Chapter-wise NOTES

for
CBSE Examination 2024

(Strictly Based on NCERT Books 2023-24

and CBSE Papers Marking Scheme)

Concept of Management
Definitions of Management
“Management is the process of designing and maintaining an
environment in which individuals, working together in groups,
efficiently accomplish selected aims.”
— Harold Koontz and Heinz Weihrich
“Management is defined as the process of planning, organising,
actuating and controlling an organisation’s operations in order
to achieve coordination of the human and material resources
essential in the effective and efficient attainment of objectives.”
— Robert L. Trewelly and M. Gene Newport
“Management is the process of working with and through others
to effectively achieve organisational objectives by efficiently using
limited resources in the changing environment.” — Kreitner
Management is the process of getting things done with the
aim of achieving goals effectively and efficiently.
• 'Process' means functions/activities of management to get
things done, i.e. planning, organising, staffing, directing and
controlling.
• Effectiveness: Being effective or doing work effectively
basically means finishing the given task. Effectiveness
in management is concerned with doing the right task,
completing activities and achieving goals. In other words, it
is concerned with the end result.
• 'Efficiency' means doing the task correctly and with
minimum cost.
Top Tip
There is a kind of cost-benefit analysis involved and the
relationship between inputs and outputs.
• If by using less resources (i.e., the inputs) more
benefits are derived (i.e., the outputs) then efficiency
has increased. Input resources are money, materials,
equipment and persons required to do a particular task.
• Efficiency is also increased when for the same benefit
or outputs, fewer resources are used and less costs
are incurred.
Obviously, management is concerned with the efficient
use of these resources, because they reduce costs and
ultimately lead to higher profits.
Effectiveness versus Efficiency
These two terms are different but they are interrelated. For
management, it is important to be both effective and efficient.
Effectiveness and efficiency are two sides of the same coin. But
these two aspects need to be balanced and management at
times, has to compromise with efficiency. For example, it is
easier to be effective and ignore efficiency i.e., complete the
given task but at a high cost. Suppose, a company’s target
production is 5000 units in a year. To achieve this target the
manager has to operate on double shifts due to power failure
most of the time. The manager is able to produce 5000 units
Chapter 1
Nature and
Significance of
Management
but at a higher production cost. In this case, the manager was
effective but not so efficient, since for the same output, more
inputs (labour cost, electricity costs) were used.
At times, a business may concentrate more on producing goods
with fewer resources i.e., cutting down cost but not achieving
the target production. Consequently, the goods do not reach
the market and hence the demand for them declines and
competitors enter the market. This is a case of being efficient
but not effective since the goods did not reach the market.
Characteristics/Features of Management G2IP MCD
1. Management is a Goal oriented process: Every organisation
has a set of basic goals which are the basic reason for its
existence and unites the efforts of different individuals in
the organisation towards achieving these goals.
2. Management is Pervasive: The activities involved in
managing an enterprise are common to all organisations,
whether economic, social or political. These activities are
performed at all levels – Top, middle and lower and in all
the departments of all type of organisations.
3. Management is a Continuous process: The process of
management is a series of continuous, composite but
separate and ongoing series functions. These functions are
simultaneously performed by all managers all the time.
4. Management is a Dynamic function: Management is a
dynamic function and has to adapt itself to the changing
environment. In order to be successful, an organisation
must change itself and its goals according to the needs of
the environment.
5. Management is an Intangible force: Management is an
intangible force that cannot be seen but its presence can
be felt in the way the organisation functions. The effect
of management is noticeable when targets are met and
employees are happy and satisfied.
6. Management is a Group activity: An organisation is a
collection of diverse individuals with different needs. Every
member of the group has a different purpose for joining the
organisation but as members of the organisation they work
towards fulfilling the common organisational goal.
This requires team work and coordination of individual effort
in a common direction. At the same time management
should enable all its members to grow and develop as needs
and opportunities change.
7. Management is Multi-dimensional: It involves three
dimensions: Management of work, Management of people,
Management of operations.
• Management of work means translating the work in
terms of goals to be achieved and assigning the means to
achieve it.
• Management of people means dealing with employees
as individuals with diverse needs and behaviour as well
as dealing with individuals as a group of people.
 iv EXAM HANDBOOK Business Studies XII
• M
 anagement of operations means managing a
production process which involves transforming inputs
into desired output for consumption.
Objectives of Management
1. Organisational or Economic Objectives
• Survival–Management must earn enough revenues to
cover cost for the survival of the business.
• Profit–Management has to ensure that business earns profit
which is essential for covering cost and risk of the business.
• Growth–Management must exploit fully the growth
potential of the organization. Indicators of growth are
increase in sales turnover, capital investment and number
of products and employees.
2. Social Objectives: It involves the creation of economic value
for various constituents of society like using environment-
friendly methods of production, providing basic amenities
like schools and health care for community, giving
employment opportunities to the disadvantaged sections of
the society, etc.
3. Personnel Objectives: Personnel objectives of management
aim at satisfying the needs of the employees such as financial
needs by giving them competitive salary and perks, social
needs such as peer recognition, and higher level needs such
as personal growth and development.
Importance of Management
DPS EG
1. Management increases Efficiency: The aim of a manager
is to reduce costs and increase productivity through better
planning, organising, directing, staffing and controlling the
activities of the organisation.
2. Management helps in achieving group Goals: Management
is required not for itself but for achieving the goals of the
organisation. The task of a manager is to give a common
direction to the individual effort in achieving the overall goal
of the organisation.
3. Management creates a Dynamic organisation: All
organisations have to function in an environment which is
constantly changing. People in an organisation generally
resist changes. Management helps people adapt to these
changes so that the organisation is able to maintain its
competitive edge.
4. Management helps in achieving Personal objectives: A
manager motivates and leads his team in such a manner
that individual members are able to achieve personal goals
while contributing to the overall organisational objective.
Through motivation and leadership the management
helps individuals to develop team spirit, cooperation and
commitment to group success.
5. Management helps in the development of Society:
Management helps in the development of society by
providing good quality products and services, creating
employment opportunities, adopting new technology for
the greater good of the people and leading the path towards
growth and development.
Levels of Management
1. Top Level Management consists of Chief Operating Officer,
Chief Executive Officer (CEO), Chief Finance Officer, Director,
Chairman, President, Vice-President, etc.
Shree Radhey Publications (Subhash Dey)
Functions: (i) To coordinate the activities of different
departments according to the overall objectives of the
organisation. (ii) To be responsible for welfare and survival of
the organisation. (iii) To analyse the business environment and
its implications for the survival of the firm. (iv) To formulate
overall organisational goals, and framing strategies for their
achievement. (v) To be responsible for all the activities of the
business and for its impact on the society.
2. Middle Level Management consists of divisional/
departmental heads, such as Production Manager, Marketing
Manager, Operations Manager, Plant Superintendent, etc.
Functions: (i) To interpret the policies framed by top
management. (ii) To ensure that their department has the
necessary personnel. (iii) To assign necessary duties and
responsibilities to the employees. (iv) To motivate employees
of their respective departments to achieve the desired
objectives. (v) To cooperate with other departments for smooth
functioning of the organisation.
3. Operational or Supervisory Management consists of
Supervisors and Foremen.
Functions: (i) To oversee the efforts of the workforce. (ii) To
interact with the actual workforce and pass on the instructions
of the middle management to the workers. (iii) To ensure that
the quality of output is maintained and wastage of material is
minimized. (iv) To ensure safety standards are maintained.
Functions of Management POS DC
1. Planning: Planning is the function of determining in advance
what is to be done and how it is to be done. This implies
setting goals in advance and developing a way of achieving
them efficiently and effectively. Planning cannot prevent
problems, but it can predict them and prepare contingency
plans to deal with them if and when they occur.
2. Organising: Organising is the management function of
assigning duties, grouping tasks, establishing authority and
allocating resources required to carry out a specific plan.
Organising function examines the activities and resources
required to implement the plan. It decides who will do a
particular task, where it will be done, and when it will be
done.
3. Staffing: Staffing simply stated, is finding the right people
for the right job. Staffing is to make sure that the right
people with the right qualifications are available at the right
places and times to accomplish the goals of the organisation.
Staffing is also known as the human resource function and it
involves activities such as recruitment, selection, placement
and training of personnel.
4. Directing: Directing involves leading, influencing and
motivating employees to perform the tasks assigned to
them. Motivation and leadership are two key components
of direction. Motivating workers means creating an
environment that makes them want to work. Leadership is
influencing others to do what the leader wants them to do.
Directing also involves communicating effectively as well as
supervising employees at work.
5. Controlling: Controlling is the management function
of monitoring organisational performance towards the
attainment of organisational goals. It involves establishing
 NOTES & Sample Papers for CBSE 2024 Exam
standards of performance, measuring current performance,
comparing this with standards and taking corrective action
where any deviation is found.
Management as an Art
Art is the skillful and personal application of knowledge to
achieve desired results.
Management is an art because of the following reasons:
1. Existence of theoretical knowledge: As in art, in management
too, there is a lot of literature available in various areas of
management which the manager has to specialise in.
2. Personalised application: Like in any art, in management too,
a manager applies his acquired knowledge in a personalised
and unique manner.
3. Based on continuous practice and creativity: Management
satisfies this criteria as manager gains experience through
regular practice and becomes more effective. Like any other
art, a manager after studying various situations, formulates
his own theories for use in a given situation.
Management as a Science
Science is a systematised body of knowledge that explains
certain general truths or the operation of general laws.
Management is a science but not an exact science. The reasons are:
1. Systematised body of knowledge: Like science, management
is a systematised body of knowledge with its own theories
and principles that have developed over a period of time.
2. Principles based on observation and experimentation:
Like science, management principles are derived through
observation and repeated experimentation. However,
since management deals with human beings the outcome
of these experiments are not capable of being accurately
predicted. So, this feature of science is not fully present in
management.
3. Universal validity: Principles of management like principles
of pure science provide managers with certain standardised
techniques that can be used in different situations. However,
since they have to be modified according to a given situation,
their application and use is not universal. So, this feature of
science is not fully present in management.
Top Tip
Management is both an art and a science.
• The practice of management is an art.
• However, managers can work better if their practice
is based on the principles of management. These
principles constitute the science of management.
Management as an art and a science are therefore not
mutually exclusive, but complementary to each other.
Management as a Profession SWEEP
All the features of profession are not fully present in management:
1. Well-defined body of knowledge: The subject of
management is taught at different institutions to provide
management education.
2. Restricted Entry: There is no restriction on anyone being
appointed as a manager in any business enterprise.
So, presently this feature of profession is not present in
management.
EXAM HANDBOOK Business Studies XII v
3. Professional association: There are several associations
of practising managers in India, like the AIMA, that have
laid down a code of conduct to regulate the activities of
their members, but, there is, however, no compulsion for
managers to be members of such associations. So, presently
this feature of profession is not fully present in management
4. Ethical code of conduct: AIMA has devised a code of conduct
for Indian managers but there is no statutory backing for
this code. So, presently this feature of profession is not fully
present in management.
5. Service motive: The basic purpose of management to help
the organisation achieve its goals by providing good quality
products at reasonable prices, thereby, serving the society,
is being increasingly recognised. So, presently this feature of
profession is not fully present in management.
It can be concluded that management is not a full fledged
profession like legal, accounting or medical professions
because it does not meet the exact criteria of a profession.
Coordination – The essence of management
The process by which a manager synchronises the activities of
different departments is called coordination.
Definitions of Coordination
“Coordination is balancing and keeping together the team by
ensuring suitable allocation of tasks to the various members and
seeing that the tasks are performed with harmony among the
members themselves.” — E.F.L. Brech
“Coordination is the process whereby an executive develops an
orderly pattern of group efforts among his subordinates and secures
unity of action in the pursuit of common purpose.” — McFarland
“Coordination is the orderly synchronising of efforts of subordinates
to provide proper amount, timing and quality of execution so that
their united efforts lead to the stated objectives, namely, the
common purpose of the enterprise.” — Theo Haimann
Coordination is not a separate function of management. It is
the force that binds all other functions and thus called the
essence of management.
• The process of coordinating the activities begins at the
planning stage in which the top management plans for the
entire organization.
• At the organizing stage, the organizational structure is
developed as per plans.
• The staffing function is performed to fill the positions
developed in the organization structure.
• Directing is then required to ensure that these plans are
executed accordingly.
• Controlling function ensures that the discrepancies between
actual and planned activities are taken care of.
Characteristics/Features of Coordination DU PCR I
