CBSE Sample Papers for Class 12 Business Studies Paper 2

CBSE Sample Papers for Class 12 Business Studies Paper 2 are part of CBSE Sample Papers for Class 12 Business Studies Here we have given CBSE Sample Papers for Class 12 Business Studies Paper 2.

CBSE Sample Papers for Class 12 Business Studies Paper 2

Students who are going to appear for CBSE Class 12 Examinations are advised to practice the CBSE sample papers given here which is designed as per the latest Syllabus and marking scheme, as prescribed by the CBSE, is given here. Paper 2 of Solved CBSE Sample Papers for Class 12 Business Studies is given below with free PDF download solutions.

Time: 3 Hours
Maximum Marks: 80

General Instructions

(i) Answer to questions carrying 1 mark may be from one word to one sentence.
(ii) Answer to questions carrying 3 marks may have about 50 to 75 words.
(iii) Answer to questions carrying 4 – 5 marks may have about 150 words.
(iv) Answer to questions carrying 6 marks may have about 200 words.
(v) Attempt all the parts of a question together.

Questions

Question 1:
State any one demerit of demonetisation.

Question 2:
What are Planning premises ?

Question 3:
Name the process of exchange of information between two or more persons to reach common understanding.

Question 4:
Sara worked in a call centre. Her team manager did not wish to be contradicted and gave rewards depending on the result. State one benefit of the style of leadership being followed by Sara’s team manager.

Question 5:
What does a high Debt Service Coverage Ratio indicate ?

Question 6:
Aarohan Ltd., an automobile manufacturer, was diversifying into manufacturing two – wheelers. They knew that India is on a growth path and a new breed of consumer is eager for a first vehicle. The market responded very well to the new product. The company did not have to allow credit, as it had advance orders from four to six months with deposits paid. Also, due to efficiency in managing their operations as soon as a vehicle was off the assembly line, it was out to the dealers. Give any one reason discussed above which helped the firm in managing its working capital efficiently.

Question 7:
SEBI recently called for information and issued a show cause notice to NSE and its 14 officials seeking explanation on the Preferential Access allegations at the Exchange’s Co¬location facility. State the function that SEBI performed by doing so.

Question 8:
Identify the right of a consumer under Consumer Protection Act, 1986 which consumer organisations help a consumer to claim by performing the function of “encouraging consumers to strongly protest and take an action against unscrupulous, exploitative and unfair trade practices of sellers”.

Question 9:
Progress Ltd. is facing difficulties in introduction of machinery of latest technology as they are facing resistance from the informal groups who are pressurising the members to work against organisational interests. As the Human Resources manager of the company, would you advise the management of the company to confront them or give them some other suggestion to deal with the informal groups.

Question 10:
Shyam wanted to start a business of selling handicrafts by getting in touch with the craftsmen in the rural areas of Bengal. He wants to make a low investment in fixed Capital. Advise him in taking suitable decisions regarding the Nature of Business, Scale of operations and Financing Alternatives (in a developed financial market) that he needs to take for the purpose.

Question 11:
State any three functions of a supervisor.

Question 12:
Malaysian budget airline group Sky Europe announced discounted fares, starting as low as ₹1,099 for domestic destinations operated by its Indian Joint Venture carrier and ₹ 2,099 for international flights operated by other group airlines under a limited period offer.

1.  Identify the medium of communication which can be used by the firm to inform a large number of people about the new fares.
2. Also, state any two merits of the communication tool, apart from the one discussed above.

Question 13:
State any three responsibilities that a consumer must keep in mind while purchasing gold jewelry.

Question 14:
Having transformed 2500 kirana stores across eight cities in to virtual super markets, the start up Quick Bizz further decided in advance, to collaborate with 15,000 – 20,000 store owners in top 30 cities of the country by the end of this year. The company has set its eye on digitising over 1,00,000 kirana stores over next 18 – 24 months

1. Identify and explain the step in the process of one of the functions of management discussed above.
2. Also explain the last step to be performed by Quick Bizz as part of the process.

