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CBSE Sample Papers for Class 12 Business Studies Paper 2 are part of CBSE Sample Papers for Class 12 Business Studies Here we have given CBSE Sample Papers for Class 12 Business Studies Paper 2.

CBSE Sample Papers for Class 12 Business Studies Paper 2

Students who are going to appear for CBSE Class 12 Examinations are advised to practice the CBSE sample papers given here which is designed as per the latest Syllabus and marking scheme as prescribed by the CBSE is given here. Paper 2 of Solved CBSE Sample Papers for Class 12 Business Studies is given below with free PDF download solutions.

Time: 3 Hours
Maximum Marks: 80

General Instructions

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

Question 1:
Aircel started an earnest awareness campaign ‘Save our Tigers’. The campaign’s main agenda was to conserve tigers. This campaign highlights which objective of management?

Question 2:
Some products have certain unique features. They attract significant groups of buyers. Identify the kind of product.

Question 3:
Sunrise Ltd intends to achieve a return of 20% on investment. What type of plan is it?

Question 4:
The employees of Murfi Wear Ltd take part in hockey matches on Sunday. Name the type of organisation formed.

Question 5:
Priyanka wants to buy a gold ring. As an aware customer, how can she be sure about the quality of gold ring, which she is going to buy?

Question 6:
However qualified, experienced and learned a teacher may be, he/she is required to give a demo and teach a class before being selected. What kind of test is it?

Question 7:
XYZ Services was looking to hire 100 new employees in the month of February, 2018. The human resource department is asked to achieve this target with the help of operations department. By the end of February, 2018, the target could not be achieved. For this HR department is blaming operations department and vice-versa. Which concept is missing in the above paragraph?

Question 8:
Give the meaning of capital market.

Question 9:
Differentiate between management principles and values on the basis of mode of formation and nature.

Question 10:
Nature of money market can be well explained with the help of its features. State any three such features of money market.

Question 11:
In a manufacturing unit which is located in the remote town area, a labourer gets ₹ 400 after completing 100 units of product in a day. Another gets ₹ 500 after completing 80 units in a day.
(i) Which principle is violated in the given case?
(ii) State some of its adverse effects.

Question 12:
“Packaging has acquired great significance in the marketing of goods.” In the light of this statement, explain any three functions of packaging.

Question 13:
If planning involves working out details for the future, why does it not ensure success?

Question 14:
XYZ Co produces leather purses and they are using animal’s skin as a raw material.

1. Which values do you find disturbing in the above para?
2. Find out the component of business environment which is being overlooked?

Question 15:
(i) Name the organisation which has the benefit of easy to fix responsibility.
(ii) Name the type of organisation which does not have pre-determined objectives.
(iii) Differentiate between formal and informal organisation

Question 16:
“Management is skillful and personal application of existing knowledge to achieve desired results.” Explain.

Question 17:
Khushi purchased some household goods from a general store. After reaching home she found a face cream in her merchandise, for which she has not been billed. After checking the date of expiry and other details, she started using it. Her face burnt due to the use of cream.

1. Can Khushi file a complaint? Justify your answer.
2. Under Consumer Protection Act, 1986, who can file a complaint?

Question 18:
You are a management guru. In your opinion, is controlling the last function or the beginning of the process of management?

Question 19:
A company X Ltd is setting-up a new plant in India for manufacturing auto components. India has a highly competitive and cost effective production base in the sector. Many reputed car manufacturers source their auto components from here. X Ltd is planning to capture about 40% of the market share in India and also export to the tune of atleast $5 million in about 2 years of its planned operations. To achieve these targets, it requires a high trained and motivated work force. You have been asked by the company to advise it in this matter, which function of management helps in obtaining right people and putting them on the right place/jobs? Explain any three benefits of this function.

Question 20:
What do you mean by strategy? Explain its features.

Question 21:
KAY Ltd is a company manufacturing textiles. It has a share capital of ₹ 60 lakh. In the previous year its earning per share was ₹ 0.50. For diversification, the company requires additional capital of ₹ 40 lakh. The company raised funds by issuing 10% debentures for the same. During the year, the company earned profit of ₹8 lakh on capital employed. It paid tax @ 40%.

