12 Businessstudies23 24 sp01

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Class 12 - Business Studies

Sample Paper - 01 (2023-24)
Maximum Marks: 80
Time Allowed: : 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.
1. Ravi is the Managing Director of Ionn Ltd., manufacturing different varieties of cheese. He has an efficient team
working under him consisting of Lalit at, the Production manager, Varun - the Marketing manager and Abhay - the
Finance manager. They understand and interpret the policies made by Ravi, ensure that their departments have adequate
manpower, assign them the necessary duties and motivate them to achieve the desired objectives. Identify the level of
management they are working.
a) Top Level Management
b) Operational Management
c) All of these
d) Middle Level Management
2. What type of instruments are traded in a Money Market?
a) Call money
b) Commercial bills
c) All of these
d) Treasury bills
3. ________ is the essence of Planning.
a) Forecasting
b) Directing
c) Organising
d) Controlling
4. ________ aims at reducing the cost of funds procured, keeping the risk under control and achieving effective
deployment of such funds.
a) Trading on Equity
b) Capital Structure
c) Financial planning
d) Financial management
5. Controlling cannot prevent ________.
a) Setting Standards
b) Deviations
c) Order and Discipline
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d) Comparision of Actual and planned standards
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6. Identify the principle of management followed in the following pictorial representation.
a) Scalar Chain
b) Order
c) Unity
d) Equity
7. At present only two depositories are registered with SEBI ________.
a) NSDL and HDFC
b) NEFT and TDS
c) NSDL and ABSL
d) NSDL and CDSL
8. Nisha was working as a Human Resources Manager in a famous consultancy firm, KLI Global Services. Her job
included preparing job descriptions, recruitment, developing compensation and incentive plans and facilitating
employees learning. They had entered into alliances with institutes to ensure continuous learning of their employees.
With the jobs becoming more and more complex, KLI Global Services invested large amount of money in making the
employees learn the skills necessary to complete the jobs. Identify the concept adopted by KLI Global Services.
a) Induction
b) Recuritment
c) Training
d) Selection
9. Which of the following statements is incorrect?
i. A low Debt Service Coverage Ratio indicates better ability to meet cash commitments and consequently, the
company's potential to increase debt component in its capital structure.
ii. Use of higher debt increases the cost of equity.
iii. Low interest rates increase a firm's capacity to employ higher debt.
iv. None of the above
a) Option (i)
b) Option (ii)
c) Option (iv)
d) Option (iii)
10. Assertion(A): Division of work is of great importance in Organising.
Reason(R): It makes sure that there is no duplication of work and no burden of work on one person.
a) Both A and R are true and R is the correct explanation of A.
b) Both A and R are true but R is not the correct explanation of A.
c) A is true but R is false.
d) A is false but R is true.
11. Which of the following is not a money market instrument?
a) Preference share

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b) Call money
c) Commercial Share
d) Treasury Bill
12. There is more need of working capital in businesses where the demand to be seasonal. What out of the following is the
cause?
A. Capital remains stuck up for a long time in the raw material
B. Capital remains stuck up for a long time in the manufactured goods
C. More machines are needed
a) C and B
b) A and B
c) A and C
d) None of these
13. Statement I: Under the Consumer Protection Act 2019, a consumer also includes any user of goods if such use is made
with the approval of the buyer.
Statement II: Any person who obtains goods or avails services for resale or commercial purpose is nottreated as a
consumer and is outside the scope of Consumer Protection Act 2019.
a) Both the Statements I and II are not correct.
b) Statement II is correct and Statement I is not correct.
c) Both the Statements I and II are correct.
d) Statement I is correct and Statement II is not correct.
14. Ketan Enterprises adopts different ways to provide training to employees, like Job. Rotation, Coaching, Vestibule
Training, Conference, Lecture Method, and Role Playing.
Identify the type of plan being described in the above lines.
a) Strategy
b) Method
c) Programme
d) Procedure
15. When cost of debt is less than ROI, companies often employ more of cheaper debt to enhance the EPS. Such practice is
called ________.
a) Capital Structure
b) Trading on Equity
c) Financial planning
d) Financial management
16. Statement I: Marketing planning covers various important aspects including the plan for increasing the level of
production, promotion of the products, etc., and specifies the action programmes to achieve these objectives.
Statement II: Standardisation is the process of classification of products into different groups, on the basis of some of
its important characteristics such as quality, size, etc.
a) Statement I is correct and Statement II is not correct.
b) Both the Statements I and II are not correct.
c) Statement II is correct and Statement I is not correct.
d) Both the Statements I and II are correct.
17. A.co. is manufacturing garments. The manager wants to increase profits by purchasing new high-speed machines or
increasing the sale price or using waste materials in manufacturing stuffed toys. He decided that using waste material is
the best solution for him.
Identify the concept of management involved.
a) Planning