Question 15:
At present, apart from the basic pay and allowances as a part of compensation, the employees and employers contribute 12% of basic wages each towards Employees Provident Fund scheme and Employees Pension Fund scheme. A proposal to reduce the contribution by employers and employees to 10% of basic pay and dearness allowance was listed on the agenda for a recent meeting of Employees Provident Fund Organisation held. The stakeholders expressed their reservations about it and they feel that it should be continued at 12%. Explain any two needs as suggested by Maslow’s Need Hierarchy Theory, which will not be satisfied by the incentives discussed above.

Question 16:
State the first four steps which are involved in the screen-based trading for buying and selling of securities in the secondary market.

Question 17:
Bye – Bye Motors recently informed the media about its aim to train up to 4000 people in the next 3 years in the skills associated with automobile industry as part of its program to provide technical and vocational education for unemployed youth. The firm has already started the program in collaboration with Automobile Skill Development Council. This news in the media has helped the firm in promoting its image in the eyes of the public and consumer activist groups.

1. Why is it important for the company to satisfy the public and the consumer activist groups ? Give reasons.
2. Which departments in the firm can. be given the responsibility to disseminate information and build goodwill of the firm ?

Question 18:
R&T Reality, the property development arm of the construction and engineering giant R&T in a recent report to the media shared that it is betting on bigger and better projects providing greater benefits to the customers, lower prices and faster execution to boost its growth. The spokesperson of the company informed the media that besides the innovative features, quality and brand, the fair pricing followed by the company is also a hit with the buyers. He said that the company is also focusing on accurate, speedy and timely delivery. Proper communication with the market was being maintained through advertising. Even dealers were to be offered incentives to boost the sales.
The above para describes the combination of variables used by R&T Reality to prepare its market offering. Identify and explain the variables.

Question 19:
It is heartening that the implementation of compliance requirements of the Companies Act, 2013 has progressed substantially with NIFTY 500 companies. Data shows a significant increase in women’s participation in the top management of Indian Companies from 5% few years ago to 13% now. Even companies which are not in NIFTY 500 have undertaken drives to increase women’s participation across different areas of work. The government had also announced that it would support such companies. Identify and explain the dimensions of business environment discussed above which brought about the change.

Question 20:
Give any five characteristics of management.

Question 21:
Textile manufacturer Super Textiles reported 43% fall in its profits in the fourth quarter ended 31 March 2017, which is beyond the acceptable range 25% decided by the company. This was due to higher fuel cost and lower yield on account of demonetisation. The company aims to implement cost saving measures by restructuring contracts and its business processes to meet its targets in the future.

1.  Name the function of management discussed above.
2. Also identify and explain the steps of the function of management discussed above.

Question 22:
Saksham Ltd., a firm manufacturing textile, wished to diversify their business. They were considering two options, either to diversify into manufacturing tooth-paste or switches. They wanted to invest in the purchase of land, to set up a manufacturing unit in the backward areas of Gujarat, which would also lead to the generation of employment opportunities in the area, but only after fulfilling all legal requirements and taking appropriate steps to ensure that the environment was not polluted. The finance manager of the company, Mr. Ramakant was asked by the management to prepare a report on the factors which should be considered while making the above investment decision.

1. State any two factors that Mr. Ramakant would give in his report.
2. Also state reasons which make it important for the above decision to be made carefully.

Question 23:
The IT major GIPRA is terminating the employment of its senior managers, if after evaluating their performance against pre-determined standards it is found lacking. With this disruption analysts say a large portion of the employees may become irrelevant unless they learn new skills and apply the knowledge to work on emerging technologies. GIPRA is ready to facilitate employee learning, through its in-house centers.

1. Name the function of management performed by GIPRA to maintain a satisfactory work force.
2. Identify and explain the two steps in the process of the function of management discussed above.
3. Also state any two steps of the function of management discussed, that the firm had to perform before performing the above steps.

