Class 12 Business Studies Sample Paper 8 with Solutions (MCQs, Case-Based & Descriptive Questions)

Free CBSE Class 12 Business Studies Sample Paper (Solved)

Imagine your class is organising a school fair. You need to divide responsibilities, arrange funds, decide prices, promote stalls and satisfy customers.

These everyday decisions are closely connected to Class 12 Business Studies.

With our free CBSE Class 12 BST sample paper, you can cover important topics such as Principles of Management, Business Environment, Planning, Organising, Staffing, Directing, Controlling, Financial Management, Financial Markets, Marketing Management and Consumer Protection.

This worksheet contains MCQs, assertion-reason questions, case-based questions and long-answer questions.

Before you proceed further, below are the quick details:

• Class: 12
• Subject: Business Studies
• Sample Paper Number: 8
• Time Allowed: 3 Hours
• Maximum Marks: 80
• Sample Paper Status (Solved/Unsolved): Solved

Table of Contents

Questions

Answers

The worksheet begins from here.

Questions

General instructions:

• This question paper contains 34 questions.
• Answers to the questions carrying 3 marks may be from 50 to 75 words.
• Answers to the questions carrying 4 marks may be about 150 words.
• Answers to the questions carrying 6 marks may be about 200 words.
• Attempt all parts of the questions together.

Q1. Management is considered to be an art because:

1. Principles of management have universal validity.
2. Principles of management have universal application.
3. Different principles of management are brought into effect differently by different managers.
4. It is not important for practising managers to be members of a professional association.

Q2. Identify the correct sequence of steps involved in the communication process.

1. Sender, Message, Encoding, Media, Decoding, Feedback, Receiver, Noise
2. Sender, Decoding, Receiver, Feedback, Message, Encoding, Media, Noise
3. Sender, Message, Encoding, Media, Decoding, Receiver, Feedback, Noise
4. Sender, Media, Decoding, Receiver, Message, Encoding, Feedback, Noise

Q3. Hemant is working as a supervisor in a company. Due to his hard work, he is promoted to the post of Production Manager. Now, the post of supervisor is vacant, as no one can be transferred or promoted to this post.

Name the source of recruitment the company will use to fill this post.

1. Internal sources
2. External sources
3. Both (a) and (b)
4. None of the above

Q4. Sachin's friend Arvind works as a Chartered Accountant in Solutions Ltd. Arvind, in a meeting with the Board of Directors of the company, came to know that the firm would soon be declaring a bonus issue, which would result in an increase in the price of shares. Considering this, Arvind advised Sachin to purchase the shares of Solutions Ltd. Sachin acted on his advice and bought the shares before time.

Which function of the Securities and Exchange Board of India (SEBI) can control such malpractices?

1. Protective Functions
2. Regulatory Functions
3. Development Functions
4. All of the above

Q5. Which of the following statements is false about Taylor and Fayol?

1. Fayol was a practitioner, whereas Taylor was a scientist.
2. Fayol's principles are applicable in specialised situations, whereas Taylor's principles are universally applicable.
3. Fayol's principles were formed through personal experience, whereas Taylor's principles were formed through experimentation.
4. Fayol's principles are applicable at the top level of management, whereas Taylor's principles are applicable at the shop floor.

Q6. Match the types of plans given in Column I with their respective examples given in Column II and choose the correct alternative:

Column I	Column II
A. Strategy	(i) It refers to the desired future position that the management would like to reach.
B. Policy	(ii) It provides the broad contours of an organisation's business.
C. Procedure	(iii) It provides a basis for interpreting strategy, which is usually stated in general terms.
D. Objectives	(iv) It is a routine step on how to carry out activities.

1. A – (i), B – (iii), C – (ii), D – (iv)
2. A – (ii), B – (iii), C – (iv), D – (i)
3. A – (iii), B – (i), C – (ii), D – (iv)
4. A – (i), B – (iv), C – (ii), D – (iii)

Q7. The management of ABC Ltd. set up a target of selling 10,000 units per week and made all their plans based on this target. But due to a change in technology adopted by the competitors, who reduced their cost, ABC Ltd. could not achieve its target.

Identify the limitation of planning highlighted in the given case.

1. Planning leads to rigidity
2. Planning reduces creativity
3. Planning does not work in a dynamic environment
4. Planning does not guarantee success

Q8. Archana applied for the post of a music teacher in a reputed school in Haryana. After successfully clearing the tests and the interview, she was offered a letter containing the date of joining and confirmation for her acceptance.