1. Coordination Integrates group efforts by unifying diverse
interests into purposeful work activity.
2. Coordination ensures Unity of action by acting as a binding
force between departments and ensuring that all action is
aimed at achieving the goals of the organisation.
3. Coordination is a Continuous process as it starts at the
planning stage and continues till controlling.
4. Coordination is a Pervasive function as it is required in all
types of organisations, in all the departments and at all
levels.
 vi EXAM HANDBOOK Business Studies XII
5. Coordination is the Responsibility of all managers at the
top, middle and operational level.
• Top level managers need to coordinate with their
subordinates to ensure that the overall policies are duly
carried out.
• Middle level management coordinates with both the top
level and first line managers.
• Operational level management coordinates the activities of
its workers to ensure that work proceeds according to plans.
6. Coordination is a Deliberate function as every manager has
to coordinate the efforts of different people in a conscious
and deliberate manner.
Need and Importance of Coordination
1. Growth in size: As organizations grow in size, the number of
people employed by the organization increases. Individuals
differ in their habits of work, needs and behavior and may
Concept of Principles of Management
Principles of management are general guidelines for
managerial decision making and behaviour.
• Management principles are not as rigid as principles of pure
science. They deal with human behaviour and, thus, are to be
applied creatively given the demands of the situation.
• Management principles are guidelines for managerial
decisions or actions whereas management techniques are
procedures or methods, which involve a series of steps to be
performed to accomplish desired goals.
Fayol’s Principles of Management
1. Division of work: Work can be performed more efficiently if
it is divided into specialised tasks. A trained specialist who
is competent, is required to perform each job leading to
specialization which results in efficient and effective output.
2. Authority and Responsibility: Managers require authority
equal to responsibility. An organisation should build
safeguards against abuse of managerial power. At the same
time, a manager should have necessary authority to carry
out his responsibility. For example, a manager enhances the
production target from 500 units to 700 units per month but
the authority to draw raw material was not given by him. The
production manager should not be blamed if he could not
achieve the revised production target. He should have the
necessary authority to carry out his responsibility.
3. Discipline: Discipline refers to the obedience to
organizational rules and employment agreement. It requires
good superiors at all levels, clear and fair agreement and
judicious application of penalties. Example: Suppose
Shree Radhey Publications (Subhash Dey)
have their own individual goals. Coordination is necessary
to harmonize individual goals and organizational goals.
Coordination ensures that all individuals work towards the
common goals of the organization.
2. Functional differentiation: Functions of organization are
divided into departments — finance, production, marketing
or human resources. All these departments are inter-
dependent. However, there may arise conflict among them.
Coordination is needed to ensure unity of action to avoid
inter-departmental conflicts.
3. Specialisation: Modern organizations have high degree of
specialization and employ a number of specialists. This leads
to conflict as some specialists do not like to take advice
or suggestions from others. Coordination is required to
reconcile their differences in approach.
Chapter 2
Principles of
Management
management and labour union have entered into an
agreement whereby workers have agreed to work overtime
without any additional payment to revive the company
out of loss. In return, the management has promised to
increase wages later. Both workers and management must
honour their commitments.
4. Unity of command: Each employee in an organisation
should receive orders from one superior only and he
should be responsible to only one superior. If this principle
is violated “authority is undermined, discipline is in jeopardy,
order disturbed and stability threatened.”
Aim: It prevents dual subordination.
Implications: It affects an individual employee.
5. Unity of Direction: All the divisions/units of an organisation
should be moving towards the same objectives through
coordinated and focused efforts. Each group of activities
having the same objective must have one head and one plan.
This ensures unity of action and coordination.
Aim: It prevents overlapping of activities.
Implications: It affects the entire organisation.
6. Subordination of individual interest to general interest:
The interests of an organisation should take priority over the
interests of any individual employee. The larger interests of the
workers and stakeholders are more important than the interest
of any one person. A manager can ensure this by his exemplary
behaviour. For example, he should not fall into temptation of
misusing his powers for individual/ family benefit at the cost
of larger general interest of the workers/ company.
7. Remuneration of employees: It states that the remuneration
of employees should be just and equitable. Employees
 NOTES & Sample Papers for CBSE 2024 Exam
should be paid fair wages, which should give them at least a
reasonable standard of living. At the same time it should be
within the paying capacity of the company. This will ensure
good relations between workers and management.
8. Centralisation and Decentralisation: The concentration of
decision-making authority by the top management is called
centralisation whereas its dispersal among more than one
person is known as decentralisation.
In general, large organisations have more decentralisation
than small organisations. According to Fayol, “There
is a need to balance subordinate involvement through
decentralisation with managers’ retention of final authority
through centralisation.”
9. Scalar chain: It refers to chain of authority and
communication that runs from top to bottom and should
be followed by the managers and the subordinates. It
facilitates smooth flow of communication and unity of
command in the organisation. This chain should not be
violated in the normal course of formal communication.
However, in case of any emergency, a shorter route named
‘gang plank’ may be used to avoid delay in communication.
For example: There is one head A who has two lines
of authority under him, B-C-D and L-M-N. If C has to
communicate with M who is at the same level of authority,
then he has to transverse the route C-B-A-L-M due to the
principle of scalar chain. However, if there is an emergency,
then C can directly contact M through gang plank.
A and workers should work hard and be willing to embrace
B
L 3. Cooperation, not individualism: This principle is an
C M
D N
Scalar Chain Gang Plank
10. Order: It states that there should be a place for everything
and everyone in an organization and that everything or
person should be found in its allotted place. This will lead
to increased productivity and efficiency.
11. Equity: Equity states that there should be no discrimination
against anyone on account of sex, religion, language, caste,
belief, nationality etc. It emphasises kindliness and justice
in the behaviour of managers towards the workers. This will
ensure loyalty and devotion.
12. Stability of personnel: Employees, once selected, should be
kept at their post for a minimum fixed tenure and be given
reasonable time to show results. It will help to minimize
employee turnover and maintain organizational efficiency. Any
adhocism will create instability/insecurity among employees.
They would tend to leave the organization. Recruitment,
selection and training cost of new employees will be high.
EXAM HANDBOOK Business Studies XII vii
13. Initiative: Initiative means thinking out and executing the
plan within the prescribed limits of authority. It states that
the workers should be encouraged to develop and carry
out their plans for improvement in the organisation. A good
company should have an employee suggestion system
whereby initiative/suggestions which result in substantial
cost/time reduction should be rewarded.
14. Esprit De Corps: It states that management should promote
a team spirit of unity and harmony among employees to
realise organisational objectives. Otherwise, it will result in
a loss of coordination. A manager should replace ‘I’ with
‘We’ in all his conversations with workers to foster team
spirit. This will give rise to a spirit of mutual trust and
belongingness among team members. It will also minimise
the need for using penalties.
Taylor’s Scientific Management – Principles
Scientific management means knowing exactly what you want
men to do and seeing that they do it in the best and cheapest way.
1. Science not rule of thumb: Taylor believed that there was
only one best method to maximise efficiency. This method
can be developed through scientific study and analysis of
each element of a job and should substitute ‘Rule of Thumb’.
This standard method then should be followed throughout
the organisation.
2. Harmony Not Discord: There should be complete harmony
between the management and the workers. Management
should share gains of the company with the workers;
change for the good of the company. This requires ‘Mental
revolution’ on the part of both management and workers.
Both management and the workers should transform their
thinking. Both should realise that they require one another.
extension of principle of ‘Harmony, Not Discord’. There
should be complete cooperation between the management
and the workers instead of individualism. According to
Taylor, there should be an almost equal division of work
and responsibility between workers and management. The
management should work almost side by side with the
workers helping, encouraging and smoothing the way for
them. For all important decisions taken by the management,
workers should be taken into confidence. The management
should be open to any constructive suggestions made by the
employees and suitably reward them.
4. Development of each and every person to his/her greatest
efficiency and prosperity: This principle is concerned with
efficiency of employees which could be built in right from
the process of employee selection. The work assigned to
employees should suit their capabilities. They should be
given the required training to increase their efficiency.
Efficient employees would produce more and earn more. This
will ensure greatest efficiency and prosperity for both the
company and the workers.
Techniques of Scientific Management
1. Functional Foremanship: Functional foremanship is
an extension of the principle of division of work and
specialisation. It is a technique which aims to improve the
quality of supervision at shop floor by putting a worker under
 viii EXAM HANDBOOK Business Studies XII
eight specialist foremen. In this technique, planning is separated
from execution. Taylor suggested four foremen for planning and
four foremen for execution.
The four foremen for planning and their role:
(i) Instruction card clerk: To draft instructions for the workers.
(ii) Route clerk: To specify the route of production.
(iii) Time and cost clerk: To prepare time and cost sheet.
(iv) Disciplinarian: To ensure discipline.
The four foremen for execution and their role:
(i) Speed boss: To be responsible for timely and accurate
completion of the job.
(ii) Gang boss: To keep machines and tools ready for
operation by the workers.
(iii) Repair boss: To ensure proper working conditions of
machines and tools.
(iv) Inspector: To check the quality of work.
2. Method Study: The objective of method study is to find out
one best way of doing the job and includes all activities from
procurement of raw materials till the final product is delivered
to the customer. It helps to minimize the cost of production,
improve the quality and maximize satisfaction of the customer.
3. Motion Study: It is a technique to study the movements which
are undertaken while doing a well defined job. The movement
could be productive, incidental and unproductive. Motion
study seeks to eliminate unnecessary and wasteful movements
so that it takes less time to complete a job efficiently.
4. Time Study: It is a technique to determine the standard
time i.e. the time taken by a worker of reasonable skill and
efficiency to perform a well-defined job. Standard time is fixed
for the whole of the task by taking several readings. Objective
of time study is to determine the number of workers to be
employed, and determine labour costs.
5. Fatigue study: Fatigue Study determines the amount and
frequency of rest intervals in completing task. The rest
intervals help the workers to regain stamina and work again
with the same capacity resulting in increased productivity.
There can be many causes for fatigue like long working
hours, doing unsuitable work, bad working conditions etc.
6. Differential piece wage system: It is a technique which
differentiates between efficient and less efficient workers.
Taylor wanted to reward the efficient workers. So he
introduced different rate of wage payment for those who
performed above standard and for those who performed
below standard.
Example: Standard output (per worker per day) = 100 units.
Wage rate I = `4 per unit (for output >= 100 units)
Wage rate II = `3 per unit (for output < 100 units).
Worker A produced 101 units and Worker B 99 units.
Total wages of Worker A = 101 × 4 = `404
Shree Radhey Publications (Subhash Dey)
Total wages of Worker B = 99 × 3 = `297
Difference in output produced = 2 units
Difference in wages = `107.
As per Taylor, this loss of `107 should be enough for the
inefficient worker (worker B) to be motivated to perform better.
7. Standardisation and simplification of work
Standardisation is the process of setting standards for every
business activity – standardisation of process, raw material,
time, etc. Objectives: (i) To reduce a given line or product
to fixed types, sizes and characteristics. (ii) To establish
standards of excellence and quality in materials. (iii) To
establish standards of performance of men and machines.
(iv) To establish interchange ability of manufactured parts
and products.
Simplification of Work is a technique to eliminate unnecessary
varieties, sizes and dimensions of products. It leads to reduced
inventories and increased turnover to reduce costs.
Nature/Characteristics/Features of Management Principles
UGC2 F2B
1. General guidelines: Principles of management are guidelines
to action but do not provide readymade, straitjacket
solutions to all managerial problems since real business
situations are very complex and dynamic.
2. Formed by practice and experimentation: Principles of
management are derived by observation, experimentation
and personal experience of managers.
3. Universal applicability: Principles of management apply to
all types of organisations, at all levels and at all times.
4. Flexible: They are not rigid but are flexible and can be
modified by the manager when the situation so demands.
5. Contingent: Application of principles of management is dependent
upon the prevailing situation at a particular point of time.
6. Behavioural: Management principles aim at influencing
behaviour of human beings.
7. Cause and effect relationships: Principles of management
establish cause and effect relationship so that they can be
used in similar situations in a large number of cases.
Significance of Management Principles TOP SMS
1. They Provide the managers with useful insights into real world
situations by learning from past mistakes and conserving time
by solving recurring problems quickly. Principles adds to their
knowledge and understanding of managerial situations and
circumstances.
2. They help in Optimum utilisation of resources as the
wastages associated with trial and error approach can
be reduced. They help in effective administration as the
decisions are free from personal bias.
3. They help managers in Scientific/thoughtful decision-
making because decisions based on principles are free from
bias. They are based on the objective assessment of the
situation.
4. They help in Meeting changing environment requirements as
they can be modified according to the needs of environment.
5. They help in fulfilling Social responsibility by responding to
the demands of the public.
6. They are used as a basis for management Training, education
and research.
 IMPORTANT TIPS
for
CBSE Business Studies XII
2024 Examination
 NOTES & Sample Papers for CBSE 2024 Exam BUSINESS STUDIES XII EXAM HANDBOOK 1

