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-Strictly Confidential: (For Internal and Restricted Use Only)

Senior School Certificate Examination


March -----2024
Marking Scheme---Business Studies(054) 66/1/1

General Instructions:
1 You are aware that evaluation is the most important process in the actual and correct
assessment of the candidates. A small mistake in evaluation may lead to serious
problems which may affect the future of the candidates, education system and teaching
profession. To avoid mistakes, it is requested that before starting evaluation, you must
read and understand the spot evaluation guidelines carefully.
2 “Evaluation policy is a confidential policy as it is related to the confidentiality of
the examinations conducted, Evaluation done and several other aspects. Its’
leakage to public in any manner could lead to derailment of the examination
system and affect the life and future of millions of candidates. Sharing this
policy/document to anyone, publishing in any magazine and printing in News
Paper/Website etc may invite action under various rules of the Board and IPC.”
3 Evaluation is to be done as per instructions provided in the Marking Scheme. It should
not be done according to one’s own interpretation or any other consideration. Marking
Scheme should be strictly adhered to and religiously followed. However, while
evaluating, answers which are based on latest information or knowledge and/or are
innovative, they may be assessed for their correctness otherwise and due marks be
awarded to them. In class - XII, while evaluating two competency based questions,
please try to understand given answer and even if reply is not from marking
scheme but correct competency is enumerated by the candidate due marks should
be awarded.
4 The Marking scheme carries only suggested value points for the answers
These are in the nature of Guidelines only and do not constitute the complete answer.
The students can have their own expression and if the expression is correct, the due
marks should be awarded accordingly.
5 The Head-Examiner must go through the first five answer books evaluated by each
evaluator on the first day, to ensure that evaluation has been carried out as per the
instructions given in the Marking Scheme. If there is any variation, the same should be
zero after deliberation and discussion. The remaining answer books meant for evaluation
shall be given only after ensuring that there is no significant variation in the marking of
individual evaluators.
6 Evaluators will mark( √ ) wherever answer is correct. For wrong answer CROSS ‘X” be
marked. Evaluators will not put right (✓)while evaluating which gives an impression
that answer is correct and no marks are awarded. This is most common mistake which
evaluators are committing.
7 If a question has parts, please award marks on the right-hand side for each part. Marks
awarded for different parts of the question should then be totaled up and written in the
left-hand margin and encircled. This may be followed strictly.
8 If a question does not have any parts, marks must be awarded in the left-hand margin
and encircled. This may also be followed strictly.

1
9 If a student has attempted an extra question, answer of the question deserving more
marks should be retained and the other answer scored out with a note “Extra
Question”.
10 No marks to be deducted for the cumulative effect of an error. It should be penalized
only once.
11 A full scale of marks 80 as given in Question Paper has to be used. Please do not
hesitate to award full marks if the answer deserves it.
12 Every examiner has to necessarily do evaluation work for full working hours i.e., 8
hours every day and evaluate 20 answer books per day in main subjects and 25 answer
books per day in other subjects (Details are given in Spot Guidelines). This is in view of
the reduced syllabus and number of questions in question paper.
13 Ensure that you do not make the following common types of errors committed by the
Examiner in the past:-
● Leaving answer or part thereof unassessed in an answer book.
● Giving more marks for an answer than assigned to it.
● Wrong totaling of marks awarded on an answer.
● Wrong transfer of marks from the inside pages of the answer book to the title page.
● Wrong question wise totaling on the title page.
● Wrong totaling of marks of the two columns on the title page.
● Wrong grand total.
● Marks in words and figures not tallying/not same.
● Wrong transfer of marks from the answer book to online award list.
● Answers marked as correct, but marks not awarded. (Ensure that the right tick mark
is correctly and clearly indicated. It should merely be a line. Same is with the X for
incorrect answer.)
● Half or a part of answer marked correct and the rest as wrong, but no marks
awarded.
14 While evaluating the answer books if the answer is found to be totally incorrect, it
should be marked as cross (X) and awarded zero (0)Marks
15 Any unassessed portion, non-carrying over of marks to the title page, or totaling error
detected by the candidate shall damage the prestige of all the personnel engaged in the
evaluation work as also of the Board. Hence, in order to uphold the prestige of all
concerned, it is again reiterated that the instructions be followed meticulously and
judiciously
16 The Examiners should acquaint themselves with the guidelines given in the “Guidelines
for spot Evaluation” before starting the actual evaluation.
17 Every Examiner shall also ensure that all the answers are evaluated, marks carried over
to the title page, correctly totaled and written in figures and words.
18 The candidates are entitled to obtain photocopy of the Answer Book on request on
payment of the prescribed processing fee. All Examiners/Additional Head
Examiners/Head Examiners are once again reminded that they must ensure that
evaluation is carried out strictly as per value points for each answer as given in the
Marking Scheme.