Question 24:
Raj at joined as a CEO of Bharat Ltd., a firm manufacturing Computer hardware. On the first day he addressed the employees. He said that he believed that a good company should have an employee suggestion system and he wished to minimise employee turnover to maintain organisational efficiency. He informed all employees that he would ensure that all agreements were clear, fair and there was judicious application of penalties. However, he said that he believed that lazy personnel should be dealt with sternly to send the message that everyone was equal in the eyes of management. Also that he would want to promote a team spirit of unity and harmony among employees, which would give rise to a spirit of mutual trust and belongingness among team members and eventually minimise need for using penalties. He told all present that the interests of the organisation should take priority over the interests of any one individual employee.
Identify and briefly explain any four principles of management given by Fayol, which Raj at highlighted in his address to the employees.

Question 25:
“Put simply, decentralisation refers to delegation of authority throughout all the levels of the organisation.” In the light of the above statement give the meaning of and difference between delegation of authority and decentralisation.

Answers

Answer 1:
Demonetisation created inconvenience for the public due to cash crunch.

Answer 2:
Planning premises are the assumptions made about the future on the basis of which the plans are drawn.

Answer 3:
Communication.

Answer 4:
Quick decision-making.

Answer 5:
A high Debt Service Coverage Ratio indicates better ability of the company to pay off its liability of interest on debts and repayment of debt.

Answer 6:
Following are two reasons which helped Aarohan Ltd. in managing its working capital efficiently :
(a) No policy of allowing credit on sales.
(b) High operating efficiency.

Answer 7:
SEBI performed regulatory function by calling for information by undertaking inspection, conducting enquiries and audit.

Answer 8:
Right to be heard.

Answer 9:
As the Human Resources manager of the company, I would advise the management to confront informal groups :

1. It would be in the best interest of the organisation if the existence of such groups is recognised and the roles that their members play are identified.
2. The knowledge of such groups can be used to gather their support and consequently lead to improved organisational performance. Such groups can also provide useful communication channels.
3. Instead of confronting them, the management should take skillfully advantage of both formal and informal organisation so that work continues smoothly.

Answer 10:
Shyam should take following decisions to ensure low investment in fixed capital requirement:

1. Nature of business – A manufacturing unit requires heavy investment in fixed assets including plant machinery etc. Therefore, Shyam should start a trading concern of buying handicrafts from the craftsmen and selling them because a trading concern needs lower fixed capital.
2.  scale of operations – An organisation operating at a large scale will require heavier investment of fixed capital in the form of more space, furniture, machinery etc. Hence, Shyam should keep the scale of his organisation small.
3. Financing alternatives – An organisation has an option of availing leasing facilities, it should take assets on lease by paying lease rent. This will reduce requirement of fixed capital. Otherwise Shyam will have to invest the huge funds in purchase of fixed assets which will require more fixed capital.

Answer 11:
The role and functions of a supervisor or importance of supervision as an element of directing may be described as under :

1. Day to Day contact – A supervisor is directly related with the workers. He maintains day to day contact and friendly relations with the bottom level workers. A supervisor acts as a guide, friend and philosopher to the workers.
2. Linking pin – A supervisor acts as a link between workers and management. He communicates management’s decisions to the workers and workers’ viewpoints, grievances, suggestions and complaints to the higher management.
3. Group unity – A supervisor acts like a captain of team and maintains group unity among workers under his control. He sorts out internal differences and maintains harmony among workers.

Answer 12:

1. Advertising.
2. Following are merits of advertising :
   • Making shopping easier – Advertising makes the shopping easier for the consumer. A consumer is well aware of the source of availability of products and also the prices at which these are available. This knowledge helps in saving a lot of time and efforts involved in shopping.
   • Education of consumers – Advertising helps to overcome old habits of the consumers and educates them in the use of new products and their diverse uses. Consumers get the benefit of better advice in safe and proper use of product and develop new ways of life.
   • Satisfaction – Advertising creates confidence amongst prospective buyers as they feel more comfortable and assured about the quality of the product.