Identify the step in the staffing process being described in the above lines.

1. Reference and background checking
2. Selection decision
3. Job offer
4. Contract of employment

Q9. Read the following statements—Assertion (A) and Reason (R)—and choose one of the correct alternatives given below:

Assertion (A): Business environment is a complex phenomenon.

Reason (R): Business environment consists of various interrelated and dynamic forces.

Alternatives:

1. Both Assertion (A) and Reason (R) are true, and Reason (R) is the correct explanation of Assertion (A).
2. Both Assertion (A) and Reason (R) are true, but Reason (R) is not the correct explanation of Assertion (A).
3. Assertion (A) is true, but Reason (R) is false.
4. Assertion (A) is false, but Reason (R) is true.

Q10. "It may be difficult to know the extent of the relative impact of the social, economic, political, technological or legal factors on change in demand of a product in the market."

Which feature of the business environment is being highlighted by the given statement?

1. Relativity
2. Complexity
3. Dynamic nature
4. Specific and general forces

Q11. If, in a particular situation, the Earning Per Share (EPS) falls with the increased use of debt, it indicates that:

1. The rate of return on investment is less than the cost of debt.
2. The rate of return on investment is more than the cost of debt.
3. Either (a) or (b)
4. Neither (a) nor (b)

Q12. Which of the following statements highlights that management is a multi-faceted concept?

1. Management translates the work in terms of goals to be achieved and assigns the means to achieve them.
2. Management means dealing with employees as individuals and as a group of people.
3. Every organisation provides some basic product or service, for the production of which there is a process or flow of input material and technology for transforming this input into output for consumption.
4. All of the above

Q13. While taking a loan from a financial institution, Lokesh Enterprises signed an agreement that they shall not pay dividends to their shareholders of more than 15% until the loan is repaid, or dividends shall not be declared if the liquidity ratio is found to be less than 1:1.

Identify the factor related to dividend decisions being described in the above case.

1. Access to capital market
2. Preferences of shareholders
3. Contractual constraints
4. Legal constraints

Q14. Complete centralisation would obviate the need for __________ and complete decentralisation would obviate the need for __________.

1. Management hierarchy; higher managerial positions
2. Higher managerial positions; management hierarchy
3. Lower management; top management
4. Concentration of decision-making; delegation

Q15. Name the level of packaging of socks depicted in the given picture.

1. Primary packaging
2. Transportation packaging
3. Secondary packaging
4. None of the above

Q16. Which of the following statements about organisation structure is false?

1. The organisational process is the outcome of organising structure.
2. The organisation structure can be defined as the framework within which managerial and operating tasks are performed.
3. The span of management, to a large extent, gives shape to the organisation structure.
4. A proper organisation structure ensures a smooth flow of communication.

Q17. Which of the following statements best defines the techniques of management?

1. It is a set of guidelines to take decisions and actions.
2. It is a procedure which involves a series of steps to be taken.
3. They are general rules for behaviour of individuals.
4. None of the above

Q18. __________ serves as an intermediary between the investor and the depository who is authorised to maintain the accounts of dematerialised shares.

1. Depository participant
2. Depository
3. Stock exchange
4. None of the above

Q19. Read the following statements carefully.

Statement I: Standards can be set in both quantitative as well as qualitative terms.

Statement II: Standards set in terms of cost to be incurred, revenue to be earned, product units to be produced and sold, and time to be spent in performing a task all represent qualitative standards.

Choose the correct option from the options given below:

1. Statement I is true and II is false.
2. Statement II is true and I is false.
3. Both the statements are true.
4. Both the statements are false.

Q20. When is a trade confirmation slip issued to an investor?

1. On placing an order
2. On execution of the order
3. On settlement of the order
4. None of the above

Q21. Geet has been appointed as an Operational Manager in Syntech Ltd.

1. Name the managerial level at which she will be working.
2. State any four functions that she will perform as an Operational Manager in Syntech Ltd.

Or

Mohan Ltd., a garment manufacturing company, set the target production of 100 garments per month at the estimated cost of ₹200 per garment. Rohan, a worker, worked a double shift and manufactured around 150 garments but at the estimated cost of ₹230 per garment. On the other hand, Sohan, another worker, focused on cost and handled resources very carefully, so he manufactured 90 garments but at the estimated cost of ₹190 per garment. The third worker maintained the balance and achieved the target of 100 garments at the estimated cost of ₹200 per garment.

