SAHODAYA SCHOOLS COMPLEX, BANGALORE

PRE-BOARD EXAMINATION 2023 – 24

SUBJECT: BUSINESS STUDIES
SET-B

(MARKING SCHEME)

CLASS: XII MAX. MARKS: 80

1. Madhvi is working as a manager in ‘Taarik and Company’. She is involved in a problem related
to a particular product. She is unable to decide whether she should produce that product in her
own company or she should buy it from the market. She studied both the options deeply with the
help of specialists. In order to maintain the company’s impression on the minds of the customers,
she decided to produce the product in the company itself. She is hopeful of the complete success
of this decision. Identify the stage of the ‘planning process’ on which Madhvi reached the final
decision. (1)
(a) Evaluating alternative courses
(b) Selecting an alternative
(c) Implementing the plan
(d) Follow-up action
2. While scrutinizing the production records, it is found that a particular batch the rejection rate
was 5%against the set standard of 2%. The management found that this was due to negligence of
quality control staff. 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
3. ---------------- is the framework within which managerial and operating tasks are performed. It
specifies the relationship between people, work and resources. It allows coordination and
correlation between human, physical and financial resources. (1)
(a) Organization structure
(b) Span of management
(c) Delegation
(d) Decentralization
4. The government of India undertook many initiatives to encourage domestic manufacturing and
export of defence equipment. ‘MAKE IN INDIA’ in defence was one such scheme launched by
the Government to encourage companies across the world to manufacture defence products in
India. Identify the dimension of business environment which is related to the above mentioned case. (1)
(a) Technological environment
(b) Legal environment
(c) Political environment
(d) Economic environment
5. Assertion (A) : Business environment is largely uncertain.
Reason (R) : It is very difficult to predict future happenings especially when environment
changes are taking place too frequently. (1)
(a) Both Assertion (A) and Reason (R) are true and (R) is the 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

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 (d) Assertion (A) is false but Reason (R) is true
6. Surya Ltd a manufacturing enterprise is replacing the old technology with modern and more
efficient set up so that they can reduce the costs and increase the profitability. Which objective
of management will the firm not be able to achieve by carrying out this process? (1)
(a) Efficiency
(b) Social
(c) Profit
(d) Survival
7. The process of organizing involves identifying and dividing the work into small and manageable
activities and then grouping those activities which are similar in nature. This grouping process is
called_______________________. (1)
(a) Span of Management
(b) Organisation structure
(c) Departmentalisation
(d) Delegation
8. Whats App was the first application for mobile chat. Afterwards many other applications came
but Whats App is still No1 mobile chat app. Which point of importance of the business
environment is highlighted? (1)
(a) Helps in tapping resources
(b) Helps in policy making
(c) Identifying threats and getting warning signals
(d) Helps in identifying opportunities and taking first mover advantage
9. Himalayan 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 Himalayan 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.
10. The Uttarakhand government has developed surveillance network using latest satellite
technology. Under this system, the state’s mining department will be in a position to check
mining activities across the state. They are also considering the use of drones against illegal
mining. Identify the dimensions of the business environment. (1)
(a) Economic and Legal
(b) Technological and Social
(c) Political and economic
(d) Social and Economic
11. 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.
12. Statement-I Tata differentiates it’s 3 quality of tea with 3 different labels (Tata Agni, Tata
Premium and Tata Gold)
Statement-II Labelling helps to describe a product and specify it’s contents
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

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 (c) Both the statements are true
(d) Both the statements are false
13. 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 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)
14. Naina has 1000 equity shares of a company. She wants to sell 500 shares. Which market should
she approach? (1)
(a) Money market
(b) Capital market
(c) Primary market
(d) Stock market
15. Mehak Limited has hired 300 salesmen who will be assigned the task of contacting prospective
buyers and creating awareness about the new range of organic incenses introduced by the
company. Identify the element of promotion been described in the given lines. (1)
(a) Advertising
(b) Sales promotion
(c) Personal selling
(d) Public relation
16. 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

17. X Ltd works towards bringing continuous improvement in the quality of the product. Identify
the concept of marketing they lay emphasis on. (1)
(a) Selling concept
(b) Product concept
(c) Production concept
(d) Societal Marketing concept
18. Pragati 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
19. Within 3 years of its inception, Pandu Limited has created a very positive reputation about itself
and its products in the eyes of general public by participating extensively in various social
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 welfare programs. Identify the component of promotion mixing described in the given lines. (1)
(a) Advertising
(b) Personal selling
(c) Public relation
(d) Sales promotion
20. Arrange the steps involved in trading procedure at the stock exchange in correct sequence: (1)
i) Settlement of order
ii) Opening of De mat Account
iii) Placing of order
iv) Execution of order
(a) (ii) ; (iv);( iii);(i)
(b) (ii) ;(i) ;(iii);(ii)
(c) (iii);(ii);( ii);(i)
(d) (ii);(iii);(iv);(i)
21. Rishitosh Mukerjee has recently joined AMV Ltd, a company manufacturing refrigerators. He
found that his department was under-staffed and other departments were not cooperating with his
department for smooth functioning of the organisation. Therefore, he ensured that his department
has the required number of employees and its cooperation with other departments is improved.
(a) Identify the level at which Rishitosh Mukerjee was working.
(b) Also, state two functions required to be performed by Rishitosh Mukerjee at this level.
(3)
ANSWER: Part (a) Rishitosh Mukerjee is working at middle level of the management.
Part (b) The three more functions that he has to perform at this level are stated below:
(a) He has to assign duties and responsibilities to the people in his department.
(b) He has to motivate the people in his department to achieve the desired objectives.
(c) He has to interpret the policies framed by top management.
22. Explain “Critical point control” with respect to Analyzing deviations, a step in the process of
controlling. Give a suitable example. (3)
ANS : It is neither economical nor necessary to keep a check on each and every activity in an
organization. Focus should be on KRAs. For instance in a manufacturing organization, an
increase of 5% in the labor cost may be more troublesome than a 15% increase in postal charges.

