Class XII

Business Studies(054)
Practice Paper -4
Session: 2020-21
MM-80 Time: 3 hours

General Instructions:
1. This question paper contains 34 Questions.
2. Marks are indicated against each question.
3. Answers should be brief and to the point.
4. Answers to the Questions carrying 3 marks may be from 50 to 75
words.
5. Answers to the Questions carrying 4 marks may be about 150 words.
6. Answers to the Questions carrying 6 marks may be about 200 words.
7. Attempt all parts of the questions together.

Section-A

Q1. “Each individual in the organization must know who he has to take
orders from and to whom he is accountable.” What process of organising
is highlighted in this line?
A. Division of work B. Departmentalisation
C. Assigning duties D. Establishing a reporting relationship.

Q2. “The research and development of COVID-19 vaccine depends on the

technology available in the country and political willingness to spend the
public funds and resources on such research.” Which feature of Business
environment is highlighted here?

A. Relativity B. Uncertainty
C. Complexity D. Dynamic

Q3. “All India Management Association(AIMA) and such other associations

are there for practicing managers. But it is not compulsory for managers to
be members of such associations nor does it have any statutory backing.”
Identify the characteristics of the profession that management doesn’t fulfil
in the statement being discussed above.
A. Ethical code of conduct B. Professional association
C. Restricted entry D. Service motive

Q 4. “There is a sudden rise in the online transactions and online delivery

of essential commodities and services due to COVID-19 pandemic. It is so
because everyone wants contactless transactions, as far as possible.”

Which dimension of the business environment is highlighted that leads

people to do more online transactions?

A. Social Environment B. Political Environment

C. Legal Environment D. Technological Environment

Q 5. Name the process through which it is ensured that the right people
with the right qualifications are available at the right place and time to
accomplish the goals of the organisation.

A. Planning B. Organising
C. Staffing D. Directing

Q6. Jyotsna, an energetic entrepreneur, is engaged in manufacturing of

designer sarees. She always keeps track of international news and current
affairs. So in January, 2020 she was well aware of the fact that a deadly
virus COVID-19 is about to hit masses globally. She procured the required
raw material and other inputs in advance. She took this step as she got
early warning signals of any future strict action taken by the government to
fight with such pandemic.
What importance of the business environment is highlighted in the above
case whereby Jyotsna procured raw material in advance?

A. Getting first mover advantage

B. Tapping useful resources
C. Identify threats and early warning signals
 D. Improving performance.

Q7. Which of the following is an element of Legal environment of business?

A. Volume of export and Import B. Literacy rate in country

C. Court Judgement D. Government intervention in
Business

Q8. “A company wants to install a set of new machines in its factories. The
top level management has to make policy regarding purchase of machinery
and middle level management must be coordinated with, to interpret these
policies, to make it operational. The operational level management then
coordinates the activities of its workers to install the machinery in the
factory.”
What characteristic of coordination is highlighted in the above paragraph?

A. Integrated group efforts B. ensures unity of action

C. responsibility of all managers D. deliberate function

Q9. Puneet, a manager in a Multinational company, is aware of the fact that

his performance standards are set and incentives are only given if he will
meet the set standards.
What importance of controlling is highlighted in the above paragraph ?

A. Improving employee motivation B. Ensure order and discipline

C. Efficient use of resources D. Facilitate coordination in action

Q10. For better control, Key Result Areas (KRAs), are given more focus. It
will help managers to exercise better control over the various activities.
Which concept related to controlling is highlighted here ?

A. Analysing Deviation B. Critical Point Control

C. Management by Exception D. Taking corrective action.
Q11. ……………………… determines the levels of management in the
structure of organisation.

A. Departmentalisation B. Division of work

C. Duties assigned D. Span of Management

OR

………………….is a framework within which managerial and operating

tasks are performed.

A. Organisation B. Organisational Structure

B. Functional Structure D. Divisional Structure

Q12. Marketing is ………..

A. a social process B. selling process

C. promotional Process D. distribution process

OR

PG India Ltd. is a leading electronics product manufacturer. PG India Ltd.

brings a range of LED Television sets ranging from 32 inch screen to 65
inch screen with different price range. These TV sets are non smart and
smart, HD ready and Full HD. Thus PG India Ltd. tries its best to meet the
needs and preferences of the potential buyers. What function of marketing
is used by PG India Ltd. ?

