CBSE Class 12 Business Studies Question Paper 2025 Solved Code 66-1-1

1. The risk related to inability to meet fixed financial charges like interest payment and other repayment obligations is known as : [1 Mark]
(A) Operating risk
(B) Financial risk
(C) Business risk
(D) None of the above

Answer: (B) Financial risk

Teacher's Note:
a) Financial risk arises from the use of debt, which carries fixed interest and repayment obligations.
b) Higher debt in the capital structure means higher financial risk.

2. Bimal Rai is working in Funny Bunny Ltd. The company manufactures games and toys for children. The basic task of Bimal Rai is to integrate diverse elements and coordinate the activities of different departments. He also analyses the business environment and its implications for the survival of the firm. The level of management at which Bimal Rai is working is : [1 Mark]
(A) Top level
(B) Middle level
(C) Operational level
(D) Both Middle and Operational level

Answer: (A) Top level

Teacher's Note:
a) Integrating diverse elements and analysing the business environment are functions of top management.
b) Top managers are responsible for the welfare and survival of the whole organisation.

3. Salim and Karim are good friends. They started a business of selling high quality seeds for growing organic vegetables. They are offering 200 varieties of vegetable seeds suitable for terrace gardens, balconies and backyards. Due to the growing trend towards healthy consumption habits, there is a huge demand for their seeds. The dimension of business environment being discussed above is : [1 Mark]
(A) Economic Environment
(B) Political Environment
(C) Social Environment
(D) Legal Environment

Answer: (C) Social Environment

Teacher's Note:
a) Changing trends such as health and fitness consciousness form part of the social environment.
b) The key phrase in the case is "growing trend towards healthy consumption habits".

4. Shridhan wanted to purchase an electric car. He visited a retail showroom of a car company where these cars were displayed. The Marketing Manager of this showroom told Shridhan that the company offers credit facilities, maintenance services and many other services that help in bringing repeat sales and developing brand loyalty for their cars. The marketing function being discussed by the Marketing Manager in the above case is [1 Mark]
(A) Product Designing and Development
(B) Marketing Planning
(C) Customer Support Services
(D) Branding

Answer: (C) Customer Support Services

Teacher's Note:
a) Customer support services include after-sales service, credit facilities and maintenance services.
b) Their aim is customer satisfaction, repeat sales and brand loyalty.

5. Which of the following statement is correct with respect to 'Exchange Mechanism', a feature of Marketing ? [1 Mark]
(A) For an exchange it is necessary that there should be involvement of atleast three parties.
(B) The parties do not have the freedom to reject other parties offer.
(C) The acceptance of the offer for each party has to take place on the basis of compulsion.
(D) For an exchange it is necessary that each party should be capable of offering something of value to the other.

Answer: (D) For an exchange it is necessary that each party should be capable of offering something of value to the other.

Teacher's Note:
a) An exchange needs at least two parties, each offering something of value.
b) Each party is free to accept or reject the other's offer, so options (B) and (C) are wrong.

6. One of the responsibilities of an aware consumer is to buy only standardised goods as they provide quality assurance. Identify the quality certification mark to be seen by a consumer in the picture given below : [1 Mark]
(A) ISI Mark
(B) Agmark
(C) Hallmark
(D) FPO/FSSAI Mark

[Figure: Picture of an electric iron with its power cord and plug.]

Answer: (A) ISI Mark

Teacher's Note:
a) Electrical appliances like an electric iron should carry the ISI mark.
b) Remember: Agmark is for agricultural products, Hallmark for jewellery and FPO/FSSAI for food products.

For Visually Impaired Candidates (in lieu of Q. 6)

Madhu wants to buy Jewellery for her daughter's marriage. Which of the following quality certification mark should she look for while buying Jewellery : [1 Mark]
(A) FPO/FSSAI Mark
(B) ISI Mark
(C) Hallmark
(D) Eco-mark

Answer: (C) Hallmark

Teacher's Note:
a) Hallmark certifies the purity of gold and silver jewellery.
b) ISI is for electrical goods and Eco-mark is for environment-friendly products.

7. Which of the following is not a protective function of Securities and Exchange Board of India : [1 Mark]
(A) Prohibition of fraudulent and unfair trade practices.
(B) Controlling insider trading and imposing penalties for such practices.
(C) Promotion of fair practices and code of conduct in securities market.
(D) Undertaking measures to develop the capital markets by adapting a flexible approach.