1. Identify the qualities possessed by Rohan and Sohan and what they are lacking.
2. Which quality is possessed by the third worker?
3. Which worker will be preferred by the management?

Q22. With a change in the consumption habits of people, Neel, who was running a sweets shop, shifted to the chocolate business. On the eve of Diwali, he offered chocolates in attractive packages at reasonable prices. He anticipated huge demand and created a website, chocolate.com, for taking orders online. He got a lot of orders online and earned huge profits by selling chocolates.

Identify and explain the dimensions of the business environment discussed in the above case.

Q23. In an interview, Mr. Harsh, chairman of RPG Group, said, "My style of leadership is a soft touch, non-threatening, non-controlling, directional leadership. I let my colleagues alone."

Identify and briefly explain the style of leadership Mr. Harsh has adopted, with its two merits and demerits each.

Q24. Mr. Shanker is the Chief Manager of a reputed company that manufactures garments. He called the production manager and instructed him to keep a constant and continuous check on all the activities related to his department so that everything goes as per the set plan. He also suggested that he keep track of the performance of all the employees in the organisation so that targets are achieved effectively and efficiently.

Identify and discuss any two features of controlling highlighted in the above situation.

Or

Samarth is working in an MNC. He has created an atmosphere of proper controlling in his department. In order to do so, he keeps himself aware of any dishonest behaviour and takes stern action immediately. Recently, he has installed CCTV cameras to keep vigil on the employees.

1. In the above case, which importance of controlling has been implemented by Samarth?
2. Explain any two importance of controlling other than the one highlighted above.

Q25. Identify and explain the principles of management which:

1. Avoid dual subordination.
2. Strive to minimise employee turnover.
3. Ensure fairness to all employees.
4. Encourage workers to develop and carry out their plans for improvements in the organisation.

Or

Explain the work study techniques that help in developing standards to be followed throughout the organisation.

Q26. "Dreams can be turned into reality when managers think in advance what to do and how to do it."

1. Name the function of management indicated by the given statement.
2. Explain any three characteristics of the function of management highlighted above.

Q27. Read the statements given in points 1 and 2 and answer the questions that follow.

1. It does not provide definite answers, but rather develops a logical and rational mind that can determine relationships among pertinent variables and thereby understand a phenomenon.

   1. Name the concept which is the process of increasing the knowledge and understanding of employees.
   2. State the concept tied to the goals of organisations more than to the goals of individuals.

2. The activities whose outcome not only improves job performance but also helps individuals in their progress towards maturity and actualisation of their potential capacities.

   1. Identify the concept which results in making not only good employees but better men and women too.
   2. What is the duration of the process?

Q28. Sam Ltd. is engaged in the business of export of garments. In the past, the performance of the company had been up to expectations. In line with the latest technology, the company decided to upgrade its machinery. For this, the Finance Manager, Kalmia, estimated the amount of funds required and the timings. This will help the company in linking the investment and the financing decisions on a continuous basis. Kalmia, therefore, began with the profit estimates in the business.

1. Identify the financial concept discussed in the above paragraph.
2. Also, state the objectives to be achieved by the use of the financial concept so identified.
3. State any two importance of the financial concept discussed in the above paragraph.

Q29. The personal or impersonal process of assisting and/or persuading a prospective customer to buy a commodity or service or to act favourably upon an idea that has commercial significance to the seller.

1. Identify the component of the marketing mix indicated here.
2. Also, explain any three elements.

Or

Name the element of the marketing mix which affects the revenue and profits of the firm. Explain any three factors which help in determining this element.

Q30. Griant Ltd., an automobile company, is a leading manufacturing company in its segment. The company has decided to launch fully charged solar vehicles. This costs the company ₹2,000 crores annually. When the relationship manager of the company was asked about the reason for bearing so much extra cost, he replied that the company considered environment-friendly techniques the only solution for reducing pollution. The company feels that by bearing extra cost, it is fulfilling its responsibility.

By quoting lines, identify and explain the marketing management philosophy discussed in the above case.

Q31.

1. Explain any two rights of consumers from the following:
   1. Right to safety
   2. Right to be heard
   3. Right to seek redressal
2. State any three functions performed by consumer organisations for the protection and promotion of consumer interests.