CBSE Sample Question Papers

2023-24 and 2022-23 with
20 Sample Papers for Practice

Important Tips for CBSE Business Studies XII 2024 Examination

 During the Reading Time, read all questions carefully. Select the Option to be answered in questions having
internal choice.
There will be Internal Choice in 2 Questions of 3 marks, 2 Questions of 4 marks and 2 Questions of 6 marks.
When reading, underline the key lines with pencil which help you to write answers.
 In Competency-based Questions, before reading the whole question first you must read what is required in the
question as given in the last line(s) of the question.
 Timing is an essential ingredient of success. Business Studies XII paper is worth 80 marks and must be completed
in 180 minutes. Allowing 20 minutes revision time, this leaves 160 minutes or 2 minutes per mark. So, do not
spend 10-15 minutes on a question worth just 3 marks! Do not exceed the time you have allocated for each
question.
There are 4 types of questions in the CBSE Business Studies XII Examination. These are:
Types of Marks Word limit No. of Total Estimated Time
Questions Questions Marks
MCQ 1 one word to one 20 20 20 min.
sentence
SA-I 3 50-75 words 4 12 30 min.
SA-II 4 About 150 words 6 24 50 min.
LA 6 About 200 words 4 24 60 min.
20 Minutes –
Revision
Total 34 80 180 min.

