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PRE-BOARD EXAMINATION
CLASS XII (2024-25)
BUSINESS STUDIES (054)
Time Allowed: 3 hours Answer Key Maximum Marks: 80
General Instructions:
 This question paper contains 34 questions.
 Marks are indicated against each question.
 Answers should be brief and to the point.
 Answers to the questions carrying 3 marks may be from 50 to 75 words; 4 marks may be about 150 words and 6
marks may be about 200 words.
 Attempt all parts of the questions together.

1 Profit maximisation as the objective of management does not hold true and is fast changing. Therefore, 1
if an organisation has a good management team that is efficient and effective it automatically serves
society by providing good quality products at reasonable prices. Identify the characteristics of the
profession that is not fully present in management.
(a) Restricted entry (b) Service motive
(c) Professional association (d) Ethical code of conduct

ANS. (b) Service motive

2 Instruments traded in capital market are: 1

(a) Bonds (b) Debentures
(c) All of these (d) Equity Shares and Preference Shares
ANS:
(c) All of these
3 Planning is a time - consuming process: 1
(a) importance (b) objectives
(c) limitation (d) benefit
ANS:
(c) limitation
4 A textile company is diversifying and starting a cement manufacturing plant. Its investment in fixed 1
capital will __________
(a) remain constant (b) become zero
(c) decrease (d) increase
ANS
(d) increase
5 Controlling is a function which brings back the management cycle to: 1
(a) Management (b) Planning
(c) Organising (d) Directing
Answer
(b) Planning

NIRMAL SINIGH RANA, PGT- Commerce, SHRIJI BABA SARASWATI VIDYA MANDIR, MATHURA
 6 Identify the principle of scientific management being ignored in the given picture, where boss is eating
food whereas workers are not allowed to take lunch.

(a) None of these (b) Science, not rule of thumb

(c) Co-operation not individualism (d) Harmony not discord
Ans.
(c) Co-operation not individualism
7 Financial market _________ financial assets 1
(a) Exchange (b) Creates (c) Creates and Exchange (d) Interchange
ANS:
(c) Creates and Exchange
8 An organisation provides security services. It requires such candidates who are reliable and don't leak 1
out the secrets of their clients.
Which step in the selection process will help to ensure this?
(a) Reference and Background Checks (b) Personality Tests
(c) Employment Interview (d) All of these Solution
ANS:
(a) 'Reference and Background Checks'
9 Which of the following statements is false? 1
1. Service industries require less working capital
2. Working capital requirement is higher in firms with shorter processing cycles
3. A liberal credit policy results in larger working capital requirements
4. Larger the lead time, larger shall be the amount of working capital required

(a) option (4) (b) option (3)