Q32. Voltage fluctuations have been common and quite high in India. They harm our electrical appliances like televisions, refrigerators and air conditioners, often leaving them in a permanently damaged condition. N-Guard Company decided to manufacture stabilisers for North India, where the voltage fluctuation ranges from 220V–230V. Once the demand for North India was taken care of, they decided to launch stabilisers of varying voltages from 90V–260V to meet the requirements of voltage fluctuations in other regions of India also. Three engineers were appointed for the South, West and East regions of India, as the voltage was different in all three regions. Though all the engineers were appointed to manufacture stabilisers, the product differed from region to region.

1. Identify the organisational structure of N-Guard Company.
2. State any three advantages of the structure identified in the above paragraph.
3. Also, state any two limitations of the structure identified in the above paragraph.

Q33. Discuss Maslow's Need Hierarchy theory of motivation.

Or

"Directing is the heart of the management process as it converts plans into performance." In the light of this statement, discuss any four points of importance of directing.

Q34. A student asked the teacher, "How can a company arrange for fixed capital which is to be used in long-term projects?"

The teacher explained, "If a company wants to have funds, it can issue shares directly to the public or it can sell the whole issue to the intermediaries. After subscribing to the shares, shareholders are not bound to keep them with them. They can sell them in the market and get them encashed."

In the above paragraph, two types of capital market are highlighted. Name them and state any five differences between them.

Or

Differentiate between the two segments of the financial market on any six bases.

Answers

Class 12 Business Studies – Practice Paper 1 Answers

Q1. Answer: (c)

Q2. Answer: (c)

Q3. Answer: (b)

Q4. Answer: (a)

Q5. Answer: (b)

Q6. Answer: (b)

Q7. Answer: (c)

Q8. Answer: (c)

Q9. Answer: (a)

Q10. Answer: (b)

Q11. Answer: (a)

Q12. Answer: (d)

Q13. Answer: (c)

Q14. Answer: (a)

Q15. Answer: (a)

Q16. Answer: (a)

Q17. Answer: (b)

Q18. Answer: (a)

Q19. Answer: (a)

Q20. Answer: (b)

Q21. Answer:

1. Supervisory level of management.
2. The four functions performed by her are:
   • Directly overseeing the efforts of the workforce.
   • Serving as a link between the workers and middle-level managers.
   • Ensuring sufficient availability of resources and good quality of output.
   • Providing guidance and training to workers.
   • Ensuring that good working conditions are provided to the workers.

   (Any four)

Or

1. Rohan is effective but lacks efficiency, whereas Sohan is efficient but lacks effectiveness.
2. The third worker is effective as well as efficient.
3. The management will prefer the third worker as management always insists on achieving goals effectively as well as efficiently.

Q22. Answer:

The dimensions of the business environment discussed in the given case are social environment and technological environment.

Social Environment

• It includes various social forces such as customs, beliefs, literacy rate, educational levels, lifestyle, values, etc.
• Changes in the social environment affect an organisation in the long run.

Example:

• Nowadays, people are paying more attention towards their health, as a result of which demand for mineral water, diet coke, etc., has increased while demand for tobacco and fatty food products has decreased.

Technological Environment

• It includes forces relating to scientific improvements and innovations, which provide new and advanced ways or techniques of production.
• A businessman must closely monitor the technological changes taking place in the industry, as it helps in facing competition and improving the quality of the products.

Example:

• Digital India initiative by the government and move towards a paperless society.

Q23. Answer:

The style of leadership followed by Mr. Harsh is laissez-faire or free-rein leadership.

• Such a leader decentralises authority, does not lead and avoids power.
• He serves only as a contact to bring information and resources needed by subordinates.
• The followers are given a high degree of independence to formulate their own objectives and ways to achieve them.
• The group members work on their own tasks, resolving issues themselves.

The merits of laissez-faire (free-rein) style of leadership are:

• Positive effect on job satisfaction and morale of employees.
• Maximum scope for development.
• Full utilisation of employees' potential.

(Any two)

The demerits of laissez-faire (free-rein) style of leadership are:

• No guidance and support.
• Lack of coordination.

