CBSE Class 12 Business Studies Question Paper 2026 Solved Code 66-1-2

1. 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 coordination is done at every level of management, the feature is "responsibility of all managers".

2. ‘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; efficiency means doing it at minimum cost.
b) The project finished on time (effective) but cost Rs. 2,00,000 extra (not efficient).

3. 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 are short-term (up to one year), so they are highly liquid.
b) Money market instruments are not traded on stock exchanges; they are dealt over the telephone or through banks and financial institutions.

4. 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) The tube and bottle holding the colour are primary packaging; the outer box is secondary packaging.
b) Secondary packaging gives extra protection and is thrown away once the product is used.

5. 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) The Consumer Protection Act provides a three-tier machinery: District, State and National Commissions.
b) Forming consumer associations is one of the ways of consumer protection.

6. 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 towards another man. Zig-zag lines come from the megaphone, and a speech bubble with jumbled symbols (!, *, %, +, x) appears above the second man, who covers his ears with both hands and has his eyes closed.]

Answer: (C) Noise

Teacher's Note:
a) Noise means any obstruction or hindrance in the communication process.
b) The jumbled symbols and the covered ears show that the message is disturbed and not received properly.

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

6. 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; decoding is done by the receiver.
b) Symbols may be words, pictures, gestures, etc.

7. 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 no cash memo was taken.
b) A cash memo is proof of purchase and is needed to file a complaint later.

8. 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) Organisational barriers include policy, rules and regulations, status, complexity in structure and organisational facilities.

9. 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) Grievance cells are set up to respect the consumer's right to be heard.
b) Note that the options in this question are in a different order from the usual A-R options.

10. 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 (shows) the deviation; the next step, analysing deviations, finds its causes.
b) Do not confuse "revealing" a deviation with "analysing" it.

11. 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 Act, the right to choose is the right to be assured access to a variety of goods at competitive prices.
b) Ritika compared many brands and prices before choosing, so she exercised this right.

12. 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) Duties can be assigned only after departments are formed.

13. 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) Replacing guess work and personal experience with one best method is the key clue.
b) Taylor believed there is only one best method to maximise efficiency.

14. 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 the options; they are often the incorrect ones.

15. 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 proportion of debt in the capital structure rises.
b) Interest and preference dividend are fixed financial charges.

16. ‘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 key words "keeps on changing" point to the dynamic nature of business environment.
b) Relativity means the environment differs from country to country and region to region.

17. 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 is Critical Point Control; Statement II is Management by Exception.
b) Both are techniques used while analysing deviations in the controlling process.

18. ‘If the shareholders in general desire that at least a certain amount is paid as dividend, the companies are likely to declare the same.’
The factor affecting dividend decision discussed above is : [1 Mark]
(A) Stability of dividends
(B) Amount of earnings
(C) Legal constraints
(D) Shareholders’ preference

Answer: (D) Shareholders’ preference

Teacher's Note:
a) The clue is "if the shareholders in general desire".
b) Stability of dividends means keeping the dividend per share steady over years.

19. 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; unity of direction means one head and one plan.
b) Students often mix these two principles, so remember "command = boss".

20. 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 is looking ahead and preparing for future events.
b) Forecasting is the basis of this feature of planning.

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

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

Teacher's Note:
a) Other valid points: consult others before communicating, be aware of language, tone and content, be a good listener, and follow up communications.
b) Write a heading and one line of explanation; only listing the points gets half marks each.

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 valid features: it shows interpersonal relations between leaders and followers, and it is exercised to achieve common goals of the organisation.
b) Give exactly three features as the question says "any three".

22. ‘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 the accomplishment against the standards and correcting the 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 goals and brings to light the deviations, if any.
2. Judging accuracy of standards: a good control system helps to review and revise the standards in the light of changes in the organisation and the environment.

Teacher's Note:
a) Do not write "making efficient use of resources" (stopping pilferage), "ensuring order and discipline" (biometric attendance) or "improving employee motivation" (standards told in advance), as these are discussed in the case.
b) Facilitating coordination in action is another valid point for part (ii).

