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CBSE Sample Papers for Class 12 Entrepreneurship Set 2 with Solutions

Students must start practicing the questions from CBSE Sample Papers for Class 12 Entrepreneurship with Solutions Set 2 are designed as per the revised syllabus.

CBSE Sample Papers for Class 12 Entrepreneurship Set 2 with Solutions

Time : 3 Hours
Maximum Marks: 70

General Instructions:

  • This question paper contains 34 questions.
  • The question paper contains 4 sections – A, B, C, and D
  • Part A contains multiple-choice questions.
  • Part B -2 marks; Answers to these questions may be from 30-40 words.
  • Part C -3 marks; Answers to these questions may be from 50-75 words.
  • Part D -5 marks; Answers to these questions may be from 120-150.
  • Internal choice is given in the paper, there ¿s no overall choice.

Part-A

Question 1.
The entrepreneurs have an option to brand their product individually, as it signifies: [1](A) Separate brand name
(B) Group brand name
(C) Family brand name
(D) None of these
Answer:
(A) is correct.
Explanation: An entrepreneur can follow different policies in choosing brand name keeping in mind the range of products offered by him/her. The new product is given a name so that it can get public attention. Thus, as, the whole meaning and direction of a company can be explained through its brand management strategy, an entrepreneur should be very careful in deciding in choosing its brand strategy. In individual brand name, an entrepreneur can choose distinct names for each of his offerings, i.e., every product is promoted on the basis of a separate brand name.

Question 2.
Assertion (A): A franchise agreement is an official document.
Reason (R): Franchising opportunities have often evolved from changes in the environment as well as important social trends. [1](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:
Option (B) is correct.
Explanation: A franchise agreement is the legal document that binds the franchisor and franchisee together. This document explains what the franchisor expects from the franchisee in running the business. The agreement is designed to assure that all of they franchisees within an organization are treated equally. The expectations must be uniform throughout the system.

Franchising allows entrepreneurs to be in business for themselves, but not by themselves. Franchising opportunities have
often evolved from changes in the environment as well as important social trends.

CBSE Sample Papers for Class 12 Entrepreneurship Set 2 with Solutions

Question 3.
Roban a budding musician created a lot of musical notes for his upcoming video. He was extremely thrilled to listen to his compositions. He presented his compositions to his friend Victor. The release of musical video of Rohan was getting delayed for a few months due to shortage of cash. Meanwhile, Victor used most of the musical compositions of Rohan in his video. Rohan was extremely upset to know that his friend had cheated him and used all his work Identify which of the following intellectual property rights Rohan could have done to save his work. [1](A) Copyrights
(B) Trademark
(C) Patents
(D) Industrial
Answer:
Option (A) is correct.
Explanation: Intellectual property (IP) rights are the legally recognized exclusive rights to creations of the mind. Under this law, owners are granted certain exclusive rights to a variety of intangible assets. Common types of intellectual property rights
include copyrights, trademarks, patents, industrial design rights, and trade secrets. Copyright gives the creator of the original work exclusive rights to it, usually for a limited time. It applies to a wide range of creative, intellectual or artistic forms or work For example: musical composition, literary work such as poems, plays, etc.

Question 4.
Rohan embarked on an entrepreneurial venture by establishing a gym called ‘Fit Zone.’ He equipped the facility with a diverse range of machines and enlisted qualified trainers to assist customers in their workouts. Initially, he set a nominal hourly fee to make the gym accessible to individuals from economically disadvantaged backgrounds. The gym quickly gained popularity, prompting Rohan to operate in multiple shifts and hire additional trainers. He also expanded the facility by installing extra machines to accommodate a larger customer base.

Within a year, Fit Zone began generating substantial profits. Encouraged by his success, Rohan leased a nearby building and opened a Wellness and Recreation Club’ for senior citizens, offering services at affordable rates. Furthermore, Rohan actively encouraged young individuals to participate in the local cleanliness drive initiated by the government. They willingly dedicated one hour each day before the gym and recreation club opened to contribute to the cleanliness of nearby areas. Given these developments, identify the type of business expansion undertaken by Rohan. [1](A) Internal expansion
(B) External expansion
(C) Merger
(D) None of these
Answer:
Option (A) is correct.
Explanation: Internal expansion results from the gradual increase in the activities of the concern. The concern may expand its present production capacity by adding more machines or by replacing oid machines with the new machines with higher
productive capacity. The internal expansion can also be undertaken by taking up the production of more units or by entering new fields on the production and marketing sides. Internal expansion may be financed by the issue of more share capital, generating funds from old profits or by issuing Long-term securities. The net result of internal expansion is the increase in business activities and the broadening the present capital structure.