 Write impersonally. In other words, do not use ‘I’ or ‘We’ in your answers. For example, do not write — “I don’t
agree with the statement.” Rather you must write — “The given statement is not correct.”
 The following table shows a list of key directive words which are most likely to occur in CBSE Business Studies
XII examination questions. You should read these carefully and understand what each means. However, always
consider the weightage of the question. Write your answers as per the word-limit prescribed by CBSE.
Directive Words The examine is supposed to:
Name/Identify/Which Write the name of the concept/term only
State Make clear
List/Enumerate/State Write the statements without giving heading
Explain/ Describe Give the heading and then explanation/description with reasons and examples, if
required.
Comment Give your reasoned opinions on
 2 BUSINESS STUDIES XII EXAM HANDBOOK Shree Radhey Publications (Subhash Dey)

 Remember the weightage of the units. This helps you when you are not able to find the unit from which a
particular question has been put up.
Unit Weightage
I. Nature and Significance of Management, Principles of Management and Business 16 marks
Environment
II. Planning and Organising 14 marks
III. Staffing, Directing and Controlling 20 marks
IV. Financial Management and Financial Markets 15 marks
V. Marketing and Consumer Protection 15 marks
Total 80 marks
 To score 100% marks, the presentation of answers is as much important as their content.
 Write the main heading in capital letters. (Use dark and bold pen like Pilot V10)
 Underline the headings with pencil.
 Explanation/description from next line of heading.
 Attempt all parts of a question together.
 Give answer in points, as far as possible, rather than in paragraphs. Use bullets for the points.
 Leave one line space between two headings
 Attempt all questions of 3 marks, 4 marks and 6 marks from new page.
 During last 20 minutes of revision, first of all make sure that you have attempted all the questions and written
Question Number for each answer. If any question(s) left, attempt it first. Don’t leave it even if you don’t know the
proper answer. Remember that writing something is always better than leaving it at all. Then, read your answers
one by one underlining the key lines using pencil.

To conclude, it is very important for you to be well-organised and to be able to plan ahead if you are to score 100% marks
in CBSE Business Studies XII Examination. Revision should be an ongoing process, not just a last-minute activity you
carry out just before a written examination. A lack of time and an inability to understand the relevance of directive words
are the most common causes of under performance. I know Board examinations create a lot of anxiety among students.
Everyone expects good performance so as to get admission in a college of repute. My advice to you is:
To work hard and give your 100%. Remember: Success will never lower its standard to accommodate you. You have to
raise your standard to achieve it. For every bird, God provides food but not in their nest.
Always believe in yourself. Don’t give up. One thing keep in mind: You are something! Because God does not create garbage.
Always remember God. Without Him, your all efforts are in vain! 0 0 0 0 0 0 0 = 0. But if you put 1 before these zeros,
you get 1 crore (10000000). We human beings are zeros without Him! And 1 is God!

I’ll feel pleasure to solve any of your queries/doubts related to the subject through Whatsapp Number 9810475716
Finally I pray the Supreme Divine to bestow the best of blessings on you!

Regards
Your servant
SUBHASH DEY
B.Com. (Hons.), M.Com. (DSE), M.A. (Economics), PGDBA (Finance), B.Ed, PGD in Labour and Administrative Laws
• Author and Publisher of CBSE Books – Accountancy, Business Studies, Economics, English, Mathematics, Legal Studies,
Physical Education and Entrepreneurship
• M.Com (Delhi School of Economics)– Gold Medalist, Topper of Delhi University
• Consecutive four years’ Economics topper of Delhi University
• Resource Person and Educationist conducting Workshops/Seminars of Teachers and Students in Schools and Colleges
• Founder of ‘Shree Radhey Publications’ and ‘DEY’SEDU.COM’
 CBSE Sample
Question Papers
2023-24 and 2022-23

(with Marking Scheme)

 NOTES & Sample Papers for CBSE 2024 Exam BUSINESS STUDIES XII EXAM HANDBOOK 3

Sample Question Papers

CBSE Sample Question Paper 2023-24

Maximum Marks – 80 Time – 3 Hours
General Instructions: Answers to the questions carrying 3 marks may be from 50 to 75 words, of 4 marks may be about 150 words and of 6 marks may
be about 200 words. Attempt all parts of the questions together.

Q.1 The Board of directors of Medex Pharma Ltd. decided to issue debentures worth 40 lakhs in order to finance a major Research and
Development project. This would increase the Debt Equity ratio from 1 : 1 to 2 : 1.However, at the same time it would increase the
Earnings per share. The reason that will justify the above situation is: (1 mark)
(a) Unfavourable financial leverage, as the financial risk will be higher.
(b) Unfavourable financial leverage, as return on investment is lower than the cost of debt.
(c) Favourable financial leverage as debt is easily available
(d) Favourable financial leverage, as return on investment is higher than cost of debt
Q.2 A bottle of Anti-dandruff shampoo mentions — ‘Clean your hair and get rid of dandruff in one squeeze’. The Product related
decision is: (1 mark)
(a) Branding (b) Product quality
(c) Packaging (d) Labelling
Q.3 With the presence of women in the workforce, there has been a shift towards formal wear, increased demand of electronic gadgets
and increase in demand of cosmetics. The related dimension of business environment referred in the above lines is: (1 mark)
(a) Technological environment (b) Social environment
(c) Political environment (d) Economic environment
Q.4 Name the function of marketing which is effective in bringing repeat sales from the customers and developing brand loyalty
for a product. (1 mark)
(a) Standardization and grading (b) Promotion
(c) Customer support services (d) Packaging and labelling
Q.5 SEBI calls for information and issues a show cause notice to stock exchange and its officials seeking explanation and conducting
audit and enquiry. Which function is SEBI performing? (1 mark)
(a) Regulatory function (b) Development function
(c) Protective function (d) Both (a) and (c)
Q.6 Identify the point of significance of management illustrated in the picture. (1 mark)
 4 BUSINESS STUDIES XII EXAM HANDBOOK Shree Radhey Publications (Subhash Dey)

(a) Management helps in achieving group goals (b) Management helps in achieving personal objectives
(c) Management helps in development of society (d) Management increases efficiency
Q.7 The allocative function of Financial market helps in ________.
(a) Bringing transparency in trading procedure (b) Earning higher rate of return to household sector
(c) Better functioning of depository (d) Determining the prices of securities
Q.8 IND Dyechem Ltd. is a chemical manufacturing company producing dyes and pigments both for domestic and international
market. It has enjoyed a considerable market share but lately, it has been facing problems in terms of target sales and customer
satisfaction. This is due to the reason that new entrants have emerged with better technology and competitive pricing. The Chairman
of the company addressed this issue in the departmental meeting. The production head, Mr. Kamble, advised the Chairman
to revamp the system and take immediate necessary actions to rectify the problem so that sales are achieved as per the plans.
Identify the relevant function of management being discussed here. (1 mark)
(a) Organising (b) Staffing
(b) Controlling (d) Planning
Q.9 Choose the incorrect statement about pricing objectives as a factor affecting the price of a product. (1 mark)
(a) If a firm’s objective is to maximize profits in the short run, it should charge maximum price for its products.
(b) If a firm’s objective is to capture market share, it should keep low price of its product.
(c) If a firm wants to attain product quality leadership, it should charge lower prices.
(d) If a firm is facing problems in survival due to stiff competition, it may offer discount on its products.
Q.10 Assertion (A): Management is concerned with efficient use of resources.
Reason (R): For management both efficiency and effectiveness need to be balanced.
(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 and 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 (1 mark)
Q.11 Concentration of decision making functions at the apex of management hierarchy is called __________. (1 mark)
(a) Decentralisation (b) Delegation
(c) Organisational structure (d) Centralisation
Q.12 Some employees have been assigned the job of measuring the output in an objective and reliable way. They are applying
different techniques for achieving this aim. Some of these are personal-observation, sample-checking etc. They are also keeping
the units of measurement same as that of the units in the standards.
Name the step of ‘Controlling process applicable in the above paragraph. (1 mark)
(a) Analysing deviations (b) Comparing actual performance with standards
(c) Establishing standards (d) Measurement of actual performance
Q.13 Statement I: For products requiring long term storage like agricultural products, the warehouses are located near to the market.
Statement II: Higher the level of inventory, higher will be the level of service to customers but the cost of carrying the
inventory will also be high.
(a) Statement I is true and II is false (b) Statement II is true and I is false
(c) Both the statements are true (d) Both the statements are false (1 mark)
Q.14 Mr. Vivek is working as the General Manager of Oshin Hotels Ltd. Mr. Vivek observed that Government was taking a special
interest in the Tourism industry as this sector is an important source of foreign exchange and employment promotion. On the
basis of this news, the company decided to set up hotels at several tourist places. Oshin Hotels Ltd. established 50 hotels before
other companies considered this issue. Very soon, this brand Oshin Hotels Ltd. became well known in the market. Identify the
importance of business environment described here. (1 mark)
(a) It enables the firm to identify opportunities and getting the first mover advantage.
(b) It helps the firm to identify threats and early warning signals.
(c) It helps in tapping useful resources.
(d) It helps in improving performance.
Q.15 Name the function of management that acts as a means for translating plans into action. (1 mark)
(a) Planning (b) Directing
(c) Organising (d) Controlling
Q.16 Statement I: Electronic holdings can be converted into physical certificates with the process of dematerialisation. (1 mark)
Statement II: There is no danger of theft, loss or forgery of share certificates in dematerialisation.
(a) Statement I is true and II is false (b) Statement II is true and I is false
(c) Both the statements are true (d) Both the statements are false
 NOTES & Sample Papers for CBSE 2024 Exam BUSINESS STUDIES XII EXAM HANDBOOK 5