(c) option (2) (d) option (1)
Ans.
(c) option (2)
10 1
Assertion (A): Organising helps in the growth and diversification of an enterprise.
Reason (R): It allows a business enterprise to add more job positions, departments and
even diversify their product lines
(a) Both A and R are true and R is the correct explanation of A.
(b) Both A and R are true but R is not the correct explanation of A.
(c) A is true but R is false.
(d) A is false but R is true.
ANS:
(a) Both A and R are true and R is the correct explanation of A.
NIRMAL SINIGH RANA, PGT- Commerce, SHRIJI BABA SARASWATI VIDYA MANDIR, MATHURA
11 Which of the following is not a part of capital market? 1
(a) Stock exchange (b) Investors
(c) Development banks (d) The Reserve Bank of India (RBI)
Answer is option '
(d) The Reserve Bank of India (RBI)
12 A public issue of equity may reduce the management's holding in the company and make it vulnerab le 1
to takeover. This factor also influences the choice between debt and equity especially in companies in
which the current holding of management is on a lower side. The factor affecting the choice of capital
structure is:
(a) Risk consideration (b) Control
(c) Cost of debt (d) Cost of equity
Ans.:
(b) Control
13 Statement I: Assert yourself to ensure that you get a fair deal is a consumer right. 1
Statement II: Right to be heard means a right to file a complaint in case of dissatisfaction with a good
or a service
(a) Statement Il is correct and Statement I is not correct.
(b) Both the Statements I and II are not correct.
(c) Both the Statements I and II are correct.
(d) Statement I is correct and Statement II is not correct
Ans.:
(c) Both the Statements I and II are correct.
14 The owner of Sweet Memories wedding hall spent a great deal of time, money and effort in renovatio n 1
expecting a bumper wedding season in 2020 but due to the pandemic, weddings became intimate home
affairs and not many bookings happened. The limitation of planning highlighted in the above case is:
(a) It is time consuming.
(b) It may not work in a dynamic environment
(c) It reduces creativity
(d) it leads to rigidity
Ans.:
(b) It may not work in a dynamic environment
15 One of the functions of 'financial market is "providing liquidity to financial assets." 1
(a) Capital Market (b) Money Market
(c) Primary Market (d) Secondary Market
Ans.:
(d) Secondary Market
16 Statement I: Marketing is concerned with exchange of goods and services from producers to 1
consumers or users in such a way that maximises the satisfaction of customers' needs.
Statement II: Gathering and Analysing Market Information is important for making an analysis of the
available opportunities and threats as well as strengths and weaknesses of the organisation and help in
deciding what opportunities can best be pursued by it.
(a) Both the Statements I and II are not correct.
(b) Statement I is correct and Statement II is not correct.
(c) Statement Il is correct and Statement I is not correct.
(d) Both the Statements I and II are correct.
Ans.:
(d) Both the Statements I and II are correct.
NIRMAL SINIGH RANA, PGT- Commerce, SHRIJI BABA SARASWATI VIDYA MANDIR, MATHURA
17 In 2019 alone, Swiggy has launched operations in 300 towns and cities. Swiggy follows a two-step 1
sequence while expanding to a small town. First, it provides more laborious training to restaurant and
delivery partners compared to their counterparts in the city Second, it focuses on building scale in
operations and increasing the restaurant's reach to a larger base of consumers, including optimis ing
kitchens, resource planning among others.
Identify the type of plan being described in the above lines.
(a) Procedure (b) Method
(c) Programme (d) Strategy
Ans.:
(d) Strategy
18 Match the dimension of management in Column I with their respective definition in Column II 1
Column I Column II
a. Management of work (1) In a factory, a product is manufactured, in a garment store a
customer's need is satisfied and in a hospital a patient is treated.
Management translates the goals to be achieved and assigns the
means to achieve it.
b. Management of people (ii) No matter what the organisation, it has some basic product or
service to provide in order to survive the flow of input material and
the technology for transforming this input into the desired output for
consumption.
c. Management of (i) The task of management is to make people work towards
operations achieving the organisation's goals, by making their strengths effective
and their weaknesses irrelevant.
(A) (a)- (i); (b)- (iii);, (c)-(ii) (B) (a)-(ii), (b)-(i), (c) - (iii)
(C) (a)-(iii); (b)-(ii); (c)-(i) (C) (a)-(i); (b)-(ii); (c)-(iii)
Ans.
(A) (a)-(i); (b)-(iii); (c)-(ii)
19 The third decision related to financial management is: 1
(a) Dividend Decision (b) Investment Decision
(c) Financing Decision (d) Working capital Decision
Ans.
(a) Dividend Decision
20 Which one of the following is a step of controlling? 1
(a) Assessing personnel required
(b) Taking corrective action
(c) Assessing the environment
(d) Taking disciplinary
Ans.
(b) Taking corrective action

NIRMAL SINIGH RANA, PGT- Commerce, SHRIJI BABA SARASWATI VIDYA MANDIR, MATHURA
21 Ketan, Managing Director of Darjeeling Tea Limited decided that his company will serve society 3
through earning a reasonable profit. For achieving this goal, he started the business of tea. In order to
attract the tea consumers of the whole country, he gave his advertisement on the television. The
company had just started capturing the market when a survey report was presented on a news channel.
This report stated that the people had started liking coffee more than tea and that it was useful for health
also. The company had to immediately change its business from that of tea to coffee. Ketan saved the
company from suffering the possible heavy loss through his timely action.
Identify and state the characteristics of management highlighted in the above case.