CBSE Sample Papers for Class 12 Entrepreneurship Set 2 with Solutions

Question 5.
‘Texus Lid’ deals in making skin care products. The company decided to launch a new product. ihey also decided to charge a price to cover the cost of producing a product plus a reasonable profit. The suggested pricing strategies are: [1](i) Cost-plus pricing
(ii) Skimming pricing
(iii) Penetration pricing
(iv) Competitive pricing
(A) (i) only
(B) (ii), (iii)
(C) (i), (iv)
(D) (iv) only
Answer:
Option (A) is correct.
Explanation: The most common technique is cost-plus pricing, where the manufacturer charges a price to cover the cost of producing a product plus a reasonable profit. The cost-plus method is simple, but it does not encourage the efficient use of resources.

Cost-plus pricing is typically based on a manufacturing estimate. Biggest advantage of this is that company knows exactly the amount of expenditure that has incurred on making a product and therefore they can add profit margin accordingly which helps in achieving the desired revenue for a firm.

Question 6.
Madhu Chandan started the first Organic Mandya store in 2015 on the Bengaluru – Mysore highway. Today it has grown into a 25 crores turnover organic retail chain with eight stores. By buying the agricultural products from the farmers and selling them at ‘Organic Mandya’ stores, Madhu has not only provided a direct market to the farmers, but also has built a 25 crores turnover organic retail chain. Which idea field has Madhu Chandan taken up? [1](i) Natural resources
(ii) Service sector
(iii) Trading related
(iv) Existing products or services
(A) (i) only
(B) (ii), (iii)
(C) (iii), (iv)
(D) (iii) only
Answer:
Option (A) is correct.
Explanation: ideas can be generated based on natural resources. A product or service may be desired from forest resources, agriculture, horticulture, mineral, animal husbandry, wind, sun, and human resources.

Question 7.
Hitesh, a fisherman, faced a lot of problems in selling the fish he caught. His entire community was facing this problem and most of the time they had to dump the fish they caught back into the sea. He read a newspaper article on how people have started ordering online for most of the essentials. He spoke to his fellow fishermen about selling their fish online and started their business with a small delivery truck and an app and slowly and steadily their business started to flourish. What trend has Hitesh spotted? [1](A) Read trends
(B) Watch trends
(C) Talk trends
(D) Think trends
Answer:
Option (A) is correct.
Explanation: Entrepreneurs regularly read the leading publications and websites affecting their business. This could include industry publications, trade association sites, major newspapers, key business magazines, thought leaders and influential bloggers, etc.

Question 8.
Priya started a beauty parlour business by the name Beauty Co. She is a professional expert who has a great knowledge of makeup and hair care. She spent ₹ 5,00,000 to open the parlour for which she invested ₹ 3,00,000 of her own money and borrowed a loan for ₹ 2,00,000. Interest rate per annum is 4%. Sales revenue per month is ₹ 35,000. The cost of goods sold is ₹ 10,000 per month. Fixed expenses per month is ₹ 15,000 (salary ₹ 7,000, rent and utility ₹ ‘8,000), depreciation ₹ 1,000/- and tax an 8%. What will be the value of Return on Equity of Priya’s business? [1](A) 35.04%
(B) 34.00%
(C) 34.04%
(D) 36.00%
Answer:
Option (C)is correct.
Explanation: ROE = \(\frac{\text { Net profit after Tax }}{\text { Equity }} \times 100\)
Net Profit After Tax = Gross Margin – Fixed Expenses – Depredation – Interest – Tax
= ₹ 30,000 – (₹ 15,000 × 12) – ₹ 1,000 – ₹ 8,000 – Tax
= ₹ 1,11,000 – (₹ 1,11,000 × \(\frac{8}{100} \))
= ₹ 1,11,000 – ₹ 8,800 = ₹ 1,02,120
ROE = \(\frac{₹ 1,02,120}{₹ 3,00,000} \times 100\) = 34.04%

Question 9.
Nortis Limited is one of the leading pharmaceutical companies that engages in research and development, manufacturing, marketing, and distribution of chemical and biological drugs for human and veterinary use as well as traditional herbal products, medical devices, and cosmetics. Nortis Ltd. focuses on inventory control as they believe it is essential for an enterprise to ensure efficient, effective, and optimum use of raw materials and to know the availability of resources for production. To expand their business, they have taken short-term loans and at the same time have also invested in short-term capital. Why inventory control is essential for Nortis Limited? [1](A) To ensure efficient, effective, and optimum use of raw materials.
(B) To know the availability of resources for production.
(C) To ensure and make efforts to purchase raw materials in bulk to get quantity discounts.
(D) All of the above
Answer:
Option (D) is correct.
Explanation: The process of inventory control gives decisions to the entrepreneur to take important decisions about the various activities like production line and use of material in the business. It is very essential for the enterprise to ensure efficient, effective, and optimum use of raw materials and to know the availabílity of resources for production.

