SAHODAYA SCHOOLS COMPLEX, BANGALORE

PRE-BOARD EXAMINATION 2023 – 24

SUBJECT: BUSINESS STUDIES
SET-A

CLASS: XII MAX. MARKS: 80

MARKING SCHEME

1. Assertion (A) : Business environment is a complex phenomenon

Reason (R) : It is relatively easier to understand in parts but difficult to grasp in totality (1)
(a) Both Assertion (A) and Reason (R) are true and (R) is correct explanation of (A)
(b) Both Assertion (A) and Reason (R) are true and (R) is not correct explanation of (A)
(c) Assertion (A) is true but Reason (R) is false
(d) Assertion (A) is false but Reason (R) is true
2. Planning is concerned with the future which is uncertain. Therefore the manager is required to
make certain assumptions. These assumptions are called -------------- (1)
(a) Ends (b) Alternatives (c) Ideas (d) Premises
3. “In order to increase awareness of the company’s products in the market and customers, Mr.
Rahul the CEO has decided to advertise in all the leading
News papers in every state of India for next four months”. Identify the type
of plan highlighted in the given statement. (1)
(a) Strategy (b) Policy (c) Procedure (d) Method
4. While scrutinizing the production records, it is found that a particular batch the rejection rate
was 5%against the set standard of 2%. This action is part of which step in the controlling
process? (1)
(a) Measurement of actual performance
(b) Comparing actual performance with standards
(c) Analyzing deviations
(d) Taking corrective action
5. The need for an adequate organizational structure is felt by an enterprise when ------------ (1)
(a) It grows in size and complexity
(b) Coordination becomes difficult due to emergence of new functions
(c) There is a need for better control over the operations of the business enterprise
(d) All the above
6. Statement-I Promotion mix refers to combination of promotional tools used by an organization to
achieve its communication objectives
Statement-II Advertising creates a monologue and not a dialogue.
Choose the correct option from the options given below: (1)
(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
7. Match the various terms of Financial Markets Column - I with their respective Statements in
Column-II (1)
Column – I Column – II
A Financial market (i) It is also known as the Stock market
B Primary market (ii) It is a market for creation and exchange of financial

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 assets.
C Secondary market (iii) It is also known as New issue market

(a) (ii), (iii), (i) (b) (i), (iii), (ii) (c) (iii), (ii), (i) (d) (i), (ii), (ii)

8. According to Securities Contracts Regulation Act, 1956 ______ means any body of individuals
whether incorporated or not, constituted for the purpose of assisting, regulating or controlling the
business of buying and selling or dealings in securities. (1)
(a) Money market (b) Capital Market (c) Primary Market (d) Stock Market
9. Harshita Verma has set up a factory to manufacture herbal hand sanitizers in Meerut. The size and
shape of the bottles in which the products are packed are specially designed so that it should be
convenient to handle and use by the consumers. The bottles in which sanitizers are packed is part
of _____________ (1)
(a) Primary Package (c) Secondary Package
(b) Transportation Package (d) Both Primary and Secondary Package
10. Which of the following statements is incorrect? (1)
(a) Providing liquidity to securities is one of the functions of stock exchange
(b) Process of holding shares in electronic form is known as Dematerialization
(c) Securities Exchange Board of India performs the regulatory function of controlling insider trading
and imposing penalties for such practices
(d) Capital market consists of Commercial banks, Development banks and stock exchanges
11. Beauty Products Ltd is a natural and ethical beauty brand famous for offering organic beauty
products for men and women. The company uses plant based materials for its products and is the
number one beauty brand in the country. It not only satisfies the customers but also believes in
overall protection of the planet. Identify the marketing philosophy being used by Beauty Products
Ltd. (1)
(a) Selling concept (c) Production concept
(b) Product concept (d) Societal marketing concept
12. Swati Ltd has chalked out an action plan in order to increase it’s market share in the international
market by 20% in the next one year. The action plan contains the details about how the production
levels will be increased, promotional activities will be carried out and so on. Identify the type of
marketing function being described in the given lines (1)
(a) Gathering and analyzing marketing information
(b) Marketing Planning
(c) Product designing and development
(d) Packaging and labelling
13. “Buy one get one free” is an example of which element of Promotion mix? (1)
(a) Advertising (c) Public Relations
(b) Personal selling (d) Sales Promotion
14. Krishna is holding 100 shares of Radhika Industries Ltd. Radhika Industries Ltd. wants to expand
its operations. For this it decided to issue shares. They decided to offer its existing shareholders
the privilege to subscribe to its new issue of shares. Identify the method of floatation of new issue
described in the above case (1)
(a) Private placement (c) Right issue
(b) Offer for sale (d) Offer through prospectus