23. ‘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. Reason: A divisional structure is suitable when a large variety of products are manufactured. Here the company has decided to diversify its product range into 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 interrupting existing operations, by adding a divisional head and staff for the new product line.

Teacher's Note:
a) The key clue for divisional structure is "diversify its product range".
b) Other valid advantages: divisional heads can be held accountable for profits, and it promotes flexibility and faster decision making.

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

Answer:
1. Operational (supervisory) managers directly oversee the efforts of the workforce.
2. They interact with the actual workforce and pass on the instructions of the middle management to the workers.
3. Through their efforts, quality of output is maintained, wastage of materials is minimised and safety standards are maintained.

Teacher's Note:
a) Operational level managers are foremen and supervisors.
b) They act as a link between middle management and workers.

OR

(b) State any three points of importance of management. [3 Marks]

Answer:
1. Management helps in achieving group goals by giving a common direction to individual efforts.
2. Management increases efficiency by reducing costs and increasing productivity through better planning, organising, staffing, directing and controlling.
3. Management creates a dynamic organisation by helping people adapt to changes, so that the organisation keeps its competitive edge.

Teacher's Note:
a) Other valid points: it helps in achieving personal objectives and in the development of society.
b) Write one line of explanation with each point to earn full marks.

25. 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 and non-business, small and large, public and private sector, manufacturing and services. However, the extent of their application varies with the nature of the organisation, business activity, scale of operations and the like.
2. General guidelines: The principles are guidelines to action. They do not provide readymade, straitjacket solutions to all managerial problems, because real business situations are very complex and dynamic. Still, their importance cannot be underestimated, because even a small guideline helps to solve a given problem.

Teacher's Note:
a) Each point carries ½ mark for identification and 1½ marks for explanation.
b) Link each point to the case: "applied as much to 'Tako Solutions' as to 'Sabka Mart Retail'" and "would not provide readymade solutions".

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

Answer:
1. When vacancies are filled through internal promotions, the scope for fresh talent is reduced and the danger of 'inbreeding' increases.
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) Another valid point: frequent transfers of employees may reduce the productivity of the organisation.
b) Do not write merits of internal sources by mistake; the question asks for limitations.

OR

(b) State any eight specialized activities and duties which human resource personnel must perform in an organization. [4 Marks]

Answer:
1. Recruitment, i.e., search for qualified people.
2. Analysing jobs and collecting information about jobs to prepare job descriptions.
3. Developing compensation and incentive plans.
4. Training and development of employees for efficient performance and career growth.
5. Maintaining labour relations and union-management relations.
6. Handling grievances and complaints.
7. Providing for social security and welfare of employees.
8. Defending the company in law suits and avoiding legal complications.

Teacher's Note:
a) Each activity carries ½ mark, so all eight must be written.
b) A short phrase for each activity is enough here.

27. (a) Explain the following steps of the planning process :
(i) Setting objectives
(ii) Developing premises [4 Marks]

Answer:
(i) Setting objectives:
1. Objectives specify what the organisation wants to achieve.
2. Objectives may be set for the entire organisation, for each department and for employees at all levels. If the end result is clear, it becomes easier to work towards the goal.
(ii) Developing premises:
1. Planning is concerned with the future, so a manager has to make certain assumptions about the future. These assumptions are called premises.
2. Premises are the base material upon which plans are drawn. They may be in the form of forecasts, existing plans or any past information about policies.

Teacher's Note:
a) Setting objectives is the first step and developing premises is the second step of the planning process.
b) Use the word "assumptions" when explaining premises; examiners look for it.

OR

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

Answer:
(i) Strategy:
1. A strategy provides the broad contours of an organisation's business and is formulated by taking the business environment into consideration.
2. It is a comprehensive plan for accomplishing the organisation's objectives. It includes determining long-term objectives, adopting a particular course of action and allocating the resources needed to achieve the objectives.
(ii) Programme:
1. Programmes are detailed statements about a project which outline the objectives, policies, procedures, rules, tasks, human and physical resources required and the budget to implement any course of action.
2. A programme includes the entire gamut of activities as well as the organisation's policy and how it will contribute to the overall business plan.