Answer: (D) Undertaking measures to develop the capital markets by adapting a flexible approach.

Teacher's Note:
a) Developing the capital market with a flexible approach is a development function of SEBI.
b) Protective functions aim at protecting investors, such as stopping insider trading and unfair trade practices.

8. There are two Statements, Assertion (A) and Reason (R).
Assertion (A) : Larger the lead time, larger is the quantity of material required to be stored and larger shall be the amount of working capital required.
Reason (R) : If the raw material do not have a record of un-interrupted availability, higher stock levels may be required.
Choose the correct alternative from the alternatives given below : [1 Mark]
(A) Assertion (A) is false and Reason (R) is true.
(B) Both Assertion (A) and Reason (R) are false.
(C) Assertion (A) is true and Reason (R) is false.
(D) Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of Assertion (A).

Answer: (D) Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of Assertion (A).

Teacher's Note:
a) Availability of raw material and lead time are both factors affecting working capital requirement.
b) When supply is uncertain, more stock must be kept, which needs more working capital.

9. Which of the following statement is correct about personal selling : [1 Mark]
(A) It is an impersonal form of communication.
(B) Personal selling does not allow a sales person to develop personal relationships with the prospective customers.
(C) Personal selling involves oral presentation of message in the form of conversation with one or more prospective customers for the purpose of making a sale.
(D) Personal selling refers to short-term incentives, which are designed to encourage the buyers to make immediate purchase of a product or service.

Answer: (C) Personal selling involves oral presentation of message in the form of conversation with one or more prospective customers for the purpose of making a sale.

Teacher's Note:
a) Personal selling is a personal, face-to-face form of communication.
b) Option (D) describes sales promotion, not personal selling.

10. There are two statements, Assertion (A) and Reason (R) :
Assertion (A) : Coordination ensures unity of action.
Reason (R) : Coordination act as a binding force between departments and ensures that all action is aimed at achieving the goals of the organisation.
Choose the correct alternative from the alternatives given below : [1 Mark]
(A) Both Assertion (A) and Reason (R) are correct and Reason (R) is the correct explanation of Assertion (A).
(B) Both Assertion (A) and Reason (R) are correct, but Reason (R) is not the correct explanation of Assertion (A).
(C) Assertion (A) is correct, but Reason (R) is wrong.
(D) Assertion (A) is wrong, but Reason (R) is correct.

Answer: (A) Both Assertion (A) and Reason (R) are correct and Reason (R) is the correct explanation of Assertion (A).

Teacher's Note:
a) Coordination ensures unity of action because it binds all departments towards common goals.
b) First check whether each statement is true, then check whether R explains A.

11. In an informal organisation, authority arises out of ________. [1 Mark]
(A) Virtue of position in management
(B) Company's rules and policies
(C) Scalar chain
(D) Personal qualities

Answer: (D) Personal qualities

Teacher's Note:
a) In informal organisation, authority comes from personal qualities, not from position.
b) Options (A), (B) and (C) relate to formal organisation.

12. HG Air Conditioner Pvt. Ltd. is lagging behind its scheduled production target by a month. Despite a high demand, the company is struggling to meet its production target. Even after taking measures like training of employees and assigning additional workers and equipment to the project, the targets could not be met. The Production Manager, now, decided to revise the standards.
Identify the step of the controlling process under which the Production Manager decided to revise the standards. [1 Mark]
(A) Setting performance standards
(B) Measurement of actual performance
(C) Analysing deviations
(D) Taking corrective action

Answer: (D) Taking corrective action

Teacher's Note:
a) When deviations cannot be corrected by other measures, revising the standards is a corrective action.
b) Do not choose "Setting performance standards" just because the word "standards" appears in the case.

13. Statement - I : Motivation is a complex process as individuals are heterogeneous in their expectations, perceptions and reactions.
Statement - II : Motivation can be either positive or negative.
Choose the correct option from the following : [1 Mark]
(A) Statement I is true and Statement II is false.
(B) Statement II is true and Statement I is false.
(C) Both Statement I and Statement II are true.
(D) Both Statement I and Statement II are false.