2
66 MARKING SCHEME– 2024
/1 BUSINESS STUDIES-054 Marks
/1 66/1/1
EXPECTED ANSWERS / VALUE POINTS
1 Q. For taking the company out of losses, Ravi Kumar took
over as the Managing Director of the struggling Vova
Watch Company' in January 2020. As soon as he joined, he
tried to find out the reason for the company not doing well.
He found that the employees were not involved in decision-
making and they had to just follow orders, resulting in low
morale of employees.
Recognising the need for change, Ravi Kumar started on a
journey to bring back the enthusiasm and motivation of the
employees. He initiated open dialogues and encouraged
them to actively participate in decision-making. Together,
they developed action plans to address the company's
challenges regarding outdated designs and inefficient
production processes etc.
As time passed, Vova Watch Company' transformed from a
struggling enterprise to a profit making enterprise. Identify
the leadership style of Ravi Kumar:
(A) Autocratic leadership style
(B) Democratic leadership style
(C) Free-rein leadership style
(D) Both (A) and (B)

Ans. (B) Democratic leadership style 1 mark

2 Q. Which of the following is an element of 'Social


Environment'?
(A) Rates of saving and investment
(B) Expectations from the workforce
(C) The nature of relationship of our country with foreign
countries
(D) Planned outlay in public and private sectors

Ans. (B) Expectations from the workforce 1 mark

3 Q. Statement I: Delegation is the entrustment of


responsibility and authority to another, and the creation of

3
accountability for performance.

Statement II: Irrespective of the extent of delegated


authority, the manager shall still be accountable to the
same extent as before delegation.

Choose the correct option from the following:


(A) Statement I is true and Statement II is false.
(B) Statement II is true and Statement I is false.
(C) Both the Statements are true.
(D) Both the Statements are false.

Ans. (C) Both the Statements are true. 1 mark

4 Q. _------------ refers to doing the task correctly and with


minimum cost.
(A) Effectiveness
(B) Coordination
(C) Process
(D) Efficiency

Ans. (D) Efficiency 1 mark

5 Q. 'Dovex' was a large company with a renowned name in


healthcare industry, specialising in the development and
production of life saving medications and medical devices.
With a strong reputation for ethical practices, 'Dovex'
attracted a large number of investors who had great faith in
the company's future. This allowed 'Dovex' to raise capital
easily from the market whenever expansion or new projects
were to be undertaken. As a result, it could pay high
dividends to the shareholders. The factor affecting dividend
decision discussed above, which allowed 'Dovex' to pay high
dividends to the shareholders is:
(A) Cash flow position
(B) Stock market reaction
(C) Legal constraints
(D) Access to capital market

Ans. (D) Access to capital market 1 mark

6 Q. "It is a career oriented process designed to help the

4
employees in the progress towards maturity and
actualization of their potential capabilities." Identify the
process:
(A) Staffing
(B) Selection
(C) Development
(D) Training

Ans. (C) Development 1 mark

7 Q. 'SK Builders' became the market leader in the designer


house segment as it was the first to recognize the need of
using Artificial Intelligence in designing houses in the
changing environment of technological advancement. This
highlights the following point of importance of business
environment:
(A) It helps to identify threats and early warning signals.
(B) It enables the firm to identify opportunities and getting
the first mover advantage.
(C) It helps in tapping useful resources.
(D) It helps in improving performance.

Ans. (B) It enables the firm to identify opportunities and


getting the first mover advantage. 1 mark

8 Q. In the ---------- market, prices are determined and


decided by the management of the company.
(A) Primary
(B) Secondary
(C) Money
(D) Stock

Ans. (A) Primary 1 mark

9 Q. The process of estimating fund requirements of a


business and specifying the sources of funds is called:
(A) Capital structure
(B) Financial planning
(C) Financial management
(D) Capital budgeting

Ans. (B) Financial planning 1 mark

5
10 Q. Statement I: A financial market facilitates the transfer
of savings from savers to investors.

Statement II: It gives savers the choice of different


investments and helps to channelise surplus
funds into the most productive use.

Choose the correct option from the following:


(A) Statement I is true and Statement II is false.
(B) Statement II is true and Statement I is false.
(C) Both the Statements are true.
(D) Both the Statements are false.