(Or any other valid point)

Q24. Answer:

The two features of controlling highlighted in the given situation are:

1. Goal-Oriented
   • Controlling ensures that an organisation's resources are being used effectively and efficiently for the achievement of predetermined goals.
   • Controlling is thus a goal-oriented function.
2. Pervasive
   • Managers at all levels of management—top, middle and lower—need to perform the controlling function to keep control over activities in their areas.
   • Moreover, controlling is as much required in an educational institution, military, hospital or club as in any business organisation.
   • Thus, it is a pervasive function.
3. Continuous
   • Controlling should not be misunderstood as the last function of management.
   • It is a function that brings the management cycle back to the planning function.
   • The controlling function involves constant review of actual performance for taking timely corrective action.
   • This process helps in the formulation of future plans in the light of the problems that were identified and, thus, helps in better planning in future periods.
   • Thus, controlling only completes one cycle of the management process and improves planning in the next cycle.

(Any two)

Or

1. Ensuring order and discipline
2. The importance of controlling is as follows:
   1. Accomplishing organisational goals
      • The controlling function measures progress towards the organisational goals and indicates deviations, if any, to take corrective action.
      • It, thus, guides the organisation and keeps it on the right track so that organisational goals may be achieved.
   2. Judging accuracy of standards
      • An efficient control system enables management to verify whether the standards set are accurate or not by carefully checking the changes taking place in an organisational environment.
   3. Making efficient use of resources
      • Efficient utilisation of resources through the controlling process enables a manager to reduce wastage of resources.
   4. Improving employee motivation
      • An efficient control system ensures that employees know well in advance what they are expected to do and also the standards of performance on the basis of which they will be appraised.
      • It, thus, motivates them and helps them to give better performance.
   5. Facilitating coordination in action
      • Controlling provides direction to all activities.
      • Predetermined standards are set for governing each department and employee in an organisation, which are well coordinated with one another.
      • This ensures that overall organisational objectives are accomplished.

   (Any two)

Q25. Answer:

1. Avoids dual subordination – Unity of Command
   • The principle of unity of command states that each subordinate in a formal organisation should receive orders from and be responsible to only one superior.
   • If this principle is violated, "authority is undermined, discipline is in jeopardy, order disturbed and stability threatened."
   • This principle resembles military organisation.
   • This is to prevent confusion regarding tasks to be done.
2. Strives to minimise employee turnover – Stability of Personnel
   • "Employee turnover should be minimised to maintain organisational efficiency," according to Fayol.
   • Personnel should be selected and appointed after due and rigorous procedure. But once selected, they should be kept at their post or position for a minimum fixed tenure. They should have stability of tenure. They should be given reasonable time to show results.
   • Any ad hocism in this regard will create instability or insecurity among employees. They would tend to leave the organisation.
   • Recruitment, selection and training costs will be high. So stability in tenure of personnel is good for business.
3. Ensures fairness to all employees – Equity
   • "Good sense and experience are needed to ensure fairness to all employees, who should be treated as fairly as possible," according to Fayol.
   • This principle emphasises kindness and justice in the behaviour of managers towards workers.
   • This will ensure loyalty and devotion.
   • There should be no discrimination against anyone on account of sex, religion, language, caste, belief or nationality, etc.
4. Encourages workers to develop and carry out their plans for improvements in the organisation – Initiative
   • "Workers should be encouraged to develop and carry out their plans for improvements," according to Fayol.
   • Initiative means taking the first step with self-motivation.
   • It is thinking out and executing the plan.
   • Initiative should be encouraged. But it does not mean going against the established practices of the company for the sake of being different.
   • A good company should have an employee suggestion system whereby initiatives or suggestions which result in substantial cost or time reduction should be rewarded.

Or

Work Study Techniques

1. Method Study
   • The objective of method study is to find out one best way of doing the job.
   • Taylor devised the concept of assembly line by using method study.
   • The objective of the whole exercise is to minimise the cost of production and maximise the quality and satisfaction of the customer.
   • For this purpose, many techniques like process charts and operations research, etc., are used.
2. Motion Study
   • Motion study refers to the study of movements like lifting, putting objects, sitting and changing positions, etc., which are undertaken while doing a typical job.
   • Unnecessary movements are sought to be eliminated so that it takes less time to complete the job efficiently.
   • On close examination of body motions, for example, it is possible to find out:
     • Motions which are productive.
     • Motions which are incidental.
     • Motions which are unproductive.
   • Taylor used stopwatches and various symbols and colours to identify different motions.
3. Time Study
   • It determines the standard time taken to perform a well-defined job.
   • Time-measuring devices are used for each element of a task. The standard time is fixed for the whole task by taking several readings.
   • The method of time study will depend upon the volume and frequency of the task, the cycle time of the operation and time measurement costs.
   • The objective of time study is to determine the number of workers to be employed, frame suitable incentive schemes and determine labour costs.
4. Fatigue Study
   • A person is bound to feel tired physically and mentally if he or she does not rest while working.
   • Fatigue study seeks to determine the amount and frequency of rest intervals in completing a task.
   • The rest intervals will help one to regain stamina and work again with the same capacity. This will result in increased productivity.
   • There can be many causes for fatigue like long working hours, doing unsuitable work, having uncordial relations with the boss or bad working conditions, etc. Such hindrances to good performance should be removed.