Answer: (C) Both Statement I and Statement II are true.

Teacher's Note:
a) Both statements are features of motivation.
b) Positive motivation uses rewards like promotion; negative motivation uses punishment or stopping increments.

14. Alfa Graphics Ltd. was a reputed Indian company which had been in business for many years. The Chief Executive Officer of the company, Rohit Gupta always believed in understanding the business environment as well as responding and adapting to it.
When he found that a foreign multinational company, Leno Graphics, is entering the Indian market with new substitutes, he prepared to meet this threat by reducing cost and creating good quality and aesthetically appealing layouts, advertisements, logos etc. As a result, Alfa Graphics Ltd. was not only able to retain its own customers, but also started getting new projects.
The point of importance of Business Environment discussed above is : [1 Mark]
(A) Tapping useful resources.
(B) Identifying threats and early warning signals
(C) Improving performance
(D) Identifying opportunities and getting first mover advantage.

Answer: (B) Identifying threats and early warning signals

Teacher's Note:
a) The entry of a foreign company with substitutes was a threat, and the firm prepared to meet it.
b) Look for the word "threat" in the case to identify this point.

15. Organising provides a clear description of jobs and related duties. This helps to avoid confusion and duplication.
The point of importance of organizing described above is : [1 Mark]
(A) Adaptation to change
(B) Effective administration
(C) Development of personnel
(D) Expansion and growth

Answer: (B) Effective administration

Teacher's Note:
a) Clarity in working relationships and job descriptions leads to effective administration.
b) Avoiding confusion and duplication are the keywords for this point.

16. Statement - I : Regulation of takeover bids by companies is one of the Regulatory functions of Securities and Exchange Board of India.
Statement - II : Training of intermediaries of securities market is one of the Development functions of Securities and Exchange Board of India.
Choose the correct option from the following : [1 Mark]
(A) Statement I is correct and Statement II is incorrect.
(B) Statement II is correct and Statement I is incorrect.
(C) Both Statement I and Statement II are correct.
(D) Both Statement I and Statement II are incorrect.

Answer: (C) Both Statement I and Statement II are correct.

Teacher's Note:
a) Regulating takeover bids is a regulatory function of SEBI.
b) Training of intermediaries is a development function of SEBI.

17. 'High inflation rates generally result in constraints on business enterprises as they increase the various costs of business such as the purchase of raw materials and payment of wages and salaries to employees etc.' The dimension of business environment referred to above is : [1 Mark]
(A) Political Environment
(B) Technological Environment
(C) Social Environment
(D) Economic Environment

Answer: (D) Economic Environment

Teacher's Note:
a) Inflation rate, interest rates and income levels are parts of the economic environment.
b) Rising costs of raw materials and wages are economic factors.

18. Match the concepts of marketing in Column - I with their respective explanations in Column - II : [1 Mark]
Column - I | Column - II
(a) Product concept | (i) Its main focus is on quality, performance and feature of the product.
(b) Selling concept | (ii) Its main focus is on satisfaction of customer needs.
(c) Marketing concept | (iii) Its main focus is on aggressively persuading buyer to purchase the existing product.
(d) Societal concept | (iv) Its main focus is on satisfaction of customer needs and society's well-being.
Choose the correct options from the following :
(a) (b) (c) (d)
(A) (iv) (iii) (ii) (i)
(B) (iii) (ii) (i) (iv)
(C) (ii) (i) (iii) (iv)
(D) (i) (iii) (ii) (iv)

Answer: (D) (i) (iii) (ii) (iv)

Teacher's Note:
a) Product concept focuses on quality, selling concept on aggressive selling, marketing concept on customer needs.
b) Societal concept adds society's well-being to customer satisfaction.

19. Sadhna, a graduate of a reputed institute of management, is a successful manager. She applies her acquired knowledge in a personalised and skillful manner in difficult situations at work. She uses her imagination and creativity in handling these situations.
The aspect of the nature of management highlighted in the above case is : [1 Mark]
(A) Management as an Art
(B) Management as a Science
(C) Management as a Profession
(D) Management both as a Science and as a Profession

Answer: (A) Management as an Art

Teacher's Note:
a) Personalised application of knowledge, skill and creativity are features of an art.
b) The keywords are "personalised and skillful manner" and "imagination and creativity".

