CBSE Pre-board Exam 2024-25 Class 12th

Business Studies Most Important Question

1. 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regarding outdated designs and inefficient production processes etc.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
2. 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
3. Statement I : Delegation is the entrustment of responsibility and authority
to another, and the creation of 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.
4. ____________ refers to doing the task correctly and with minimum cost.
(A) Effectiveness
(B) Coordination
(C) Process
(D) Efficiency
Ans. (D) Efficiency
5. ‘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
6. ‘‘It is a career oriented process designed to help the 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
7. ‘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.
8. 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
9. 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
10. 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.
11. 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
12. 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
(B) Divisional organisational structure
(C) Functional organisational structure
(D) Both (B) and (C)
Ans. (C) Functional organisational structure
13. 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
2.
organisation
Recruitment
(ii) It refers to the employee occupying the position or
3.
post for which he/she has been selected
Orientation
(iii) Evaluating an employee’s current and/or past
4.
performance as against certain predetermined standards
Performance
Appraisal (iv) The process of searching for 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)
14. 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
(B) Planning is continuous
(C) Planning is pervasive
(D) Planning is a mental exercise
Ans. (B) Planning is continuous
15. 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
16. 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
17. 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.
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 Reason (R) is the
correct explanation of Assertion (A).
18. 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
19. 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.
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
20. ‘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
21. (a) State any three features of business environment.
Ans. 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.
(iii) Different elements or parts of business environment are closely inter-
related.
(iv) Dynamic nature: Business environment is dynamic 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 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
(b) State any three features of ‘Demonetization’.
Ans. 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.
(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.
(iv) It creates a less-cash or cash-lite economy, i.e., channelising more savings
through the 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. 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:
• A capital-intensive organisation requires higher investment in plant and
machinery as it relies less on manual labour, thus higher fixed capital.
• Labour intensive organisations require less investment in fixed assets.
Hence, their fixed capital requirement is lower.
(ii) Growth prospects:
• When growth is expected, a company may choose to create higher capacity in
order to meet anticipated higher demand quicker.
• This entails larger investment in fixed assets and consequently larger fixed
capital.
23. 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
• It is a method of training in which employees learn their jobs on the
equipment they will be using, but the training is conducted away from the
actual work floor.
• This is usually done when employees are required to handle sophisticated
machinery and equipment.
(If an examinee has identified the method of training as ‘Off the job’, 1 mark is
to be given)
24. (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.
(ii) It controls insider trading and imposing penalties for such practices.
(iii) It undertakes steps for investor protection.
(iv) It promotes fair practices and code of conduct in securities market.
OR
(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 and large, Participants are financial
institutional participants such institutions, banks, corporate
as the RBI, banks, financial entities, foreign investors and
institutions and finance ordinary retail investors/public.
companies.
Instruments The main instruments traded The main instruments traded are
are short term debt equity shares, debentures, bonds,
instruments such as T-bills, preference shares etc.
trade bills reports, commercial
paper and certificates of
deposit.
Investment Investment in money market Investment in capital market
outlay entail huge sums of money as does not necessarily require a
instruments are quite huge financial outlay
expensive
Duration It deals in instruments with It deals in medium and long term
maximum tenure of one year securities
Liquidity Money market instruments Capital market securities are
enjoy relatively a higher considered liquid investments
degree of liquidity as there is because they are marketable on
formal arrangement for this. the stock exchanges, however a
share may not be actively traded.
Safety Money market is generally Capital market instruments are
much safer with a minimum riskier both with respect to
risk of default returns and principal repayment
Expected Investment in money market Investment in capital market
return generally yield relatively lower generally yield higher return for
rate of return investors.
25. ‘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.
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 application forms.
(ii) Selection tests: These tests attempt to measure certain characteristics of
individuals. ranging from aptitudes, manual dexterity, intelligence to
personality.
(iii) Employment interview: A formal, in-depth conversation is conducted to
evaluate the applicant’s suitability for the job and the 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 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. (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.
(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.
(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
(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.
(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.
(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. Differentiate between ‘Delegation’ and ‘Decentralisation’ on any four
bases.
Ans. Differences between Delegation and Decentralisaton: (Any four)
Basis Delegation Decentralisation
Nature Delegation is a compulsory act Decentralisation is an optional
because no individual can policy decision. It is done at the
perform all tasks on his own. discretion of the top management.
Freedom of There is more control by There is less control over
action superiors hence less freedom executives, hence greater freedom
to take own decisions. of action.
Status It is a process followed to It is the result of the policy
share tasks. decision of the top management.
 Scope It has narrow scope as it is It has wide scope as it implies
limited to superior and his extension of delegation to the
immediate subordinate. lowest level of management.
Purpose The purpose is to lessen the The purpose is to increase the role
burden of the manager. of the subordinates in the
organisation by giving them more
autonomy.

28. (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.
• 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.
• To the extent the firm avails credit on purchases, the working capital
requirement is reduced.
OR
(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:
• 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:
• When a company increases debt, the financial risk faced by the equity
holders, increases. Consequently, their desired rate of return may increase.
• If debt is used beyond a level, cost of equity may go up and share price may
decrease sharply inspite of increased earning per share(EPS).
29. 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.
(ii) State any three points of importance of the function identified in (i) above.
Ans. (i) Controlling
(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 predetermined standards.
(4) It improves employee motivation as the employees know 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.
(6) It facilitates coordination in action as each department is governed by pre-
determined standards which are well coordinated with one another.
(If an examinee has only listed the underlined points, ½ mark for each point
should be awarded)
30. 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.
Ans. (i) State Commission
(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 loss or injury
suffered by the consumer due to the negligence of the opposite party.
(c) To pay punitive damages in appropriate circumstances.
(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 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. (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 welldefined job.
• It is used to determine the number of workers to be employed; frame
suitable incentive schemes and determine labour costs.
(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 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 undertaken while
doing a typical job.
• It seeks to eliminate unnecessary movements so that it takes less time to
complete the job efficiently.
 OR
(b) Explain the following features of principles of management :
(i) General guidelines
(ii) Mainly behavioural
(iii) Formed by practice and experimentation
Ans. (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 human beings.
• They enable a better understanding of the relationship between human and
material resources in accomplishing organisational purposes.
(iii) Formed by practice and experimentation:
• The principles of management are formed by experience and collective
wisdom of managers.
• The principles are formed by experimentation.
32. 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 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 shows the way to
deal with changes and uncertain events.
“This analysis enabled the company to look ahead and anticipate changes and
develop managerial responses, wherever necessary”
Limitations of planning:
(i) Planning leads to rigidity:
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.
“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 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.
“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”.
(ii) Packaging and Labelling:
• Packaging refers to the act of designing and producing the container or
wrapper of a product.
• Labelling refers to designing and developing the label to be put on the
package. It may vary from a simple tag to complex graphics.
“They designed and developed eco-friendly biodegradable bags and reusable
containers to courier their products to the customers”
OR
“ 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. (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 abilities of
employees to perform specific jobs are increased.
OR
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 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:
• 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 regular studies.
OR
(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.
(iii) Guides employees to fully realise their potential:
Directing guides employees to fully realise their potential and capabilities by
motivating and providing effective leadership.
(iv) Facilitates introduction of needed changes:
A manager reduces resistance to change through motivation, 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 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)