Ans.
The characteristics of management highlighted in the above case are:
(a) Goal-oriented Process: Ketan, the Managing Director, had a clear goal of serving society while
earning a reasonable profit.
(b) Dynamic Function: The Company responded promptly to the survey report, indicating its
ability to respond to external environmental changes.
(c) Continuous Process: Ketan made a decisive decision to change the business strategy,
demonstrating his ability to make timely and informed decisions.
(d) Adaptability: The Company adapted quickly to the changing market trends, shifting from tea
to coffee production.
(e) Proactivity: Ketan took timely action to change the business strategy, preventing potential
heavy losses.
(f) Flexibility: The Company demonstrated flexibility by altering its product line in response to
changing consumer preferences.
22 Mention three advantages and three disadvantages of laissez – faire Leadership. 3
Ans.
Advantages
(i) Employee satisfaction: Employees feel trusted to take ownership of their work, which can lead
to increased job satisfaction and employee retention.
(ii) Creativity: Laissez-faire leadership can encourage creativity and innovation.
(iii) Delegation: Leaders can delegate tasks to team members based on their strengths and
expertise.
(iv) Flexibility: Laissez-faire leadership can encourage flexibility.
(v) Personal growth: Laissez-faire leadership can promote personal growth and motivation.

Disadvantages:
(i) Accountability: Laissez-faire leadership can lead to accountability issues.
(ii) Chaos: Laissez-faire leadership can lead to chaos.
(iii) Fragmentation: Laissez-faire leadership can create a fragmented workplace.
(iv) Lack of structure: Laissez-faire leadership can lack structure.
(v) Overwhelm: Employees may feel overwhelmed.
(vi) Role clarity: Laissez-faire leadership can hinder the recreation of role clarity.
(vii) Unclear decision-making: Laissez-faire leadership can have an unclear decision-mak ing
process

NIRMAL SINIGH RANA, PGT- Commerce, SHRIJI BABA SARASWATI VIDYA MANDIR, MATHURA
 OR
State any three measures to overcome barriers to effective communication.
Answer.
(1) clarify the Ideas before Communication
(2) Communicate according to the Need of Receiver.
(3) Consult others before Communicating.
(4) Be aware of Language, tone and content of massage.
(5) Be a good listener
(6) Ensure proper feedback.
(7) Follow up communication
23 Length of production cycle affects the working capital requirements of an organisation. Explain how? 3
Answer.
Production Cycle
Production cycle means the time involved in converting the raw material into the finished product. The
longer is the period, the more will be the time for which the capital remains blocked and more working
capital will be required. A shop-building company, e.g., needs more working capital than a cable
manufacturing company for the simple reason that the former takes longer time as the former’s
production cycle is long.

24 Consumer protection has a wide scope. Justify the statement. 3

Answer
Consumer protection has a wide scope, encompassing various aspects of consumer rights and interests.
Here are some justifications for this statement:
(i) Protection against unfair trade practices: Consumer protection laws safeguard consumers
against deceptive, misleading, or unfair business practices, such as false advertising, defective
products, or fraudulent schemes.
(ii) Product safety and quality: Consumer protection ensures that products meet certain safety
and quality standards, reducing the risk of harm or injury to consumers.
(iii) Right to information: Consumers have the right to accurate and timely information about
products and services, enabling them to make informed decisions.
(iv) Protection of consumer rights: Consumer protection laws uphold consumers' rights,
including the right to choose, the right to be heard, and the right to redress.
(v) Regulation of business practices: Consumer protection regulates business practices, such as
pricing, packaging, and labeling, to prevent exploitation and ensure fair competition.
(vi) Dispute resolution and redress: Consumer protection provides mechanisms for resolving
disputes and seeking redress, such as consumer courts, tribunals, and alternative dispute
resolution methods.
(vii) Education and awareness: Consumer protection involves educating consumers about their
rights and responsibilities, as well as promoting awareness about product safety, quality, and
other consumer-related issues.
(viii) Environmental protection: Consumer protection also encompasses environmental concerns,
such as eco-labeling, sustainable consumption, and waste management.
(ix) Digital consumer protection: With the rise of e-commerce and digital transactions, consumer
protection has expanded to include online consumer rights, data protection, and cybersecurity.
(x) Vulnerable consumer protection: Consumer protection also focuses on safeguard ing
vulnerable consumers, such as children, seniors, and people with disabilities, who may be
more susceptible to exploitation or harm.

