Saturday, November 1, 2025

CBSE Class 12th Business Studies Revision Notes - N5

Free Business Studies - Class 12th (CBSE) - Revision Notes - N5 - Organising

Dear Students,

Pull up your socks and get ready to read free revision notes for CBSE class 12th mainly focused on Chapter 5: Organising.

These revision notes are built by expert CBSE teachers to improve your knowledge level.

Here are the quick details:
  • Subject: Business Studies
  • Class: 12th (CBSE)
  • Chapter Name: Organising

Revision Notes for CBSE Class 12th - Business Studies

Meaning of Organising

  • Organizing refers to arranging everything in orderly form and making the most efficient use of resources. 
  • It can be defined as a process that initiates the implementation of plans by clarifying jobs and working relationships and effectively deploying resources for the attainment of identified and desired results (goals).

Steps in the Organizing Process

  1. Identification and Division of Work: The first step in the process of organizing involves identifying and dividing the work that must be done as per the plans.  The division of work make sure there is no duplication of work and there is no burden of work on one person. The manager divides the work into smaller unit, and each unit of work is called a job.
  2. Departmentalization: After dividing the work in smaller jobs, related and similar jobs are grouped and put under one department. The departmentation can be done by the organization ways such as Functional Departmentation and Divisional Departmentation.
  3. Assignment of Duties: After dividing the organization into specialized departments each individual working in different departments is assigned a duty matching to his skill and qualifications. The work is assigned according to the ability of individuals.
  4. Establishing Reporting Relationship: In the fourth step of the organizing process all the individuals are assigned some authority matching to the job they must perform. The managers with maximum authority are considered as top level management and managers with minimum authority are grouped into lower-level management. So, everyone knows who will report to whom.

Importance/Significance/Benefits of Organising

  1. Benefits of Specialisation: Every individual is assigned a part of the total work and not the whole task. Repetitive performance of a particular task allows a worker to gain experience in that area and leads to specialisation.
  2. Clarity in a working relationship: Each employee knows very clearly to whom he can give order and from whom he must receive the order.
  3. Effective Administration: Clarity in working relationships enables proper execution of work. Management of an enterprise thereby becomes easy, and this brings effectiveness in administration.
  4. Adaption to Change: It allows the organisation structure to be suitably modified according to changes in business environment. Thus, provides stability to the enterprise as it can then continue to survive with changes.
  5. Development of Personnel: Delegation allows the managers to reduce their workload by assigning routine jobs to their subordinates. It gives them the time to explore areas for growth and the opportunity to innovate.
  6. Expansion and Growth: It allows an enterprise to add more job positions, departments and even diversify their product lines.
  7. Optimum utilization of resources: It leads to the proper usage of all material, financial and human resources. Avoidance of duplication of work helps in preventing confusion and minimising the wastage of resources and efforts.

Organization Structure

  1. It is the framework within which managerial and operating tasks are performed.
  2. It specifies the relationships between people, work and resources in an organization.
  3. It allows correlation and coordination among human, physical and financial resources and accomplish desired goals.
  4. It is essential to ensure a smooth flow of communication and better control over the operations of a business enterprise.

Span of Management refers to the number of subordinates that can be effectively managed by a superior. The Span of management largely gives shape to the organization structure. This determines the levels of management in the structure.

Types of Organization Structure

Functional Structure

It is an organizational structure formed by grouping of jobs of similar nature according to functions and organizing these major functions as separate departments.

For example, all the jobs related to production are grouped under the production department, related to sales in sales department, related to purchase in purchase department.

An image showing functional structure for CBSE Class 12th Chapter: Organising

Suitability for those enterprises which have the following:

  • Only one category of product.
  • The size of the organization is large.
  • It has diversified activities.
  • Operations require a high degree of specialization.

Advantages of Functional Structure

  • Specialization
  • Increase Managerial and Operational Efficiency
  • Easy Coordination
  • Effective Training

Disadvantages of Functional Structure

  • Difficulty in Achieving Organizational Goals
  • Inflexibility of employees in shifting to other departments
  • Conflict of Interest
  • Problems in Coordination

Divisional Structure

When the organization is large and is producing more than one type of product then activities related to one product are grouped under one department.

For example, a large company may have divisions like footwear, garments etc.

An image showing divisional and functional structure for CBSE Class 12th Chapter: Organising

Suitability of Divisional Structure

  • Organizations which require product specialization.
  • Organizations producing multi product or different line of products.
  • Growing companies which plan to add more line of products in future.

Advantages of Divisional Structure

  • Product Specialization
  • Expansion and Growth
  • Flexibility

Disadvantages of Divisional Structure

  • More Resources Required
  • Conflicts
  • Ignoring of Organizational Interests 

Differences Between Functional and Divisional Structure

An image showing differences between functional and divisional structure

Formal and Informal Organisation

  1. Formal Organisation

Meaning of Formal Organisation: It refers to the organization which is designed by the management to accomplish a particular task. It specifies authority and responsibility.

Features of Formal Organisation

  • Created intentionally by the process of organizing.
  • Purpose is the achievement of organizational goal.
  • Every individual is assigned a fixed authority (decision-making power).
  • Creates a scalar chain of communication.

Advantages of Formal Organisation

  • Systematic working
  • Coordination
  • Achievements of Organizational Goals

Disadvantages of Formal Organisation

  • Delay in Action
  • Emphasis on Work Only 
  • No Recognition of Creativity

  1. Informal Organisation

Meaning of Informal Organisation: Interaction among people at work gives rise to a 'network of social relationships among employees. The informal organizational structure gets created automatically and the main purpose of such structure is getting psychological satisfaction.

Features of Informal Organisation

  • Created automatically without any intended efforts of managers.
  • Formed by the employees to get psychological satisfaction.
  • Does not follow any fixed path of flow of authority or communication.