A. Customer Value B. Exchange Mechanism

C. Market Offering D. Needs and Wants

For Question no. 13 to 16: read the following paragraph:

Arun Ltd. wants to raise Rs. 5000 Crores from the Primary market for
entering into a new segment of 5G telecom services in India. It hired the
services of a renowned financial consultancy firm-Dhanpat Rai Pvt. Ltd. for
suggesting the same. Dhanpat Rai Pvt. Ltd. suggested to offer 30% shares
to existing shareholders prior to going public. As the company is doing the
same in the past as well. Shares worth Rs. 2000 Crores were sold through
the issuing house at an agreed price. It was also suggested to issue shares
worth Rs. 1500 crores to some selected individuals. It helps to raise capital
more quickly than a public issue. The proposal of Dhanpat Rai Pvt. Ltd.
was accepted by the Board of directors of Arun Ltd.

Q13. Identify the method of floatation adopted by Arun Ltd. to issue its 30%
shares.
A. Offer for sale B. e-IPO
C. Rights Issue D. Private Placement

Q14. Identify the method of floatation through which shares worth Rs. 2000
Crores were sold through the issuing house at an agreed price
A. Offer for sale B. e-IPO
C. Right Issue D. Private Placement

Q15. Identify the method of floatation through which shares worth Rs.
1500 crores to some selected individuals.
A. Offer for sale B. e-IPO
C. Right Issue D. Private Placement
Q16. The issue of shares worth Rs. 1500 crores to some selected
individuals will result in a benefit of raising capital quickly then the public
issue. What other benefit is offered by such an issue?
A. It makes paper work less
B. It reduces legal formalities
C. It can bring more premium money
D. It saves the issue related expenses.
(For Question No. 17-20) Read the following text and answer the following
questions:
Tarun, a renowned Spice trader in khari-baoli, Delhi, developed a mix of
spices which can be used both in cooking vegetables as well as can be
used to make a healthy and immunity boosting drink as well. He named it
as- “” He got its registration so that no duplicates could be made.
In the present times of Covid pandemic this spice mix sold like a hot cake.
Tarun took advantage of the situation and set a high price as per the rising
demand. Releasing the fact that the price is high and people will not buy
large quantities, he makes packs of different weights ranging from 100g to
1 Kg. As the demand for his Spice mix was increasing, he shifted from
‘selling it directly to customers’ to ‘involve agents at every state whereby
wholesalers will buy it locally and and turn the stock will be bought by
retailers and then it will be sold to customers.

Q17. What marketing related decision was taken by Tarun so that no one
can make duplicates of its Spice mix ?
A. Pricing B. Trademark
B. Brand mark D. Advertising

Q18. What marketing related decision is taken by Tarun to make packs of

different weights ?
A. Packaging B Branding
C. Labelling D. Pricing

Q19. What marketing related decision is taken by Tarun to sell the spice
mix throughout the country?

A. Product B.Pricing
C. Physical Distribution D. Promotion

Q20. What way is adopted by Tarun to reach its increasing customer base?

A. Direct Channel B. One-level Channel

C. Two-level Channel D. Three-level Channel
 SECTION B

Q 21. Mukesh opened the first fast food joint in Rohini. His burgers are very
famous in that area. He got the first mover advantage and his business is
doing very well. To earn higher profits, he started cutting the costs. He
reduced the number of cooks and delivery boys. As a result, there would be
a delay in delivery of food to customers.
Over a period of time,as more competitors entered the market, the demand
for his food declined.
Whenever he would get orders which his staff could not handle, he
outsourced the staff to complete the orders on time. This resulted in an
increase in the cost of food.
Identify the aspects of management ignored by Mukesh. Explain this
aspect with the help of an example.

Q 22. A call centre needs staff to satisfy the growing demands. In order to
fill the vacancies, it has to undertake the process of selection to identify the
most suitable people. State and explain the first three steps of the selection
process.

Q 23. In the Controlling process, which step is performed after the

Measurement of Actual Performance? Explain the two ways in which it is
done.
OR

Suggest the corrective actions for each of the following, with reasons:
defective material, defective machinery, and defective process of
production.