20. 'The principles of management can be modified by the managers when the situation so demands.' This highlights which of the following feature of principles of management : [1 Mark]
(A) General guidelines
(B) Flexible
(C) Contingent
(D) Mainly behavioural

Answer: (B) Flexible

Teacher's Note:
a) Principles of management are not rigid; managers can modify them as per the situation.
b) Do not confuse with "contingent", which means their application depends on the prevailing situation.

21. P. Madhav is the production manager of 'Trendy Style Pvt. Ltd.', a firm manufacturing office furniture. His objective is to increase production by 20% in the next one year. But the Sales Manager, R. Shetty does not approve of the increase in production, till changes are brought about in the quality of wood, locks, handles etc. to incorporate latest trends. This kind of conflict brings to light an important concept of management that can help to link the activities of various departments.
(i) Identify and explain the concept discussed above.
(ii) State any two points of importance of the concept identified in (i) above. [3 Marks]

Answer:
(i) The concept is Coordination. Coordination is the process by which a manager synchronises the activities of different departments towards the achievement of a common goal.
(ii) Importance of coordination (any two):
1. Growth in size: As the organisation grows and the number of people increases, coordination is needed to integrate their efforts and to harmonise individual goals with organisational goals.
2. Functional differentiation: Division of work creates departments like production, sales and finance. Coordination links the activities of these departments.

Teacher's Note:
a) Half mark is for identifying "Coordination" and half mark for its meaning.
b) Specialisation is another valid point: coordination reconciles differences among specialists.
c) Write exactly two points of importance as the question says "any two".

22. (a) Give meaning of 'Communication'. State first two elements in the process of communication. [3 Marks]

Answer:
Meaning: Communication is the process of exchange of ideas, views, facts, feelings, etc., between or among people to create common understanding.
First two elements in the process of communication:
1. Sender: The person who conveys his thoughts or ideas to the receiver.
2. Message: The content of ideas, feelings, suggestions, orders etc. intended to be communicated.

Teacher's Note:
a) The meaning carries 1 mark and each element carries 1 mark.
b) Give the elements in the correct order: sender comes first, then message.
c) The words "common understanding" are important in the meaning.

OR

(b) State any three 'Organisational barriers' to Communication. [3 Marks]

Answer:
1. Rigid rules and regulations: Too many rules and formal procedures may delay communication.
2. Status: The status of the superior may not allow subordinates to express their feelings freely.
3. Complexity in organisation structure: Many levels of management lead to delayed and distorted communication.

Teacher's Note:
a) Lack of organisational facilities (like meetings or a suggestion box) is also a valid organisational barrier.
b) Do not mix up organisational barriers with semantic or psychological barriers.

23. Madhwan was appointed as a Human Resource Manager in 'Health Grow Ltd.' six months back. As a Human Resource Manager, he has to perform many specialised activities and duties like analyzing jobs by collecting information about jobs and prepare job descriptions, training and development of employees etc.
State three other specialized activities that Madhwan must perform in addition to the above as a Human Resource Manager of Health Grow Ltd. [3 Marks]

Answer:
The other specialised activities Madhwan must perform are:
1. Recruitment: searching for qualified people and encouraging them to apply for jobs in the company.
2. Developing compensation and incentive plans: deciding fair pay, bonuses and incentives for employees.
3. Maintaining labour relations and union-management relations: keeping good relations with workers and their unions to avoid disputes.

Teacher's Note:
a) Do not repeat job analysis or training, as they are already given in the case.
b) Other valid points: handling grievances, providing social security and welfare, and defending the company in law suits.

24. (a) State any three points of importance of Financial Planning. [3 Marks]

Answer:
1. It helps in forecasting what may happen in future under different situations, so the firm can face them in a better way.
2. It helps in avoiding business shocks and surprises and prepares the company for the future.
3. It helps in coordinating various business functions, like sales and production, by providing clear policies and procedures.

Teacher's Note:
a) Other valid points: reduces waste and duplication, links present with future, and links investment and financing decisions.
b) Write exactly three points, one line each.

OR

(b) State any three factors that affect the fixed capital requirements of a company. [3 Marks]

Answer:
1. Nature of business: A trading concern needs lower investment in fixed assets than a manufacturing organisation.
2. Scale of operations: A large organisation operating at a higher scale needs more investment in fixed assets than a small one.
3. Choice of technique: A capital-intensive organisation needs more investment in plant and machinery than a labour-intensive one.