Ans. (C) Both the Statements are true. 1 mark

11 Q. Choose the incorrect statement from the following about


functions of a Stock Exchange:
(A) Provides liquidity and marketability to new securities
(B) Ensures safety of transactions
(C) Contributes to economic growth
(D) Provides scope for speculation

Ans. (A) Provides liquidity and marketability to new


securities 1 mark

12 Q. Online retailer 'Bizen' has grown to be the biggest


provider worldwide in the field of e-commerce. Its revenues
are growing steadily year after year. It owes its success to
the rapid rate of digitisation and its organisational
structure. 'Bizen's Managing Director, Mohit makes
strategic decisions and has control over the entire
organisation. In 'Bizen', jobs of similar nature are grouped
together into Human Resource Department, Marketing
Department, Purchase Department and Research and
Development Department. These departments are further
divided into sections and all departmental heads report to
Mohit who is the co-ordinating head. This ensures
efficiency in the utilization of manpower and minimizes
duplication of efforts. The type of organizational structure
of 'Bizen' is:
(A) Informal organisational structure

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(B) Divisional organisational structure
(C) Functional organisational structure
(D) Both (B) and (C)

Ans. (C) Functional organisational structure 1 mark

13 Q. Match the terms given in Column I with their meanings


in Column II:

Column I Column II
1. Placement (i) Introducing the selected employee to
other employees and familiarising him
with the rules and policies of the
organization

2. Recruitment (ii) It refers to the employee occupying


the position or post for which he/she has
been selected

3. Orientation (iii) Evaluating an employee's current


and/or past performance as against
certain predetermined standards

4. Performance (iv) The process of searching for


Appraisal prospective employees and stimulating
them to apply for jobs in the
organization

Choose the correct option from the following:


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

Ans. (C) 1-(ii), 2-(iv), 3-(i), 4-(iii) 1 mark

14 Q. Plans are prepared for a specific period of time, may be


for a month, a quarter or a year. At the end of that period,
there is a need for a new plan to be drawn on the basis of
new requirements and future conditions. The feature of
planning reflected in the above lines is:
(A) Planning is futuristic
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(B) Planning is continuous
(C) Planning is pervasive
(D) Planning is a mental exercise

Ans. (B) Planning is continuous 1 mark

15 Q. The marketing management philosophy which uses


availability and affordability as a means to achieve the
objectives is:
(A) Marketing concept
(B) Selling concept
(C) Product concept
(D) Production concept

Ans. (D) Production concept 1 mark

16 Q. Identify the tool of promotion used by 'Mehta Sons


Garments' to boost its sales:
(A) Advertising
(B) Personal selling
(C) Sales promotion
(D) Public relations

Ans. (C) Sales promotion 1 mark

17 Q. Read the following statements: Assertion (A) and


Reason (R). Choose the correct alternative from the options
given below:

Assertion (A): Many enlightened business firms have set up


their own consumer service and grievance cells.

8
Reason (R): The consumer has a right to file a complaint
and to be heard in case of dissatisfaction with a
good or service.

(A) Both Assertion (A) and Reason (R) are true and Reason
(R) is the correct explanation of Assertion (A).

(B) Both Assertion (A) and Reason (R) are true, but
Reason(R) is not the correct explanation of
Assertion(A).

(C) Assertion (A) is true, but Reason (R) is false.

(D) Assertion (A) is false, but Reason (R) is true.

Ans. (A) Both Assertion (A) and Reason (R) are true and 1 mark
Reason (R) is the correct explanation of Assertion (A).
18 Q. Which of the following is not a component of 'Physical
Distribution'?
(A) Inventory control
(B) Standardisation and grading
(C) Order processing
(D) Transportation

Ans. (B) Standardisation and grading 1 mark

19 Q. Beenu had a bookstore in Sabad called 'Book-mark'. For


years, the bookstore was doing reasonably well but with the
rise of digital books and online retailers, her sales had
declined. Beenu's daughter, who had just completed her
MBA with a specialisation in marketing decided to launch a
marketing campaign to revive the bookstore. The
campaign's focus was on the joy of reading books in
physical form, the joy of turning pages and the warm
atmosphere of the bookstore. She organised story writing
and other competitions every weekend. The information of
these was given to the parents and children through
television, radio, children's magazines, etc. Attractive prizes
were offered to the winners. This increased the footfall of
the children and their parents and the bookstore soon
became popular.

9
The tool of communication used by Beenu's daughter to
revive the bookstore was:
(A) Advertising
(B) Personal selling
(C) Sales promotion
(D) Public relations

Ans. (D) Public relations 1 mark

20 Q. 'Best Electronics' is led by its visionary Chief Executive


Officer, Nikhil. It has a reputation for good quality
products and customer service. Nikhil recognised the need
to continually innovate and provide customers with the
latest products. He wanted the company to be the market
leader in electronics.
Nikhil knew that to realise his ambitious vision, he needed a
clear and well-defined plan that would provide broad
contours of the company's business. His team conducted
extensive market research to uncover emerging trends,
customer preferences, and potential competitors. On its
basis, a plan was prepared defining the company's direction
and scope in the long run. On the implementation of the
plan 'Best Electronics' became the market leader in two
years. The type of plan which helped 'Best Electronics' to
become the market leader was:
(A) Policy
(B) Rule
(C) Strategy
(D) Procedure

Ans. (C) Strategy 1 mark

21 Q(a). State any three features of business environment.

Ans.
(a) Features of business environment are: (Any three)
(i) Business environment is the sum total of all
factors/things external to business firms and, as such,
is aggregative in nature.
(ii) Business environment includes both specific such as
customers, investors, etc and general forces such as
political, social, etc.

