STUDY MATERIAL FOR HIGH ACHIEVERS

CHAPTER-1
NATURE AND SIGNIFICANCE OF MANAGEMENT
1 Mark Questions
Read the following statements-Assertion (A) and Reason (R). Choose one of the correct
alternatives given below:( for question 1 to 4 )
(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 and Reason (R) is not the correct explanation of
Assertion (A).
(c) Assertion (A) is true but Reason (R) is false.
(d) Assertion (A) Is false and Reason (R) is true.
Q1. Assertion (A): Management is an activity which is necessary wherever there is a group of
people working in an organisation.
Reason (R): People in an organisation are performing diverse tasks but they are working
towards the same goal.
Q2. Assertion (A): Management is concerned with the efficient use of input resources, such a
money, material, equipment and persons.
Reason (R): It reduces costs and ultimately lead to higher profits.
Q3. Assertion (4): The entry to a profession is not restricted through an examination or through
acquiring an educational degree.
Reason (R): There is no restriction on anyone being appointed as a manager in any business
enterprise.
Q4. Assertion (4): Coordination is important as it integrates the efforts of individuals, department
and specialists.
Reason (R): All departments and individuals in the organisation are interdependent
Q5. The process of creating an internal environment, where individual work effectively and
efficiently for achievement of goal is known as
(a) Coordination (b) Delegation (c) Management (d) Planning
Q6. Management is a process because
(a) It involves series of steps (b) It leads to systematic working
(c) It involves one single activity (d) None of the above
Q7. Managers apply management principles by using creativity. This is related to
(a) Management as Science (b) Management as an Art
(c) Management as both Science and Art (d) Management as a profession
Q8. Liaison with the outside world is the function of
(a) Top Level (b) Supervisory Level (c) Middle Level (d) All of the above
Q9. Which of the following is the most important function of management?
a) Planning b) Organizing c) Directing d) Controlling
Q10. ―Coordination is not a separate function of management but it happens to be the final truth
of all functions.‖ In what context this observation has been made?
(a) Coordination is the essence of management
(b) Coordination is not established automatically
(c) Coordination is a continuously moving process
(d) None of these

3 Marks Questions
Q11. Certain persons who had done their MBA established 'Alpha Limited with the aims of
earning justifiable profit and doing service to the society. In order to run their business
successfully they took the help of several people. The people working in the company were
doing different activities. Their activities were different, but their aim was the same. Here the
need was to continue putting in such efforts as may not let the people lose their aim. Therefore,
the arrangement made in the company was such that the efforts of all the people may lead them
towards the same path.
(a) Identify the feature of management described in the paragraph given above.
(b) Also explain two more features of management.
Q12. The Principal of Shivaji Public School, Shri Rakesh Mohan, set up the goal of Quality
Education for his school. For the realisation of this goal, he made several plans. His special
focus was on the satisfaction of employees. At the end of the year, it was found that all his
activities were done successfully in accordance with the plans made. It took no time for the
people to know the news that the school had accomplished its goal of quality education.
Everyone said that it was a miracle performed by the school management.
(a) Identify the feature of management referred to in the above paragraph.
(b) Also explain two more features of management.
Q13. All the players of a team want to play whole-heartedly. To win the game is their only
objective. But their captain does not tell them timely what each one of them is to do. On account
of the deficiency of division of work, victory often slips out of the hands of the team. The captain
of another team divides the work properly at the right time. The work is handed over to all the
members of team in accordance with each individual's interest and calibre. But the majority of
the team members want to see the captain losing the game. Defeat of such a team is almost
definite.
(a) Identify both the situations described in the paragraph given above.
(b) Write down the effect of the situations identified in the point 'a'.
Q14. Das is the Managing Director of 'Gamut Ltd., manufacturing different varieties of cheese.
He has an efficient team working under him consisting of Rajat the Production manager, Vinay -
the Marketing manager and Adit - the Finance manager. They understand and interpret the
policies made by Das, ensure that their departments have adequate manpower and assign them
the necessary duties.
(a) State two more functions other than those mentioned above, that this team may perform at
the level they are working.
(b) Also recognise the level.
Q15. The Marketing Manager of Surya Bulb Limited fixed the target for all his Sales Executive
and gave them all the possible authorities to achieve it. They were asked to submit to him their
performance report at the end of the month. All of them did the same. On the receipt of report,
the expected and actual results of the Sales Executives were compared. On this basis planning
for the future was done. The Sales Executives also wrote in their report what the expectation of
the customers from the company were. Majority of them had written that they (customers)
wanted the company to cooperate in the construction of the Dharamshala going on in the city at
that time. The Marketing Manager placed this demand of the customers before the board of
Directors. This was happily accepted.
Identify the two functions of management described above by quoting the relevant lines
Q16. Hitesh is the Chief Executive Officer of 'Kids Garments Ltd‘. Due to festive season, Hitesh
got an additional order of 10,000 garments which he had to supply within two days. Due to his
goodwill in the market, he did not want to lose the order. So, he decided to achieve the target by
operating on double shifts. He achieved the target and supplied the order within two days. But
due to double shifts, his cost of production was higher than the regular production cost.
Identify and give the meaning of the two concepts of management discussed in the above para.
[CBSE 2023 (66/1/1)]
Q17. Praveen and Naveen are friends. Praveen became a professional after completing his
MBBS from "Hindu Medical College‖. Naveen completed his MBA from IIM, Bangalore. In a
discussion with Praveen, Naveen said that he too is a professional and is working with a
multinational company as a senior manager getting a good package. Praveen was not
convinced about the fact that Naveen was a professional in spite of being aware that nowadays
there is increasing emphasis on managed business concerns. Praveen gave three reasons in
support of his opinion.
Explain the three reasons that Praveen might have given. [CBSE 2023 (66/3/3)]
Q18. After completing his MBA degree, Aman joined a multinational company "Zerodha Ltd".
His Job demands long hours and commitment to the organisation. He is responsible for
integrating diverse elements and coordinating all the activities of the business and for its impact
on society. His job is complex and stressful. [CBSE 2023 (66/4/1)]
(a) Identify the level of management at which Aman joined the organisation.
(b) State any two functions to be performed by Aman at this level other than those discussed in
the para.
Q19. Monika, Rashmi and Garima are childhood friends. After completing their education,
Monika joined a school as a teacher. Rashmi joined a firm as a Chartered Accountant and
Garima as a General Manager in a Multi-National Company. After a long time in a re-union
function of the school, they met each other. Rashmi said that they were all professionals now.
Garima told Rashmi that she can say this about Monika and herself, but not about her since
Management is not considered a full-fledged professional.
Why did Garima say that she was not a professional? State any three points in support of your
[CBSE 2023 (66/5/3)]

4 Marks Questions
Q20. XYZ Power Ltd. set up a factory for manufacturing solar lanterns in a remote village as
there was no reliable supply of electricity in rural areas. The revenue earned by the company
was sufficient day by day, so the company decided to increase production to generate higher
sales For this they decided to employ people from the nearby villages as very few job
opportunities were available in that area. The company also decided to open schools and
crèches for the children of its employees. Identify and explain the objectives of management
discussed above.
Q21. Mega Ltd. was manufacturing water-beaters. In the first year of its operations, the revenue
earned by the company was just sufficient to meet its costs. To increase the revenue, the
company analysed the reasons of less revenues. After analysis, the company decided:
(i) to reduce the labour cost by shifting the manufacturing unit to a backward area where labour
was available at a very low rate. (ii) to
start manufacturing solar water-heaters and reduce the production of electric water- heaters
slowly. This will not only help in covering the risks, but also help in meeting other objectives too.
Identify and explain the objectives of management discussed above.
Q22. 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.
(a) Identify the level of management at which Ashutosh Goenka was working.
(b) State three other functions being performed by Ashutosh Goenka. [CBSE 2017]
Q23. Rishitosh Mukerjee has recently joined AMV Ltd., a company manufacturing refrigerator
found that his department was under-staffed and other departments were not cooperating with
his department for smooth functioning of the organisation. Therefore, he ensured that his
department has the required number of employees and its cooperation with other departments
is improved.
(a) Identify the level at which Rishitosh Mukerjee was working.
(b) Also, state three more functions required to be performed by Rishitosh Mukerjee at this level.
[CBSE 2017]
Q24. Three groups of employees of 'Gama Limited' are working at different posts. The first
group of employees is responsible for the welfare and survival of the organisation. In order to
discharge its responsibility properly, this group continuously keeps a watch over the Business
Environment. With a view to coping with the changes going on in the Business Environment, this
group immediately discusses the change to be brought about in the company's plans. The
second group of employees is responsible for maintaining quality and safety standards, and
minimising wastages. The responsibility of third group of employees is to explain the policies
decided by the top management and developing the feeling of cooperation among all the
departments of the company.
(a) Identify the concept of management described in the paragraphs given above.
(b) Identify the three types of the concept identified in (a) by quoting the relevant lines.
Q25. A student of MBA had to give presentation on Management in his class. The main parts of
his presentation were the following: "Several Representative Associations have been set up in
India, for example for Law "Bar Council of India', for Medical, 'Medical Council of India' and for
Accountancy "Institute of Chartered Accountants. Similar organisations for Management have
been set up in India and other countries. In India 'All India Management Association-AIMA
organisation is set up. But in order to become a Manager, to become a member of 'AIMA' is not
obligatory" (a) On the basis
of description given in the paragraph above, explain whether management is a profession.
(b) Write about the characteristic of a profession, on the basis of which management can be
regarded as a profession.
Q26. Mr Sidharth Aggarwal has completed his education of MBA. During the course of his MBA
he got the full theoretical knowledge of management. Now he has a full knowledge of
management and is ready to work as a manager. He got selected in "Volta Limited for the post
of Finance Manager. Within a few days of his joining the company he speeded up the working of
his department, although his predecessor, the Finance Manager working prior to Mr Aggarwal
had been more qualified and experienced. Mr Aggarwal faced several problems in the course of
his working, but he never felt discouraged but overcome them with firmness. During this period
he got the opportunity of visiting several other companies. Besides, he participated in several
seminars related to the problems of management and learnt the modern methods of
management. He had a special interest in reading and writing articles on the problems of
management. Because of this reason, there has been a continuous growth in his knowledge
and experience of management. Now, he is working as a successful manager. He has obtained
a distinct recognition in the field of finance. (a)
In the above paragraph, three points of a concept of the nature of management have been
described. Identify this concept.
(b) Describe briefly the three points of the concept identified in (a) by quoting the relevant lines.
Q27. Company X is facing a lot of problems these days. It manufactures white goods like
washing machines, microwave ovens, refrigerators and air conditioners. The company's
margins are under pressure and the profits and market share are declining. The production
department blames marketing for not meeting sales targets and marketing blames production
department for producing goods, which are not of good quality meeting customers' expectations.
The finance department blames both production and marketing for declining return on
investment and bad marketing.
(a) What quality of management do you think the company is lacking? Explain briefly.
(b) What steps should the company management take to bring the company back on track?
Q28. Ashita and Lakshita are employees working in Dazzling enterprises dealing in costume
jewellery. The firm secured an urgent order for 1,000 bracelets that were to be delivered within 4
days. They were assigned the responsibility of producing 500 bracelets each at a cost of 100
per bracelet. Ashita was able to produce the required number within the stipulated time at the
cost of ₹55,000 whereas, Lakshita was able to produce only 450 units at a cost of 290 per unit.
State whether Ashita and Lakshita are efficient and effective. Give reasons to justify your
answer.

6 Marks Questions
Q29. Miss Suruchi Sarohi is a senior manager in 'Nirmal Soap Factory Pvt. Ltd‘. She has got the
administrative qualities of a good manager and all the qualities of a leader in her. She is running
the whole business successfully. She divides the work among her workers on the basis of their
respective capability and interest. Not only does she hand over the work to them, but also gives
them the authority to take decisions. She pays full attention to making them capable enough to
participate in the realisation of the objectives of business. In her company people of several
religions and castes are working. Even then she has succeeded in uniting them in a group. She
knows that the success of her company depends upon the level of production. This is the
reason that Miss Sarohi is keeping a special watch over this department of hers. Actually, this is
the department on the performance of which depends the survival of company in the market for
a long time. Identify and explain the
characteristics of management described in the paragraphs above by quoting the relevant lines.
Q30. The Top Management of "Vrinda Limited' has done proper arrangement for all the
resources of men, machines, material and money for its business. A special attention has been
paid to the running of all the activities properly. Several competitor companies were using
imported modern machines. Influenced by them, this company also had to instal similar
machines. The technology of these machines was most sophisticated. Before the employees
could protest against this technology, they were given the training in it. Hence, they accepted
the installation of these machines happily. Some of the employees understood this technology
very soon. The company felt happy with their work and rewarded them. Its impact on the other
employees was also positive. The top management had directed all the employees to have free
and informal communication and give suggestions, lodge complaints and even talk about their
personal matters.
Identify and explain the three points of importance of management described in the paragraph
above by quoting the relevant lines.

ANSWER
1 (a)
2.(a)
3.(d)
4. (a)
5. (c)
6. (a)
7. (b)
8. (a)
9. (a)
10.(a)
11. (a) Here the feature of management described as 'Management is goal oriented process‘.
(b) (i) Management is all pervasive: Management being all pervasive refers that it is needed
everywhere and common to all organisations whether economic, social or political.
(ii) Management is multi-dimensional: The management is not such an activity which is related
to a particular task, rather it is related to the Work, People and Operations
12. (a) Management is an intangible force.
(b) (i) Management is goal oriented: Every organisation sets up itself with a view to realise a
specific goal. Management unites the efforts of people in the organisation towards achieving
pre-determined goals.
(ii) Management is a continuous process: The management process contains a series of
continuous, composite, but separate functions. These functions are: Planning. Organising,
Stalling. Directing and Controlling
13. (a) (i) In the first situations cooperation is there, but coordination is lacking.
(ii) In the second situation coordination is there, but there is no cooperation.
(b) (i) In the first situation, on account of the absence of coordination, the efforts of cooperation
receive a big blow. (ii) In the
second situation, because of the absence of cooperation, the feeling of dissatisfaction comes in
the players.
14. (a) (i) Motivating employees, (ii) Creating Cooperation (ii) Middle Level Management.
15. (a) "The Marketing Manager of Surya …………………rights to achieve it." Organising (b)"On
the receipt Controlling Sales Executives were compared." Controlling
16. Efficiency and Effectiveness Efficiency means doing the task correctly and with minimum
cost. Effectiveness is concerned with doing the right task, completing activities and achieving
goals.
17. Reasons that Praveen might have given:
(i) Restricted Entry: There is no restriction on anyone being appointed as manager in any
business enterprise, irrespective of the educational qualifications possessed as compared to
other professions like a doctor, a lawyer, etc
(ii) Professional Association: There are several associations of practicing managers in India, like
the AIMA (All India Management Association), however, there is no compulsion for managers to
be members of such an association nor does it have any statutory backing unlike other
professions.
(iii) Ethical code of conduct: All professionals are bound by a code of conduct which guides the
behaviour of its members, which may not be followed by manager though AIMA that has laid
down a code of conduct to regulate the activities of their members.
18. (a) Top Level Management
(b) Functions to be performed by Aman at this level:
(i) Responsible for the welfare and survival of the organisation.
(ii) Analysing the business environment and its implications for the survival of the firm
19. Garima said that she is not a professional as management is not considered as a full-
fledged profession because of the following reasons:
(i) Restricted Entry: There is no restriction on anyone being designated or appointed as
Manager in any business enterprise. Anyone can be called a manager irrespective of
educational qualifications possessed as compared to other professions like a doctor, a lawyer
etc.
(ii) Professional Association: There are several associations of practicing managers in India like
AIMA (All India Management Association) but there is no compulsion for managers to be
members of such associations nor does it have any statutory backing unlike other professions.
(iii) Ethical code of conduct: All professionals are bound by a code of conduct which guides the
behaviour of its members, which is not followed by manager though AIMA that has laid down a
code of conduct to regulate the activities of their members.
20. The objectives of management referred to are:
(a) Organisational Objective: It refers to the utilisation of human and physical resources
available in the organisation, considering the interest of all stakeholders.
(b) Social Objective: It refers to the consideration of the interest of the society during managerial
activities.
21. The objectives of management referred to are:
(a) Organisational Objective: It refers to the utilisation of human and material resources
considering the interest of all stakeholders.
(b) Social Objective: It refers to the consideration of the interest of the society during managerial
activities.
22.(a) Top Level
(b) Functions of Top Level Management:
(i) To Formulate objectives for the organisation.
(ii)To formulate polices for the achievement of objectives.
(iii) To coordinate the activities of various departments,
23. (a) Middle Level Management
(b) Functions required to be performed by Rishitosh Mukerjee:
(i)interpret the policies framed by the top management.
(ii)To ensure that their department has the necessary personnel.
(iii) To motivate employees of their respective departments to achieve the desired objectives
24. (a) Here the levels of management have been described. (b) Here the following three levels
of management have been highlighted:
(i) "The first group……………………………..of the organisation."
Top-Level Management
(ii) "The second group…………………………. wastages‖
Lower-Level Management
(iii) "The responsibility of third group……………………… departments of the company." Middle-
Level Management.
25. (a) On the basis of this description, management can't be regarded as a profession,
because in management, one of the main characteristics of a profession- Professional
Association is not present. No doubt, in India, "Management Association' is there, but its
objective is not to issue a licence to a person to become a manager but to do research in
management.
(b) Well-defined body of knowledge: In management, this characteristic of a profession is there.
management has its own principles which can be called an organised body of knowledge.
26. (a) Here the concept of management 'Management as an Art' has been described. Here an
effort has been made that in management all the three special features are present.
(b) (i) "During the course of his MBA... theoretical knowledge of management".
Existence of Theoretical knowledge: The basis of art is the theoretical knowledge. With regard
to Management also sufficient theoretical knowledge is available. Management has its own
theory or doctrine which is possible to be translated into practice. Hence management can be
taken as an art.
(ii) "Within a few days of his joining the company working of his department."
Personalised Application: Every person uses the theoretical knowledge available in the field of
art according to his personalised application. In the field of management also every person
makes the personalised application of the available theoretical knowledge. Hence, we may take
management as an art.
(iii) "Because of this reason, there has been... knowledge and experience of management‖
Based on Practice and Creativity: Art can be refined through a continuous practice of theoretical
knowledge. Similarly, a manager can have a distinct recognition through a continuous practice
of the theoretical knowledge of management. Hence, on this basis management also can be
considered an art.
27. (a) It is coordination.
(b)The management may take following steps:
(i) There is a need to integrate the efforts of individuals, departments and specialists.
(ii) There is a need to harmonise individual goals and organisational goals
(iii) Top management must clearly inform that coordination is the function of every manager in
the organisation.
28. (a) Ashita is effective but not efficient. [She was able to produce the required number (500
Bracelets) within the stipulated time (4 days) but at a higher cost of ₹110 (₹55,000=500×₹110).]
(b) Lakshita is efficient but not effective. [Though she was able to achieve a lower cost of ₹90
per unit but could not produce the required number (500 Bracelets). She was able to produce
only 450 units.)
29. In the above paragraphs the characteristic of management described is that 'management is
multi-dimensional.
In this discussion the following dimensions of management have been touched.
(i) "Not only does she hand over ........ take decisions."
Management of work: Every organisation is established to do some special work. To accomplish
this work fully several activities are performed. The manager ensures success in the
performance of these activities.
(ii) "She pays fall attention to uniting them in a group,"
Management of people: The job of running every organisation is done by the people. The
manager puts in efforts to increase their strengths and eliminate their weakness
(iii) "She knows that the success department of hers."
Management of operations: In every organisation there is definitely some or the other production
activity. The manager exploits all the necessary resources to do this activity successfully.
30.(i) A special attention has been……………………………. activities properly," Management
Increase Efficiency: The managers reduce costs through planning, organising, stalling, directing
and controlling the different activities of the organisation, and increase production.
(ii) "Several competitor companies…………………………. were given the training in it."
Management Creates a Dynamic Organisations: The Business Environment keeps changing.
The people protest against it. But the managers avert the possible protest by telling the people
the advantages of change well in time.
(iii)"The top management…………………………………………. personal matters." Management
Helps in Achieving Personal Objectives: Managers make the people capable enough through
their efficient leadership that the way to their promotion gets open. Now they become entitled to
more remuneration.
KENDRIYA VIDYALAYA SANGATHAN VARANASI REGION
Useful Question for High Achievers
Business Studies
Chapter 2- Principles of Management Class- XII
1- ‗She/he keeps machines, materials, tools etc, ready for operations by concerned workers.‘
Whose work is described by this sentence under functional foremanship?(1)
1. Instruction Card Clerk (b) Route Clerk
(c) Repair Boss (d) Gang Boss
2- M/s Zenith Computers is a small organization engaged in assembling of computers. In this
organization decision making rests with top management while the middle level is involved in
only implementation of plans. O the other hand, Zepto computers Ltd is large company where a
number of people from each level are involved in the decision making process. The application
of the principle of ―Centralization & Decentralization‖ is different I the two organizations as the
situation in each enterprise is NOT same. (1)
From the following identify the nature of principles of management:
1. Contingent (b) Universal
(c) Mainly Behavioral (d) Flexible
3- Assertion (A): Segregating work in the workforce amongst the worker will enhance the
quality of Product.
Reason (R): Division of work leads to specialization. (1)
1. Both A and R true and R is the correct explanation of A
2. Both A and R are true but R is not the correct explanation of A
3. A is true and R is false
4. A is false and R is true
4- The management and workers have entered into an agreement that workers will do overtime
to cover up looses of the company. In return, the manager will increase the wages. But
management later refused to increase the wages. Name the principle violated in this
situation.(1)
(a) Initiative (b) Authority & Responsibility
(c) Esprit de corps (d) Discipline

5- One _______ and one _______ for a group of activities having the objective is principle of
unity of direction. (1)
(a) Men, Money (b) Boss, Subordinate
(c) Money, Material (d) Head, Plan
6-The principles of management enhance the understanding of relationship between human
and material resources for the achievement of organisational goals. Identify the feature of the
principles of management being described in the given statement. (1)
(a) Cause and effect relationships
(b) Optimum utilisation of resources and effective administration
(c) Formed by practice and experimentation
(d) Mainly behavioural
7-According to this principle of general management, ―an organisation should safeguard against
abuse of managerial power, but at the same time a manager should have the necessary
authority to carry out his responsibility.‖ Name the principle of management being described in
the given statement. (1)
(a) Discipline (b) Authority and responsibility
(c) Unity of command (d) Unity of direction
8- According to Henri Fayol, if this principle of general management is violated, ―authority is
undermined, discipline is in jeopardy, order disturbed and stability threatened.‖ Identify the
principle. (1)

(a) Authority and responsibility (b) Discipline

(c) Unity of command (d) Equity
9- According to this principle of scientific management, ―Scientific management has for its
foundation the firm conviction that true interest of the management and workers are one and the
same; the prosperity for the employer cannot exist for a long time unless it is accompanied by
prosperity for the employees and vice versa.‖ (1)
(a) Science, not rule of thumb (b) Co-operation, not individualism
(c) Harmony, not discord (d) All of the above
10- Through this principle of management, Henri Fayol guides the managers to exhibit
exemplary behaviour and advises that they should not fall into temptation of misusing their
powers for personal benefit at the cost of general interest of the organisation. Which principle of
management is being described in the above statement? (1)
(a) Remuneration of employees
(b) Centralisation and decentralisation
(c) Subordination of individual interest to general interest
(d) Equity
11- Davinder is a class XII commerce student in a reputed school in Punjab. Satinder is his
elder brother who is doing his Masters in Hospital administration from Delhi after completing his
Bachelor of Science course. During vacations when Satinder comes home, Davinder shows him
the business studies project that he is preparing on the topic ‗Principles of Management‘.
Satinder tells him that these principles are also a part of MBA course curriculum at the
beginner‘s level as they form the core of management in practice. But he finds this principle
different from those of pure science. (3)
In context of the above case:
1. Outline the concept of principles of management.
2. Why does Satinder find the principle of management different from those of pure
science?
3. Why do the principles of management form the core of management in practice?
Explain by giving any two points highlighting the importance of principles of management.
12- The degree of centralization or decentralization will depend on the situations and
circumstances of each enterprise.
1. State the nature of management principles being highlighted here.
2. State any two other natures of management principles. (3)
13- Every year a meeting is organized in the lawns of the owner of a company. In this meeting
the owner of the company grants some funds for the benefit of the families of the employees.
The employees on the other hand never resist any change or put excessive demands. The
general environment in the company is very supportive to the employees. The employee
turnover ratio is very low.
Which concept of management is discussed here?
Which principle of management will be easily followed here? (3)
14- Faiyaz the production manager of ABC Ltd. wants to increase the speed of packaging. In
order to identify and eliminate needless and unproductive movements of workers in packaging,
he installed the movie camera in the factory. Which technique of Taylor is adopted by Faiyaz ?
How can the technique helped ABC Ltd (3)