1. State whether the shareholders gained or lost, in respect of earning per share on diversification. Show your calculations clearly.
2. Also, state any three factors that favour the issue of debentures by the company as part of its capital structure.

Question 22:
Timely Ltd is a manufacturer of premium wall clocks. The company has been doing extremely well and has been able to carve a niche in the market. The company recently decided to go global. To achieve the above objective, the company decided to increase its production to 30,000 units per month. But, after two months, the management observed that only 45,000 units were manufactured. Company is * opting for a good control system in order to achieve the targets on time.

1.  In context to this, give some of the advantages of controlling.
2. State the values that will be served by an effective control system.

Question 23:
Motivation refers to the way in which urges, desires, aspirations, strivings or needs direct, control and explain the behaviour of human beings. It is something which moves the person to action and continues him in the course of action already initiated. With reference to this, explain the process of motivation.

Question 24:
Dev Ltd is a company engaged in the production and distribution of films. The company is an established name in Bollywood. Now the company wants to enter in the regional cinemas also and for this, they are now targeting the South Indian Film Industry. They have launched three films in South with leading actors and actresses and even managed to sign Rajnikanth. To fund its projects, the management takes a decision to raise money for long-term capital needs of business from certain sources.

1. State the different sources of long-term capital.
2. Decision to raise money for long-term capital needs is affected by several factors. Discuss any five such factors.

Question 25:
“Generally, consumers prefer to buy goods directly from the producers but it is not always possible.” Explain four different factors responsible for this.

Answers

Answer 1:
This campaign highlights social objective of management.

Answer 2:
These products are known as speciality products.

Answer 3:
It is an objective plan.

Answer 4:
Informal organisation is formed by the employees of Murfi Wear Ltd.

Answer 5:
She should check the BIS’s (Bureau of Indian Standards) ‘Hallmark’ on the ring.

Answer 6:
Trade test, which is used to evaluate candidate’s professional efficiency.

Answer 7:
In the given paragraph, coordination is missing between the HR department and the operations department. It affects the organisational value of cooperation among different departments.

Answer 8:
Capital market refers to facilities and institutional arrangements through which long-term funds, both debt and equity are raised and invested.

Answer 9:
Difference between management principles and values are:

Answer 10:
Features of money market are as follows :

1. It deals in short-term monetary assets, whose period of maturity is upto one year.
2. It is a market where low risk, unsecured and short-term debt instruments are issued and actively traded everyday.
3. Liquidity is provided by the Discount and Finance House of India, specially formed for this purpose.

Answer 11:

• Principle of equity is violated.
• Adverse effects are:
  • It creates dissatisfaction among the employees.
  • Skilled workers lose confidence in the organisation.
  •  It emerges poor relations between workers and managers

Answer 12:
Packaging refers to the act of designing and producing the container or wrapper of a product.
Three functions of packaging are as follows:

1. Product Identification Packaging helps a product to be identified by the customer, e.g. Maggi Noodles in yellow colour, Lays in blue, green and red colour can be identified easily.
2.  Product Protection Packaging protects the contents of a product from spoilage, breakage, leakage, damage, etc. e.g. Air tight containers and packets are used for biscuits, tea, etc.
3. Product Promotion Packaging promotes the sales of the product. Package is the buyer’s first encounter with the product and is capable of attracting or repulsing the buyer. The colourful attractive packing of the product may induce the customer to buy it. e.g. Ferrero Rocher Chocolates, Calcium Sandoz, etc

Answer 13:
The success of an enterprise is possible only when plans are properly made and then implemented. In order to achieve goals, plans need to be translated into action or else, they become meaningless. Managers usually rely on previously tried and tested successful plans and like to use them in every similar condition/situation. It is not necessary that just because the plan has worked before, it will work again. There are so many unknown factors to be considered. The kind of complacency and false sense of security that plans provide, may actually lead to failure instead of success.

Answer 14:
(i) The values overlooked by the company are :
(a) Conservation of wildlife and natural heritage of fauna.
(b) Religious sentiments of the people/society.

(ii) Social component of business environment is being overlooked in this case. Social environment of business includes the social forces like customs and traditions, values, social trends, society’s expectations from business, etc.