Advantages of Informal Organisation

  • Fast Communication
  • Fulfils Social Needs
  • Disadvantages
  • Spread Rumours
  • No Systematic Working
  • May Bring Negative Results

A group of people eating at tablesAI-generated content may be incorrect.

 

Differences Between Formal and Informal Organization

An image showing differences between formal and informal organisation

Delegation of Authority

Meaning of Delegation: Delegation of authority means the granting of authority to subordinates to operate within prescribed limits. Delegation helps a manager to extend his area of operations, as without it, his activities would be restricted to only what he himself can perform. However, delegation does not mean abdication. The manager shall still be accountable for the performance of the assigned tasks. Moreover, the authority granted to a subordinate can be taken back and redelegated to another person.

Importance of Delegation

  • Effective management
  • Employee development
  • Motivation of employees
  • Facilitation of growth
  • Basis of management hierarchy
  • Better coordination

Elements of Delegation

An image showing Elements of Delegation in a workflow

  1. Responsibility means the work assigned to an individual. A subordinate must perform the assigned duty. Responsibility is the obligation of a subordinate to properly perform the assigned duty. Responsibility flows upward because a subordinate will always be responsible to his superior.
  2. Authority means the power to make decisions. To carry on the responsibilities every employee needs to have some authority. So, when managers pass their responsibility to their subordinates, they also pass some of the authority to the subordinate. Authority flows downwards from superior to subordinate. The authority must be equal to the responsibility.
  3. Accountability implies being answerable for the outcome of the assigned task. Once responsibility for the performance of an assigned task is accepted, one cannot deny accountability. Accountability arises from responsibility.  Accountability flows upwards i.e., a subordinate will be accountable to a superior for satisfactory performance of work. It cannot be delegated or passed.

Centralisation and Decentralisation

  • Centralization refers to the concentration of power or authority in a few hands, i.e., top level. An organization is centralized when the decision-making authority is in the hands of top-level management only.
  • Decentralization is defined as a systematic distribution of authority at every level of management. Those organizations in which such authority is shared with lower levels are 'decentralized organizations. The decision-making authority is pushed down the chain of command.

Importance of Decentralization

  • Develops initiative among subordinates
  • Develops managerial talent for the future
  • Quick decision-making
  • Facilitates Growth
  • Better Control
  • Relief to Top Management

Differences between Decentralization and Delegation

An image showing easy differences between centralisation and decentralisation in an organisation

Organising Flowchart

An image showing revision notes for CBSE Class 12th Chapter: Organising

An image highlighting quick revision notes for CBSE Class 12th, particularly for Chapter: Organising

An image showing easy revision notes for CBSE Class 12th Chapter: Organising

Main differences between centralisation and decentralisation for class 12th students

The End

Have you finished the entire revision of the notes? Now, it’s time to test your knowledge!
Go through the worksheets (containing case studies, MCQs, theory questions) related to CBSE Class 12th (Chapter: Organising) by clicking the link/s below:

Friday, October 31, 2025

CBSE Class 12th Business Studies Worksheet - W9a

Free Business Studies - Class 12th (CBSE) - Worksheet - W9a - Financial Management

Students of CBSE class 12th know that they can score better marks in Business Studies board exams when they practice case studies of Chapter 9: Financial Management.
If you are one of those bright students, we are here to assist you.
On this page, you can find several case studies (short and long) for practice and solve them. The first section is for short case studies, followed by long case studies.
Here are the quick details:
  • Subject: Business Studies
  • Class: 12th (CBSE)
  • Chapter Name: Financial Management
Below is the content pattern:

CBSE Business Studies Case Studies for Chapter 9: Financial Management

Short Case Studies

Case Study 1​

Identify and state the type of decisions in the following cases.

  1. Ravi wants to open a restaurant and is looking for a proper place to open it. He is also thinking of the amount of funds which will be required for some of the set-ups, like food making and storage machinery.
  2. Ravindra is running a toy manufacturing company. He thinks of expanding his business. He meets his uncle and asks him for a sum of ₹2 crore. His uncle asks for a high interest rate.

He agrees to it and promises to pay the money back within 2 years.

Case Study 2

The demand for takeaway food businesses is increasing day by day. People working in multi-national companies have to work till night very often, and they are reluctant to cook food.

Taking advantage of this opportunity, Amit and Bijoy started ‘Langer’, a takeaway food business. The food became famous because of its good quality and the standards of hygiene followed by it. Over the years, the business became very profitable. 

They decided to expand the business by opening more branches in different cities. To ensure consistent food quality at all branches and to maintain hygiene and quality, they planned to import machines with advanced technology. 

The cost of each machine was ₹ 12 crores. They knew that this decision had to be taken very carefully, as it involves a huge cost, and that the decision, once taken, is irreversible.

  1. Identify and state the financial decision discussed in the above paragraph.
  2. Explain any two factors affecting the decision identified in (i) above.

Case Study 3

Hemant, the finance manager, and Arun Chopra, the managing director of Ghokla Ltd., were discussing the source of finance to be raised for the modernisation of their existing plant.

Noting that ‘Sensex’ has soared by 5078 points in the last three years, Hemant suggests that equity should be the preferred source. Arun Chopra wanted to consider the following factors:

  1. Keeping in mind the high operating costs of the company, suggest another source of finance that can be used for the modernisation of the existing plant.
  2. Also, explain the two factors highlighted above that should be kept in mind for taking this decision.

Case Study 4

Sunrises Ltd., dealing in readymade garments, is planning to expand its business operations in order to cater to the international market. 

For this purpose, the company needs additional ₹ 80,00,000 for replacing machines with modern machinery of higher production capacity.

The company wishes to raise the required funds by issuing debentures. The debt can be issued at an estimated cost of 10%. The EBIT for the previous year of the company was ₹ 8,00,000 and the total capital investment was ₹ 1,00,00,000.

Suggest whether the issue of debenture would be considered a rational decision by the company. Give a reason to justify your answer.