10
(iii) Different elements or parts of business environment
are closely inter-related.
(iv) Dynamic nature: Business environment is dynamic 1x3
and keeps on changing whether in terms of =
technological improvement, shifts in consumer
preferences , etc
(v) Business environment is uncertain as it is very
difficult to predict future happenings, especially 3 marks
when environment changes are taking place too
frequently
(vi) Business environment is complex as it consists of
numerous interrelated and dynamic conditions or
forces that are relatively easier to understand in parts
but difficult to grasp in its totality.
(vii) Business environment is a relative concept since it
differs from country to country and even region to
region.

(If an examinee has only listed the underlined points, ½


mark for each point should be awarded)
OR
OR
Q(b). State any three features of 'Demonetization'.

Ans (b). Features of demonetization are: (Any three)


(i) Demonetisation is viewed as a tax
administration measure and people with black
money had to declare their unaccounted wealth
and pay taxes at a penalty rate.
(ii) Demonetisation is also interpreted as a shift
on the part of the government indicating that tax
evasion will no longer be tolerated or accepted. 1x3
(iii) Demonetisation led to tax administration =
channelizing savings into the formal financial
system, to enable banks with deposits to provide
a base loans, at lower interest rates. 3 marks
(iv) It creates a less-cash or cash-lite economy,
i.e., channelising more savings through the

11
formal financial system and improving tax
compliance.

(If the examinee has only listed the underlined points, ½


mark for each point should be awarded)

22 Q. Kanav, after passing out of college with specialization in


renewable energy, was determined to start a solar power
plant. The venture required heavy investment in plant and
machinery and less on manual labour. Kanav invested in
the latest solar panel technology and infrastructure and
purchased the latest solar panels, inverters and battery
storage systems.
Despite the high risk and substantial investment, Kanav's
business had good expansion possibilities. The world was
increasingly moving towards clean energy solutions, and
there was a growing demand for sustainable power sources.
So, Kanav decided to create a higher capacity to meet the
anticipated demand quickly. This entailed further
investment in fixed assets which Kanav was able to arrange.
As the years passed, the solar power plant did very well and
played a pivotal role in the city's transition towards a
greener and more sustainable future.
Identify and explain the two factors affecting the fixed
capital requirements discussed in the above case.

Ans. Factor affecting the fixed capital requirements in the


case are:
(i) Choice of technique: ½ mark for
• A capital-intensive organisation requires higher identifying
investment in plant and machinery as it relies less on and 1 mark
for
manual labour, thus higher fixed capital.
explanation
• Labour intensive organisations require less
investment in fixed assets. Hence, their fixed capital 1 ½ x2
requirement is lower.
(ii) Growth prospects: = 3 marks
• When growth is expected, a company may choose to
create higher capacity in order to meet anticipated
higher demand quicker.

12
• This entails larger investment in fixed assets and
consequently larger fixed capital.

23 Q. A renowned car company named 'BB Motors' was


known for producing high performance cars. They were
committed to ensure that its employees had the skills and
knowledge to build these innovative high-performance cars.
To achieve this, they implemented a unique approach for
training. The company transformed a section of its factory
into what they called the 'Learning Floor'. Actual work
environment was created by allotting a specialized space.
The space was equipped with a range of car components,
tools and sophisticated car equipment identical to those
used on the factory floor, where the company's employees
would undergo their training.
Identify and explain the method of training used by 'BB
Motors' to ensure that its employees had the skills and
knowledge to build innovative high-performance cars.

Ans. Vestibule training 1 mark for


identifying
• It is a method of training in which employees learn their
jobs on the equipment they will be using, but the training + 2 marks for
is conducted away from the actual work floor. explanation
• This is usually done when employees are required to
handle sophisticated machinery and equipment.
= 3 marks
(If an examinee has identified the method of training as ‘Off
the job’, 1 mark is to be given)

24 Q(a). State any three protective functions of Securities and


Exchange Board of India.
Ans.

Protective functions of Securities and Exchange Board of


India are: (Any 3)
(i) It prohibits fraudulent and unfair trade practices like
making misleading statements, manipulations, price
rigging etc.
1x3
(ii) It controls insider trading and imposing penalties for
=

13
such practices.
3 marks
(iii) It undertakes steps for investor protection.
(iv) It promotes fair practices and code of conduct in
securities market.
OR OR

Q(b) Differentiate between 'Money Market' and 'Capital


Market' on any three bases.