NIRMAL SINIGH RANA, PGT- Commerce, SHRIJI BABA SARASWATI VIDYA MANDIR, MATHURA
 In conclusion, consumer protection has a wide scope, addressing various aspects of consumer rights,
interests, and well-being. Its scope continues to evolve in response to changing market trends,
technologies, and consumer needs.
OR
What are the responsibilities of a consumer?
Answer
As a consumer, you have several responsibilities to ensure that you make informed decisions, protect
your rights, and contribute to a fair and sustainable marketplace. Here are some key responsibilities of
a consumer:

(i) Be Aware of Your Rights: Familiarize yourself with consumer protection laws, regulatio ns,
and standards in your country or region.
(ii) Make Informed Decisions: Gather accurate and reliable information about products or
services before making a purchase. Read labels, check reviews, and ask questions.
(iii) Read and Understand Contracts: Carefully read and understand the terms and conditions of
any contract or agreement before signing.
(iv) Use Products and Services Responsibly: Use products and services in a responsible and
sustainable manner. Follow instructions, maintain products properly, and dispose of waste
correctly.
(v) Provide Accurate Information: Provide accurate and truthful information when making a
purchase, returning a product, or filing a complaint.
(vi) Respect the Environment: Consider the environmental impact of your purchasing decisions.
Choose products with minimal packaging, buy sustainable products, and conserve natural
resources.
(vii) Support Fair Business Practices Support businesses that engage in fair and ethical practices,
such as paying fair wages, respecting labor rights, and promoting sustainability.
(viii) File Complaints and Provide Feedback: If you're not satisfied with a product or service, file a
complaint with the business or relevant authorities. Provide constructive feedback to help
businesses improve.
(ix) Be Mindful of Advertising and Marketing Claims: Be cautious of exaggerated or mislead ing
advertising claims. Verify information and don't rely solely on advertisements when making
purchasing decisions.
(x) Stay Informed and Educated: Continuously educate yourself on consumer rights,
responsibilities, and emerging issues. Stay informed about product recalls, safety notices, and
changes in consumer laws.

By fulfilling these responsibilities, you can help create a fair, sustainable, and consumer-frie nd ly
marketplace.
25 Give the meaning of 'strategy' and 'rule' as types of plans. 4
OR
Explain 'Programme' as a type of plan.

NIRMAL SINIGH RANA, PGT- Commerce, SHRIJI BABA SARASWATI VIDYA MANDIR, MATHURA
26 "Controlling implies taking action". Explain. 4
Ans.
Controlling is a management function that involves taking corrective action to ensure that an
organization's objectives are being met. It implies taking action to:
(a) Detect deviations: Identify any discrepancies between actual performance and planned
performance.
(b) Correct deviations: Take corrective action to address any deviations or discrepancies.
(c) Prevent future deviations: Implement measures to prevent similar deviations from occurring in
the future.
Controlling involves:
- Setting performance standards
- Measuring actual performance
- Comparing actual performance with planned performance
- Analysing deviations
- Taking corrective action to address any deviations
In essence, controlling implies taking proactive and corrective action to ensure that an organization is
on track to achieve its objectives.
OR
Mr. Ajay kumar is a production manager in a big manufacturing company. He found that refreshme nt
expenses have increased by 15% and cost of production has increased by 5%. Out of the two deviatio ns,
which deviation needs immediate attention?