Q.17 ‘Pace.’ is a reputed Chartered Accountant firm which renders services to big MNC’s. The Chartered Accountants of the firm
are required to travel to Delhi and NCR for which they use company’s cars. The firm decided to convert its Petrol cars to
Electric cars in order to improve the quality of life of people. Identify the dimensions of business environment. (1 mark)
(a) Political and Legal environment (b) Legal and Social environment
(c) Technological and Political environment (d) Social and Technological Environment
Q.18 Match the following tools of promotion with their explanation and choose the correct option (1 mark)
A. It is undertaken by some identified person /company who makes efforts and bears the cost of it. 1. Personal selling
B. It plays an important role at the awareness stage and develops product preferences with the aim of 2. Sales Promotion
making sale.
C. It helps in managing public opinion and company’s relation with the public on regular basis. 3. Advertising
D. It uses tools specifically designed to promote to customers, middlemen and to salespersons. 4. Public Relations
(a) A (3), B (1), C (4), D (2) (b) A (1), B (3), C (4), D (2)
(c) A (2), B (3), C (4), D(1) (d) A (2), B (4), C (1), D (3)
Q.19 From the following which is not a relevant feature of management as science: (1 mark)
(a) Principles are based on the basis of experimentation
(b) Systematized body of knowledge
(c) Based on practice and creativity
(d) Universal Validity
Q.20 The aim of demonetisation was not to____________. (1 mark)
(a) Curb corruption
(b) Reduce the prices of real estate
(c) Withhold the accumulation of black money generated by undeclared income
(d) Counterfeit the use of high denomination notes for illegal activities
Q.21 Captcha Ltd. is a construction company in which all the employees learn various ways of dealing with diverse situations from
their seniors. Company provides financial as well as non-financial incentives. This helps the employees to grow and develop
their abilities. The organisation behaves as a responsible constituent of society and always creates good quality products. It
has a positive image in the market. The training modules are excellent and the employees always try to find unique ways
of providing solutions in the context of rapidly changing business environment. This has helped the organisation to adjust
smoothly. Identify and state three points of importance of management being highlighted here. (3 marks)
Q.22 State any three reasons as to why controlling is regarded as an indispensable function of management. (3 marks)
OR
Enumerate any three advantages of Management by Exception which is used by manager in analysing deviations. (3 marks)
Q.23 Resolutions Pvt. Ltd. is a publishing company. Its book on Business Studies for class XII is in great demand. As a result, the
employees in the marketing department are always racing against time as they have to work overtime and on holidays as well to
cater to the demand. The work stress has led to dissatisfaction among the employees of the marketing department.
(i) Name and explain the step of staffing process which has not been performed properly.
(ii) Also, explain the immediate next step in the process of staffing. (3 marks)
Q.24 State any three functions of Stock Exchange. (3 marks)
OR
State the first three steps involved in the screen-based trading for buying and selling of securities. (3 marks)
Q.25 Explain the following features of Directing: (a) Directing initiates action (b) Directing is a continuous process (4 marks)
OR
Explain the following leadership styles: (a) Autocratic leadership (b) Laissez Faire leadership (4 marks)
Q.26 State any four limitations of using internal sources of recruitment. (4 marks)
OR
State any four commonly used sources of recruiting employees from outside the organisation. (4 marks)
Q.27 Mr. Akshay, a 20 year old college student purchased a book online from XYZ Pvt Ltd and when it was delivered, he noticed
that there was no MRP mentioned on it. He browsed the internet and found that the book was sold at different prices in
different places. He filed a case in District forum against the publisher. The court held in favour of Akshay and awarded a
compensation of 10,000.
(a) Identify and state the consumer right violated in the above case.
(b) Name and explain the right exercised by Mr. Akshay. (4 marks)
 6 BUSINESS STUDIES XII EXAM HANDBOOK Shree Radhey Publications (Subhash Dey)

Q.28 Explain the following factors affecting the dividend decision of the company: (4 marks)
(a) Taxation Policy (b) Cash Flow Position
Q.29 Identify and state the various elements of communication highlighted in the following cases: (4 marks)
(i) Department ‘A’ has sent an encoded message to department ‘B’ through internet. What is the role of internet here?
(ii) Madhur is making gestures so that he can send a message to Ranbhir. What is Madhur doing here?
(iii) Ranbhir is trying to understand the message sent by Madhur by reading his gestures. What is Ranbhir doing here?
(iv) Kamesh picks up his phone and finds a message on it. He reads the message carefully. What is the role of Kamesh here? 4
Q.30 Dhaval Acharya, after acquiring a bachelor’s degree in Hotel Management joined his father’s chain of vegetarian restaurants in
Ahmednagar. Being young and enterprising, he suggested his father to add a new section of vegetarian bakery items which required
an investment of 5 crores. His father Mr. Aariketh Acharya suggested him to take the decision with caution and understood
everything comprehensively as bad decision may damage the financial fortune of business. Identify the decision suggested by Mr.
Aariketh Acharya. State by giving any three reasons as to why he must have advised his son to take decision with caution. (4 marks)
Q.31 (1) Explain any two techniques of Scientific Management from the following: (3 marks)
(a) Method study (b) Motion study (c) Time study
(2) Differentiate between Unity of Command and Unity of Direction on any three basis. (3 marks)
OR
(1) Explain any two principles of Fayol from the following: (3 marks)
(a) Discipline (b) Order (c) Initiative
(2) Differentiate between contributions made by F.W.Taylor and Henry Fayol on any three basis. (3 marks)
Q.32 Explain the steps that are required to be performed by a manager before evaluating all possible courses of action in planning
process. (6 marks)
OR
Explain how planning: (a) Reduces overlapping and wasteful activities (b) Establishes standards for controlling (c) Facilitates
decision making (6 marks)
Q.33 Read the statements given in point 1 and 2, answer the questions that follow: (6 marks)
(1) Tea is produced in Assam but is carried to customers not only in this state but also in other parts of the country.
(a) Identify and explain the function of marketing that enables the marketer to achieve its goals.
(b) Enumerate any two factors that marketer should take into consideration in order to analyse the identified needs.
(2) Paddy is grown during summer season but its demand and sale takes place throughout the year.
(a) Name and state the function of marketing which should be undertaken to reduce the gap between production and
consumption of Paddy.
(b) State by giving two reasons as to why proper discharge of this function is important.
Q.34 Diligent developers, a website design company in Bangalore is a startup initiative of Mr. Maniraj which aims at achieving a
profit margin of 10% in its first year. Mr. Maniraj appointed Mr. Advait as the Digital marketing Head, Mr. Kiyansh as the
head of Backend department and Mr. Nirved headed the Graphics Designing Department. Since each head was specialised
in specific skills, it resulted in increased efficiency and better coordination. However, problems arose when Mr. Advait started
considering group objectives superior to organisational objectives and stopped exchanging information with Mr. Kiyansh and
Mr. Nirved. The company had to bear the brunt of lack of coordination and was unable to achieve its objectives.
(a) Identify and state the organisational structure adopted by the company.
(b) State two benefits and two limitations of the identified structure highlighted in the above case. (6 marks)

Answers/Hints
1. (d) 2. (d) 3. (b) 4. (c) 5. (a) 6. (a) 7. (b) 8. (c) 9. (c) 10. (b)
11. (d) 12. (d) 13. (b) 14. (a) 15. (c) 16. (b) 17. (d) 18. (a) 19. (c) 20. (b)
21. (1) Helps in achieving personal objectives (2) Helps in the development of society (3) Creates a dynamic organisation (Explain)
23. (1)Estimation of manpower requirements (2) Recruitment (Explain)
27. (a) Right to be informed (b) Right to seek redressal (Explain)
29. (i) Media (ii) Encoding (iii) Decoding (iv) Receiver (Explain)
30. Hint: Capital budgeting decision
33. (1) (a) Transportation (b) • Nature of the product • Cost and location of target market
(2) (a) Storage or Warehousing
(b) • To ensure smooth flow of products in the market
• To protect against any unavoidable delays in delivery or meet contingencies in demand.
34. Hint: Functional structure
20 Sample Papers
for Practice

(with Answers)
 BUSINESS STUDIES XII EXAM HANDBOOK Shree Radhey Publications (Subhash Dey)
124

Sample Paper 20 (for Practice)