Ans. Difference between 'Money Market' and 'Capital


Market' (Any three):
Basis Money market Capital market
Participants Participants are by Participants are
and large, financial
institutional institutions, banks,
participants such as corporate entities,
the RBI, banks, foreign investors
financial institutions and ordinary retail
and finance investors/public.
companies.
Instruments The main The main 1x3
instruments traded instruments traded =
are short term debt are equity shares,
instruments such as debentures, bonds,
T-bills, trade bills preference shares 3 marks
reports, commercial etc.
paper and
certificates of
deposit.
Investment Investment in Investment in
outlay money market entail capital market
huge sums of does not
money as necessarily require
instruments are a huge financial

14
quite expensive outlay
Duration It deals in It deals in medium
instruments with and long term
maximum tenure of securities
one year
Liquidity Money market Capital market
instruments enjoy securities are
relatively a higher considered liquid
degree of liquidity investments
as there is formal because they are
arrangement for marketable on the
this. stock exchanges,
however a share
may not be
actively traded.
Safety Money market is Capital market
generally much instruments are
safer with a riskier both with
minimum risk of respect to returns
default and principal
repayment
Expected Investment in Investment in
return money market capital market
generally yield generally yield
relatively lower rate higher return for
of return investors.

25 Q. ‘Verfab' was a garment manufacturing company known


for its high quality fashionable clothing. They had been in
the fashionable clothing business for the last 23 years. The
company was earning enough profit and the demand for
their fashionable clothing was rising tremendously. The
company was expanding and needed to hire new talent to
meet the growing demand. They followed a comprehensive
process to ensure that they brought in the best candidates.

15
The process began with a first-round evaluation of
applications. The Human Resources team carefully
reviewed each candidate's qualifications, experience and
suitability for the available positions. It eliminated
unqualified or unfit job seekers based on the information
supplied in the application forms and shortlisted 21
candidates who met the basic requirements.
The shortlisted candidates were then asked to take a series
of tests that attempted to measure certain characteristics of
individuals, ranging from manual dexterity to intelligence
to personality. These tests included assessments of their
sewing skills, attention to detail, and knowledge of garment
manufacturing processes.
15 candidates who performed well in the tests were invited
for a formal in-depth conversation with the senior staff
from the design team. Thereafter, 10 candidates were found
suitable for the job position available.
Since these 10 candidates had cleared all the above steps,
'Verfab' conducted verification by contacting their previous
employers to confirm the details the candidates had
provided.
Thereafter, a decision was made to choose 8 candidates who
were best fitted for the roles.
Explain the steps of the comprehensive process discussed
above till the verification stage, to ensure that the company
brought in the best candidates to meet the growing demand
for fashionable clothing.

Ans.
The steps of the comprehensive process discussed above
are :
(i) Preliminary screening:
It helps the manager to eliminate unqualified or unfit
job seekers based on the information supplied in the ½ mark for
application forms. heading and ½
(ii) Selection tests: mark for
These tests attempt to measure certain characteristics of explanation
individuals. ranging from aptitudes, manual dexterity, =1 mark
intelligence to personality.
(iii) Employment interview:
A formal, in-depth conversation is conducted to
evaluate the applicant’s suitability for the job and the =1x4

16
interviewees may also seek information from
interviewer.
(iv) Reference and background checks:
References are used for verifying information and,
gaining additional information on an applicant from = 4 marks
previous employers, known persons, teachers, university
professors, etc.

(If an examinee has not given the headings as above but has
given the correct explanation, full credit should be given)

26 Q(a). State any four characteristics of management.

Ans.
Characteristics of management are: ( Any four)
(i) Management is a goal-oriented process as it unites
the efforts of different individuals in the organisation
towards achieving these goals.
(ii) Management is all pervasive function as its activities
are common to all organisations whether economic,
social or political.
(iii) Management is multidimensional/complex as it
involves: Management of work, Management of
people and Management of operations.
(iv) The process of management is a series of
continuous, composite but separate functions that are
simultaneously performed by all the managers all the
time. 1x4
(v) Management is a group activity as it requires team
work and coordination of individual efforts in a
common direction towards fulfilling the common
organisational goal.
(vi) Management is a dynamic function and has to adapt
itself to the changing environment. = 4 marks
(vii) Management is an intangible force that cannot be
seen but its presence can be felt in the way the
organisation functions.

(If an examinee has only listed the underlined points, ½


mark for each point should be awarded)
OR
OR

17
Q(b). State any four functions performed by Top Level
Management.

Ans. Functions performed by Top Level Management


are: (Any four)
(i) Their basic task is to integrate diverse elements and
coordinate the activities of different departments
according to the overall objectives of the
organisation. 1x4
(ii) They are responsible for the welfare and survival of
the organisation.
(iii) They analyse the business environment and its
implications for the survival of the firm.
(iv) They formulate overall organisational goals and
strategies for their achievement. = 4 marks
(v) They are responsible for all the activities of the
business and for its impact on society.

