CBSE Class 12 Business Studies Question Paper 2026 Solved Code 66-1-1

1. Ritika wanted to buy a new washing machine. She visited 'Elec Duniya', a large electronics store. She saw there many different brands and models on display like KM, Neo, Unipool, INH etc.
The salesperson at the store explained the differences in quality, brand reputation and prices of different washing machines. Ritika could now compare fully automatic, semi-automatic, top load and front load washing machines. The salesperson encouraged her to take her time, check different brands and resolve her queries. Ritika also went to another shop nearby to compare prices and features of different washing machines.
After comparing all the available options, Ritika chose a 'Neo' front load washing machine because it offered the best features within her budget.
The consumer right exercised by Ritika in the above case is : [1 Mark]
(A) Right to be heard
(B) Right to be assured
(C) Right to consumer education
(D) Right to seek redressal

Answer: (B) Right to be assured

Teacher's Note:
a) Under the Consumer Protection Act, 2019, the consumer has the right to be assured, wherever possible, of access to a variety of goods at competitive prices.
b) This is the same idea as the "right to choose" - Ritika compared many brands and chose freely within her budget.
c) Do not pick right to consumer education; she was comparing products, not learning about her rights.

2. The workers in Alpha manufacturing company were using traditional methods for production of metal parts. Since no standard procedure existed, workers relied on personal experience and guess work. As a result, productivity in the assembly line began to decline.
To improve productivity, the company hired a consultant specializing in scientific management. The consultant explained that there was only one best method to maximize efficiency and this method could be developed through proper study and analysis. He emphasized that the scientific method should replace the old method, that the workers were using.
So, to develop the scientific method, the consultant carefully investigated the traditional methods through work-study and by unifying the best practices, he developed a standard method that would be followed by everyone in the organization.
After applying scientific method, there was a three fold increase in productivity within six months.
The principle of scientific management which helped the company in increasing the productivity was : [1 Mark]
(A) Science, not Rule of Thumb
(B) Harmony, Not Discord
(C) Cooperation, Not Individualism
(D) Development of Each and Every Person to His or Her Greatest Efficiency and Prosperity

Answer: (A) Science, not Rule of Thumb

Teacher's Note:
a) Key clues: "only one best method", "scientific method should replace the old method" and "unifying the best practices".
b) Taylor said rule of thumb and guess work must be replaced by methods developed through scientific study.

3. Read the following statements carefully :
Statement - I : Consumers should get together and form themselves into consumer associations for protection and promotion of their interests.
Statement - II : The Consumer Protection Act provides for setting up a two-tier enforcement machinery for the redressal of consumer grievances.
With reference to given statements, choose the correct alternative from the following : [1 Mark]
(A) Both the statements are true.
(B) Both the statements are false.
(C) Statement I is true, Statement II is false.
(D) Statement I is false, Statement II is true.

Answer: (C) Statement I is true, Statement II is false.

Teacher's Note:
a) Forming consumer associations is one of the ways of consumer protection, so Statement I is true.
b) The Consumer Protection Act, 2019 provides a three-tier machinery - District, State and National Commissions - not two-tier.

4. Identify the element of communication process from the above picture : [1 Mark]
(A) Feedback
(B) Media
(C) Noise
(D) Decoding

[Figure: A man in a suit shouts through a megaphone at another man, who covers both ears with his hands and has his eyes closed. A speech bubble above the second man is filled with jumbled symbols (!, *, %, +, x and zig-zag marks), and zig-zag lightning-like lines are drawn near the megaphone and in the lower left corner.]

Answer: (C) Noise

Teacher's Note:
a) Noise means any obstruction or hindrance to communication, which distorts the message.
b) The jumbled symbols and the receiver covering his ears show that the message is not being received clearly.

For Visually Impaired Candidates (in lieu of Q. 4)

4. The element of communication process that converts the message into communication symbols is : [1 Mark]
(A) Feedback
(B) Media
(C) Decoding
(D) Encoding

Answer: (D) Encoding

Teacher's Note:
a) Encoding is done by the sender; it converts the message into words, symbols or gestures.
b) Do not confuse it with decoding, which is done by the receiver to convert symbols back into meaning.

5. Read the following statements - Assertion (A) and Reason (R) :
Assertion (A) : Many enlightened business firms have set up their own consumer service and grievance cells.
Reason (R) : The consumer has a right to file a complaint and to be heard in case of dissatisfaction with a good or service.
Choose the correct alternative from the alternatives given below : [1 Mark]
(A) Both Assertion (A) and Reason (R) are false.
(B) Assertion (A) is false and Reason (R) is true.
(C) Both Assertion (A) and Reason (R) are true, but Reason (R) is not the correct explanation of Assertion (A).
(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) The right to be heard means a consumer can file a complaint and be heard when dissatisfied.
b) Firms set up consumer service and grievance cells to respect this right, so R explains A.

