CBSE Sample Papers for Class 12 Business Studies Set 8 with Solutions

Students must start practicing the questions from CBSE Sample Papers for Class 12 Business Studies with Solutions Set 8 are designed as per the revised syllabus.

CBSE Sample Papers for Class 12 Business Studies Set 8 with Solutions

Time : 3 hrs Max.
Marks : 80

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.
• Answers to the questions carrying 4 marks may be about 150 words.
• Answers to the questions carrying 6 marks may be about 200 words.
• Attempt all parts of the questions together.

Question 1.
“Off upto 40 % on all brands” is an example of which promotional tool? [1]
(a) Discount
(b) Quantity deals
(c) Rebate
(d) Gifts
Answer:
(a) Discount

Question 2.
IM Ltd issued prospectus for subscription of its shares for ₹ 100 crores. The issue was oversubscribed. Later, SEBI inspected the prospectus and found some misleading statements about management of company. Identify the function performed by SEBI. [1]
(a) Regulatory
(b) Protective
(c) Development
(d) Both (a) and (b)
Answer:
(b) Protective

Question 3.
The objective of ……… is to create a pool of prospective candidates, from which the best candidate can be selected. [1]
(a) selection
(b) placement
(c) training
(d) recruitment
Answer:
(d) recruitment

Question 4.
Which of the following styles of leadership provides full scope for initiative and creativity? [1]
(a) Free-rein style of leadership
(b) Democratic style of leadership
(c) Autocratic style of leadership
(d) None of the above
Answer:
(a) Free-rein style of leadership

Question 5.
According to ………, “stock exchange means any body of individuals, whether incorporated or not, constituted for the purpose of assisting, regulating or controlling the business of buying and selling of securities”. [1]
(a) Securities Contracts Regulation Act, 1956
(b) Securities and Exchange Board of India Act, 1992
(c) Reserve Bank of India Act, 1934
(d) The Banking Regulation Act, 1949
Answer:
(a) Securities Contracts Regulation Act, 1956

Question 6.
Mehak is working in a company on a permanent basis. As per job agreement, she is required to work for 8 hours a day and was free to work overtime. Mehak worked overtime, due to which she fell ill and had to take leave from her work. No one showed concern and enquired about her health. She realised that she was fulfilling only few of her needs while some other needs still remained to be fulfilled. You are required to identify the need(s) of Mehak that still remained to be fulfilled. [1]
(a) Physiological needs
(b) Safety needs
(c) Social needs
(d) All of the above
Answer:
(c) Social needs

Question 7.
Assertion (A) Controlling is regarded as goal-oriented process. [1]
Reason (R) Controlling ensures that an organisation’s resources are effectively utilised for achievement of goal.
Alternatives
(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, but Reason (R) is false
(d) Assertion (A) is false, but Reason (R) is true
Answer:
(a) Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of Assertion (A)

Question 8.
Arrange the stages of control in right sequence [1]
(i) Performance measurement
(ii) Corrective actions
(iii) Setting up standards
Codes
(a) (i), (ii), (iii)
(b) (iii), (ii), (i)
(c) (iii), (i), (ii)
(d) (i), (iii), (ii)
Answer:
(c) (iii), (i), (ii)

Question 9.
Which function is highlighted in the lines, “SEBI regularly inspects the various elements of trading and also conducts the brokers’ enquiries”? [1]
(a) Protective
(b) Developmental
(c) Regulatory
(d) None of these
Answer:
(c) Regulatory

Question 10.
Which of the following statements is incorrect about staffing? [1]
(a) Staffing is a never ending process
(b) Effective staffing ensures success of the organisation
(c) HRM is both a line and staff activity
(d) Recruitment and staffing are one and the same thing
Answer:
(d) Recruitment and staffing are one and the same thing

Question 11.
Which type of organisational structure will you suggest for a firm which has diversified activities and operations requiring a high degree of specialisation? [1]
(a) Centralised
(b) Decentralised
(c) Divisional
(d) Functional
Answer:
(d) Functional

Question 12.
Minimum-Maximum (MM) Ltd was started to manufacture hand sanitizers during the time of pandemic. They established factory near Noida in Uttar Pradesh. The top management of company decided to put up a notice on the notice-board outside the factory specifying the details of the jobs available. In this manner, they were able to hire quickly. Since, it was the time when Covid-19 cases were rising, they decided to first get the newly recruits tested. They were inducted only if they tested negative for Covid-19. Which method of external recruitment was used by the company? [1]
(a) Casual callers
(b) Labour contractors
(c) Advertisement
(d) Direct recruitment
Answer:
(d) Direct recruitment

Question 13.
Statement I Modern marketing concept refers to the group of people who do not have the ability but willingness to buy a particular product.
Statement II Marketing concept refers to the set of actual and potential buyers for a product. [1]
Alternatives
(a) Statement I is true and Statement II is false
(b) Statement I is false and Statement II is true
(c) Both the statements are true
(d) Both the statements are false
Answer:
(b) Modern marketing concept means discovering potential customers and creating goods or services to fultil their needs and wants.