Q 24. State and explain the money market instruments which :

(i) are issued as zero coupon bonds.
(ii) serve as a source of “Bridge financing”.
(iii) help in maintaining cash reserve ratio.
OR
The overall objective of SEBI is to protect the interests of investors. It
controls insider trading and imposes penalties for such practices. State
other three protective functions of SEBI.

SECTION C Formatted: Font: Bold

Q 25. The employees working on Aarogya Setu application are unable

to work on it due to increasing subscribers. Suggest how can their
skills and knowledge be increased so that they can handle their work
independently. State any three benefits that the workers can derive
through this.

Q. 26. Identify the non-financial incentives in the following cases:

i) A computer training centre organises skill development
programmes. They have a sound promotion policy to give more
growth opportunities to the employees.
ii) CashurDrive is an Outdoor Advertising Company. They ensure that
the employees make their work more meaningful. There are
opportunities for personal growth. This results in an increase in
motivation for the employees at the workplace.
iii) Staff of an international school has been given autonomy to
conduct online classes.They are involved in the decision making
process for conduct of examination. The positive outcome is the
tapping of skills and talents of the employees to a higher degree.
iv) Raghu Enterprises announces the name of the star employee who
has the maximum sales for the month. The name of the employee is
written on the notice board and his/her picture is flashed on the
company website with the picture.

Q 27. Maslow believed that within every human being, there exists a
hierarchy of five needs. Basic Physiological needs like food, clothing
and shelter being the first, explain the other four needs in
chronological order.
OR
Jyoti has recently been awarded as the most promising Sales
Manager. She has helped her colleagues and subordinates restart
various halted projects by removing their doubts and directing them
at every stage. This has helped them achieve their targets on time.
She guides her team so effectively that every single effort of every
employee matters and is directed towards achievement of objectives.
Jyoti is fun loving, jovial and very caring for her team. This has
helped her to bring cooperation and commitment among her team
members. She continues to overcome any resistance by the
employees whenever any changes are introduced in the company.
She gives them proper explanations and convinces them why it's Formatted: Font: Bold

important to incorporate changes. Her consistent efforts have been

noted by the top level management and they see her as a promising
employee who would take the company to a higher level.
Identify the four points of importance of directing highlighted above by Formatted: Font: Bold

quoting the lines.

Q. 28. What is Financial Management? What are the three important

financial decisions taken by a Financial Management?
OR
‘A Capital Budgeting decision is capable of changing the financial
fortune of a company.’
Do you agree with this statement? Give reasons for your answers.

Q 29. Mahesh is engaged in Transport Business. He transports exotic

fruits to various parts of the country. Stating the reasons in support
for your answer, identify the working capital requirements of Mahesh.
Mahesh also wants to expand and diversify his transport business.
Explain any two factors which would affect his fixed capital
requirements.

Q 30. Explain any two reliefs that the Consumer Court can grant to
consumers in case of genuine complaints in each of the following
situations:
i) Anuradha was charged more than the printed price for a NCERT
Business Studies book, since it was in short supply.
ii) Mukesh was sold a truck with a defective engine.
iii) Shankar suffered injury while using a newly bought defective
electric iron.

SECTION D

Q 31. Match the following on the basis of effect:

S. No. Column 1 S. No. Column 2

a Division of work i Ensures congenial Formatted: Font: Bold

atmosphere
b Discipline ii Specialisation Formatted: Font: Bold

c Remuneration of iii Invites penalty if violated Formatted: Font: Bold

Employees
Formatted: Font: Bold

Explain each of these principles in your own words.

Q 32. Defining ‘Organisational objectives’ is the first step in the

process of planning. Explain in brief, the other steps of this process.
OR
In spite of the best efforts of managers, sometimes planning fails to
achieve desired results due to its limitations. Explain the limitations
of planning.

Q 33. Arun Electronics has been increasing its profits exponentially.

The company decided to change some of its policies. The decision
making authority was handed over to lowermost employees. This
turned out to be beneficial for the company. The employees felt a lot
of development in their skills. They could manage things on their
own. The production of the company also increased. The top
management of the company Mr Arun Sethi and his brother could
now focus on new innovations.
However this was short lived. The company’s manufacturing branch
could not fulfill even half of its production targets. The Operations
Manager was held responsible for this. His plea was that his right to
command the workers was inadequate.
The top management gave more powers to him and this ensured
better control.
i) Identify the concept of management highlighted here.
ii) List any five points of importance of this concept.

