure that the costs of operating a control system should not exceed the benefits derived from it
(C) ln this case, a control by exception can be undertaken. Under this principle, as competition has led to decline in the company’s market share, this deviation can be tackled through human intervention by the top management by making quick decisions and introduce new strategies and revamping their controlling systems.
As controlling process can be expensive, the quick decisions from top management will ensure preparation and execution of quick strategies and plans for achieving organisational goal of retaining a favourable market share.
“Sound Financial Planning is essential for the success of any enterprise.” Explain this statement by giving any three reasons. (3)
Financial planning is preparation of a financial blueprint of an organisation future operations. Objective of financial planning is to ensure that sufficient funds are available at right time. Sound financial planning is essential for success of any enterprise, because of the following reasons: (any three)
- It helps in avoiding business shocks and surprises and helps the company to prepare for the future.
- It helps in coordinating various business functions by providing clear policies and procedures.
- Detailed plans of action prepared under financial planning helps in reducing waste, duplication of efforts and gaps in planning.
- It tries to link the present with the future.
“Some learning opportunities are designed and delivered to improve skills and abilities of employees whereas some other are designed to help in the growth of the individuals in all respects.” Identify and explain the concept to which this statement relates.
Alfa Ltd. was dealing in renewable energy services. To get the business, the team leader and his team used to travel to different states to give presentations to the clients. As per the policy of the company, the team leader used to travel by air whereas his team travelled by road/train. It was not only time-consuming but also forced the female team members to travel alone at times.
As a result, the subordinates were not acting in a desired manner to achieve the organisational goals. The CEO of the company came to know about it. He called the team leader, discussed the matter with him and decided to change the travel policy of the company. It was decided that in future, all the members including the leader would travel together and usefully utilise the travelling time in discussion about the presentation to be given to the clients. This made a positive impact and every member of the team started acting in a manner as desired by the team leader. State the features of the element of the function of management used by the CEO. (5)
“Some learning opportunities are designed and delivered to improve skills and abilities of employees”- the given statement is related with training. Training is any process by which the aptitudes, skills and abilities of employees to perform specific jobs are increased.
It is a process of learning new skills and application of knowledge. It attempts to improve their performance on the current job or prepare them for any intended job.
“Some other are designed to help in the growth of the individuals in all respects”- the given statement is related to development. Development refers to the learning opportunities designed to help employees grow.
It covers not only those activities which improve job performance but also those which bring about growth of the personality, help individuals in the progress towards maturity and actualisation of their potential capacities so that they become not only good employees but better men and women.
CEO of the company uses motivation in the above case. Motivation means incitement or inducement to act or move. In the context of an organisation, it means the process of making subordinates to act in a desired manner to achieve certain organisational goals.
The features of motivation are:
(1) Motivation is an internal feeling: The urge, drives, desires, aspirations, striving or needs of human being, which are internal, influence human behaviour.
(2) Motivation produces goal directed behaviour: The promotion in the job may be given to employee with the objective of improving his performance. If the employee is interested in promotion, it helps to produce a behaviour to improve performance.
(3) Motivation can be either positive or negative: Positive motivation provides positive rewards like increase in pay, promotion, recognition etc. Negative motivation uses negative means like punishment stopping increments, threatening etc. which also may induce a person to act in the desired way.
(4) Motivation is a complex process: as the individuals are heterogeneous in their expectations, perceptions and reactions any type of motivation may not have uniform effect on all the members.
Determining the relative proportion of various types of funds depends upon various factors. Name the concept and explain any four such factors. (5)
Determining the relative proportion of various types of funds is known as Capital Structure.
The following are the factors affecting choice of capital structure:
(1) Cash flow position: size of projected cash flow must be considered before borrowing. Cash flow must not only cover picked cash payment obligations but there must be sufficient buffer also.
(2) Interest coverage ratio (ICR): it is a ratio used to determine how is a company can pay interest on its outstanding debt this interest coverage ratio can be calculated as: earning before interest and taxes / interest expenses interest coverage ratio is also called “ times interest earned” as it refers to the number of times earnings before interest and Taxes (EBIT) of a company covers the interest obligation for same period.