Question 14.
Coordination is considered the essence of management because [1]
(a) it is a common thread that runs through all the activities within the organisation.
(b) it is implicit and inherent in all functions of the organisation.
(c) it is a force that binds all the functions of management.
(d) All of the above
Answer:
(d) All of the above

Question 15.
Statement I Demonetisation led to channelising savings into the formal financial system. [1]
Statement II Digital transactions require internet connectivity as they need cell phopes for customers and Point of Sale (POS) machines for merchants.
Alternatives
(a) Statement I is true and Statement II is false
(b) Statement II is true and Statement I is false
(c) Both the statements are true
(d) Both the statements are false
Answer:
(c) Both the statements are true

Question 16.
Which of the following statements is incorrect with regard to the use of fixed capital? [1]
(a) The investment decisions are irreversible
(b) The business risk involved is low
(c) It affects the long-term growth of the business
(d) A large volume of funds is involved
Answer:
(b) The business risk involved is low

Question 17.

Identify the type of communication illustrated by the picture given above in which all the colleagues are talking to each other without following a scalar chain. [1]
(a) Formal communication
(b) Informal communication
(c) Grapevine communication
(d) Horizontal communication
Answer:
(c) Grapevine communication

Question 18.
Ashoka handloom industries is a company manufacturing bedcovers/bed sheets. Mr. Ashok Khadhidhari is the production manager in the company. His design team developed some prints for bedcovers in bright colours on silk. Although they looked very impressive, the use of silk made the product too expensive for the average customer. Praising their effort, Mr. Ashok suggested that they keep the silk bedcovers for special occasions like Diwali and Christmas and offer the bedcovers on a regular basis. Name the main function of management to which the above case is related. [1]
(a) Planning
(b) Organising
(c) Directing
(d) Controlling
Answer:
(c) Directing

Question 19.
Rahul, as an efficient worker, wanted more than average salary. But the company’s goal was to maximise profit and thus they denied Rahul’s request. Rahul did not like the company’s decision and therefore created chaos in the company, by breaking the company’s rules. Which principle(s) of management is being violated here? [1]
(a) Remuneration of employees
(b) Subordination of individual interest to general interest
(c) Discipline
(d) Both (b) and (c)
Answer:
(d) Both (b) and (c)

Question 20.
Match the following [1]

Codes
A — B — C
(a) (i) — (ii) — (iii)
(b) (iii) — (i) — (ii)
(c) (ii) — (iii) — (i)
(d) (i) — (iii) — (ii)
Answer:
(b) (iii) — (i) — (ii)

Question 21.
“Stock exchanges are market places where securities that have been listed thereon, may be bought and sold for either investment or speculation.” In the light of this statement, explain any two features of stock exchange. [3]
Or
“Investment decision relates to how the firm’s funds are invested in different assets so that the firm is able to earn highest possible returns on investment.” In the light of this statement, state why this decision is crucial for a business.
Answer:
Following are the two features of stock exchange
(i) Organised Market Stock exchange is an organised market. Every stock exchange has a management committee which has all the rights related to management and control of exchange. All the transactions taking place in the stock exchange are done as per the prescribed procedure under the guidance of management committee.
(ii) Dealing in Securities Issued by Various Concerns Only those securities are traded in the stock exchange which are listed there. After fulfiling certain terms and conditions, a company can get its securities listed on stock exchange.

Or

Investment decisions are crucial because (any three)

• They affect the overall earning capacity of firm in long-run.
• These decisions normally involve huge outflow of funds.
• These decisions are irreversible or can be reversed at times at a huge cost.
• These decisions affect profitability, growth and competitiveness of the firm.

Question 22.
How does organising as a function of management help in bringing administrative efficiency? [3]
Or
“Useless and redundant activities are minimised or eliminated, when managers adopt planning.” Comment.
Answer:
The organising function of management helps in bringing administrative efficiency in the following ways

• It leads to the elimination of overlapping and duplication of activities.
• It enables people to work as a team.
• It brings clarity in working relationships thereby ensuring proper execution of work.