Q.1 ‘Bubbly Bee’ Enterprises recently launched its new range of balloons with inbuilt lights on the occassion of Diwali
and set a target of 10% return on investment. The Managing Director, Sudhakar integrated the efforts of all the
three departments i.e., Purchase, Production and Sales departments at different levels for achieving the target
harmoniously. The product was an instant hit and ‘Bubbly Bee’ Enterprises was able to achieve its target. The
characteristic of coordination discussed in the above case is: (1 mark)
(a) Coordination is a continuous process.
(b) Coordination is multi-dimensional.
(c) Coordination requires ethical code of conduct.
(d) Coordination is an all pervasive function.
Q.2 Murty, a Professor of Management conducted a class on ‘Management principles’ and explained to his students the
significane of Management Principles. In the next class, the Professor asked his students to play roles of different
managers. He gave them various situations and asked them to think like managers and provide solutions to the
problems given in these situations. Each student applied the principles of management to the given situation in his
own personalized manner, depending upon his creativity.
The nature of management highlighted in the above case is: (1 mark)
(a) Management as a Science
(b) Management as an Art
(c) Management both as an Art and as a Science
(d) Management as a Profession
Q.3 Match the principle/technique/concept of management in Column I with their respective explanation in
Column II: (1 mark)
A. Standardisation of work (i) To establish interchange ability of the manufactured parts and products.
B. Mental revolution (ii) Classification of workers as efficient and inefficient an the basis of certain
standards
C. Cooperation, not (iii) Change in the attitude of workers and management towards one another
individualism from competition to cooperation.
D. Differential piece rate (iv) Equal division of work and responsibility between workers and management
system.
(a) (i), (iv), (iii), (ii) (b) (i), (iii), (iv), (ii)
(c) (ii), (iv), (i), (iii) (d) (iii), (i), (ii), (iv)
Q.4 Name the principle of management according to which a manager should replace ‘I’ with ‘We’ in all his
conversations with the workers. (1 mark)
(a) Initiative
(b) Discipline
(c) Esprit De Corps
(d) Subordination of Individual Interest to General Interest
Q.5 Match the dimension/element of business environment in Column I with their respective explanation in
Column II: (1 mark)
A. Economic environment (i) Banks reducing interest rates on housing loans
B. Political environment (ii) An increasing number of working women
C. Legal environment (iii) Alcoholic beverages are prohibited to be advertised on ‘Doordarshan’
D. Social environment (iv) A stable government has built up confidence among the firms to invest in big
projects
(a) (ii), (i), (iii), (iv) (b) (i), (iv), (iii), (ii)
(c) (iii), (ii), (i), (iv) (d) (i), (iii), (ii), (iv)
 CBSE Sample Question Paper and BUSINESS STUDIES XII EXAM HANDBOOK
125
20 Practice Papers
Q.6 Prem Lal, the Managing Director of Awasthi Ltd, retired after 33 years of service. The responsibility was given to
Raj. Raj realised that there was lot of rivalry, confusion and misunderstanding among the departmental heads. He
detected inefficiencies, took corrective measures and developed a master plan for the organisation to follow. This
served as a basis for coordinating the activities of all departments, led to clarity of thought and action and work got
off to a smooth start.
The point of importance of planning discussed above is: (1 mark)
(a) Planning reduces overlapping and wasteful activities.
(b) Planning establishes standards for controlling.
(c) Planning reduces the risks of uncertainty.
(d) Planning promotes innovative ideas.
Q.7 Read the following statements-Assertion (A) and Reason (R): (1 mark)
Assertion (A): Planning reduces creativity.
Reason (R): Since people tend to think along the same lines as others, there is nothing new or innovative.
(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 and Reason(R) is false.
(d) Assertion (A) is false and Reason(R) is true.
Q.8 Identify the concept of management overlooked by the manager, as shown in the picture. (1 mark)

(a) Authority (b) Accountability

(c) Delegation (d) Decentralisation
Q.9 In a decentralised organisation, one of the challenges is the accountability of performance. In response to this challenge,
better control systems are being evolved by the corporate enterprises. Identify such control system(s). (1 mark)
(i) Balance score card (ii) Management Information system
(iii) Critical Point Control (iv) Management by Exception
(a) Only (i) and (ii) (b) Only (ii) and (iii)
(c) Only (i) and (iv) (d) Only (i) and (iii)
Read the following text and answer the questions no. 10 & 11 on the basis of the same:
Mr. Vikas Goel is an H.R. Manager of “Sanduja Furniture Private Limited.” At the beginning of the new year he anticipated
that the company willneed 30 new additional persons to fill up different vacancies. He gave an advertisement in the
newspaper inviting applications for filling up different vacant posts. As many as 120 applications were received. The same
were scrutinized. Out of these, conditions of 15 applicants were not acceptable to the company. Letters of regret, giving
reasons, were sent to them. Remaining candidates were called for preliminary interview. The candidates called for were
asked to fill up blank application forms. Thereafter, they were given four tests. The objective of the first test was to find
out how much interest the applicant takes in his work. The objective of the second test was to find out ‘specialization’ of
the applicant in any particular area. Third test aimed at making sure whether the applicant was capable of learning through
training or not. The purpose of the fourth test was to find out how much capability a person has to mix-up with other
persons, and whether he can influence other persons and get influenced by them.
 BUSINESS STUDIES XII EXAM HANDBOOK Shree Radhey Publications (Subhash Dey)
126

Q.10 The purpose of the fourth test was too find out how much capability a person has to mix-up with other persons,
and whether he can influence other persons and get influenced by them. Which selection test is indicated in this
situation? (1 mark)
(a) Personality Test (b) Intelligent Tests
(c) AptitudeTest (d) TradeTest
Q.11 From the given lines, ‘Out of these, conditions of 15 applicants were not acceptable to the company.’ Letters of
regret, giving reasons, were sent to them. Which aspect of staffing is highlighted in the statement? (1 mark)
(a) Recruitment (b) Selection
(c) Training (d) Education
Q.12. Match the following: (1 mark)
(i) The leader encourages his subordinates to participate in decision (A) Autocratic leadership
making.
(ii) The leader is dogmatic i.e. does not wish to be contradicted. (B) Democratic leadership
(iii) The leader does not believe in the use of power unless it is absolutely (C) Laissez faire leadership
essential.
(a) (i) – (A),(ii) – (B),(iii) – (C) (b) (i) – (C),(ii) – (B),(iii) – (A)
(c) (i) – (B),(ii) – (A),(iii) – (C) (d) (i) – (C),(ii) – (A),(iii) – (B)
Q.13 In an organisation all the employees take things easy and are free to approach anyone for minor queries and
problems. It has resulted in loss of secrecy and confidential information being leaked out. What system do you
think the manager should adopt to improve communication? (1 mark)
(a) Formal communication (b) Informal communication
(c) Oral communication (d) Written communication
Q.14 Vinber Ltd. set up a manufacturing unit at Bhiwadi at Himachal Pradesh to manufacture electric geysers and
supply them to dealers all over the country. Their production target was 500 geysers per week. It was decided by
the management that variation in production upto 10 units would be acceptable. At the end of the first week, the
production was 450 geysers. The next week, production increased to 470 geysers. A week later, production was 460
geysers. On investigation, it was found out that fluctuation in production was due to irregular supply of electricity.
Which step of the function of management highlighted above is not discussed? (1 mark)
(a) Measurement of Actual Performance
(b) Comparing Actual Performance with Standards
(c) Analysing Deviations for causes
(d) Taking corrective action if deviations go beyond the acceptable limits.
Q.15 Higher dividend per share is associated with: (1 mark)
(a) high earnings, high cash flows, unstable earnings and higher growth opportunities
(b) high earnings, high cash flows, stable earnings and high growth opportunities
(c) high earnings, high cash flows, stable earnings and lower growth opportunities
(d) high earnings, low cash flows, stable earnings and lower growth opportunities
Q.16 Public issue of shares and debentures have to be made under SEBI guidelines. Raising funds from banks and other
financial institutions require fulfillment of other norms. The relative ease with which these norms can be met or
the procedures completed may also have a bearing upon the choice the source of finance. The factor affecting the
choice of capital structure is ________. (1 mark)
(a) Stock market conditions
(b) Capital structure of other countries
(c) Regulatory framework
(d) Flexibility
Q.17 The directors of a company want to modernise its plant and machinery by making a new issue of shares to the
public. As the finance manager, advise the directors where to approach for new public issue of shares. (1 mark)
(a) Stock exchange (b) Money market
(c) Securities and Exchange Board of India (d) Any consultant
 CBSE Sample Question Paper and BUSINESS STUDIES XII EXAM HANDBOOK
127
20 Practice Papers
Q.18 Which of the following is not a Regulatory function of the Securities and Exchange Board of India ? (1 mark)
(a) Regulation of take over bids by companies
(b) Levying fee or other charges for carrying out the purposes of the SEBI Act, 1992.
(c) Registration of collective investment schemes and Mutual Funds.
(d) Controlling insider trading and imposing penalties for such practices.
Q.19 Rasika Ltd. is a company which produces a variety of juices. A profitable business opportunity is seen by it in
the field of producing soft drinks. The marketing manager of the company, Piyush Rustogi has to take several
decisions, to achieve marketing success, such as : (1 mark)
— Whether the drink will be packed in glass bottles or plastic cans;
— What will be the name (brand name) of the drink;
— At what price it will be sold, i.e. at par with the price at which other competitive brands are sold or below it or
above it;
— What distribution network will be used to make the product available, e.g. hotels, restaurants, groceries shops,
kiosks selling cigarette, paan, etc;
— Whether the new soft drinks will be promoted by putting up advertisements in newspaper or magazine or on
radio or television; or say if newspaper, whether in a local newspaper or a national daily; whether in a paper of
regional language or an English daily, etc.
Identify the combination of variables chosen by the marketing manager of the company to prepare a new brand of
soft drinks.
(a) Product, Price, Place and Promotion
(b) Branding, Packaging and Labeling
(c) Advertising, Personal Selling, Sales Promotion and Public Relations
(d) Grading, Standardising and Marketing Planning
Q.20 Which of the following statement is true? (1 mark)
(a) Asserting oneself to ensure that one gets a fair deal, is the right of a consumer.
(b) ISI is the quality certification mark used in case of food products.
(c) The legal framework in India requires the manufacturers to provide the information such as ingredients of the
product, on the package and label of the product.
(d) A complaint can to be made to a District commission when the value of the good or service does not exceed
`1 crore.
Q.21 Identify by quoting the lines, the importance of business environment from the following: (3 marks)
(i) Maruti Udyog became the leader in the small car market because it was the first to recognise the need for small
cars in an environment of rising petroleum prices and a large middle class population in India.
(ii) Entry of new players in the market, which means more competition may make an enterprise think afresh
about how to deal with the situation.
(iii) Many studies reveal that the future of an enterprise is closely bound up with what is happening in the
environment. It really makes a difference in the performance of an enterprise.
Q.22 K&K Co. Ltd. is engaged in manufacturing machine components. The target production is 200 units daily. The
company had been successfully attaining this target until two months ago. Over the last few months it has been
observed that daily production varies between 150-170 units.
Identify any three possible causes for the decline in production and the steps to be taken to achieve the desired
targets. (3 marks)
Q.23 (a) Explain whether the following manufacturing concerns require large or small working capital:
(i) Bread, (ii) Sugar, (iii) Coolers (3 marks)
OR
(b) Shyam wanted to start a business of selling handicrafts by getting in touch with the craftsmen in the rural
areas of Bengal. He wants to make a low investment in fixed Capital. Advise him in taking suitable decisions
regarding the Nature of Business, Scale of operations and Financing Alternatives (in a developed financial
market) that he needs to take for the purpose.
 BUSINESS STUDIES XII EXAM HANDBOOK Shree Radhey Publications (Subhash Dey)
128