Teacher's Note:
a) Other valid factors: technology upgradation, growth prospects, diversification, financing alternatives and level of collaboration.
b) Always show how the factor increases or decreases fixed capital, not just its name.

25. (a) State any four points of importance of 'Directing' function of Management. [4 Marks]

Answer:
1. Initiates action: Directing helps to initiate action by people towards the desired objectives by guiding them and clarifying their doubts.
2. Integrates efforts: It integrates employees' efforts so that every individual effort contributes to organisational performance.
3. Brings out potential: It guides employees to fully realise their potential and capabilities through motivation and effective leadership.
4. Facilitates change: It helps in introducing needed changes in the organisation through effective motivation, communication and leadership.

Teacher's Note:
a) "Brings stability and balance in the organisation" is another valid point.
b) Write the heading of each point first; only headings earn half mark each.

OR

(b) State any four limitations of internal sources of recruitment. [4 Marks]

Answer:
1. When vacancies are filled through internal promotions, the scope for induction of fresh talent is reduced.
2. Employees may become lethargic if they are sure of time-bound promotions.
3. A new enterprise cannot use internal sources, and no organisation can fill all its vacancies from internal sources.
4. The spirit of competition among the employees may be hampered.

Teacher's Note:
a) "Frequent transfers may reduce productivity" is another valid limitation.
b) Do not write advantages of internal sources by mistake.

26. (a) Explain the following external sources of recruitment :
(i) Direct Recruitment
(ii) Casual Callers [4 Marks]

Answer:
(i) Direct Recruitment:
1. A notice is placed on the notice board of the enterprise giving details of the jobs available.
2. Job-seekers (skilled or semi-skilled) assemble outside the premises of the organisation on the specified date and selection is done on the spot.
(ii) Casual Callers:
1. Business organisations keep a database of unsolicited applications in their offices, which is a valuable source of manpower.
2. A list of such job seekers is prepared and screened to fill vacancies as they arise.

Teacher's Note:
a) Each source carries 2 marks, so give two points for each.
b) Keywords: "notice board" and "selection on the spot" for direct recruitment; "unsolicited applications" for casual callers.

OR

(b) Explain the following non-financial incentives which motivate employees for higher performance :
(i) Employee participation
(ii) Organisational climate [4 Marks]

Answer:
(i) Employee participation:
1. It means involving employees in decision-making on issues related to them.
2. It may be in the form of joint management committees, work committees, etc.
(ii) Organisational climate:
1. It refers to the characteristics which describe an organisation and distinguish it from other organisations.
2. Individual autonomy, reward orientation, consideration to employees and risk-taking help in developing a better organisational climate.

Teacher's Note:
a) Each incentive carries 2 marks: meaning plus one more point.
b) Give examples like work committees to make the answer complete.

27. Abha had guests at home. She ordered vegetable, biryani from 'Biryani House'. The biryani came in a beautiful packaging and Abha opened it with lot of excitement. However, when she started serving biryani to the guests, she realised that it was non-vegetarian. She checked the package and noticed that there was no indication whether it was a vegetarian or non-vegetarian biryani. She contacted 'Biryani House' for the same. The manager at 'Biryani House' apologized and immediately sent a vegetarian biryani along with complimentary sweet dish.
Identify and explain the two consumer rights discussed in the above case. [4 Marks]

Answer:
(a) Right to be informed:
1. The consumer has a right to complete information about the product he intends to buy, such as ingredients, date of manufacture, price and quantity.
2. For this reason, the law in India requires manufacturers to give such information on the package and label of the product.
(b) Right to seek redressal:
1. The consumer has a right to get relief if the product or service falls short of his expectations.
2. The Consumer Protection Act provides relief such as replacement of the product, removal of defect and compensation for any loss or injury suffered.

Teacher's Note:
a) "No indication whether it was a vegetarian or non-vegetarian biryani" points to the right to be informed.
b) "Immediately sent a vegetarian biryani" points to the right to seek redressal; the scheme also gives full credit for "Right to be heard" with correct explanation.
c) Each right carries 2 marks: identification plus explanation.