Case Study 5

Sunflower Ltd. is a trusted name in diagnostic services with seven branches across the city of Mumbai.

Over the past couple of years, the directors noticed that the rise in health consciousness in the city, coupled with the rise in disposable incomes, has led to increased health check-up packages available in the city itself. 

Considering this, they decided to open branches in Ahmedabad and Pune.

It was estimated that it would require 150 crore of additional funds. The directors have to make the decision about how much funding should be raised from equity capital and how much from debt.

It will affect the overall cost of capital and the financial risk of the company.

  1. Identify and state the financial decision discussed in the above paragraph.
  2. State any three factors that should be kept in mind by the board of directors of Sunflower Ltd. while making the decision identified in (i) above.

Case Study 6

Chetanshi Ltd. has been a company dealing in readymade garments for several years. Recently, the profit of the company has started increasing. 

The finance manager has decided to retain the profit instead of distributing it among the shareholders.

  1. Identify and state the financial decision taken by the finance manager in the above case.
  2. State any three factors affecting the decision identified in (i) above.

Case Study 7

Gupta International Ltd. earned a net profit of 50 crore. Mahesh, the finance manager of Gupta International Ltd., wants to decide how to appropriate these profits.

  1. Identify and state the decision that Mahesh will have to make.
  2. State any three factors that will help him in making this decision.

Case Study 8

Aval Ltd. is engaged in the business of exporting canvas goods and bags. In the past, the performance of the company had not been up to expectations. 

In line with the latest demand in the market, the company decided to modernise its plant, for which it required specialised machinery.

For this, the finance manager, Prabhu, prepared a financial blueprint of the organisation’s future operations to estimate the amount of funds required and the timings, with the objective to ensure that enough funds are available at the right time.

He also collected the relevant data about the profit expected for the coming years. By doing this, he wanted to be sure about the availability of funds necessary for the growth of the business. 

For funds from the internal source, the company could not find alternative mechanisms of financing. He is trying to find out alternative sources from outside the organisation.

  1. Identify the financial concept discussed in the above paragraph. Also, state the objectives to be achieved by the use of the financial concept so identified.
  2. “There is no restriction on payment of dividend by a company.” Comment.

Case Study 9

Gagla Engineering Ltd. is a leading manufacturer of rods used to manufacture trucks. It is important for a finance manager to ensure the availability of funds whenever required and their possible sources.

It is also important to ensure that the company does not raise funds unnecessarily. The fund requirement and the availability have to be matched.

  1. Identify and give the meaning of the concept discussed in the case, which will help the finance manager to achieve his objectives.
  2. Also, state any three points of importance of the concept identified in (i) above.

Case Study 10

Though Kan Apparels is making huge profits every year on a regular basis, it is not able to provide sufficient dividends to its shareholders. 

As a result, EPS remains low. Identify and explain the concept that can help to resolve the problem.

Case Study 11

The Return on Investment (RoI) of a company ranges between 10%-12%. For the past three years, to finance their fixed capital needs, they have had the following options for borrowing debt. 

  • Option ‘A’: Rate of interest 9%. 
  • Option ‘B’: Rate of interest 13%. 

Which source of debt, ‘Option A’ or ‘Option B’ should the company choose? 

Explain your answer. Also, state the concept being used in making the decision.

Case Study 12

Company ‘A’ has a debt-equity ratio of 3:1. Another Company, ‘B’, has a debt-equity ratio of 2.5:1. Both companies are part of an industry where the operating costs are high. 

Many of the companies in this industry are vulnerable to high business risks.

Which one of the two companies is going to have higher chances of financial risk?

Why do you think the financial risk in the above-mentioned industry is going to be dangerous for the companies?

Case Study 13

Kanav, after passing out of college with a specialisation in renewable energy, was determined to start a solar power plant. 

The venture required heavy investment in plant and machinery, as well as semi-skilled labour. 

Kanav needed to set up the solar panel manufacturing unit and purchase the latest solar panels, inverters, and rechargeable storage systems. 

Near the bank of the nearby river and other investments, Kanav’s business had good expansion possibilities.

Due to the government’s continuous move towards clean energy sources, there was a growing demand for electricity for houses and commercial installations in the area. 

But he did not anticipate the demand that would come in the future, and therefore, the anticipated demand exceeded quickly. 

These earnings have stabilized, and the sales were more than the expected amount. As the years passed, the solar power plant did very well and played a pivotal role in the city’s planned transition towards a greener and more sustainable future.

Identify and explain the two factors affecting the fixed capital requirements discussed in the above case.

Case Study 14

Pinnacle Ltd. deals in the sale of stationery and office furniture. They source the finished products from reputed brands that give them credit on the basis of four to six months' credit. 

Seeing the demand for electronics items, they are now also planning to market these items by opening outlets throughout India.

For this, they decided to join hands with a Japanese electronic goods manufacturer.

Identify and state any two factors that would affect the fixed capital requirement of Pinnacle Ltd. as discussed above.

Case Study 15

KJ Ltd. is manufacturing trucks at its manufacturing unit in Kolkata. The demand for its trucks is high as the economic growth is about 7% to 8%.

The company is planning to add a 20% increase in the demand for its trucks. It plans to set up a new truck manufacturing plant.

For this, the company will require approximately ₹2,000 crore as fixed capital and ₹500 crore as working capital. The company has already arranged for its fixed capital.

State any three factors that the finance manager of the company should keep in mind while arranging its working capital.

Case Study 16

Verma Ltd. has various warehousing arrangements. The services provided by the company help businesses to reduce their overheads, increase efficiency, and reduce distribution costs.

  1. State whether the working capital requirements of Verma Ltd. will be high or low. Give a reason.
  2. Explain any two factors affecting working capital requirement.

Long Case Studies

Case Study 17

S Ltd. is manufacturing steel at its plant in India. It is enjoying a buoyant demand for its products as economic growth is about 7-8% and the demand for steel is growing. 

It is planning to set up a new steel plant to cash in on the increased demand.