Answer 15:
(i) Formal organisation has the benefit of easy to fix responsibility.
(ii) Informal organisation does not have pre-determined objectives.
(iii) Difference between formal and informal organisation are:

Answer 16:
The above statement highlights the nature of management as an art, which is clarified by the following points:

1.  There is a lot of literature available in various areas of management like marketing, finance, etc which the manager needs to specialise in.
2. A manager applies scientific methods and body of knowledge to a given situation, issue or problem in his own unique manner.
3. A successful manager practices the art of management in the day-to-day activities of managing an enterprise based on studies, observation and experience.
   Thus, we can conclude that management is an art.

Answer 17:
(i) No, Khushi cannot file a complaint, as she is not a consumer under the Consumer Protection Act, 1986 because she has not paid any consideration for the face cream.

(ii) Under Consumer Protection Act, 1986, a complaint can be filed by:
(a) Any consumer.
(b) Any registered Consumer Association.
(c) Central or State Government.
(d) One or more consumers on behalf of numerous consumers.
(e) Legal heir or representative of deceased consumer.

Answer 18:
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.
In general, the process of management begins with planning and ends at controlling, but when a manager performs the function or steps of controlling, it is observed that the first step of controlling is setting standards. The controlling function finds out how far actual performance deviates from standards and analyses the corrective actions to be taken.
This process helps in formulation of future plans, thus becomes the premise of setting plans. Therefore, we can say it is the beginning of management process. Thus, it can be stated that, controlling function is both the beginning as well as the end of the management process.

Answer 19:
Staffing is that function of management which helps in obtaining right people and putting them on the right jobs.
Proper staffing ensures the following three benefits to the organisation:

1. Obtaining Competent Personnel It helps in discovering and obtaining competent personnel for various job positions in an organisation.
2. Higher Performance Staffing ensures high performance by putting right person on the right job.
3. Continuous Survival and Growth Proper staffing ensures continuous survival and growth of the enterprise through succession planning of managers.

Answer 20:
Strategies are general programmes of action towards the attainment of comprehensive objectives.
According to Allen, “Strategy is a unified, comprehensive and integrated plan designed to assure that the objectives are achieved.”

Features of strategy are as follows:

1. Strategy is flexible in nature. Changes can be incorporated, whenever required.
2. Strategy is formulated by top level management and its implementation is done by middle and lower management.
3. Strategy is formulated for allocation of resources necessary for achieving objectives.
4. Strategy is relative combination of actions. The combination is to meet a particular condition, to solve certain problems or to attain a desirable objective.

Answer 21:

Since, earning per share has fallen from 0.50 to 0.40, therefore the shareholders stand to lose on diversification.
Note In the absence of any information, shares are assumed to be of ₹ 10 each.

(ii) Three factors that favour issue of debentures by the company as part of its capital structure are :
(a) Debenture interest payable is a charge to the profits. Hence, a company stands to gain in terms of tax benefits.
(b) Issue of debentures help the shareholders of the company to gain through Trading on Equity’.
(c) Debenture is a cheaper source of finance as compared to equity.

Answer 22:
(i) Some advantages of good control system are as follows:

(a) Attainment of Organisational Objectives Budgeting as a system of control, focuses on specific and time bound targets. Thus, it helps in attainment of organisational objectives.
(b) Motivation to the Employees It is a source of motivation to the employees, who knows the standards against which their performance will be evaluated.
(c) Optimum Utilisation of Resources By allocating the resources according to the requirements of the different departments, it helps in optimum utilisation of resources.
(d) Budgeting Process It helps the management to learn from past experience. The management can
critically look at the success or failure of the past budgets and isolate errors, analyse their cause and establish steps to be taken to avoid repetition of such errors.

(ii) Values that can be served by good control system are as follows:
(a) Discipline (b) Orderliness (c) Efficiency/Increase in productivity

Answer 23:
Motivation process is based on unsatisfied human needs. It is as follows:
(i) An unsatisfied need of an individual creates tension which stimulates his or her drives.
(ii) These drives generate a search behaviour to satisfy such need.
(iii) When such need is satisfied, the individual is relieved from tension.
e.g. An employee has a need for promotion to a higher position. If this need is strong, it creates tension for the employee which stimulates his or her drives. Finally, he/she will fix it as his/her goal and search behaviour to reach the goal. If he/she succeeds in getting promotion (goal achievement), his/her need for promotion would be satisfied. This reduces his/her tension.