28. 'Tech Work' an Artificial Intelligence (AI) startup started in 2024. It was earning good profits. It wanted to expand its business and for its research and development, it required Rs. 100 crores.
The Chief Executive Officer of 'Tech Work' consulted the Finance Manager who suggested that there is a market which facilitates transfer of investible funds from savers to entrepreneurs seeking to establish new enterprises or expand existing ones through the issue of securities.
The management of 'Tech Work' decided to raise funds from the investors by issuing equity shares @ Rs. 200 per share for the first time.
(i) Name the type of capital market through which 'Tech Work' decided to raise funds for its expansion.
(ii) State three features of the market identified in (i) above. [4 Marks]

Answer:
(i) Primary Market (New Issue Market).
(ii) Features of the primary market:
1. It deals with new securities issued by new companies or fresh issues by existing companies to investors.
2. Securities are sold by the company to the investors directly or through an intermediary.
3. It directly promotes capital formation as funds flow from savers to the company.

Teacher's Note:
a) The clue is "issuing equity shares ... for the first time", which means a new issue.
b) Other valid features: only buying of securities takes place, prices are decided by the company's management, and there is no fixed geographical location.

29. Ganesh Jain is the Marketing Manager at 'KL Foods Ltd'. He has a team of four employees working under him - Kavya, Ritesh, Pooja and Madhav. Kavya and Ritesh are temporary employees while Pooja and Madhav's job is permanent. All four of them have been working hard and consistently met all targets. Ganesh Jain wanted to reward them for their good performance. He understood that in all human beings, there exists a hierarchy of needs. So, he identified the need level of each of the employees to provide motivation to them.
Kavya and Ritesh were made permanent in the job with a good pension plan while Pooja and Madhav were given an autonomy status.
(i) Identify and state the need of employees recognized by Ganesh Jain in the above case.
(ii) State any two assumptions on which Maslow's Need Hierarchy Theory is based on. [4 Marks]

Answer:
(i) Needs recognised by Ganesh Jain:
1. Kavya and Ritesh - Safety and Security Needs: These needs provide security and protection from physical and emotional harm (job security, pension plan).
2. Pooja and Madhav - Esteem Needs: These needs refer to self-respect, autonomy status, recognition and attention.
(ii) Assumptions of Maslow's Need Hierarchy Theory (any two):
1. People's behaviour is based on their needs, and satisfaction of these needs influences their behaviour.
2. People's needs are in a hierarchical order, starting from basic needs to higher level needs.

Teacher's Note:
a) Permanent job with pension shows safety needs; autonomy status shows esteem needs.
b) Other valid assumptions: a satisfied need no longer motivates, and a person moves up only when the lower need is satisfied.
c) Identify the need separately for each pair of employees.

30. VK Ltd. is a fast moving consumer goods company. It has shareholders spread all over India. Most of its shareholders depend upon a regular income from their investment.
VK Ltd. has been earning consistent profits. The management of the company keeps in mind the preference of the shareholders regarding payment of dividend. Since its shareholders, in general, desire that atleast a certain amount is paid as dividend to them every year, the company declares dividend every year.
Atul, the Finance Manager of the company identified promising growth opportunities. He suggested to the Chief Executive Officer to retain the earnings to finance the required investments instead of declaring dividend every year. For this, the Chief Executive Officer decided to call a General Body Meeting of the shareholders.
(i) Identify two factors affecting dividend decision discussed above.
(ii) State two other factors that affect the dividend decision of a company. [4 Marks]

Answer:
(i) Factors discussed in the case:
1. Shareholders' Preference.
2. Growth Opportunities.
(ii) Other factors (any two):
1. Amount of earnings: Dividends are paid out of current and past earnings, so higher earnings allow higher dividends.
2. Cash flow position: Enough cash must be available in the company for declaration of dividend.

Teacher's Note:
a) Part (i) needs only identification (half mark each); part (ii) needs statement with explanation (1½ marks each).
b) Other valid factors: stability of earnings, stability of dividends, taxation policy, stock market reaction, access to capital market, and legal and contractual constraints.