15. 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 specialized in

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 specific skills, it resulted in increased efficiency and better coordination.
However, problems arose when Mr. Advait started considering group objectives superior to
organizational 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. Identify and state the organizational structure adopted by the company. (1)
(a) Functional structure (c) Matrix Structure
(b) Divisional structure (d) Network Structure
16. XYZ Industries is facing a lot of opposition as it pays less salary to women workers as compared
to men workers for equal work. Which dimension of the business environment is being violated in
the given situation? (1)
(a) Legal environment (c) Social environment
(b) Political environment (d) Economic Environment
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)
(a) Political and Legal environment
(b) Legal and Social environment
(c) Technological and Political environment
(d) Social and Technological Environment
18. Ganga Ltd. is a company manufacturing automobiles where division of work into key areas
includes production, purchase, marketing, accounts and personnel. Which of the following is a
disadvantage of the organization structure of Ganga Ltd.? (1)
(a) It may lead to increase in cost
(b) Managers may gain power and assert independence and ignore organization interests.
(c) It ensures that different functions get due attention.
(d) Heads do not get training for top management positions.
19. Identify the reason which makes management important in the light of the fact that it is generally
seen that managers in an organization try to reduce costs and increase productivity. (1)
(a) Management helps in achieving group goals.
(b) Management creates a dynamic organization
(c) Management increases efficiency
(d) Management helps in the development of society.
20. The government of India made an amendment in the Payment of Wages Act 1936, to allow
employers of certain industries to make payment through various electronic modes of payment.
This is another milestone in the direction to further push to cashless economy. Identify the
dimension of business environment which does not relate to the above mentioned case. (1)
(a) Technological environment (c) Political environment
(b) Legal environment (d) Economic environment
21. The production, purchase and sales managers at Sharda Ltd, a firm manufacturing readymade
garments are generally at a conflict, as they have their own objectives. Usually each thinks that
only they are qualified to evaluate, judge and decide on nay matter, according to their professional
criteria. Name the concept which will be required by the CEO Raman, to reconcile the differences
in approach, interest or opinion in the organization. Also Explain any 2 merits of the concept
identified. (3)
ANS : Coordination MERITS : Binding force, Synchronization of activities
22. “Planning is prescriptive whereas, controlling is evaluative.” Explain. (3)
ANS : Planning is basically an intellectual process involving thinking, articulation and analysis to
discover and discover and prescribe an appropriate course of action for achieving objectives. Thus
planning is prescriptive.
Controlling checks whether decisions have been translated into desired action, thus controlling is

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 evaluative.
OR
“An attempt to control everything results in controlling nothing.” Identify and explain the
technique of management control based on the statement.
ANS : Management by Exception (Explain with example)
23. Shweta Ltd. filled the position of General Manager by shifting their Finance Manager to that
position and the post of Finance Manager was taken up by their deputy finance manager. However,
the post of deputy finance manager was still vacant. (3)
(a) Identify the source of recruitment adopted by Shweta Ltd.
ANS : Internal sources
(b) State any two limitations of the source of recruitment highlighted in the above para.
ANS : Hampers the spirit of competition, Incomplete source
24. State the objectives of Securities Exchange Board of India. (3)
ANS : To regulate stock exchanges, To protect interests and rights of investors, To prevent trading
malpractices
OR
State various functions of Secondary Market.
ANS : Provides liquidity, Contributes to economic growth, Existing investors can disinvest and
new investors can enter
25. Blue Heavens Ltd. purchased a new hi-tech machine from Germany for manufacturing high
quality auto components in a cost effective manner. But during the production process, the
manager observed that the quality of production was not as per standard. On investigation it was
found that there was lack of knowledge amongst the employees of using these hi-tech machines.
So. frequent visit of engineers was required from Germany. This resulted in high overhead
charges. Suggest what can be done to develop the skills and abilities of employees for producing
high quality products by using these hi-tech machines. Also state how the employees will get
benefitted from your suggestion (4)
ANS :Training
MERITS : Improved skill and knowledge, More efficiency, Improves morale of the employees
OR
Ramesh started working in a factory as an unskilled employee. Considering his good attitude his
manager decided to give training to him to operate the welding machine.
Explain any 4 benefits that the factory will get with this training.
ANS : MERITS: Enhances employee productivity, Equips the managers, Improves morale of
employees, Leads to higher profits

26. 'KPM Ltd. is manufacturing breads and biscuits for many years. It has approximately 150
employees and most of them are not happy with the working environment. Because of this, the
labour turnover rate is very high. Therefore the company appoints a new Human Resource
Manager, Naveen, to analyse the situation. Naveen finds that there is no free flow of
communication and there is no suggestion box for the employees to voice their suggestions or
grievances. The company rarely organises a social or cultural gathering, the employees just come,
finish their work and leave the organisation. (4)
(a) Identify the communication barrier discussed above
ANS : Organizational Facilities
(b) Identify the category of this communication barrier.
ANS : Organizational Barrier
(c) State any 2 barriers under the same category
ANS : Rules and regulations, Organisational structure complexity or Organisational Policy