Q26. Answer:

1. Planning
2. The characteristics of the planning function of management are:
   1. Planning focuses on achieving objectives
      • 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.
   2. Planning is a primary function of management
      • 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 for all other functions.
   3. Planning is pervasive
      • Planning is required at all levels of management as well as in all departments of the organisation.
      • It is not an exclusive function of top management or of any particular department.
      • But the scope of planning differs at different levels and among different departments.
      • For example:
        • Top management undertakes planning for the organisation as a whole.
        • Middle management does departmental planning.
        • At the lowest level, day-to-day operational planning is done by supervisors.

   (Or any other relevant point)

Q27. Answer:

1.

1. Education is the concept which is the process of increasing the knowledge and understanding of employees.
2. Training is tied to the goals of organisations more than to the goals of individuals.

   The term 'training' is used to indicate the process by which the attitudes, skills and abilities of employees to perform specific jobs are increased. It is a short-term process.

2.

1. Development refers to the learning opportunities designed to help employees grow. It is an ongoing process.
2. It is a long-term process which takes place throughout the life of a person.

Q28. Answer:

1. Financial Planning
2. Financial planning strives to achieve the following two objectives:
   1. To ensure availability of funds whenever required
      • This includes a proper estimation of the funds required for different purposes such as for the purchase of long-term assets or to meet day-to-day expenses of business, etc.
      • Apart from this, there is a need to estimate the time at which these funds are to be made available.
      • Financial planning also tries to specify possible sources of these funds.
   2. To see that the firm does not raise resources unnecessarily
      • Excess funding is almost as bad as inadequate funding.
      • Even if there is some surplus money, good financial planning would put it to the best possible use so that financial resources are not left idle and do not unnecessarily add to the cost.
      • Thus, a proper matching of funds requirements and their availability is sought to be achieved by financial planning.
3. The importance of financial planning is as follows:
   • It helps in forecasting what may happen in future under different business situations.
   • It tries to link the present with the future.
   • It provides a link between investment and financing decisions on a continuous basis.
   • By spelling out detailed objectives for various business segments, it makes the evaluation of actual performance easier.

   (Any two)

Q29. Answer:

1. Promotion
2. The three elements of Promotion are:
   1. Advertising
      • 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 good or service.
      • The most common modes of advertising are newspapers, magazines, television and radio.
   2. Personal Selling
      • Personal selling involves the oral presentation of a message in the form of a conversation with one or more prospective customers for the purpose of making sales.
      • It is a personal form of communication.
      • There is a lot of flexibility in personal selling. The sales presentation can be adjusted to fit the specific needs of the individual customers.
      • It is possible to take direct feedback from the customer.
   3. Sales Promotion
      • Sales promotion refers to short-term incentives which are designed to encourage buyers to make immediate purchases of a product or service.
      • These include all promotional efforts other than advertising, personal selling and publicity, used by a company to boost its sales.
      • Sales promotion activities include offering cash discounts, sales contests, free gift offers and free sample distribution.
      • Sales promotion is usually undertaken to supplement other promotional efforts such as advertising and personal selling.
   4. Public Relations
      • Public Relations, i.e., managing public opinion of an organisation, is an important task which can be performed by the marketing department.
      • The business needs to communicate effectively with customers, suppliers and dealers, since they are instrumental in increasing sales and profit.
      • Public relations involves a variety of programmes designed to promote or protect a company's image and its individual products in the eyes of the public.
      • The business relates with a number of groups including suppliers, shareholders, intermediaries, activist groups and the government.

   (Any three)

Or

The element of the marketing mix which affects the revenue and profits of a firm is Price Mix.