This process is explained with the help of a flow chart given below :

Answer 24:
(i) Sources of long-term capital are as follows:
(a) Equity shares
(b) Preference shares
(c) Debentures
(d) Long-term loans and advances
(e) Retained earnings

(ii) The following factors affect the financing decision :

• Cost The cost of all the sources of finance is different. The rate of interest on debt, fixed rate of dividend to be paid on preference share capital and the expectations of the shareholders on the equity share capital are in the form of costs. If the situations happen to be favourable, the benefit of cheap finance can be availed of by choosing debt capital.
•  Risk Debt capital is most risky and from the point of view of risk, it should not be used.
• Flotation Cost From the point of view of floating costs, retained profit is the most appropriate source. Therefore, its use should be made.
• Cash Flow Position If the cash flow position of the company is good, the payment of interest on the debt and the refund of capital can be easily made. Therefore, in order to take advantage of cheap finance, debt can be given priority.
• Level of Fixed Operating Costs
  In business, there are mainly two types of costs which are as follows:
  • Fixed Operating Cost e.g. Rent of the building, payment of salary, insurance premium, etc.
  • Fixed Financial Cost e.g. Interest on debt, etc.

If the level of fixed operating costs is in excess, it is better to keep the fixed financial costs at the minimum. Therefore, debt capital should not be used. On the contrary, if the level of fixed operating cost is low, the use of debt capital is more profitable.

Answer 25:
Generally, consumers prefer to buy directly from the producers but it is not always possible. Instead, consumers are supposed to take the help of channels of distribution, i.e. middlemen. In this channel, mainly agents, wholesalers and retailers are included.

Following four reasons are responsible for this are:
(i) Geographical Difference There are limited number of producers of any product while consumers are unlimited and scattered over a wide geographical areas. Hence, it is not possible to buy goods directly from the producers.
(ii) More Risk At the time of transportation of goods from one place to another, element of risk is always there. By using channel of distribution, such type of risk can be avoided.
(iii) Heavy Buying Costs It is a costly and difficult task to contact the producers directly.
(iv) Unavailability of Credit Facility Generally, it is not possible to have credit facility while purchasing directly from the producers.

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CBSE Sample Papers for Class 12 Business Studies Paper 1 are part of CBSE Sample Papers for Class 12 Business Studies Here we have given CBSE Sample Papers for Class 12 Business Studies Paper 1.

CBSE Sample Papers for Class 12 Business Studies Paper 1

Students who are going to appear for CBSE Class 12 Examinations are advised to practice the CBSE sample papers given here which is designed as per the latest Syllabus and marking scheme as prescribed by the CBSE is given here. Paper 1 of Solved CBSE Sample Papers for Class 12 Business Studies is given below with free PDF download solutions.

Time: 3 Hours
Maximum Marks: 80

General Instructions

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

Question 1:
Which principle of management is violated if an employee is asked to receive orders from two superiors?

Question 2:
The top management of ‘Raheja Ltd’ focuses on maintaining an effective two way communication with their employees. They aim to keep everyone well informed and involve employees in company’s activities and provide opportunities for them to give their feedback. What will the company achieve by following such a network of communication? Give any two points.

Question 3:
Banking sector reforms have led to easier credit terms and better services. This is an example of a key component of the business environment. Name this component.

Question 4:
Demonetisation is the act of stripping or discontinuing a currency unit of its status as legal. Why does demonetisation policy implement in a country?

Question 5:
What is the primary objective of financial management?

Question 6:
In Mumbai, Salman found impurities in a bottle of soft drink which he had bought. He approached the redressal forum. Which right is exercised by him?

Question 7:
Name the market where companies issue new securities.

Question 8:
What do you understand by the term recruitment?

Question 9:
What do you mean by informal organisation? State any two features of it.

Question 10:
Explain any three components of physical distribution.