Teacher's Note:
a) Remember the three dimensions of a strategy: long-term objectives, course of action and allocation of resources.
b) A programme is for a specific project, so use the word "project" in your answer.

28. ‘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: This is needed to identify the needs of the customers and to analyse the available opportunities and threats, and strengths and weaknesses of the organisation.
2. Product designing and development: This makes the product attractive to the target customers, improves its performance and gives it a competitive advantage in the market.
3. Branding: This involves deciding whether to sell the product in its generic name or under a brand name. A brand name creates product differentiation, which helps in building customer loyalty and promoting sales.
4. Packaging and labelling: This means designing and developing the package for the product and the label to be put on the package.

Teacher's Note:
a) Match each function to a line: "market research", "developed a stylish stainless steel bottle", "named the bottle 'Eco-Sip'" and "the packaging was made using".
b) Only listing the four functions earns ½ mark each; add one line of meaning for full marks.

29. ‘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) Delegation (of authority).
(ii) Importance of delegation (any three):
1. Effective management: By empowering the 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. Motivation of employees: When a superior entrusts a task to a subordinate, it shows trust on the superior's part and builds commitment on the part of the subordinate.

Teacher's Note:
a) Other valid points: facilitates growth, forms the basis of management hierarchy, and leads to better coordination.
b) Do not write "decentralisation"; the case is about one manager passing routine work to his subordinates.

30. ‘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 is: Management is multidimensional. It is a complex activity with three main dimensions:
1. Management of work: All organisations exist to perform some work. Management translates this work into goals to be achieved and assigns the means to achieve them.
2. Management of people: Human resources are the greatest asset of an organisation. It means dealing with employees as individuals with diverse needs and behaviour, and also dealing with them as a group of people.
3. Management of operations: Every organisation needs a production process. This involves the flow of input materials and the technology for transforming these inputs into the desired output for consumption.

Teacher's Note:
a) Identification carries 1 mark; each dimension carries ½ mark for heading and ½ mark for explanation.
b) The case lines on goals, human resources and production process point to the three dimensions.

31. 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. Providing liquidity and marketability to existing securities:
Line: "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."
Explanation: The basic function of a stock exchange is to create a continuous market where securities are bought and sold. This gives liquidity and marketability to securities.
2. Safety of transactions:
Line: "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."
Explanation: The membership of a stock exchange is well regulated and its dealings are well defined under the existing legal framework. This ensures that the investing public gets a safe and fair deal.
3. Providing scope for speculation:
Line: "Aabha clarified that speculation does exist, but it happens in a restricted and controlled way."
Explanation: The stock exchange provides sufficient scope, within the provisions of law, for speculative activity in a restricted and controlled manner.
4. Spreading of equity cult:
Line: "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."
Explanation: The stock exchange ensures wider share ownership by regulating new issues, better trading practices and taking effective steps to educate the public about investments.

Teacher's Note:
a) Each function carries 1½ marks: ½ for quoting, ½ for identification and ½ for explanation.
b) Quote the exact line from the case inside quotation marks; do not paraphrase it.
c) Do not add functions like "contributing to economic growth" that are not in the case.

32. (a) Explain the following steps in the staffing process :
(i) Performance appraisal
(ii) Promotion and career planning
(iii) Compensation [6 Marks]

Answer:
(i) Performance appraisal:
1. It means evaluating an employee's current and/or past performance against certain predetermined standards.
2. The process includes defining the job, appraising performance and providing feedback.
(ii) Promotion and career planning:
1. Promotions are an integral part of people's career. In a promotion, an employee is placed in a position of increased responsibility, more pay and job satisfaction.
2. Managers need to design activities that serve employees' long-term interests and encourage them to grow and realise their full potential.
(iii) Compensation:
1. It refers to all forms of pay or rewards going to employees. It may be direct financial payments like wages, salaries, incentives, commissions and bonuses, or indirect payments like employer-paid insurance and vacations.
2. Direct financial payments may be time based or performance based. Plans can also combine time-based pay with incentives for higher performance.

Teacher's Note:
a) Each step carries 2 marks, so write at least two clear points for each.
b) Mention both direct and indirect payments under compensation.

