CBSE Sample Papers for Class 12 Business Studies Paper 3

CBSE Sample Papers for Class 12 Business Studies Paper 3 are part of CBSE Sample Papers for Class 12 Business Studies Here we have given CBSE Sample Papers for Class 12 Business Studies Paper 3.

CBSE Sample Papers for Class 12 Business Studies Paper 3

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 3 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:
Give the meaning of ‘motivation’ as an element of directing.

Question 2:
Differentiate between ‘formal’ and ‘informal’ organisation on the basis of ‘origin’.

Question 3:
Why is ’employment interview’ conducted in the process of selection ?

Question 4:
Alpha Enterprises is a company manufacturing water geysers. The company has a functional structure with four main functions – Production, Marketing, Finance and Human Resource. As the demand for the product grew, the company decided to hire more employees.
Identify the concept which will help the Human Resource Manager in deciding the actual number of persons required in each department.

Question 5:
Hina Sweets is a renowned name for quality sweets since 1935. Harsh the owner of Hina Sweets was worried as the sales had declined during the last three months. When he enquired from the Sales Manager, the Sales Manager reported that there were some complaints about the quality of sweets. Therefore Harsh ordered for sample checking of sweets.
Identify the step taken by Harsh that is related to one of the functions of management.

Question 6:
What is meant by ‘financial management’ ?

Question 7:
Meca Ltd. a reputed automobile manufacturer needs Rupees ten crores as additional capital to expand its business. Atul Jalan, the CEO of the company wanted to raise funds through equity. On the other hand the Finance Manager, Nimi Sahdev said that the public issue may be expensive on account of various mandatory and non-mandatory expenses. Therefore, it was decided to allow the securities to institutional investors.
Name the method through which the company decided to raise additional capital.

Question 8:
Sunita took her niece, Aishwarya for shopping to ‘Benetton’ to buy her a dress on the occasion of her birthday. She was delighted when on payment for the dress she got a discount voucher to get 20% off for a meal of ₹500 or above at a famous eating joint.
Identify the technique of sales promotion used by the company in the above situation.

Question 9:
Explain ‘unity of command’ and ‘equity’ as principles of general management.

Question 10:
State any three points of importance of planning function of management.

Question 11:
Explain briefly any three functions performed by a supervisor.

Question 12:
Somnath Ltd. is engaged in the business of export of garments. In the past, the performance of the company had been up to the expectations. In line with the latest technology, the company decided to upgrade its machinery. For this, the Finance Manager, Dalmia estimated the amount of funds required and the timings. This will help the company in linking the investment and the financing decisions on a continuous basis. Dalmia therefore, began with the preparation of a sales forecast for the next four years. He also collected the relevant data about the profit estimates in the coming years. By doing this, he wanted to be sure about the availability of funds from the internal sources of the business. For the remaining funds he is trying to find out alternative sources from outside.
Identify the financial concept discussed in the above para.
Also state the objectives to be achieved by the use of financial concept, so identified.

Question 13:
Ginika, Tanish and Rohit were friends from college days and now they are doing different jrinds of business. They regularly meet and discuss their business ideas and exchange notes on customer satisfaction, marketing efforts, product designing, selling techniques, social concerns etc.
In one of such meeting, Ginika drew the attention of Tanish and Rohit towards the exploitation of consumers. She told that most of the sellers were exploiting the consumers in various ways and were not paying attention towards the social, ethical and ecological aspects of marketing, whereas she was not doing so.
Tanish told that they were under pressure to satisfy the consumers, but stated that the consumers would not buy or not buy enough unless they were adequately convinced and motivated for the same.
Rohit stressed that a company cannot achieve its objectives without understanding the needs of the customers. It was the duty of the businessmen to keep consumer satisfaction in mind because business is run by the resources made available to them by society. He further stated that he himself was taking into consideration the needs of the customers.
Identify the various types of thinking that guided Ginika, Tanish and Rohit in the marketing efforts of their business. Also, state one more feature of the various types of thinking identified that is not given in the above para.

Question 14:
Ashutosh Goenka was working in ‘Axe Ltd.’, a company manufacturing air purifiers. He found that the profits had started declining from the last six months. Profit has an implication for the survival of the firm, so he analysed the business environment to find out the reasons for this decline.