Question 11:
Mr Giriraj Ajmera is working as a sales department head in ABC Ltd. Name the level of management at which he is working. Explain any two functions performed by him.

Question 12:
‘Drink Up’ and ‘Sweet Drink’ are two competing companies manufacturing aerated drinks. During the past financial year, Drink Up was able to produce 1,00,000 bottles at the cost of ₹5,65,000 and Sweet Drink was able to produce bottles at a cost of ₹3,54,375. Which company is more efficient?

Question 13:
Name the method of recruitment in the following cases:

1. A company get applications on and off even without declaring any vacancy. However, as and when the vacancy arises, the company makes use of such applications.
2. Recruitment by which most of the senior positions of the industry as well as commerce are filled.
3. Casual vacancies of unskilled or semi-skilled jobs when there is a rush of order or when some permanent workers are absent.

Question 14:
‘Dreamz House’ is a company engaged in developing and promoting housing projects. The total capital of the company is ₹75,00,000, out of which ₹30,00,000 has been raised from loans. Compute the following:

1. The debt-equity ratio of the firm
2. The percentage of debt in the total capital of the firm.

Question 15:
What is National Stock Exchange of India (NSEI)? Explain its various segments.

Question 16:
Nimisha entered into Big Bazaar and purchased the products as per her needs. The sales person did not force her either directly or indirectly to buy the products. Secondly, the big retail chain provides the products after taking into consideration the following factors:
(a) Health of the consumers
(b) Fitness of the products
(c) Quality of the product
(d) Proper quantity at reasonable prices
(e) Customs and traditions of the consumers, etc.

1. What values are cherished by an individual in the above case?
2. Why should producers consider the above mentioned aspects?

Question 17:
You are a consumer. As per your viewpoints, what is consumer protection? Also, state its three importance.

Question 18:
In the rainy season, the level of impurities in the water bodies tend to rise, leading to an increase in the number of cases of jaundice and hepatitis. Keeping this in mind, the court passed an order that all schools must have water purifiers for the school children, keeping in view the below stated reasons:

1. Society in general is more concerned about the quality of life.
2. Innovative techniques are being developed to manufacture water purifier at competitive rates.
3.  Incomes are rising and children at home are also drinking purified water.
4. The government is also showing positive attitude towards the water purifier business.

Identify the different dimensions of business environment by quoting lines from the above para.

Question 19:
“Staffing is the part of human resource management.” Discuss.

Question 20:
A company Ltd manufacturing cosmetics, which enjoyed a pre-eminent position in business, has grown in size. Its business was very good till 1991. But after that, new liberalised environment has seen entry of many MNC’s in the sector.

With the result, the market share of X Ltd has declined. The company 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 has no choice. But now, the company is under pressure to reform and decentralise.

1.  What do you understand by decentralisation? Can an organisation in general, be fully centralised or fully decentralised?
2. Explain any three advantages of decentralisation.

Question 21:
A stock exchange is an institution which provides a platform for buying and selling of existing securities. SEBI, as a watch dog performs various functions which protects the investors.

1. Explain the regulatory and protective functions of SEBI.
2. Name the values which SEBI strives to fulfil through its functions.

Question 22:
Discuss the importance of controlling.

Question 23:
ABC Ltd is facing a problem of declining market share due to increased competition in the market. In order to retain its share in the market, what logical steps should be followed by a manager?

Question 24:
Identify the principles of management violated in the following cases and explain them.

1. Manav, a manager, speaks to people at all levels, including his as well as other departments.
2. Manav, a manager, expects his subordinates to work for personal satisfaction and contentment, without any monetary reward.
3. Manav, a manager, expects that his subordinate produces instant results, without giving him sufficient time to settle in the new environment.
4. Manav, a manager, is not strict with his employees regarding timings and targets of work.

Question 25:
There are some barriers in communication which are concerned with encoding and decoding of message. Explain such barriers.

Answers

Answer 1:
Principle of unity of command is violated if an employee is asked to receive orders from two superiors.

Answer 2:
The company will have following achievements:

1. Good communication helps in the smooth functioning of the enterprise.
2. It increases managerial efficiency.

Answer 3:
This is an example of legal environment.