6. Sudha is a corporate executive and has to attend a felicitation function to be held in her office tomorrow. So she decides to colour her hair. On recommendation of her friend, she purchased 'NATURO' hair colour. After reading essential details such as shade, its ingredients, usage instructions and expiry date mentioned on the box, Sudha opened the box. She took out the colour tube and developer bottle from the box and threw away the box.
The level of packaging of box thrown away by Sudha was : [1 Mark]
(A) Primary packaging
(B) Transportation packaging
(C) Secondary packaging
(D) General packaging

Answer: (C) Secondary packaging

Teacher's Note:
a) Primary packaging is the product's immediate container (the colour tube and developer bottle).
b) Secondary packaging is the additional layer (the box) which is thrown away when the product is about to be used.

7. Read the following statements - Assertion (A) and Reason (R) :
Assertion (A) : Money market instruments have a higher degree of liquidity as compared to capital market securities.
Reason (R) : Money market instruments are traded on the stock exchanges.
Choose the correct alternative from the alternatives given below : [1 Mark]
(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 and Reason (R) is false.
(D) Assertion (A) is false and Reason (R) is true.

Answer: (C) Assertion (A) is true and Reason (R) is false.

Teacher's Note:
a) Money market instruments have a maturity of up to one year, so they are highly liquid.
b) They are not traded on stock exchanges; deals happen over the phone or electronically through banks and financial institutions.

8. Ravi purchased gold jewellery from a reputed jewellery store. He ensured that the jewellery had a hallmark which confirm its purity and authenticity. To avoid paying goods and services tax (GST) he asked the salesperson to write the gold weight and making charges on a slip of paper and hand over it to him.
Which of the following responsibilities of a consumer was not fulfilled by Ravi while purchasing jewellery ? [1 Mark]
(A) Be aware about various goods and services available in the market so that an intelligent and wise choice can be made.
(B) Ask for a cash memo on purchase of goods and services.
(C) Buy only standardized goods as they provide quality assurance.
(D) Assert yourself to ensure that you get a fair deal.

Answer: (B) Ask for a cash memo on purchase of goods and services.

Teacher's Note:
a) Taking a slip of paper instead of a proper bill means Ravi did not ask for a cash memo.
b) He did buy a standardised (hallmarked) product, so option (C) was fulfilled.

9. 'CARO Tech Solutions' aimed at development of a software system for the company's growing operations. The project was to be completed within six months with a budget of Rs. 12,00,000.
The software development team successfully completed its project on time by outsourcing a part of the project, leading to an additional expense of Rs. 2,00,000.
From the following, identify whether the software development team is : [1 Mark]
(A) Efficient and Effective
(B) Efficient but not effective
(C) Effective but not efficient
(D) Neither efficient nor effective

Answer: (C) Effective but not efficient

Teacher's Note:
a) Effectiveness means completing the work on time; the project was finished within six months.
b) Efficiency means doing the work at minimum cost; the extra Rs. 2,00,000 shows the team was not efficient.

10. Due to severe winter and rising pollution levels, 'Green India Electronics' planned to launch a new eco-friendly heater in the market. It conducted a survey and found that the demand of this product was very high. As the winter season lasts only for 2 to 3 months, the Chief Executive Officer wanted that there should be close coordination among all the managers to deliver orders on time. Top level managers were asked to work in coordination with their subordinates to ensure that company's policies were properly followed. To ensure that the heaters would be ready on time, the production manager co-ordinated with the operational level managers. Operational level managers co-ordinated the activities of the workers to ensure that work proceeded according to plans. As a result 'Green India Electronics' was able to launch its heaters on time, in the market.
The feature of co-ordination discussed in the above case is : [1 Mark]
(A) Co-ordination is a deliberate function.
(B) Co-ordination is the responsibility of all managers.
(C) Co-ordination is a continuous process.
(D) Co-ordination ensures unity of action.

Answer: (B) Co-ordination is the responsibility of all managers.

Teacher's Note:
a) The case shows top, middle (production manager) and operational level managers all coordinating.
b) When every level of management is involved, the feature is "responsibility of all managers".

11. 'Business environment keeps on changing whether in terms of technological improvement, shifts in consumer preferences or entry of new competitors in the market.'
The feature of business environment highlighted in the above statement is : [1 Mark]
(A) Totality of external forces
(B) Complexity
(C) Dynamic nature
(D) Relativity

Answer: (C) Dynamic nature

Teacher's Note:
a) The words "keeps on changing" point directly to the dynamic nature of business environment.
b) Relativity means the environment differs from country to country or region to region - do not confuse the two.