Q 34. On the basis of a) meaning, b) main focus, c) means and d)

ends differentiate between ‘Production Concept’ Philosophy and
‘Product concept’ Philosophy.
OR
“Money spent on Advertising is not a waste but an investment.”
Do you agree with this view? Give reasons in support of your answer.
 Class XII
Business Studies(054)
PRACTICE PAPER -4
Session: 2020-21

Marking scheme

1. D. Establishing a reporting relationship.

2. C. Complexity
3. B. Professional association
4. D. Technological Environment
5. C. Staffing
6. B. Tapping useful resources
7. C. Court Judgement
8. C. responsibility of all managers
9. A. Improving employee motivation
10. B. Critical Point Control
11. D. Span of Management OR B. Organisational Structure
12. A. a social process OR C. Market Offering
13. C. Rights Issue
14. A. offer for sale
15. D. Private Placement
16. D. It saves the issue related expenses.
17. B. Trademark
18. A. Packaging
19. C. Physical Distribution
20. D. Three-level Channel

21. The aspects of management ignored by Mukesh are:

Efficiency: doing the task correctly with minimum cost
Effectiveness: Doing the right task, completing activities and achieving
goals.
For example, if a company’s target production is 5000 units in a year, to
complete the given task the manager has to operate on double shifts due to
power failure most of the time. The manager is able to reach the target
production but at a higher cost. In this case, the manager was effective but
not efficient, since for the same output, more inputs ( labour cost, electricity
costs) were used.

22. The first three steps involved in the selection process are:
i) Preliminary Screening: This helps the manager eliminate unqualified or
unfit job seekers.
ii) Selection Tests: An employment test attempts to measure certain
characteristics of individuals like manual dexterity, intelligence or
personality.
iii) Employment Interview: Interview is a formal in-depth conversation
conducted to evaluate the applicant’s suitability for the job.

23. The step done after measurement of Actual Performance is: Analysing
Deviations.
Deviations in the key areas of business that need to be attended more
urgently as compared to deviations in certain insignificant areas. This can
be done in two ways:
i) Critical Point Control: Control should focus on key result areas which
are critical for the success of an organisation.
ii) Management by Exception: This emphasis on the fact that if the
manager tries to control everything, he may end up controlling nothing. So,
he should make a priority list and bring to the notice of top management
only significant deviations which go beyond permissible limits.

OR

Taking corrective action:

S. No. Causes of Deviation Suggestive Corrective action to

be taken
a Defective material Change the quality specification of
the material used
b Defective machinery Repair the existing machine or
replace the machine if it cannot be
replaced
c Defective process Modify the existing process

24. The money market instruments are:

(i) are issued as zero coupon bonds: Treasury Bills.
(ii) serve as a source of “Bridge financing”: Commercial Papers.
(iii) help in maintaining cash reserve ratio: Call Money
(Explanation as per NCERT)

OR

SEBI performs many protective functions besides controlling Insider

trading and imposing penalties for such practices. They are as follows:
i) Prohibition of fraudulent and unfair trade practices like making misleading
statements, manipulations, price rigging etc.
ii) Undertaking steps for investor protection.
iii) Promotion of fair practices and code of conduct in the securities market.

25. Skills and knowledge of employees working on Aarogya Setu can be

increased by giving them vestibule/ on the job training.
Three benefits which the employees can derive from this are: (any three)
i) It helps in promotion and career growth due to improved skills and
knowledge.
ii) It helps him to earn more due to improved performance.
iii) It reduces the accidents as the employees are more efficient to handle
machines.
iv) It increases the morale of the employees as the employees are more
satisfied.

26. The non-financial incentives highlighted in the case studies are:

i) Employee Participation
ii) Employee empowerment
iii) Job enrichment
iv) Career advancement opportunity.