Answer 13:
A consumer must keep in following points in mind while purchasing gold jewellery :

1. Awareness – A consumer should be aware of various types of jewellery available in the market. A consumer must have all relevant information before making the purchase of jewellery. This will help him in making wise choice of jewellery.
2. Standardized goods – A consumer should be quality conscious and should buy only standardised goods as they provide quality assurance. A consumer must look for “Hallmark” on jewellery.
3. Cash memo – A consumer must ask for cash memo on purchase of the jewellery.

Answer 14:

1. Setting the objectives – The first step involved in the planning process is setting up of
   objectives for the entire organisation as a whole as well as for each of the departments or units thereof. Objectives specify what the organisation wants to achieve. Objectives must be stated in clear and unambigious terms so that it is easier to work towards the accomplishment of objectives.
2. Last step to be performed by Quick Bizz as part of the process of planning is follow-up action.
   • Follow-up action – Planning requires not only the preparation of plans and programmes but also their implementation. Follow-up action is needed to see whether plans are being implemented and activities are performed according to schedule. On the basis of continuous follow-up action, plans may be modified.

Answer 15:
Incentive of basic pay and allowances satisfy the basic needs or physiological needs.
Retirement benefits satisfy the safety needs or security needs.
Maslow has identified three other needs besides the above-mentioned two needs. Following are the needs:

1. Social needs – Social needs are also known as affiliation or belonging needs. Social needs include friendship, love, affection, attention and social acceptance.
2. Esteem needs – Esteem needs are also known as egoneeds. Esteem needs include factors such as self-respect, autonomy status, attention and recognition.
3. Self actualisation needs – Self actualisation need is the highest level of need in the hierarchy of needs. Self actualisation need is the need “to be what one is capable of becoming” and includes need for optimal developmental of potential abilities, knowledge and skills, need to be creative and achieve self-fulfilment.

Answer 16:
Following are the first four steps which are involved in the screen-based trading for buying and selling of securities in the secondary market:

1. Selection of broker – The first step is to select a broker who will buy/sell securities on behalf of the investor. This is necessary because trading of securities can only be done through SEBI registered brokers who are the members of a stock exchange. Brokers may be individual, partnership firms or corporate books.
   The broker charges brokerage/commission for his services.
2. Opening demat account – The next step is to open a demat account. Demat (Dematerialised) account refers to an account which an Indian citizen must open with the depository participant (banks, stock brokers) to trade in listed securities in electronic form.
   The securities are held in the electronic form by a depository. At present, there are two depositories in India NSDL (National Securities Depository Ltd.) and CDSL (Central Depository Services Ltd.).
   Depository interacts with the investors through depository participants. Your Depository Participant will maintain your securities account balances and intimate to you the status of your holding from time to time.
3. Placing the order – The next step is to place the order with the broker. The order can be communicated to the broker either personally or through telephone, cell phone, e-mail etc.
   The instructions should specify the securities to be bought or sold and the price range within which the order is to be executed. Only the securities of listed companies can be traded on the stock exchange.
4. Executing the order – According to the instructions of the investor, the broker buys or sells securities.
   The broker then issues a contract note. A copy of the contract note is sent to the client. The contract note contains the name and the price of the securities, names of the parties, brokerage charged. It is signed by the broker.

Answer 17:

1.  (a) The voice and opinion of the general public is important as they may be interested in the company and its product and have an impact on the business ability to achieve its objectives. Thus, it is imperative to manage public opinion and the company’s relation with the public on a regular basis.
   (b) Consumer activist groups need to be satisfied because they can impose restriction on the sales of the firm’s products directly by urging customers to refrain from buying them through the imposition of laws.
2. The following departments in the firm can be given the task to disseminate information and buijd goodwill:
   (a) The marketing department.
   (b) A separate department to manage public relations.

Answer 18:
The following are the variables used by R&T Reality to prepare its market offering :

(a) Product – Product means goods or services or ‘anything of value’, which is offered to the market for sale. The concept of product relates to not only the physical product but also the benefits offered by it from customer’s view point. The concept of product also includes the extended product or what is offered to the customers by way of after sales services, handling complaints, etc. The important product decisions include deciding about the features, quality, packaging, labeling and branding of the products.