1. Identify the level of management at which Ashutosh Goenka was working.
2. State three other functions being performed by Ashutosh Goenka.

Question 15:
Sanchit, after completing his entrepreneurship course from Sweden returned to India and started a coffee shop ‘AromaCoffeeCan’ in a famous mall in New Delhi. The speciality of the coffee shop was the special aroma of coffee and a wide variety of flavours to choose from. Somehow, the business was neither profitable nor popular. Sanchit was keen to find out the reason. He appointed Sandhya, an MBA from a reputed college, as a Manager to find out the causes for the same.
Sandhya took feedback from the clients and found out that though they loved the special unique aroma of coffee but were not happy with the long waiting time being taken to process the order. She analysed and found out that there were many unnecessary obstructions in between which could be eliminated. She fixed a standard time for processing the order.
She also realised that there were some flavours whose demand was not enough. So, she also decided to stop the sale of such flavours. As a result with in a short period Sandhya was able to attract the customers.
Identify and explain any two techniques of scientific management used by Sandhya to solve the problem.

Question 16:
Give the meaning of ‘objectives’ and ‘budget’ as types of plans.

Question 17:
Explain briefly ‘transfers’ and ‘promotions’ as internal sources of recruitment.

Question 18:
These days, the development of a country is also judged by its system of transferring finance from the sector where it is in surplus to the sector where it is needed most. To give strength to the economy, SEBI is undertaking measures to develop the capital market. In addition to this there is another market in which unsecured and short-term debt instruments are actively traded everyday. These markets together help the savers and investors in directing the available funds into their most productive investment opportunity.

1. Name the function being performed by the market in the above case.
2. Also, explain briefly three other functions performed by this market.

Question 19:
Umang Gupta is the Managing Director of Denver Ltd. The company had established a good name for itself and had been doing well. It was known for timely completion of orders. The Production Manager, Ms Kanta was efficiently handling the processing of orders and had a team of fourteen motivated employees working under her. Everything was going on well. Unfortunately she met with an accident. Umang knew that in the absence of Ms Kanta, the company may not be able to meet the deadlines. He also knew that not meeting the deadlines may lead to customer dissatisfaction with the risk of loss of business and goodwill. So, he had a meeting with his employees in which accurate and speedy processing of orders was planned. Everybody agreed to work as team because the behaviour of Umang Gupta was positive towards the employees of the organisation. Hence everyone put in extra time and efforts and the targets were met on time.
Not only this, Umang visited Ms Kanta and advised her to take sufficient rest.
Identify the leadership style of Umang Gupta and explain it with the help of a diagram.

Question 20:
Metlapp Networks and Technologies Ltd. is a leader in technology innovation in the United States, creating products and solutions for connecting the world. It has a large research and development team which invented the first smart watch, named as W-7. The watch besides showing the time, also monitors few health parameters like heart beat, blood pressure etc.
While in search of markets abroad, the company found that in India, the reform process was underway with the aim of accelerating the pace of economic growth. The company decided to take advantage of simplified export procedure and removal of quantitative as well as tariff restrictions in India.
It set up its office in Jamnagar with a view to capture the Indian market. In a short span of time, the company emerged as a market leader. Success of the company attracted many other players to enter the market. Competition resulted in reduction in prices, thereby benefiting the customers.

1. In the above paragraph, two major concepts related to government policy have been discussed. Identify and explain these concepts.
2. Also, explain briefly any three impacts of these concepts on Indian business and industry.

Question 21:
State the steps in the process of controlling.

Question 22:
Indian Youth Organisation (IYO) organised a visit of its members to an old age home to inculcate the habit of social work among them. The visit revealed that the living conditions of the inmates of the old age home were not hygienic. So, the IYO members decided to clean the premises. During their cleanliness drive, they realised that the old age home also required pest control. But some of the inmates of old age home were reluctant for it because they believed that the pest control may create health problems for them. IYO, therefore decided to provide ethical, safe and odourless pest control. They showed to the inmates of old age home a pamphlet of the proposed pest control product which promised easy, inexpensive and long lasting pest control. The inmates happily agreed and the pest control was carried out. It worked for a fortnight but to their dismay the effect started wearing off. IYO contacted the pest control company which kept on postponing their visit. After waiting for a month, IYO filed a case in the consumer court.
The consumer court was satisfied about the genuineness of the complaint and issued necessary directions to the pest control company.