Q.24 (a) Radhika Ltd. is a natural and ethical beauty brand famous for offering organic beauty products for women.
The company uses plant based materials for its products and is the No.1 beauty brand in the country. It not
only satisfies its customers but also believes in overall protection of the planet.
Krishna Ltd., a company manufacturing refrigerators, takes all the marketing decisions from the point of
view of the customers. The market research reveals that the customers want features like double door in the
refrigerators and a separate provision for water cooler in it.
Identify the philosophies of marketing being followed by Radhika Ltd. and Krishna Ltd. Explain the difference
between the two philosophies on the basis of: (i) Focus (ii) Means. (3 marks)
OR
(b) Zoom Udyog, a car manufacturing Co., has started its business with Zoom 800 and slowly launched Zoom-
1000, Wagon-Z, Swy-fy etc. and offered various services like after sale service, availability of spare parts etc.
Explain the three important decisions related to the element of marketing mix referred here.
Q.25 (a) Name the process of designing and maintaining an environment in which individuals, working together in
groups, efficiently accomplish selected aims. Explain its importance by giving any three points. (4 marks)
OR
(b) Name the process whereby an executive develops an orderly pattern of group efforts among his subordinates
and secures unity of action in the pursuit of common purpose. Explain any three features of it.
Q.26 (a) Explain how the principles of management help in: (4 marks)
(i) thoughtful decision-making,
(ii) meeting changing environment requirements,
(iii) providing managers with useful insights into reality, and
(iv) optimum utilisation of resources and effective administration.
OR
(b) Explain the following principles of management:
(i) Equity (ii) Science not Rule of Thumb
Q.27 An auto company C Ltd. is facing a problem of declining market share due to increased competition from other
new and existing players in the market. Its competitors are introducing lower priced models for mass consumers
who are price sensitive. C Ltd. sets its long-term objective to increase profits by 20% features
and new technological advancements. For this, the company raises `100 crore by issuing equity shares.
(a) Identify the type of plan the company is preparing.
(b) State its three dimensions by quoting the line from the above paragraph. (4 marks)
Q.28 ‘Madhav Ltd.’ is a company manufacturing textiles. It has a share capital of `60 lakh at the face value of `100 each. For
diversification into cement manufacturing, the company requires additional capital of `40 lakh. The finance manager
of the company, Gaurang as recommended that the company can raise funds of the same amount by issuing 10%
debentures of `10 each. Given that earning per share (EPS) of the company after diversification is `4 and tax rate is
40%, did Gaurang give a justified recommendation? Show your calculations clearly. (4 marks)
Q.29 Aditya Khosla, the Managing Director of ‘D.L.W. Ltd.’ and Rajesh Puri, the Finance Manager were discussing
about the avenues of investing the idle funds of the company. Aditya Khosa was of the opinion that money should
be invested in the capital market whereas Rajesh Puri, being more conservative, feels that it would be better if
the investment was made in money market. Since the economy was buoyant, the Managing Director convinced
Rajesh that they should take advantage of it and invest in the capital market to get good returns. Ultimately it was
decided to invest the idle funds in the capital market.
(a) What kind of instruments should the company buy?
(b) Why is the capital market expected to give a better return in a buoyant economy? State the reason.
(c) Why and how safe are the securities in this market as compared to money market? (4 marks)
Q.30 (a) Manuj bought a packet of chips from a local shopkeeper and found that the ingredients given on the label
were not legible. He complained about it to the company. The company sent a written apology stating that
they will make sure that existing packets are withdrawn from the market and new packets with legible labels
are soon made available.
State the consumer right which Manuj exercised. (1 mark)
 CBSE Sample Question Paper and BUSINESS STUDIES XII EXAM HANDBOOK
129
20 Practice Papers
(b) Mohit purchased a smart phone for ` 30,000 from a mobile phone seller on his verbal commitment that the
smart phone will be replaced in case of any defect, within a span of six months. The phone started creating
technical issues in spite of proper maintenance and upkeep of the phone. The seller denied taking any action
on the complaint made by Mohit. Name the redressal agency under the Consumer protection Act where Mohit
can file his complaint. (1 mark)
(c) Aman a degree holder in Entrepreneurship came to know about Piplantri Village located in Rajasthan, where
in 2006 an initiative was started, in which 111 trees are planted every time a girl child is born. To keep termites
away from the trees the villagers have planted 2.5 million Aloe Vera plants around the trees. This has turned
the village into an oasis, as the planting of trees led to higher water levels. Aman decided to visit the village
to start a business unit, for the processing and marketing of Aloe Vera into juices, gels and other products.
However, on visiting the village Aman found that the villagers were suffering exploitation at the hands of local
merchants who were engaged in unscrupulous, exploitative trade practices like hoarding and black marketing
of food products and also selling unsafe, adulterated products to the villagers. After looking at their plight
instead of a business organisation he decided to set up an organisation for the protection and promotion of the
consumer interest of the villagers.
State any two functions that the organisation established by Aman will be performing. (2 marks)
Q.31 One of India’s largest IT solutions providers, Wipro Technologies, is taking on the likes of IBM and Accenture in
its effort to be included among the largest and most successful technology services companies in the world.
Restructuring Wipro was considered the most important step in becoming a global giant, driven by the goal
towards improved customer-orientation.
During the past few months, Wipro separated itself into several subsidiaries by product line: telecommunications,
engineering, financial services, etc. Each subsidiary brings in about $300 million in annual earnings and is self-
sufficient with their own accounting books, personnel and administrative functions.
(a) Which type of organisation structure is suitable for Wipro Technologies and why?
(b) State any two advantages and two disadvantages of the organisation structure recommended by you in (a).
(6 marks)
Q.32 (a) Explain briefly any one on-the-Job method of training and one off-the-Job method of training. Also state any
three benefits of training to the employees. (6 marks)
OR
(b) Most of the senior positions of industry as well as commerce are filled by one of the method of external
recruitment.
(i) Identify the method of external recruitment and state its one advantage and one disadvantage.
(ii) Explain briefly any three other external sources of recruitment for casual vacancies of unskilled or semi-
skilled jobs.
Q.33 (a) Explain any six barriers to communication which result on account of use of wrong words, faulty translations,
different interpretations, etc. (6 marks)
OR
(b) Explain the most popular classification of leadership styles based on the use of authority.
Q.34 ‘Various tools of communication are used by the marketers to promote their products.
(a) Why do companies use all tools at the same time?
(b) Name the most commonly used non-personal tool of promotion which is paid for by the marketer. Explain its
any two features.
(c) Which tool of promotion will primarily be used for the following?
(i) To promote or protect a company’s image or its individual products.
(ii) An existing product meant for mass usage by literate people.
(iii) To introduce a new product to a particular class of people through door-to-door visits.
(iv) To attract attention of the people by using incentives. (6 marks)
 CBSE Sample Question Paper and BUSINESS STUDIES XII EXAM HANDBOOK
189
20 Practice Papers