Or

Planning serves as the basis of coordinating the activities and efforts of different divisions, departments and individuals. It helps in avoiding confusion and misunderstanding. As it ensures clarity in thought and action, work is carried on smoothly without interruptions. Thus, we can say, by opting planning, managers can eliminate or minimise the useless and redundant activities.

Question 23.
The Human Resource Department of Oberoi’s Airlines Pvt. Ltd. has recently selected 11 pilots. The new pilots have to handle sophisticated equipments. For this, the human resource manager wants to design an off-the-job training programme which will help them to improve their performance on their jobs. Identify and explain the method of training that can be used by the company in the given situation. [3]
Answer:
In the given situation, vestibule training method would be the most appropriate. In vestibule training, employees learn their jobs on the equipment they will be using, but the training is conducted away from the actual work floor.
Actual work environments are created in a class room and employees use the same materials, files and equipment.
This is usually done when employees are required to handle sophisticated machinery and equipment.

Question 24.
Mr. Seth and his wife had booked business class tickets for Air Mindo Flight from New York to Mumbai on 14th October, 2022 and paid a total of ₹ 2,43,241. The complainants had paid for business class seats, but had been provided defective seats. As a result, they had to bear physical discomfort and mental harassment. Air Mindo was found guilty of deficiency in service. District Commission, Ahmedabad allowed Mr. and Mrs. Seth to file a complaint by Consumer Education and Research Society (CERS), Ahmedabad, against the Regional Manager of Air Mindo, Ahmedabad and the Commercial Director of Air Mindo, Mumbai. It was observed by the Commission that the airline was guilty of deficiency in service and directed it to refund Mr. Seth’s ₹ 2,43,241 along with 9 % interest from the date of complaint. [3]
(i) Is the step taken by them appreciable or not?
(ii) What are the other possible reliefs they could ask for? State any four.
Answer:
(i) Yes, the step taken by them is appreciable.
(ii) Other possible reliefs could be

• To pay punitive damages in appropriate circumstances.
• To discontinue the airline service.
• To remove the deficiency in services.
• To pay an amount to be credited to consumer welfare fund or any other organisation be utilised in the prescribed manner.

Question 25.
Write a short note on [4]
(i) District Commission
(ii) National Commission
Answer:
(i) District Commission This is established by the State Government in each district. Only those complaints can be filed in the District Commission, where the value of goods or services and the compensation claimed is upto ₹ 1 crore. An order passed by the District Commission in a matter of original jurisciction is appealable betore the State Commission.

(ii) National Commission This is established by the Central Government. Only those complaints can be filed in the commission, where the value of goods or services and the compensation sought is more than ₹ 10 crore. An order passed by the National Commission in a matter of original jurisdiction is appealable before the Supreme Court.

Question 26.
Explain the following factors affecting dividend decision of the company [4]
(i) Cash flow position
(ii) Stock market reaction
Or
Which institution is known as the watch dog of securities market in India and why?
Answer:
(i) Cash Flow Position Payment of dividend involves an outflow of cash. A company may be earning profit but may be short on cash. Thus, company having surplus cash may declare higher dividend while during shortage of cash, company may declare low dividend.

(ii) Stock Market Reaction Rate of dividend and market value of the shares are directly related to each other. Investors view an dividend as a good news and stock prices react positively to it and vice-versa.

Or

Securities Exchange Board of India (SEBI) is the watch dog of the securities market as it performs various functions to regulate and protect the interests of investors while dealing with securities. (1) The functions performed by SEBI to facilitate this role are as follows (any three)

• Registration of brokers and sub-brokers in the market.
• Registration of collective investment schemes and mutual funds.
• Controlling takeover bids and imposing penalties for such practices.
• Prohibition of fraudulent and unfair trade practices.

Question 27.
Write a short note on organising. [4]
Or
Define planning and discuss any three limitations of planning.
Answer:
Organising can be defined as “Identifying and grouping different activities in the organisation and bringing together the physical, financial and human resources to establish the most productive relations for the achievement of specific goals.” The process of organising include:

• Identification and division of work
• Departmentalisation
• Assignment of duties
• Establishing reporting relationships

Some of the advantages of organising are

• Benefits of specialisation
• Clarity in working relationships

Question 28.
Rajiv, the CEO of a technology firm, wants to promote a culture of innovation and sustainability in his company. He decides to launch a new division that focuses on developing eco-friendly products. To lead this initiative, he selects four individuals Neha Sharma, David Smith, Maria Rodriguiz and Akio Tanaka – as the heads of research and development, marketing. operations and finance departments, respectively. Identify and state the next two steps that Rajiv has to follow in the staffing process after selecting the above heads. [4]
Answer:
Selection is done in the third step, in which a prospective candidate is chosen from the pool of candidates. It ensures that the organisation gets the best among the available and it enhances the morale of selected candidate.