15- SG Ltd is a well-known company manufacturing washing machines. The company has the
policy of paying proper attention to the training of the managers. The organization teaches the
various management principles to the managers whenever required so that they apply them and
understand the practical aspects of business through them. Year by year the organisation is
able to increase its revenue this is because mangers are able to economically use the funds of
the company and increase the output of workers through various principles of management. The
company has decided to donate 10% of its earning to nearby orphanage.
Identify the three importance of principles of management highlighted in above case by
quoting lines. (3)

16- Rajveer works as a plant superintendent in a carpet making factory. In order to complete
the export orders on time, the production manager asks him to make the workers work over time
whereas the finance manager is strictly against this practice because it will increase the cost of
production. Moreover, Rajveer feels that since the company is manufacturing handmade
carpets as well as machine made carpets there is a lot of overlapping of activities. Therefore,
there should be two separate divisions for both of them wherein each division should have its
own in charge, plans and execution resources.
(4)
In context of the above case:
1. Identify and explain the principle of management which is being violated.
2. Also identify the principle of management that Rajveer feels should be implemented in
the factory.
3. Give any two differences between the principle of management as identified in part (a)
and part (b) respectively.
17- Mr. Rajiv the senior manager of unique enterprise considered himself very wise and used to
take all the decisions himself without consulting the employees, he never used to help anyone
nor did he use to take help of anyone. The employees of unique enterprise were not working
efficiently and company‘s profit margin started declining to tackle the problem, the company
appointed a new manager from IIM Bangalore. The new manager after joining made a policy
that all the decisions will be taken after consulting employees in the meeting. All employees
must give some suggestions and best suggestions will be rewarded with financial and
nonfinancial incentives. This policy had very positive effects on company.
(4)
1. State the principle of Henry Fayol used by new manager.
2. State the technique of scientific management related to above case.
18- Explain the technique of ―Functional Foremanship and the concept of ―Mental Revolution‖ as
enunciated by Taylor. (4)
19- ‗Kanpur Leather Ltd.‘ is the manufacturer of leather products. It is pro¬ducing on large scale
and its organisational structure is functional. In the production department various foremen have
been employed. Each foreman has been made responsible for production planing,
implementation and control. This has led to a situation of confusion and uncertainty. Suggest a
technique of scientific management to Kanpur Leather Ltd. which may help it to effectively
organise planning and its execution. (4)
20- Example Pvt. Ltd. is an organisation which is governed by people who are egoistic and
consider themselves as the most intelligent. All the suggestions made by the workers are not
even attended which has resulted in many strikes during last couple of months. The result is
lack of productivity. However recent reports from the organisation say that there is a training
module going on for the employees so that their individual development can take place to the
maximum. Some training modules are thought of being implemented. This may take the
organisation out of its current bad performance. This training module which is now to be
followed at the main branch will be later given a uniform format and will be applied to all
branches of the organisation. .
Identify the principle of management which is violated initially and the principle of scientific
management which is followed later on. Which concept of scientific management is discussed in
the last part of the above case? (6)
21-Arnav, a purchase manager of a company, has to purchase 85 tons of raw materials. He
purchased the raw material from a firm owned by his relative, at a rate more than market price.
Which management principle is being violated? State any 02 other principles. What should
have been the appropriate course of action should be followed by Arnav?
(6)
22- Explain any five points of significance of Principles of Management (6).
ANSWERS
1- (d) Gang Boss
2- (d) Flexible
3- (a) Both A and R true and R is the correct explanation of A
4- (d) Discipline
5- (d) Head, Plan
6- (d) Mainly behavioural
7- (b) Authority and responsibility
8- (c) Unity of command
9- (c) Harmony, not discord
10- (c) Subordination of individual interest to general interest
11- (1) The principles of management serve as a broad and general guideline for the managerial
decision making and action.
(2) Satinder finds the principles of management different from those of pure science because
the management principles are not as rigid as principles of pure science. This is due to the fact
that they deal with the human behavior and thus, need to be applied creatively in the light of
given situation.
(3) The importance of principles of management is described below:
1. Providing managers with useful insights into reality:
2. Optimum utilization of resources and effective administration:
12- (a) Management Principles are Flexible
(b) Universal Applicability, General Guidelines, Formed by Practice, Mainly Behavioral, Cause
& Effect Relationship, Contingent.
13- The concept of management discussed here is Mental Revolution.
Principle- Esprit de Corps.
14- Motion study
Motion study can help in detecting and eliminating unproductive
movements and can determine the better way of doing the job
15- 1. Providing manager useful insight into reality
The organisation teaches ........practical aspects of business through them
2. Optimum utilization of resources
This is because the mangers........through various principles of management
3. Fulfiling social responsibilty
The company has decided to donate.......to a nearby orphanage
16- The principle of management which is being violated in stated below:
1. Unity of command: ,Unity of direction:
2. Principle of Initiative
3.The difference between the principle of Unity of Command and Unity of Direction is given
below:
The main difference between unity of command and unity of direction is that the unity of
command emphasizes that employees should receive orders from only one superior, while the
unity of direction focuses on ensuring that the teams work towards the same objectives under
one plan and one head.
17- 1- Principle of initiative. 2- ―Cooperation not individualism.‖
18- Functional Foremanship: A foreman refers to a person who is in charge of the operational-
level workers. According to this technique the planning and the production functions should be
separated. That is under the manager there should be one planning incharge and one
production incharge.
Each incharge should have four personnel under him/ her. The following are the four persons
that work under the planning incharge: i Instruction Card Clerk: To give instructions to the
workers. ii Route Clerk: To show the route of production. iii Time and Cost Clerk: To take care of
the time and costs. iv Disciplinarian: To ensure that discipline is being maintained.
Under Production Incharge: i Speed Boss- To ensure timely completion of tasks, ii Gag Boss-
To keep the machines and tools ready for the workers, iii- Repair Boss- To ensure proper
working of the machines, iv- Inspector- To control the quality of work done.
Taylor's concept of "Mental Revolution" is a call for a change in the mindset of both
management and workers. He believed that both parties need to work together in order to
achieve maximum efficiency and productivity.
19- Functional Formanship is the technique of Scientific management which may help Kanpur
Leather Ltd. to effectively organise planning and its execution.
In order to apply specialisation at the supervisory level, Taylor developed the concept of
functional foremanship. He suggested that under the factory manager there are a planning
incharge and a production incharge.
The main function of the planning incharge is to plan all aspects of the job to be performed.
Under the planning incharge four personnel are appointed: 1. Route Clerk concerned with
determination of the exact sequence in which various operations are to be performed. 2.
Instruction Card Clerk who issues instructions to workers for handling their jobs. 3. Time and
Cost Clerk who frames the time schedule and keeps record of the cost of operations. 4.
Disciplinarian concerned with enforcing the rules and regulations and maintaining discipline in
the factory.
Under the production incharge, the following four personnel are appointed concerned with the
execution of plans: 1. Gang Boss to arrange machines, tools, materials, etc., for the workers. 2.
Speed Boss to check whether the work is progressing as per schedule and instructions issued.
3. Repair Boss to check and maintain machines and tools in proper working conditions. 4.
Inspector for checking quality of the work done by the workers.
20- The principle of management which is violated initially is Cooperation not Individualism as
the suggestions were overlooked and the strikes happened. All the suggestions made by the
workers are not even attended which has resulted in many strikes during last couple of months.
The principle of management which is followed later on is Development of Each and Every
Person to His or Her Greatest Efficiency and Prosperity. However recent reports from the
organisation say that there is a training module going on for the employees so that their
individual development can take place to the maximum. The concept of management which is
discussed in the last part of the case is Standardisation. This training module which is now to
be followed at the main branch will be later given a uniform format and will be applied to all
branches of the organisation.
11- 1- Subordination of individual interest over general interest
2- Any Two other principles of Fayol- Authority & Responsibility, Stability of Tenure,
equality, order, discipline etc.
22- Significance of Principles of Management-
(i) Providing Managers with useful insights into reality- Adherence to these principles will add to
their knowledge, ability and understanding of managerial situations. It also enables managers to
learn from past mistakes and solve recurring problems quickly.
(ii) Optimum utilization of resources and effective administration- Both human and material
resources, available with company are limited. They have to be put to optimum use to give
maximum benefit with minimum cost.
(iii) Scientific Decision- Management principles help in thoughtful decision making. They
emphasize logic rather than blind faith. Decision should be free from bias and prejudice.
(iv) Meeting changing environment requirements- Although principles are in nature of general
guidelines but they can be modified and as such help managers to meet changing requirements
of environment.
(v) Fulfilling social responsibility- The increased awareness of public, forces businesses,
especially limited companies to fulfill their social responsibilities. Interpretation of principles also
assumes newer and contemporary meanings with change in time.
(vi) Management training, education and research- These principles provide basic groundwork
for development of management as a discipline. These principles enable refinement of
management practices as well by facilitating development of new management techniques
which have developed due to further research on these principles
 KENDRIYA VIDYALAYA VARANASI
SUBJECT: BUSINESS STUDIES
UNIT 3: BUSINESS ENVIRONMENT
MULTIPLE CHOICE QUESTIONS (MCQ)

FOR BRIGHT STUDENTS

Q1. From the following two statements choose the correct options 1
Statement I: Business environment include both general and specific forces
Statement II: Business environment is relatively easier to understand its parts and but
Difficult to grasp in its totality

(a)Statement I is correct and II is wrong

(b)Statement II is correct and I is wrong
(c)Both the statements are correct
(d) Both the statements are incorrect

Q2 From the following two statements choose the correct options 1

Statement I: The understanding of business environment enable the firm to identify
opportunities and threats
Statement II: The analysis and understanding of business environment doesn„t help the firm
in policy formulation and planning.
(a)Statement I is correct and II is wrong
(b)Statement II is correct and I is wrong
(c)Both the statements are correct
(d) Both the statements are incorrect

Q3 How does business environment help firms cope with rapid changes? 1
a) By maintaining the status quo
b) By understanding and analyzing environmental changes to develop suitable courses of
action
c) By focusing only on internal strategies
d) By reducing external competition

Q4 Determination of the economic policies is for the purpose of regulating ________ . 1

(a) Political Environment
(b) Social Environment
(c) Legal Regulatory Environment
(d) Economic Activities

5 Which of the following is an external factor that influences a business but is difficult to 1
predict? 1
a) Political stability
b) Consumer preferences
c) Technological innovations
d) Market competition
6 What does the term 'relativity' in the business environment refer to? 1
a) Business environment is the same across all countries and regions
b) Political, social, and economic conditions differ from one country or region to another
c) The future business environment is easily predictable
d) All businesses respond to the same environmental conditions in the same way

7 Which of the following is an example of how technological developments influence 1

business?
a) Increase in tax rates
b) Shifts in consumer tastes
c) Innovation making older products obsolete
d) Political instability in foreign markets

8 Assertion: Political environment is related with governments responsibility towards business. 1

Reason: Government stability directly affects business scenario in a country.
(a) If both assertion (A) and reason (R) are true and reason (R) is the correct explanation of
assertion (A).
(b) If both assertion (A) and reason (R) are true, but reason (R) is not the correct explanation
of assertion (A).
(c) If assertion (A) is true, but reason (R) is false.
(d) If assertion (A) is false but reason (R) is true
9 How does an understanding of business environment contribute to a firm’s 1
performance?
a) By limiting the scope of its operations
b) By increasing dependency on external factors
c) By improving the ability to predict changes and respond accordingly
d) By making external forces irrelevant

10 What is meant by the term 'first mover advantage' in the context of business 1
environment?
a) Gaining competitive advantage by being the first to enter the market or recognize an
opportunity
b) Entering the market after all competitors have established their presence
c) Dominating the market through high advertising spending
d) Being the first to introduce a new law or regulation

3 MARKS QUESTIONS
Q11 The Court passed an order to ban polythene bags as 3
1. The bags are creating many environmental problems which affect the life of people in
general.
2. Society in general is more concerned about quality of life.
The Government decided to give subsidy to jute industry to promote this business.
Innovative techniques are being developed to manufacture jute bags at low rates.
Incomes are rising and people can afford to buy these bags.
Identify the different dimensions of Business Environment by quoting the lines from the
above particulars.

Q12 What are the various importance of Business Environment‟ 3

Q13 Mr. Z after completing MBA from USA comes to India to start a new business under the 3
banner Ecom Creations Ltd. He launches a new product in a e-learning for senior Secondary
School students in Commerce stream, which already has n established market in UK and
USA but not in India. His business starts flourishing in India. Now more Indian
companies entered into the market with other subjects also.
Identify and quote the lines from above para which highlight the significance of
understanding business environment.

Q14 Make in India is an initiative launched by the Government of India to encourage 1

national and multinational companies to manufacture their products in India. It
focuses on job creation and skill enhancement and is in twenty five sectors of the
economy. Under the initiative, brochures on these sectors and a web portal were
released. The initiative aims at high quality standards and minimizing the impact
on the environment. It also seeks to attract foreign capital investment in India.
In context of the above case:
2. Identify the various dimensions of business environment being referred to by quoting
lines from the paragraph.
3. List any two values which the Government of India wants to convey through this
initiative.

Q15 State the features of business Environment. 3

4 MARKS QUESTIONS
Q16 Mr. JAY after completing MBA from U k comes to India to start a new business under the 4
banner ABC Ltd. He launches a new product in e-learning for senior Secondary School
students in Commerce stream, which already has an established market in UK and USA but
not in India. His business starts flourishing in India. Now more Indian companies entered
into the market with other subjects also.
Identify and quote the lines from above para which highlight the significance of
understanding business environment

Q17 In the year 2016,the State Government of Kerala had made it mandatory for 4
Anganwadi hostels and canteens in educational institutions to secure the Food
Safety and standards Authority of India (FSSAI) license to ensure food safety. As
the educational institutions also get categorized as food business operators in the
event of the annual turnover of the hostels, they run exceeding Rs. 12 lakh per
annum.
In context of the above case:
4. Identify and explain the various dimensions of business environment being referred to
here.
5. List any two values which the State Government of Kerala wants to convey through
this initiative.

Q18 Mr. X is working as the Country Head of a company which owns a chain of 4
malls under the name of „Virtuoso‟ in the various parts of India. Through an analysis report
of the business environment, it has been brought to his notice that in the coming years,
shopping at a mall will not be a necessity for the buyers as purchases can be made online
from anywhere and at any time with ease and at the consumer‟s convenience. Hence, malls
 will have to provide much more than shopping to be able to attract customers. So, he
recommends that „Virtuoso‟ malls should to be restructured into recreation centres, offering
more spaces to socialize, host events and concerts, and provide ample Food and
Beverages options. Consequently the share of entertainment segment and Beverages segment
in the overall mall space is increased by 20%. As a result, the company gains enormously by
getting the first mover advantage.

In context of the above case:

1. Define the term „Business Environment‟.
2. Explain the terms „Threats‟ and „Opportunities‟ by quoting lines from the paragraph.

6 MARKS QUESTIONS
Q19 GIGA Ltd. manufactures fashionable and designer clothes. Recently it finds that the 6
demand for its products has been declining. After market research it was discovered that
fashion and tastes of the consumers is changing at a fast pace. Customers‟ demand is
increasing. New competitors have entered the market with new designs. It is very difficult
for the company to predict future happenings. Also, it is difficult to know the extent of the
relative impact of the social, economic, political, technological or legal factors on decrease
in demand of its products in the market.
A meeting was held in which managers from different functional levels heading Production,
Marketing, Finance, etc., for example, Chief Operating Officer, Chief Finance Officer, Vice
President (Marketing) were present to discuss how to deal with the situation. After a long
discussion, it was decided that they would study and analyze the market first to identify
customer tastes and fashion and then manufacture garments accordingly. It was also
decided to increase expenditure on advertising, after-sales services, etc.
1. Identify any two features of business environment by quoting the lines from the above
case.
2. At which level of management the meeting of managers of GIGA Ltd. was held?
3. Identify any two impact of government policy changes on business, quoting lines from
the above case.
4. State the importance of understanding of environment by business managers in the
light of the above para.

Q20 Eco-friendly products are gaining power as the consumers‟ awareness about 6
environmental issues has increased over the years and they are conscious about choosing
products that do not have adverse effects on the environment. They are now more
conscious about the carbon emission and climate change effects, and want themselves to
be „seen‟ as a green advocate among their peers. In such a scenario, it has become a
challenge for the companies as they have to not only meet the needs of the consumers but
also ensure that their products are safe and environment friendly. At a result, there is
growing need for better and advanced technologies to works as a catalyst in this regard.
1. Identify the relevant feature of business environment being discussed above.
2. Describe briefly any three points which highlight the importance of business
environment and its understanding by managers.

Q21 XLT is running an ice cream parlous in a local market. Keeping in mind the 6
changing perceptions about health among the people, one of his employee Abhiraj
suggests to him that they should introduce a range a flavored yogurt. Bharat
accepts his suggestion as a result both the image and the profitability of his
 business increases.
In the context of the above case:
6. Identify the feature of management which is being highlighted.
7. State the related dimension of the business environment.
8. Name and explain the related principle of general management.

Q22 Continuous and comprehensive evaluation is a process of assessment, mandated 6

by the right to Education Act, of India. This approach to assessment has been
introduced by state governments in India, as well as by the Central Board of
Secondary Education in India. With the introduction of (CCE) system in
education there is greater focus on project based learning. As a result, besides
time and effort the students are willing to invest money to enhance the visual
appeal of their project files so as to score higher marks. In order to cash on the
opportunity Rishabh has started a small business unit to manufacture different
kinds of decorative materials for the project files. He has employed a team of
four creative designers for developing the innovative material with the help of
latest technology. However, he has a prejudice against women and therefore pays
less salary to them as compared to the male staff for equal work.
In the context of the above case:
9. Name any two functions of management that Rishabh will have to perform in order to
manage his business successfully.
10. Name and explain the principle of management which is being violated by Rishabh.
11. Identify the related dimensions of the business environment.
 KENDRIYA VIDYALAYA VARANASI
SUBJECT: BUSINESS STUDIES
UNIT 3: BUSINESS ENVIRONMENT
ANSWERS

MULTIPLE CHOICE QUESTIONS (MCQ)

FOR BRIGHT STUDENTS

Q1. 1
ANS: c) Both the statements are correct

Q2 ANS (a) Statement I is correct and II is wrong 1

Q3 Answer: b) By understanding and analyzing environmental changes to develop suitable 1

courses of action

Q4 1
ANS.(d) Economic Activities

Q5 Answer: c) Technological innovations 1

Q6 Answer: b) Political, social, and economic conditions differ from one country or region 1
to another

Q7 Answer: c) Innovation making older products obsolete 1

Q8 (b)Assertion and reason both are true but reason is not the correct explanation of assertion 1
Q9 Answer: c) By improving the ability to predict changes and respond accordingly 1

Q10 Answer: a) Gaining competitive advantage by being the first to enter the market or 1
recognize an opportunity

3 MARKS QUESTIONS
Q11 Ans. 3
1. Legal environment:
2. Social environment:
3. Political environment:
4. Technological environment:
5. Economic environment:
Q12 ANS: 3
12. It enables the firm to identifying opportunities and getting the first mover advantage
13. Help the firm to identify threats and early warning signals.
14. Help in tapping useful resources
 15. Help in coping with rapid changes
16. Help in assisting in planning and policy formulation
Help in improving performance
Q13 Ans. 3
● “Comes to India to start a new business … launches a new product in e-learning for
Senior secondary school students in Commerce stream.”
1. It helps in assisting in planning and policy formulation.
2. It helps the firm to identify opportunities and get the first mover advantage.
● “His business starts flourishing in India.”
1. It helps in improving performance.
● “Now more Indian companies entered into the market with different subjects also.”
1. It helps the firm to identify threats and early warning signals.
1.Q14 ANS: The various dimensions of business environment being referred to in the above case 3
are as follows:
1. Political Environment:
2. Technological Environment:
3. Economic Environment:
3. The two values which the Government of India wants to convey through this initiative are:
4. High quality standards
Concern for environment
Q15 ANS. 3
4. Totality of external forces
5. Specific and general forces
6. Inter- relatedness
7. Dynamic natures
8. Uncertainty
9. Complexity
relativity
4 MARKS QUESTIONS
Q16 4
ANS:
-learning for
Senior
secondary school students in Commerce stream.”
1. It helps in assisting in planning and policy formulation.
2. It helps the firm to identify opportunities and get the first mover advantage.

1. It helps in improving performance.

also.”
1. It helps the firm to identify threats and early warning signals.
10.
Q17 ANS: The various dimensions of business environment being referred to in the above case 4
are as follows:
11. Political Environment:
12. Legal environment:
13. The two values which the State Government of Kerala wants to convey through this
initiative are:
14. High quality standards
15. Good health

Q18 4
Ans.
 1. The term „Business Environment‟ means the sum total of all individuals, institutions
and other forces that are outside the control of a business enterprise but that may
affect its performance.
2. The term „threats‟ refers to the external environment, trends and changes that will
hinder a firm‟s performance.
“Trough an analysis report of the business environment, it has been brought to his notice
that in the coming years, shopping at a mall will not be a necessity for the buyers as
purchases can be made online from anywhere and at any time with ease and at the
consumer‟s convenience.Hence, malls will have to provide much more than shopping to be
able to attract customers.”
The term „opportunities‟ refers to the positive external or changes that will help a firm to
improve its performance.
“As a result, the company gains enormously by getting the first mover advantage.”
6 MARKS QUESTIONS
Q19 6
Ans.
1. Features of business environment:
1. Dynamic nature: „fashion and taste of the consumers is changing at a fast pace.‟
2. Uncertainty: „It is very difficult for the company to predict future happening.‟
3. Complexity: „It is difficult to know the extent of the relative impact of the social,
economic, political, technological or legal factors on decrease in demand of its
products in the market.
1. Top level management
2. Impact of government policy changes on business:
1. Increasing competition: „New competitors have entered the market with new designs.‟
2. More demanding customers: „Customers‟ demand is increasing.‟
3. Market orientation: „it was decided that they would study and analyze the market first
to identify customer tastes and fashion and then manufacture garments accordingly.
It was also decided to increase expenditure on advertising, after-sales services, etc.‟
1. Business environment helps the manager in coping with rapid changes.
Q20 6
ANS:
1. Inter-relatedness is the relevant feature of business environment which is being
discussed above.
2. The three points which highlighted the importance of business environment and its
understanding by managers are described below:
1. It enables the firm to identify opportunities and getting the first mover advantage: The
dynamic business environment provides numerous opportunities for a business to
evolve as per the changing needs. Therefore, early identification of the forthcoming
opportunities helps an enterprise to be the first to exploit them instead of losing them
to the competitors.
2. It helps the firm to identify threats and early warning signals: sometimes the changes
in the external environment may pose as a threat and hinder a firm‟s performance.
An awareness about the business environment helps the managers to identify such
threats on time and take necessary decisions and action.
3. It helps in tapping useful resources as the enterprise designs policies that allow it to
get the resources that it nee
16.
21 ANS: The feature of management which is being highlighted is Dynamic. 6
17. The related dimension of the business environment is Social.
18. The related principle of general management is Initiative.
Initiative means taking the first step with self-motivation. The workers should be
 encouraged to develop and carry out their plans for improvement. Suggestion system
should be adopted in the organization.