12. A position when a company is unable to meet its fixed financial charges like interest payment, dividend on preference shares and repayment obligations is referred to as ______ . [1 Mark]
(A) Trading on equity
(B) Financial risk
(C) Business risk
(D) Operating risk

Answer: (B) Financial risk

Teacher's Note:
a) Financial risk rises as the share of debt in the capital structure rises.
b) Higher fixed obligations increase the chance of not being able to pay them.

13. Identify the incorrect statement with respect to the importance of planning function of management : [1 Mark]
(A) Planning provides directions by stating in advance how work is to be done.
(B) Planning eliminates uncertainty by looking ahead and anticipating changes.
(C) Planning facilitates decision making by making a choice among various alternative courses of action.
(D) Planning promotes innovative ideas as new ideas can take the shape of concrete plans.

Answer: (B) Planning eliminates uncertainty by looking ahead and anticipating changes.

Teacher's Note:
a) Planning only reduces the risks of uncertainty; it cannot eliminate uncertainty.
b) Watch for words like "eliminates" in such questions - they often make a statement incorrect.

14. Organising is the process that initiates implementation of plans by clarifying jobs and working relationships and effectively deploying resources for attainment of identified and desired results.
Organising process thus involves a series of steps that need to be taken in order to achieve the desired goal.
Arrange the steps of the process of organizing in the correct order : [1 Mark]
(A) Identification and Division of work, Assignment of duties, Departmentalisation, Establishing authority and reporting relationships
(B) Identification and Division of work, Assignment of duties, Establishing authority and reporting relationships, Departmentalisation
(C) Departmentalisation, Identification and Division of work, Establishing authority and reporting relationships, Assignment of duties
(D) Identification and Division of work, Departmentalisation, Assignment of duties, Establishing authority and reporting relationship

Answer: (D) Identification and Division of work, Departmentalisation, Assignment of duties, Establishing authority and reporting relationship

Teacher's Note:
a) Remember the order as "Divide, Group, Assign, Relate".
b) Departments must be created before duties can be assigned to the job positions in them.

15. Identify the feature of planning which states that the purpose of planning is to meet future events effectively to the best advantage of an organisation : [1 Mark]
(A) Planning involves decision making
(B) Planning is futuristic
(C) Planning is a mental exercise
(D) Planning focuses on achieving objectives

Answer: (B) Planning is futuristic

Teacher's Note:
a) Planning means looking ahead; it is done for the future.
b) The phrase "meet future events effectively" is the keyword for this feature.

16. Match the principle of management given in Column - I with its explanation given in Column - II :
Column - I | Column - II
(a) Discipline | (i) There should be one and only one boss for every individual employee in the organisation.
(b) Unity of direction | (ii) There should be a place for everything (everyone) and everything (everyone) should be in its (his/her) place.
(c) Order | (iii) There should be obedience to organisational rules and employment agreement which is necessary for the working of the organisation.
(d) Unity of command | (iv) Each group of activities having the same objective must have one head and one plan.
Choose the correct option from the following :
(a) (b) (c) (d) [1 Mark]
(A) (iii) (iv) (i) (ii)
(B) (iv) (iii) (ii) (i)
(C) (iv) (iii) (i) (ii)
(D) (iii) (iv) (ii) (i)

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

Teacher's Note:
a) Unity of command means one boss for each employee; unity of direction means one head and one plan for each group of activities.
b) Discipline is about obedience to rules, and order is "a place for everything and everything in its place".

17. The step of controlling process which reveals the deviation between actual performance and desired results is : [1 Mark]
(A) Setting performance standards
(B) Analysing deviations
(C) Taking corrective action
(D) Comparing actual performance with the standards

Answer: (D) Comparing actual performance with the standards

Teacher's Note:
a) Comparison reveals the deviation; the next step, analysing deviations, studies how serious it is and its causes.
b) Many students choose (B) by mistake - "reveals" points to the comparison step.

18. 'Certain provisions of the Companies Act place restrictions on payouts as dividend. Such provisions must be adhered to while declaring the dividend.'
The factor affecting dividend decision discussed above is : [1 Mark]
(A) Access to capital market
(B) Contractual constraints
(C) Legal constraints
(D) Stock market reaction

Answer: (C) Legal constraints

Teacher's Note:
a) Restrictions coming from a law such as the Companies Act are legal constraints.
b) Contractual constraints come from loan agreements with lenders, not from law.