The factors determining the Price Mix are:

1. Product Cost
   • The total cost of a product includes production, selling and distribution costs.
   • In the long run, the firm strives to cover all their costs.
   • The cost sets the minimum level or floor price for a product.
   • In addition to that, the firm aims to earn a profit margin over and above the costs.
2. The Utility and Demand
   • The upper limit of the price range will depend on the utility the product has and hence its demand in the market.
   • So, the cost of the product is the seller's concern.
   • The buyer's concern is the utility of the product.
   • The demand for the product will depend on its utility and its price.
   • The law of demand states that a lower price will lead to higher demand.
   • Another factor to consider when determining the price is the elasticity of demand.
   • If the demand is elastic, then the company can charge a lower price for its products.
   • If the demand is inelastic, then the company can charge a higher price for its products.
3. The Extent of Competition in the Market
   • The price of a product can be set up to the higher limit if the extent of competition is low in the market, and vice versa.
   • Competitors' prices, their reactions, their products, quality and features must be considered before fixing the price.
   • To protect the interests of the general public, the government has all the rights to control the prices of various products and services, including the products in the category of essential commodities such as drugs, some food items, LPG, etc. With government intervention, there can be a check on the activity of monopolists as they cannot charge an unfairly high price for essential commodities.
4. Pricing Objectives
   • If the objective of the firm is to maximise sales, the price will be set at a lower level, whereas if the firm's objective is profit maximisation, the price will be set at a higher level.

Q30. Answer:

Quote: "When the relationship manager of the company was asked about the reason for bearing so much extra cost, he replied that the company considered environment-friendly techniques as the only solution for reducing pollution."

The marketing management philosophy discussed in the given case is Societal Marketing Philosophy.

It 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 long-term well-being of the consumers and society is taken care of.

It is an extension of the marketing concept as it supplements the concern for the long-term welfare of society.

Q31. Answer:

1. 1. Right to Safety

      The right to safety is important for safe and secure living. Without any effective regulatory mechanism, consumers suffer most in terms of safety. The right to safety means the right to be protected against products and services which are hazardous to health or life. In order to ensure this right, the marketers should not use substandard raw materials in the production of goods.

   2. Right to be Heard

      According to this right, a consumer has the right to file a complaint and to be heard in case of dissatisfaction with a good or a service. It is because of this reason that many enlightened business firms have set up their own consumer service and grievance cells. Many consumer organisations are also working towards this direction and helping consumers in redressing their grievances.

   3. Right to Seek Redressal

      According to this right, a consumer has the right to get relief in case the product or service falls short of his expectations. The Consumer Protection Act provides a number of reliefs to consumers, including replacement of the product, removal of defects in the product, compensation paid for any loss or injury suffered by the consumer, etc.

   (Any two)

2. The functions performed by consumer organisations for the protection and promotion of consumers' interests are:
   1. Educating the general public about consumer rights by organising training programmes, seminars and workshops.
   2. Publishing periodicals and other publications to impart knowledge about consumer problems, legal reporting, reliefs available and other matters of interest.
   3. Carrying out comparative testing of consumer products in accredited laboratories to test the relative qualities of competing brands and publishing the test results for the benefit of consumers.
   4. Providing legal assistance to consumers by way of providing aid, legal advice, etc., in seeking legal remedy.

   (Any three)

Q32. Answer:

1. Functional structure (Based on functions of management).
2. The advantages of functional structure are:
   • Occupational specialisation

     A functional structure leads to occupational specialisation since it promotes efficiency in the utilisation of manpower as employees perform similar tasks within a department and are able to improve performance.

   • Coordination is established

     It promotes control and coordination within a department because of similarity in the tasks being performed.

   • Helps in increasing managerial efficiency

     It helps in increasing managerial and operational efficiency, and this results in increased profit.

   • Minimises cost

     It leads to minimum duplication of efforts, which results in economies of scale and thus lowers cost.

   • Ease of training

     It makes training of employees easier as the focus is only on a limited range of skills.

   • Due attention

     It ensures that different functions get due attention.

   (Any three)

3. The limitations of functional structure are:
   • Ignoring organisational objectives

     Each departmental head overemphasises their departmental objectives, ignoring overall organisational objectives, which may lead to the creation of functional empires.

   • Difficulty in inter-departmental coordination

     All departmental heads work as per their own wish, which leads to coordination within the department easier but makes inter-departmental coordination difficult.

   • Conflict of interests

     A conflict of interests may arise when the interests of two or more departments are not compatible. For example, the sales department insisting on a customer-friendly design may cause difficulties in production.

     Inter-departmental conflicts can also arise in the absence of clear separation of responsibility.