It is estimated that it will require about ₹5,000 crore to set up about ₹500 crore of working capital to start the new plant.

  1. Describe the role and objectives of financial management for this company.
  2. Explain the importance of making a financial plan for this company. Give an imaginary plan to support your answer.

Case Study 18

‘Neeraj Exports Ltd.’ is engaged in the export of electronic goods. 

The company has been expanding its operations for the last few years and is now planning to set up a new manufacturing unit. It is faced with the decision of how to finance this new project.

The company has a solid cash flow position and has been consistently generating profits. 

However, it already has significant fixed operating costs in the form of rent, salaries, and other expenses. 

The current shareholders are not in favour of issuing additional equity shares as they fear losing control of the company. 

Meanwhile, the stock market is experiencing a downturn, which makes raising funds through equity challenging. In light of these factors, the company is considering its financing options.

Quoting lines from the above discussion, identify and explain any four factors affecting the financing decision.

Case Study 19

Abhishek Ltd. manufactures cotton clothes. It has been consistently earning good profits for many years. This year, too, it has been able to generate profits. 

There is enough cash in the company and good prospects for growth in the future.

It is a well-managed organisation and believes in quality, equal employment opportunities, and good remuneration practices. It has many shareholders who prefer to receive a regular income for their investments.

It has taken a loan of ₹ 50 lakhs from ICICI Bank and is bound by certain restrictions on the payment of dividends according to the terms of the loan agreement.

The above discussion about the company leads to various factors that decide how much of the profits should be retained and how much should be distributed by the company.

Quoting the lines from the above discussion, identify and explain any four such factors.

Case Study 20

‘Sarah Ltd.’ is a company manufacturing cotton yarn. It has been consistently earning good profits for many years. This year too, it has been able to generate enough profits. 

There is enough cash in the company and good prospects for growth in the future. 

It is a well-managed organisation and believes in quality, equal employment opportunities, and good remuneration practices. 

It has many shareholders who prefer to receive a regular income from their investments.

It has taken a loan of ₹40 lakh from IDBI and is bound by certain restrictions on the payment of dividends according to the terms of the loan agreement. 

The above discussion about the company leads to various factors that decide how much of the profits should be retained and how much should be distributed by the company.

Quoting the lines from the above discussion, identify and explain any four such factors.

Case Study 21

Mr. Shah is the owner of Shah Marble Ltd. Within a short span of time, the company could generate cash flows from operations to meet its cash payment obligations, but also create a sufficient buffer. 

The company is on the growth path, and a new brand of marble is going to be brought in by the Italian marble sold by Shah Marble Ltd. 

To meet the increasing demand, Mr. Shah planned to expand his business by acquiring a mine. This required an investment of ₹ 120 crore. 

To seek advice on the matter, he called his financial advisor, Mr. Seth, who advised him to go for a judicious mix of equity (40%) and debt (60%).

Mr. Shah suggested that he take a loan from a financial institution, as the cost of raising funds from such a financial institution is cheap. 

He also opined that this will increase the financial risk but will also raise the return to equity shareholders. 

He also assured that the issue of debt will not dilute the control of existing shareholders.

He also apprised that interest on a loan is a tax-deductible expense and brings down the tax liability.

After due deliberations with Mr. Seth, Mr. Shah decided to raise funds through debt. Debenture financing is not very expensive.

  1. Identify and explain the concept of financial management as advised by Mr. Seth in the above situation.
  2. State any four factors affecting the concept as identified in part (i) above, which have been discussed between Mr. Shah and Mr. Seth.

Case Study 22

Mania Industries Ltd manufactures steel. Its plants are located in Gujarat. It produces around one million tonnes of steel every year. 

It has outgrown competition and is planning to expand the capacity of the existing steel plants. It will require ₹1,500 crore of Fixed Capital and an additional ₹500 crore as Working Capital to match the capacity of the capital. 

The company is considering the use of debentures for raising the debt by the debentures of 1,540 crore.

The capital structure at present comprises equity only. The finance manager of the company suggested that since the stock markets are undergoing a bearish phase, the company should issue debentures.

  1. Is it justified to raise funds by issuing debentures? Give a reason.
  2. Explain the impact of the issue of debentures on the risk faced by the company.
  3. Explain the impact of the cost of debt and cost of equity on the capital structure of the company.

Case Study 23

ABC Tech Solutions is a growing software company that specialises in developing innovative technology solutions for various industries. 

The company recently decided to expand its operations by building new development centers in different cities. 

To set up this center, ABC Tech Infrastructure needs additional investment in fixed assets like computers, networking equipment, and office infrastructure.

While planning this expansion, the management faces the challenge of determining how much fixed capital would be required in the short term as well as beyond a long-term perspective. 

The CEO, Mr. Rajesh, emphasised the importance of efficient asset utilisation to ensure that available capital is not blocked and hampers future growth. 

Additionally, the finance team must carefully consider the allocation across these long-term investments to facilitate the organisation’s smooth functioning.

The management analyses the factors while setting up the new office, needs to quantify the costs of acquiring fixed assets and the company’s future expansion plans. 

They ensure they allocate sufficient capital. 

Mr. Rajesh ensures the importance of managing fixed capital to ensure that assets are used efficiently, financial charges are minimized, and the company can remain competitive in the market.

  1. Give any four reasons why management of fixed capital is important.
  2. State any two factors that affect the requirement of fixed capital.

Case Study 24

Vikram Automobiles Pvt. Ltd., a leading manufacturer of electric two-wheelers in India, has witnessed an extraordinary surge in demand over the past 12 months. 

“It’s been an exciting period for us, with sales hitting record levels,” says the CFO of Vikram Automobiles.

The company caters to the growing urban population eager to shift to eco-friendly modes of transport.

Interestingly, working capital management has been smooth, with a turnover of trade receivables averaging between 10 and 20 days.