19. Read the following statements carefully :
Statement - I : Control should focus on key result areas which are critical to the success of an organization.
Statement - II : Only significant deviations which go beyond the permissible limit should be brought to the notice of management.
With reference to the given statements, choose the correct alternative from the following : [1 Mark]
(A) Both the statements are true.
(B) Both the statements are false.
(C) Statement I is true and Statement II is false.
(D) Statement I is false and Statement II is true.

Answer: (A) Both the statements are true.

Teacher's Note:
a) Statement I describes Critical Point Control and Statement II describes Management by Exception.
b) Both are techniques used while measuring performance and analysing deviations.

20. Which of the following is NOT an organisational barrier to communication ? [1 Mark]
(A) Status
(B) Organisational facilities
(C) Lack of proper incentives
(D) Rules and regulations

Answer: (C) Lack of proper incentives

Teacher's Note:
a) Lack of proper incentives is a personal barrier to communication.
b) Status, organisational facilities, rules and regulations, organisational policy and complexity in structure are organisational barriers.

21. 'Riya Mart' is a company manufacturing disposable crockery. They have been in business for the past five years, but were not earning good profits. Concerned about this, the Chief Executive Officer (CEO), Verma, ordered an internal audit. The audit uncovered several issues like inventory pilferage, employees coming late and their performance not upto the mark. To stop inventory pilferage, Verma, the CEO, introduced surprise stock checks and installed an automated inventory management system to track stock movements. A biometric attendance system was also setup to keep a check on employees coming late. In addition to this, to motivate employees for better performance, they were told in advance what they are expected to do and what are their standards of performance. As a result of these steps, the inventory pilferage reduced, employees became more punctual and their performance improved.
(i) Identify and state the function of management performed by Verma, the Chief Executive Officer of the company.
(ii) State any two points of importance of the function identified in (i) above, which are not discussed in the above para. [3 Marks]

Answer:
(i) The function of management performed by Verma is Controlling. Controlling means measuring actual accomplishment against the set standards and correcting deviations, to make sure that objectives are achieved according to plans.
(ii) Importance of controlling not discussed in the para (any two):
1. Accomplishing organisational goals: Controlling measures progress towards the organisational goals and brings to light the deviations, if any.
2. Judging accuracy of standards: Controlling helps to review and revise the standards in the light of changes taking place in the organisation and in the environment.

Teacher's Note:
a) Identification carries half a mark and the statement (meaning) carries half a mark; write both.
b) Do not write "ensuring order and discipline" or "improving employee motivation" in part (ii), as these are already discussed in the case.
c) Other acceptable points are "facilitating coordination in action" and "making efficient use of resources".

22. 'Soal Footwear Ltd.' is known for its high quality athletic shoes and casual sneakers. With increasing competition and changing consumer preferences, it decided to diversify its product range by adding clothing, bags and accessories under the same brand umbrella. This diversification aimed to capture a larger share of the market and increase customer loyalty.
(i) Suggest with reason which type of organisational structure will be suitable for 'Soal Footwear Ltd.' (1+2)
(ii) State any two advantages of the organisational structure suggested in (i) above. [3 Marks]

Answer:
(i) Divisional structure will be suitable for 'Soal Footwear Ltd.'
Reason: Divisional structure is suitable when a large variety of products is manufactured. Here the company has decided to diversify its product range by adding clothing, bags and accessories.
(ii) Advantages of divisional structure (any two):
1. Product specialisation helps in developing varied skills in a divisional head and prepares him for higher positions.
2. It facilitates expansion and growth, as new divisions can be added without disturbing existing operations, by simply adding a divisional head and staff for the new product line.

Teacher's Note:
a) The keyword "diversify its product range" in the case points to divisional structure.
b) Part (i) carries half a mark for the structure and half a mark for the reason.
c) Other advantages accepted are fixing accountability for profits and promoting flexibility and initiative.

23. (a) State any three measures to improve communication effectiveness. [3 Marks]

Answer:
1. Clarify the ideas before communication: The problem to be communicated should be studied in depth, analysed and stated clearly so that it is clearly conveyed to subordinates.
2. Communicate according to the needs of the receiver: The manager should adjust his communication to the education and understanding level of the subordinates.
3. Ensure proper feedback: The communicator may ask questions about the message conveyed to check whether the receiver has understood it correctly.

Teacher's Note:
a) Give a heading and one line of explanation for each measure; only listing gets half a mark each.
b) Other measures accepted are consulting others, being aware of language and tone, following up and being a good listener.

OR

(b) State any three features of leadership. [3 Marks]

Answer:
1. Leadership indicates the ability of an individual to influence others to work willingly.
2. Leadership tries to bring change in the behaviour of others, so that they work towards the goals.
3. Leadership is a continuous process, as the leader has to keep guiding and influencing the followers all the time.