Question 10.
Fit Ltd. has become a well-known brand name in the field of fitness. Their products range from exercise equipment to protein powders. The company decided to launch a new product in the market which they believed will be a game changer. The company did a market survey among people from various age groups to know the acceptability of the product. What step of the creativity process is the company right now in? [1](A) Idea germination
(B) Preparation
(C) Incubation
(D) illumination
Answer:
Option (B) is correct.
Explanation: On the basis of the idea, interest, and curiosity the need is adjudged by the entrepreneur and he starts looking for the answer to implement the idea. If the idea is to launch a new product or service then market research is conducted. That happens because the seed of curiosity has taken form of an idea, the entrepreneurs foresee the future of the product.

CBSE Sample Papers for Class 12 Entrepreneurship Set 2 with Solutions

Question 11.
In which of the following stages of venture capital finance an entrepreneur presume that the idea has been transformed into a product and is being produced and sold: 11](A) Seed capital finance
(B) Start-up finance.
(C) Second round financing
(D) Pre-public stage
Answer:
Option (C) is correct.
Explanation: This is the first encounter with the rest of the market, the competitors and an attempt to squeeze the market and get some market share from the competitors. At this stage, larger funds than the other early-stage financing are required for expansion, modernization, and diversification.

Question 12.
Sole proprietorship form of business is best suited for which of the following businesses: [1](A) Large scale
(B) Medium scale
(C) Small scale
(D) None of these
Answer:
Option (C) is correct
Explanation: Sole proprietorship ¡s suitable where the market is limited, localised and the customers give importance to personal attention. It is suitable where the capital requirement is small and risk involved is limited. It is also suitable for the production of goods and services which involve manual skill e.g., handicrafts, filigree work, jewellery, tailoring, haircutting, etc.

Question 13.
Calculate BliP, from the following information: X Co. lid, earns profits during the year ₹ 1,03,017. Depredation charged on: [1]Building = ₹ 6,000
Fixtures = ₹ 5,000
Office equipment = ₹ 13,120
Total Depreciation = ₹ 24,120
Rent = ₹ 24,120
Interest on Investment = ₹ 73,950
Fixed 40% of salary = ₹ 6,800
Fixed 40% of overheads = ₹ 60,000
Insurance = ₹ 52,830
(A) 80.62%
(B) 76.62%
(C) 56.62%
(D) 65.62%
Answer:
Option (B) is correct.
Explanation: B.E.P = \(\frac{\text { Fixed cost } \times 100}{\text { Fixed cost }+ \text { Profit }}\)
Fixed Cost = Depredation + Rent + Interest on Investment + Fixed salary of wages + Insurance + Fixed of overheads
= ₹ 24,120 + ₹ 1,20,000 + ₹ 73,950 +₹ 6,800 + ₹ 52,830 + ₹ 60,000 = ₹ 3,37,700
B.E.P = \(\frac{₹ 3,37,700 \times 100}{₹ 3,37,700+₹ 1,03,017}\) = 76.62%

Question 14.
Assertion (A): The primary advantage an entrepreneur stands to gain by going public is access to capital.
Reason (R): Right issue does not require any brokers, agents, underwriters, prospectus or enlistment, etc. Il)
(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:
Option (B) is correct.
Explanation: The primary advantage an entrepreneur stands to gain by going public is access to capital. Entrepreneurs can use the capital raised for a variety of purposes including growth and expansion, retiring existing debt, corporate marketing and development, acquisition of capital.

Rights issue is a method of raising additional finance from existing shareholders by offering securities to them on a pro-rata basis i.e., giving them a right to a certain number of shares in proportion to the shares they are holding.

Question 15.
Assertion (A): To form a partnership firm at least two persons are required.
Reason (R): Partnership is created by an agreement among the persons who have agreed to loin hands. Ill
(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:
Option (B) is correct.
Explanation: ‘Partnership’ is an association of two or more persons who pool their financial and managerial resources and agree to carry on a business and share its profit. The persons who form a partnership are individually known as partners and
collectively a firm or partnership firm. Partnership is created by an agreement among the persons who have agreed to join hands. Such persons must be competent to contract.