22 5. ANS: The two functions of management that Rishabh will have to perform in order to 6
manage his business successfully are Planning and Organizing.
6. The principle of management which is being violated by Rishabh is Equity.
7. The related dimensions of the business environment are:
8. Legal Environment
9. Political Environment
10. Economic Environment
11. Social Environment
19. Technological Environment
PLANNING
Q.1. Identify the step of Planning Process? (1)

A) Setting objectives
B) Identifying an alternative course of action
C) Implementation of Plan
D) Follow-up action
Q.2. Assertion (A): Planning is time-saving process. (1)
Reason (R): The success of an enterprise is possible only when plans are properly
drawn up and implemented.
(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, but Reason (R) is false
(D) Assertion (A) is false, but Reason (R) is true
Read the following passage and answer the following questions:
Rakesh inherited a 25-acre ancestral land from his grandparents. He decided to
venture into agriculture. For this purpose we set out specific goals, objectives and
activities. Everything was a challenge because he was not aware about farming. He
learnt every activity in the process thought of assisting other farmers as well.
He eventually launched his own company Farming Solutions Ltd. He wanted to be
sure that the activities effectively made the best interest of the company and the
farmers. Hence, the prepared annual plan for production, sales and marketing
through sales forecasting.
He also realised that farmers by growing only one or two crops. On account of this
deal and remained idle for the rest of the year. Thus, he identified and evaluated
different alternative through which the farms could be utilised throughout the year.
He used his foresight and logical and systematic thinking based on analysis of all
taxes and examined and evaluated all the alternative. He presented a plant to the
farmers union, where after harvesting the primary crop seasonal vegetables and
fruit could be grown.
Q.3. ―For this purpose he set out specific goals objectives and activities.‖ Which feature (1)
of planning is depicted in this statement?
(A) planning focuses on achieving objectives
(B) planning is a primary function of management
(C) planning is pervasive
(D) planning is continuous
Q.4. ―Hence, he prepared an annual plan for production, sales and marketing through (1)
sales forecasting.‖ Which feature of planning is depicted in the statement?
(A) planning is continuous
(B) planning is futuristic
(C) planning in was decision making
(D) planning is a mental exercise
Q.5. Identify the correct sequence of steps involved in the planning process. (1)
 (A) Evaluating alternative courses, Identifying alternative course of actions,
Setting objectives, Developing premises
(B) Setting objectives, Identifying alternative course of actions, evaluating
alternative courses, Developing premises
(C) Setting objectives, developing premises, Identifying alternative course of
actions, Evaluating alternative courses
(D) Setting objectives, Developing premises, Identifying alternative course of
actions, Evaluating alternative courses
Q.6. ‗It is not always true that just because a plan has worked before it will work (1)
again‘. Identify the related limitation of planning.
(A) Planning leads to rigidity
(B) Planning reduces creativity
(C) Planning may not work in a dynamic environment
(D) Planning does not guarantee success
Q.7. According to the Economic Survey, insights from behavioural economics can be (1)
strategically utilised to create an aspirational agenda for social change – from
BBBP (Beti Bachao Beti Padhao) to BADLAVL (Beti Aapki Dhan Lakshmi Aur
Vijay Lakshmi); from Swachh Bharat to Sundar Bharat; from ‗Give It Up‘ for the
LPG subsidy to ‗Think about the Subsidy‘ and from tax evasion to tax
compliance. Identify the type of plan being described in the above lines.
(A) Programme (B) Method
(C) Strategy (D) Rule
Q.8. Assertion (A): Planning works fantastically in a dynamic environment. (1)
(R): Plans operate in an external environment, which consists of a number of
dimensions.
(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 and Reason (R) is not the
correct explanation of Assertion (A)
(C) Assertion (A) is True but Reason (R) is False
(D) Assertion (A) is False but Reason (R) is True
Q.9 Observe the picture given below and identify the feature of planning highlighted in (1)
it.

(A) Planning is pervasive

(B) Planning is primary function of management
(C) Planning focus on achieving objectives
(D) Planning is continuous process
Q.10. Which of the following statements is not true with reference to planning? (1)
(A) Planning is a pre-requisite for controlling
(B) Planning does not lead to rigidity
(C) Planning enables a manager to look ahead and anticipate changes
(D) Planning facilitates co-ordination among departments and individuals in the
organisation
Q.11. ABC Electronics deals in electrical goods manufacturing business. It plans for a (3)
 successful year of production and sale this year. It has in advance given targets
to all its departments and employees. The departments and employees are
happy about this. They know that now they won‘t have to do unconcerned
activities thus leading to more focused approach resulting in saving of
resources. The company is thinking of starting two new plants in the southern
portion of India. For this some concrete plan has to be made. The main core
team of the company has decided to weigh all the options and then choose the
best one. The road might be long but the company is geared to face all the
challenges.
In the above case identify importance of planning highlighted.
Q.12. XYZ ltd. has a plan of increasing profits by 20%. It has devoted a lot of time and (3)
money to this plan. But the competition starts increasing, so it could not change
its plan to beat its competitors because huge amount of money had already
been devoted to the pre-decided plan. It caused losses to the company.
Explain any two limitations of planning highlighted in the above case. Also,
quote the lines from it.
Q.13. Hero Cycles was in the business of manufacturing racing-cycles and had monopoly (3)
in the market. The company was doing very well and was consistently meeting its
objective of 10% increase in sales every year. Encouraged by the good track
record, the Managing Director of the company kept an ambitious target of 15%
increase in sales for the next year. The same year, two competitors also entered
the market and because of this the company was not able to meet its target.
Identify & Explain the limitation of one of the functions of management because of
which the company was not able to achieve its target.
Q.14. It is deciding in advance what to do and how to do? It is one of the basic (3)
managerial functions. It requires that before doing something, the manager must
formulate an idea of how to work on a particular task. This function is closely
connected with creativity and innovation. It seeks to bridge the gap between where
we are and where we want to go and is performed at all levels of management.
In spite of this the function of management referred above has a number of
limitations. Explain any two such limitations.
Q.15. In an annual general meeting, a company sets its targets for the year. The (3)
manufacturing department has decided to manufacture 2.5 million units of the
product and has decided to monitor the performance so as to control it accordingly.
The survey done by the company has shown a number of cities in the north which
are showing increased demand for the product. The company in its research during
the last three months generated various options and decided to follow the best one.
The HR team is also concerned about its output. The HR head revealed that there
can be shortage of MBA pass outs which can reduce the quality of manpower in the
near future so it has decided to arrange HR workshops in different colleges to get
the best candidates. The board meeting ends on a positive note.
In the above case identify the importance of planning and the concerned lines.
Q.16. Identify the types of plans: (4)
1. On the wall of ‗Health is Wealth‘ hospital a board is hanging. On this board. It is
written ‗We care for the health of senior citizens as our topmost priority‘. This
hospital is known for treating people aged more than 60 years.
2. Nitin calls his new subordinates for a meeting. He is a top-level manager. He
arranges for a power point presentation to train his subordinates who are all middle
level managers. He tells them the way of doing task of treating suppliers through a
new software system to be installed within next 30 days.
3. Yogesh takes a meeting and guides his employees in a type of plan which is
 chronological in nature and is situation specific. It is a collection of various methods
in a step wise sequence.
4. Gaurav has given a detailed statement of expected results in numerical terms.
This plan is conveyed to the subordinates by him in a special meeting.
Q.17. An established firm has fifty years of experience in shipping industry. The company (4)
time and again proves itself as one of the dominant figures in the market. The plan
for the whole year is given a lot of importance. According to the owner of the
company their plans are the basic structures upon which other important functions
of management rest. It is important that the plans are communicated to the
employees. The top management ensures that the plans are communicated and
implemented at all levels and in all departments. To learn from past mistakes is a
habit of this successful company. They prepare plans for short term as well as long
term where it can be seen that throughout the year the plans are prepared one after
another. Shipping industry needs such dedicated companies. The goals are
specific and the activities to achieve these specific goals are undertaken. The
company has planned a growth of 20% in revenue this year. Let‘s see how much
it‘s possible for it to achieve it by the end of the year.
In the above case identify the various features of planning highlighted.
Q.18. Suresh is an energetic middle level manager. He tries to make best plans. For this (4)
he involves foresight and intelligent imagination. Within three years many of his
projects have been very successful. His high success rate is due to his good plans.
He always makes alternative plans and selects the best out of them after
considering relevant aspects. However, he knows it is not necessary that his all
plans will be successful. He knows that sometimes his concern for making very
good plans eats a lot of time and energy. His friend Jai suggests him to take
suggestions from others when he makes his plans and also consider plans made
by others. Even after so much painstaking Suresh knows that his plans can yet fail
in the uncertain business environment. He has recently decided to plan carefully in
future.
Which features of Planning have been highlighted in the above case?
Which limitations of Planning have been highlighted in the above case?
Q.19. Explain the following features of planning: (4)
(a) Planning focuses on achieving objectives; and
(b) Planning is a mental exercise.
Q.20. Glen Pharmaceuticals Ltd. is engaged in the manufacturing and distribution of (4)
medicines. The company has set up an objective of increasing its sales turnover by
20%. Tο achieve this objective the company has decided to diversify into baby
health care products. Since the company has already set its objectives and
developed premises based on the same, it wants your help for the remaining steps
to be taken in this process. Explain briefly these steps.
Q.21. A company is manufacturing readymade garments. The CEO wants to increase the (6)
profits by purchasing new high speed machines, increasing the sale price or using
waste material in manufacturing stuffed toys. He decided that using waste material
to increase the profit is the best solution for him.
(a) Identify the concept of management involved.
(b) Mention the steps involved in the above process by quoting the lines from the
question.
(c) To complete the process of their concept identified in (a) what further steps
does the manager have to take?
Q.22. An established firm has twenty-five years of experience in shipping industry. The (6)
company time and again proves itself as one of the dominant figures in the
 market. The plan for the whole year is given a lot of importance. According to
the owner of the company their plans are the basic structures upon which other
important functions of management rest. It is important that the plans are
communicated to the employees. The top management ensures that the plans
are communicated and implemented at all levels and in all departments. To
learn from past mistakes is a habit of this successful company. They prepare
plans for short term as well as long term where it can be seen that throughout
the year the plans are prepared one after another. Shipping industry needs such
dedicated companies. The goals are specific and the activities to achieve these
specific goals are undertaken. The company has planned a growth of 20% in
revenue this year. Let‘s see how much it‘s possible for it to achieve it by the end
of the year.
In the above case identify the various features of planning highlighted.
Also Identify and Explain the type of plan which is indicated in the above case?

ANSWERS
Q.1. (B) Identifying an alternative course of action (1)
Q.2. (D) Assertion (A) is false, but Reason (R) is true (1)
Q.3. (A) planning focuses on achieving objectives (1)
Q.4. (B) planning is futuristic (1)
Q.5. (C) Setting objectives, developing premises, Identifying alternative course of (1)
actions, Evaluating alternative courses
Q.6. (D) Planning does not guarantee success. (1)
Q.7. (A) Programme (1)
Q.8. (D) Assertion (A) is False but Reason (R) is True (1)
Q.9. (C) Planning focus on achieving objectives (1)
Q.10. (B) Planning does not lead to rigidity (1)
Q.11. The importance of planning indicated in the above case are: (3)
20. Planning provides directions: It has in advance given targets to all its
departments and employees.
21. Planning reduces overlapping and wasteful activities: They know
that now they won‘t have to do unconcerned activities thus leading to more
focused approach resulting in saving of resources.
22. Planning facilitates decision making: The main core team of the
company has decided to weigh all the options and then choose the best one.
Q.12. (i) ‗XYZ ltd. has devoted a lot of time and money to its plan.‘ (3)
Planning is a time-consuming process. It also involves huge costs.
(ii) ‗The competition starts increasing, so it could not change its plan to beat its
competitors because huge amount of money had already been devoted to the
pre-decided plan.‘
Planning leads to rigidity. Following a pre-decided plan, when circumstance
change, may not turn out to be in the organisation‘s interest
Q.13. Planning may not work in a dynamic environment: The business environment is (3)
dynamic, nothing is constant. The organisation has to constantly adapt itself to
changes. It becomes difficult to accurately assess future trends in the environment.
Planning cannot foresee everything and thus, there may be obstacles to effective
planning.
Q.14. Planning function of management has been referred above. (3)
Two limitations of the planning function of management are:
1. Rigidity: One of the limitations of planning is rigidity. The existence of a plan
 puts the managerial activities In a rigid framework. Programmes are carried out
according to the plan and deviations are considered to be highly undesirable.
2. Reduces creativity: Planning involves deciding in advance what is to be done,
how is it to be done, when is it to be done and by whom is it to be done. There is
very little scope for deviating from the plans. This blind conformity with the pre-
determined guidelines discourages individual initiative and freedom.
Q.15. The importance of planning highlighted above: (3)
1. Planning establishes standards for controlling. The manufacturing department
has decided to manufacture 2.5 million units of the product and has decided to
monitor the performance so as to control it accordingly.
2. Planning facilitates decision making. The Company in its research during the last
three months generated various options and decided to follow the best one.
3. Planning reduces the risk of uncertainty. The HR head revealed that there can
be shortage of MBA pass outs which can reduce the quality of manpower in the
near future so it has decided to arrange HR workshops in different colleges to get
the best candidates.
Q.16. The different types of plans are: (4)
1. Policy 2. Method 3. Procedure 4. Budget
Q.17. The features of planning highlighted above are: (4)
1. Planning is a primary function of management: According to the owner of the
company their plans are the basic structures upon which other important functions
of management rest.
2. Planning is pervasive: The top management ensures that the plans are
communicated and implemented at all levels and in all departments.
3. Planning is continuous: They prepare plans for short term as well as long term
where it can be seen that throughout the year the plans are prepared one after the
other.
4. Planning focuses on achieving objectives: Goals are specific and the
activities to achieve these specific goals are undertaken.
Q.18. The features of Planning which have been highlighted in the above case are: (4)
23. Planning is a mental exercise: For this he involves foresight and intelligent
imagination.
24. Planning involves decision making: He always makes alternative plans
and selects the best out of them after considering relevant aspects.
The limitations of Planning which have been highlighted are:
25. Planning is a time-consuming process: He knows that sometimes his
concern for making very good plans eats a lot time and energy.
26. Planning does not guarantee success: Even after so much painstaking
Sukumar knows that his plans can yet fail in the uncertain business
environment.
Q.19. (a) Planning focuses on achieving objectives: Organisations are set up with a (4)
general purpose in view. Specific goals are set out in the plans along with the
activities to be undertaken to achieve the goals. Thus, planning is purposeful.
Planning has no meaning unless it contributes to the achievement of predetermined
organisational goals.
(b) Planning is a mental exercise: Planning requires application of the mind
involving foresight, intelligent imagination and sound judgement. It is basically an
intellectual activity of thinking rather than doing, because planning determines the
action to be taken. However, planning requires logical and systematic thinking
rather than guess work or wishful thinking. In other words, thinking for planning
must be orderly and based on the analysis of facts and forecasts.
Q.20. Remaining steps to be taken in the process of planning are: (4)
(i) Identifying and evaluating alternative courses of action.
(ii) Selecting an alternative.
(iii) Preparation of derivative plans. (iv) Implementing the plan and follow up
action.
Q.21. (a) Concept of Management: Planning (6)
(b) Steps mentioned above:
12. Setting objectives:
Quote: The manager wants to increase the profits...
13. Identifying the alternative courses of action:
Quote: Purchasing new high-speed machines, or increasing the sale price, or
using waste material in manufacturing stuffed toys.
14. Evaluating alternative courses and selecting an alternative:
Quote: Decided to use the waste material.
(c) Further steps to complete the process of planning:
15. Follow-up
16. Implementation of plans.
Q.22. The features of planning highlighted above are: (6)
27. Planning is a primary function of management. According to the owner of
the company their plans are the basic structures upon which other important
functions of management rest.
28. Planning is pervasive. The top management ensures that the plans are
communicated and implemented at all levels and in all departments.
29. Planning is continuous. They prepare plans for short term as well as long
term where it can be seen that throughout the year the plans are prepared
one after the other.
30. Planning focuses on achieving objectives. Goals are specific and the
activities to achieve these specific goals are undertaken.
The type of plan which is indicated in the above case is ‘Objective’.
****************
 Chapter- ORGANISING
Sr. Questions Marks
No.
1 What is the basis of delegation of authority? 1
a)Both Division of labour and Centralisation
b)Decentralisation
c)Centralisation
d)Division of labour

2 Assertion (A): Formal organisation provides stability to the 1

organisation.Reason (R): It places more emphasis on structure and work
a)Both A and R are true and R is the correct explanation of A.
b)Both A and R are true but R is not thecorrect explanation of A.
c)A is true but R is false.
d)A is false but R is true.

3 Arrange the following steps in the process of organising in the correct 1

sequence:
Assignment of duties
Departmentalisation
Identification and division of work
Establishing reporting relationship
1.
a)(iii); (ii); (iv); (i)
b)(ii); (iii); (i); (iv)
c)(iii); (ii); (i); (iv)
d)(i); (ii); (iv); (iii)

4 Which of the following is not a feature of functional structure? 1

(a) It promotes functional specialisation.
(b) Managerial development is difficult.
(c) It is easy to fix responsiblity for performance.
(d) It is an economical structure to maintain.

5 Assertion (A) : Organising removes ambiguity in transfer of information 1

and
instructions.
Reason (R) : The establishment of working relationship under organising
clasifies lines of communication.
Read the above statements—Assertion (A) and Reason (R) and choose
the
correct alternative out of the following:
(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
(c) Assertion (A) is true but Reason (R) is false
(d) Assertion (A) and Reason (R) both are false

6 Statement I : Functional structure is economical 1

 Statement II : In a functional structure functions are duplicated
Read the above statements I and II and choose the correct option from
the
following:
(a) Statement I is correct but statement II is incorrect.
(b) Statement I is incorrect but statement II is correct
(c) Both the statements I and II are correct
(d) Both the statements I and II are incorrect

7 The power of taking decisions in order to guide the activities of other is 1

called
................
(a) Accountability (b) Authority
(c) Responsibility (d) Delegation

(
8 Upward flow of communication is there in the following :- 1
(a) Authority and responsibility (b) Authority and Accountability
(c) Responsibility and accountability (c) None of these.

9 Assertion (A): Formal organisation provides stability to the organisation. 1

Reason (R): It places more emphasis on structure and work.
a) Both A and R are true and R is the correct explanation of A.
b) Both A and R are true but R is not the correct explanation of A.
c) A is true but R is false.
d) A is false but R is true.

10 Complete centralisation would imply concentration of all decision making 1

functions at the ________.
a) Floor level management
b) apex of the management hierarchy
c) lower level of the management hierarchy
d) middle level management

11 "A company‘s formal structure results in slow decision-making due to 3

excessive procedural delays. How can the company maintain the
advantages of formal organisation while improving decision-making
speed?"

12 "In a team where an informal organisation exists, group interests 3

sometimes conflict with organisational objectives. How can management
ensure that group interests do not disrupt organisational goals?"

.
13 Why does informal organisation exist within the framework of formal 3
 organisation? Give any two reasons for the emergence of informal
organisations.

14 Sudhir is working as a purchase manager in a power sector company. All 3

his subordinates hold him in highregard for his exceptional managerial
skills. On one hand, as a manager, he is a tough task master and
expectsstrict compliance to the organisational rules and procedures from
his subordinates. On the other hand, he makesconscious efforts to
develop rapport with his subordinates by interacting freely with them
during the lunchbreaks in the cafeteria. Many a times these chit chats
helps him to get an insight into the views and opinions ofhis team
members about the policies of the organisation.In the context of the case:
a. Identify and explain the two types of organisations have been
discussed.
b. State any three differences between the types of organisations as
identified in part (a) of the question

15 The directors of Girish Electronics, an organisation manufacturing T.V. 3

components, have asked Vinod, theirMarketing Manager to achieve a
target sale of ₹ 5,00,000 per day. Vinod has delegated the task to Ankit,
hisDeputy Sales Manager working under him. Ankit could not achieve the
targets. Is Vinod responsible for thefailure of Ankit? State the relevant
principle in support of your answer.

16 A company manufacturing sewing machines set up in 1945 by the British 4

promoters follows formal organisationculture in totality. It is facing lot of
problems in delays in decision-making. As the result it is not able to
adapt tochanging business environment. The work force is also not
motivated since they cannot vent their grievancesexcept through formal
channels, which involve red tape. Employee turnover is high. Its market
share is alsodeclining due to changed circumstances and business
environment.You are to advise the company with regard to change it
should bring about in its organisation structure toovercome the problems
faced by it. Give three reas ons in terms of benefits it will derive from the
changessuggested by you.
2.
17 What is meant by Delegation? State any three points which highlight the 4
importance of delegation in anorganisation.
3.
18 The Employees of Ankit Ltd., a software company, have formed a 4
dramatic group for their recreation. Name the typeof organisation so
formed and state its three features.

19 What is a divisional structure? Discuss its advantages and limitations. 4

4.
20 E-Solutions Ltd. started its operations in the year 2000. At the time of its 6
inception, the company had only ten employees with two departments, a
Production department and an Administration department. The products
supplied and the services provided by the company started gaining
popularity over the years. The management had faith in the abilities of
the employees and thus they allowed them freedom of action. The
 management recognised that the decision-makers at different levels of
the organisation need to be given more autonomy. They took a policy
decision that there will be less control of superiors over subordinates.
This increased the role of the subordinates in the organization and now
they were in a position to take numerous as well as important decisions.
As a result, its business has diversified into many areas. Presently, it has
its operations throughout the country with seven branches overseas. Its
organizational structure has now changed into divisional structure and
ten thousand people are working with the company.

a. Identify the concept of management which helped the company to

diversify into many areas and branches abroad.
b. Explain five points of importance of the concept identified in (a) above.

1.
21 "XYZ Ltd. has recently expanded its operations, and the management is 6
considering restructuring the organisation to improve efficiency and
coordination. Based on your understanding of the process of organising
and organisational structure, suggest a suitable approach for XYZ Ltd. to
optimise its structure. How would you address key aspects like division of
work, reporting relationships, and span of management?"

22 "ABC Corp. is a fast-growing company that is experiencing an increasing 6

workload on top management. The company is considering
decentralising its decision-making process to reduce the burden on
senior leaders and encourage quicker responses to market changes.
Based on the concept of decentralisation, how would you explain the
benefits of decentralisation for ABC Corp. in terms of managerial
development, decision-making speed, and organisational growth?"

Answers
Sr. Questions Marks
No.
1 Ans- 1
(d)Division of labour
Explanation:
Division of labour is a basis for delegation of authority

2 Ans- 1
(b)Both A and R are true but R is not the correct explanation of A.

3 Ans- 1
(c)(iii); (ii); (i); (iv)

4 Answer: c 1
Explanation:
(c) it is difficult to fix responsibility for performance
5 1
(a)
6 1
Ans
(a) Statement I is correct but statement II is incorrect.

7 1
(b) Authority
8 1
(c) Responsibility and accountability
9 1
a) Both A and R are true and R is the correct explanation of A.
10 1
b) apex of the management hierarchy
11 3
Answer:
To improve decision-making speed without sacrificing the advantages of
formal organisation, the company can streamline processes by reducing
unnecessary levels of approval, decentralising decision-making authority,
and implementing clear protocols for urgent decisions. Training
managers to empower their teams with more autonomy in routine
decisions can also reduce delays.
For example, a company can implement a policy where managers have
the authority to make decisions within a certain budget, avoiding lengthy
approval chains for small-scale decisions, while still maintaining overall
accountability.
12 3
Answer:
Management can ensure that informal group interests align with
organisational goals by creating clear communication channels and
promoting a strong organisational culture that emphasizes shared goals.
Management should also address any conflicts early by involving
informal leaders to mediate and align group interests with company
objectives. Encouraging open discussion and resolving issues through
team-building activities or regular feedback sessions can prevent
disruptions.
For example, if a team prioritises social needs over work deadlines,
management can set clear expectations and include both work and social
activities as part of the team‘s goal-setting, ensuring that employees feel
their social needs are met without compromising work performance.
13 Ans- 3
i. To fullfil the social needs of the members: The basic purpose of
informal organisation is fulfillment of social and personal needs of people.
People share common thoughts, feelings and interests different from
formal organisational goals. Their social needs of friendship, love and
support are strengthened by informal organisations.
ii.To make the communication easy.
Advantages
i.There can be faster spread of communication.
ii.It helps to full the social needs of the members and this enhances their
job satisfaction.
 iii.Top level managers can know the real feedback of employees on
various policies and plans.

14 Ans- 3
Hint- Formal and informal organisation.

15 Ans- 3
Yes; since delegation does not mean abdication. Delegation helps a
manager to extend his area of operation as without it hisactivities would
be restricted to only what he himself can do. However delegation does
not mean abdication; the manger shall stillbe accountable for the
assigned task.
16 Ans- 4
Introduction of informal organisation: The informal organisation may be
defined as ―a network of personal and socialrelationships that arise
spontaneously as people associate with one another in a work
environment. It is composed of all theinformal groupings of people within
a formal organisation.‖
5. a. It leads to faster spread of information as well a quick
feedback since fixed lines of communication are not
followed.
6. b. It fulfills the social needs of the members. This enhances
their job satisfaction since it gives them a sense of
belongingnessin the organisation.
7. c. It contributes towards fulfillment of organisational
objectives by compensating for inadequacies in the forma
lorganisation.For example, employees' reactions towards
plans and policies can be tested.
17 Ans-Delegation is the entrustment of responsibility and authority to 4
another and the creation of accountability for performance.‘Importance of
delegation of authority:It helps in effective management as the managers
get more time to concentrate on important matters.
8. 1.It helps in development of employees as the employees
get more opportunities to utilize their talent.
9. 2. It helps to motivate employees as the employees feel
encouraged and try to improve their performance further.
10. 3. It facilitates growth by providing a ready workforce to
take up leading positions in new ventures.
11. 4. It establishes a management hierarchy through clear
superior subordinate relationships.
18 Ans-It is an informal organisation. he informal organisation may be 4
defined as ―a network of personal and social relationships that
arisespontaneously as people associate with one another in a work
environment. It is composed of all the informal groupings of peoplewithin
a formal organisation.‖ The main features of it are the following:
31. Based on Formal Organisation: This is based on formal
organisation where people also have informal relations. (It
meansfirst of all the formal organisation is established and then
informal organisation is created out of it.)
32. It has no Written Rules and Procedures: In this organisation, there
 are no written rules and procedures to governinterrelationship. But
there are group norms which have to be observed.
33. Independent Channels of Communication: In this organisation
relations among different people are not defined because aperson
at the lowest rank can have direct contact with the person at the
highest level. The flow of communication cannot bespecified.