Answer 4:
Demonetisation policy is an attempt to make a cashless corruption free society and create a digital country.

Answer 5:
The primary objective of financial management is to maximise the shareholder’s wealth.

Answer 6:
Right to be heard is exercised by him.

Answer 7:
Companies issue new securities in primary market.

Answer 8:
Recruitment is the process of searching for prospective employees and stimulating them to apply for jobs in the organisation.

Answer 9:
Informal organisation is the system of social relationship among the members of formal organisation. It emerges on its own in a natural manner within the formal organisation structure.

Following are the features of an informal organisation:

1.  It reflects human or social relationships among people.
2.  It is unplanned and emerges spontaneously.
3. Members develop independent channels of communication.

Answer 10:
The three main components of physical distribution are explained below:

1. Order Processing A good physical distribution system provides an accurate and speedy processing of orders, in the absence of which goods would reach to the customer late or in wrong quantity, resulting in customer dissatisfaction.
2. Transportation It is one of the major elements in the physical distribution of goods as it carries goods and raw materials from the point of production to the point of sale.
3. Warehousing It refers to the act of storing and assorting products in order to create time utility. The basic purpose of warehousing is to arrange placement of goods and facilitates storing until the goods are sold.

Answer 11:
He is working at a middle level of management.
Functions performed by him are as follows:

1. Interpretation of policies framed by top management to lower level.
2. Recruiting and selecting the employees for their department.
3. Cooperating with other departments for smooth functioning.

Answer 12:
Cost per bottle of Drink Up = \(\frac { 5,65,000 }{ 1,00,000 }\) = ₹ 5.65
Cost per bottle of Sweet Drink = \(\frac { 3,54,375 }{ 67,500 }\) = ₹ 5.25
Since, cost per unit of Sweet Drink is less, therefore it is more efficient.

Answer 13:

1. Casual Callers Method In this method, company makes use of database of unsolicited applicants which are kept in file. Company recalls them to fill the current vacancies.
2. Advertisement Method This method is used to fill the most of the senior positions of the industry as well as commerce.
3. Direct Recruitment Method Through direct recruitment, casual vacancies of unskilled or semi-skilled jobs are filled, when there is a rush of order or when some permanent workers are absent.

Answer 14:
Total Capital of the Firm= ₹ 75,00,000
Debt = ₹ 30,00,000
∴ Equity = ₹ 45,00,000 (75,00,000-30,00,000)

Answer 15:
National Stock Exchange of India (NSEI) It is the latest, most modern and technology driven exchange. It was incorporated in 1992 and was recognised as a stock exchange in April 1993. It started its operations in 1994 in trading on the wholesale debt market segment.

Market Segments of NSEI The exchange provides trading in the following three segments:
(i) Wholesale Debt Market Segment This segment provides a trading platform for a wide range of fixed
income securities that include central government securities, treasury bills, state development loans, bonds issued by public sector undertakings, floating rate bonds, zero coupon bonds, index bonds, commercial paper, certificate of deposit, corporate debentures and mutual funds.

(ii) Capital Market Segment It provides an efficient and transparent platform for trading in equity, preference, debentures, exchange traded funds as well as retail government securities.

(iii) Future and Options Segment NSEI has also introduced trading in future and options contracts. This section provides us with an insight into the derivative segment of NSEI. Real time quotes and information regarding derivative products, trading systems and processes, clearing and settlement, risk management, statistics, etc are available here.

Answer 16:

1.  The value of freedom is cherished by an individual as she is purchasing the product as per her needs and nobody is forcing her to buy a particular product.
2. Producers should consider health, fitness, quality, quantity, customs and traditions, etc because it is essential for a business unit to consider the social aspects of business environment as the business exists in the society and it is the duty of a producer to produce the goods as per the needs and wants of the society. In order to survive in the long-run, these aspects should be considered.

Answer 17:
Consumer protection is a very wide term. It includes rights, responsibilities and various remedies available to consumers. It is not only beneficial for consumer, but it is equally important for businessman also.

The importance of consumer protection from the point of view of consumers are explained below:
(i) Consumer Ignorance In some countries like India, consumers are ignorant about the rights and reliefs which are available to them. Thus, it becomes necessary to educate them about the same, so as to achieve consumer awareness.