CBSE Sample Papers for Class 12 Entrepreneurship Set 2 with Solutions

Question 16.
During the Pandemic, the worst hit were the families who were infected by the virus and had no source for home-cooked nutritious food. ‘Chilly Chillz’ is a multi-cuisine chain of restaurants operating throughout Delhi by a well-established network of outlets. The owner of the chain understood the concern and started serving 3-course meal to such families on payment basis. The interested customers had to log in the website, select their location, and set their menu for the day. This service proved to be a great support for suffering families. What was the source of generation of basic ideas? [1](A) Innovation
(B) Invention
(C) Problem
(D) Competition
Answer:
Option (C) is correct.
Explanation: When a problem exists, an idea leads to a solution to resolve that problem, it emerges as a business opportunity.

Question 17.
George Kutty has a coffee bean processing unit in Kerala. During the pandemic, he has learnt different styles to make coffee. He started improvising his product and range to make coffee premixes in different varieties like Latte, Mocha, Dalgona which will eventually help him to establish a place for his brand in the beverage industry. Identify the idea field used by him. [1](1) Market driven
(ii) Trading related
(iii) Creative efforts
(iv) Service sector
(A) (i), (ii)
(B) (iii) only
(C) (ii), (iv)
(D) (iv) only
Answer:
Option (B) is correct.
Explanation: Creativity is an important and key component of the talents and abilities needed for an entrepreneur. Apart from applying creativity to spot and harness opportunities, it can also be applied to develop new products and services.

Question 18.
Amaze Ltd. is a company engaged in the manufacturing of air- conditioners. The company has four main departments Purchase, Marketing & Sales, Finance and Warehousing. As the demand for the product grew, the company decided to recruit more employees in the Finance department and Marketing & Sales departments. Identify the component of the business plan which will help the Human Resource Manager to decide and recruit the required number of persons for each department. [1](A) Marketing Plan
(B) Financial Plan
(C) Manpower Plan
(D) Organisational Plan
Answer:
Option (C) is correct.
Explanation: Manpower planning ¡s a process by which an entrepreneur ensures that he/she has the right number of people, and the right kind of people with appropriate skills, at the right place and the right time to do work for which they are economically most suitable.

Part-B

Question 19.
Why is SWOT analysis important in preparing the marketing plan? [2]Answer:

  • It is important for an entrepreneur to identify his/her target market for the enterprise
  • Marketing plan needs to consider strengths and weaknesses of the new venture to ensure its success.

Question 20.
Is it mandatory to get a partnership firm registered? Justify the statement by giving any two reasons. (2)
OR
A production plan helps to plan the work in such a manner that one can dearly form an idea about some aspects. Name any four such aspects. [2]Answer:
It is not mandatory to get a partnership firm registered, However, an unregistered partnership firm is denied of the following rights:

  • A partner cannot file a suit in any court against the firm or other partners for the enforcement of any right arising from a contract or right conferred by the Partnership Act.
  • A right arising from a contract cannot be enforced in any court by or on behalf of the firm against any third party.
  • The firm or any of its partners cannot daim a set office., mutual agreement of debts owned by the disputant parties to one another) or other proceedings in a dispute with a third party. (Any two)

OR
A production plan helps to plan a work in such a manner that one can clearly form an idea about:

  • Production schedule
  • Machinery, equipment requirement
  • Plant layout
  • Inventory requirement
  • Manpower requirement
  • Process involved in manufacturing
  • Time and work-study

Question 21.
Explain the terni ‘Logo. [2]OR
What is Variable Pricing Technique? [2]Answer:
“Logo” (short for Logotype) is an identifying symbol for a product or business. It can be any distinctive design, mark or sign which stands associated with the entrepreneur’s offering. “Logo” is an important feature or part of branding. Thus, a logo is a graphic image or emblem commonly used by commercial enterprises, organizations, and even individuals to aid and promote instant public recognition.
OR
Variable Pricing Technique is one in which different prices are charged from different categories of customers. This method has both the objectives viz, selling more quantity and also charging higher prices but at different times. e.g. Indian railways
charges different fares for AC 3 tier, AC 2 tier, second class, and general compartment.

CBSE Sample Papers for Class 12 Entrepreneurship Set 2 with Solutions

Question 22.
Explain the ability to perceive and preserve basic ideas as an important factor in sensing opportunities. [2]OR
Sensing entrepreneurial opportunities converts an idea into an enterprise. What are the different types of opportunities an entrepreneur may find? [2]Answer:
‘Ability to perceive and preserve basic ideas’ is an important factor in sensing opportunities. Spotting an idea often triggers the process of sensing an opportunity.
The following are the various sources which lead to the emergence of basic ideas:

  • Problems
  • Change
  • Inventions
  • Competition
  • Innovation

OR
There are two types of opportunities:

  • Existing opportunity: These opportunities already exist in the environment.
  • Created opportunity: Such opportunities are created according to fashion, technological changes, and taste of customers.