Answer:
Increasing cost of production by 5% is more critical.
According the critical point control, it is neither economical nor possible to keep a check on each and
every activity in the organisation. Therefore, control should focus or key result areas (KRAs) which
are critical and urgent to the success of the organisation. If anything goes wrong at critical points the
entire organisation will suffer.
27 Factory system of production implies that managers serve as a link between the owners and the 4
workers. Since as managers they had the mandate to get work done from the workers, there always
exists the possibility of a kind of class conflict, the managers versus workers. Taylor recognised that
this conflict helped none, the workers, the managers or the factory owners. Both should realise that
each one is important. In such a situation even trade unions will not think of going on strike etc.
According to Taylor, Scientific management has for its foundation the firm conviction that the true
interests of the two are one and the same; that prosperity of the business cannot exist for a long time
unless it is accompanied by prosperity/well - being of its workers. Japanese work culture is a classic
example of such a situation. In Japanese companies, a paternalistic style of management is in practice.
There is complete openness between the management and workers. If at all workers go on strike they
wear a black badge but work more than normal working hours to gain the sympathy of the manageme nt.

1. Identify and explain the principle of scientific management highlighted in the above
paragraph.
2. To achieve a state like that of Japanese work culture, Taylor called for an important
concept. Identify and explain that concept.

NIRMAL SINIGH RANA, PGT- Commerce, SHRIJI BABA SARASWATI VIDYA MANDIR, MATHURA
 Ans.
1. Harmony, Not Discord
This is the principle of scientific management highlighted in the paragraph, "Harmony, Not
Discord" is a principle of Scientific Management introduced by Frederick Winslow Taylor. It
emphasizes the importance of achieving harmony and cooperation between management and workers,
rather than allowing discord and conflict to prevail.
Key Aspects of Harmony, Not Discord
(a) Interdependence: Recognizes that management and workers are interdependent, and that their
interests are aligned.
(b) Mutual Benefits: Seeks to find solutions that benefit both management and workers, rather than
pursuing individual interests at the expense of the other party.
(c) Cooperation: Encourages cooperation and collaboration between management and workers to
achieve common goals.
2. To achieve this state, Taylor called for Mental Revolution
Mental Revolution is a concept introduced by Frederick Winslow Taylor, the father of Scientific
Management. It refers to a fundamental change in the mindset and attitudes of both management and
workers.
Key Aspects of Mental Revolution
1. Shift from Adversarial to Collaborative Relationship: Mental Revolution aims to
replace the traditional adversarial relationship between management and workers with
a more collaborative and cooperative one
2. Change in Mindset: It requires a change in the mindset of both parties, recognizing that
their interests are interdependent and that they can achieve common goals by working
together.
3. Focus on Mutual Benefits: Mental Revolution emphasizes the importance of finding
solutions that benefit both management and workers, rather than pursuing individ ua l
interests at the expense of the other party.

28 Mahamana Enterprises is not only giving salary to its employees but it also offers bonuses to them over 4
and above the salary. To further encourage the employees, it announced that it will provide a share in
the profits of the company to them. These incentives are helpful in increasing the purchasing power of
the employees.
State four other incentives of the type of incentive discussed in the above para.
Answer:
1. Profit Sharing: Distributing a portion of the company's profits to employees to align their interests
with the organisation's success.
2. Stock Options: Providing employees with the opportunity to purchase company stock at a
discounted rate, giving them a stake in the company's growth.
3. Performance Bonuses: Offering additional compensation based on individual or team performance
to reward and motivate high achievers.
4. Commission: Providing a percentage of sales as additional income for employees, particularly in
sales roles, to incentivise increased sales and revenue.