(b) Price – Price is the amount of money customers have to pay to obtain the product. The marketers have not only to decide about the objectives of price setting but to analyse the factors determining the price and fix a price for the firm’s products. Decisions have to be taken in respect of discounts to customers, traders and credit terms, etc., so that the customers perceive the price to be in line with the value of the product.

(c) Place – Place or physical distribution include activities that make firms products available to the large customers. Important decision areas in this respect include selection of intermediaries to reach the customers, providing support to the intermediaries. The other decision areas relate to managing inventory, storage and warehousing and transportation of goods from the place it is produced to the place it is required by the buyers.

(d) Promotion – Promotion of products and services include activities that communicate availability, features, merits, etc., of the products to the target customers and persuade them to buy it. Most marketing organisations undertake various promotional activities and spend substantial amount of money on the promotion of their goods through using number of tools such as advertising, personal selling and sales promotion techniques.

Answer 19:
Following are two dimensions of business environment discussed in the given para :

(a) Legal environment – Legal environment consists of those governmental regulations and laws that define the rules under which business must operate. Typically, government laws and rules are designed to foster the overall goal. The legal environment provides operating parameters under whjph business has to exist and work. Legal environment, therefore, exercises a significant influence on business activities.

Following are the components of legal environment:

1. Rights and duties of citizens.
2. Laws relating to business.
3. Judicial system of the country.
4. Flexibility of laws.

(b) Political environment – Political environment provides the framework within which the business has to function. Policies of the government change with the change in the political party in power. No business can succeed without understanding the political environment i.e., political peace, stability and political programmes of the parties. Policies of the government change according to the attitudes of the political leaders.
Following are the components of political environment:

1.  Type of government in existence.
2. Governmental attitude towards various industries.
3. Platforms of political parties.
4.  Lobbying efforts by interest groups.
5. Progress towards the passage of laws.
6. Predisposition of candidates running for office.

Answer 20:
Following are the features of management:

1. Management is a group activity – Management comes into picture where groups of persons are involved in working towards a common objective. Where a single individual works for his individual goals, management has no role to play.
2. Management is multi-dimensional – Management is a composite process consisting of management of people, work and operations. It integrates people in relation to physical resources.
3. Management is all pervasive – Management is required in all types of organisations and at each level. It focuses on efficiency and effectiveness in the activities of an organisation.
4. Management is a dynamic function – Management is a dynamic function of business organisation. Its functions change from time to time depending upon the conditions of the business i.e., changes in economic, social, political, technological and human conditions. It adjusts itself to the atmosphere which is always dynamic.
5. Management is intangible – Management is an unseen force. Management requires application of mind involving foresight, intelligent imagination and sound judgment. The success of management is felt through orderliness, enthusiastic employees and adequate work output.
6. Management is continuous process – Management is not confined to a particular point of time. It involves continuous handling of problems and issues.
7. Management is goal oriented process – Management deals with achieving organisational and personal goals. It seeks to harmonise the personal goals with organisational goals.

Answer 21:
(A) Controlling.
(B) Following are the steps of controlling discussed in the given para :

(a) Analyzing deviations – Some deviation in performance is expected in all activities. It is therefore, important to determine the acceptable range of deviations. Also, deviations in key areas of business need to be attended more urgently as compared to deviations in certain insignificant areas. Critical point control and management by exception should be used by the manager in this regard. After identifying the deviations that demand managerial attention these deviations need to be analysed for their causes.
(b) Taking corrective action – The final step in the controlling process is taking corrective action. No corrective action is required when the deviations are within acceptable limits. However, when the deviations go beyond the acceptable range, especially in the important areas, it demands immediate managerial attention so that deviations do not occur again and standards are accomplished.

Answer 22:
(A) Following are the factors that should be kept in mind by the company while making the investment decision :

1. Cash flows of the project – The financial manager should carefully analyse the amount of cash flows i.e., cash receipts and payments over the life of investment before considering a capital budgeting decision.
2. Rate of return – The financial manager should calculate the expected returns from each proposal and risk involved.
3. Investment criteria – The financial manager should evaluate investment proposals by applying capital budgeting techniques.