Question 23.
‘Jagriti Ltd.’ is the manufacturer of cars for the last 15 years and was earning good profits. Recently, due to irregular supply of parts by the suppliers the company could not make timely delivery of cars to its customers. The customers cancelled their bookings and there were very few new bookings. As a result the sale of the cars declined and also the profits. The management of the company analysed the problems and decided to take over those two firms because of whom the problems arose. One of them was supplying engines and the other tyres.

The company aLso launched new discount schemes for its customers. It also decided to employ 200 unemployed young boys and girls to take up the cleaning operations using imported machines inside the factories as well as the surrounding areas. Identify and explain the concept of ‘Enterprise growth strategy’ discussed in the above para. [2]Answer:
The concept for growth strategy — Acquisition. Acquisition is a corporate action in which a company buys most, if not all, of the target company’s ownership stakes in order to assume control of the target firm. Acquisitions are often made as part of a company’s growth strategy whereby it is more beneficial to take over an existing firm’s operations and niche compared to expanding on its own.

Question 24.
From the given particulars, calculate the EOQ [Economic Order Quantity]Annual Requirement -2000 units
Cost of material per unit – ₹ 50
Cost of placing and receiving one order – ₹ 50
Annual carrying cost for inventory value- 10%. [2]OR
Given below is the data provided by a shopkeeper about the stationery sold by him. Calculate the unit price per customer from the information provided. [2]

Month Number of people buying stationery Average amount billed
1 50 120
2 40 140
3 60 130
4 80 185
5 70 175

Answer:
C = 10% to ₹ 50 = ₹ 5
EOQ = \(\sqrt{\frac{2 \times P \times A}{C}}\) Where P = Cost of placing the Order and A is the annual requirement.
EOQ = \(\sqrt{\frac{2 \times 50 \times 2000}{5}} \)
= \(\sqrt{40000}\) = 200
OR

Month Number of people buying stationery Average amount billed Amount Billed
1 50 120 6000
2 40 140 5600
3 60 130 7800
4 80 185 14800
5 70 175 12250
Total 300 46,450

Unit Price per customer = \(\frac{\text { Total Billed Amount }}{\text { Number of Customers }}\)
= \(\frac{46450}{300}\)
= ₹ 154.83 per customer

Part-C

Question 25.
Kiran finished his graduation from Polytechnic college in the year 2018. He had specialised in repairing of electronic goods. After few months of his graduation, he met his uncle who has a small factory manufacturing electronic circuits used in Television. His unde informed Karan that he could no longer run the unit so Karan decided to take over the factory. I lis uncle had two workers. Karan was able to get a huge order of supplying ₹ 10,000 units of electronic circuits every month from a popular TV manufacturing company in India. He knew that to meet the orders timely he has to employ more people. In order to do so he decided to formulate Manpower planning. Describe the factors that Karan has to keep in mind while formulating a manpower plan.
Answer:
Karan has to formulate manpower planning keeping in mind the following:
(i) What kind of people are required? To carry on its work, each organisation needs personnel with the necessary qualifications, skills, knowledge, experience, and aptitude for work. Since it is a factory, Karan will need more semi-skilled employees keeping in mind that they will be manufacturing electronic circuits. He will also need a manager to supervise the production work.

(ii) How many people are required? This question deals with the quantity of personnel the enterprise needs. Presently the factory has just two employees, so Karan will need at least ten workers to achieve the production target every month. This number of employees will be taken into account keeping in mind the absenteeism and turnover.

(iii) How to procure personnel? As the next step in manpower planning, the entrepreneur clearly mentions the strategies, methods, policies, rules and regulations pertaining to employees. He can approach his own polytechnic college and recruit fresh graduates. He has to properly train the employees so that there is less error in production and the target is completed on time.

CBSE Sample Papers for Class 12 Entrepreneurship Set 2 with Solutions

Question 26.
The business assets of an organization amount to ₹ 50,000 but the debts that remain unpaid are ₹ 80,000. What course of action can the creditors take if: [3](i) The organization is a sole proprietorship firm.
(ii) The organization is a partnership firm with Anthony and Akbar as partners. Which of the two partners can the creditors approach for repayment of debt? Explain giving reasons.
Answer:
(i) They can claim over the personal property of the sole proprietor as his liability is unlimited.
(ii) Creditors can approach both Anthony and Akbar and they are liable to pay back in their profit sharing ratio but in case one of the partners becomes insolvent then creditor can claim from another partner also.

Question 27.
“Problems pose a challenge to entrepreneurs and in solving them, they find opportunities.” Give one example. [3]OR
What are the three steps involved in the process of sensing entrepreneurial opportunities? [3]Answer:
A problem is a roadblock in a situation, something that sets up a conflict and forces you to find a solution. When an entrepreneur identifies such a roadblock, he/she is said to have identified the problem. For example, once a man from Kerala went on a tour to Punjab with his family. He liked Punjabi Food, but the other members of his family liked only typical Kerala food. It was available hardly in one or two restaurants and was expensive too.