One of the key reasons working capital remained in control was the pre-orders for their new range of electric scooters. 

Customers had placed advanced orders months in advance, with deposits paid, which helped boost the company’s cash flow.

The quick turnover of finished products and the company’s efficient inventory management kept storage costs low. 

“As soon as the scooters are manufactured, they are immediately shipped to dealers, keeping inventory at minimal levels,” said the CFO.

Moreover, favourable banking relationships further supported the company’s strong cash flow position, aiding in efficient working capital management.

  1. Explain the concept of working capital.
  2. Identify and explain any four factors that affect the requirement of working capital.

The End

Thursday, October 30, 2025

CBSE Class 12th Business Studies Worksheet - W5a

Free Business Studies - Class 12th (CBSE) - Worksheet - W5a - Organising

Are you in CBSE Class 12th and want to practice more case studies regarding Chapter 5: Organising?
For that matter, we are here to assist you.
On this page, you can find several case studies (short and long) for practice and solve them. The first section is for short case studies, followed by long case studies.
Here are the quick details:
  • Subject: Business Studies
  • Class: 12th (CBSE)
  • Chapter Name: Organising
Below is the content pattern:

CBSE Business Studies Case Studies for Chapter 5: Organising

Short Case Studies

Case Study 1​

A company named ‘Mahi Cycles’ has decided to start a new branch in the Middle East.​​ The company has recognised the amount of work to be done in a number of hours.​​
The company has found out that it will take 25,000 hours of manual work and has subsequently divided the number of hours for different operations.​​
Then very methodically, responsibility for the recognised amount of work was given to different individuals according to their c​​apabilities.
  1. Which function of management is highlighted above? State its meaning.​
  2. Identify and explain the two steps of this function indicated above.

Case Study 2​

Rakesh and Mamnaa Ltd. is manufacturing baby bottles and has separate departments of production, sales, and finance. Which type of structure would you suggest to them, and state some of its advantages?​

Case Study 3​

Reena Industries is a company that manufactures office furniture. The company chose to diversify its operations to improve its growth potential and increase market share. After evaluating the various alternatives, Sukhvinder, the Managing Director of the company, decided that they should add ‘Home Interiors and Furnishings’ as a new line of business activity.​
  1. Name and explain the framework that the diversified organisation should choose. Give one reason in support of your answer.​
  2. State any two limitations of this framework.

Case Study 4​

Neha runs a factory where she manufactures shoes. 
The business has been doing well, and she intends to expand by diversifying into leather bags as well as western formal wear, thereby making her company a complete provider of corporate wear. 
This will enable her to market her business unit as the one-stop for working women.​
Which type of structure would you recommend for her expanded organisation and why?

Case Study 5​

Some college friends together set up a multi-product company. Their company makes five different products. Three products of the company have been successfully launched in the market. But the company has not succeeded in launching the fourth and fifth products in the market.​
  1. What sort of organisational structure, in your view, might have been adopted by the company?​
  2. Explain any two advantages of the structure identified in (i).

Case Study 6​

DEF Ltd., a leading manufacturing company, has a strict hierarchy where every employee has a clear set of duties and responsibilities.​
The company follows a formal structure, where communication flows through established channels and every employee knows their role within the organisation.
This formal structure has led to a high degree of discipline and unity in operations, with well-defined rules and procedures being strictly adhered to.​
  1. Identify the type of organisation being used by DEF Ltd.​
  2. State three benefits of this organisation.

Case Study 7

Mr. Atul is the owner of a garment manufacturing company. He finds the spreading of the message in his organisation a problem, as a lot of time is taken. 
On many occasions, he tried to bring different equipment and software systems to increase the speed of spreading the message. 
In the month of February this year, a new type of machine was installed in the production department.
He wanted to have a candid opinion about the utility of the machine from the employees, but no one had the courage to tell him about the flaws of the machine on his face. 
After three months, when there were shortcomings in the production of garments, he realised his limitations.​
With the passage of time, he found the motivation level of employees too low. 
Many of the employees and workers were new and found the place unfamiliar, and didn’t have friends, which resulted in a lowering of production.​
  1. What would you suggest to Mr. Atul in this scenario?
  2. Identify the three problems in the above case and give the outcomes of your solution given in point (i) above on these problems.

Case Study 8​

Manoj Ghai was the managing director of a restaurant in Lucknow called ‘Kitchen Hues’. 
The restaurant was doing well, and the volume of work started increasing slowly and steadily. Manoj Ghai was not able to manage all the work on his own. 
The increasing magnitude of work made it impractical for him to handle it all by himself. Moreover, his objective is to open more branches of this restaurant at different places. 
He appointed Nikhil Gupta as the general manager of ‘Kitchen Hues’ and gave him the authority to manage his subordinates and to take action within the scope of his position.​
For the smooth running of the restaurant, he also gave him the authority to hire and train the staff as per the requirements. 
Manoj Ghai was satisfied with the work of Nikhil Gupta and was able to open other branches of the restaurant at Agra and Kanpur, as well.​
  1. Identify the concept followed by Manoj Ghai, which helped him to open the new branches of the restaurant.​
  2. Also, explain briefly the two points of importance of this concept identified in (i).

Case Study 9​

The production head of Ahanya Limited, an organisation that manufactures generators, has been asked to achieve a target of 100 generators per day. 
He delegates the task to 12 production managers working under him. Seven of the production managers could not achieve their respective targets. Is the production head responsible? 
Explain in brief the relevant principle in support of your answer.

Case Study 10​

The directors of Alfa Ltd., an organisation manufacturing computers, have asked their production manager to achieve a production target of 150 computers per day. 
The production manager has asked his foreman to achieve this target, but he did not give him the authority for the requisition of tools and materials from the stores department. The foreman could not achieve the desired target.​
Can the directors blame the production manager, and can the production manager blame his foreman for not achieving the target? Discuss.