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b) Coordination
c) Organizing
d) Directing
18. Match the CHARACTERISTICS of management in Column I with their correct EXPLANATIONS in Column II:
Column I Column II
(a) Goal-oriented
(i) Management is a complex activity involving management of people, work and operations.
process
(b) Group activity (ii) Some aims and objectives are the basic reason for existence of an organization.
(iii) Diverse individuals with different needs work together to fulfill the common
(c) Multi-dimensional
organizational goal.
a) (a) - (iii), (b) - (ii), (c) - (i)
b) (a) - (iii), (b) - (i), (c) - (ii)
c) (a) - (ii), (b) - (i), (c) - (iii)
d) (a) - (ii), (b) - (iii), (c) - (i)
19. What out of the following is the effect of optimal capital structure?
a) Increase in the value of equity share
b) Increase in shareholders wealth
c) All of these
d) Low financial risk
20. ________ standard is associated with production.
a) Quality and Quantity
b) Inventory
c) Labour
d) Liquidity
21. A very innovative firm has decided to increase its sales. The company is good but they have noticed that their growth has
stagnated for the last couple of years. The top management calls for an emergency meeting. The people are told the
activities they have to perform. Thus the work is divided among individuals. The efforts taken by the firm turn out to be
very productive for the organisation and it gains huge profit. The newspapers and management institutes also praise the
company for its high standards of management. However, as time passes the size of the organisation grows and thus they
think of bringing another concept of management with a lot of precision. This concept of management is not voluntary
but rather based on a lot of clear cut thinking in advance. The main idea is to reduce confusion among the employees
regarding any of the activities they have been assigned. Identify the functions of management highlighted in the above
lines which the company follows. Also identify in the above lines a concept of management discussed which the
company tries to bring. Find out one importance and one characteristic of this concept highlighted above.
22. Give the meaning of Communication as an element of directing.
OR
Blue Birds Ltd. offers to its employees to issue shares at a price which is less than the market price.
(i) Name and explain the type of incentive offered to the employees.
(ii) Explain one more incentive of the same category.
23. Hamam Singh owns fruit orchids near Bhowali near Nainital where finest quality of apples, peaches, strawberries, and
plums are grown. He plans to start 15 juice kiosk in different localities in Nainital in partnership with his brother-in-law
Gurpal Singh. He is planning to take place for shops on rent besides he needs money for the purchase of other
ingredients, machines for making the juice, and the salaries of the employee(s) making the juice etc.

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Identify and explain any two factors affecting fixed capital requirements of Hamam Singh's new business proposal being
discussed in the above paragraph by quoting lines from the paragraph.
24. State any three points which highlight the importance of consumer protection from consumer’s point of view.
OR
State how Government and Consumer Awareness Act could help in achieving the objectives of consumer protection.
25. Give the meaning of 'objectives’ and ’budget' as types of plans.
OR
Explain any three points of importance of the planning function of management.

26. “Controlling implies taking action”. Explain.
OR
Define the concept of Management by Exception.