OR

(b) Explain the following non-financial incentives :
(i) Career advancement opportunity
(ii) Employee participation
(iii) Job enrichment [6 Marks]

Answer:
(i) Career advancement opportunity:
1. Managers should give employees opportunities to improve their skills and be promoted to higher level jobs. This works as a tonic and encourages employees to perform better.
2. Appropriate skill development programmes and a sound promotion policy help employees to achieve promotions.
(ii) Employee participation:
1. It means involving employees in decision making on issues related to them.
2. In many companies, these programmes are practised in the form of joint management committees, work committees, canteen committees, etc.
(iii) Job enrichment:
1. It is concerned with designing jobs that include a greater variety of work content and require a higher level of knowledge and skill.
2. It gives workers more autonomy and responsibility, and provides opportunity for personal growth and a meaningful work experience, which motivates the individual.

Teacher's Note:
a) Non-financial incentives satisfy psychological, social and emotional needs, not money needs.
b) Give an example (like work committees) for employee participation to strengthen the answer.

33. ‘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: A trading concern needs lower investment in fixed assets than a manufacturing organisation, because it does not need to buy plant and machinery. Koka Manufacturing Ltd. is a manufacturer, so it needs higher fixed capital.
2. Scale of operations: A larger organisation operating at a higher scale needs a bigger plant, more space, etc. So it requires higher investment in fixed assets than a small organisation. Koka is a large scale manufacturer.
3. Technology upgradation: In certain industries, assets become obsolete sooner, so their replacement becomes due faster. Higher investment in fixed assets may be required in such cases, as in the electronics industry.
4. Financing alternatives: 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, and thus reduces fixed capital requirements.

Teacher's Note:
a) Each factor carries ½ mark for identification and 1 mark for explanation.
b) Clues: "manufacturer", "large scale", "prone to obsolescence" and "lease the required machinery".
c) Do not write working capital factors like operating cycle or credit allowed.

34. (a) Explain the following tools of promotion mix :
(i) Advertising
(ii) Personal selling
(iii) Sales-promotion [6 Marks]

Answer:
(i) Advertising:
1. It is the most commonly used impersonal form of communication, which is paid for by the marketers (sponsors) to promote some goods or service.
2. The most common modes of advertising are newspapers, magazines, television and radio.
(ii) Personal selling:
1. It is a personal form of communication. It involves oral presentation of a message in the form of a conversation with one or more prospective customers for the purpose of making sales.
2. Companies appoint salespersons to contact prospective buyers, develop personal relationships, create awareness about the product and develop product preferences, with the aim of making a sale.
(iii) Sales promotion:
1. Sales promotion refers to short-term incentives designed to encourage buyers to make an immediate purchase of a product or service.
2. It includes cash discounts, sales contests, free gift offers and free sample distribution, aimed at customers, middlemen and salespersons to boost the sales of a firm.

Teacher's Note:
a) Key words: advertising is "paid" and "impersonal"; personal selling is "oral" and "face to face"; sales promotion is "short-term incentive".
b) Each tool carries 2 marks, so give a meaning and one more point for each.

OR

(b) Explain the following features of marketing :
(i) Needs and wants
(ii) Creating a market offering
(iii) Customer value [6 Marks]

Answer:
(i) Needs and wants:
1. A need is a state of felt deprivation. It is basic to humans and does not relate to a particular product. Wants are culturally defined objects that are potential satisfiers of needs.
2. A marketer's job is to identify the needs of the target customers and develop products and services that satisfy such needs.
(ii) Creating a market offering:
1. Market offering means a complete offer for a product or service, with given features like size, quality and taste, at a certain price, available at a given outlet or location.
2. A good market offer is developed after analysing the needs and preferences of the potential buyers.
(iii) Customer value:
1. A product will be bought only if the buyer sees it as giving the greatest benefit or value for money.
2. The marketer's job is to add value to the product, so that customers prefer it over competing products and decide to buy it.

Teacher's Note:
a) Clearly show the difference between a need (basic) and a want (culturally defined).
b) Write two points under each feature, as each feature carries 2 marks.

Please click the link below to download pdf file of CBSE Class 12 Business Studies Question Paper 2026 Solved Code 66-1-2