Case Study 11​

Team Leader: “I have so many tasks piling up, and it feels like there is no end to it.”​
Team Member: “Maybe I can assist you with some of the tasks. It might ease your burden.”​
Team Leader: “I appreciate the offer, but I prefer to handle everything myself. I’m not sure if anyone else can do it the way I need it done.”​
Team Member: “I understand, but I’m confident I can complete the tasks efficiently.”​
Team Leader: “I’m sorry, but I’d rather manage it all on my own. Thanks, though.”​
  1. Which element is missing in the above conversation, as reflected by the team leader’s attitude?​
  2. Do you think this element is important? Give any three reasons.

Case Study 12​

Rahul Gupta started a telecommunication company, ‘Essence Ltd.’, to manufacture economical mobile phones for the Indian rural market with 15 employees. 
The company did very well in its initial years. As the product was good and marketed well, the demand for its products went up. 
To increase production, the company decided to recruit additional employees. 
Rahul Gupta, who was earlier making all decisions for the company, had to selectively delegate the authority.​​
He believed that subordinates are competent, capable, and resourceful and can assume responsibility for the effective implementation of their decisions. 
This paid off, and the company was not only able to increase its production but also expand its product range.​​
  1. Identify the concept used by Rahul Gupta through which he was able to steer his company to greater heights.​
  2. Also, explain any three points of importance of this concept.

Case Study 13​

Arnav Electricals is a company that has, in recent years, adopted the decentralised method of running the organisation. 
The company has grown dynamically, and the decisions taken by the lower-level management are implemented, which saves time as people taking decisions are near the point of action. 
However, recently, the chairman of another manufacturing firm, who is also a good friend of Arnav, the chairman of Arnav Electricals, met him and asked him how he could evaluate the performance of employees in case he goes for a decentralised approach.​
A few hours later, Arnav’s secretary calls him and asks for the list of work to be done the next day. He narrates to him all the important tasks to be executed.​
  1. Which importance of decentralisation has been highlighted in the above case?​
  2. What advice do you think Arnav should give to have better control in a decentralised organisation?

Long Case Studies

Case Study 14​

Priya works as a project manager in an event planning company. She has been assigned the responsibility of overseeing a large-scale fashion show for one of the firm’s prestigious clients.​
To ensure the event’s success, Priya carefully analyses the different tasks involved and organises the work into specific task groups, such as the logistics team, design team, and hospitality team.​
To ensure smooth coordination both within and among the teams, she appoints a leader for each group.
Every team member is instructed to report to their respective leader, and all team leaders are expected to follow Priya’s overall directions.​
  1. Identify the management function Priya is performing.​
  2. Briefly describe the various steps involved in the performance of the management function identified in point (i) of the question.

Case Study 15

Riya Kapoor was the Chief Operating Officer of ‘Fresh Organics’, a company specialising in organic food products. 
Fresh Organics offered a wide range of organic fruits, vegetables, and other food items. Riya Kapoor ensured that the company’s operations were efficient and organised by grouping work according to specific functions such as production, marketing, finance, and human resources. 
Each department had specialised tasks and was headed by an expert in that particular area.​​
This structure helped Fresh Organics streamline its operations, resulting in high productivity and efficiency. 
The marketing department, for example, was able to focus entirely on market research and promotional activities, leading to an increase in brand awareness. 
The production department, on the other hand, ensured that the quality of the products remained top-notch, as they could focus solely on manufacturing processes.​​
However, as Fresh Organics grew, the company faced new challenges. The departments started working in silos, and the marketing team often had conflicting priorities. 
The production and marketing teams had conflicting priorities, which resulted in delays in launching new products. 
Additionally, the rigid departmental boundaries made it difficult for the company to adapt quickly to market changes, such as the sudden demand for ready-to-eat organic meals.​​
  1. On the basis of the above paragraph, identify the type of organisational structure adopted by Fresh Organics.​
  2. Explain three benefits of this structure as discussed in the case.​
  3. Explain two drawbacks of this structure as discussed in the case.

Case Study 16​

‘Health Relax Ltd.’ is one of India’s leading consumer healthcare brands in diagnostic services. It has an integrated nationwide network of diagnostic centres. 
The company was exploring new avenues for its expansion. The top-level managers analysed the business environment and found that since 2023 was the International Year of Millets, it was expected that the global demand for millets in the next two years would grow by around 5% annually. 
India, being one of the leading producers and exporters of millets, realised that there was a great business opportunity in the millet industry. 
The Board of Directors of the company had decided to move into the business of selling bread, noodles, and dosa mix made of millets.​​
The company had to restructure itself. It diversified into varied product categories and created a structure comprising separate business units. Each unit had a manager responsible for performance who had authority over the unit.​​
Manpower was grouped on the basis of the different products manufactured​​.
  1. Identify the type of organisational structure of Health Relax Ltd. after restructuring and give its meaning.​
  2. Briefly explain any two advantages and two disadvantages of the type of organisational structure identified in point (i) of the question.​

Case Study 17​

ABC Corporation, a multinational company operating in the technology sector, specialises in developing software solutions for various industries, including finance, healthcare, and retail.​
With a global presence, the company has grown rapidly over the past decade, expanding its operations into multiple countries.​
In response to its increasing complexity and the need for more efficient management of diverse product lines, ABC Corporation adopted a suitable organisational structure.​
This structure is characterised by the creation of separate divisions based on product lines and geographic regions.​
Each division operates as an independent entity with its own set of functions, including marketing, sales, R&D, and customer service.​
The company’s organisational chart shows several key divisions:​
  • The North American Division is responsible for the company’s operations in the United States and Canada.​
    This division handles all aspects of product development, marketing, and sales specific to North American clients.​
  • The European Division manages the company’s operations across European countries.​
    It tailors products and marketing strategies to meet the needs of the diverse European market.​
  • The Asia-Pacific Division focuses on the Asia-Pacific region, which includes countries like China, Japan, and India.​
    This division oversees regional market demands and coordinates local operations.​
  • Healthcare Solutions Division Specialises in software products tailored specifically for the healthcare industry.​
    This division is responsible for developing industry-specific solutions and managing relationships with healthcare clients globally.​
  • Financial Services Division Dedicated to providing software solutions for the financial sector.​
    This division manages client relationships and product development for financial institutions worldwide.​