1.  State any six directions that might have been issued by the court.
2.  Who, other than IYO, can file complaint in the consumer court ?

Question 23:
Aman Chadha started ‘Bulls Eye’ a company for providing cyber security solutions to businesses. Its objective is to prevent, detect and respond to cyber attacks and protect critical data. He was a hardworking software engineer and an expert in cyber security. His reputation grew by leaps and bounds as he was not only a person of integrity but also did his work with utmost honesty and sincerity. The business started growing day by day.
He was delighted when he was offered a big project by the Ministry of Defence. While working on the project, he found that the volume of work made it impractical for him to handle all the work by himself. He decided to expand the team. The company maintained a close liaison with a local engineering college. During a campus placement, Ishan and Vrinda were appointed to work for the new project.
He found the new employees capable, enthusiastic and trustworthy. Aman Chadha was thus, able to focus on objectives and with the help of Ishan and Vrinda, the project was completed on time. Not only this Aman Chadha was also able to extend his area of operations. On the other hand Ishan and Vrinda also got opportunities to develop and exercise initiative.

1. Identify and briefly explain the concept used by Aman Chadha in the above case which helped him in focusing on objectives.
2. Also, state any four points of importance of the concept identified in (1) above.

Question 24:
Explain briefly any four factors which affect the choice of capital structure of a company.

Question 25:
Mediquip Ltd. is a company dealing in distribution of medical equipments. The company recently imported 15000 units of sugar testing machines to test the sugar levels without taking blood samples. For deciding the marketing strategy, the Chief Executive Officer of the company called a meeting of the marketing heads of different zones.
In the meeting, Sandeep, the North Zone Marketing Head, suggested that since the machines were sophisticated they need to visit hospitals personally, to explain its working to the hospital staff who would be using the machines. He also suggested that additional trained people may be recruited for the same.
Himanshu, another Zonal Head, added that since lot of money had been spent on the import of the machines, the company was short of funds to pay to the additional staff as suggested by Sandeep.
Rahul, a newly appointed Zonal Head of South Zone suggested that since the size of the order is not large, a detailed study of the factors determining the choice of channels of distribution is required before making the right choice.

1. Identify the factors influencing the choice of channels of distribution which were discussed in the meeting.
2. Also, explain briefly the other consideration to be taken care of in each factor identified in part (1).

Answers

Answer 1:
Motivation, as an element of directing, means a technique used to influence the people in an organisation to perform efficiently.

Answer 2:
Formal organisation originates as a result of rules and policies of an organisation structure while infprmal organisation originates as a result of personal and social relations within formal organisation.

Answer 3:
Employment interview is conducted in the process of selection to have an overview of candidate’s overall personality and suitability for the job.

Answer 4:
Workload analysis (Manpower planning) will help the Human Resource Manager in deciding the actual number of persons.

Answer 5:
The step of controlling is measurement of actual performance.

Answer 6:
Financial management means a part of general management which is concerned with optimal procurement as well as usages of finance.

Answer 7:
“Private placement” is the method through which the company decided to raise additional capital.

Answer 8:
Usable benefit is the technique of sales promotion used by the company.

Answer 9:

1. Unity of command – According to this principle, an employee should receive orders and instructions from one superior only. For example, if there is more than one superior, each may want that work is carried out according to his instructions. The subordinate will be confused regarding whose instructions he should follow. Also, there is a possibility of conflict among superiors regarding how the work should be accomplished. In the process, work performance is likely to suffer. Besides, when there is unity of command, it is easy to fix responsibility for mistakes.
2. 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.