19 4
Ans-
Divisional Structure: In a divisional structure, all activities of the
organization are grouped into a number of divisions. Divisionsmay be
created either on the basis of products or territories. Each unit has a
divisional manager responsible for the performanceand who has
authority over the unit. Each division performs different activities together
like the production of goods, marketing,purchase etc. to achieve the
organizational objectives. Each department is headed by a functional
head, who has to carry out allfunctional activities concerned with the
department.
1. Advantages of Divisional StructureProduct Specialization:
Divisional structure leads to product specialization. A
divisional head gains experience andspecialisation in all
functions related to a particular product. This specialization
helps in the development of varied skills in adivisional head
and he may prepare himself for the higher positions.
2. Expansion and Growth: Divisional structure plays important
role in adding new divisions without interrupting the
existingones. It leads to expansion and growth of an
enterprise.
3. Promotes flexibility and initiative: Divisional structure allows
each division to work as an autonomous unit. This
encouragesfast decision making and avoids unnecessary
delays. It promotes flexibility and initiative.
4. Accountability: It is easy to measure the performance of
each division because the divisional heads are accountable
forprofits. It is easy to identify revenues and costs related to
different departments. It helps in proper performance
measurement.It is also helpful in fixation of responsibility in
case of poor performance by any division and appropriate
remedial action canbe taken.
5.
6. Disadvantages/Limitations of Divisional Structure Misuse of
Authority: Divisional structure provides authority to division
managers to supervise all activities related to a particular
division. Such a manager may misuse his authority and
ignore organizational interests.
7. Conflict: Divisional structure may lead to conflict and
confusion between different divisions regarding the
allocation of funds and resources. A particular division may
seek to maximize its profits at the cost of other divisions.
8. Duplication of Activities: There may be a duplication of
activities which increase the costs. Similar activities are
 performed in all division which leads to duplication of work
and increases expenditure.

20 6
Ans-
. a. The Concept of Management which helped the Company to Diversify
into many Areas and Branches Abroad is Decentralization.
b. Importance of Decentralization can be explained with the help of the
following points:
1. Developing Initiative among Subordinates: Passing of authority at
middle and lower level shows the trust and faith oftop-level in their
subordinates and this trust and faith motivate the employees working at
different levels as they are allowed to make decisions without seeking the
approval of superiors.
34. Develop Managerial Talent for Future: In decentralization,
Managers working at the lower and middle level also learn the art
of making decisions. They get the experience of performing
activities of top executives and learn to manage the authority
given to them.
1. 3. Quick Decision-making: In the Decentralization
process decision-making is not restricted in few
hands only by decision-making power is entrusted to
all the managers who are taking actions or
performing the activities. This leads to faster
decisions because employees who have to perform
the activities are allowed to take decisions also.
2. 4. Relief to Top Level Management: In the process
of Decentralization top-level managers are not
overburdened with the responsibilities and authority
as they systematically pass the authority and
responsibilities at different levels and they become
free to concentrate on core and important issues.
3. 5. Facilitates Growth: Decentralization grants more
autonomy or freedom to a lower level. Thus
productivity increases and it will generate more
revenue which can be used for expansion.
21 6
Answer:
To optimise XYZ Ltd.‘s organisational structure, the company must
consider the following steps based on the process of organising:

1. Identification and Division of Work:

Recommendation: Begin by analysing the existing roles and
responsibilities to identify tasks that can be grouped logically. This will
ensure that work is divided effectively to prevent duplication and improve
efficiency. For instance, if XYZ Ltd. has expanded into multiple
geographical regions, the work can be divided by regions or product lines
(e.g., North Region, South Region, Product A, Product B).
Application: This step ensures that tasks are focused, manageable, and
aligned with the company‘s goals. By clearly defining the scope of
responsibilities for each department or unit, employees can focus on
 specific tasks without overlap.
2. Departmentalisation:
Recommendation: Depending on XYZ Ltd.‘s nature of work, they should
consider either functional or divisional departmentalisation:
Functional: If the company's operations are primarily standardized and
centralized (e.g., marketing, finance, human resources), functional
departmentalisation may be the most suitable. This would involve
grouping similar activities together, such as marketing, sales, and
production under separate heads.
Divisional: If XYZ Ltd. operates in diverse markets or regions, a divisional
structure would be more effective, with each division responsible for a
specific product, service, or geographical area. For example, a "North
Division" and "South Division" can be set up with their own respective
sales and operations teams.
Application: This ensures that each department or division has a clear
focus and can operate independently, leading to improved coordination
within each unit.
3. Assignment of Duties:
Recommendation: After departmentalisation, specific duties must be
assigned to individuals within each department or division. Managers
should define clear job roles based on the requirements of the
organisation and each department.
Application: For instance, in the sales department, duties such as client
relationship management, sales targets, and customer support can be
assigned to different employees based on their skills and expertise. This
will avoid confusion and ensure tasks are completed efficiently.
4. Establishing Reporting Relationships:
Recommendation: It‘s crucial to define clear reporting relationships to
ensure accountability and smooth communication. XYZ Ltd. should
establish a hierarchical structure where employees know to whom they
report and who reports to them. This clarity helps reduce conflicts and
ambiguity in decision-making.
Application: For example, each regional manager in the divisional
structure should report to a general manager who oversees multiple
regions. Furthermore, clear lines of authority and responsibility should be
communicated through organizational charts and internal
communications.
5. Span of Management:
Recommendation: The span of management (number of subordinates
reporting to a manager) should be balanced to avoid overburdening
managers or creating inefficiencies. A narrower span of management
allows for more attention and guidance for each subordinate, but it could
result in higher managerial costs. A wider span can reduce managerial
costs but may overwhelm managers.
Application: In XYZ Ltd.‘s case, if the company has experienced rapid
growth, it may be wise to adopt a moderate span of management. For
example, each department head might supervise between 6-8
subordinates rather than a larger number, ensuring managers can
provide proper guidance and support without being stretched too thin.
22 Answer: 6
Decentralisation would offer several key benefits to ABC Corp.,
especially in terms of managerial development, quicker decision-making,
and organisational growth:
35. Development of Managerial Talent:
1. By delegating authority to lower levels of the organisation,
ABC Corp. can foster leadership skills and decision-making
capabilities among mid-level managers. This allows
managers to take ownership of their areas and develop the
experience needed for higher roles.
2. For example, divisional managers could be given more
control over their departments, enabling them to manage
budgets, make strategic decisions, and solve problems,
ultimately preparing them for future senior positions.
36. Quicker Decision-Making:
1. Decentralisation empowers lower-level managers to make
decisions without waiting for approval from top
management. This speeds up the decision-making process,
enabling ABC Corp. to respond more quickly to market
changes or operational issues.
2. For instance, a regional manager could adjust marketing
strategies or inventory levels without seeking approval from
the headquarters, thus reacting promptly to local market
demands.
37. Reduction of Burden on Top Management:
1. By decentralising authority, top management can focus on
more strategic issues, as operational decisions are handled
by lower-level managers. This reduces the pressure on
senior leaders and allows them to concentrate on long-term
planning and overall company growth.
2. For example, top executives at ABC Corp. could shift their
attention to international expansion plans, while day-to-day
decisions about sales or production could be managed by
regional or departmental managers.
38. Encouraging Initiative and Organisational Growth:
1. Decentralisation encourages initiative at all levels, as
managers feel more responsible and empowered to make
decisions that benefit their departments. This leads to
higher motivation, innovation, and ultimately contributes to
the growth of the organisation.
2. For instance, a department head may propose new product
ideas or process improvements based on their direct
interactions with customers or market trends, contributing to
the company‘s competitive advantage.
CLASS XII -STAFFING
Question bank (High Achievers)
1 Omkar ltd. is involved in manufacturing electronic items. The sales of the
companygrowingdaybyday.Butcustomersaredemandingforlatesttechnologyintheproductof
the company. Therefore, company has imported some hi-tech machine from Japan and
Germany so as to improve the quality of their products in comparison to the competitors
but the problem is that some workers of factory remains idle and some are not able to 1
handle these machine due to lack of knowledge.
Suggest which method of training should be given to the workers in the given situation.
(a)VestibuleTraining (b)ApprenticeshipTraining
(c)Induction Training (d)Campus Training
2

Identify the type of training in the given image

(a)Induction Training (b)InternshipTraining
C) (a)VestibuleTraining (b)ApprenticeshipTraining
3 Rakesh works as a software engineer in an IT company. He provided the reference of close
friend Rohan to the Human Resource Department for the post of Senior Business
Development Manager. Rohan was duly selected for the concerned post by the company.
Identify the source of recruitment being used by the company. 1
(a) Advertising
(b) Placement agencies and management consultants
(c) Recommendation of employees
(d) Direct recruitment
4 Assertion (A): Expenses on training are the investment for the future.
Reason (R): Expenses on training makes employees able to complete their work in an
efficient manner and give the benefit of specialization to the organization.
Choose the correct option from the following: 1
(a) A is correct but R is not the correct explanation of A.
(b) A is correct and R is the correct explanation of A.
(c) Only A is correct, R is incorrect.
(d) Both A and R is incorrect
5 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.
(a)WorkloadAnalysis (b)Workforce Analysis
(c) Selection (d)Recruitment.
Or
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.

(a)Workload Analysis (b)Workforce Analysis

(c) Selection (d)Recruitment
Match the terms given in Column I with their meanings in Column II :

Column I Column II
6 17. Placement 21. Introducing the selected employee to other
employees and familiarising him with the rules and
policies of the organisation
18. Recruitment
22. It refers to the employee occupying the
position or post for which he/she has been selected
19. Orientation

23. Evaluating an employee‟s current and/or past

performance as against certain predetermined
20. Performa standards
nce Appraisal
24. The process of searching for prospective
employees and stimulating them to apply for jobs in
the organization

Choose the correct option from the following :

25. 1-(i), 2-(ii), 3-(iii), 4-(iv)
26. 1-(ii), 2-(iii), 3-(i), 4-(iv)
27. 1-(ii), 2-(iv), 3-(i), 4-(iii)
28. 1-(ii), 2-(i), 3-(iv), 4-(iii)

Identify the External source of recruitment illustrated by the picture given below:

29. Direct Recruitment

30. Casual Callers
31. Advertisement
32. Labour Contractor
8
 ABC Tech Solutions, a leading IT company, recently faced a talent shortage due to rapid
expansion. To address this, the HR department initiated a robust staffing process. They
began with analyzing the number of employees required and the qualifications needed for
various roles. Recruitment was done through campus placements and job portals. A rigorous
selection process, including aptitude tests, group discussions, and personal interviews, was
conducted. Once hired, employees underwent an induction program to familiarize them with
the company‟s policies and culture. Some were also provided on-the-job training to develop
specific skills required for their roles.
Which method of recruitment was used by ABC Tech Solutions?
a. Internal recruitment
b. External recruitment
c. Promotion
d. Transfers

Assertion (A): Internal sources of recruitment improve employee morale and motivation.
Reason (R): Internal recruitment offers existing employees opportunities for promotion and
9 career growth.

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, but Reason (R) is false.
d. Assertion (A) is false, but Reason (R) is true.

Assertion (A): Staffing is an essential managerial function.

10 Reason (R): Staffing ensures the right person is placed in the right job at the right time.

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, but Reason (R) is false.
d. Assertion (A) is false, but Reason (R) is true.

11 Mrs. AhilyaPasi is the Principal of a prestigious school in New Delhi. The school has a
vacancy of a headmistress/headmaster of the junior wing of the school. The senior teachers
of the school have the opinion that only internal candidates should be considered for this 3
post. However, Mrs. Pasi and the management would like to invite applications from external
sources too. Briefly explain any three justifications the management can provide to convince
the staff for inviting applications of external candidates for the vacant post.
12 Identify and explain the type of training mentioned in the following case:
Navin is a newly recruited candidate in a company. Being new to the organisation he is taken 3
around the office premises by the HR Manager to familiarise him with the work environment
and the other members of the organisation. The basic idea behind is to outline the basic
overview of the business and its functioning and Navin‟s role in the environment.

13 Sunshine Pvt. Ltd. is a publishing company. Its book

onAccountancyforclassXIisingreatdemand.Asaresult,theemployees in the marketing
department are always racingagainst time. The employees have to work overtime and
 onholidaysto caterto the demand. 3
Managersinthemarketingdepartmentareunderstressastheyhave to handle more than two
territories. The work stress hasledtodissatisfactionamong theemployeesand managers.

39. Name and explain the step of staffing process which has not been performed
properly.
40. State the next two stages immediately following thestepidentified in part (1)
14 Radhika Garments Ltd. are the manufacturers of „Ladies Designer Suits‟ with their own trade
mark. During the year 2013-14 the company employed 30 senior technicians to work on
machines imported from France for manufacturing of „Ladies Designer Suits‟. The
technicians were employed on a probation of one year and were put on their respective jobs
after 10 days of on-the-job training. Because of the faulty selection process they could not
perform well. Ten of them left the job on their own and 12 had to be removed by the
company during the probation period. Now the company is in the process of selecting new
technicians. Advice the company about any three types of selection tests, describing each in
about 20 words, that may be used for selecting the desired technicians.

15 AkashIndustrieswantstohirestaffforitschemicaldivision.Thepersonneldepartmentlist out the

following methods of recruitment:
(a)Maxconsultantscanbeaskertolookoutforsuitablepersonnelonbehalfofthecompany. 4
(b)Participate in placement programme organized by different colleges in Delhi University.
(c)Consider voluntary applications received earlier from various job seekers.
(d)Using www.Naukri.comtosearchforprospective candidates.
Identify the source of recruitment in the given cases.
16 Gautam Natarajan is the founder of 'Brewed Beans Coffee, a famous chain of 21 outlets in 4
South India, selling high quality filter coffee. He is known for his leadership and vision. He
believes that human resources are the most important assets of an organisation. He often
quotes, "The right people can help you take your business to the top, the wrong people can
break your business." This is the reason he considers the function of management that fills
the various positions in the organization structure to be the most critical
And fundamental to organizational performance.

(a) Identify the function of management that has been emphasized by Gautam Natarajan.
(b) State any four points of importance of function identified in (a) above.
17 Mayank, the director of a company, is planning to manufacture stuffed toys for utilising waste 4
material of one of his garments factories. He decided that this manufacturing unit will be set
up in a rural area, so that people living in rural areas can have job opportunities. For this, he
selected Arbaaz, Kriti, Lata and Ritik as heads of Sales, Accounts, Purchase and Production
departments respectively. They were differently abled, but intelligent and creative persons in
designing.
State the next three steps Mayank has to follow in the staffing process after selecting heads
of different department.
18 Company A requires new employees. For this the company has started making efforts. The
financial condition of the company is not very good but the requirement of employees at key
positions is required. 4
Company B doesn‟t want too much complication in the process of selection and placement.
It wants to keep the process simple. The targets of production are already very demanding
for the top management. They want a way where their least efforts are required to form the
required taskforce to be involved for special projects.
Company C is struggling with lack of balance in the composition of its workforce. There are
certain departments in which the number of employees is surplus whereas there are certain
 departments in which there is shortage of required number of employees.
a) How can Company A solve its problem?
b) Which type of recruitment will be good for Company B?
c) What do you think could be the solution for Company C?

XYZ Ltd. is a fast-growing electronics company that recently introduced new technology in its
19 production process. However, employees are struggling to adapt to the changes, leading to 6
reduced productivity and errors. The management has decided to conduct training programs
to address this issue.
Answer the following:
1.Explain significance of training in this scenario.
2. Discuss any three types of training methods that XYZ Ltd. can use to help its employees
adapt to the new technology.
20 Sharmila, a very able HR manager, is called by her boss. He tells her to judge whether there
is under manning or over manning in the organisation. She takes her work sincerely and 6
finds out that the total number of employees in the organisation is less than required. Then
she starts a process of searching potential employees for the organisation. In her efforts to
do so she adopts three ways:
33. She goes to various MBA colleges to find out new talent.
34. She talks to the existing employees for information about candidates in their know-
ledge who can be recruited in the organisation.
35. She asks for data base of the candidates who applied last year but could not make it
to the organisation.
a. Which type of analysis is done by Sharmila?
b. Which process is started by Sharmila to meet the problem of under manning?
c. Identify different types of sources of external recruitment highlighted in the
above case.

21 After the outbreak of pandemic COVID-19, Yash Publishing Limited is planning to go digital 6
as the teachers and students are now more interested in E-content. After due consultation
with the top management, the company decided to publish E-books. For the same, they
hired a recruitment agency
to tap the right talent for the job.
The company also approached a well-established university in the city of Indore to recruit
qualified personnel for various managerial positions. For the post of E-content writer, the
company is using shine.com and monster.com.
(a) Identify and explain the function of management highlighted above.
(b) Quoting lines from the above, explain the types of external sources of recruitment
discussed in the para.
(c) State any two advantages of external sources of recruitment.
22 ABC Ltd. purchased a new machinery from America formanufacturing some auto 6
components. It was a cost-effectiveand quality production machine but during the
productionprocess, manager observed that the quality of the productionwas not as per
standards. On investigation, it was found thatthere was lack of knowledge of using these
hi-tech machines.So, frequent visits by engineers were required from Americabutthis
resulted inhigh overheadcharges.
Suggest what can be done to develop the skills and abilities ofemployees for producing
quality products by using these hi-tech machines. Also state how the employees or the
organisation will be benefited by your suggestion.
ANSWERS
1 (a)Vestibule Training 1
2 (d)Apprenticeship Training 1
3 (c) Recommendation of employees 1
4 (b) A is correct and R is the correct explanation of A 1
5 (a)Workload Analysis 1
6 C.1-(ii), 2-(iv), 3-(i), 4-(iii) 1

7 C. advertisement 1

8 b. External recruitment 1
9 a. Both Assertion (A) and Reason (R) are true, and Reason (R) is the correct explanation of 1
Assertion (A).
10 a. Both Assertion (A) and Reason (R) are true, and Reason (R) is the correct explanation of 1
Assertion (A).

11 1. Qualified Personnel: External sources help management to attract people to apply for vacant
jobs in the organization.
2. Wider Choice: External sources provide wide choice and help the enterprise to make right
choice of candidates.
3
3. Fresh Talent
4.competitive spirit
12 Induction/Orientation Training
orientation or Induction is the process of introducing new employees to the organization, its 3
culture, policies, and their job roles. It is an essential step in the staffing process and ensures
that new employees feel comfortable and prepared to start their work effectively.
Helps new employees settle into their roles and adapt to the organization‟s work culture.

It Reduces initial confusion and clarifies expectations and Promotes a sense of belonging and
reduces employee turnover.
13 The step of staffing process which has not been performed properly is:
Estimation of manpower requirements: It is the first step in the staffing process and iscarried
out with the help of workload analysis (assessment of the number and types of human
resources necessary for the performance of various jobs and accomplishment of 3
organisational objectives) and work force analysis (assessment of the number and
typeavailable).
41. The next two stages immediately following the step Estimation of man
power requirement are as follows:
42. Recruitment: Recruitment may be defined as the process of searching for
prospective employees and stimulating them to apply for jobs in
theorganization.
43. Selection: Selection is the process of choosing the best candidate from a pool of
applicants.
14 Three types of selection tests:
1. Intelligence tests. Such tests are designed to check the level of intelligence of the
candidates. It reflects the learning ability of an individual along with his ability to make 3
judgments and decisions.
2. Aptitude test. Aptitude test is designed to measure the potential of an individual for
learning new skills. It reflects the candidate‟s capacity to develop in the future.
3. Personality test. Such tests help in judging the overall personality of an individual. These
indicate about the person‟s reactions to emotions, maturity level and value system

15 44. PlacementAgencyandmanagementConsultants.
45.Campusrecruitments 4
46. Casual callers.
(d)Web publishing.
16 (a) The function of management is 'Staffing.
(b) 'Importance of Staffing.
The importance of staffing can be understood from the following points:
4
1. Filling Jobs with Competent Personnel: Staffing helps in discovering and competent
personnel for various jobs.
2. Better Performance: Proper staffing ensures higher performance by putting the right person
on the right job.
3. Survival and Growth: Staffing ensures continuous survival and growth of the enterprise
through succession planning for managers.

4. Optimum utilisation of human resources: Staffing process helps to ensure optimum use of
human resources by avoiding overstaffing. It prevents under-utilisation of personnel and high
labour costs. It also helps in avoiding disruption of work by indicating in advance the shortage of
personnel.
5. Improves job satisfaction and morale: Proper staffing improves job satisfaction and morale of
employees through objective assessment and fair rewarding of their contribution. In brief, sound
and effective staffing function helps in achieving overall organisational efficiency & its success.

17 The next three steps that Mayank has to follow in the staffing process after selecting heads of
different departments are:

(a) Placement and orientation.

b) Training and development 4
36. Performance Appraisal.
d) Promotion and career planning
18 The Company A can solve its problem by going for Internal Recruitment as in this way the
process of selection and placement will be simplified. The candidates who are already part of the 4
organisation can be more easily judged and evaluated. The reliability component will also be
high in this type of recruitment.
The Company B should go for Internal Recruitment. This mode of recruitment will be cheaper
and the Company can thus save money which is required more in case of external recruitment.
The Company C should opt for Internal Recruitment as employees can be transferred from
surplus areas to areas where there is shortage of employees. So an optimum balance can be
achieved within the departments.
The concept of management which is highlighted in the above case is „Merits of Internal
 Recruitment‟.

19 1.Significance of Training in This Scenario:

Helps employees understand and operate the new technology.
Reduces errors and increases productivity. 6
Boosts employee confidence and morale by enhancing their skills.
Ensures smooth adaptation to technological advancements.

2. Types of Training Methods for XYZ Ltd.:

On-the-Job Training:
Employees can learn by directly working on the new technology under the guidance of
supervisors or experienced co-workers. It provides hands-on experience and immediate
feedback.
Vestibule Training:
A replica of the new technology can be set up in a separate area where employees are trained
without disrupting actual production. This method ensures employees gain practical knowledge
in a controlled environment.
Apprenticeship Training:
This method pairs employees with skilled mentors who train them over a specific period,
ensuring they develop expertise in handling the new technology.

By implementing these methods, XYZ Ltd. can ensure its employees are better equipped to
adapt to the new system, leading to enhanced efficiency and productivity.
37. The type of analysis done by Sharmila is workforce analysis. Her boss tells her to judge
20 whether there is under manning or over manning in the organisation.
38. The process started by Sharmila to meet under manning is recruitment. She then starts a 6
process of searching potential employees for the organisation.
39. The different types of sources of external recruitment highlighted in the above case are:
a. Campus recruitment. She goes to various MBA colleges to find out new talent.
b. Employee recommendation. She talks to the existing employees for information
about candidates in their knowledge who can be recruited in the organisation.
c. Casual callers. She asks for data base of the candidates who applied last year but
could not make it to the organisation.
21 (a) The function of management is 'Staffing. Staffing is that part of the process of management
which is concerned with obtaining, utilising and maintaining a satisfactory and satisfied
workforce.
(b) (i) 'They find a recruitment agency to tap the right talent for the job': “Placement agencies and
management consultants”.