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 OR
Ankur is working as a production manager in an organisation. His subordinate Saurabh discussed
with him a method of production which will reduce the cost of production. But due to some
domestic problems and Ankur's mind being pre-occupied he is not in a position to understand the
message. Saurabh got disappointed by this.
(a) Identify the communication barrier discussed above
ANS : Lack of attention
(b) Identify the category of this communication barrier.
ANS : Psychological Barrier
(c) State any 2 barriers under the same category
ANS : Distrust, Pre matured evaluation, Status
27. "Mr. Rajesh is an accountant in a large financial company. He comes from a rural background and
a low-income family. He worked hard to earn his college degree. He is an intelligent and capable
employee. His fault is that being under probation, he does not want to take risks and hesitates to
take decisions on his own. He often takes small and routine matters to the boss or to other
accountants.
Since he is a capable person, his boss wants to motivate him to be more independent in his work.
The boss believes that such an approach will improve Mr. Rajesh's performance and give him self-
confidence. However, the boss is not sure how to motivate Mr. Rajesh"
Quoting lines from the above para, identify the "need" which is not satisfied in case of Mr. Rajesh.
As the boss, how will you motivate Mr. Rajesh. Give any three ways. (4)
ANS : Security needs are not satisfied
TECHNIQUES TO MOTIVATE
 Giving job security (Giving him letter of confirmation)
 Giving him independent work
 Job Enrichment
 Employee participation
28. A business that doesn't grow dies', says Mr. Shah, the owner of Shah Marble Ltd. with glorious 36
months of its grand success having a capital base of 80 crore. Within a short span of time, the
company could generate cash flow which not only covered fixed cash payment obligations but
also create sufficient buffer. The company is on the growth path and a new breed of consumers is
eager to buy the Italian marble sold by Shah Marble Ltd. To meet the increasing demand, Mr.
Shah decided to expand his business by acquiring a mine. This required an investment of 120
crore. To seek advice in this matter, he called his financial advisor Mr. Seth who advised him
about the judicious mix of equity (40%) and Debt (60%). Mr. Seth also suggested him to take loan
from a financial institution as the cost of raising funds from financial institutions is low. Though
this will increase the financial risk but will also raise the return to equity shareholders. He also
apprised him that issue of debt will not dilute the control of equity shareholders. At the same time,
the interest on loan is a tax deductible expense for computation of tax liability. After due
deliberations with Mr. Seth, Mr. Shah decided to raise funds from a financial institution. (4)
(a) Identify and explain the concept of Financial Management as advised by Mr. Seth in the
above situation.
ANS : Capital structure
(b) State any 3 factors affecting the concept as identified in part (a) above which have been
discussed between Mr. Shah and Mr. Seth.
ANS : Cash Flow position, Interest coverage ratio, Debt service coverage ratio, Return on
Investment, Cost of Debt, Tax rate, Cost of equity, Floatation cost, Risk considerations,
Flexibility (Any 3 Points with explanation)
29. Kritika limited is a company manufacturing textiles. It has a share capital of 60 lakhs. The
earning per share in the previous year was Rs 0.50. For diversification, the company requires
additional capital of 40 lakhs. The company raised funds by issuing 10% debentures for the

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 same. During the current year the company earned profit of 8 lakhs on capital employed. It paid
tax @ 40%. State whether the shareholders gained or lost, in respect of earning per share on
diversification. Show your calculations clearly. (4)

30. Cutie Beauty Ltd. is a beauty brand famous for its organic beauty products for men and women.
The company uses organic plant extract to produce its products which are non- allergic and
beneficial for each type of skin. The product is made available in different packs and sizes. The
label of the product contains full information about the ingredients, batch number, date of
manufacture and expiry price etc. and the company has set up its customer care cell to handle all
sort of queries of its customer. Identify and explain any 2 consumer rights taken care of by the
company by quoting the lines from the passage. (4)
ANS :
 Right to safety(The company uses organic plant extract to produce its products which are
non- allergic and beneficial for each type of skin)
 Right to be assured (The company has set up its customer care cell)
 Right to Information (The label of the product contains full information about the
ingredients, batch number, date of manufacture and expiry price etc.