Answer 10:
Following are the points which highlight the importance of planning :

1. Planning provides directions – Every organisation has some objectives to pursue and achieve. Planning highlights these objectives so that all organisational activities are directed towards these objectives. Planning provides a sense of direction in an organisation. Planning directs efforts into actions that contribute to accomplishment of goals. By providing framework, planning makes work more meaningful and orderly.
2. Planning reduces uncertainty – A business enterprise has to operate in a dynamic and complex environment which is full of economic, social and political uncertainties. In the process of planning, attempt is made to forecast conditions in future. This provides a better understanding of what is likely to happen in the future and how to face these situations.
3. Planning facilitates decision-making – Decision-making involves making a choice from among the various available alternatives after evaluating them. Planned targets provide the basis against which available alternatives are evaluated and selected. Planning avoids hasty decisions.

Answer 11:
Following are the functions of a supervisor in an organisation :

1. Communication of orders and instructions – A supervisor issues a number of orders to his subordinates everyday. Orders are issued to require them to act or not to act in a particular way.
2. Controlling – Supervisory control includes checking on the methods in use and progress of work against the planned schedule, recording actual performance at regular intervals and reporting deviations to the manager concerned.
3. Motivation – A supervisor inspires and motivates his subordinates through proper incentives towards better work performance.

Answer 12:
Financial planning is the concept discussed in the paragraph.
Financial planning aims to match funds requirements and their availability. It prepares a blueprint of an organisation’s future preparations relating to finance.
Financial planning strives to achieve the following twin objectives :

1. To ensure sufficient funds whenever required – The success of business primarily depends on how carefully the financial plan has been prepared. Financial planning tries to estimate the required funds, specify the time at which these funds are to be made available and possible sources of these funds.
2.  To avoid excess funding – Financial planning ensures that the enterprise does not raise resources unnecessarily. Financial planning eliminates wastage of resources and ensures that financial resources are not left idle.

Answer 13:

Feature of societal marketing concept – It is based on profit through consumer satisfaction and social welfare.
Feature of selling concept – It is based on profit through sales volume.
Feature of marketing concept – It is based on profit through production and distribution of goods and services which are needed by the customers.

Answer 14:

1. Ashutosh Goenka was working at top level of management.
2. Following are the functions of top level management:
   • To determine goals for the enterprise.
   •  To suggest ways of achieving the goals of the enterprise.
   •  To frame policies for the enterprise.
   • To maintain liason with the outside world viz., government, trade unions, etc.
   •  To control and monitor the planned performance.

Answer 15:
Following are the techniques of scientific management used by Sandhya :

1. Time study – Time study is a work measurement technique which is designed to determine the time taken by a qualified worker to carry out a specified task under specified conditions at a defined rate of working. The object of time study is to determine the number of workers to be employed and to frame suitable incentive schemes. The method of time study depends upon volume and frequency of the task, the cycle time of the operation and time measurement costs.
2. Motion study – Motion study is a technique which involves close observation of the movements of the body and limbs required to perform a job. The purpose of motion study is to eliminate useless motions and determine the best way of doing a job in less time. Motion study divides the motions into productive and unproductive motions. Motion studies may be made by using stopwatches, symbols or colours.
3. Simplication of work – It is a technique to eliminate superflous varieties, sizes and dimensions of products. It leads to reduced inventories, fuller utilisation of equipment and increased turnover to reduce costs.

Answer 16:
Objectives – Objectives are the type of plan which determines end points, for the attainment of which all activities are undertaken. Following are the features of objectives :

1. Objectives reflect philosophy of management. They summarise the pious intention of the management. They focus on broad general issues.
2. Objectives indicate the destination. They need to be expressed in specific or quantitative terms.
3.  Objectives are always laid down by the top management.

Budget – A budget is a statement of expected results expressed in numerical terms. Following are its features:

1.  Budget is expressed in numerical terms.
2.  A budget is a control device because budgeted targets act as standards which are compared with actual results.
3. A budget is flexible and may be changed in the light of deviations. An example of budget is cash budget.

Answer 17:

Transfers – Transfer as an internal source of recruitment may be defined as shifting of an employee from one department to another department without a substaintiable change in the responsibilities and status of the employee. Transfer may lead to changes in duties and responsibilities, working conditions etc, but not necessarily salary. Transfer is practically a horizontal movement of employees. Transfer is a good source of filling the vacancies with employees from over-staffed department.