   • Inflexibility

     It may lead to inflexibility as people with the same skills and knowledge base may develop a narrow perspective and thus have difficulty in appreciating any other point of view. Functional heads do not get training for top management positions because they are unable to gather experience in diverse areas.

   (Any two)

Q33. Answer:

Maslow's Need Hierarchy Theory of Motivation was first introduced by Abraham Maslow in 1943 for his paper titled 'Theory of Motivation' and is based on a hierarchy of needs, which starts with the most basic needs and subsequently moves on to higher levels. Maslow's Need Hierarchy Theory is considered fundamental to understanding the phenomenon of motivation.

His theory was based on human needs. He felt that within every human being, there exists a hierarchy of five needs. These are:

1. Basic Physiological Needs
   • These needs are most basic in the hierarchy and correspond to primary needs.
   • Hunger, thirst, shelter, sleep are some examples of these needs.
   • In the organisational context, basic salary helps to satisfy these needs.
2. Safety/Security Needs
   • These needs provide security and protection from physical and emotional harm.
   • Examples: Job security, stability of income, pension plans, etc.
3. Affiliation/Belongingness/Social Needs
   • These needs refer to affection, sense of belongingness, acceptance and friendship.
4. Esteem Needs
   • These needs include factors such as self-respect, autonomy, status, recognition and attention.
5. Self-Actualisation Needs
• It is the highest level of need in the hierarchy.
• It refers to the drive to become what one is capable of becoming.
• These needs include growth, self-fulfilment and achievement of goals.

Maslow's theory is based on the following assumptions:

• People's behaviour is based on their needs. Satisfaction of such needs influences their behaviour.
• People's needs are in hierarchical order, starting from basic needs to other higher-level needs.
• A satisfied need can no longer motivate a person; only the next higher-level need can motivate him.
• A person moves to the next higher level of the hierarchy only when the lower need is satisfied.

Or

The importance of Directing is as follows:

1. Initiates Action
   • Directing helps to initiate action by people in the organisation towards 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. Integrates Employees' Efforts
   • Directing integrates employees' efforts in the organisation in such a way that every individual effort contributes to the organisational performance.
   • Thus, it ensures that individuals work for organisational goals.
   • For example, a manager with good leadership abilities will be in a position to convince the employees working under him that individual efforts and team efforts will lead to the achievement of organisational goals.
3. Guides Employees
   • 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.
4. Facilitates Introduction of Changes
   • Directing facilitates the introduction of needed changes in the organisation.
   • Generally, people have a tendency to resist changes in the organisation.
   • Effective directing through motivation, communication and leadership helps to reduce such resistance and develop the required cooperation in introducing changes in the organisation.
   • For example, if a manager wants to introduce a new system of accounting, there may be initial resistance from accounting staff.
   • But if the manager explains the purpose, provides training and motivates with additional rewards, the employees may accept change and cooperate with the manager.

Q34. Answer:

The two types of capital market highlighted in the given paragraph are Primary Market and Secondary Market.

Differences between Primary Market and Secondary Market:

Basis	Primary Market	Secondary Market
(a) Securities Traded	There is sale of securities by new companies.	There is trading of existing shares only.
(b) Issued By	Securities are sold by the company to the investors directly.	Ownership of existing securities is exchanged between investors. The company is not involved at all.
(c) Capital Formation	The flow of funds is from savers to investors, i.e., the primary market directly promotes capital formation.	Enhances encashability of shares, i.e., the secondary market indirectly promotes capital formation.
(d) Buying and Selling	Only buying of securities takes place in the primary market.	Both buying and selling of securities can take place on the stock exchanges.
(e) Price Determination	Prices are determined and decided by the management of the company.	Prices are determined by the demand and supply for the security.
(f) Geographical Location	There is no fixed geographical location.	It is located at specified places.

(Any five)

Or

Differences between Capital Market and Money Market:

Basis	Capital Market	Money Market
(a) Liquidity	Securities are comparatively less liquid.	Securities are comparatively more liquid.
(b) Instruments	Shares, debentures and bonds.	Treasury bill, commercial paper, certificates of deposit, call money and commercial bill.
(c) Expected Return	Generally yields a higher return than money market instruments.	Money market securities yield comparatively less return.
(d) Safety	Securities are riskier than money market instruments.	Securities are comparatively safer.
(e) Duration	It deals in medium-term and long-term securities.	It deals in short-term securities.
(f) Investment Outlay	Investment outlay is small.	Investment outlay is large.

The End

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