31. (a) Explain the following principles of General Management :
(i) Scalar chain
(ii) Equity
(iii) Initiative [6 Marks]

Answer:
(i) Scalar chain:
1. The formal line of authority from the highest to the lowest ranks is called the scalar chain. The organisation should have a chain of authority and communication from top to bottom, which managers and subordinates should follow.
2. This chain should not be violated in the normal course of formal communication. However, in an emergency, a shorter route called "gang plank" may be used to avoid delay.
(ii) Equity:
1. There should be no discrimination against anyone on account of gender, religion, language, caste, belief or nationality.
2. Managers should show kindliness and justice in their behaviour towards workers to ensure their loyalty and devotion.
(iii) Initiative:
1. Initiative means taking the first step with self-motivation. Workers should be encouraged to develop and carry out their plans for improvement.
2. A good company should have an employee suggestion system, where suggestions that reduce cost or time are rewarded. But initiative does not mean going against the established practices of the company.

Teacher's Note:
a) Each principle carries 2 marks, so give meaning plus one more point for each.
b) Mention "gang plank" in scalar chain; it is a keyword examiners look for.
c) These are Fayol's principles, so do not mix them with Taylor's techniques.

OR

(b) 'Objectives of Management can be classified into organisational, social and personal objectives.' Explain these objectives. [6 Marks]

Answer:
(i) Organisational objectives: Management should use human and material resources to the maximum possible advantage to fulfil the economic objectives of the business. These are:
1. Survival: Management must earn enough revenue to cover costs so that the business survives.
2. Profit: Mere survival is not enough; the business must earn profit to cover its costs and risks.
3. Growth: Management must fully exploit the growth potential of the organisation to remain in the industry in the long run.
(ii) Social objectives: These mean consistently creating economic value for various constituents of society. Examples are using environment-friendly methods of production, giving employment to underprivileged sections, and providing basic amenities like schools and healthcare.
(iii) Personal objectives: People working in the organisation have diverse needs, such as financial needs, social needs and higher level needs. Management aims to reconcile personal goals with organisational objectives to create harmony in the organisation.

Teacher's Note:
a) Organisational objectives carry 3 marks: explain survival, profit and growth separately.
b) Social and personal objectives carry 1½ marks each; give an example with the meaning.

32. (a) Explain the following points of importance of 'Planning' function of management :
(i) Planning provides directions.
(ii) Planning promotes innovative ideas.
(iii) Planning reduces the risk of uncertainty. [6 Marks]

Answer:
(i) Planning provides directions:
1. Planning ensures that goals are clearly stated, so they act as a guide for deciding what action should be taken and in which direction.
2. If goals are well defined, employees know what the organisation has to do and what they must do to achieve those goals.
(ii) Planning promotes innovative ideas:
1. New ideas can take the shape of concrete plans through planning.
2. It is the most challenging activity for management, as it guides all future actions leading to growth and prosperity of the business.
(iii) Planning reduces the risk of uncertainty:
1. Planning enables a manager to look ahead and anticipate changes.
2. By deciding the tasks in advance, planning shows the way to deal with changes and uncertain events. Changes cannot be eliminated, but they can be anticipated and managerial responses can be developed.

Teacher's Note:
a) Each point carries 2 marks; write two sentences of explanation for each.
b) Note that planning reduces risk; it cannot remove uncertainty completely.

OR

(b) Explain 'Objectives', 'Rule' and 'Budget' as types of plans. [6 Marks]

Answer:
(i) Objectives:
1. Objectives are the ends which management seeks to achieve. They are usually set by top management and focus on broad, general issues.
2. They should be expressed in specific terms, that is, measurable in quantitative terms and to be achieved within a given time period.
(ii) Rule:
1. A rule is a specific statement that tells what is to be done and what is not to be done. It allows no flexibility or discretion.
2. It reflects a managerial decision that a certain action must or must not be taken.
(iii) Budget:
1. A budget is a statement of expected results expressed in numerical terms. It quantifies future facts and figures.
2. Since a budget is in numbers, it is easy to compare actual figures with expected figures and take corrective action.

Teacher's Note:
a) Each type of plan carries 2 marks.
b) Keywords: "measurable and time-bound" for objectives, "no flexibility" for rule, "numerical terms" for budget.