(If an examinee has only listed the underlined points, ½


mark for each point should be awarded)

27 Q. Differentiate between 'Delegation' and


'Decentralisation' on any four bases.

Ans. Differences between Delegation and Decentralisaton:


(Any four)

Basis Delegation Decentralisation


Nature Delegation is a Decentralisation is
compulsory act an optional policy
because no decision. It is done at
individual can the discretion of the
perform all tasks top management.
on his own.
Freedom of There is more There is less control
action control by over executives,
superiors hence hence greater
less freedom to freedom of action.
take own 1x4
decisions.
Status It is a process It is the result of the
followed to share policy decision of

18
tasks. the top management.
Scope It has narrow It has wide scope as
scope as it is it implies extension = 4 marks
limited to superior of delegation to the
and his immediate lowest level of
subordinate. management.
Purpose The purpose is to The purpose is to
lessen the burden increase the role of
of the manager. the subordinates in
the organisation by
giving them more
autonomy.

28 Q(a). Explain how the following factors affect the working


capital requirement of a business:
(i) Operating efficiency
(ii) Credit availed

Ans.
Factors affecting working capital requirement of a business:

(i) Operational efficiency:


• Firms manage their operations with varied degrees of
efficiency. 2
• Such efficiencies may reduce level of raw material,
finished goods and debtors, resulting in lower
working capital. +
(ii) Credit availed:
• A firm allows credit to its customers and also gets credit
from its suppliers. 2
• To the extent the firm avails credit on purchases, the
=2+2
working capital requirement is reduced.
=4 marks

OR
OR

19
Q(b). Explain how the following factors affect the choice of
capital structure of a company:
(i) Flexibility
(ii) Cost of equity

Ans. Factors affecting choice of capital structure:


(i) Flexibility:
2
• If a firm uses its debt potential to the full, it loses
flexibility to issue further debt.
• It must maintain some borrowing power to take care of +
unforeseen circumstances.

(ii) Cost of equity: 2


• When a company increases debt, the financial risk
faced by the equity holders, increases. Consequently, =2+2
their desired rate of return may increase.
• If debt is used beyond a level, cost of equity may =4 marks
go up and share price may decrease sharply inspite
of increased earning per share(EPS).

29 Q. Piyush is the Production Manager of a shoe company


'Comforty'. He has 1000 workers under him in his
department. Piyush booked a special order for 300 pairs of
gents shoes at an estimated cost price of ₹ 500 per pair plus
a 20% profit margin. This order is to be completed within
10 days. After completion of the order, Piyush found out
that the production cost of one pair of shoes was ₹ 700. He
tried to find out the reason but he couldn't. He reported it
to the Chief Executive Officer. For this the Chief Executive
Officer appointed Abhay, who was not only a specialized
Cost Accountant, but also a qualified Human Resource
Manager. After two days, Abhay reported that the set
target could have been completed by only 800 workers. This
revealed that there was overmanning in the organization,
The organization was not utilizing the human resources
optimally which had led to high labour cost.

The above case highlights an important function of


management.

(i) Identify the function of management discussed above.

20
(ii) State any three points of importance of the function
identified in (i) above.

Ans.
(i) Controlling 1 mark for
identifying
(ii) Importance of Controlling : ( Any three)
(1) It helps in accomplishing organisational goals by
bringing to light the deviations, if any, and indicating
corrective action.
(2) It helps in judging accuracy of standards in the light of
changes taking place in the organization and
environment.
(3) It helps in making efficient use of resources by ensuring
that each activity is performed in accordance with pre- +
determined standards.
(4) It improves employee motivation as the employees know 1x3
well in advance the standards of performance on the
basis of which they will be appraised.
(5) It ensures order and discipline among employees by
keeping a close check on their activities. = 1+3
(6) It facilitates coordination in action as each department is
governed by pre-determined standards which are well
coordinated with one another. 4 marks

(If an examinee has only listed the underlined points, ½


mark for each point should be awarded)

30 Q. Anuj, after a lot of research, paid 'SS Developers' an


advance of ₹ 2 crore to build a lavish house for him. They
promised to deliver the property within 18 months. At the
end of 18 months, Anuj asked for the delivery of the
property many times but the developer did not respond.
Anuj realized that 'SS Developers' was not in a position to
hand over the property to him. Anuj asked for a refund of
the money with interest, which 'SS Developers' refused.
Anuj approached the consumer court with his complaint.
(i) Which grievance redressal agency had Anuj
approached?
(ii) State any three reliefs Anuj is likely to get, if the
consumer court is satisfied with the complaint.