Promotion – Promotion as an internal source of recruitment may be defined as advancement of employees to higher level or position. Promotion is an upward movement of employees and carries higher responsibilities, facilities, status and salary. Promotion helps to improve the motivation, loyalty and satisfaction of employees.

Answer 18:

1. In the given para, mobilisation of savings and channeling them into the most productive uses is the function of money market.
2. The other functions performed by the money market are as under :
   • Price discovery – Money market includes both the suppliers and investors of funds. Money market helps in determining current market prices of various securities on the basis of demand and supply.
   • Liquidity – Money market provides ready market for the sale and purchase of financial assets. Financial assets can be converted into cash at any time.
   • Lesser cost of transactions – Money market is a common platform where buyers and sellers enter into transactions. It helps to save time, effort and money of investors and lenders of funds.

Answer 19:
The leadership style of Umang Gupta is a democratic leadership style.

1.  Subordinates are involved in decision-making.
2. There is two-way communication i.e., interchange of ideas between leader and followers. The leader keeps the group informed about matters affecting them and listens to suggestions, grievances and opinions of his subordinates.
3. It inspires confidence and motivation among followers.
   Following is the diagram depicting democratic leadership style :

Answer 20:
(a) In the given paragraph, following two major concepts related to government policy have been discussed :

(1) Liberalization – Liberalisation means the extensive reduction in government regulations and making business enterprises free from direct or physical controls. Liberalisation includes the following:

1. Abolishing licensing’tequirement in most of the industries except a short list.
2. Freedom in deciding the scale of business activities i.e., no restrictions on expansion or contraction of business activities.
3. Removal of restrictions on the movement of goods and services.
4. Freedom in fixing the prices of goods and services.
5. Reduction in tax rates and lifting of unnecessary controls over the economy.
6.  Simplifying procedures for imports and exports.
7. Making it easier to attract foreign capital and technology to India.

(2) Globalisation – Globalisation refers to the growing economic interdependence among countries. Globalisation ensures free movement of capital, technology, labour and manpower. Following are the features of globalisation :

1. Liberalisation of import licensing.
2.  Rationalisation of tariff structure.
3. Reforms in foreign exchange management.
4.  Reduction in custom duties.
5. Lifting of restrictions on imports.

Following are the impacts of liberalisation and globalisation on Indian business and industry :

• Increasing competition – Asa result of changes in the rules of industrial licensing and entry of foreign firms, competition for Indian firms has increased especially in service industries like telecommunications, airlines, banking, insurance, etc.
•  Loss of budgetary support to public sector – As a result of changes in the government policy, there is a greater role for privatisation and lesser role for public sector. Consequently, budgetary support of the government for public sector has been declining over the years.
• Professional management – Asa result of global outlook, work culture has improved in India. Management has become professionalised. Managers and workers have become more conscious about quality and cost.

Answer 21:
Following are the various steps in the process of controlling :

1. Setting performance standards –  Standards represent desired performance. They state clearly as to what must be achieved during a specific period. To be useful, standards must be set in measurable terms.
2. Measurement of actual performance – The actual performance of employees is measured and expressed in the same units as the planned targets or standards either through direct personal observation or through regular oral/written reports. Managers generally prefer periodic measurement of performance.
3. Comparison of actual performance with the standard – Comparison of actual performance with the standard is undertaken to find out the extent of deviations.
4. Analyzing deviations – After ascertaining the deviation between actual results and targeted (standard) results, the next step is to identify the causes thereof. The deviations and causes are then reported so that corrective action may be taken at appropriate level.
5. Taking corrective actions – Corrective actions are required to prevent the recurrence of deviations if any, and to ensure the achievement of planned goals. Such actions may involve a change in methods, machinery, rules or procedures, improving physical conditions or work or nature of supervision.

Answer 22:

1. Following are the directions that might have been issued by the court:
   •  Removal of defect from the service of pest control.
   •  Refund of the price paid for the service.
   • Compensation for any loss to inmates.
   • Payment of punitive damages.
   • To issue corrective advertisement in place of misleading advertisement.
   •  Payment of cost.
2. Following other than IYO can file complaint in the consumer court:
   • Inmates of the old age home being the beneficiary of services.
   • Any registered consumers’ association.
   • Government.