(ii) 'Approached a well establishing university in the city of Indore to recruit qualified personnel 6
for variousmanagerial positions': Campus recruitment.
(iii) 'For the post of e-content writer the company is using shine.com and monster.com': Web
publishing.
c). Importance of external source:
1.Qualified Personnel: External sources help management to attract people to apply for vacant
jobs in the organisation.
2. Wider Choice: External sources provide wide choice and help the enterprise to make right
choice of candidates.
3. Fresh Talent
4.competitive spirit
22 Training should be provided to the employees to develop their skills and abilities
 for producing quality products by using these hi- tech machines.
The benefits of imparting training to the employee are as follows:

47. Better career: Training leads to better career opportunities for the employees as
it helps to improve their skills and knowledge of doing the job.
48. Increased earnings: Training leads to increased performance by the 6
employees there by helping them to earn more.
49. Increased efficiency: Training makes the employees more efficient in
handlingmachinesand less proneto accidents.
4.Improved motivation: Training increases the satisfaction and morale of employees
there by motivating them to work with greater enthusiasm.
Study material/Questions for High Achiever students
Chapter 7: Directing
Q1-'Maslow's Need Hierarchy theory' is based on certain assumptions. Identify the incorrect
statement with respect to these assumptions:
40. People's behaviour is based on their needs.
41. A satisfied need can no longer motivate a person.
42. People's needs are in a hierarchical order, starting from basic needs to higher level needs.
43. A person moves to lower level of need only when a higher-level need is satisfied. 1

Q2- Statement 1: Leadership indicates the ability of an individual which influences the
behaviourof others.
Statement II: Leadership is exercised to achieve personal goals of the
leader.Choose the correct option from the following:
44. Statement I is true and Statement II is false.
45. Statement II is true and Statement I is false.
46. Both the Statements are true.
47. Both the Statements are false. 1

Q3- The communication gap due to size and complexity of organisation’s structure comes
underthe following category:
48. Semantic barrier
49. Psychological barrier
50. Organisational barrier
51. Personal barrier
Or
Identify the barriers of communication which arises due to policy, available facilities in
theorganisation and status difference between sender and receiver of information?
52. Semantic barrier
53. Psychological barrier
54. Organisational barrier
55. Personal
barrier 1
Q4-Assertion (A) Financial incentives refer to incentives which are in direct monetary form or
measurable in monetary term and serve to motivate people for better performance.
Reason(R) : All the needs of individuals are satisfied by money alone.
Choose the correct alternative from the followings:
 56. Both Assertion (A) and Reason (R) are correct and Reason (R) is the correct
explanation ofAssertion (A).
57. Both Assertion (A) and Reason (R) are correct but Reason (R) is not the correct
explanation ofAssertion (A).
58. Assertion (A) is correct, but Reason (R) is incorrect.
59. Assertion (A) is
incorrect, but Reason (R) is correct 1

Q5-Match the following column I with Column II with suitable features of Directing by using the
given option:
1 Exists wherever superior-subordinates relation exists (i) Continuous process

2. Throughout the life of the organisation (ii) Flows from top to bottom

3. Initiated at top and flows to the bottom level (iii) Takes place at every
level
4. Other functions create setting for this function (iv) Initiates action

Choose the correct option from the following:

(A) 1-(iii), 2-(i), 3-(iv), 4-(ii)
(B) 1-(i), 2-(iii), 3-(iv), 4-(ii)
(C) 1-(ii),2-(iv), 3-(i), 4-(iii)
(D) 1-(iii), 2-(i),3-(ii), 4-(iv) 1

Q 6- Assertion: Motivation helps in improving the performance of employees in an organization.

Reason: Motivation is based on the internal needs of individuals, which encourages them to perform
better and achieve organizational goals.
a) Both Assertion and Reason are correct, and Reason is the correct explanation of Assertion.
b) Both Assertion and Reason are correct, but Reason is not the correct explanation of Assertion.
c) Assertion is correct, but Reason is incorrect.
d) Assertion is incorrect, but Reason is correct.
Q 7: Assertion: Leadership is not an important factor in the success of an organization.
Reason: Leadership involves influencing people to strive towards organizational goals, which is essential for
success.
a) Both Assertion and Reason are correct, and Reason is the correct explanation of Assertion.
b) Both Assertion and Reason are correct, but Reason is not the correct explanation of Assertion.
c) Assertion is incorrect, but Reason is correct.
d) Assertion is correct, but Reason is incorrect.

Q 8:Assertion: Communication can occur in both formal and informal ways within an organization.
Reason: Informal communication, such as rumors, is always accurate and trustworthy.
a) Both Assertion and Reason are correct, and Reason is the correct explanation of Assertion.
b) Both Assertion and Reason are correct, but Reason is not the correct explanation of Assertion.
c) Assertion is correct, but Reason is incorrect.
d) Assertion is incorrect, but Reason is correct.
Q9:A manager is noticing several rumors circulating among the employees about upcoming
layoffs. Despite the rumors, the manager ensures that all official updates are communicated
through emails and formal meetings. What kind of communication barriers is the manager
addressing?
a) Psychological barriers
b) Semantic barriers
c) Transmission barriers
d) Personal barriers
Q10:An organization has a well-established formal communication system involving memos
and meetings. However, employees frequently discuss work-related matters informally
through social media and casual conversations. Which type of communication is this?
a) Formal communication
b) Informal communication
c) Both formal and informal communication
d) Neither formal nor informal communication

Q11- What is psychological barrier in the process of communication? Explain any two
psychological barriers to communication.

OR
‘Directing helps in effective and efficient functioning of the organization.' Explain this
statementby giving any three points. 3

Q12-Vinux Ltd.’ offers its employees shares at a price which is less than the market price.
60. Identify the incentive offered by the company and state the type of incentive discussed above.
61. State two other incentives of the type of incentive identified in (a) above. 3

Q13- Managers in Mac Ltd.' faced lot of issues due to barriers in communication leading to
creationof an environment of distrust and misunderstanding.
Suggest any four measures to improve communication effectiveness in Mac Ltd. 4
 Q14-State the four needs in Maslow's Need Hierarchy after 'Basic Physiological Needs'.
Or
Explain the following need as per the Maslow’s need hierarchy theory of motivation
a. Safety and Security need
b. Affiliation need
c. Esteem need
d. Self-actualization need 4

Q15-Give the meaning of ‘Formal’ and ‘Informal’ communication.

Or
Identify and explain the meaning of type of communication discussed in the following cases:
62. Which communication flows through official channels designed in the
organisation chart between superior and subordinates.
63. When
workers chatting in a canteen about the behaviour of the superior, discussing g about
rumors that some employees are likely to be transferred to one another. 4

Q.16. A behavior study was done on total of 100 employees of an organization. Group A (of 50
employees) were appreciated by the manager for their work and initiative for new idea. All these
employees were given option of flexible working hours and were paid wages at a higher piece rate. On
the other hand, Group B (of remaining 50 employees) was criticized for their poor performance. Their
increments were stopped and they were paid wages at a lower piece rate. (a) Identify and explain the
feature of motivation highlighted in the above case. (b) What type of leadership is followed by the
manager? Justify your answer. 4

Q17-. Huma is working in a company on a permanent basis. As per job agreement she had to work for 8
hours a day and was free to work overtime. Huma worked overtime, due to which she fell ill and had to
take leave from her work. No one showed concern and enquired about her health. She realized that she
was fulfilling only some of her needs while some other needs still remained to be fulfilled. (i) By quoting
the lines from the above para, identify the needs of Huma which she is able to fulfil. (ii) Also explain two
other needs of Huma followed by the above needs, which still remained to be satisfied.

Q18- Himesh is the CEO of Nelco Ltd. one of the world’s most successful companies. His success
stories have been well documented. He chooses highly motivated and capable managers who
canperform their tasks creatively and adequately without his help. He allows the group
members to work on their own tasks and resolve issues themselves. He intervene, but only
when needed to correct an unfavourable situation. He does not use power unless it is absolutely
essential. He evenallows mistakes to happen for his people to learn from them. He supports
them and supplies themthe required information to complete the assigned task.
50. Identify the leadership style adopted by Himesh.
51. With the help of a diagram, explain the other two leadership styles based on the use of authority.
6

Q19- Nilesh a sales representative of Omega Ltd. has changed seven jobs in the las tone year.
Hisa a hard working person but is not able to finalise deals with the customers due to his
inadequatevocabulary and omission of needed words. Sometime he uses wrong words because
 of which intended meaning is not conveyed . all this created a mis-understanding between him
and his clients.
1. Identify the category of communication barrier discussed above
2. State the communication barrier discussed above.
3. Explain more other communication barriers of the same category

Or
When communication barrier arises due to problems and obstructions in the process of
encodingand decoding of message into words or impressions. Normally, such barriers result on
account ofuse of wrong words, faulty translations, different interpretations, etc.
52. Identify the category of communication barrier discussed above
53. State the communication barrier discussed above.
54. Explain more other communication barriers of the same category 6

Q. 20. Rajiv is working as Personal Manager in a company. The specialty of the company is that financial
position of all the employees is good. The employees working here are honest punctual and
hardworking. The CEO of the company asked him to suggest a method of motivation. The CEO asked him
to suggest a method which is happily accepted by all the employees. Rajiv spoke to many employees in
this connection. Some employees suggested give more importance to individual autonomy, another
suggested good performance should be appreciated another group suggested to award, certificate,
trophies to recognize the good performance. Mr. Rajiv mixed all and suggested a method of motivation
to CEO. The CEO happily accepted that and it was immediately implemented. With in few days the
company’s growth rate appeared to have become fast.
1. Identify the functions of management indicate in the above paragraph.
2. Which motivation methods were suggested by different group of employees.
3. Which motivation method combine all the above stated and was suggested by personal manager.

Q. 21. Prateek is working in a multinational company in Noida. He was running a temperature for the
last many days. When his blood was tested, he was found to be positive for malaria. He was admitted in
a hospital and a blood transfusion was advised by the doctors as his condition was very serious. One of
his colleagues sent a text message to his superior, Mr. B. Chatterjee. Mr. B. Chatterjee immediately sent
a text message to the employees of the organization requesting them to donate blood for Prateek.
When the General Manager came t o know about it, he ordered for fumigation in the company premises
and cleaning the surroundings.
1. From the above paragraph, quote lines that indicate formal and informal communication.
2. State any two features of informal communication.
3. Identify any two values that are being communicated to society in the above case.

Q22- Sunidhi has started a designer studio in the basement of her residence after completing her
masters in fashion designing. She has appointed ten employees to take care of the various aspects of the
work. She interacts regularly with each employee to tell exactly what is expected of him/.her and what
he/she needs to do to be regarded as a good performer. At the same time she allows a free work
environment wherein the employees openly chit chat with each other in order to fulfil their social and
emotional needs. Sometimes, these interactions also lead to spreading rumours which are not
authentic.
In the context of the above case:
1. Name and explain the two types of communication being referred to in the above paragraph.
2. How does effective communication increases managerial efficiency?

======
Answer to the Questions for High
Achiever students Chapter 7:
Directing
Ans1. (D) A person moves to lower level of need only when a higher-level need is satisfied.
1
Ans2. (A) Statement I is true and Statement II is false. 1
Ans 3 (c) Organisational barrier 1
Ans4: c) Assertion (A) is correct, but Reason (R) is incorrect. 1
Ans5. (D) 1-(iii), 2-(i),3-(ii), 4-(iv) 1
Answer6: a) Both Assertion and Reason are correct, and Reason is the correct explanation of Assertion.
Answer7: c) Assertion is incorrect, but Reason is correct.

Answer8: c) Assertion is correct, but Reason is incorrect.

Answer9: a) Psychological barriers
Answer10: b) Informal communication

Ans11. Psychological barriers:

It refers to the emotional or psychological factors which acts as barriers in the communication
process is known as Psychological barrier. For example, a worried person cannot communicate
properly and an angry receiver cannot understand the real meaning of message. The state of
mindof both sender and receiver of communication reflects in the effective communication.

1-Premature evaluation: Some times people evaluate the meaning of message before the
sendercompletes his message. Such premature evaluation may be due to pre-conceived notions
or prejudices against the communication.
55. Lack of attention: The preoccupied mind of receiver and the resultant non-
listening of message acts as a major psychological barrier. For instance, an employee
explains about his problems to the boss who is pre-occupied with an important file
before him. The boss does not grasp the message and the employee is disappointed.
56. Loss by transmission and poor: retention: When communication passes through
various levels, successive transmissions of the message results in loss of, or transmission
of inaccurate information. This is more so in case of oral communication. Poor
retention is another problem.
Usually people cannot retain the information for a long
timeif they are inattentive or not interested.
57. Distrust: Distrust between communicator and communicate acts as a barrier. If
the parties donot believe each other, they can not understand each others message in its
original sense.
OR
‘Directing helps in effective and efficient functioning of the organization.' Explain this
statement by giving any three points.

Ans. Importance of directing (any three points)

1-Directing helps to initiate action: Directing helps to initiate action by people in the organisation
towards attainment of desired objectives.
2.Directing integrates employees’ efforts: Directing integrates employees’ efforts in the
organisation in such a way that every individual effort contributes to the organisational
performance. Thus, it ensures that the individuals work for organisational goals.
58. Directing guides employees to fully realise their potential :
Directing guides employees to fully realise their potential and capabilities by motivating and
providing effective leadership..
 59. Directing facilitates introduction of needed changes in the organisation: Effective
directingthrough motivation, communication and leadership helps to reduce such resistance.
60. Effective directing helps to bring stability: Effective directing helps to bring stability and
balance in the organisation since it fosters cooperation and commitment among the people and
helps to achieve balance among various groups, activities and the departments. 3

Ans12: (a)
Co-partnership/ Stock option
Financial incentives are the incentives measurable in direct monetary form/term which serve
tomotivate people for better performance.
61. Two other financial incentives are : (Any 2)
62. Pay and allowances include basic pay, dearness allowance and other allowances.
63. Productivity linked wage incentive aims at linking payment of wages to increase in
productivity at individual or group level.
64. Bonus is an incentive offered over and above the wages/ salary to the employees.
65. Sharing profit with employees serves to motivate the employees to improve their
performanceand contribute to increase in profits
66. Retirement benefits such as provident fund, pension, and gratuity provide financial security
toemployees after their retirement.
67. Perquisites and fringe benefits are offered such as car allowance, housing, medical aid,
andeducation to the children etc., over and above the salary. 3

Ans 13: Measures to improve communication effectiveness (any

four):(i)Clarify the ideas before communication.
68. Communicate according to the needs of receiver.
69. Consult others before communicating.
70. Be aware of languages, tone and content of message.
71. Convey things of help and value to listeners.
72. Ensure proper feedback to make communication process more responsive.
73. Communicate for present as well as future.
74. Follow up communication.
75. Be a good listener. 4

Ans14. Four needs in Maslow's Need Hierarchy after 'Basic Physiological Needs' are:
76. Safety and security needs: which provide security and protection from physical
and emotionalharm.
77. Affiliation/ Belongingness needs: which refer to the need for affection, sense of
belonging,acceptance and friendship.
78. Esteem needs: refer to the need for self respect, autonomy status, recognition and attention.
79. Self
actualization needs: are the highest level of needs in the hierarchy and refer to the drive
to become what one is capable of becoming. 4

Ans 15. Formal communication : is the communication which flows through official channels
designed in the organisation chart. This communication may take place between a superior and
subordinate, a subordinate and superior or among same cadre employees or managers.
 Informal communication: is the communication that takes place without following the formal
lines of communication. It is generally referred to as the ‘grapevine’ because it spreads
throughoutthe organisation with its branches going out in all directions in utter disregard to the
levels of authority. 4

Ans.16. Motivation can be either positive or negative. Positive motivation provides positive rewards like
increase in pay, promotion, recognition, etc. Negative motivation uses negative means like punishment,
stopping increments, threatening, etc.
2. Autocratic leadership style. The leader’s following is based on the assumption that reward or
punishment both can be given depending upon the result. 4

Ans.17- ‘Huma is working in a company on a permanent basis’. According to above line Huma is able to
fulfil her following needs: (a) Physiological needs(b) Safety or Security needs (ii) Needs of Huma which
still remained to be satisfied are: 1. Affiliation Need: It refers to the need for affection, since to
belongingness, acceptance and friendship. 2. Esteem Need: It refers to the need for self-respect,
autonomy, status, recognition and attention.
4

Ans 18: a) Laissez faire leadership style

b) Autocratic leadership style:
A is the Leader and B,C and D are the followers

An autocratic leader gives orders and expects his subordinates to obey those orders. If a
manageris following this style, then communication is only one-way with the subordinate only
acting according to the command given by the manager.
This leader is dogmatic, i.e., does not change or wish to be contradicted. His following is based
onthe assumption that reward or punishment both can be given depending upon the result.
This leadership style is effective in getting productivity in many
situations like in a factory where the supervisor is responsible for production on time and has to
ensure labour productivity. Quick decision-making is also facilitated.
But there are variations also, they may listen to everyone’s opinion, consider subordinates
ideas and concerns but the decision will be their own.

D
B C
Democratic leadership style:

B C D
 In the above diagram, A is the leader and B.C and D are subordinates. A as democratic leader
develops action plans and makes decisions in consultation with his subordinates. Such a leader
recognises that people perform best if the set their own objective.
A democratic leader will develop action plans and makes decisions in consultation
with his subordinates. He will encourage them to participate in decision-making. This kind of
leadership style is more common now-a-days, since leaders also recognise that people perform
best if they have set their own objectives. They also need to respect the other’s opinion and support
subordinates to perform their duties and accomplish
organisational objectives. They exercise more control by using forces within the group. 6

Ans19: a) Semantic barriers: Semantics is the branch of linguistics dealing with the meaning of
words and sentences. Semantic barriers are concerned with problems and obstructions in the
process of encoding and decoding of message into words or impressions. Normally, such barriers
result on account of use of wrong words, faulty translations, different interpretations, etc. These
are discussed below:
b) Badly expressed message: Some times intended meaning may not be conveyed by a manager
to his subordinates. These badly expressed messages may be an account of inadequate vocabulary,
usage of wrong words, omission of needed
words, etc.
C) (i) Symbols with different meanings:
A word may have several meanings. Receiver has to perceive one such meaning for the word used
by communicator. For example, consider these three sentences
where the work ‘value’ is used: (a) What is the value of this ring? (b) I value our friendship.
80. What is the value of learning computer skills?
You will find that the ‘value’ gives different meaning in different contexts. Wrong perception leadsto
communication problems.
81. Faulty translations: Sometimes the communications originally drafted in one language (e.g.,
English) need to be translated to the language understandable
to workers (e.g., Hindi). If the translator is not proficient with both the languages, mistakes may
creep in causing different meanings to the communication.
82. Unclarified assumptions: Some communications may have certain assumptions which are
subject to different interpretations. For example, a boss may instruct
his subordinate, “Take care of our guest”. Boss may mean that subordinate should take care of
transport, food, accommodation of the guest until he leaves the
place. The subordinate may interpret that guest should be taken to hotel with care.
Actually, the guest suffers due to these unclarified assumptions.
83. Technical jargon: It is usually found that specialists use technical jargon while explaining to
persons who are not specialists in the concerned field. Therefore, they
may not understand the actual meaning of many such words.
84. Body language and gesture: decoding: Every movement of body communicates some
meaning. The body movement and gestures of communicator matters so much in conveying the
message. If there is no match between what is said and what is expressed in body movements,
communications may be wrongly perceived. 6

Ans. 20- Directing. 2. (i) Recognition (ii) Autonomy 1. Organizational climate. 2. (i) Ethical behavior (ii)
Motivating employees (iii) Taking Suggestions from employing. 6
Ans 21. (i) Informal communication: “One of his colleagues sent a text message to his superior, Mr. B.
Chatterjee. Mr. B. Chatterjee immediately sent a text message to the employees of the organization
requesting them to donate blood for Prateek.” (ii) Formal communication: “When the general manager
came to know about it, he ordered for fumigation in the company premises and cleaning surroundings.” 1.
The features of informal communication are as follows: 1. The grapevine/informal communication spreads
very fast and sometimes gets distorted. 2. It is very difficult to detect the source of such communication. 1.
The two values that are being communicated to the society are: 1. Humanity 2. Cleanliness.
6

Ans.22. The two types of communication being referred to in the above paragraph are formal
communication and informal communication. 1. Formal communication: The communication that flows
through official channels designed in the organization structure is called formal communication. This
communication may take place between a subordinate and superior or among same team employees or
managers. Usually a written record of such communications is maintained, recorded and filed in the office.
Formal communication may be further classified as – Vertical and Horizontal. 2. Informal communication:
Informal communication is the type of communication that takes place without following the formal lines
of communication. It is generally referred to as the ‘grapevine’ because it spreads throughout the
organization with its branches going out in all directions in utter disregard to the levels of authority. The
informal communication arises out of needs of employees to exchange their views, which cannot be done
through formal channels. 1. Effective communication increases managerial efficiency by lubricating the
working of the entire organization through quick and effective performance of managerial functions. It
enables the management to express the goals and targets, issue instructions, allocate jobs and
responsibilities and look after the performance of subordinates. 6

====
 KENDRIYA VIDYALAYA SANGTHAN, VARANSI REGION
STUDY MATERIAL
CLASS- XII SUBJECT- BUSINESS STUDIES
CHAPTER- CONTROLLING
QUESTIONS FOR BRIGHT STUDENTS
1.Assertion (A): Controlling ensures that resources are used in the most effective and efficient
manner.
Reason (R): In controlling, each activity is performed in accordance with predetermined standards
and norms to reduce wastage and spoilage of resources.
(a) Both (A) and (R) are true, and (R) is the correct explanation of (A).
(b) Both (A) and (R) are true, but (R) is not the correct explanation of (A).
(c) (A) is true, but (R) is false.
(d) (A) is false, but (R) is true.
2. Statement-I Management by exception facilitates delegation of authority and increases the
morale of the employees.
Statement-II . It saves the time and effort of managers as they deal with only significant deviations.
Choose the correct option from the options given below:
(a) Statement I is true and II is false
(b) Statement II is true and I is false
(c) Both statements are true
(d) Both statements are false
3 Controlling function finds out how far __________ deviates from standards.
(a) Actual performance
(b) Improvement
(c) Corrective actions
(d) Cost
4.Identify an important principle of management control in which only significant deviations which
go beyond the permissible limit should be brought to the notice of management.
(a) Management by control
(b) Control by exception
(c) Critical point control
5 What should be the ‗focus point‘ for a manager while controlling, as controlling at each and every
step is not possible?
(a) Special area
(b) Key result area
(c) Normal area
(d) None of these

6 Statement-I Management by exception facilitates delegation of authority and increases the

morale of the employees.
Statement-II . It saves the time and effort of managers as they deal with only significant deviations.
Choose the correct option from the options given below:
(a) Statement I is true and II is false
(b) Statement II is true and I is false
(c) Both statements are true
(d) Both statements are false

7 Controlling is known as a backward-looking function because.

(a) it relates to a future course of action
(b) it is like a post-mortem of past activities to find out the deviation
(c) it aimed at improving future performance
(d) all of the above
 8 While scrutinizing the production records it is found that in a particular Batch, the rejection rate
was 5% against the standard of 2%. The management found out that this was due to the
negligence of quality control staff. This action is part of which step in the controlling process.
(a) Measurement of actual performance
(b) comparing actual performance with standards
(c) analysing deviations
(d) taking corrective action

9 Identify an important principle of management control in which only significant deviations which
go beyond the permissible limit should be brought to the notice of management.
(a) Management by control
(b) Control by exception
(c) Critical point control
10 Which of the following is not a process of controlling?
(a) Analyzing deviations
(b) Integrates employees efforts
(c) Taking corrective measures
(d) Setting performance standards

11 Name the principle that a manager should consider while dealing with deviations effectively.
State any one situation in which an organisation‘s control system loses its effectiveness.
12 State any one situation in which an organisation‘s control system loses its effectiveness.
13 Give any two standards that can be used by a company to evaluate the performance of its
Finance & Accounting department.
14 Mr. Arfaaz had been heading the production department of Writewell Products Ltd., a firm
manufacturing stationary items. The firm secured an export order that had to be completed on a
priority basis, and production targets were defined for all the employees. One of the workers, Mr.
Bhanu Prasad, fell short of his daily production target by 10 units for two days consecutively. Mr.
Arfaaz approached Ms. Vasundhara, the CEO of the Company, to file a complaint against Mr.
Bhanu Prasad and requested her to terminate his services. Explain the principle of management
control that Ms. Vasundhara should consider while taking her decision.
15 ‗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

16 Gagan is trying to apply a function of management in his department. First he lets his team
perform according to their best potential. Then in a meeting he calls ody and asks his team to
check what they have performed. One day it was found that the total number of units produced
were 20 less than the set target. It was decided that no worker will go home unless and until this
gap of 20 units is overcome.
85. Which function of management is being performed by Gagan and his team?
86. What is ‘20‘ in the above case?
87. At which stage of management do you think the target was set? What is its signi-ficance
now?
17 Peter is a production manager in a tyre manufacturing company. Recently he noticed that his
team could not achieve the target production of 80 units per day. Instead on an average the
production touched the target of only 65 units. On thorough analysis he found out that the
deviation between standard production and actual production is far beyond acceptable range, on
overall analysis he also found out that there has been a marginal increase in office stationery
expenses. Moreover, he detected that the machine installed for the purpose of manufacturing was
not able to perform at its best. Being a management expert, suggest Peter how he should deal
with the existing problem.
 18 Identify the step of controlling process applicable in the following cases:
88. Esha is keenly observing the quantity of capsules produced in a pharmaceutical company.
She realises that there is no need for any action to be taken as the deviations are within the
acceptable limits. A day later when she comes to work she finds the situation opposite to that
of the previous day. This lime the deviation was beyond the acceptable range and needed
immediate action. She called her subordinates and told them that this should not happen
again.
89. Mahesh who is the owner of a company has decided to focus only on a few activities of his
business. He considers that the rest of all activities are not critical to the performance of his
company. One such area he finds is of labour. The labour cost recently went up by 4%
sending signals of coming danger. Now he will put his efforts to control this variation by
arranging labour at a cheaper rate.
90. In a company a manager is trying to find out the deviation between the actual number of fans
produced and the desired number. He already knows about the standard as the company
has assigned him a definite quantity of fans to be produced.
91. Manoj Khanna a senior experience manager is concerned about the 2% rise in the raw
materials. However he knows that this is an acceptable range. He tells his staff that if this
rise goes beyond 2% it should be brought into the notice of management. Then he sets a
limit of 5% when the management should give it the priority over other activities.
92. Virendra wants to ran his company in a different manner. He wants to set standards to be
achieved in both qualitative as well as quantitative terms. He wants to judge the motivation,
skill levels and satisfaction of the employees. Ail these things will require qualitative
standards. On the other hand the company will have to set quantitative standards for the
number of units produced.
93. Some employees have been assigned the job of judging the output of production in a neutral
and reliable way. They are applying different techniques for achieving this aim. Some of
these are personal observation, sample checking, etc. They are also keeping the units of
measurement same to that of the units of set standards.
.
19 Seeta, Geeta and Babita Ltd is engaged in manufacturing machine components. The target of
production is 250 units per day per worker. The company had been successfully attaining this
target until two months ago. Over the last two months, it has been observed that daily production
varies between 200-210 units per worker.
(i) Name the function of management and identify the step in the process of this function which
helped in finding out that the actual production of a worker is less than the set target.
(ii) To complete the process of the function identified in and to ensure the performance as per set
targets, explain what further steps a manager has to take. (All India 2010)
Or
Kapil and Kamal Company is a large manufacturing unit. Recently, the company had conducted
time and motion studies and concluded that on an average, a worker could produce 300 units per
day. However, it has been noticed that the average daily production of a worker is in the range of
200-225 units.
(i) Name the function of management and identify the step in the process of this function which
helped in finding out that the actual production of a worker is less than the set target.
(ii) To complete the process of the function identified in and to ensure the performance as per time
and motion studies, explain what further steps a manager has to take.