27. Mr. Radha Krishan Kher is the Production Manager of Krishna Milk Products Pvt. Ltd. He is producing several milk
products. Various alternatives are available for producing each product. It is the endeavour of Mr. Kher that the best and
cheap alternative be adopted in production. He has made a special arrangement in his department. According to it, a
proper place will be earmarked for everything used in the production department. He has also directed the employees of
the department that everything should be available at its decided place. There is a provision for awarding punishment to
those who ignore this direction. All activities of Mr. Kher’s department are closely related to each other. To maintain
balance among them he makes special efforts so that there is no obstruction in production.
i. Which technique of scientific management is being practised by the company in the above paragraph.
ii. Quoting the lines, identify that function of the management which is called Essence of Management.
iii. Which principle of Henry Fayol is being followed by the company.
28. Describe any three barriers to communication.
29. Stock exchange acts as a regulator of the securities market. It creates a continuous market where the securities are bought
and sold. It gives investors the chance to disinvest and reinvest. Through this process of disinvestment and reinvestment,
savings get channelized into their most productive investment avenues. To ensure that the investing public gets a safe
and fair deal in the market, the membership of the stock exchange is well regulated and its dealings are well defined
according to the existing legal framework. It also ensures wider share of ownership by regulating new issues, better
trading practices and taking effective steps in educating the public about investments. Various functions performed by
the Stock Exchange are discussed in the above para. By quoting lines from the above para, state any four functions of
stock exchange.
30. Vastra Ltd. is engaged in the manufacturing of apparel. Over the years, it has became a popular brand due to its good
product quality and exclusive designing. The company plans to open its own retail showrooms in metropolitan cities in
India. In order to meet its financial needs it has offered for subscription an IPO of Rs.4 lakh equity shares in the price
band of Rs.430 - Rs.445 each. As per the guidelines of SEBI, the company has provided a complete disclosure of the
relevant details in its prospectus.
a. Identify and explain the right of the consumer being fulfilled by the directives of SEBI in the above mentioned case.
b. Briefly explain any two points highlighting the importance of consumer protection from the point of view of the
businessmen.
31. Define staffing as a function of management and state its importance.

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OR
Atul is working in an organisation. After every three months, his manager transfers him from one department to another
so that he may gain a broader understanding of all the departments of the organisation.
Name and explain the method of training Atul is undergoing.
32. Describe the main constituents of a new economic policy (economic reforms).
OR
Business environment is the sum total of all individuals, institutions and other forces which are likely to influence the
performance of a business enterprise although they happen to exist outside its boundaries. Illustrate the statement with
the help of examples.
33. A company manufacturing sewing machines set up in 1945 by the British promoters follows formal organisation culture
in totality. It is facing lot of problems in delays in decision making. As the result it is not able to adapt to changing
business environment. The work force is also not motivated since they cannot vent their grievances except through
formal channels, which involve red tape. Employee turnover is high. Its market share is also declining due to changed
circumstances and business environment. You are to advise the company with regard to change it should bring about in
its organisation structure to overcome the problems faced by it. Give reasons in terms of benefits it will derive from the
changes suggested by you.
34. Advertisement is an important business activity. On the one hand, it makes available to the people information regarding
different new and old products and on the other, it is also a source of living for many persons. Impressed by these traits
of advertisement Tanu, Manu and Sanchit, three students of Class-XII made up their mind to go ahead with project work
on an advertisement. All the three conversed with the people about advertisement. Each one of them, on the basis of his
survey, concluded as under:
i. Tanu opined that advertisement costs get transferred to consumers in the form of high prices.
ii. Manu was of the opinion that advertisement showed reality in a twisted form.
iii. Sanchit maintained that advertisement was turning people from reality to artificiality.
a. What do the above remarks about advertisement hint at? Clarify it.
b. Identify two values that advertisement presents to society.