(ii) Unorganised Consumers Consumers need to be organised in the form of consumer organisations, which would take care of their interests. In India, we have consumer organisations and NGO’s, which are working in the field of educating consumers about their rights and promoting their interests.

(iii) Widespread Exploitation of Consumers In order to capture large market share, some traders, manufacturers and service providers are engaged in exploitative and unfair trade practices. Some of these are supply of defective and unsafe products, adulteration, false and misleading advertisements, etc. Therefore, they need protection against such malpractices of the sellers.

Answer 18:
The quoted lines from the given para, which are indicative of different dimensions of business environment are as follows:

1. The court passed an order that all school must have water purifier.’ The quoted line is depicting legal environment. Business has to function within the framework of laws and regulations of the country. Legal environment exercises significant influence on business activities.
2. ‘Society in general is more concerned about the quality of life.’ The quoted line is depicting the social environment as this environment consists of all the social and cultural forces within which business firms operate.
3. ‘Innovative techniques are being developed to manufacture water purifier at competitive rates.’
   The quoted line is depicting the technological environment. It includes forces relating to scientific improvements and innovations which provide new ways of producing goods and services.
4.  ‘Income are rising and children at home are also drinking purified water.’
   The quoted line is depicting the economic environment. It consists of the factors and forces concerning means of production and distribution of wealth. It includes all such forces of economic development which influence the product market scope of business.
5. The government is also showing positive attitude towards the water purifier business.’
   The quoted line is depicting the political environment. It is concerned with the forces related with political stability, conditions that have strong impact on business.

Answer 19:
Human resource management is a wider term as compared to staffing. It includes staffing, record keeping, personal policy formulation, conducting personal research, providing expert’s services, etc. Hence, staffing is a part of the human resource management and not all of it.

Staffing function deals with the human element of management. It is important because the performance of an organisation depends upon its human resource, its competence and motivation. But, as organisations grow and number of employees increase, a separate department called Human Resource Department (HRD) is formed. It consists of specialists for all areas related to HRM.

The areas of human resource management can be divided into the following categories:

1. Recruitment i.e. searching for eligible candidates.
2. Providing expert services.
3. Developing compensation and incentives plans.
4. Handling grievances and complaints.
5. Providing for social security and welfare of employees.
6. Defending the company in law suits.

Answer 20:
(i) Decentralisation refers to systematic delegation of authority at all levels of management and in all departments of organisation to take decision.
While complete centralisation implies concentration of authority in a few hands, complete decentralisation implies greater autonomy to the lower levels of management. Therefore, an organisation cannot be completely centralised or decentralised. As an organisation grows in size, there is a tendency to move towards decentralised organisation. At the same time, decisions need to be centralised in priority areas and Key Result Areas (KRAs).

(ii) Advantages of decentralisation are given below:
(a) Develops Initiative amongst Subordinate Decentralisation helps to promote self-reliance and confidence amongst the subordinates. This is because when lower level managers are given freedom to take their own decisions, they learn to depend on their own judgement.

(b) Quick Decision-making In a decentralised organisation, since the decision-making power is entrusted to all the managers who perform the activities, there is no delay in decision-making and they are taken quickly.

(c) Facilitates Growth Decentralisation provides greater autonomy to the lower levels of management as well as divisional or departmental heads. This increases the productivity levels and the organisation is able to generate more profits, which can be used for growth and expansion purposes.

Answer 21:
(i) (a) SEBI performs the following regulatory functions:

•  Registration of brokers, sub-brokers and other players in the market.
• Registration of collective investment schemes and mutual funds.
• Regulation of takeover bids by companies.
• Levying fee or other charges for carrying out the purposes of the Act.

(b) SEBI Perfoms the following protective functions:

• Prohibition of fraudulent and unfair trade practices.
• Controlling insider trading and imposing penalties for such practices.
• Undertaking steps for investor protection.
• Promotion of fair practices and code of conduct in securities market.

Because of the regulatory and protective functions performed by SEBI, it is a watch dog of security market.