Teacher's Note:
a) Other features accepted are that it shows interpersonal relations between leaders and followers and that it is exercised to achieve common goals.
b) Write exactly three features, as the question asks for "any three".

24. (a) State any three functions of middle level management. [3 Marks]

Answer:
1. They interpret the policies framed by top management.
2. They ensure that their department has the necessary personnel.
3. They assign necessary duties and responsibilities to personnel in their department.

Teacher's Note:
a) Middle management is the link between top management and supervisors, so its functions are about implementing policies.
b) Other correct functions are motivating people, cooperating with other departments, implementing plans and being responsible for first line managers.

OR

(b) State any three features of 'Demonetisation'. [3 Marks]

Answer:
1. Demonetisation is a tax administration measure, as it requires declaration of unaccounted wealth and payment of taxes at a penalty rate.
2. It is seen as a shift on the part of the government that tax evasion will no longer be tolerated or accepted.
3. It creates a less-cash or cash-lite economy, which improves tax compliance.

Teacher's Note:
a) Another feature accepted is that it channelises savings into the formal financial system.
b) Do not write the objectives or the date of demonetisation; the question asks for features.

25. 'Sheetal Cosmetics Ltd.', is a fast growing beauty and skin care company known for its innovative products and aggressive market expansion. As the company increased its marketing activities like new product launches, accelerated advertising campaigns, social media promotions and influencer collaborations etc., the workload of the marketing department grew sharply. Despite working long hours, the marketing manager Arjun couldn't give adequate attention to strategic planning and high impact decisions as minor operational issues began consuming most of his time. Noticing this, the Chief Executive Officer (CEO) advised Arjun that it was now impractical for him to handle the entire volume of work alone, so he should allow his subordinates to take up routine tasks. This would not only help him manage his time better but also satisfy the subordinate's need for recognition. This will also provide opportunities to the subordinates to develop and exercise initiative.
(i) Identify the concept suggested by CEO that will help Arjun to manage volume of work effectively.
(ii) State any three points of importance of the concept identified in (i) above. [4 Marks]

Answer:
(i) The concept suggested by the CEO is Delegation (of authority).
(ii) Importance of delegation (any three):
1. Effective management: By empowering employees, managers get more time to concentrate on important matters.
2. Employee development: Employees get more opportunities to use their talent and develop themselves for higher positions.
3. Facilitation of growth: It helps in the expansion of the organisation by providing a ready workforce to take up leading positions in new ventures.

Teacher's Note:
a) "Allow his subordinates to take up routine tasks" is the clue for delegation.
b) Other points accepted are motivation of employees, basis of management hierarchy and better coordination.
c) Give a heading with a short explanation for each point; only listing gets half a mark each.

26. (a) State any four merits of internal source of recruitment. [4 Marks]

Answer:
1. Employees are motivated to improve their performance, as a promotion at a higher level may lead to a chain of promotions at lower levels.
2. It simplifies the process of selection and placement, as candidates already working in the enterprise can be evaluated more accurately and economically.
3. Transfer is a tool of training, as it prepares employees for higher jobs, and people recruited from within do not need induction training.
4. It is economical, as filling jobs internally is cheaper than getting candidates from external sources.

Teacher's Note:
a) Another merit accepted is that transfer shifts workforce from surplus departments to departments with a shortage of staff.
b) Write merits only; do not mix in the limitations of internal sources.

OR

(b) State any four benefits of training to the employees. [4 Marks]

Answer:
1. Improved skills and knowledge due to training lead to a better career for the individual.
2. Increased performance by the individual helps him to earn more.
3. Training makes the employee more efficient in handling machines, so he is less prone to accidents.
4. Training increases the satisfaction and morale of employees.

Teacher's Note:
a) The question asks for benefits to the employees, not to the organisation; do not write points like "less wastage" or "higher profits".
b) Remember the four points as Career, Earnings, Safety and Morale.

27. (a) Explain the following points of importance of planning :
(i) Planning establishes standards for controlling
(ii) Planning reduces overlapping and wasteful activities [4 Marks]

Answer:
(i) Planning establishes standards for controlling:
1. Planning provides the goals or standards against which actual performance is measured. By comparing actual performance with the standards, managers can know whether goals have been achieved and correct the deviations.
2. Planning is a prerequisite for controlling. Without goals and standards, finding deviations, which is a part of controlling, would not be possible.
(ii) Planning reduces overlapping and wasteful activities:
1. Planning serves as the basis for coordinating the activities and efforts of different divisions, departments and individuals.
2. It helps in avoiding confusion and misunderstanding by eliminating useless and redundant activities.