(3) Debt service coverage ratio: this ratio is a measurement of cash flow available to pay current debt obligations of the firm. Higher Debt service coverage ratio indicates battery ability to meet cash commitments and consecutively the company’s potential to increase debt component in its capital structure.
(4) TAX rate: since interest is a detectable expense, the cost of debt is affected by the tax rate. Higher tax rate, makes Dept relatively cheaper and increases it attraction vis-a-vis equity.
“Providing liquidity and marketability to existing securities by allowing the investors a chance to disinvest and reinvest” is one of the important function of secondary market. Explain and also state other functions of secondary market. (3)
The functions of Secondary Market are:
(1) It provides liquidity and marketability to existing securities by allowing the investors a chance to disinvest and reinvest The basic function of a stock exchange is the creation of a continuous market where securities are bought and sold. It gives investors the chance to disinvest and reinvest.
(2) It determines the price of securities on the basis of the forces of demand and supply. Share prices on a stock exchange are determined by the forces of demand and supply. A stock exchange is a mechanism of constant valuation through which the prices of securities are determined.
(3) It ensures safety of transactions as the transactions carried out within an existing legal framework. The membership of a stock exchange is well- regulated and its dealings are well defined according to the existing legal framework. This ensures that the investing public gets a safe and fair deal on the market
(4) It contributes to economic growth as it indirectly promotes capital formation. Stock exchange is a market in which existing securities are resold or traded. Through this process of disinvestment and reinvestment savings get channelised into their most productive investment avenues. This leads to capital formation and economic growth.
(5) It spreads equity cult and ensures wider share ownership: The stock exchange can play a vital role in ensuring wider share ownership by regulating new issues, better trading practices and taking effective steps in educating the public about investments.
(6) It provides scope for speculation within the provisions of law: It is generally accepted that a certain degree of healthy speculation is necessary to ensure liquidity and price continuity in the stock market.
Enjoyourtrip.com is a reputed company which book hotels, flights, buses online. The company offers new types of schemes to the potential customers. Mohan was offered a scheme of staying in a hotel for 6 days and 5 nights for free. However, when he reached the destination, he was told that every room of the hotel was booked. He told them that he was informed earlier that his room was booked. He even showed them the confirmation he received on his mail.
(A) Can Mohan file a complaint against the tourist agency?
(B) Will he get a relief in this case?
(C) Name the relief he will get.
(D) Which consumer right has been violated in this case?
Gopal, Mohan and Shyam are three friends having their separate small manufacturing units in an industrial estate. They are hard¬working and honest and undertake their respective production activities following the good practices of business.
They use good quality raw materials and adopt standardised process. They fix the prices of their products with a reasonable profit margin. But all of them are worried about the malpractices like manufacturing sub-standard, duplicate, and defective goods by the fellow manufacturers. Therefore, they decided to form an organisation with a constitution of its own which is free from government interference.
This organisation would encourage consumers to strongly protest and take action against unscrupulous, exploitative and unfair trade practices of sellers. State three other functions which may be performed by this organisation in addition to those mentioned above. (5)
(A) Yes, Mohan can file a complaint against Enjoyourtrip.com as he has got the confirmation as the proof He even showed the confirmation he received on his mail at the destination.
(B) Yes, Mohan will get a relief as he has proof of confirmation of his booking. He will get relief as his time and money, fare charges for travelling purpose, are wasted.
(C) The relief Mohan will get is ‘he will be compensated for the loss of time and money and also for filing the complaint’. The second relief will be directed towards the company which will have to stop this wrong trade practices for future.
(D) The consumer right which has been violated here is ‘Right to be Informed’. This was the responsibility of the company to inform him beforehand if the rooms were not available. They did the worse by giving him confirmation and denying him the hotel room at the last moment.
Functions perform by the organisations are as follows- (any three)
- Educating the general public about consumer rights by organising training programmes, seminars and workshops.
- Publishing periodicals and other publications to impart knowledge about consumer problems, legal reporting, reliefs available and other matters of interest.
- Providing legal assistance to consumers by way of providing aid, legal advice etc. in seeking legal remedy.
- Filing complaints in appropriate consumer courts on behalf of the consumers.
- Taking an initiative in filing cases in consumer courts in the interest of the general public, not for any individual