(ii) The values which SEBI fulfils are:
(a) Safety
(b) Transparency
(c) Fairness

Answer 22:
A good control system helps an organisation in the following ways:
(i) Accomplishing Organisational Goals The controlling function measures progress towards the organisational goals and brings to light deviations, if any and indicates corrective action. Thus, it guides the organisation and keeps it on the right track so that organisational goals might be achieved.

(ii) Judging Accuracy of Standards A good control system enables management to verify whether the standards set are accurate and objective. An efficient control system keeps a careful check on the changes taking place in the organisation.

(iii) Making Efficient Use of Resources By exercising control, a manager seeks to reduce wastage and spoilage of resources. Each activity is performed in accordance with predetermined standards and norms. This ensures that resources are used in the most effective and efficient manner.

(iv) Improving Employee Motivation A good control system ensures that employees know well in advance what they are expected to do and what are the standards of performance on the basis of which they will be appraised. Thus, it motivates and helps them to give better performance.

(v) Ensuring Order and Discipline The controlling function helps to minimise undesirable behaviour of employees by keeping a close check on their activities. Thus, it facilitates order and discipline in the

Answer 23:
Steps to be followed by a manager are enumerated below:

1. Setting Objectives This is the first step in planning, objectives should be established for the entire enterprise and for each and every department.
2. Developing the Planning Premises A business premises is an assumption on which the plans are based. Management makes assumptions for everything it plans.
3. Search for Alternatives This involves collection of right type of data and its anaylsis.
4. Evaluation of Alternatives After developing alternative courses, the management will evaluate the merits and demerits of various alternatives in the light of the objectives of the business and planning premises.
5. Selection of Best Course of Action This is the stage of decision-making. Quantitative techniques may also be used to choose the best course of action.
6. Follow up Planning provides the future course of action. Future is uncertain. A system of continuous evaluation of the plan may be designed and implemented.

Answer 24:
(i) Scalar Chain According to Fayol, Scalar chain refers to the chain of authority and communication that runs from top to bottom and should be followed by managers and their subordinates.
The above figure illustrates the scalar chain. If D and G wants to communicate, the message should usually move up through C, B, A, E, F and then G whereas, the manager is communicating with all levels and all departments, without following the scalar chain.

(ii) Remuneration of Employees According to Fayol, the quantum and methods of remuneration payable to employees should be fair and reasonable. It should be satisfactory to both employers and employees, which gives them a reasonable standard of living and should be within the paying capacity of the company.

(iii) Stability of Personnel According to Fayol, employee turnover should be minimised to maintain organisational efficiency. Therefore, suppose an individual gets selected for a post, then he should be given appropriate time to prove his abilities.
We can say, that he should be kept at the post for a minimum fixed tenure. This ensures stability, so that he can get proper time to explore his skills.

(iv) Discipline It is the sincerity and obedience towards organisational rules and regulations, as these are necessary for the smooth functioning of an organisation.
According to Fayol, good superiors at all levels, fair agreements and judicious application of penalties are helpful in maintaining discipline. It means obedience on part of workers as well as managers.

Answer 25:
The barriers which are concerned with problems and obstructions in the process of encoding and decoding of message into words or impressions are called semantic barriers. Such barriers result in faulty translations, different interpretations, etc.

Types of semantic barriers are discussed below:
(i) Badly Expressed Message Sometimes due to inadequate vocabulary, usage of wrong words, omission of needed words, etc intended meaning may not be conveyed by a manager to his subordinates.

(ii) Symbols with Different Meanings A word may have several meanings. Receiver has to perceive the same meaning for the word used by the sender, e.g. the word ‘value’ has different meanings in the given examples: What is the value of this equipment? I value our relationship, You should value your time. Thus, the word should be perceived in the same sense as it is used by the sender otherwise, it leads to communication problems.

(iii) Technical Jargon It is a common situation, faced by many in an organisation. The specialists use technical language or words, while explaining the process to persons who are not aware about these terms and may not understand their actual meaning.

(iv) Faulty Translations Sometimes the communication is drafted in one language and translated in another language, e.g. a manager drafts an information in english and while translating, uses hindi. If he is not proficient in both languages, mistakes may creep in and lead to faulty translation in the process.

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