29 Nishant is a big supporter of the vital role played by the stock exchange in securing wider circulatio n 4
of ownership of companies to the common people and supports the education of the common public
about the positive effects of making investments. However, he knows nothing spreads very fast in
public and takes its own time. He knows that it is only due to the presence of the stock markets that a
continuous market is made available to the buying and selling of the securities. People don't want late
NIRMAL SINIGH RANA, PGT- Commerce, SHRIJI BABA SARASWATI VIDYA MANDIR, MATHURA
 results; they want everything instant. True investor knows that there should be knowledge before the
habit of making investments. The knowledge about the companies participating should be there before
any big decision is taken. Most of the people however, get attracted to the stock market as it allows
speculative activity within limits which helps in liquidity of the shares in the stock market. We have
different newspapers which give a lot of news these days about strictness in the stock market. All this
is happening today because scams took place in the 80s. But now everything takes place in a legal
framework providing a safe and fair deal in the market. It can be expected that in the future days to
come things are going to get better for investors and issuers, not to mention the intermediaries.
Identify and explain the functions of the stock exchange discussed in the above para
Answer:
The different types of functions of stock exchange highlighted in the above case are:
1. Stock exchange helps in the spreading of the equity cult. Nishant is a big supporter of the vital
role the stock exchange plays in securing wider circulation of ownership of companies to the common
people and supports the education of the common public about the positive effects of making
investments.
2. Stock exchange helps in providing liquidity and marketability to the traded securities . He
knows that it is only due to the presence of the stock markets that a continuous market is made availab le
to the buying and selling of the securities.
3. Stock exchange attracts the investor by providing scope for speculation. Most of the people
however, get attracted to the stock market as it allows speculative activity with the healthy limits which
help in liquidity of the shares in the stock markets.
4. Stock exchange secures safety of transaction of the securities. But now everything takes place in
legal framework providing safe and fair deal in the market.
30 Explain the following rights of a consumer provided under The Consumer Protection Act, 2019: 4
1. Right to Safety
2. Right to Seek Redressal
Ans.
Here are explanations of the two rights of a consumer provided under The Consumer Protection Act,
2019:

1. Right to Safety

The Right to Safety ensures that consumers are protected from hazardous goods and services that can
cause harm to their health, life, or property. This right implies that:
- Businesses must ensure that their products or services meet safety standards and regulations.
- Consumers have the right to be informed about potential risks associated with a product or
service.
- Manufacturers and service providers must take necessary precautions to prevent harm to
consumers.

2. Right to Seek Redressal

The Right to Seek Redressal empowers consumers to seek compensation or resolution when they suffer
a loss or injury due to a defective product or service. This right includes:
- The right to file a complaint with the consumer dispute redressal commission.
- The right to seek compensation for losses or injuries suffered.
- The right to seek replacement, refund, or repair of defective products.
These rights aim to protect consumers from unfair trade practices, promote fair competition, and ensure
that businesses prioritize consumer welfare.
NIRMAL SINIGH RANA, PGT- Commerce, SHRIJI BABA SARASWATI VIDYA MANDIR, MATHURA
31 Moga Industries Ltd. approached a well established university in the city of Madurai to recruit qualified 6
personnel for various technical and professional jobs. They selected Tanya, Ritu, Garima, and Chetan
for various vacancies in the organisation. After the selection and placement, 'Moga Industries Ltd.' felt
the need to increase the skills and abilities, and the development of a positive attitude of the employees
to perform their specific jobs better. The company also realised that learning new skills would improve
the job performance of the employees. Hence, the company decided to take action for the same.
(a). Name the step of the staffing process regarding which the company decided to take action.
(b). State the benefits of the action to Moga Industries Ltd.
Ans.
(a) Step of Staffing Process: Training and Development
The step of the staffing process regarding which the company decided to take action is Training and
Development. This step involves enhancing the skills, abilities, and knowledge of employees to
perform their jobs better and adapt to changing job requirements.

(b) Benefits of Training and Development to Moga Industries Ltd.:

The benefits of Training and Development to Moga Industries Ltd. are:
1. Improved Job Performance: Training and Development helps employees acquire new skills,
enhancing their job performance and productivity.
2. Increased Efficiency: Well-trained employees make fewer mistakes, reducing waste and costs, and
improving overall efficiency.
3. Better Adaptability: Training and Development enables employees to adapt to changing job
requirements, new technologies, and evolving market conditions.
4. Enhanced Employee Motivation and Job Satisfaction: Training and Development demonstrates
the company's investment in employees' growth, boosting their motivation and job satisfaction.
5. Competitive Advantage: A well-trained workforce can be a key differentiator for Moga Industries
Ltd., setting it apart from competitors and enhancing its reputation.
OR
Explain in brief the various steps involved in the process of staffing.
Ans.
Staffing is referred as both line and a staff activity. Steps involved in the staffing process
are:
(i) Manpower Planning: The organization estimates the total manpower
requirement by considering all the departments of the organization. It is not only
about the number of people but also the type of people. Three steps are involved
in manpower planning;
a) Workload analysis,
b) Workforce analysis and
c) Comparing both to find out requirement.
(ii) Recruitment: Recruitment refers to the process of inducing people to apply for
the job. The requirements can be fulfilled from inside the organisation by
promotions and transfers. To recruit people from outside the organisations contact
various placement consultants or advertise in the newspaper.
(iii) Selection: Selection refers to selecting the most suitable candidate to fill the
vacant job position. It involves test, interviews, etc. Selected candidates are less
than the number of rejected candidates, that's why this method is also called a

NIRMAL SINIGH RANA, PGT- Commerce, SHRIJI BABA SARASWATI VIDYA MANDIR, MATHURA
 negative process.
(iv) Placement and Orientation: Placement refers to occupying of the post for which
he is selected. Orientation refers to the introduction of new employee to the
existing employees.
(v) Induction: it is concerned with the process of introduction of a new employee to
the organization.
(vi) Training and development: To improve the competency of employees and to
motivate them. It is more accurately considered as a process of skill formation
and behavioural change.
(vii) Performance appraisal: Promotion and Compensation are given on the basis of
performance appraisal.
32 A good understanding of the environment by business managers enables them not only to identify and 6
evaluate but also to react to the forces external to their firm.
How would you argue that the success of a business enterprise is significantly influenced by its
environment?
Ans.
The success of a business enterprise is significantly influenced by its environment. Here's why:

Environmental Factors Impacting Business Success

1. Market Demand: Environmental factors like demographics, consumer preferences, and economic
conditions affect market demand, influencing sales and revenue.
2. Competition: The competitive landscape, shaped by environmental factors like technologica l
advancements, regulatory changes, and market trends, impacts a firm's market share and profitability.
3. Resource Availability: Environmental factors like availability of raw materials, labor, and capital
influence a firm's production capacity, costs, and quality.
4. Regulatory Framework: Government policies, laws, and regulations, which are part of the
environment, affect a firm's operations, costs, and profitability.
5. Social and Cultural Factors: Environmental factors like social norms, cultural values, and ethics
influence consumer behavior, employee motivatio n, and stakeholder expectations.

Consequences of Ignoring the Environment

1. Missed Opportunities: Failing to recognize environmental changes can lead to missed

opportunities, such as new markets or technologies.
2. Threats and Risks: Ignoring environmental threats, like changes in government policies or
consumer preferences, can lead to significant risks and losses.
3. Inadequate Response: Reacting slowly or inadequately to environmental changes can result in lost
competitiveness and market share.

Benefits of Environmental Awareness

1. Strategic Decision-Making: Understanding the environment enables informed strategic decision-

making, aligning business goals with environmental opportunities and challenges.
2. Innovation and Adaptation: Environmental awareness fosters innovation and adaptation, allowing
businesses to stay ahead of competitors and respond to changing circumstances.
3. Risk Management: Recognizing environmental risks enables proactive risk manageme nt,

NIRMAL SINIGH RANA, PGT- Commerce, SHRIJI BABA SARASWATI VIDYA MANDIR, MATHURA
 minimizing potential losses and maximizing opportunities.
In conclusion, the success of a business enterprise is significantly influenced by its environme nt.
Understanding and adapting to environmental factors is crucial for strategic decision-mak ing,
innovation, risk management, and ultimately, achieving business objectives.
OR
Tinku is an eight year old boy. As his mother's birthday was drawing closer he wanted to buy a gift for
her from his pocket money. So he decided to empty out his piggy bank. He calculated his total savings
as Rs. 2500. When he shared his plan with his father he agreed to take him to a nearby mall to buy a
gift. Tinku selected a beautiful handbag for his mother worth Rs. 2500 at a store. When Tinku handed
over the money from his piggy bank to the shopkeeper, he refused to accept a five hundred rupees note
saying that it is no longer valid currency. Tinku was very surprised. Then his father explained to him
that what the shopkeeper was saying is true as that particular type of five hundred rupees notes has
been discontinued by the government.
In the context of the above case:
1. Identify the concept being discussed in the above paragraph because of which a currency note
becomes invalid
2. State any three features of the concept as identified in part (a) of the question.
Ans.
(a) Concept: Demonetisation