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Class 12 - Business Studies

Sample Paper - 01 (2023-24)
Solution
1. (d) Middle Level Management

Explanation: Middle Level Management
2. (c) All of these
Explanation: Types of money market instruments are, Treasury Bills. Treasury bills (T-bills) are short-term notes issued
by the U.S. government, Federal Agency Notes, Short-Term Tax Exempts, Certificates of Deposit, Commercial
Paper, Bankers' Acceptances, Repurchase Agreements.
3. (a) Forecasting
Explanation: Forecasting is the essence of planning.
4. (d) Financial management
Explanation: Financial management
5. (b) Deviations
Explanation: Control as a function identifies deviations between the actual and set standard of a task.
6. (a) Scalar Chain
Explanation: Scalar Chain
7. (d) NSDL and CDSL
Explanation: One is the National Securities Depository Limited (NSDL) and the other is the Central Depository Service
(India) Limited (CDSL) are two depositories which registered with SEBI.
8. (c) Training
Explanation: Training
9. (a) Option (i)
Explanation: A higher DSCR indicates better ability to meet cash commitments and consequently, the company's
potential to increase debt component in its capital structure.
10. (a) Both A and R are true and R is the correct explanation of A.
Explanation: Division of work is important because it ensures that there is no duplication of efforts and also leads to
specialisation.
11. (a) Preference share
Explanation: Preference share
12. (b) A and B
Explanation: Both (A) & (B) are responsible for this situation
13. (c) Both the Statements I and II are correct.
Explanation: Both the Statements I and II are correct.
14. (b) Method
Explanation: Method is the correct option.
15. (b) Trading on Equity
Explanation: Trading on Equity
16. (a) Statement I is correct and Statement II is not correct.
Explanation: Statement I is correct and Statement II is not correct.

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17. (a) Planning
Explanation: Planning as a concept of management is been discussed here.
18. (d) (a) - (ii), (b) - (iii), (c) - (i)
Explanation: (a) - (ii), (b) - (iii), (c) - (i)
19. (c) All of these
Explanation: The capital structure of a company affects both the profitability and the financial risk. A capital structure
will be said to be optimal when the proportion of debt and equity is such that it results in an increase in the value of the
equity share. In other words, all decisions relating to the capital structure should emphasize increasing the shareholders’
wealth.
20. (a) Quality and Quantity
Explanation: Quality and quantity standards are used to measure performance.
21. The functions of management highlighted above are Planning (The company has decided to increase its sales) and
Organising (The work is identified and divided among individuals).
The concept of management highlighted above is Coordination. The process by which a manager synchronises the
activities of different departments is known as coordination.
The importance of coordination when the size of the organisation increases is told here and the characteristic
highlighted is coordination is deliberate. The concept of management is not voluntary but based on a lot of clear cut
thinking in advance.
22. Communication is a process of exchange of ideas, views, facts, feelings etc between or among people to create common
understanding. There are two forms of Organisational communication:
i. Formal communication
ii. Informal Communication
OR
(i) The name of the incentive offered is Stock Options. Under these incentives schemes, employees are offered company
shares at set price which is lower than market price. Sometimes, management may allot shares in line of various
incentives payable in cash.The allotment of shares creates a feeling of ownership to the employees and makes them to
contribute for the growth of the organisation.
(ii) Retirement benefits: Several retirement benefits such as provident fund, pension and gratuity provide financial
security to employees after their retirement. This acts as an incentive when they are in service in the organisation.
23. Fixed capital includes the assets and capital investments—such as property, plant, and equipment (PPE) —that are
needed to start up and conduct business, even at a minimal stage. These assets are considered fixed in that they are not
consumed or destroyed during the actual production of a good or service but have a reusable value. Fixed-capital
investments are typically depreciated on the company's accounting statements over a long period of time—up to 20 years
or more. The two factors that will affect his fixed capital requirements when he will start his own ice-cream factory are
described below:
i. Level of collaboration: If a person gets an opportunity to set up his business in collaboration with another enterprise
its fixed capital requirements will reduce considerably else his fixed capital requirements will be more.
"He plans to start open 15 juice kiosk in different localities in Nainital in partnership with his brother-in-law Gurpal
Singh."
ii. Financial alternatives available: If a business is able to get the place to start the factory and machinery on lease his
fixed capital requirements will reduce considerably. Whereas, if he decides to purchase them his fixed capital
requirements will be more.
"He is planning to take place for shops on rent."
24. Importance of consumer protection from consumer's point of view is:

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i. Spreading Awareness among the Consumers: Due to widespread ignorance of consumers about their rights and
reliefs available to them, they need to be made aware in this regard Consumer protection provides information to the
ignorant consumers regarding their rights and reliefs available to them. With this, even the sellers who try to cheat the
ignorant and illiterate consumers, become conscious and mend their ways.
ii. Unorganized consumers: Consumers need to be organized for safeguarding their interests. In developing countries
like India, consumérs are not organized. In other words, there is a dearth of a National Level Consumer Organization.
There are very few consumer organizations which are working to protect the interests of consumérs. Consumer
protection encourages the establishment of more consumer organizations.
iii. Widespread exploitation of consumers: Consumers is exploited by unscrupulous, exploitative and unfair trade
practices of sellers. They might be exploited by unfair trade practices like defective and unsafe products, adulteration,
hoarding, black marketing, etc. Consumers need protection against such unfair trade practices. Consumer protection
has been a support system for all such consumers to protect their interests and provide them justice.
OR
i. Government The government can protect the interests of the consumers by enacting various legislations. The legal
framework in India encompasses various legislations, which could provide protection to consumers. The most
important of these regulations is the Consumer Protection Act, 1986, which provides three-tier machinery for
redressal of consumer grievances. The Government has the responsibility of safety and security of its people and
therefore it must frame such laws which could make the sellers refrain from various malpractices.
ii. Consumer Awareness Act: A consumer, who is well-informed about his rights and his reliefs available to him,
would be in a position to raise his voice against unfair trade practices or unscrupulous exploitation. This would
enable him to safeguard his interests. Consumer Awareness Act, provides the consumer a platform to raise his voice
against any form of malpractice.
25. Objectives
These are defined as ends which the management seeks to achieve by its operations.
The objectives are usually set by the top management of the organisation.
Objectives focus on broad and general issues.
They define the future state of affairs which the organisation strives to realise.
For example, An organisation may have an objective of increasing sales by 10% or earning a reasonable rate of
return.
Budget
It is a statement of expected results expressed in numerical terms.
It is a projection designed to define the anticipated costs and results in numerical terms of a single project.
It comes under the single-use plan.
It is considered as a control device, prepared during the planning process.
Various types of budget are cash budget, production budget, sales budget etc.
OR
i. Planning provides directions: Planning ensures that the goals or objectives 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: Planning is an activity that enables a manager to look ahead and
anticipate changes. By deciding in advance the tasks to be performed, planning shows the way to deal with changes
and uncertain events.
iii. Planning reduces overlapping and wasteful activities: Planning serves as the basis of coordinating the activities
and efforts of different divisions, departments and individuals. It helps in avoiding confusion and misunderstanding.
Since planning ensures clarity in thought and action, work is carried on smoothly without interruptions.