Each division has its own head who reports directly to the company’s CEO.​ 

This set-up allows each division to operate with a degree of autonomy, making decisions that best suit their specific market or product line.​

It facilitates a more focused approach to managing diverse product lines and regions, enabling quicker decision-making and more effective responses to market changes.​

However, this structure also presents challenges since each division operates somewhat independently, which can lead to duplication of efforts and a lack of standardisation across the company.​

Coordination between divisions can sometimes be complex, as each division prioritises its own goals and objectives.​

  1. Identify the organisational structure of ABC Corporation.​
  2. State the meaning of the organisational structure identified in (i).​
  3. How does this structure differ from a functional structure?

Case Study 18​

A company manufacturing sewing machines, set up in 1945 by the British promoters, follows a formal organisational culture in totality.​
It is facing a lot of problems with delays in decision-making.​
As a result, it is not able to adapt to a changing business environment.​
The workforce is also not motivated, since they cannot address their grievances except through formal channels, which involve red tape.​ Employee turnover is high.​ Its market share is also declining due to changed circumstances and the business environment.
  1. You are to advise the company with regard to changes it should bring about in its organisational structure to overcome the problems faced by it​.
  2. Give reasons in terms of the benefits it will derive from the changes suggested by you.

Case Study 19​

Rewton Ltd. was a reputed computer software company providing unique software all over India.​ The turnover of the company was very high, resulting in good profits.​
The chief executive officer, Vihanan, was very strict and disciplined.​
He specified the boundaries of authority and responsibility for achieving organisational goals.​
There was systematic coordination among the various activities and specific relationships among various job positions.​
The company provided facilities like a canteen, a gym, a library, a music room, and a rest area for its employees, which they could use during rest intervals.​
Using these facilities, the employees developed friendships and discussed not only their personal, social, and emotional issues, but also the official ones.​
The general manager was of a different view.​
He told the chief executive officer that there was no use providing these facilities to the employees, as it is an extra financial burden on the organisation, on one hand, and on the other, it encourages groupism, and whenever any change is required in the organisation, they all resist.​
He suggested that they should do away with these facilities.​
But the chief executive officer, Vihanan, explained to the general manager that this type of social interaction is necessary and is in the best interest of the organisation.​
The interaction among people at work gives rise to a network of social relationships among employees and these networks.​
  1. Identify and explain the type of organisation whose existence the chief executive officer felt was necessary.
  2. State any two reasons due to which the general manager felt that there was no use of the type of organisation identified in  point (i) above.

Case Study 20​

Nisha and Arjun had always been passionate about eco-friendly fashion and wanted to create a business that promoted sustainable clothing. 
They founded ‘EcoThreads’, a company dedicated to selling clothing made from organic and recycled materials. Initially, they handled all the operations from their small office, making decisions about design, production, marketing, and sales.​
However, as their business grew, they realised that centralising all the decision-making was slowing down their operations. 
They needed to respond quickly to market demands, and it became clear that they couldn’t manage everything on their own. Recognising this, they decided to decentralise the decision-making process by empowering different departments within the company.​
They appointed a design team to independently create new clothing lines based on market trends, a production team to manage manufacturing, and a marketing team to handle customer engagement and sales strategies.​
This allowed each department to make quick decisions without waiting for approval from the founders.
As a result, ‘EcoThreads’ was able to release new collections faster, improve its supply chain efficiency, and tailor their marketing strategies to specific customer segments.​
In just a few months, their sales increased significantly, and they expanded their market reach to include international customers.​
Quoting lines from the above paragraph, identify and explain the concept discussed in the case.​
Also, state reasons why it is important to adopt this concept.

Case Study 21​

A company X Ltd. manufactures cosmetics, which have enjoyed a pre-eminent position in business, and has grown in size. Its business was very good till 1991.​
But after that, a new liberalised environment has seen the entry of many MNCs in the sector. As a result, the market share of X Ltd. has declined.​
The company had followed a very centralised business model with directors and divisional heads making even minor decisions.​
Before 1991, this business model had served the company very well, as consumers had no choice. But now, the company is under pressure to reform.
  1. What organisation structure changes should the company bring about in order to retain its market share?​
  2. How will the changes suggested by you help the firm? (Keep in mind that the sector in which the company is FMCG.)

The End

Monday, October 27, 2025

CBSE Class 11th Business Studies Test - t7b

Free Business Studies - Class 11th (CBSE) - Test - t7b - Sources of Business Finance

Dear class 11th students,
Prepare yourself for your examination by clearing your concepts regarding “Chapter 7: Sources of Finance”.
Therefore, our team has developed an exclusive test that students can solve and gain more knowledge about the topic.
Here are the quick details:
  • Subject: Business Studies
  • Class: 11th (CBSE)
  • Chapter Name: Sources of Business Finance
  • Marks: 40​
  • Time: 1.5 hours