These techniques involve a number of calculations regarding the amount of investment, interest rate, cash flows and rate of return.
(B) The following are the reasons that make the above decision to be made carefully :

1.  These decisions have a bearing on the long-term growth.
2. These decisions result in a substantial portion of capital funds being blocked in long-term project.
3.  These decisions influence the overall business risk complexion of the firm.
4. These decisions once taken, are not reversible without incurring heavy losses.

Answer 23:
(A) Staffing.
(B) Following two steps of staffing have been discussed in the given para :

1.  Training and development – The purpose of training and development is to ensure continuing learning of the employees and to develop hidden qualities and talent of employees. Training is beneficial for the workers as well as for organisation. Training makes the employees more efficient and aware of advanced knowledge and skills.
2. Performance appraisal – Performance appraisal means evaluating an employee’s current and/or past performance as against certain pre-determined standards. The process of performance appraisal includes defining the job, appraising performance and providing feedback. Performance appraisal facilitates a human resource manager to plan the policy of training, promotion and compensation.

(C) Before performing the steps of training and development and performance appraisal, the management had to perform following steps :
(i) Manpower planning – Manpower planning or human resource planning may be defined as the process of analysing and estimating the need and availability of employees. Manpower planning is, essentially, the process of securing the services of the qualified people for various positions in the organisations at the right time.
(ii) Recruitment – Recruitment is the process of searching for prospective employees and stimulating them to apply for jobs in the organisation.

Following are two sources of recruitment:
(a) Internal sources. (b) External sources.
(iii) Selection – Selection of personnel is a series of steps by which candidates are screened to find out which of them is best suited for a particular job. It is the process of dividing the applicants into two categories, namely,
(a) those who are to be employed, and (b) those who are to be rejected.
Selection is a very comprehensive and complex process which involves a number of steps such as employment tests, interview, medical examination, etc.
(iv) Placement and orientation – Placement is the process of fitting the selected person to the right job. Orientation is the task of introducing and familiarising the new employee to the enterprise.

Answer 24:
Following are the principles of management highlighted by Rajat in his address :

(i) Initiative – Initiative is the power of thinking out a plan and ensuring its successful implementation. It stimulates human endeavour. In other words, initiative means eagerness to initiate action without being asked to do so. Employees at all levels should be allowed to take initiative in work related matters. In an organisation, initiative on the part of its employees can become a great source of strength for it. It indicates that subordinates should be encouraged to make and execute plans within the authority given to them.

(ii) Discipline – Discipline in the context of management means obedience, proper conduct in relation to others and complying with the rules and regulations of the organisation. Smooth running of business requires discipline. Discipline is required not only on the part of workers but also on the part of management. It is facilitated if there are good supervisors at all levels, rules are clear, and penalties are imposed with fairness.

(iii) Equity – Principle of equity implies that managers should be fair and impartial while dealing with their subordinates. The principle of equity suggests that similar treatment is assured to people in similar positions. For example, workers performing similar jobs should be paid the same wage rate. Equity is essential to create and maintain cordial relations between managers and subordinates.

(iv) Espirit de corps – “Espirit de corps” is the principle of management according to which a manager replaces “I” with “We” in all his conversation with workers.
Fayol’s principle of management “Espirit de corps” means that there should be mutual understanding and team spirit in the workforce. This will promote harmony in the work group and they will contribute to the maximum.

(v) Stability of personnel – “Employee turnover should be minimised to maintain organisational efficiency,” according to Fayol. Personnel should be selected and appointed after due and rigorous procedure. But once selected they should be kept at their post/position for a minimum fixed tenure.

(vi) Subordination of individual interest to general interest – In all situations the interests of the group/company will supersede the interest of any one individual. This is so because larger interests of the workers and stakeholders are more important than the interest of any one person.

Answer 25:
Following table shows the points of distinction between delegation of authority and decentralisation :

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