This was a problem. The man from Kerala decided to find a solution. The result was that he started an inexpensive eating place which offered typical South Indian food. Soon people started visiting his place. Now they can satisfy their need of South Indian
food. The enterprise was a great success. Thus, a problem gave rise to an opportunity.
OR
Three steps involved in the process of sensing entrepreneurial opportunities are as follows:
(i) Scanning of Environment: The word ‘Scan’ means- to examine closely, especially in search of their relevant environment to identify opportunities and threats affecting them. It also develops an understanding of social, economic, political, and other developmental factors in order to ensure that perceived entrepreneurial opportunity is compatible with them. It helps in knowing trends, issues, and expectations from the environmental changes.

(ii) Generation of Ideas: While scanning the environment, entrepreneur can take up a thorough study of different sources of business ideas to explore it. These ideas can come from talking to friends and others, customers, brainstorming, visiting shops, etc. It is mainly a conscious effort to explore ideas from several sources with the purpose to find a creative solution to a problem or need.

(iii) Identification of Product or Services: After evaluating the various ideas received from various sources, an entrepreneur scrutinizes it and selects the best product or service for launching an entrepreneurial venture.

Question 28.
Name and explain the element of promotion mix that would help in clearing the stock of off-season goods. Also mention the objectives of this element. [3]OR
How does the considerations related to market have an impact on the selection of a distribution channel? Explain impact of any three such considerations. [3]Answer:
Sales promotion is the element of promotion mix that would help in clearing the stock of off-season goods. Sales promotion, in a specific sense, refers to those sales actualities that supplement both personal selling and advertising and co-ordinate them and help to make them effectives such as displays, shows and expositions, demonstrations, and other non-recurrent selling efforts not in the ordinary routine.

Objectives of sales promotion are as follows:

  • To introduce a new product into the market.
  • To build a bridge between the entrepreneur and the customer.
  • To encourage sale of a product.

OR
Considerations related to market are given below:

  • Number of buyers: If the number of buyers is large then it is better to take the services of middlemen for the distribution of the goods. On the contrary, the distribution should be done by the manufacturer directly if the number of buyers is less.
  • Types of buyers: Buyers can be of two types: General Buyers and Industrial Buyers. 1f more buyers of the product belong to general category then there can be more middlemen. But in case of industrial buyers, there can be fewer middlemen.
  • Buying habits: A manufacturer should take the services of middlemen if his/her financial position does not permit him/her to sell goods on credit to those consumers who are in the habit of purchasing goods on credit.
  • Buying quantity: It is useful for the manufacturer to rely on the services of middlemen if the goods are bought in smaller quantities.
  • Size of market: If the market area of the product is scattered fairly, then the producer must take the help of middlemen.

Question 29.
Finance is the elixir that assists in the formation of new businesses, and allows businesses to take advantage of opportunities to grow and expand. In the light of this statement, discuss some of the sources available to an entrepreneur to raise finance. [3]Answer:
Following are some of the sources available to an entrepreneur to raise finance:
(i) Capital markets: Capital Markets play a vital role of a financial intermediary. A capital market may be defined as an organized mechanism meant for effective and smooth transfer of capital or financial resources from the investors to the entrepreneurs. Here, productive capital is raised and made available for industrial purposes.

(ii) Angel investor Business angel or informal investor or an angel investor, is an affluent individual who provides capital for a business start-up and early-stage companies having a high-risk, high-return matrix usually in exchange for convertible debt or
ownership equity.

(iii) Venture capital: Venture capital is a type of private equity capital provided as seed funding to early-stage, high potential, high-risk, growth-up companies/entrepreneurs who lack the necessary experience and funds to give shape to theii ideas.

Thus, venture capital is an equity-based investment in a growth-oriented small to medium business to enable the investors to accomplish objectives, in return for minority shareholding in the business or the irrevocable right to acquire.

Part-D

Question 30.
Angel investors and venture capital are two sources of raising finance for an entrepreneur. Explain the concept of both the sources stating three distinguishing features of each. [5]Answer:
Angel Investor
(i) Individual Investors: Angel investors are typically high-net-worth individuals or successful entrepreneurs who Invest their personal Funds in startups. They often have a personal interest in supporting and nurturing early-stage companies.
(ii) Early-Stage Focus: Angel investors are more inclined to invest in startups at the seed or pre-seed stages.
They are willing to take on higher risks associated with nascent businesses and provide the initial capital needed to get the venture off the ground.
(iii) Hands-On Involvement: Angel investors often take a hands-on approach by providing mentorship, guidance, and industry expertise to the entrepreneurs they invest in. They actively engage with the startup’s operations and decision-making, leveraging their own experience to support the company’s growth.