Teacher's Note:
a) Each part carries 2 marks, so write two clear points under each heading.
b) Use the keywords "prerequisite for controlling" and "useless and redundant activities".

OR

(b) Explain the following types of plans :
(i) Objective
(ii) Method [4 Marks]

Answer:
(i) Objective:
1. Objectives are the desired future position that the management would like to reach. They should be expressed in specific terms and in the form of a written statement.
2. They are usually set by top management and focus on broad, general issues. Different departments and units may have their own objectives.
(ii) Method:
1. Method is the prescribed way or manner in which a task has to be performed, considering the objective.
2. It deals with a task comprising one step of a procedure and specifies how this step is to be performed. It may vary from task to task.

Teacher's Note:
a) Do not confuse method with procedure; a procedure is a sequence of steps, while a method tells how one step is done.
b) Give an example, such as "to earn 10% return on investment" for an objective, to make the answer clear.

28. Rajiv was on the board of directors of 'Tako Solutions', a software development company and 'Sabka Mart Retail', a large supermarket chain. He wanted to apply management principles in both the companies to improve efficiency and profitability.
He knew that management principles can be applied as much to 'Tako Solutions' as to 'Sabka Mart Retail' though the extent to which the principles can be applied will differ, because the nature of work, scale of operations and business activities in a software firm and a supermarket chain are not the same.
Rajiv also knew that the management principles would not provide readymade solutions because real world situations faced by the two companies were very complex and dynamic. Still, he believed that even small guidelines could help in solving many problems and will improve the way both companies worked.
Identify and explain the two points that highlight the nature of principles of management, in the above case. [4 Marks]

Answer:
1. Universal applicability: The principles of management apply to all types of organisations - business as well as non-business, small as well as large, public as well as private sector, manufacturing as well as services. However, the extent of their applicability varies with the nature of the organisation, business activity, scale of operations and the like.
2. General guidelines: The principles are guidelines to action but do not provide readymade, straitjacket solutions to all managerial problems, because real business situations are very complex and dynamic and are a result of many factors. However, their importance cannot be underestimated, because even a small guideline helps to solve a given problem.

Teacher's Note:
a) Each point carries half a mark for identification and one and a half marks for explanation.
b) Clue for point 1: "can be applied as much to 'Tako Solutions' as to 'Sabka Mart Retail' though the extent ... will differ".
c) Clue for point 2: "would not provide readymade solutions" and "even small guidelines could help".

29. 'GW Industries', known for its paper products, decided to produce and launch a new line of sustainable packaging called 'EcoPac'.
As management is a complex activity, the Chief Executive Officer of the company translated the work into clear goals and assigned the means to achieve those. He knew that human resources are the greatest asset of an organization, so getting work done through them is also a major task. The production of high quality sustainable packaging also required a proper production process. This was put in place for managing the flow of input materials and technology to convert these materials into high quality sustainable packaging.
In this way 'GW industries' took care of various aspects for successful launch of 'EcoPac'.
A characteristic of management is discussed in the above case. Identify and explain the characteristic. [4 Marks]

Answer:
The characteristic of management discussed is: Management is a multi-dimensional activity. It has three main dimensions:
1. Management of work: All organisations exist for the performance of some work. Management translates this work in terms of goals to be achieved and assigns the means to achieve it.
2. Management of people: It means dealing with employees as individuals with diverse needs and behaviour, and also dealing with individuals as a group of people.
3. Management of operations: It requires a production process which involves the flow of input material and the technology for transforming this input into the desired output for consumption.

Teacher's Note:
a) Identification carries 1 mark; each dimension carries 1 mark (half for the heading and half for the explanation).
b) Match each dimension with the case: "translated the work into clear goals" (work), "human resources" (people), "production process" (operations).

30. 'Eco Care', a start-up, plans to launch a reusable water bottle for environmentally conscious millennials and Gen Z. For this, they conducted a market research to identify the needs of the customers so that an informed decision could be taken for successful marketing of the product. They wanted to work carefully on the design to make the bottle attractive to the target customers.
On the basis of consumer views and opinions, they developed a stylish stainless steel bottle with double wall insulation to keep beverages cold for 24 hours, giving it a competitive advantage in the market.
They named the bottle 'Eco-Sip' creating a brand identity focused on sustainability and simplicity. It would also help in product differentiation.
The packaging was made using hundred percent recyclable cardboard, with details of sustainability, features, price etc. printed on it.
State the four functions of marketing that are carried out by 'Eco Care' in the above case. [4 Marks]

Answer:
1. Gathering and analysing market information: It is necessary to identify the needs of the customers and to analyse the available opportunities and threats as well as the strengths and weaknesses of the organisation.
2. Product designing and development: It helps to make the product attractive to the target customers, improve its performance and give it a competitive advantage in the market.
3. Branding: It involves deciding whether to sell the product under its generic name or give it a brand name. A brand name helps in product differentiation, which builds customer loyalty and promotes sales.
4. Packaging and labelling: It refers to designing and developing the package for the product and the label to be put on the package.