27. Maslow’s Need Hierarchy

Maslow identified five levels in his Need Hierarchy.
i) Physiological need which is basic for human survival and includes need
for food, water, air, shelter, sleep, thirst etc.
The other needs in chronological order are as follows:
ii) Security or safety needs: These are the needs for physical safety as well
as psychological security and include safety of person and property,
security of job and need for a predictable, secure and safe environment.
iii) Social Needs: These are the needs for belongingness, friendship, love,
affection, attention, and social acceptance.
iv) Esteem or ego needs: These needs are need for self-esteem. Self-
esteem needs include needs for self-respect, self-confidence, competence,
autonomy,and knowledge. Other esteem needs relate to reputation,
prestige, power, status, recognition and respect for others.
v) Self-actualisation needs: This is the need ‘to be what one is capable of
becoming’. It includes optimal development of potential abilities, knowledge
and skills, need to be creative and schieve self-fulfilment.
Once a given level of needs is satisfied, it ceases to be a motivator and the
next higher level of need has to be activated to motivate an individual.
OR
The importance of directing highlighted in the case of Jyoti are as
follows:
i) Initiates action
‘She has helped her colleagues …..by removing their doubts and directing.’
ii) Guides employees
‘She guides her team so effectively …...towards achievement of objectives.’
iii) Bring stability and balance in the organisation
‘This has helped her to bring cooperation….. team members.’
iv)Facilitates introduction of change
‘She continues to overcome any resistance….to incorporate changes.’
28. Financial Management may be defined as planning, directing,
controlling the procurement and utilisation of funds available to a firm in a
proper way. Financial Management is that part of management which is
concerned with efficient acquisition and allocation of funds. Three main
decisions taken by a finance manager are:
i) Investment decisions: This relates to the careful selection of assets in
which funds are to be invested. It may include:
Management of current assets, capital budgeting, management of mergers,
reorganisations and disinvestments.
ii) Financing Decisions : This decision relates to the composition of
relative proportion of various sources of finance.
iii) Dividend decision: This decision relates to the appropriation of profits
earned, including the disposition of profits between dividends and retained
profits.
OR
Yes, the capital budgeting decision is capable of changing the financial
fortune of a company. The reasons for this are as follows:
i) The size of assets, profitability and competitiveness are all affected by
capital budgeting decisions
ii) These decisions normally involve huge amounts of investment.
iii) These decisions are normally irreversible except at a huge cost.
Therefore they need to be taken with utmost care.

29. Since Mahesh is involved in Transport Business, and transports exotic

fruits to different states, he needs only a low working capital. This is
because his business does not involve any processing and the operating
cycle is short. His business transaction also takes place without any loss of
time.
The following are the two factors that would affect Mahesh’s fixed capital
requirements in case of expansion and diversification of business:
i) Available alternatives for financing: If leasing facilities are easily available
in a financial market, they provide an easy alternative for Mahesh’s
business and facilitate an outright purchase of fixed assets.
ii) Possibility of collaboration: Mahesh may opt for collaborations for certain
facilities( warehousing, transportation, etc). This is so because, if the scale
of operations is not so large, enough to utilise such facilities fully and
individually, by itself.

30. Reliefs that the Consumer Court can grant to the customers are ( any
two)
a. i) To refund the price paid
ii) To pay punitive damages
iii) To discontinue the unfair/ restrictive trade practice and not to
repeat the same in future.
iv) To pay any amount ( not less than 5% of the value of book) to be
credited to the Consumer Welfare Fund or any other
organisation/person, to be used in the prescribed manner.
v) To pay adequate costs to the appropriate party
b. i) To remove the defect in the engine
ii) To replace the defective engine with a new one, free from any
defect
iii) To refund the price paid
iv) To pay punitive damages
c. i) To remove the defect in the electrical iron
ii) To replace the defective electrical iron with a new one, free from
any defect
iii) To refund the price paid
iv) To pay a reasonable amount of compensation for the loss or injury
suffered by the consumer due to negligence of the opposite party
v) To cease manufacture of hazardous goods like defective electrical
iron.
31. a- ii
b- iii
c -i
Division of work: Work can be performed more efficiently if it is divided into
specialized tasks.
Discipline: Obedience to organizational rules and employee agreement
which are necessary for the working of the organization.
Remuneration of Employees: Remuneration should be just and equitable.
Employees should be paid fair wages, which should give them a
reasonable standard of living.