Venture Capital:
(i) Professional Investment Firms: Venture capital is provided by professionally managed investment firms that raise funds from various sources, such as pension funds, endowments, and wealthy individuals. These firms have dedicated teams of experts in various domains.

(ii) Growth-Stage Focus: Venture capital firms typically invest in startups that have demonstrated significant growth potential and are in the early to late stages of development. They seek ventures with the potential to scale rapidly and become market leaders.

(iii) Strategic Support: In addition to capital, venture capital firms provide strategic support to the startups they invest in. They offer business advice, access to their extensive networks, and industry connections that can help the startup expand its market reach and achieve sustainable growth. However, venture capitalists usually take a more hands-off approach compared to angel investors, focusing primarily on financial aspects and providing guidance when needed.

These distinguishing features highlight the different approaches, investment stages, and levels of involvement between angel investors and venture capital firms in supporting and financing entrepreneurs.

CBSE Sample Papers for Class 12 Entrepreneurship Set 2 with Solutions

Question 31.
Anshu and Nishu started identical businesses performing identically in terms of sales, variable costs, fixed costs, etc. The only difference is Anshu did not borrow any money and Nishu borrowed ₹ 6 lacs at the interest rate of 10% per annum. Total capital investment in both businesses is ₹ 10 lacs. Their EBIT is ₹ 150 lacs. Tax rate @ 20%. [5](i) Calculate ROE and ROI for each business.
(ii) Comment on the results.
(iii) Which of these is a good indicator of own money?
Answer:
(i)
CBSE Sample Papers for Class 12 Entrepreneurship Set 2 with Solutions 1
(ii) Nishu’s ROE is greater than Anshu’s ROE due to presence of loan capital in capital structure and ROI is lesser.
(iii) For a true measure of how “own money” is being used ROE is a gxd indicator. ROI on the other hand, gives an indication of how “total money” is being used.

Question 32.
Price depends on cost of production, segment targeted ability of the market to pay, supply-demand and a host of other direct and indirect factors. Justify the statement by explaining the factors to be kept in mind while fixing the price of a commodity or service? [5]OR
Assuming you plan to manufacture detergent powder. How would you assess the size of the market of your locality? What strategies would you adopt to sell the product? Explain any five. [5]Answer:
Factors to be kept in mind while fixing the price of a commodity or service are:
(i) Pricing objectives: The objective of the firm is a very important factor which helps in deciding the price of the commodity. If the objective of company is profit maximization, then generally high prices are fixed. If the objective is sales maximization, then prices are kept low. If the firm wants to capture big share in the market (heu it has to keep its price low so that more number of people are attracted to purchase the product. If the firm has to survive in a competitive market, then it has to keep its price low by offering discounts.

(ii) Product cost: The price should be fixed in such a manner that it is able to cover the product cost. Product cost comprises of fixed cost and variable cost. Fixed cost remains constant irrespective of change in output whereas variable cost varies with
change in output. In case of a competitive market, price should be so fixed that it is able to at least cover the variable cost.

(iii) Extent of the competition in market: When a firm does not face any competition then it can enjoy complete freedom in fixing the price. But when the competition is more then price is fixed keeping in mind the price of competitor’s product. For example: Pepsi company cannot fix the price of its drinks without considering the price of Coke.

(iv) Customer’s demand and utility: When demand of a product is inelastic then the company can fix high prices but if the demand is elastic then the price has to be brought down. If the product is highly demanded then high prices can be fìxed but in case of less demand low price have to be fixed. If product is offering higher utility, then high price can be charged from customer as customer is ready to pay more. Whereas if utility is low, high price cannot be charged.

(v) Government and legal regulations: To protect the interest of general public, the government has all the right to control the prices of various products and services by including the products in the category of essential commodities. With government
intervention there can be a check on a monopolist as he cannot charge unfairly high price for essential commodities.