Sample Paper-19 (b) Factors affecting the Choice of Capital Structure

(Explain)
1. (b)Social Objectives 34. (a) As it determines the emphasis or weightage to be
2. (b)Middle Level Management put on different factors, in achieving organisational
3. (d)Staffing and Controlling objectives.
4. (d)Both (a) and (b) (b) Raman—Production concept
5. (c)(iii), (ii), (i) Joginder— Product concept
6. (a)Functional foremanship John—Selling concept
Iqbal — Marketing concept
7. (a)Time Study
Shreya—Societal marketing concept (Explain)
8. (d)Division of work
9. (c)` 1315 Sample Paper-20
10. (b)Remuneration of Employees
1. (d) Coordination is an all pervasive function.
11. (a)Planning is continuous
2. (b) Management as an Art
12. (a)(iii), (i), (ii), (iv)
3. (b) (i), (iii), (iv), (ii)
13. (c)Implementing the plan
4. (c) Esprit De Corps
14. (d)Planning reduces creativity
5. (b) (i), (iv), (iii), (ii)
15. (b)(i) – (C), (ii)- (B), (iii) - (D), (iv) – (A)
6. (a) Planning reduces overlapping and wasteful
16. (c)Strategy activities.
17. (b)Statement II is correct and Statement I is not 7. (a) Both Assertion (A) and Reason (R) are true and
correct. Reason (R) is the correct explanation of Assertion
18. (a) Both Assertion (A) and Reason (R) are true. (A).
19. (d) Mohit cannot file a complaint. 8. (c) Delegation
20. (a) Sirajuddin can appeal against the order of National 9. (a) Only (i) and (ii)
Commission to the Supreme Court of India within 10. (a) Personality Test
a period of 30 days of such order.
11. (b) Selection
21. (a) (i) ‘Estimating Manpower Requirements’.
(ii) Workload Analysis 12. (c) (i) – (B),(ii) – (A),(iii) – (C)
(iii) • Recruitment • Selection 13. (a) Formal communication
OR 14. (d) Taking corrective action if deviations go beyond
(b) (i) Staffing. the acceptable limits.
(ii) • Training and development • Performance 15. (c) high earnings, high cash flows, stable earnings and
Appraisal lower growth opportunities
(iii) • Selection • Orientation and Placement 16. (c) Regulatory framework
22. Hint: Controlling 17. (d) Any consultant
24. (a) Learn about the risks associated with products and 18. (d) Controlling insider trading and imposing penalties
services, follow manufacturer’s instructions and use for such practices.
the products safely. 19. (a) Product ,Price , Place and Promotion
(b) (i) Right to be heard 20. (d) A complaint can to be made to a District
(ii) Right to seek redressal (Explain) commission when the value of the good or service
26. Hint: Divisional Structure does not exceed `1 crore.
28. Job security, Career advancement opportunity, 21. Importance of business environment:
Organizational climate, Status (Explain) (i) Identifying opportunities and getting the first
29. (a) Yes. Reason: Three months credit on purchases mover advantage.
availed from the suppliers while no credit allowed “...it was the first to recognise the need for small
to customers (selling the product in cash). cars...”
(b) (i) Diversification (ii) Assisting in planning and policy formulation.
(ii) Level of collaboration (Explain) “... think afresh about how to deal with the situation.”
30. Public Relations (Explain) (iii) Helps in improving performance.
32. (a) Hint: Explain any four advantages of internal sources “... future of an enterprise is closely bound up with
(b) Apprenticeship Training (Explain) what is happening in the environment. It really makes
a difference in the performance of an enterprise.”
33. (a) Factors affecting dividend decision (Explain)
 BUSINESS STUDIES XII EXAM HANDBOOK
190
22.
Causes of deviation Corrective action to be taken
(i) Defective Change the quality specification for the
material material used
(ii) Defective Repair the existing machine or replace the
machinery machine if it cannot be repaired
(iii) Obsolete Undertake technological upgradation
machinery machinery
23. (a) (i) Bread: Small—The product is sold for cash
and production cycle is short i.e., quick cash
turnover.
(ii) Sugar: Large—The ratio of cost of raw
material to the total cost of production is
quite high and the availability of raw material
(sugarcane) is seasonal.
(iii) Coolers: Large—It is a seasonal product.
It requires large amount of working capital
to store the output during the non-season
period.
(b) Decisions Shyam should take to ensure low
investment in fixed capital requirement with
respect to:
(i) Nature of Business: Instead of setting up a
manufacturing unit, Shyam should start a
trading concern of buying handicrafts from
the craftsmen and selling them.
(ii) Scale of operations: Shyam should keep the
scale of his organization small.
(iii) Financing alternatives: A developed financial
market may provide for leasing facilities.
So instead of making outright purchase of
assets, for example of office space, Shyam
should take them on lease and reduce his
requirement of fixed capital.
24. (a) Radhika Ltd. – Societal marketing concept
Krishna Ltd. – Marketing concept
Basis Marketing Societal Marketing
Concept Concept
Focus Its focus is on satisfaction Customer needs and society's
of customers' needs. well-being—It takes care of
long-term well-being of the
consumers as well as the
society.
Means It uses integrated It also uses integrated
marketing (in respect of marketing as a means to
product, price, promotion achieve the objective.
and physical distribution)
as a means to achieve the
objective.
OR
(b) 'Product' element of marketing mix
Three important product decisions:
(i) Branding: Branding is the process of giving
a name, or a sign or a symbol to a product
Shree Radhey Publications (Subhash Dey)
which helps in identifying and distinguishing
it from the competitors’ product.
(ii) Packaging: ‘Packaging’ means the act of
designing and producing the container or
wrapper of a product and putting the product
into it.
of (iii) Labelling: Labelling is the process of designing
the label and putting it on the package to
provide information regarding the product, its
contents, method of use etc.
25. (a) Management (Explain any three points of importance
of management)
OR
(b) Coordination
(Explain any three features of coordination)
27. (a) Strategy
(b) Strategy includes three dimensions:
(i) Determining long term objectives
“C Ltd. sets its long-term objective to increase
profits by 20% in the next year.”
(ii) Adopting a particular course of action: “... the
company is introducing new models with added
features and new technological advancements.”
(iii) Allocating resources necessary to achieve the
objective: “... the company raises `100 crore by
issuing equity shares.”
28. Earnings per share = `4
EPS = Earning after tax/No. of equity shares
4 = Earning after tax/60,000
Earning after tax (EAT) = `2,40,000
Interest = `40,00,000 × 10/100 = `4,00,000
Let the Earning before tax (EBT) = x
EBT – Tax = EAT
x – 0.40 x = 2,40,000 ⇒ 0.60 x = 2,40,000
x = 2,40,000/0.60 = 4,00,000
Earning before tax (EBT) = `4,00,000
EBIT = Earning before tax + Interest
= `4,00,000 + `4,00,000 = `8,00,000
ROI = EBIT/Total Investment × 100
= 8,00,000/1,00,00,000 × 100 = 8%
As ROI (8%) < Rate of interest (10%), the company’s
EPS falls down because of use of debt, i.e. unfavourable
financial leverage. Thus, the finance manager Gaurang
was not justified in making this recommendation.
29. (a) Shares, debentures, bonds
(b) Capital market is expected to give a better return in
a buoyant economy as:
(i) The securities are held for a longer duration
(ii) There is a scope of earning capital gains on
shares.
 CBSE Sample Question Paper and BUSINESS STUDIES XII EXAM HANDBOOK
191
20 Practice Papers
(c) Securities in capital market are riskier with • Labour Contractors
respect to return and principal repayment. Issuing • Recommendations of Employees
company may fail to perform as promoters may (any three)
defraud investors. 33. (a) Hint: Semantic barriers
30. (a) Right to seek redressal (give the meaning) (b) Depending on the use of authority, there are three
(b) Mohit cannot file a complaint against the seller basic styles of leadership:
in the consumer court as he does not have cash- (i) Autocratic
memo. (ii) Democratic
(c) Hint: Two functions of an NGO/Consumer (iii) Laissez-faire (Explain)
organisation for the protection and promotion of 34. (a) The companies use all tools at the same time
the consumers because of the nature of market, nature of product,
31. (a) Divisional Structure, since Wipro is multi- promotion budget and objectives of promotion
product company having product line – being different at different times.
telecommunications, engineering, financial (b) Advertising (Explain its two features)
services, etc.
(c) The tools of promotion used are:
32. (b) (i) Advertisement
(i) Public Relations
(ii) • Direct Recruitment
(ii) Advertisements
• Casual Callers
(iii) Personal Selling
• Employment Exchange
(iv) Sales Promotion