21
Ans.
1 mark for
(i) State Commission identifying
(ii) Reliefs Anuj is likely to get, if the consumer court is
satisfied with the complaint are: (Any three)
a) To refund the price paid for the product, or the charges +
paid for the service.
b) To pay a reasonable amount of compensation for any 1x3
loss or injury suffered by the consumer due to the
negligence of the opposite party.
c) To pay punitive damages in appropriate
circumstances. = 1+3
d) To discontinue the unfair/ restrictive trade practice and
not to repeat it in the future.
e) Compensate for any loss or injury suffered by =4 marks
consumer under product liability action and withdraw
hazardous products from being offered for sale etc.
f) To pay any amount(not less than 5% of the value of
defective goods or deficient services provided) to be
credited to the Consumer Welfare fund or any other
organisation/person, to be utilised in the prescribed
manner.
g) To pay adequate costs to the appropriate party.

31 Q. (a) Explain the following techniques of Scientific


Management:
(i) Time study
(ii) Differential piece wage system
(iii) Motion study

Ans. (i) Time study:


• It is a technique of scientific management which
determines the standard time taken to perform a well-
defined job.
2
• It is used to determine the number of workers to be
employed; frame suitable incentive schemes and
determine labour costs. +

22
(ii) Differential piece wage system:

• Differential Piece Wage System is a technique which


differentiates between efficient and less efficient
workers. It rewards the efficient workers and motivates 2
the less efficient ones to improve their efficiency.
• In this plan, there are two piece rates – one for those
workers who produce the standard output or more, and
the other for those who produce less than the standard
output. +

(iii)Motion study:

• Motion study refers to the study of movements which are 2


undertaken while doing a typical job.
• It seeks to eliminate unnecessary movements so that it = 6 marks
takes less time to complete the job efficiently.

OR OR

Q(b). Explain the following features of principles of


management:
(i) General guidelines
(ii) Mainly behavioural
(iii)Formed by practice and experimentation

Ans. 2
(i) General guidelines:
• The principles of management are guidelines to action
but do not provide readymade straitjacket solutions to all +
managerial problems.
• It is so because real business situations are very complex
and dynamic and are a result of many factors.

(ii) Mainly behavioural:


• Management principles aim at influencing behaviour of 2
human beings.
• They enable a better understanding of the relationship +
between human and material resources in accomplishing
organisational purposes.
2

23
(iii)Formed by practice and experimentation:
• The principles of management are formed by experience = 6 marks
and collective wisdom of managers.
• The principles are formed by experimentation.

32 Q. Atul Sharma was the Chief Executive Officer of a


footwear company, 'Stepone Footwear’. The company
manufactured innovative and comfortable footwear for all
age groups. Atul Sharma was known for meticulous
planning. He ensured that the goals and objectives of the
company are clearly stated so that they act as a guide for
deciding what action should be taken and in which
direction. Before each season, 'Stepone Footwear’ carefully
analysed market trends, customer preferences and
production schedules. This analysis enabled the company to
look ahead and anticipate changes and develop managerial
responses, wherever necessary. As a result, they were able
to consistently deliver innovative and comfortable shoes to
the market.
During one season, there was a sudden surge in demand for
eco-friendly shoes. 'Stepone Footwear' had already planned
their production for the year with specific goals to be
achieved within a specific time frame. The managers of
'Stepone Footwear' did not have the flexibility to change
the plan to cope with the changed circumstances. Another
shoe company 'Eco Step' quickly adapted and started
manufacturing comfortable eco-friendly shoes. By not
being able to adjust to the rapidly changing market,
'Stepone Footwear’ faced inventory surplus while 'Eco
Step' emerged as a market leader in sustainable eco-
friendly footwear.
Quoting lines from the above paragraph, identify and
explain two benefits and two limitations of 'Planning
function of management discussed in the above case.

Ans. Benefits of planning:


(i) Planning provides directions:
Planning provides direction for action by stating in advance
how work is to be done.

“He ensured that the goals and objectives of the company are
clearly stated so that they act as a guide for deciding what

24
action should be taken and in which direction.”

(ii) Planning reduces the risks of uncertainty:

By deciding in advance the tasks to be performed, planning ½ mark for


shows the way to deal with changes and uncertain events. identifying +
½ mark for
“This analysis enabled the company to look ahead and explanation
anticipate changes and develop managerial responses, + ½ mark for
wherever necessary” quoting

=1 ½ mark for
each benefit
Limitations of planning: and limitation
(i) Planning leads to rigidity:
=1 ½ x4
In an organisation, a well defined plan is drawn up with
specific goals to be achieved within a specific time frame, these
plans then decide the future course of action and managers may
not be in a position to change it. = 6 marks

“The managers of 'Stepone Footwear' did not have the


flexibility to change the plan to cope with the changed
circumstances.”