(vi) Marketing methods used: The price of the product also gets affected by various techniques of methods of marketing used to promote the products. If company is using intensive advertising to promote the sale of product then it will charge high price.
Other marketing methods which affect price of a product are type of packing, salesman employed, customer support services, etc.
OR
There are large number of sales promotion techniques:

  • Price off or Rebate: It is generally offered to the customers to increase sales. In this, the offered price is less than normal price.
  • Samples: An entrepreneur can distribute free samples to the customers to get popularity for his new product.
  • Premiums: In this technique, the seller offers a gift for each purchase. It means gift along with the product or inside the product package.
  • Quantity Plus: In this seller offers more quantity at no extra cost.
  • Coupons: In this, seller offers a discount coupon on the purchase of specified product. The holder of the coupons can go to the shopkeeper and get the product at cheaper price.
  • Contest: In this technique, the customers are invited to participate in the contest like writing a slogan on the product, suggesting good name for a new product, and gain awards for the best one. Such contests are held through radio, TV, newspapers, magazines etc. e.g., two free air tickets to Malaysia.
  • Buying Allowance: Special discounts are offered to a trade for a specific period.
  • Display of Goods: In this the goods are displayed attractively and artistically in the windows of their shop by the retailer. Special display of goods like banners, etc. can be done which helps the retailer to provide brief information of the available product with him.

Question 33.
Shalini Enterprises is dealing in Health Drinks. The enterprise has been manufacturing ‘Mother’s Choice’ a malt-based health drink. Adapting to the latest market trends she decided to bring out an improved form of fortified health drink with vitamin B-12, iron, and minerals to increase immunity. She believed that by modifying the product she will be able to create a new product. [5](i) Identify the concept and define it.
(ii) What are the different ways of doing it.
Answer:
Trendspotting Ways by which entrepreneurs can spot trends are as follows:
(i) Read Trends: Entrepreneurs regularly read the leading publications and visit websites affecting their business. This could include industry publications, trade association sites, major newspapers, key business magazines, thought leaders and influential bloggers.

(ii) Talk Trends:
Talking to people is an equally important trend spotting tactic. Entrepreneurs get involved in specific industry’s trade associations and attending events both online and offline. They also take advantage of social networking tools like social network websites and forums. They even start or join groups on the networks and see what people are buzzing about and the latest trends.

(iii) Watch Trends:
Entrepreneurs go out in the marketplace to see what customers want. There’s no substitute for getting out in the marketplace. They make it a point to regularly go where their target customers hang out. The entrepreneur spends some time simply watching and observing, what people are eating, doing, wearing, using? What stores or restaurants draw crowds and which Sit empty?

(iv) Think Trends:
Entrepreneurs absorb and think about what they have read, heard and observed. They start making connections and observations which lead to business-boosting insight. As an entrepreneur begins gathering all these information regularly, they will start to develop a “trend-spotter mind.” As they absorb and mull about what they’ve read, heard and observed, they’ll start to make connections and observations that will lead to business-boosting insights.

CBSE Sample Papers for Class 12 Entrepreneurship Set 2 with Solutions

Question 34.
Explain two components of Human Resource Plan. [5]OR
Explain the steps in preparing the marketing plan. [5]Answer:
(i) Estimating Type of Manpower Planning:
Human Resource Planning begins with the estimation of manpower requirement which means finding out the number and type of employees needed by the organization in near future, Manpower requirement not only includes finding out number of people needed but also the type of people required.

Type means what should be the qualification, educational background of the people whom we need to appoint. While assessing the type of manpower required, company should also make policy regarding the number of people to be appointed from backward classes, women force, minority, etc.

(ii) Procuring Personnel: it includes:

  • Recruitment: It refers to inducing the prospective candidates to apply for job. In this, the organization searches for suitable candidates and induces them to apply for the job. The end result of recruitment is receiving applications for jobs.
  • Selection: It refers to choosing the most prominent and suitable candidates to perform the job. It involves conducting test and interviews so that suitable candidates can be selected.
  • Training: It refers to equipping the employees with the necessary skills to perform the job. It also includes overall growth and development of employees.

OR
The procedure for preparing the marketing plan involves the following steps:
(i) Business Situation Analysis: This helps in finding out “where we have been”. Existing organizations review past performance and achievements of the enterprise but new ventures focus on:

  • Personal profile of the entrepreneur.
  • Emphasis on product development.
  • What needs it satisfies?
  • Any other enterprise/experience of the entrepreneur.
  • Any other market segmentation if planned.

(ii) Identify the Target Market:
Target market refers to the group of customers who will be our potential buyers. Divide the target customers into smaller groups as per consumers’ characteristics and buying situations and then develop a marketing plan integrating product, price, plan, and promotion.

(iii) Conduct SWOT Analysis: The entrepreneur must consider in the target market his enterprise’s:

  • Strength
  • Weakness
  • Opportunities
  • Threats

(iv) Establish Goals: Goal is the aim 01 an enterprise. A firm must set SMART goals.
(v) Marketing Strategy: The marketing strategies involve action plan and decisions related to four P’s i.e., product, price, place, and promotion.
(vi) Implementation and Monitoring of the Plan: It is important for an entrepreneur to be flexible and be prepared to make adjustments if necessary in the plan.


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