Teacher's Note:
a) Clues: "market research" (market information), "design ... attractive" (product designing), "named the bottle 'Eco-Sip'" (branding), "packaging ... details printed on it" (packaging and labelling).
b) Only listing the four functions gets half a mark each, so add one line of explanation for each.

31. 'Koka Manufacturing Ltd.' is a large scale manufacturer in the electronics industry. In this industry assets are prone to obsolescence and their replacement becomes due faster with change in technology. The company is constantly under pressure to upgrade its machinery and equipment as it would help company to stay competitive, improve its product quality and reduce production costs. So instead of purchasing the machinery, company decides to lease the required machinery, giving it flexibility to upgrade equipment at the end of lease term. This helps company to maintain operational efficiency, technological competitiveness and financial flexibility.
Identify and explain four factors that would affect the fixed capital requirements of 'Koka Manufacturing Ltd.'. [6 Marks]

Answer:
1. Nature of business ("large scale manufacturer in the electronics industry"): A trading concern needs lower investment in fixed assets than a manufacturing organisation, because it does not need to buy plant and machinery. Being a manufacturer, Koka needs more fixed capital.
2. Scale of operations ("large scale manufacturer"): A larger organisation operating at a higher scale needs a bigger plant, more space etc., and therefore requires higher investment in fixed assets than a small organisation.
3. Technology upgradation ("assets are prone to obsolescence and their replacement becomes due faster"): In certain industries, assets become obsolete sooner, so their replacement becomes due faster. Higher investment in fixed assets may therefore be required in such cases.
4. Financing alternatives ("company decides to lease the required machinery"): When an asset is taken on lease, the firm pays lease rentals and uses it. Availability of leasing facilities may reduce the funds to be invested in fixed assets, thereby reducing fixed capital requirements.

Teacher's Note:
a) Each factor carries half a mark for identification and one mark for explanation.
b) Link each factor to a line of the case to show clear understanding.
c) Do not write working capital factors such as operating cycle or credit allowed; the question is about fixed capital.

32. (a) Explain the following steps in the staffing process :
(i) Estimating manpower requirements
(ii) Selection
(iii) Placement and orientation [6 Marks]

Answer:
(i) Estimating manpower requirements:
1. It involves knowing how many persons are needed and of what type.
2. Understanding manpower requirements needs workload analysis and workforce analysis, which reveal whether the organisation is understaffed, overstaffed or optimally staffed.
(ii) Selection:
1. Selection is the process of choosing from among the pool of prospective job candidates developed at the stage of recruitment.
2. Its purpose is to ensure that the organisation gets the best among the available candidates. It also enhances the self-esteem and prestige of those selected.
(iii) Placement and orientation:
1. Placement refers to the employee occupying the position or post for which the person has been selected.
2. Orientation is introducing the selected employee to other employees and familiarising him with the rules and policies of the organisation.

Teacher's Note:
a) Each step carries 2 marks, so write two points under each heading.
b) Mention both "workload analysis" and "workforce analysis" in part (i); these are key words.
c) Explain placement and orientation separately, as they are two different ideas in one step.

OR

(b) Explain the following non-financial incentives :
(i) Status
(ii) Organisational climate
(iii) Job security [6 Marks]

Answer:
(i) Status:
1. Status means ranking of positions in the organisation. The authority, responsibility, rewards, recognition etc. of a job indicate the status given to a person holding a managerial position.
2. Psychological, social and esteem needs of an individual are satisfied by the status given to his job.
(ii) Organisational climate:
1. It indicates the characteristics which describe an organisation and distinguish one organisation from another.
2. Individual autonomy, reward orientation, consideration to employees, risk-taking etc. are characteristics which help in developing a better organisational climate.
(iii) Job security:
1. Employees want stability about future income and work, so that they do not feel worried on these aspects and work with greater zeal.
2. This becomes more important where there are inadequate job opportunities and too many aspirants for them.

Teacher's Note:
a) Each incentive carries 2 marks, so give its meaning and one more point on how it motivates.
b) Relate status to esteem needs and job security to safety needs of Maslow's hierarchy to make the answer stronger.