33. DG Ltd., an E-plane car company has developed a revolutionary flying car for passenger mobility. This hybrid flying car can accommodate upto two persons and features innovative wing like doors for comfortable entry. The seats are designed for utmost comfort, crafted from high quality materials.
The distinguishing feature of this flying car is that its production will be in India and it will utilise biofuel alongside electricity, ensuring a sustainable mode of transportation.
DG Ltd. has obtained the first testing approval for its category. Priced at Rs. 2.5 crores, the company has to take decisions in respect of discounts to customers, credit terms etc., so that the customers perceive the price to be in line with the value of the product.
To make the flying car available to the target customers, DG Ltd. is in the process of selecting dealers or intermediaries to reach the customers, providing support to the intermediaries etc.
To communicate the availability, features, merits etc. of the product to the target customers and persuade them to buy the flying car. DG Ltd. decided to go in for digital marketing campaigns, press releases and demos conducted by influencers and journalists.
The above case describes the combination of elements used by DG Ltd. to prepare its market offering.
Quoting lines from the above para, identify and explain the elements. [6 Marks]

Answer: The elements of the marketing mix used by DG Ltd. are:
1. Product (Product Mix): "This hybrid flying car can accommodate upto two persons and features innovative wing like doors for comfortable entry. The seats are designed for utmost comfort, crafted from high quality materials." Product means goods, services or anything of value offered to the market for sale. It covers decisions on planning, designing and developing the right products, including branding, labelling and packaging.
2. Price (Price Mix): "Priced at Rs. 2.5 crores, the company has to take decisions in respect of discounts to customers, credit terms etc., so that the customers perceive the price to be in line with the value of the product." Price is the amount of money customers pay to obtain the product. It involves decisions on basic price, discounts to customers and traders, credit terms, etc.
3. Place (Physical Distribution): "To make the flying car available to the target customers, DG Ltd. is in the process of selecting dealers or intermediaries to reach the customers, providing support to the intermediaries etc." Place includes activities that make the product available to target customers, such as selecting channels of distribution, supporting intermediaries, managing inventory, warehousing and transportation.
4. Promotion (Promotion Mix): "To communicate the availability, features, merits etc. of the product to the target customers and persuade them to buy the flying car. DG Ltd. decided to go in for digital marketing campaigns, press releases and demos conducted by influencers and journalists." Promotion means communicating the availability, features and merits of products to target customers and persuading them to buy. It uses tools like advertising, personal selling, sales promotion and publicity.

Teacher's Note:
a) Each element carries 1½ marks: ½ for naming, ½ for quoting and ½ for explanation.
b) For Product, quoting "production will be in India and it will utilise biofuel alongside electricity" is also accepted.
c) Quote the exact lines from the case; a quote without naming the element earns less.

34. 'Royal Glaze Ltd.' continues to maintain its position as one of the largest consumer goods companies in the world. Its organisational structure is designed to facilitate the achievement of its objectives in alignment with its vision statement. The company maintains two distinct product divisions in its organisational structure - 'Foods' and 'Home Care'.
Looking ahead, the company is focusing on embracing changes so that it can continue to be the market leader. As part of its expansion plans, it is planning to venture into the electronics segment in the near future.
(i) Identify the organisational structure of 'Royal Glaze Ltd'.
(ii) Draw the organisational structure chart of 'Royal Glaze Ltd.' considering its future plans to enter into Electronics segment.
(iii) State any three advantages of the type of organisational structure drawn in (ii) above. [6 Marks]

Answer:
(i) Divisional Structure.
(ii) Chart: At the top is the Managing Director. Below the Managing Director are three product divisions: Foods, Home Care and Electronics. Under each division head are functional departments such as Human Resources, Marketing, Research and Development, and Purchasing (with arrows from the Managing Director to each division, and from each division to its functions).
(iii) Advantages of divisional structure (any three):
1. Product specialisation: It helps in developing varied skills in a divisional head, which prepares him for higher positions.
2. Fixation of responsibility: Divisional heads are accountable for profits, so responsibility can be fixed for poor performance of a division.
3. Flexibility and initiative: Each division works as an autonomous unit, which leads to faster decision making.

Teacher's Note:
a) The chart must show the new Electronics division alongside Foods and Home Care; it carries 2 marks.
b) "Facilitates expansion and growth" is also a valid advantage, as new divisions can be added without disturbing existing ones.
c) Start each advantage with a clear heading; headings alone earn half mark each.

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