Answer 23:
Delegation of authority is the concept used by Aman Chadha.
“Delegation of authority” simply refers to an act of entrusting the subordinates with same powers that are of the superior authority i.e., granting of authority by superior to subordinate. It is
based on the elementary principle of division of work by which a superior spreads his area of managerial influence.
(if) Following are the points of importance of delegation of authority : (Any four)

(a) Effective management – Delegation reduces the workload of top executives and relieves the managers of the need to attend to minor or routine type of duties. Managers are able to devote greater attention and efforts towards more important matters.

(b) Employee development – Delegation of authority enables the employees of business to develop their capabilities to undertake new and more challenging jobs. It enables them to use their skills, gain experience and develop themselves for higher positions.

(c)  motivation of employees – Delegation of authority motivates subordinates to perform complex tasks and assume responsibilities. It promotes job satisfaction and contributes to high employee morale.

(d) Facilitation of growth – Delegation of authority helps in the expansion of an organisation by providing a ready workforce to take up leading positions in new ventures.

(e) Basis of management hierarchy – Delegation of authority establishes clear superior- subordinate relationships which are the basis of hierarchy of management.

(f) Better coordination – Delegation helps to define the authority, responsibilities and answerability related to various job positions which ensures better coordination.

Answer 24:
Following are the factors which affect the choice of capital structure of a company :

1.  Risk considerations – Financial risk and operating risk affect the capital structure of a company. Use of debt increases the financial risk of a business because company will have to pay interest and principal amount. Business or operating risk depends upon the fixed operating costs. Higher fixed operating costs result in higher business risk. If a firm’s business risk is lower, its capacity to use debt is higher.
2. Conditions of capital market – The time of issue of shares and the composition of the buyers should be kept in mind. If capital market is depressed i.e., investors are not willing to subscribe to shares, a company should rely on debt as a source of finance.
3. desire to control – Desire of the promoters to have control over the company is an important factor. If the promoters want to retain control, they will issue more debentures and preference shares and less equity shares.
4. Regulatory framework – The management of a company should consider regulatory framework provided by Companies Act, SEBI Guidelines, etc. Raising funds from banks and financial institutions require fulfilment of some norms.
5. capital structure of other companies – A company should consider the capital structure of other companies in the same industry, so that its capital structure should be in accordance with industry norms.
6.  Cash flow position – Another factor to be considered for capital structure is the size of projected cash flows particularly when company wants to raise finance through debt. Projected cash flows should cover interest as well as principal amount.
7.  Flexibility – Capital structure should be flexible enough so that it may be adjusted from time to time in the light of changing circumstances. If a company uses its debt potential to the full, its capital structure loses its flexibility.

Answer 25:
(a) fallowing were the factors affecting choice of channels of distribution which were discussed in the meeting :

1. Sandeep mentioned product related factors.
2. Himanshu mentioned company related factors.
3. Rahul mentioned market related factors.

(b) Other considerations affecting the choice of channels of distribution to be taken of are as under:

(1) Product-related factors

• Unit value –  If a unit of product has very low value, there is strong argument for using a large channel. If its value is very high, there is strong argument for using a short direct sales type of channel. (Any one)
• Perishability – Perishable product must be sold through relatively short channels or directly to the customer in order to avoid losses. Durable goods can be distributed by a long channel of distribution.
•  Nature of the product –  Consumer products are usually standardised and are sold through a number of intermediaries. Industrial products are generally customised products and require direct marketing as they involve interactions between the buyer and seller.

(2) Company related factors – Degree of control – If the management of the company wants control over the channel of distribution, the company can go for a short or direct channel of distribution.
(3) Market-related factors

• Nature of the market – For consumer goods, the channels of distribution are mostly indirect whereas for industrial goods, direct channels are preferred.
• Size of market  –  The number of channel constituents depends largely on the customer base for the products. In those products, where the market size is large and varied, the number of intermediaries is large whereas for products, where the customer base is small, direct channel of distribution are engaged.
• Concentration of customers  – Direct channels of distribution are used if the customers are concentrated. Indirect channels of distribution are used if the customers are spread over geographically.

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