The next two steps are as follows:

• Placement and Orientation In this step, employee occupies the position, for which he/she has been selected. After this, a brief presentation about the company is given and employee is introduced to his superiors, subordinates and colleagues.
• Training and Development In this step, training is imparted to the selected candidate, by which he/she can enhance his/her skills, knowledge and through this, one can explore the opportunities.

Question 29.
Sana is a young professional employed in a multinational company. Her annual package is of ₹6 lakh. Since she lives with her parents, therefore she is able to save a major part of her earnings. Her friends are constantly advising her to invest in shares. But, she is not aware about the nitty-gritties regarding the functioning of the stock exchange. So, she decided to invest in equity through the primary market, assuming that this will help her to earn stable dividends. It was observed by the Commission that the airline was guilty of deficiency in service and directed it to refund Mr. Seth’s ₹ 2,43,241 along with 9 % interest from the date of complaint. [4]
(i) Is the step taken by them appreciable or not?
(ii) What are the other possible reliefs they could ask for? State any four.
Answer:
(i) Yes, Sana’s father is correct in his assertion.
(ii) Factors affecting dividend decision are:

(a) Stability of Dividend Every company adopts the policy of maintaining the stability of dividend per share. From this point of view, a little change in profit should not be allowed to increase or decrease the dividend.

(b) Legal Constraints Certain provisions of the Companies Act put restrictions on payouts as dividend. Such provisions must be adhered to while declaring the dividend.

(c) Access to Capital Market Large and reputed companies generally have easy access to the capital market and therefore may be depended less on retained earnings to finance their growth. These companies tend to pay higher dividends than the smaller companies.

Question 30.
Identify the barriers to effective communication in the following cases [4]
(i) During a brainstorming session, a team member immediately rejects a’ colleague’s idea without giving it à fair chance.
(ii) The sales manager while addressing the fresh graduates, explained the threats and problems company was facing. He used lot of technical words which he had learnt in his MBA classes.
(iii) Chinu Garments Ltd. follow scalar chain. No employee is allowed to divert from the defined path of communication.
(iv) The national sales manager, during his visit to the southern zone, spoke to the sales manager in hindi.
Answer:
(i) Premature Evaluation Communication is likely to fail, if the receiver evaluates the meaning of message before the sender completes the message.

(ii) Technical Jargon Specialists often use technical language while explaining to persons who are not specialists in the concerned field. Therefore, they may not understand the actual meaning of many such words.

(iii) Organisational Policy Communication is hampered, if the policy of an organisation does not support the free flow of communication. There should be several channels of communication so that effective, safe, fast and correct messages can be conveyed.

(iv) Faulty Translation Managers must translate information according to the receiver’s level of understanding to ensure successful communication. When the sender does not translate in an exact manner and misses out on the core of the message, then it leads to faulty understanding of the message.

Question 31.
Read the statements given in point (i) and (ii), answer the questions that follows [3+3=6]
(i) Vipin is an owner of a reputed manufacturing company. However in his firm it is difficult to fix responsibility on a particular department.
(a) Identify the type of organisation structure in this case.
(b) State any two advantages of this organisation structure.
Answer:
(i) (a) Organisation structure used in this case is functional structure. Under this structure, jobs of similar nature are
grouped under one department.
(b) Advantages of functional structure are:

• It leads to occupational specialisation, since emphasis is placed on specific functions and repeated
  performance of similar tasks by employees leads to efficient functioning.
• It promotes control and coordination within a department because of similarity in the tasks performed.

(ii) A company’s office is situated in Delhi and manufacturing unit in a backward district of Rajasthan. Its marketing department is situated in Bhopal.
(a) Identify the type of organisation structure in this case. (1)
(b) State any two disadvantages of this organisation structure. (2)
Answer:
(a) The organisation structure used in this case is divisional structure. Under this structure, various departments
are created on the basis of products, territory or region.
(b) Two disadvantages of divisional structure are

• There is a duplication of physical facflities and functions, which leads to increase in cost.
• Managers in each division focus on their own objectives, without ttiinking of the organisational goals.