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26. Controlling is a process under which:
(i) After setting the targets actual performance is compared with the standard or planned performance.
(ii) This is done in order to identify the deviations or difference between the two.
(iii) Finally, the aim of doing controlling is to remove these deviations after identifying the causes and taking action to
correct or match the actual and planned performance.
OR
Management by exception means a system under which manager attends only to problems that need his attention and
action and thus avoids dealing with those that may be handled by his subordinates. Management by exception is widely
used.
27. i. Method Study, a principle of Scientific Management is used here. The main objective of this study is “to find out
one best way of doing the job.”
ii. “All activities of Mr. Kher’s department are closely related to each other. To maintain balance among them he makes
special efforts so that there is no obstacle in production.”
Coordination: It refers to that process through which harmony is established among different activities of an
organisation so that organisational objectives can be successfully achieved.
iii. Company is following the “Principle of Order” of Henry Fayol. According to this principle, people and materials
must be at suitable places, at an appropriate time for maximum efficiency.
28. Three barriers to communication are :
1. Semantic Barriers: It is the branch of linguistics dealing with meaning of words and sentences. These are the barriers
concerned with wrong of encoding and decoding of messages.
2. Psychological Barriers: Emotional or psychological factors acts as barriers to communicators. It is concerned with
the state of mind of the sender as well as the receiver.
3. Organisational Barriers: The factors related to organisational structure, authority, relationships, rules and regulations
may, sometimes, act as barriers to effective communication.
29. The functions performed by the Stock Exchange are as follows:
i. Economic Barometer: A stock exchange is a reliable barometer to measure the economic condition of a country.
ii. Pricing of Securities: - 'Stock exchange takes effective steps in educating the public about investments'. It
encourages wider ownership of securities.
iii. Safety of Transactions - 'It provides a platform for channelising the savings to the most productive use'. It gives
investors the chance to disinvest and reinvest.
iv. Contributes to Economic Growth - 'It ensures that investing people gets a safe and a fair deal in the market, the
membership of the stock exchange is well regulated and its dealings are well defined according to the existing legal
framework'.
30. a. The Right to information is being fulfilled by the directives of SEBI in the above mentioned case.
According to the Right to information, the consumer has the right to get complete information about the product that
he/she may propose to buy including its contents, date of manufacture and expiry, maximum retail price, quantity,
directions for use etc. Moreover, as per law, it is mandatory for the marketers to provide complete information about
the product/service to buyers.
b. An analysis of marketing management has made it clear that consumer is a king pin in the market. The producer
should produce goods keeping in mind the requirements of consumers and satisfy the consumer but it is observed that
this obligation is neglected by some businessmen and they are involved in the unfair practices such as supply of
substandard quality, adulteration etc. So there is need for consumer protection. Hence consumer protection means
protecting the interest of consumer.The importance of consumer protection from businessmen's point of view is
outlined below:

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i. Long - term interest of business: In order to ensure long term interest of business it is important that businessmen
strive to earn profits only through consumer satisfaction. This will not only ensure the survival of business but
also lead to its growth in the future.
ii. Business uses society's resources: Since a business employs society's resources to create offerings so they need to
safeguard the consumer's interests.
31. Staffing function of management helps in obtaining the right people and putting them on the right jobs. Proper staffing
ensures the following benefits to the organization:
i. Obtaining competent personnel: In all organizations, there is a need for people to perform work. Staffing function
helps in discovering and to obtain competent personnel for various jobs.
ii. Higher performance: Staffing finds the right person for the right job. It ensures the higher performance of the
employees as work is assigned according to their capabilities and at the same time, organizational objectives are
achieved in the most efficient and effective manner.
iii. Survival and growth: By appointing efficient staff, staffing ensures the continued survival and growth of an
enterprise. An organization grows with the sincere efforts of its employees only.
iv. Optimum utilization of human resources: Through manpower planning and job analysis, we can find out the
number and types of employees required in the organization. So, there are no chances of overmanning, shortage or
under-utilization of personnel.
OR
The method of training that Atul is undergoing is job rotation. Job rotation is the systematic movement of employees
from one job to another within the organization to achieve various human resources objectives such as orienting new
employees, training employees, enhancing career development, and preventing job boredom or burnout. This kind of
training involves shifting the trainee from one department to another or from one job to another This enables the trainee
to gain a broader understanding of all parts of the business and how the organisation functions as a whole.
When employees are trained by this method, the organisation finds it easier at the time of promotions, replacements or
transfers. This will broaden his horizon and capacity to do a variety of jobs. Rotation of an employee on different jobs
should not be done frequently.
32. Following are the main constituents of economic reforms:
a. Liberalisation- Liberalisation refers to the extensive reduction in government regulations guiding the public sector.
Liberalisation means to free the private sector from direct or physical controls imposed by the government.
Previously, the private sector in India was subject to a number of controls and restrictions. Following are the
important features of liberalisation:
i. Deregulation of the industrial sector
ii. Financial sector reforms
iii. Tax reforms
iv. Foreign exchange reforms
v. Trade and investment policy reforms.
b. Privatisation- Privatisation means a greater role for private capital and enterprise. The main objective of
privatisation is to make use of privately owned resources for the collective welfare of the people. Privatisation
ensures opening a larger part of the economy for the private sector and thus reducing state monopoly. Following are
the important features of privatisation:
i. Denationalisation i.e. transfer of the ownership of public sector enterprises to the private sector.
ii. Disinvestment i.e. sale of a part of the equity of public sector enterprises to private entrepreneurs.
iii. Restrictions on the public sector for expansion.
c. Globalisation- Globalisation refers to the growing economic interdependence among countries. Globalisation
ensures free movement of capital, technology, labour and manpower. Following are the features of globalisation:

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i. Liberalisation of import licensing.
ii. Rationalisation of tariff structure.
iii. Reforms in foreign exchange management.
OR
The term 'business environment' means the sum total of all individuals, institutions and other forces that are outside the
control of a business enterprise but that may affect its performance. The economic, social, political, technological and
other forces which operate outside a business enterprise are part of its environment. So also, the individual consumers or
competing enterprises as well as the governments, consumer groups, competitors, courts, media and other institutions
working outside an enterprise constitute its environment. When Pepsi and Coca-Cola got permission to set up their
business in India, it was an opportunity for them and threat for local manufacturers like gold spot, camp-cola etc. For
example, changes in governments economic policies, rapid technological developments, political uncertainty, changes in
fashions and tastes of consumers and increased competition in the market - all influence the working of a business
enterprise in important ways.
Increase in taxes by government can make things expensive to buy.
Technological improvements may render existing products obsolete.
Political uncertainty may create fear in the minds of investors.
Changes in fashions and tastes of consumers may shift demand in the market from existing products to new ones.
Increased competition in the market may reduce profit margins of firms.
33. The major change that is required to correct the situation is to move away from a complete formal organisation
structure and allow for some informal structure. An informal structure is a network of social relationships that arise
out of personal interactions among employees of an organisation beyond their officially defined roles.
An informal structure would benefit the organisation in the following manner.
As no definite path or channel of communication is followed, information spreads faster.
An informal organisation allows for personal communication beyond the officially defined roles. This unofficial
interaction provides a sense of belongingness among the employees towards the organisation and towards each
other. This helps in lowering the employee turnover.
An informal organisation supports the working of formal organisation, thereby helps in fulfilment of
organisational objectives in a better manner.
The company can diversify in other sewing related products as better and technologically advanced sewing machines,
machines with advance features such as embroidery.
34. a. The remarks in the above paragraph hint at objections against the advertisement. According to all the three
participants in the project work, the main disadvantages of advertisement are as under:
i. It Adds to Costs: An organisation has to spend a huge amount on advertisement. It increases the cost of the
products. To meet the expenditure, the price of the product is raised. No manufacturer pays for advertising
expenses out of his Advertising, therefore, it leads to an unnecessary rise in prices. In this regard, it is said that
advertising costs are passed on to the consumers in the form of high prices.
ii. It Confuses the Buyers: Many a time distorted version of reality is depicted in the advertising. Under the
influence of advertisements, consumers go in for the product. When they use it, they feel cheated. Then they
realize that the information given in the advertisement about the product was quite different from the actual
product. In this way, advertisement states people's confidence in it. Therefore, it is said that advertising confuses
consumers rather than helping them.

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iii. It undermines Social Values: Advertisement is a kind of day-dreaming for the people. It drives people away
from reality into the realm of artificiality. Through its medium people are regularly informed about new products.
Only very few products of any worth for them. The brilliance of new products overwhelms them. They are
tempted to buy them but lack the necessary resources. Consequently, they feel frustrated with their lot.
Considering it a social evil, it can be said that advertisement undermines social values.
b. Values:
i. Adds to knowledge.
ii. Provides employment opportunities.

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Class 12 - Business Studies

1. This question paper contains 34 questions.

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Explain any three points of importance of the planning function of management.

Define the concept of Management by Exception.

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Class 12 - Business Studies

1. (d) Middle Level Management

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