31. As students of a management course Karan and Kunal were asked to prepare a project report on
applicability of principles of management in real business situations. In order to conduct the
survey Kunal had selected an outlet of a popular chain of fast food restaurant whereas Karan
visited a nearby departmental store. When Kunal presented his report to the class, Karan realised
that their observations were matching on various grounds. In both the business units, work is
divided into small tasks and each is performed by a trained employee. A set of rules are
predetermined and communicated to the employees for compliance and there is a fixed place for
everything and all employees have been allotted individual space. Moreover, the managers
encourage a spirit of mutual trust and belongingness among the employees so that the need for
imposing penalties is reduced. In context of the above case:

(a) Identify and explain the various principles of management being described above. (4,2)
ANS : Division of work, Discipline, Order, Esprit De Corps (With explanation)
(b) How are the principles of management different from values?
ANS : Broad and general guidelines/ General beliefs
Guide managerial decision making and action/ Standards set for the working

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 OR
Vishesh completed his MBA at a reputed business school in Lucknow. He was impressed by the
Principles and Techniques of Scientific Management developed by F.W. Taylor. On completing
his MBA, he wanted to apply Scientific Management in his family's business of fast food chain
of restaurants named 'Burger Mania'. His main goal was to reduce costs with increased output.
To begin with, he wanted to develop a standard method which would be followed throughout the
organisation. So, he investigated traditional methods through work study and unified the best
practices. The standard method, i.e. the best way of doing the job was then developed taking into
account all parameters right from the procurement of raw materials till the delivery of the final
product to the customer. Vishesh also believed that each person should not only be scientifically
selected but should also be given the required training to increase efficiency. For this, he set up a
Special Training Unit called 'Hamburger' in Bengaluru where the workers were given the
required training to learn the best method. At the factory, the ingredients making up a burger
were strategically placed to reduce the time taken for excess movements. The standard time and
other parameters were determined on the basis of work study and Vishesh rewarded the workers
for meeting the standard output. Now, 'Burger Mania' has standardised processes, raw material,
time, machinery, product and working conditions that ensure that the food they send out to their
customers has the same high standards of excellence and level of quality in every chain or
franchise. The application of Scientific Management to every aspect of restaurant operations led
to 'Burger Mania's' widespread success.
Quoting the lines from the above, explain the Techniques (Any 4) of 'Scientific Management'
used by 'Burger Mania'.
ANS :
 Time Study (The standard time and other parameters were determined on the basis of
work study)
 Standardisation and Simplification ('Burger Mania' has standardised processes, raw
material, time, machinery, product and working conditions that ensure that the food they
send out to their customers has the same high standards of excellence and level of quality
in every chain or franchise)
 Motion Study (At the factory, the ingredients making up a burger were strategically
placed to reduce the time taken for excess movements)
 Method Study (The standard method, i.e. the best way of doing the job was then
developed taking into account all parameters right from the procurement of raw materials
till the delivery of the final product to the customer. ) (1.5*4)
32. Jay is working as the CEO of a soft drinks company. The company is doing it’s business in
collaboration with a soft drink company of France. Jay’s friend, Swami, a teacher in Business
Studies in a reputed college was discussing the chapter of ‘Marketing’ with his students. He
wanted clarity from Jay about the factors which affect the marketing decision. Jay explained that
there were a large number of factors affecting marketing decisions. Jay explained that there are
controllable and uncontrollable factors. He further explained that the controllable factors can be
constantly shaped and reshaped to achieve by the marketing managers to achieve marketing
success. Identify and explain the set of marketing tools that can be constantly shaped and reshaped
by the marketing managers. (6)
ANS : Product, Price, Place, Promotion
33. “Delegation helps a manager to extend his areas of operations as without it, his activities would be
restricted to only what he himself can do.” Explain. Also explain the advantages of Delegation in
an organization. (6)
ANS : BENEFITS OF DELEGATION :
 Effective management
 Employee development

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  Motivation of employees
 Facilitation of growth
 Basis of managerial hierarchy
 Better coordination

34. Mega Ltd. holds an Annual Management Programme every year in the month of March in which
the top managerial personnel formulates plans for the next year by analysing and predicting the
future to meet future events effectively. As they are responsible for providing direction to the
organization, facts are thoroughly checked using scientific calculations. Detailed plans are
prepared after discussion with professional experts. Preliminary investigations are also
undertaken to find out the viability of the plan. Since it is an intellectual activity requiring
intelligent imagination and sound judgement so it is mainly done by the top management.
Usually rest of the members just implement the plans. Middle level managers are neither allowed
to deviate from the plans nor are they permitted to act on their own. The top management
ensures that the expenses incurred in formulating the plans justify the benefits derived from
them.
State any two limitations and any two features of planning discussed above. (6)

ANS : FEATURES : Planning is futuristic, Planning is a mental exercise

LIMITATIONS : Planning reduces creativity, Planning involves huge cost
(1.5*4 Points with explanation)
OR
Differentiate between Single use plans and standing plans. Also explain various types of single
use plans.

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