Question 32.
Why is it important for a manager to understand its business environment? Discuss. [6]
Or
Distinguish between top level, middle level and lower level of management.
Answer:
In the present day of competitive market, it is essential for a business manager to remain alert and aware of its environment, because of the following points

(i) Identify Opportunities and Getting the First Mover Advantage Awareness of environment helps an enterprise to identify the opportunities prevailing in the market and they can make strategies to capitalise such opportunities at the earliest, e.g. Maruti Udyog became the leader in the small car market because it was the first company who recognised the need for small cars in the environment.

(ii) Identify Threats and Early Warning Signals Environmental awareness helps an enterprise in identifying possible threats in future, so that the enterprise can take timely measures to minimise the threats and its adverse effects, if any. e.g. when the new firms entered in the mid segment cars (threat). Maruti Udyog increased the production of its Esteem car, Increase in production enabled the company to make faster delivery. As a result, the company captured a substantial share of the market and became a leader in this segment.

(iii) Assist in Planning and Policy Formulation Environment awareness helps a business unit to identify opportunities and threats in the market. These serve as a basis for planning future course of action and making policies for the same.

(iv) Tapping Useful Resources A business environment is an open system which gets resources such as capital, labour. machines, materials, etc from the environment, converts them into goods and services desired by the customers and then supplies its output to the environment. Thus, a business firm depends on its external environment for tapping various resources and for the sale of its output.

Or

Difference between top leveI, middle level and lower level or supervisory level of management.

Question 33.
Briefly explain any three of the following techniques of management given by Taylor [6]
(i) Time study
(iii) Fatigue study
(ii) Motion study
(iv) Method study
Or
Briefly explain any three of the following principles of management given by Fayol
(i) Unity of direction
(ii) Equity
(iii) Esprit de corps
(iv) Order
Answer:
Techniques of Taylor’s scientific management (any three)

(i) Time Study It determines the standard Urne taken to perform a well-defined job. Time measuring devices were used to conduct this study. This type of study is helpful in deciding the time required to perform a job.

(ii) Motion Study Motion study refers to an in-depth study of movements of a worker while doing a task. Taylor recognised three types of movements.

• Productive
• Unproductive
• Incidental

The objective of motion study is to eliminate unproductive movements in doing a task to achieve efficiency and reduce the time required to do the task.

(iii) Fatigue Study Fatigue study seeks to find out the amount and frequency of rest intervals to be given to workers in completing a task. This would help the worker to regain his stamina and work with the same efficiency again

(iv) Method Study This technique of scientific management is conducted to find out the ‘one best method or way’ of performing a particular task. The objective of this study is to minimise the cost of production and maximise the quality and satisfaction of the customer.

Or

(i) Unity of Direction It implies that there should be one head and one plan for a group of activities having the same objective. All the related activities should be put under one group, and they should be in the control of one manager.

(ii) Equity This principle ernphasises kindliness and justice in the behaviour of managers towards workers. There should be no discrimination against anyone on account of sex, religion, language, caste or belief and equal opportunities should be available for all.

(iii) Esprit De Corps It means union is strength. Fayol emphasised on team work. This spirit brings harmony in the groups and they strive to work hard to achieve the targets of an organisation. For this, managers should replace ‘I’ with ‘We’ in all his conversations.

(iv) Order According to this principle, there should be an orderly arrangement and specific place for everything (material order) and everyone (social order) in the organisation.

Question 34.
As a project work in marketing management, the MBA students of IIM thought of preparing apple jam from the apples grown in their school premises and sell it in the school annual fate. They approached the principal who not only appreciated them but also gave his consent for the same. The school decided to donate 50% of the revenue generated from the sale to a nearby orphanage. After the school fate, the school also decided to extend this project by providing employment to visually challenged and disadvantaged sections of society on regular basis.
(i) Explain any two product-related decisions which the students had to take.
(ii) Suggest any two functions that the ‘label’ of the jam bottle must perform. [6]
Answer:
(i) The two product related decisions which the students had to take are:

(a) Branding A brand is a name, term, sign, symbol, design or some combination of them used to identify the products and differentiate it from that of its competitors. Thus, branding is the process of assigning a distinctive name or symbol to a product, by which it can be remembered.

(b) Packaging It refers to the act of designing and producing the container or wrapper of a product. Various kinds of goods are placed into appropriate containers for protection and convenient handling. Thus, packaging implies placing products in suitable packages for delivery of the product to customer or for the purpose of storage and transport.

(ii) The two important functions that the label of the jam bottle must perform, are as follows:

• To describe the product and specify its contents.
• To help in identification of the product or brand.