(ii) Planning may not work in a dynamic


environment:

The organisation has to constantly adapt itself to changes


taking place in the dynamic environment. However, planning
cannot foresee everything and thus, there may be obstacles to
effective planning.

“By not being able to adjust to the rapidly changing market,


'Stepone Footwear’ faced inventory surplus while 'Eco Step'
emerged as a market leader in sustainable eco-friendly
footwear.”

33. Ayush and Rhea were passionate about sustainable

25
agriculture and healthy living. They wanted to start a
business selling organic produce. They had a small farm in
a rural area where they began growing fresh organic
produce and herbs.
In the beginning, they faced challenges in marketing their
organic products. They realized that their high quality
produce needed better presentation and a strong identity to
stand out in a competitive market.
They named the business ‘Earthy Store' which indicated
the products' benefits and qualities and reflected the values
of the business - sustainablility and health.
They chose a 'logo' that incorporated elements of nature
and used earthy colours to convey their organic
commitment. They designed and developed eco-friendly
biodegradable bags and reusable containers to courier their
products to the customers. They also added personal touch
by including handwritten notes in each bag.
They also designed and developed product stickers with
detailed information about organic certification, nutritional
benefits, date of manufacture, date of expiry, etc. The
stickers so developed were put on the bags and reusable
containers for customers convenience.
‘Earthy Store' created a user-friendly website and
established strong media presence to inform potential
customers about their products and persuading them to
buy the same. Within a couple of months, they had built a
loyal customer base which made them earn profits even in a
competitive environment. In a year, they were able to
secure contracts with local grocery stores and restaurants.
Quoting lines from the above paragraph, identify and
explain the three functions of marketing discussed in the
above case.

Ans. Functions of marketing:

(i) Branding:

• Branding is the process of giving a name, term, sign,


symbol, design or some combination of them, to the
product.

26
“They chose a 'logo' that incorporated elements of nature and
used earthy colours to convey their organic commitment.”
OR
“They named the business ‘Earthy Store' which indicated the
products' benefits and qualities and reflected the values of the
business - sustainablility and health”. ½ mark for
identifying
+ 1 mark for
(ii) Packaging and Labelling: explanation
+
• Packaging refers to the act of designing and producing ½ mark for
the container or wrapper of a product. quoting
• Labelling refers to designing and developing the label to
be put on the package. It may vary from a simple tag to =2 marks
complex graphics.
=2x3
“They designed and developed eco-friendly biodegradable
bags and reusable containers to courier their products to the
customers”
OR = 6 marks
“ They also designed and developed product stickers with
detailed information about organic certification, nutritional
benefits, date of manufacture, date of expiry, etc.”

(iii) Promotion:

• Promotion refers to informing the customers about the


firm’s product, its features, etc. and persuading them to
purchase these products.

“Earthy Store' created a user-friendly website and established


strong media presence to inform potential customers about
their products and persuading them to buy the same.”

34 Q(a) Give the meaning of "Training'. Explain the following


methods of training: (i) Apprenticeship Training, (ii)
Internship Training

Ans. Training:
Training is any process by which the aptitudes, skills and

27
abilities of employees to perform specific jobs are increased.
OR 2
It is a process of learning new skills and application of
knowledge in order to improve the performance of employees
on the current job or prepare them for any intended job.
(Or any other suitable meaning)
+

(i) Apprenticeship Training:


• Under this method of training, the trainee is put under the 2
guidance of a master worker, in order to acquire a higher
level of skill.
• It is useful for people to become, for example, plumbers, +
electricians, etc.

(ii) Internship Training:


2
• It is a joint programme of training, in which educational
institutions and business firms cooperate.
• Selected candidates work in some factory or office to =
acquire practical knowledge and skill, along with their 6 marks
regular studies.
OR
OR
Q(b) Explain any four points of importance of 'Directing'
function of management.

Ans.
Importance of directing: ( Any four)
(i)Initiates action:
Directing helps to initiate action among people in an
organisation towards attainment of desired objectives.

(ii)Integrates employees’ efforts:


Directing integrates employees’ efforts in the organisation in
such a way that every individual effort contributes to the
organizational performance. Thus, it ensures that the
individuals work for organisation’s goals.
½ mark for
(iii)Guides employees to fully realise their potential: heading and 1
Directing guides employees to fully realise their potential and mark for
capabilities by motivating and providing effective leadership. explanation

28
(iv)Facilitates introduction of needed changes:
A manager reduces resistance to change through motivation, =1 ½ x 4
communication and leadership, and develop required
cooperation in introducing changes in the organisation.

(v)Brings stability and balance in the organisation:


It fosters cooperation and commitment among the people and = 6 marks
helps to achieve balance among various groups, activities and
the departments.

(If an examinee has not given the headings as above but has
given the correct explanation, full credit should be given)

29

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