20 Savita has been assigned the job of quantity controller. She knows this is a tough job but she
also realises the importance of it. Her daily routine is to send alarm to the manufacturing
department about the deviations in the number of units produced so that the target of the day
could be achieved. This helps the whole department to focus towards its main plan of action.
However one day she realises that the number of units which are to be produced is 500 which is
very high and creates chaos at the shop floor. She discusses it with the management and the
target is reduced to 450. This has helped the manufacturing department in maintaining quality of
the work done. There are 10 workers at the shop floor where Savita does inspection. She divided
the task into 45 units for each worker so that by the end of the day the target of the department is
completed. Which function of management have been highlighted in the above case?
Or
Parasmani Ship Builders is a renowned ship manufacturing company. The company is doing well
but the employees keep on complaining as they say there are no standards to judge the state of
mind of the employees, their motivation and job satisfaction levels. The HR department is trying to
see to the problems which have recently occurred with the employees. In other areas however
company has set some standards and is trying to effect the control mechanism but the company
finds all such efforts expensive. All this has not been so easy. Employees in other departments
like manufacturing, purchase, marketing, etc. have time and again resisted to the installation of
computer monitoring systems and CCTVs. They say that it is against their freedom. Despite all
these great efforts made by the company it had to face losses last year. Even though all the
control mechanisms are in place there is an entry of competitors with better technology. This has
given some bad time to the company despite its alertness in putting proper controlling in
execution.
4. Which concept of management has been highlighted in the above case?

21 A.S. Ltd.‘ is a large company engaged in assembly of air-conditioners. Recently the company
had conducted the ‗Time‘ and ‗Motion‘ study and concluded that on an average a worker can
assemble ten air-conditioners in a day. The target volume of the company in a day is assembling
of 1,000 units of air-conditioners. The company is providing attractive allowances to reduce labour
turnover and absenteeism. All the workers are happy. Even then the assembly of air-conditioners
per day is 800 units only. To find out the reason the company compared actual performance of
each worker and observed through C.C.T.V. that some of the workers were busy in gossiping.
5. Identify the function of management discussed above.
6. State those steps in the process of the function identified which are discussed in the above
paragraph.

22 Vinber Ltd. set up a manufacturing unit at Bhiwadi in Himachal Pradesh to manufacture

electric geysers and supply them to dealers all over the country.
Their production target was 500 geysers per week. It was decided by the management that
variation in production upto 10 units would be acceptable.
At the end of the first week, the production was 450 geysers. The next week, production increased
of 470 geysers. A week later, production was 460 geysers. On investigation, it was found that
fluctuation in production was due to irregular supply of electricity.
(a) The above para discusses some of the steps in the process of one of the functions of
management. Explain these steps.
(b) Also, state the step(s) that have not been discussed in the above para. (Delhi 2019)

ANSWERS
1 Ans. a) Both A and R are true, and R is the correct explanation of A
2 Ans. (c) Both statements are true

3 Ans. (a) Actual performance

4 Answer. b) Control by Exception

5 Answer. b) Key result area

6 Answer. c) Both statements are true

7 Answer. b) It is like a post-mortem of past activities to find out the deviation

8 Answer. c) Analysing deviations

9 Answer. b) Control by Exception

10 Ans. (b) Integrates employees efforts

11 Ans. The principle that should be adopted to deal with deviations is management by exception.
An organisation‘s control system loses effectiveness when standards are not able to be defined in
quantitative terms.

12 Ans. Control system is bound to lose its effectiveness whenever the standards cannot be
defined in quantitative terms, thereby making it difficult to measure deviations happening between
actual and standard performance. For example, job satisfaction cannot be described in
quantitative terms as it is different for different employees.

13 Ans. Standards that are used by a company for evaluating the performance of the Finance
and Accounting department are as follows:
1. Liquidity
2. Flow of Capital

14 Ans.The principle of management by exception should be followed. This principle states that
any effort to control everything may end up having control of nothing. Only deviations that are
beyond the limit will need to be acknowledged, and appropriate actions need to be taken.
Therefore, Mr. Bhanu should not be terminated for such a small reason.

15 Sample checking is a technique of Measurement of actual performance (Controlling).

16 Ans.1.In the above case the function performed by Gagan and his team is controlling.
2 ‘20‘ in the above case is deviation. Gap between actual performance and set standards.
3 The target was set at the planning stage of management. The significance of planning is that it
sets standards in the form of targets so that controlling could be done by minimizing deviations.

17 Ans. Peter should follow the following principles of managerial control while analysing
deviations: 1.Critical point control 2.Management/Control by Exception

18 Ans.The different steps of the controlling process applicable in the above cases are:
7. Taking corrective action.
8. Analysing deviations. Critical point control is the technique used.
9. Comparing actual and standard performance.
10. Analysing deviations. Management by exception is the technique used.
11. Setting standards.
Measurement of actual performance
19 Ans. (i)Comparing actual performance with standards or appraisal of performance is the step
involved in the process of controlling.
(ii) Analysing deviations andTaking corrective actions

20 Ans. Controlling
21 Function of management – Controlling
12. Following steps of controlling are identified in the given para:
. Setting performance standards which are the criteria against which the actual performance
would be measured.
‗…. and concluded that on an average a worker can assemble ten air-conditioners in a day.‘
A. Measurement of actual performance with the standards in an objective and reliable maimer.
‗Even then the assembly of air-conditioners per day is 800 units only.‘
B. Comparing actual performance with standards to find out any deviations.
‗…. the company compared actual performance of each worker and observed through C.C

22 Answer:
(a) The function performed is controlling and the steps discussed are:
13. Setting performance standards
14. Measurement of actual performance
15. Comparing actual performance with standards
(b) The step not discussed is ‗Taking corrective action‘.
 CLASS -XII- BUSINESS STUDIES
STUDY MATERIAL FOR HIGH ACHIEVER STUDENTS
FINANCIAL MANGEMENT
MARKS
Q.N. QUESTIONS
1. Primary aim of financial management is to 1
(a) Maximise shareholder‟s wealth
(b) Wealth maximisation concept
(c) Maximisation of the market value of equity shares
(d) All of the above
2. Which of the following is a key consideration when choosing between debt and 1
equity financing?
A) Debt financing always leads to higher financial risk
B) Equity financing never affects control of the company
C) Debt financing involves fixed interest payments and repayment of principal
D) Equity financing is cheaper than debt financing
3. If a company is considering paying a dividend that exceeds its current profits, what 1
should it primarily evaluate?
A) The company's legal constraints regarding dividend payments
B) The availability of cash reserves and its future financial needs
C) The interest rate on any outstanding debt
D) The company‟s ability to reduce floatation costs
4. Why is debt financing often considered cheaper than equity financing? 1
A) Debt is not subject to taxation
B) The company does not have to repay debt principal
C) Debt financing is tax-deductible, lowering the overall cost
D) Debt is risk-free for the company

5. Which of the following is NOT typically a factor in a company's decision on 1

dividend payments?
A) Stability of earnings
B) Cash flow position
C) Availability of tax exemptions on dividends
D) Fixed operating costs
6. When a company has fluctuating profits, which dividend policy would be most 1
appropriate?
A) A high and stable dividend policy
B) A policy of paying no dividends
C) A policy of retaining all earnings for reinvestment
D) A policy of increasing dividends even with uncertain profits
7. When a company has good growth opportunities, what is likely to happen to its 1
dividend payout policy?
A) The company will pay higher dividends to shareholders
B) The company will retain more earnings to finance its growth, leading to lower dividends
C) The company will stop paying dividends altogether
D) The company will focus solely on paying interest on debt
8. The inability of a business to meet its fixed financial obligations, like payment of interest, is known 1
as
(a) Business risk (b) Financial risk
(c) Long-term risk (d) Market risk
9. Assertion (A): Debt is more risky as compared to Equity. 1
Reason (R): Payment of dividend and return of principal amount is obligatory for the business in
case of equity.
Alternatives:
(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 and Reason (R) is not the correct explanation of
Assertion (A)
(c) Assertion (A) is true but Reason (R) is False
(d) Assertion (A) is False but Reason (R) is True.
0. If in a particular situation, the earnings per share (EPS) falls with the increased use of debt, it 1
indicates that
(a) The rate of return on investment (Rol) is less than the cost of debt.
(b) The rate of return on investment is more than the cost of debt.
(c) The cost of debt is less than the rate of return on investment.
(d) None of the above
1. Raghav is trying to co-ordinate the functioning of various departments like sales and production. 3
He has been trying to do this with the help of a concept of financial management. He quite often
calls people of both departments and tells them to work
within means. He has even prescribed a budget for it. During the time, when he is doing a lot of
analysis he connects the decision of present with the outcomes of future. This can especially he
seen in two of the prominent decisions. One is the investment and the other is the financing
decision- so the interlinking of these two decisions is assumed by him. When the year ends it is
easy for him to take some strong decisions. This happens because he is able to evaluate the
performance of various departments in terms of revenue generated and the expenses incurred. No
business is risk proof. However, he knows that at least business shocks which a business can suffer
can be minimised thus laying foundation for a better future. His involvement in the work is
definitely appreciable.
94. Which concept of financial management has been highlighted in the above case?
95. Identify the types of this concept highlighted in the above case.
2. ABC ltd. is a company wanted to prepare an optimum capital structure of debt & equity, where its 3
fund manager suggested process by which a company could maximize the wealth of shareholders
in terms of EPS.
64. Which concept of financial management has been highlighted in the above case?
65. Explain the process with the help of an example.
3. XYZ Ltd. is engaged in the business of export of garments. In the past, the performance of the 4
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.
4 State the factors affecting financing decision. 4
5. What is meant by Financial Planning? State the objectives of Financial Planning. 6
6. 'Deepak Consumer Goods' is a leading consumer goods chain with a network of 46 stores primarily 6
across Mumbai, Delhi and Pune. It was started by Deepak Gupta in 1987. It has a large market
share in Mumbai, Delhi and Pune. Looking for an opportunity to expand, it has decided to open a
new branch in Kerala. It has decided on what new resources it will invest in so that it is able to earn
the highest possible return for investors. Once the company believes that it will be able to generate
higher revenues and profits, it also has to decide on how this project will get funded. The finance
manager, Atul was told to have an optimal capital structure by striking a balance between various
sources of getting the project funded so as to increase shareholders' wealth. Atul, after assessing the
cash flow position of the company,
evaluated the cost of different sources of finance and compared the risk associated with each source
as
well as the cost of raising funds.
(a) State the two financial decisions discussed in the above situation.
(b) Explain any two factors affecting each of the decisions that still have to be considered by the
finance.
7. „ABC Ltd.‟ is a company manufacturing textiles. It has a share capital of Rs.60 lakhs. The earning 6
per share in the previous year was Rs.0.50. For diversification, the company requires additional
capital of Rs. 40 lakhs. The company raised funds by issuing 10% debentures for the same. During
the current year the company earned a profit of Rs.8 lakhs on capital employed. It paid tax @ 40%.
(a) State whether the shareholders gained or lost, in respect of earning per share on diversification.
Show your calculations clearly.
(b) Also, state any three factors that favour the issue of debentures by the company as part of its
capital structure.
8. „XYZ Ltd.‟ is a company manufacturing cotton yarn. It has been consistently earning good profits 6
for many years. This year too, it has been able to generate enough profits. There is availability of
enough cash in the company and good prospects for growth in future. It is a well-managed
organisation and believes in quality, equal employment opportunities and good remuneration
practices. It has many shareholders who prefer to receive a regular income from their investments.
It has taken loan of 40 lakhs from SBI and is bound by certain restrictions on the payment of
dividend according to the terms of loan agreement.
The above discussion about the company leads to various factors which decide how much of the
profits should be retained and how much has to be distributed by the company. Quoting the lines
from the above discussion identify and explain any four such factors.
9. Apple Inc. has maintained a substantial cash reserve for many years. However, it occasionally uses 6
debt to finance strategic initiatives, such as share buybacks and dividends, instead of drawing on its
cash reserves. This has allowed the company to take advantage of tax deductions from interest
payments while preserving its cash for other investments.
1.What are the key advantages of Apple’s strategy of using debt to finance share buybacks
and dividends, despite having large cash reserves?
2. How does Apple’s approach to capital structure (debt vs. equity) help minimize financial
risk while leveraging debt for strategic growth?
3. Given that debt interest payments are tax-deductible, how does this benefit Apple in terms
of its overall cost of capital?
0. Toys "R" Us took on a significant amount of debt in a leveraged buyout, leading to financial strain. 6
Despite struggling with debt repayments, the company continued to rely on debt for further
investments in its supply chain, ultimately leading to bankruptcy.
If you were the CFO of Toys "R" Us at the time, what steps would you have taken to manage
the company’s debt more effectively?
1. Dhaval Acharya, after acquiring a bachelor's degree in Hotel Management joined his father's chain of 6
vegetarian restaurants in Ahmednagar. Being young and enterprising, he suggested his father to add a new
section of vegetarian bakery items which required an investment of Rs.5 crores. His father Mr. Aariketh
Acharya suggested him to take the decision with caution and understood everything comprehensively as
bad decision may damage the financial fortune of business.
66. Identify the decision suggested by Mr. Aariketh Acharya.
67. State by giving any three reasons as to why he must have advised his son to take decision with
caution
2. Vedansh Limited has a share capital of Rs.10,00,000 divided into shares of Rs.100 each. For expansion 6
purpose, the company requires additional funds of Rs.5,00,000. The considering the following alternatives
for raising funds. Alternative 1 Issue of 5,000 equity shares of Rs.100 each Alternative 2 Issue of 10%
debentures of Rs.5,00,000 The company's present Earnings Before Interest and Tax(EBIT) is Rs.4,00,000
p.a. Assuming that the rate of Return of Investment remains the same after expansion, which alternatives
should be used by company in order to maximise the returns to the equity shareholders. The tax rate is
50%. Show the working.
ANSWERS
1. (d)
2. (C) Debt financing involves fixed interest payments and repayment of principal
3. (B) The availability of cash reserves and its future financial needs
4. (C) Debt financing is tax-deductible, lowering the overall cost
5. (D) Fixed operating costs
6. (A) A high and stable dividend policy
7. (B) The company will retain more earnings to finance its growth, leading to lower dividends
8. (b)
9. (d)
0. (a)
1. 96. The concept of financial management which is highlighted in the above case is 98.
‗Importance of financial planning‘.
97. The importance of financial planning highlighted in the above case are:
1. It helps in coordinating various business functions like purchase,
production and sales. Raghav is trying to coordinate the functioning of
various departments like sales and production.
2. It helps in linking, the present with the future. During the time when he is
doing a lot of analysis he connects the decision of present with the outcomes
of future.
3. It helps in linking the investment decision with the financing
decision. One is the investment and the other is the financing decision- so the
interlinking of these two decisions is assumed by him.
4. It helps in the evaluation of actual performance easier. This happens
because he is able to evaluate the performance of various departments in
terms of revenue generated and the expenses incurred.
5. It helps in avoiding business shocks and thus prepares the company for
future.
However, he knows that at least business shocks which a business can suffer
can be minimised thus laying foundation for a better future.
2. Trading on equity refers to a practice of raising the proportion of debt in the capital structure such
that the earnings per share increases. A company resorts to Trading on Equity when the rate of
return on investment is greater than the rate of interest on the borrowed fund. That is, the company
resorts to Trading on Equity in situation of favourable financial leverage. As the difference
between the return on investment and the rate of interest on debt increases, the earnings per share
increase.
The use of Trading on Equity is explained in detail with the help of the following example.
Situation I Situation II
Earnings before interest and tax 1,00,000 1,00,000
(EBIT)
Interest 30,000
Earnings Before Tax (EBT) 1,00,000 70,000
Tax 30,000 21,000
Earnings After Tax (EAT) 70,000 79,000
No. Of equity shares 50,000 20,000

Clearly, in the second situation the EPS is greater than in the first situation. In the second situation
the company takes advantage of the Trading on Equity and raises the EPS.
3. Financial planning concept has been discussed in the above para.
Following are the two objectives of Financial planning:
99. To ensure availability of funds when required. Financial planning ensures that
sufficient funds are available with the enterprise as and when required. For this
purpose, proper estimation of funds is carried out for different purposes like for the
purchase of long-term assets or for meeting day-to-day expenses of business.
100. To see that the firm does not raise resources unnecessarily. Financial planning
makes sure that an enterprise is adequately funded. It also ensures that firms do not
raise funds unnecessarily. It aims at the best possible use of financial resources.

4 Factors affecting Financing Decision:

(i). Cost
(ii). Risk
(iii). Cash flow Position
(iv). Floatation Cost.
5. Financial planning refers to estimating the requirements of a business and determining the sources of funds.
Financial planning includes both short-term and long-term planning. Objectives of financial planning are:
(i) To ensure availability of funds whenever required: if adequate funds are not available, the business
unit will not be able to honour its commitments and plans.
(ii) To see that the firm does not raise funds unnecessarily: if an excess of funds is available with the
business unit; it will unnecessarily add to the cost and may encourage wasteful expenditure and misuse of
funds.
6. (a) (i) Investment decision/ Capital budgeting decision
(ii) Financing decision
(b) factors affecting Investment decisions : (i) Cash flow Position (ii). Return on Investment
factors affecting Financing decisions : (i) Cost (ii). Risk
7.

(b) Following are the factors that favour the issue of debentures:
101. Managerial control. The company has already issued a share capital of Rs. 60
lakhs. Further use of equity can completely dilute the control into the hands of the
shareholders. Hence to have a certain degree of say in management the company
issued debentures.
102. Tax deductibility. Interest paid by the company to its debenture holders is tax
deductible. The company is paying 40% tax. Therefore, it is better for the company
to issue debentures. High tax rate makes debt relatively cheaper.
103. Cost consideration. Raising capital through debentures is cheaper as compared to
equity shares. Raising funds through debt involves low floatation costs. Moreover,
interest paid on debentures is a deductible expense. The interest is deducted from
firm‘s earnings and then the net amount is used for calculating tax liabilities. Hence
more debt in the capital structure means low cost of overall capital.

8 104. ‘It has been consistently earning good profits for many years’.
It relates to the stability of earnings of the company as a company having stable
income is always in a better position to pay higher dividend. Companies having
inconsistent and unstable earnings prefer not to declare a high rate of dividend.
105. ‘There is availability of enough cash in the company’.
The above line reflects the cash flow position of the business which is another
major factor influencing the dividend decision. In order to declare higher rate of
dividend, the company should have enough cash. A company remaining short of
cash finds it difficult to pay dividend.
106. ‘It has many shareholders who prefer to receive a regular income from their
investments’.
Shareholder’s preference is highlighted in the above statement. The management
of the company should keep in mind the preferences of shareholders while they
declare dividend. Some shareholders prefer to receive a regular income in the from
of dividend.
107. ‘It has taken a loan of 40 lakhs from IDBI and is bound by certain restrictions
on the payment of dividend’.
The above statement highlights contractual constraints due to which the company
is bound by certain restrictions on the payment of dividend. If a company has taken
loan, the lender may impose few restrictions on the declaration of dividend in future.
The dividend policy of the firm should not violate the terms and conditions of the
loan agreement.
9. 1. Tax Benefits: Apple can deduct interest payments on debt from taxable income, which reduces
its tax liability, making debt more cost-effective compared to using its own equity or cash reserves.
68. Optimal Capital Utilization: By using debt, Apple preserves its cash reserves for other
strategic initiatives, such as R&D or new investments, without depleting its liquid assets.
69. Shareholder Returns: Debt-financed buybacks help boost earnings per share (EPS) by
reducing the number of outstanding shares, which can drive up stock prices and benefit
shareholders.
2. Low Financial Risk: Apple maintains a relatively low debt-to-equity ratio, reducing the risk of
financial distress in the event of a downturn.
70. Strong Cash Flow: Apple has a strong, consistent cash flow from its product sales,
ensuring that it can comfortably service its debt, making it less risky compared to
companies with unpredictable cash flows.
71. Balanced Growth: Apple can fund its growth using its significant reserves while also
strategically using debt for short-term needs, keeping financial risk manageable.
3. Lower Cost of Capital: Debt reduces the overall cost of capital by lowering taxable income
through interest deductions. This reduces the company‟s effective tax rate and lowers the weighted
average cost of capital (WACC), enhancing the efficiency of capital allocation.
Leverage Effect: By using debt efficiently, Apple can amplify returns on equity while keeping the
overall cost

0. As the CFO, I would have taken several actions:

72. Debt Restructuring: I would have negotiated with creditors to extend the repayment terms
or reduce interest rates, giving the company more time to recover.
73. Cost Control: Focus on improving operational efficiency and reducing costs to improve
cash flow, which could then be used to service debt.
74. Defer New Debt: I would have refrained from taking on additional debt, especially if cash
flows were not consistent or reliable.
75. Alternative Financing: Consider issuing equity to raise funds, particularly if the
company‟s stock price was strong, to avoid further debt.