33. Ria ran a small online bakery business. Her business was doing very well. She saved a good amount of money every month and now wanted to invest it wisely. She was in a dilemma to keep her savings in a bank account or to invest it in the stock market. Her friend Aabha, who had done a certification course from National Stock Exchange, encouraged her to invest in the stock market. She explained to Ria that if she invests in the stock market, she could disinvest and reinvest whenever she wanted, which would provide her good liquidity. Aabha also told her that the membership of stock exchange is well regulated and all trading takes place within the legal framework. As a result, investors get a fair and safe deal.
Ria was still apprehensive as she had heard that there is lot of speculation in the stock market. She wanted to be cautious. Aabha clarified that speculation does exist, but it happens in a restricted and controlled way. She also told Ria that the stock exchange is keen to promote wider share ownership and does so by educating public about investments etc. As a result, young people have started investing in the stock market. After all this discussion, Ria felt confident and decided to invest a part of her savings in the stock market.
Quoting lines, identify and explain the four functions of stock exchange highlighted in the above case. [6 Marks]

Answer:
1. "She explained to Ria that if she invests in the stock market, she could disinvest and reinvest whenever she wanted, which would provide her good liquidity."
Function: Providing liquidity and marketability to existing securities. The basic function of a stock exchange is to create a continuous market where securities are bought and sold, which gives liquidity and marketability.
2. "Aabha also told her that the membership of stock exchange is well regulated and all trading takes place within the legal framework. As a result, investors get a fair and safe deal."
Function: Safety of transactions. The membership of a stock exchange is well regulated and its dealings are well defined under the existing legal framework, which ensures that investors get a safe and fair deal.
3. "Aabha clarified that speculation does exist, but it happens in a restricted and controlled way."
Function: Providing scope for speculation. The stock exchange provides enough scope, within the provisions of law, for speculative activity in a restricted and controlled manner.
4. "She also told Ria that the stock exchange is keen to promote wider share ownership and does so by educating public about investments etc. As a result, young people have started investing in the stock market."
Function: Spreading of equity cult. The stock exchange ensures wider share ownership by regulating new issues, encouraging better trading practices and educating the public about investments.

Teacher's Note:
a) Each function carries half a mark for quoting, half a mark for identification and half a mark for explanation.
b) Quote the exact lines from the case inside quotation marks; do not rewrite them in your own words.
c) Do not add functions not in the case, such as "pricing of securities" or "contributes to economic growth".

34. (a) Explain the following elements of Marketing Mix :
(i) Product
(ii) Price
(iii) Promotion [6 Marks]

Answer:
(i) Product:
1. Product means goods or services or anything of value offered to the market for sale. It also includes the extended product, such as after-sales service, handling complaints and availability of spare parts.
2. Important product decisions include deciding about the features, quality, packaging, labelling and branding of the product.
(ii) Price:
1. Price is the amount of money customers have to pay to obtain the product. Generally, the level of price affects the level of demand.
2. It involves setting pricing objectives and analysing factors affecting price, to decide the basic price, discounts to customers and traders, credit terms etc.
(iii) Promotion:
1. Promotion includes activities that communicate information (availability, features, merits) about products and services to target customers and persuade them to buy.
2. Marketers use tools such as advertising, personal selling, public relations and sales promotion, and spend large amounts of money on them.

Teacher's Note:
a) Each element carries 2 marks, so give its meaning and the main decisions involved.
b) Name all four promotion tools in part (iii); examiners look for them.

OR

(b) Explain the following components of physical distribution :
(i) Order processing
(ii) Warehousing
(iii) Inventory control [6 Marks]

Answer:
(i) Order processing:
1. Products flow from manufacturers to customers through channel members, while orders flow in the reverse direction, from customers to manufacturers.
2. A good physical distribution system should provide accurate and speedy processing of orders; otherwise goods reach customers late or in wrong quantity or specifications, leading to customer dissatisfaction.
(ii) Warehousing:
1. Warehousing is the act of storing and assorting products to create time utility in them. Its basic purpose is to arrange placement of goods and provide facilities to store them.
2. The need for warehousing arises because there may be a difference between the time a product is produced and the time it is required for consumption.
(iii) Inventory control:
1. An important decision is the level of inventory. A higher level gives better service to customers, but the cost of carrying inventory is also high as a lot of capital is tied up. So a balance must be kept between cost and customer satisfaction.
2. Deciding the level of inventory involves predicting the demand for the product. A correct estimate of demand helps to keep inventory and cost levels to a minimum.

Teacher's Note:
a) Use key terms such as "time utility" for warehousing and "balance between cost and customer satisfaction" for inventory control.
b) Each component carries 2 marks; write two points under each heading.

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