The concept being discussed in the above paragraph is Demonetization. Demonetization is the act of
stripping a currency unit of its status as legal tender. In this case, the government discontinued the
particular type of ₹500 note, making it invalid as a currency note.

(b) Features of Demonetization:

Here are three features of Demonetisation:
1. Withdrawal of Legal Tender Status: Demonetization involves the withdrawal of the legal tender
status of a currency note, making it invalid for transactions.

2. Replacement with New Currency: Demonetization is often accompanied by the introduction of

new currency notes or coins to replace the discontinued ones.

3. Government Initiative: Demonetization is a government- initiated process, aimed at achieving

specific economic objectives, such as reducing black money, combating counterfeiting, or promoting
digital payments.
33 The concept of Decentralisation is related to the concept of delegation. Explain this statement in brief. 6
Ans.
Decentralization and delegation are closely related concepts in management.
Decentralisation
Decentralization refers to the dispersal of decision-making authority throughout an organization. It
involves delegating decision- making powers to lower-level managers or departments, allowing them
to make decisions and take actions without needing top-level approval.
Delegation
Delegation is the process of assigning tasks, responsibilities, and authority to subordinates. It involves
entrusting someone with the power to make decisions and take actions on behalf of the delegator.
Relationship between Decentralization and Delegation
Decentralization is achieved through delegation. When top-level managers delegate decision-mak ing
authority to lower-level managers, they are decentralizing decision-making power. Delegation is the
NIRMAL SINIGH RANA, PGT- Commerce, SHRIJI BABA SARASWATI VIDYA MANDIR, MATHURA
 mechanism that enables decentralization, allowing organizations to distribute decision-mak ing
authority and increase efficiency.
In summary, decentralization is the outcome of delegation, where decision- making authority is
dispersed throughout the organization by delegating tasks, responsibilities, and authority to
subordinates.

NIRMAL SINIGH RANA, PGT- Commerce, SHRIJI BABA SARASWATI VIDYA MANDIR, MATHURA
34 Mediquip Ltd. is a company dealing in distribution of medical equipment. The company recently 6
imported 15000 units of sugar testing machines to test the sugar levels without taking blood samples.
For deciding the marketing strategy, the Chief Executive Officer of the company called a meeting of
the marketing heads of different zones.
In the meeting, Sandeep, the North Zone Marketing Head, suggested that since the machines were
sophisticated they need to visit hospitals personally, to explain its working to the hospital staff who
would be using the machines. He also suggested that additional trained people may be recruited for the
same. Himanshu, another Zonal Head, added that since a lot of money had been spent on the import of
the machines, the company was short of funds to pay to the additional staff as suggested by Sandeep.
Rahul, a newly appointed Zonal Head of South Zone suggested that since the size of the order is not
large, a detailed study of the factors determining the choice of channels of distribution is required
before making the right choice.
1. Identify the factors influencing the choice of channels of distribution which were discussed in the
meeting.
2. Also, explain briefly the other consideration to be taken

ANS.

( a) Factors affecting choice of channels of distribution which were discussed in the meeting:
(i) Product related factors
(ii) Company characteristics
(iii) Market related factors
(b) Other consideration to be taken care of in each of the factors identified above are:
(i) Product related factors:
⋅ Nature of the product.
⋅ Perishability of Product.
⋅ Unit value of Product
(ii) Company characteristics:
⋅ Degree of control over channel members.
(iii) Market related factors:
⋅Geographical concentration of potential buyers.
⋅ Size of the market.

NIRMAL SINIGH RANA, PGT- Commerce, SHRIJI BABA SARASWATI VIDYA MANDIR, MATHURA