1. (A). Mr Aariketh Acharya has suggested capital budgeting decision. Reasons why he must have advised this
decision are i) These decisions have bearing on the long-term growth. (ii) These decisions result in large
portion of funds being blocked in long-term projects, these investments are planned after a detailed
analysis. iii) These decisions affect the returns of the firm, therefore influence the overall business risk
complexion of the firm. (iv) These decisions once taken, are not reversible without incurring heavy losses.
Abandoning a project after heavy investment is costly in terms of waste of funds.
2. Ans. Rate of Return of Investment is 4,00,000/10,00,000 × 100 = 40%. EBIT after expansion - 40% ×
15,00,000 = 6,00,000,EPS Plan I is 20 and Plan II is 27.5.The company should use Plan 2 in order to increase
the return to the equity shareholders.
 CLASS -XII- BUSINESS STUDIES
STUDY MATERIAL FOR HIGH ACHIEVER STUDENTS
Q.N. Questions Marks
1. SEBI was granted legal status in the year ………... 1
a) 1988 b) 1991 c) 1992 d) 1990
2. Mr. Tilak wants to trade in stock exchange. If so, he must open a ………. Account with the 1
help of stock broker
a) Savings account b) Demat account
c) Current account d) None of the above
3. Assertion (A). Financial market mobilises savings into most productive uses. 1
Reason (R). Financial market provides choice of different investment avenues to savers, which
helps them to mobilise surplus funds to most productive uses.
(a) Both Assertion (A) and Reason (R) are true.
(b) Both Assertion (A) and Reason (R) are false.
(c) Assertion (A) is true and Reason (R) is false.
(d) Assertion (A) is false and Reason(R) is true.
4. ……. helps directly in capital formation 1
a) Primary Market b) Secondary market
c) Both a and b d) None of the above
5. Assertion (A). Capital market facilitates the process of economic development. 1
Reason (R). Capital market directly helps in capital formation, which is vital for the economic
development.
(a) Both Assertion (A) and Reason (R) are true.
(b) Both Assertion (A) and Reason (R) are false.
(c) Assertion (A) is true and Reason (R) is false.
(d) Assertion (A) is false and Reason(R) is true.
6. Statement I: Capital market instruments are considered riskier both with respect to returns & 1
principal repayment.
Statement II: Capital market investment generally yields a higher return for investors.
Choose the correct option from the options given below:
(a). Statement I is true & II is false.
(b). Statement II is true & I is false.
(c). Both the statements are true.
(d). Both the statements are False.
7. Match the various terms of Financial Markets Column-1 with their respective Statements in Cotumn-ll: 1
Column 1 Column II
It is also
Financial
(A) (I) known as
market
Stock Market
It is a market
for creation
Primary
(B) (II) and exchange
Market
of financial
assests.
It is also
Secondary
(C) (III) known as New
Market
Issue Market
(a) (ii), (iii), (i)
(b) (i), (iii), (ii)
(c) (iii), (ii), (i)
(d) (i),(ii), (iii)
8 Clearing & settlement operations of NSC is carried out by: 1
(a). NSDL (b). NSCCL
 (c). SBI (d). CDSL
9 Which of the following statements is not true with regard to primary market? 1
(a) Is also known as the old issues market.
(b) It facilitates the transfer of investible funds from savers to entrepreneurs.
(c) It deals with new securities being issued for the first time.
(d) It facilitates the transfer of investible funds from savers to entrepreneurs.
0. How can an investor place an order to a broker?
A) Only through a phone call
B) Only via email
C) Personally, through email, or phone call
D) Through a postal letter
1 State any three objectives of the Securities Exchange Board of India. 3
2 Ankita is a company secretary in XYZ Ltd. From inside the company, she came to know that
the company is going to acquire the business of some other companies. Ankita thinks that, due
to the acquisition process, market price of the share may rise. Considering this, Ankita bought
large number of shares of XYZ Ltd. This acquisition news was unknown to the public.
a) Identify the malpractice used by Ankita.
b) Name the body which regulates such malpractices
3 Financial market plays a vital role in the allocation of limited resources in an economy by
performing many significant functions. Explain three such functions.
4 Financial market is a mechanism for creation and exchange of financial assets. It connects the 3
surplus (savers) unit of an economy with deficit unit (investors). By connecting, financial
market channelizes funds to most productive avenues. Through stock exchanges, it also
promotes easy trade of financial securities. Apart from that, stock exchanges also educate
investors and prospective investors on many aspects related to capital market.
a) Identify two functions performed by financial market from the above passage
b) Explain two functions of stock exchange, other than those mentioned in the above paragraph
5 Vishakha‟s grandmother who was unwell, called her and gave her a gift packet. Vishakha 4
opened the packet and saw many crumpled share certificates inside. Her grandmother told her
that they had been left behind by her late grandfather. As no trading is now done in physical
form, Vishakha wants to know the process by adopting which she is in a position to deal with
these certificates.
A. Identify and state the process.
B. State two reasons due to which the share is not traded physically?
6 Anmol works as a sales executive in an Automobile company in Delhi. While helping a
customer in the sales process he overhears him at the table saying that the he has made huge
profits by investing in stock market. That made Anmol to think about “channelising his surplus
savings to stock market”. He is totally unaware of the trading processes related to stock
exchange. Imagine that you are a stock market consultant and help Anmol to understand the
steps involved in the trading process of securities.
7 XYZ Ltd, a well-known steel manufacturing company has managed to capture major market 4
share in this sector. Recently, it was found out that the directors of the company have tried to
manipulate the price of its securities, in order to attract investment from the general public.
Through investigation, that fraud was detected by SEBI. SEBI is considering action against
these directors.
a) Name the malpractice done by the directors of this company.
b) Mention other functions of SEBI under same category.
8 Explain the Trading Procedure at Stock Exchange. 6
9 Mr. Mukesh Bohra had lost his physical share certificates of ABC Ltd while travelling in a 6
transport bus. After a long time, she was able to trace out his lost certificates. Now he is facing
difficulties in selling those shares. One of his friends suggested to convert those physical
certificates into electronic format. Friend had an opinion that “it would be easy to convert
electronic securities into cash”. On the basis of the above discussion, answer the following
questions along with brief explanation.
 16. (a) Name the account which is opened to convert physical securities into electronic
form.
17. (b) with whom will he have to open this account?
18. (c) Which are the two major organizations, in India, who keep securities in electronic
form?
0 Differentiate between Capital market & money market on the basis of : 6
19. Participants
20. Duration
21. Instruments
22. Investment outlay
1 The organization established by Government of India with a legal Identity working similar of 6
RBI & being responsible for Regulating all activities of stock exchange, ensuring the safety of
investors investment and organizing various training, development of Agents/ brokers, DPs.
(a). Identify the name of organization mentioned in above paragraph.
(b). Explain the various functions of the identified organization.
2 After doing a course in stock trading, Madhav downloaded one trading app from the google 6
play store and he started trading securities. That helped him to earn sufficient 181
ZIET,MYSORE profits. Adwaith, a friend of Madhav, having lot of money in his pocket is
finding difficulty in appreciating the money. Madhav suggested Adwaith to open a Demat
account with any of the stock broker. An Initial Public Offer (fresh issue of securities for the
first time) of a blue-chip company was on the way. Madhav wanted to invest in that. As
Adwaith was not that much confident, he decided to buy some existing securities from the stock
market. In the context above case: (a) Identify the two different types of capital market being
referred to by quoting lines from the para. (b) State any four differences between the two types
of capital markets as identified
ANSWERS
1. (C)
2. (B)
3. (a) Both Assertion (A) and Reason (R) are true
4. (A)
5. Both Assertion (A) and Reason (R) are true.
6. (c)
7. (a)
8. (b)
9 (a)
0 (C) Personally, through email, or phone call
1 Following are the objectives of SEBI: (any three)
1. To regulate stock exchanges and the securities industry to promote their orderly functioning
2. To protect the rights and interests of investors, particularly individual investors and to
guide and educate them.
3. To prevent trading malpractices and achieve a balance between self-regulation by the
securities industry and its statutory regulation.
2 1. Mobilizing savings into investment: - financial market connects savers and investors.
2. Price discovery: - financial markets helps in fixing the prices of financial assets. Market forces
(demand and supply) determine the price of securities.
3. Liquidity to financial assets: - through easy exchange process (buying and selling), financial assets
can easily be converted into cash.
4. Reduce cost of transaction: - With the help of financial market, investors and companies can easily
gather information regarding price, cost and availability of various financial assets
3 a) Insider trading and b) SEBI
4 a) Mobilizing savings into investment and capital formation
b) Pricing of securities, safety of transactions etc.
5 a) Dematerialization and
 b) Theft, Forgery etc.
6 1.Selection of a Broker: - Broker is a member of the stock exchange who helps in buying and selling of
securities. Trading can only be done through SEBI registered broker. So, the prime step is the selection
of a broker.
2. Opening DEMAT account: - DEMAT account keeps securities in electronic format. Prospective
investors can open their demat account with Depository Participant (Banks and Stock Brokers).
Securities are held in electronic format by a depository (NSDL and CDSL). Depository participants are
the connecting link between investors and depository. 176 ZIET,MYSORE
3. Placing the order: - investor has to place an order to the broker personally or through email, phone
calls etc. The order should contain the quantity and price range at which securities can be traded.
4. Match the share and best price: - broker goes online to see the best price available.
5. Executing order: - When the shares can be bought or sold at the price mentioned, it will be
communicated to the broker’s terminal and the order will be executed electronically. The broker will
issue a trade confirmation slip to the investor.
6. Issue of contract note: - after execution, broker issues a contract note. It contains details of price,
quantity, date, time of deal and brokerage amount. It’s a legal document. A unique order number is
assigned to each transaction by stock exchange and is printed on the contract note.
7. Delivery of share and making payment: - now investor has to deliver the shares sold or make cash
payment for the shares purchased. This should be done immediately after receiving the contract note
or before the day when the broker shall make payment or delivery of shares to the exchange. This is
called the payin day.
8. Settlement cycle: - the deal has to be settled and finalized on the T+2 day
6 a) Price rigging
b) Other functions are:
1. SEBI protects the interest of investors by performing following activities
2. Check Price Rigging: - Price rigging refers to the manipulation of security prices with
an intend to cheat the investors. SEBI prohibits such practice
3. Prohibits Insider Trading: - insider trading means buying or selling securities based on
non-public, material insider information. SEBI keeps a strict check when insiders are
trading company‟s securities
4. SEBI prohibits misleading statements

8 TRADING PROCEDURE IN A STOCK EXCHANGE

23. Selection of a Broker: - Broker is a member of the stock exchange who helps in buying
and selling of securities. Trading can only be done through SEBI registered broker. So,
the prime step is the selection of a broker.
24. Opening DEMAT account: - DEMAT account keeps securities in electronic format.
Securities are held in electronic format by a depository (NSDL and CDSL). Depository
participants are the connecting link between investors and depository.

25. Placing the order: - investor has to place an order to the broker personally or through
email, phone calls etc. The order should contain the quantity and price range at which
securities can be traded.
26. Match the share and best price: - broker goes online to see the best price available.
27. Executing order: - When the shares can be bought or sold at the price mentioned, it
will be communicated to the broker‟s terminal and the order will be executed
electronically. The broker will issue a trade confirmation slip to the investor.
28. Issue of contract note: - after execution, broker issues a contract note. It contains
details of price, quantity, date, time of deal and brokerage amount. It‟s a legal
document. A unique order number is assigned to each transaction by stock exchange
and is printed on the contract note.
29. Delivery of share and making payment: - now investor has to deliver the shares sold
or make cash payment for the shares purchased. This should be done immediately after
receiving the contract note or before the day when the broker shall make payment or
delivery of shares to the exchange. This is called the pay-in day.
30. Settlement cycle: - the deal has to be settled and finalized on the T+2 day.
 31. On T+2 day, stock exchange will deliver the share or make payment to the other broker.
This is called Pay out day. The broker then has to make payment to investors within 24
hours of the pay-out day since he/she already received payment from the exchange.
32. Now the broker can make delivery of shares in demat form directly to the investor‟s
demat account.

9 a) Opening DEMAT account: - DEMAT account keeps securities in electronic format.

Prospective investors can open their demat account with Depository Participant (Banks and
Stock Brokers). Securities are held in electronic format by a depository (NSDL and CDSL).
Depository participants are the connecting link between investors and depository.
b) Depository Participants/ stock brokers: Are the middleman for trading in securities.
c) NSDL and CDSL: Are the institutions responsible for keeping in account the securities of
investors.
0 Difference Between Capital Market & Money Market

S.N. Basis Capital Market Money Market

1 Participants Public and Private Companies, Financial Institutions,
Financial institutions, Banks, Banks, Public and
Foreign Investors, Ordinary Private companies
Retail Investors from Public
2 Duration Deals in long-term and medium- Deals with short-term
term financial securities. instruments having
maximum duration of
one year
3 Instruments Shares, Debentures, Bonds and Commercial Paper,
other innovative securities Certificate of Deposits,
Treasury Bills, Trade
Bills etc.
4 Investment The value of investment is Money market
Outlay generally low instruments are
expensive and huge
amount is required to
invest

1 (a). SEBI
(b). Regulatory Functions
a. Registration of brokers, sub-brokers and other players in the security market
b. Registration of mutual funds
c. To regulate the activities of stock brokers, portfolio managers, merchant bankers,
underwriters etc.
d. To regulate the takeover bids by companies
e. To regulate stock exchanges and intermediaries by calling for information, conducting
inspections/enquiries, through auditing etc.
f. Levying fees and other chares

33. Developmental Functions

34. To provide training to intermediaries
35. Conducting research and publishing information; which can bring development to stock
market
36. Undertaking measures to develop the capital markets by adapting a flexible approach.

37. Protective Functions

38. SEBI protects the interest of investors by performing following activities
 39. Check Price Rigging: - Price rigging refers to the manipulation of security prices with
an intend to cheat the investors. SEBI prohibits such practice
40. Prohibits Insider Trading: - insider trading means buying or selling securities based on
non-public, material insider information. SEBI keeps a strict check when insiders are
trading company‟s securities
41. SEBI prohibits misleading statements
42. SEBI undertakes steps for investor protection
43. Promotion of fair practices and code of conduct in stock market.

2 PRIMARY MARKET V/S SECONDARY MARKET S.No Basis Primary Market Secondary Market 1 Type of
Securities Issue of new securities Mechanism for existing or Second-hand securities 2 Issued By Directly
by companies Securities already issued in Primary market is transferred between investors only. 3
Capital Formation Directly helps in capital formation Helps indirectly for capital formation 4 Entry All
companies can enter by following the prevailing norms Only listed companies can trade their securities
5 Price Fixed by management of the companies Fixed by free market forces (demand and supply)
Marketing management
2 – Day subject enrichment program for Commerce (Business Studies)
(20-11-2024 to 21-11-2024)
Material for – Bright Learners

1 – Marks (MCQs)

1. Assertion (A):
Customer support services are vital in marketing as they help in maintaining a positive relationship
between the company and its customers.
Reason (R):
Customer support services provide post-purchase assistance, address customer issues, and
increase customer satisfaction, which leads to repeat business and brand loyalty.
Options:
1. Both Assertion (A) and Reason (R) are correct, and Reason (R) correctly explains Assertion
(A).
2. Both Assertion (A) and Reason (R) are correct, but Reason (R) does not correctly explain
Assertion (A).
3. Assertion (A) is correct, but Reason (R) is incorrect.
4. Assertion (A) is incorrect, but Reason (R) is correct.
2. Assertion (A):
Packaging plays a critical role in marketing by protecting the product and enhancing its appeal to
consumers.
Reason (R):
Packaging is not only a functional necessity but also a powerful marketing tool that influences
consumer buying decisions through design, information, and branding.
Options:
1. Both Assertion (A) and Reason (R) are correct, and Reason (R) correctly explains Assertion
(A).
2. Both Assertion (A) and Reason (R) are correct, but Reason (R) does not correctly explain
Assertion (A).
3. Assertion (A) is correct, but Reason (R) is incorrect.
4. Assertion (A) is incorrect, but Reason (R) is correct.

3. Which of the following factors does not directly influence the pricing of a product?
a) Product cost
b) Consumer preferences
c) Government and legal regulations
d) Marketing methods used by competitors
Answer3: b) Consumer preferences

4. Which of the following is not an aspect of the promotion mix?

a) Advertising
b) Personal Selling
c) Public Relations
d) Product development
Answer4: d) Product development

5. When the price of a product is increased, what is generally the effect on its demand, according
to basic pricing principles?
a) Demand increases
b) Demand remains unchanged
c) Demand decreases
d) Demand fluctuates
Answer5: c) Demand decreases

6. Which of the following would not be classified as an industrial product?

a) Raw materials used in production
b) A business‘s office furniture
c) A washing machine purchased for household use
d) A spare part for an industrial machine
Answer:6 c) A washing machine purchased for household use

7. Branding in marketing is primarily aimed at:

a) Ensuring the product meets basic functionality
b) Creating a unique identity and perception in the market
c) Reducing production costs
d) Increasing product durability
Answer:7 b) Creating a unique identity and perception in the market

8. The Just-in-Time inventory system in physical distribution focuses on:

a) Storing excess products to meet future demand
b) Minimizing storage costs by receiving products only when needed
c) Maximizing the product variety in storage
d) Increasing warehouse capacity to stockpile goods
Answer: 8b) Minimizing storage costs by receiving products only when needed

Q.9 Match the columns

Column A
5. Functions of Labels
6. Factors Affecting Price Determination
7. Effect of Price Increase on Demand
8. Pricing as a Competitive Weapon
Column B
A. When the price of a product increases, its demand typically decreases.
B. Product Cost, Utility and Demand, Competition, Government Regulations, and Marketing
Methods.
C. Helps in describing the product, identifying the brand, grading products, and promoting them.
D. Price can be used strategically to compete in the market, affecting market share and customer
perception.
Options:
9. 1 - C, 2 - B, 3 - A, 4 - D
10. 1 - A, 2 - C, 3 - D, 4 - B
11. 1 - C, 2 - A, 3 - B, 4 - D
12. 1 - D, 2 - B, 3 - C, 4 - A
9 Correct Answer:
1. 1 - C, 2 - B, 3 - A, 4 - D

Q.11 Match the columns

Column A
13. Primary Function of Labelling
14. Factors Affecting Price Determination
15. Result of Price Decrease
16. Role of Pricing in Marketing
Column B
A. A decrease in price typically leads to an increase in demand.
B. Price serves as a competitive weapon to capture market share.
C. Describes the product, aids in identification, grading, and promotion.
D. Product Cost, Demand, Competition, Legal Regulations, and Marketing Methods.
Options:
17. 1 - C, 2 - D, 3 - A, 4 - B
18. 1 - A, 2 - D, 3 - B, 4 - C
19. 1 - B, 2 - D, 3 - A, 4 - C
20. 1 - C, 2 - B, 3 - D, 4 - A

10 Correct Answer:
1. 1 - C, 2 - D, 3 - A, 4 - B

Case study type questions

3/4/6 marks

Q.1 . Unilever has found a new way to make ice creams by using an ingredient called ‗ice
structuring protein‘ which is widely found in nature especially, in fishes which allows them to
survive in freezing arctic waters. Combining ISP with stabilizer technology allows to make
ice creams that don‘t melt so easily thereby making it more convenient for small children
and consumer in hot countries.
In the context of above case:
1. Identify the component of marketing mix being taken into consideration by the company.
2. Explain briefly the function of marketing highlighted here.
3. List any two values that the company wants to communicate to the society.

Q. 2. As a global leader in the consumer electronics and entertainment industries, Sony has
set forth ‗Road to Zero environmental plan‘, to achieve a zero environmental effect by the
year -050 by producing world-class products in a manner that both protects and promotes a
healthy and sustainable planet.
In the context of above case:
4. Identify the marketing philosophy being implemented by the company.
5. Outline the main focus and end of the relevant marketing philosophy.
6. State any two values that the company wants to communicate to the society.

Q. 3. As the number of people making online purchases has increase manifolds, there is a
growing concern about the disposal and management of packaging waste. Every item
bought is delivered with excess packaging and sometimes even non-biodegradable
materials are used.
In the context of above case:
1. Name the other two levels of packaging that the marketers may be using besides the
immediate package.
2. Describe briefly any two points highlighting the functions of packaging.
3. State any two factors that should be kept in mind by the marketers while designing the
packaging of its products.

Q. 4. Rastro Inc., is a multinational corporation that creates consumer electronics, personal

computers, servers and computer software. The company also has a chain of retail stores
known as Restro Stores. Despite high competition, Restro has succeeded in creating
demand for its products, giving the company power over prices through product
differentiation, innovation advertising and ensured brand loyalty.
In the context of above case:
1. What is product differentiation?
2. Name any one function of marketing that facilitates product differentiation.
3. Identify the component of promotion mix being used by the company by Quoting lines form
the paragraph.
4. Describe briefly the pricing objective pursued by the company.

Q. 5. Reema, Vibha and Ratna are three women entrepreneurs who are engaged in dealing
with handicraft goods under the brand name ‗Gujkriti‘ through a chain of retail outlets at five
different places in delhi. Their outsource all their products from tribal and rural women in
the state of Rajasthan. Reema is of the opinion that in order to increase the sale of their
products, they should advertise about it on television. But, Ratna is arguing that
advertisement expenses will add to cost of operation. Whereas Vibha is insisting that they
should set up an online portal to market their products across the globe.
In the context of above case:
5. Identify the tool of promotion being taken into consideration by Reema by quoting lines from
the paragraph.
6. How is the channel of distribution being suggested by Vibha different from the channel of
distribution being used by them presently?
7. Do you think that Ratna is justified in here argument that advertisement expenses will add
to cost of operations?

Q. 6. Arvind is planning to start a company manufacturing room fresheners. He intends to

use natural fruit extracts for adding fragrance to them. He estimates an investment of Rs. 0
crores to set up the factory. As it is difficult for him to raise the entire capital amount alone,
he gives a partnership offer to his school friend, Sanjay who is an angel investor. Sanjay,
after being convinced about the feasibility of the project, accepts his offer. Sanjay tells
Arvind that they should also focus on other important decisions related to the product ‗room
fresheners‘ besides deciding about its features, variety and quality. Branding is one of the
important such decision.
In the context of above case:
8. Name any other two important decisions related to a product.
9. Why is branding considered as an important function by the marketers? Give any one
reason in support of your answer.
10. State any four features of a good brand name.

Q. 7. After doing a diploma in entrepreneurship, Farihad started his own confectionary

business. He started doing a lot of hard work and used the recipes taught by his
grandmother in various preparations. He also learnt many recipes from online sites and
television programmes. He decided to keep the price of the products low initially and also
informed his customers about the goodness of the items sold by them. However, he didn‘t
mention on the package of each item weather it contained eggs or not. As a result,
vegetarian people became hesitant in buying things from his shop as they had to verbally
inquire from him about the inclusion of eggs in the preparation of various items.
In the context of above case:
11. Name the important aspect related to the marketing of products which has been ignored by
Farihad.
12. Explain briefly any free functions performed by the aspect as identified in part (a).
13. Mention the right of consumer being violated by Farihad.

Q. 8. ‗Shudh Hava Ltd.‘ is engaged in manufacturing of air conditioners and desert coolers.
The company offers a wide range of products to meet the requirements of people from
varied income groups. Recently the company has developed a new product, an air purifier
that improves the quality of air by filtering out all allergens and microbes. The company
introduced the product on two variants namely ‗Nano Tech‘ and ‗Nano Tech Premium‘. In
order to persuade people to buy the product it is offering easy payment options in equal
monthly installments for different time periods. Moreover, every buyer will be offered
 ‗scratch a card‘ option to win instant gifts like decorative items, T-shirts etc. the company is
also planning to organize competitive events based on skill and luck in various malls in
different cities.
In the context of above case:
14. Name and explain the ‗type of promotion strategy‘ adopted by the company to boost the
sales of air purifiers.
15. Also, identify the various techniques of this promotional strategy being used by the
company by quoting liens from the paragraph.
16. ―The company offers a wide range of products to meet the requirements of people from
varied income group.‖ Name the relevant consumer right being promoted by the company.

Q. 9. Nischay, after completing his masters in computer engineering decided to start his
own business. He visited his uncle Mr. Jaiprakash who has been running a successful
business in web designing. He shared with Nischay that the main reason for his success in
the business lies in his approach of building web sites according to the specifications of the
clients but also providing continuous online assistance to them and handling their
grievances effectively and doing all this at a profit. He provides these services at
competitive prices. Anybody interested in getting the web solutions can contact him
through his website. Moreover, whenever the market is sluggish he tries to create demand
by offering short-term incentives to the buyers.
In the context of above case:
17. Define the term ‗Marketing Management‘.
18. Briefly explain the various elements of marketing mix being pursued by Mr. Jaiprakash by
quoting liens from the para.

Q. 10. In today‘s world, through social media, news spread in a flash. Moreover, if it is bad
news, it acquires a speed that is virtually impossible to stop. Hence, all corporate are more
susceptible to a tarnished image today than in any other day and age. The loss of goodwill
may lead to decreased revenue, loss of clients or suppliers and fall in market share. Over
the year, therefore, most of the companies have set up a separate department to manage
the public opinions about them. The department works in close coordination with the
various interest groups like consumers, government, suppliers etc. and strives to handle
effectively if any controversies arise.
In the context of above case:
19. Identify the element of promotion mix being referred to in the above liens.
20. Briefly explain any three points highlighting the role of this element of promotion mix as
identified in part (a)

Q. 11. Traditional trade or kriana stores constitute 90% of the FMCG (fast moving consumer
goods) business in India. HUL is the market leader in FMCG with over 60 lakh outlets.
According to industry estimates, Patanjali products are currently available in two lakh
traditional retail outlets. ‗Availability of the product‘ is the single largest driver of FMCG
sales. A shopper research suggests that 10% - 20% consumers shift preference if their
favourite brand is not available at the store.
In the context of above case:
21. Identify the component of marketing mix being discussed in the above liens.
22. State the two main decisions related to the concept identified in part (a)
23. Name the type of channel of distribution adopted by HUL.