CBSE Class 11th Test

Q1. Debenture holders are called: (1 Mark)
  1. Employees of the Company
  2. Owners of the Company
  3. Creditors of the Company
  4. None of the above.
Q2. Who among the following are called owners of the company? (1 Mark)
  1. Debenture holders
  2. Employees
  3. Directors
  4. Equity shareholders
Q3. The most dependable source of funds is: (1 Mark)
  1. Equity share
  2. Preference share
  3. Public deposits
  4. Retained earnings
Q4. Ploughing back of profits is also referred to as __________ profits. (1 Mark)
Q5. Payment of dividends on shares is: (1 Mark)
  1. Compulsory
  2. Voluntary
  3. Rarely
  4. None of the above
Q6. Loans given by commercial banks are generally: (1 Mark)
  1. Short-term
  2. Medium-term
  3. Long-term
  4. None of the above
Q7. Which of the following businesses requires a higher amount of working capital? (1 Mark)
  1. Figure A
  2. Figure B
  3. Both A and B
  4. None of these
Q8. Vinita is the finance manager of Kipla Pharma Co. As the company wants to import a piece of new machinery from Japan for its expansion, the capital requirements for the same are estimated to be ₹ 5 crore. Vinita reported that the company is not in a position to bear the extra burden of paying interest to the company, so the company should use its own capital sources rather than borrowed capital. The board of directors is confident about the sales turnover and cash flow position of the company in the coming years and supports the borrowed capital source of raising capital. The company is also considering using retained earnings for the same.
Name the source of owned capital that is available free of cost. (1 Mark)
  1. Equity shares
  2. Preference shares
  3. Retained earnings
  4. Bonds
Q9. Read the following statements—Assertion (A) and Reason (R). (1 Mark)
Choose one of the correct alternatives given below. (1 Mark)
  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.
  • Assertion (A): ICICI assists the creation, expansion, and modernisation of industrial enterprise in the private sector only. (1)
  • Reason (R): ICICI is meant to assist industries in both the public and private sectors.
Q10. Match the statement given under Column I with the correct option given under Column II: (1 Mark)
Match the statement given under Column I with Column II
Column I Column II
A. Equity shares (i) Charge against assets of the company
B. Preference shares (ii) Fixed rate of dividend
C. Debentures (iii) Irredeemably
  1. (A-i) (B-iii) (C-ii)
  2. (A-ii) (B-i) (C-ii)
  3. (A-iii) (B-ii) (C-i)
  4. (A-i) (B-ii) (C-iii)
Q11. Identify and explain the source of finance highlighted in the following cases: (3 Marks)
  1. It facilitates the purchase of goods and services without making immediate payment.
  2. It refers to that part of profits which is kept as a reserve for use in the future.
  3. This source has certain characteristics of both equity shares and debentures.
  4. This source is arranged through brokers, and the rate of interest is higher than that of a bank.
  5. It is also known as ploughing back profits.
  6. This short-term source can be issued only by financially sound and highly creditworthy firms.
  7. It is a permanent source of capital and is not redeemed during the lifetime of the company.
Q12. Ajay was not happy with his government job due to political interference and red tape in his department. He decided to take retirement under the Voluntary Retirement Scheme of the government.
On his retirement, he got some amount of money in the form of gratuity and provident fund, and plans to invest in securities where he can get regular returns with ownership rights.
You, being the financial market expert working for ‘Mitra Financial Advisors, OPC (Private Limited)’ are required to advise him on the following issues: (3 Marks)
  1. Which type of security will you suggest to Ajay?
  2. State two benefits of such securities for the issuing company.
Q13. How would you differentiate between Equity shares and Preference shares? (3 Marks)
Q14. Shiv Sales Pvt. Ltd. owns the agency of different food products, which sells goods of different brands to retailers after purchasing them from several companies. It purchases almost all goods for cash, while it sells on credit for one month. 
So the company keeps struggling with short-term finance. To overcome this problem, the company’s finance department held a meeting. 
The chairperson of the meeting asked the members to express their views on the solution of this problem. 
The first person said, ‘We should use a source of finance which does not involve any bureaucracy and legal problems, and the market of which remains stable’. 
The view of the second person was that the company should buy goods on credit. The third person’s opinion was that the company needs cash credit and overdraft. 
Therefore, the source of finance should be selected considering this fact. 
The chairperson of the meeting listened to the suggestions of all kinds and, to make the final decision, asked them to present at a meeting next week.
Identify and explain the sources of finance as suggested by different persons by quoting the lines. (4 Marks)
Q15. A public limited company decided to borrow additional funds. The management of the company is not interested in dilution of control. (5 Marks)
  1. Suggest a suitable type of source of funds for raising the funds.
  2. State any four merits.
Q16. Sanjoli and some of her friends jointly set up ‘Tirmurti Limited’. The business of their company was to manufacture blankets at a low rate. 
At the time of setting up the company, they issued 25,000 shares of the face value of ₹ 10 each. In this way, they started their business with a capital of ₹ 2,50,000. 
Before collecting the money from the public, they decided that they would issue such a security that would not allow the company to incur any fixed financial charges. 
Also, they wished to have the capital from such a source as should enable the company to keep the rate of return up all the time. 
To collect the capital, Sanjoli and her friends issued a prospectus. Through it, they told the public that in the coming years, the company expected to earn a big profit and that the price of its shares would be very high. 
As a result, the investors would be able to earn extra profit. 
In the prospectus, it was also said that the company would organise its meetings from time to time and that the investors would be invited to these meetings. 
They would have the right to cast their votes in these meetings. 
The company started earning more profit than what had been proposed to the investors. (5 Marks)
  1. Identify the type of shares issued by ‘Trimurti Limited’.
  2. Quoting the relevant lines, write about the four advantages to Trimurti Limited from the shares identified in para (i).
Q17. FSN Industries Limited manufactures heavy machines for small-scale enterprises in India. It enjoys excellent earnings with a sound capital structure position in the industry. 
Capital employed of the company consists of ₹ 50 crore as equity and ₹ 20 crore as long-term borrowings (debt). 
Inspired by the ‘Make in India’ campaign, which is directed to provide ease in doing business, it wishes to spread its business operations to overseas countries by raising ₹ 10 crore to install a new manufacturing unit in rural areas of Nagaland, where the rural women are to be trained under the ‘Skill India Mission’. (6 Marks)
  1. As a financial advisor, you are asked to suggest which source of finance the company should choose to raise further funds. Explain the source.
  2. State the reason for selecting the source of finance under part (i).
  3. Differentiate between shares and debentures on the basis of:
    • Nature
    • Voting rights
    • Redemption

The End

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