OR

Explain “Management by exception” with respect to Analyzing deviations, a step in the process
of controlling. Give a suitable example.
ANS : An attempt to control everything results in controlling nothing. Only the significant
deviations which go beyond the permissible limits should be brought to the notice of
management. Foe example, If the plan lays down a deviation of 2% increase in labor costa s an
acceptable range of deviation. And the deviation is of 5% then it should be brought to the notice
of management immediately.
23. 400 million users used. This was the milestone achieved by Face Book in early 2010. One of
those users is the big 4 accounting unit the Ernst and Young, which has had a face book page
since 2006. According to the Company’s Human Resource manager, E&Y uses it’s face book
page to reach it’s potential employees. The company also hoped to promote it’s brand and show
students (Future employees) what E&Y was all about and what it would be like to work there.
Identify the source of recruitment used by E&Y and also explain it’s 2 merits. (3)

ANS : External sources. MERITS : Fresh talent, Qualified personnel

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24. State the regulatory functions of SEBI. (3)
ANS : Functions are :
 Registration of brokers and sub brokers and other players in the market
 Registration of collective investment schemes and mutual funds
 Regulation of stock brokers, portfolio exchanges, underwriters and merchant bankers and
the business in stock exchanges and other securities market
OR
Differentiate between primary and secondary market. (Any 3)

25. Anushka Ltd approached a well established university in the city of Madurai to recruit qualified
personnel for various technical and professional jobs. They selected Tanya, Ritu, Garima and
Chetan for various vacancies in the organization. After selection and placement, they felt the
need to increase the skills and abilities of employees to help them perform their job better. Hence
the company decided to take the action for the same.
Identify the step of staffing process discussed in the case. Also, explain any 3 advantages of the
concept identified to Anushka Ltd. (4)

ANS : Training
MERITS: Enhances employee productivity, Equips the mangers, Improves morale of
employees
OR
Ramesh has been working under Suresh a trained carpenter to get trained in the skill.
(a) Name the on the job training method of training Ramesh is undergoing.
ANS : Apprenticeship Training
(b) Explain any 3 benefits that Ramesh will get on being trained
ANS : MERITS : Improved skill and knowledge, More efficiency, Improves morale of the
employees
26. Sunidhi has started a designer studio in the basement of her residence after completing her
masters in fashion designing. She has appointed ten employees to take care of the various
aspects of the work. She interacts regularly with each employee to tell exactly what is expected
of him/her and what he/she needs to do to be regarded as a good performer. At the same time she
allows a free work environment wherein the employees openly chit chat with each other in order
to fulfil their social and emotional needs. Sometimes, these interactions also lead to spreading
rumours which are not authentic. In context of the above case:
(4)
(a) Name and explain the two types of communication being referred to in the above paragraph.
ANS : Formal Communication and Informal Communication (Explain) (1.5M*2)
(b) How does effective communication increase managerial efficiency?

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 ANS : Explain the point of importance (1M)
27. 'Viyo Ltd.' is a company manufacturing textiles. It has a share capital of 60 lakhs. The earning
per share in the previous year was Rs 0.80. For diversification, the company requires additional
capital of 40 lakhs. The company raised funds by issuing 10% debentures for the same. During
the current year the company earned profit of 10 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)
ANS : The shareholders lost as the EPS decreased
EBIT-EPS Analysis
Particulars AMOUNT
EARNINGS BEFORE INTEREST & TAX 10,00,000
LESS : INTEREST (4,00,000)

EARNINGS BEFORE TAX 6,00,000

LESS : TAX @ 40% 2,40,000
EARNINGS AFTER TAX 3,60,000
NUMBER OF SHARES 6,00,000
EPS 0.6

28. Beta Ltd. had been the market leader in the pharmaceutical sector. It is leading the market with
its annual sales of over Rs.20,000 crores and its profit crossing the mark of 20%. Recently its
published results showed that the cash inflows exceeded the outflows by Rs.150 crores. Having
such a wonderful record, it now plans to diversify into the healthy food business by
manufacturing and supplying healthy food supplements for infants, teenagers and elders. For this,
they need to raise additional funds which they can raise both by debt and equity. They called for
a meeting with their financial manager and his team. In the meeting, the financial manager told
them that at present their ROI is 9.2% and the interest coverage ratio is 6 times as compared to 4
times for other firms in the same industry. The Sensex and NIFTY were at present at all time
high. The rate of interest prevailing in the market is 7.5%.
The managing director also announced that 2% of its revenues from the new business would be
set aside for organizing free health camps for the old age people.
As a finance manager, list and explain the factors that you would have taken into account while
deciding the capital structure for the company related to the above paragraph. (4)