Q. 12. Yogesh buys a new laptop for his son Mukesh on his birthday from a company
owned retail outlet. After a few months, some parts of the laptop get damaged in a road
 accident. Yogesh approaches the dealer to get the damaged parts replaced with the new
ones. But, he is told that the company does not provide any after sale service to the
customers. Yogesh feels very dissatisfied as a consumer and woes that he will never buy
this companies product ever again.
In the context of above case:
24. Identify the function of marketing being ignored by the company.
25. As a business advisor, suggest any two services that will be very effective in enhancing
brand loyalty for any such product.
26. Name the appropriate redressal agency that he can approach in case he decides to file a
case against the dealer.

ANSWERS.

MCQs
Answer 1. 1. Both Assertion (A) and Reason (R) are correct, and Reason (R) correctly explains
Assertion (A).
Answer 2. 2. Both Assertion (A) and Reason (R) are correct, but Reason (R) does not correctly
explain Assertion (A).

Answer3: b) Consumer preferences

Answer4: d) Product development

Answer5: c) Demand decreases

Answer:6 c) A washing machine purchased for household use

Answer:7 b) Creating a unique identity and perception in the market

Answer: 8b) Minimizing storage costs by receiving products only when needed

Answer 9 Correct Answer:

Answer 10 Correct Answer:

Case study type questions

3/4/6 marks

Ans 1.
76. The component of marketing mix being taken into consideration by the company is
‗Product‘.
77. Product designing and development: Every marketer strives to achieve his marketing
objectives by creating offerings to satisfy a need or a want. Therefore one of the core
functions of marketing is to develop the product in the most effective and efficient way.
Every marketer endeavours to add value to his product by introducing constant innovations
in the product to enhance both its utility and attractiveness in the eyes of the potential
buyers and gain a competitive edge.

Ans 2.
44. Social marketing concept is being pursued by the company.
45. The main focus of this philosophy is on both the needs of the potential buyers as well as
concern for the society at large. The ends include profit maximization through customer
satisfaction and social welfare.
46. The two values that the company wants to communicate to the society are:
47. Concern for the environment
48. Welfare of the society

Ans 3.
49. Secondary packaging and Transportation packaging.
50. The functions of packaging in the marketing of goods and services is explained below:
51. Product Identification:
52. Product Protection:
53. The marketers should use biodegradable packaging material and packaging should
enhance the usability of the products.

Ans 4.
54. Product differentiation is a strategy used by the marketers to gain an edge over its
competitors by creating a distinguished perception of the product in the minds of the
potential buyers in terms of its utilities.
55. Branding is a function of marketing that facilitates product differentiation.
56. Advertising is the component of promotion mix being used by the company ―Giving the
company power over prices through product differentiation, innovative advertising and
ensured brand loyalty.‖
57. Attaining product quality leadership: Besides aiming at profit maximization as its pricing
objective Rastro Inc. seeks to establish a unique place for its products in the market by
offering superior quality products which can be easily distinguished from its competitors. As
a result, it is able to use differential pricing i.e. fixing up relatively higher prices for tits
products.

Ans 5.
58. The tool of promotion being taken into consideration by Reema is advertising. (Reema is of
the opinion that in order to increase the sale of their products, they should advertise about it
on television.)
59. Vibha is insisting that they should set up an online portal to market their products across the
globe i.e. adopting direct marketing or zero-level channel (manufacturer – consumer).
Whereas at present they are using indirect channels of distribution i.e. one level channel
(manufacturer – retailer – consumer) by operating through a chain of retail outlets at five
different places in Delhi.
60. No, Ratna is not fully justified in her argument although advertising as a tool of promotion is
often criticized on the ground that it adds to the cost of distribution which is passed on to the
consumers in the form of higher prices. Therefore, it increases the burden on the
consumers. But, this argument is not entirely true because advertisements help to increase
demand for the product. In order to meet the increased demand the production levels have
to be raised. As a result, the business is able to reap advantage of economies of scale and
eventually the cost of production per unit comes down and benefits the buyers as the
product‘s prices are reduced consequently.

Ans 6.
61. Labeling and Packaging are the two important decisions related to a product.
62. Branding is considered to be a very important decision by the marketers because it
facilitates product differentiation. Through branding the prospective buyers are able to bring
about a distinction between a company product and its substitutes available in the market.
This helps the company to obtain a desirable market share.
63. The four features of a good brand name are stated below:
 64. The brand name should be short, easy to pronounce, spell, recognize and remember e.g.,
Ponds.
65. A brand should suggest the product‘s benefits and qualities e.g. Sunsilk.
66. A brand name should be distinctive e.g., Lotus.
67. It should be capable of being registered and protected legally.

Ans 7.
68. The important aspect related to the marketing of products which has been ignored by
Farihad is Labeling.
69. The three important functions performed by labeling are:
70. Describes the product and specifies its contents:
71. Helps in identification of the product or brand:
72. Enables grading of products:
73. The Right to information is being overlooked by the company in the above mentioned case.
According to the right to information, a consumer has the right to get complete information
about the product he / she intends to buy including its contents, date of manufacture, date
of expiry, price, quantity, directions for use etc. Also, as per law, it is mandatory for the
marketers to provide complete information about the product / service to the buyers.

Ans 8.
74. The type of promotion strategy adopted by the company to boost the sales of air purifiers is
Sales Promotion.
Sales Promotion includes the various types of short term incentives offered by a marketer to
increase the sale of a product or service.
75. The various techniques of sales promotion being used by the company are listed below:
76. Full finance @ 0% - ―It is offering easy payment options in equal monthly installments for
different time periods.‖
77. Instant draws and assured gifts – ―every buyer will be offered ‗scratch a card‘ option to win
instant gifts like decorative items, T-shirts etc.‖
78. Contests – ―The company is also planning to organize competitive events based on skill
and luck in the various malls in the different cities.‖
79. Right to Choose is the consumer right being promoted by the company

Ans 9.
80. Marketing management is ―the art and science of choosing target markets and getting,
keeping, and growing customers through creating, delivering, and communicating superior
customer value‖ – Philip Kotler
81. The various elements of marketing mix being pursued by MR. Jaiprakash area as follows:
82. Product: ―his business is not only restricted to designing web sites according to the
specifications of the clients but also providing continuous online assistance to them and
handling their grievances‘ effectively.‖
83. Price: ―doing all this at a profit. He provides these services at competitive price.‖
84. Place: ―Anybody interested in getting the web solutions can contact him through his
website.‖
85. Promotion: ―Moreover, whenever the market is sluggish he tries to create demand by
offering short-term incentives to the buyers.‖

Ans 10.
1. The element of promotion mix being referred to in the above lines is Public Relations.
2. The role of public relations as a promotional tool is described below:
7. Public relations help to create a positive image about the company in the eyes of various
interest holders like consumers, government, suppliers etc.
8. It helps in launching new products as they may be accepted easily because of good
reputation of business.
9. It helps the business to reinstate itself in wake of controversies or prejudices etc.
 Ans 11.
10. The component of marketing mix being discussed in the above liens is place / physical
distribution.
11. The two main decisions involved in physical distribution are:
1. Physical movement of goods from producers to consumers
2. Choice of channels of distribution
12. Indirect channel of distribution has been adopted by HUL. It is a two level channel i.e.
(Manufacturer – wholesaler – retailer – consumer)

Ans 12.
13. The function of marketing being ignored by the company is customer support services.
14. As a business advisor, I would suggest the introduction of the following services that will be
very effective in enhancing brand loyalty for any such product.
15. Setting up a separate department for handling consumer complaints.
16. Providing 165 days × 2 × 7 online assistance to the buyers for any maintenance or technical
issues.
17. Yogesh can file a complaint in the District forum.

Compiled by:-
Mrityunjay Kumar, PGT Commerce, K V No2, FCI Gorakhpur – 273007
 KENDRIYA VIDYALAYA SANGTHAN, VARANSI REGION
STUDY MATERIAL
CLASS- XII SUBJECT- BUSINESS STUDIES
CHAPTER- CONSUMER PROTECTION
QUESTIONS FOR BRIGHT STUDENTS
1 Which of the following statements is not true with regard to the National Commission? 1
(a) It consists of a President and at least five other members, one of whom should be a woman
(b) The members are appointed by the Central Government
(c) A complaint can be made to the National Commission when the value of the goods or services
in question, along with the compensation claimed, exceeds ₹1 crore
(d) Where the aggrieved party was not satisfied with the order of the National Commission, the
case can be taken to the Supreme Court of India

2 A popular nationalised bank has been fined ₹8 lakh by the country‘s highest consumer court,
National Consumer Disputes Redressal Commission (NCDRC), for not sharing complete
insurance policy details with a customer. The bank has been ordered to pay the full amount as
compensation to the customer. Identify the rights of consumers being violated in the given case. 1
(a) Right to be heard
(b) Right to seek redressal
(c) Right to be informed
(d) Right to safety

3 Due to the negligence of the doctors, Johar passed away within a week‘s time after his surgery
of the spine. Which of the following parties can not file a case in this regard?1
(a) The consumer
(b) Any registered consumers‘ association
(c) A legal heir or representative of the deceased consumer
(d) All of the above

4 Which of the following functions are carried out by the consumer organisations? 1
(a) Publishing periodicals to impart knowledge about consumer issues
(b) Providing legal assistance to consumers
(c) Filing complaints in appropriate consumer courts on behalf of the consumers
(d) All of the above

78. Rajiv bought an electric geyser. One day while taking bath he felt an electric shock. He
quickly called the company and asked the concerned person to replace the geyser or fix the
problem. There was no response from the side of the company. The geyser was still in the
warranty period. Later from other neutral sources lie came to learn that many other people
have also felt the same problem and it is because the product is made up of substandard
components.
In the above case identify the consumer rights violated. Explain. 3
OR
Ronit Raj, a marketing manager is a patient of diabetes for which he takes medicines
regularly. One day, on his tour to Patna, he met with an accident and was hospitalised. Due
to doctor’s negligence a delicate nerve of his right leg was cut rendering hum crippled
throughout his life. Identify the consumer right that has been violated by the doctors under
the Consumer Protection Act, 1986 in the above situation.

79. Adesh had some problem walking on the road. He purchased a pair of shoes with high heels. After
some time of using these shoes his pain increased as he did not know that there were medically
recommended shoes available in the market for this problem. .After a few days of giving himself rest
 he approached a shop where the medically recommended shoes were sold. He was amazed to
learn that the company making the shoes was holding workshops at different places in order to
make the people suffering with such problem aware of an available option. 3

80. Which consumer responsibility was not fulfilled by Adesh?

81. Which right has been helped protected by the company selling the medically recommended
shoes?

7 Manuj bought a packet of chips from a local shopkeeper and found that the ingredients given on the
label were not legible. He complained about it to the company. The company sent a written apology stating
that they will make sure that existing packets are withdrawn from the market and new packets with legible
labels are soon made available.
State the consumer right which Manuj exercised.Explain. 3
Himanshu purchased a new car from ‗Galaxy Motors‘ for Rs.25 lakhs. He was offered free insurance for the
first year and three free servicing to be availed after the car had covered 5,000 km, 10,000 km and 15,000
km respectively. When Himanshu took the car for the first free servicing, he was told that the car was not
new and first service had already been availed on this car. He felt cheated and filed a complaint in the State
Commission. Being not satisfied with the decision of the State Commission, after two months he decided to
file an appeal against it.
Can Himanshu appeal against the decision of the State Commission? Give reason in support of your
answer. 3
9 ‗Amazing Duniya‘ is a tourist agency. It also has a group of hotels. The company offers new types of
schemes to the potential customers. Amit was offered a scheme of staying in a hotel for 6 days and 5
nights for free. However when he reached the destination he was told that every room of the hotel was
booked. He told tlhem that he was told earlier that his room was booked. He even showed them the
confirmation he received on his mail. 4
82. Can Amit file a complaint against the tourist agency?
83. Will he get a relief in this case?
84. Name the relief he will get.
85. Which consumer right has been violated in this case?
10 Ramit is running an organisation which is beyond the control of
government and the motive of the organisation is welfare of the consumers. One day Sujata
comes to his office and tells that her mom. purchased a fridge two years back. She is no more and
the fridge was purchased in her name. However the warranty period of the fridge is still active. But
the company is denying her the services. 4
86. Which type of organisation is being ran by Ramit?
87. Name one such example of an organisation.
88. Can Ramit help Sujata file a case against the company?
89. Which consumer right of Sujata has been violated here?
OR
Sumit bought a box of cheese of a reputed brand from a local shopkeeper. On opening the
box, she found a piece of stone in the cheese. She reported the matter to the shopkeeper
who forwarded her complaint to the concerned company. Within a week, the representative
of the company visited Sumit’s residence with an apology and as a replacement offered her a
new cheese pack with four other varieties of cheese as compensation for the inconvenience
to her. State the consumer right with Sumit exercised.
11 Ramit is running an organisation which is beyond the control of
government and the motive of the organisation is welfare of the consumers. One day Sujata comes to his
office and tells that her mom. purchased a fridge two years back. She is no more and the fridge was
purchased in her name. However the warranty period of the fridge is still active. But the company is
denying her the services.
18. Which type of organisation is being ran by Ramit?
19. Name one such example of an organisation.
20. Can Ramit help Sujata file a case against the company?
21. Which consumer right of Sujata has been violated here?
12 Nitish went to a shop to purchase a shirt. The shopkeeper offered him three colours of shirts.
Nitish asked him to show him the shirt which was on display. The shopkeeper told him that he
could not buy that shirt and would have to choose from the options provided by him. Out of
necessity and lack of time Nitish purchased a shirt out of the shirts shown by the shopkeeper. He
paid him cash and didn‘t take the cash memo. Later, when he wore the shirt at home and was
about to leave, he found one button of the shirt missing. He went to the shop the next day and
asked for replacement. The shopkeeper bluntly denied that the shirt was purchased from him. 4
86. Which consumer right of Nitish is violated here?
87. Which consumer responsibility was no! fulfilled by Nitish which led to this situation?
88. Can Nitish file complaint against the shopkeeper?
89. From the point of view of business which type of interest has been overlooked by the
shopkeeper?
13. Mrs. Mathur sent a jacket to a laundry shop in January 2018. The jacket was purchased
at a price of `4,500. She had previously sent the jacket for dry cleaning with Shine Dry
Cleaners and the jacket was cleaned well. However, she noticed that her jacket had white
discoloration marks when she collected the jacket this time. On informing the dry cleaner,
Mrs. Mathur received a letter confirming that discolouration indeed appeared after the jacket
was dry cleaned. She contacted the dry cleaner multiple times and requested for
compensation for discoloured jacket but to no avail.
Upon Consumer Court‘s intervention, Shine Dry Cleaners agreed to compensate `2,500 to
Mrs. Mathur for the discoloured jacket.
(a) Which right was exercised by Mrs. Mathur at the first instance ?
(b) Name and explain the right which helped Mrs. Mathur to avail the compensation.
(c) State which consumer responsibility has been fulfilled by Mrs. Mathur in the above case.
(d) State any other two responsibilities to be assumed by the consumers.
14. Anita purchased a book from Satish book stores. While reading the book, she found that ten pages
were missing. She approached the book seller and complained about the missing pages. The seller
promised that if the publisher was ready to change the book, he would change the same. After one week,
the seller informed Anita that the publisher had refused to change the book.
Where can Anita file a complaint against the seller of the book? Give reason in support of your answer. 6
15. Harish purchased a medicine from Bhatia Medical Stores for his son, who had high fever. Even after
giving the medicine his son‘s condition did not improve and he had to be hospitalised. Doctor informed
Harish that medicine given to his son was spurious. Harish complained about this to Bhatia Medical Stores.
As-a result, Bhatia Medical Stores decided to file a complaint against the manufacturer in the consumer
court. Can Bhatia Medical Stores do this? Give reason in support of your answer. 6
16. Explain the following as ways and means of consumer protection 4
(i)Consumer awareness
(ii) Government
17. Reena purchased one litre of pure desi ghee from a shopkeeper. After using it, she had a doubt that it
is adulterated. She sent it for a laboratory test which confirmed that the ghee is adulterated. State any six
reliefs available to Reena, if she complains and the consumer court is satisfied about the genuineness of
the complaint ..6
OR
State any six reliefs available to a consumer under the provision of CPA, 2019.
18 Manuj bought a packet of chips from a local shopkeeper and found that the ingredients given on the
label were not legible. He complained about it to the company. The company sent a written apology stating
that they will make sure that existing packets are withdrawn from the market and new packets with legible
labels are soon made available.
State the consumer right which Manuj exercised.
19 In a colony several people purchased mosquito killing rackets from a company. The majority of
rackets turned useless within a period of two months. Rishank who was one of the residents of the
colony decided to take the matter to the consumer court but the residents were not united and he
felt himself alone on the issue. The price of the racket was ?450. Meanwhile one of the friends of
Rishank who was a journalist reported about the incident in a daily newspaper. When the
company learnt about the situation it decided to take a milestone step. The company decided to
lake back or repair all the faulty rackets from the residents of the society. The whole slory took an
interesting twist when a technician from the company told the management that in the instruction
book provided with the racket it was written to clean the racket with special care after every one
month. When enquired it was found that the residents with faulty rackets including Rishank didn‘t
clean their rackets after one month.
90. Which important aspect from consumer point of view is highlighted in the above case?
91. At which level of consumer court could Rishank apply for the claim of his loss?
92. What was the important aspect from the point of view of business which compelled the
company to take such a milestone step?
93. Which consumer responsibility was not followed by the residents of Rishant‘s colony?
94. Which consumer right was helped protected by the company?

20 On the eve of Diwali Kalpana purchased two kilograms of sweets from VV Koyal Sweets. On
consumption of sweets her two children and husband fell sick and were to be hospitalized. Kalpana wanted
to file a case in the consumer forum but could not
do so because she did not have any proof of buying sweets from Koyal sweets. What proof could Kalpana
have obtained for filing the claim in the consumer court?
21 Nitish went to a shop to purchase a shirt. The shopkeeper offered him three colours of shirts.
Nitish asked him to show him the shirt which was on display. The shopkeeper told him that he
could not buy that shirt and would have to choose from the options provided by him. Out of
necessity and lack of time Nitish purchased a shirt out of the shirts shown by the shopkeeper. He
paid him cash and didn‘t take the cash memo. Later, when he wore the shirt at home and was
about to leave, he found one button of the shirt missing. He went to the shop the next day and
asked for replacement. The shopkeeper bluntly denied that the shirt was purchased from him.
95. Which consumer right of Nitish is violated here?
96. Which consumer responsibility was no! fulfilled by Nitish which led to this situation?
97. Can Nitish file complaint against the shopkeeper?
98. From the point of view of business which type of interest has been overlooked by the
shopkeeper? Why?

22 Rajiv bought an electric geyser. One day while taking bath he felt an electric shock. He quickly called
the company and asked the concerned person to replace the geyser or fix the problem. There was no
response from the side of the company. The geyser was still in the warranty period. Later from other neutral
sources lie came to learn that many other people have also felt the same problem and it is because the
product is made up of substandard components.
In the above case identify the consumer rights violated.

ANSWERS
1 Ans: (a) It consists of a President and at least five other members, one of whom should be a
woman

2 Ans: (c) Right to be informed

3 Ans: (a) The consumer

4 Ans: (d) All of the above

5 Ans: Right to Safety & Right to Seek Redressal.

6 Ans:
22. Be aware about various goods and services available in the market.
23. Right to be Informed

7 Ans: Right to seek redressal

 1. Ans: No, Himanshu cannot appeal against the decision of the State Commission as
the aggrieved party can appeal further only within 30 days of the passing of the
order.

9 Ans:
24. Yes
25. Yes
26. He will be compensated for the loss of time and money and also for filing the complaint‘
27. Right to be Informed

10 Ans. 1.The type of organisation run by Ramit is an NGO

One example of such an NGO is Consumer Coordination Council (Delhi).
Yes
Right to Seek Redressal

28. 11 The type of organisation run by Ramit is an NGO. Ramit is running an organisation which is
beyond the control of government and the motive of the organisation is welfare of the consumers.
29. One example of such an NGO is Consumer Coordination Council (Delhi).
30. Yes, Ramit can help Sujata file a complaint against the company because she is representative of a
deceased consumer. Her mom is no more and the fridge was purchased in her name.
31. The consumer right of Sujata which has been violated here is ‗Right to Seek RedressaT. However
the warranty period of the fridge is still active. But the company is denying her the services.

12 Ans:
3. Right to Choose
4. Ask for a cash memo after purchasing goods and services
5. No
6. Long-term interest of business

13 Ans. (a) Right to be Heard was exercised by Mrs. Mathur on first instance.
b) Right to Seek Redressal enabled Mrs. Mathur to seek compensation. A consumer has the right to
seek redressal and compensation in case of any exploitation. The Consumer Protection Act provides
for compensation in various forms such as replacement of product, cash compensation and
repair/removal of defects, among others.
(c) Yes, Mrs. Mathur was responsible consumer as she checked the jacket pre and post dry cleaning.
She also complained the Dry Cleaners before moving to the court.
(d) Any responsibilities

14 Ans. Anita can file a complaint against the seller of the book in the District Forum. District Forum is
established by the State Government in each district.

15 Ans. ‗Bhatia Medical Stores‘ cannot file a complaint against the manufacturer in the consumer court
because Bhatia Medical Stores is not a consumer in this case. He is not a user but has obtained medicine
for resale purpose/commercial purpose.

16 Ans. (i) Consumer awareness A well informed consumer will safeguard himself from unfair trade
practices. A consumer should be well informed about his rights, duties and reliefs available to him.
(ii) Government The government can protect the interest of the consumers by enacting various
legislations. CPA is one of them which provides 3-tier system of redressal to the aggrieved consumers.

17 Ans. Reliefs available to Reena are:

(i) To replace the adulterated ghee.
(ii) To refund the price paid for the product.
(iii) To pay a reasonable amount of compensation for any loss or injury/sickness suffered by her due to the
negligence of the manufacturer.
(iv) To pay punitive damages in appropriate circumstances.
 (v)To withdraw the adulterated ghee from sale.
(vi)To cease manufacture of adulterated ghee.

18 Right to seek redressal

99. 19 The important aspect from consumer point of view highlighted in the above case is
‗Unorganised Consumers‘. Rishank who is one of the residents of the colony decided to take
the matter to the consumer court but the residents were not united and he felt himself alone
on the issue.
100. Since the compensation claimed by Rishank would have been less than 10 lakhs (as the
price of racket is Rs.450) he could have approached the District Forum.
101. The important aspect from the point of view of business which compelled the company to
take such a milestone step was ‗Moral Justification‘. The Company came to know for the first
time through newspaper news. Had they been earlier informed and would not have taken
any action the answer would be ‗Government Intervention‘.
102. The consumer responsibility not followed by the residents of Rishank‘s colony was
‗Following manufacturer‘s instructions‘. In the instruction book provided with the racket, it
was written to clean the racket with special care after every one month. When enquired it
was found that the residents with faulty rackets including Rishank didn‘t clean their rackets
after one month.
103. The consumer right which was helped protected by the company was ‗Right to be
Informed‘. The Company from its side gave ‗directions for use‘ which showed that this right
of consumer was protected.

20 Kalpana could have obtained cash memo for filing the claim in consumer court.
104. 21 The consumer right of Nitish which is violated here is ‗Right to Choose‘. The shopkeeper
told him that he could not buy that shirt and would have to choose from the options provided
by him.
105. The consumer responsibility which was not fulfilled by Nitish was ‗Ask for a cash memo
after purchasing goods and services‘. He paid him cash and didn‘t take the cash memo.
106. No, Nitish can‘t file the complaint against the shopkeeper as there is no proof of purchase
since he forgot to take the cash memo from him.
107. From the point of view of business the interest which has been overlooked by the
shopkeeper is ‗Long-term interest of business‘ because a good businessman knows that the
customer should be satisfied for repeat purchase and customer retention which eventually
helps in increasing the customer base.

22 Following are the consumer rights violated in the above case:

1. Right to Safety. Many other people also have felt the same problem and it is because the
product is made up of substandard components.
2. Right to Seek Redressal. There was no response from the side of the company. The
geyser was still in the warranty period.