32. The steps taken by management in the planning process are as

under:
i) Setting organisational objectives: The objectives for the whole
organisation as well as for each department are defined and specified.
ii) Planning premises: Planning premises are the planning assumptions or
the expected environment of plans in operations, like, demand of goods,
cost of raw materials, government policies, etc.
iii) Listing alternatives: A manager lists down the possible alternatives to
achieve objectives.
iv) Evaluating alternatives: Each alternative is examined thoroughly.
v) Selecting the best alternative: Each alternative has its strong and weak
points. The best alternative under the circumstances should be selected.
vi) Implementing the plan: Once the plans have been developed, they
should be put into action. For this purpose, cooperation of all members of
the organisation should be selected.
vii) Follow-up: Since planning is a continuous process, existing plans are
reviewed at intervals to ensure whether plans selected are proceeding
along the right path. For this purpose, a system for continuous evaluation of
the plans is required.

OR

The limitations of planning are as follows:

i) Planning is an expensive process: Planning depends on an effective
system of feedback, transmitting necessary data, collection and analysis of
data and evaluation of various courses of action. It results in heavy
expenditure.
ii) Planning is a time consuming process: Planning requires collection of
information, it's analysis and interpretation. These activities take
considerable time and planning is not practicable when quick decisions are
to be made.
iii) Planning results in rigidity: Planning implies prior determination of
policies and procedures whereas the business environment is dynamic.
This prevents business managers from taking initiatives and from doing
innovative thinking.
iv) Effectiveness of planning is limited due to dynamic factors: It's difficult to
forecast the external contingencies. Hence the best of plans may lose
effectiveness due to continuous changes in factors like, political climate,
behaviour of trade unions, technological changes etc.
v) Planning reduces creativity: This activity is performed by top
management and implemented by the rest of the people in the
organisation, who, as a result, lose their creativity to do any tasks, as they
are supposed to follow the plans.
vi) Planning does not guarantee success: Planning may create a false
sense of security in the organisation. Managers feel that if they pursue the
activities as per the plans, they are guaranteed success, however, it may
not always be so, due to change in certain situations.

33. The concept of management discussed here is Decentralisation.

Decentralisation of authority refers to systematic delegation of authority at
all levels of management and in all departments of the organisation for
taking decisions and action appropriate at the respective level.
The points of importance of decentralisation are as follows:
i) Development of initiative: Decentralisation of authority gives an
opportunity to the lower level managers to take their own decisions.
ii) Development of managerial talent: Under decentralisation, lower level
managers and subordinates learn by experience.
iii) Quick decision-making: Under decentralisation, decisions are taken at
the points nearer to the place of actual operations.
iv) Better control: Decentralisation makes it easy to assess the
performance and contribution of lower level management towards
organisational goals.

34. Differentiation between Production Concept Philosophy and

Product concept philosophy are as follows:
S. Basis Production concept Product concept
No. philosophy philosophy
i Meaning Production concept P, performance and
philosophy means the featureroduct concept
process of production philosophy means the
and distribution of process of production and
products widely distribution of products of
available at affordable superior quality
prices
ii Main Focus Its main focus is on Its main focus is on quality
quantity of product and performance features
of product
iii Means Marketing strategy Marketing strategy
revolves around the revolves around the
availability and improvement of the
affordability of product product
iv Ends It is based on profit It is based on profit
through volume of through product quality
production

OR
Yes, I agree with this statement. Advertisement is an investment because
of its following advantages and role in marketing management:
i) Expansion of market: Advertising helps the manufacturer to expand the
market for his product.
ii) Continuous demand: Advertising results in continuous demand for the
products.It brings to the knowledge of the people about new products.
iii) Securing dealers: If a product is well-advertised, more dealers get
attracted to stock of advertised goods because advertisement creates
demands.
iv) Promotion of goodwill: Advertising creates goodwill for the advertised
company. It acquaints the people with the name of the manufacturer and
leads to increased sales.
v) Lower costs: Advertising makes mass selling and increased sales. This,
in turn, makes possible production at large scale which has certain
economies. This reduces the cost of production.
vi) Supplementing salesmanship: Salesmanship has to make less efforts to
sell those products which are well advertised. This is because the
prospective customer has already learnt from the advertisement about the
uses, price and other particulars of the product.