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 4 Points with explanation)
29. What is motivation? Explain the process of motivation. (4)
ANS : Motivation means incitement or inducement to act or move. It means the process of
making subordinate to act in a desired manner to achieve organizational goals
PROCESS : Unsatisfied want – Tension – Drive – Search behavior – Satisfied need- Reduction
of tension
OR
What is Leadership? Explain various styles of leadership

ANS : Leadership is the activity of influencing people to strive willingly for group objectives.
STYLES : Democratic, Autocratic, Laissez Fair (Explain)

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30. Mallaika purchased a pack of chocolates of a renowned brand for her daughter from a shop in
the nearby market. After consuming the chocolates, her daughter fell sick. She filed a case with
the District forum against the renowned brand. She lost the case because of a mistake that she
could not provide proof of purchase. What should be kept in mind by a consumer while
purchasing, using and consuming goods and services apart from avoiding the mistake committed
by Mallaika, in order to enable him/her to achieve the objective of consumer protection?
Enumerate any four points. (4)
ANS : Be informed consumer, Keep the Cash memo, Exercise Right to information, Buy
standardized products, Become a member of consumer forums, File a complaint in case of being
denied the rights.
31. R&T Reality, the property development arm of the construction and engineering giant R&T in a
recent report to the media shared that it is betting on bigger and better projects providing greater
benefits to the customers, lower prices and faster execution to boost its growth. The
spokesperson of the company informed the media that besides the innovative features, quality
and brand, the fair pricing followed by the company is also a hit with the buyers. He said that the
company is also focusing on accurate, speedy and timely delivery. Proper communication with
the market was being maintained through advertising. Even dealers were to be offered incentives
to boost the sales. The above para describes the combination of variables used by R&T Reality
to prepare its market offering. Identify and explain the variables. (6)
ANS : Product, Price, Place, Promotion
32. XYZ Ltd is a company known for its consumer business of chips and biscuits, but many people
do not know that the company also runs a medical device and diagnostics business, as well as a
pharmaceutical company. With more than 1,80,000 employees worldwide the company has
chosen to share decision making authority with lower levels and place it nearest to the point of
action. Therefore the response does not take time. This propagates the belief that people are
competent, capable and resourceful who can get a chance to prove their abilities. And enables
the company in identifying those executives who have the necessary potential to become
dynamic leaders, so that the checking required on decisions taken by lower levels of
management is the least. This makes it possible to evaluate performance at each level and each
department can be individually held accountable for their results.
By quoting the lines given above identify and briefly explain the benefits of the concept
discussed above. (6)
ANS : Concept is Decentralization
BENEFITS OF DECENTRALIZATION:
 Develops initiative among subordinates
 Develops managerial talent for the future
 Quick decision making
 Relief to the top mgt
 Facilitates growth
 Better control
33. Briefly explain the following terms of Scientific Management as given by
F.W. Taylor: (6)
a. Motion study : Refers to the study of movements like lifting, putting objects, sitting and
changing positions Etc. which are undertaken while doing a typical job. The objective is to
eliminate unnecessary movements to make the job more efficient
b. Fatigue Study : It seeks to determine the amount and frequency of rest intervals in completing a
task.
c. Mental Revolution : It involves change in the attitude of workers and management towards one
another from competition to cooperation
OR

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 Briefly explain the following principles of management given by Henry Fayol:
a. Unity of direction : Each group of activities having the same objective must have ‘ONE HEAD
AND ONE PLAN
b. Discipline : Discipline is the obedience to organizational rules and employment agreement
which are necessary for the working of the organization.
c. Espirit De Corps : Management should promote a team spirit of unity and harmony among
employees.
34. Saurabh Jain set up a telecom business in Nasik, named as 'Ketone', with an ambitious target of
reaching out to 90% of the Indian population within one year. He chose this business on the
belief that the demand for data services will increase 4 times within the next 2-3 years. To fulfil
such an ambitious target, he had to either acquire an existing telecom business or collaborate or
go independent aggressively in the light of tough competition. He assessed the proposals of
different companies vis-a-vis earnings per share, tax liabilities, dividends paid, etc. and their
future projections, knowing fully well that the projections may change if the country's economic
policies get modified. The above paragraph discusses some of the steps of one of the functions of
management. By quoting lines from the above paragraph, explain these steps in chronological
order.
ANS : Setting objectives, Developing planning premises, Identifying alternative courses of
action, Evaluating alternative courses. (1.5M*4)

OR
Differentiate between Single use plans and standing plans. Also explain various types of single
use plans.

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