Business Studies (319) - April' 2019 | NIOS SENIOR SECONDARY Solved Papers

1. Which of the following is true about management :   1

2. Which of the following principles of management states that work should be assigned to a subordinate for which it is best suited.   1

3. It is a plan laying down the ‘what’, ‘how’, ‘who’, and ‘when’ of accomplishing a specific job.  1

4. Systematic instrument of authority at all levels of management and in all departments is called as :     1

5. Which of the following is also called a bill of exchange.    1

6. Finance required for modernization is called as :   1

7. Interaction between buyers and sellers using internet is called.    1

8. ‘Travel today pay fare later’ is which type of promotional tool :    1

10. Which of the following judicial machinery established under the Consumer Protection Act 1986 must have a woman member:     1

11. Is management a process? Explain in briefly.             3

Ans: Management is an ongoing process. It continues as long as the organisation exists. No activity can take place without management. To perform all activities like production, sale, storage, operation etc. management is required. So, as long as these activities continue the process of management also continues to operate.

12. Give any three points of difference between delegation and decentralization.                         3

Ans: Difference between delegation and decentralisation:

13. Briefly explain the limitations of public deposits.              3

Ans: Following are the limitations of public deposits.

1. Uncertainty: A concern should be of high repute and have a high credit rating to attract public to deposit their savings. There may be sudden withdrawals of deposits, which may create financial problems. Depositors are regarded as fair weather friends.

2. Insecurity: Public deposits do not have any charge on the assets of the concern. It may not always be safe to deposit savings with companies particularly those, which are not very sound financially.

3. Limits on the amount raised : There are limits on the amount that can be raised through public deposits.

14. What is meant by ‘Industrial goods’?                   3

Ans: Goods meant for consumption or use as inputs in production of other products or provision of some service are termed as ‘industrial goods’. These are meant for non-personal and commercial use and include (i) raw materials,(ii) machinery, (iii) components, and (iv) operating supplies (such as lubricants, stationery etc). The buyers of industrial goods are supposed to be knowledgeable, cost conscious and rational in their purchase and therefore, the marketers follow different pricing, distribution and promotional strategies for their sale.

15. Give the meaning of Performa invoice.                           3

Ans: It is a document sent prior to the actual sale to the buyer. It informs the buyer about the amount he is required to pay for the specified goods purchased by him. It provides almost the same information as an invoice provides. It is sent in the following cases:

a) When goods are sent on consignment basis.

b) When goods are sent abroad.

c) When supplier expects payment before dispatch of goods.

16. Briefly explain the following general principles of management.                     4

A.      Equity and

B.      Order

Ans: Equity: This principle requires the managers to be kind and just to workers. This promotes a friendly atmosphere between superiors and subordinates and motivates them to perform their duties efficiently.

Order: Placement of men and materials should be properly made. Proper space should be made available where materials can be kept safely. Each man should be provided the work for which he is best suited.

17. Briefly explain the importance of staffing as a function of management.      4

Ans: Need and Importance of Staffing:

1. Obtaining competent personnel: Proper staffing helps in discovering and obtaining competent personnel for various jobs.

2. Higher performance: Proper staffing ensures higher performance by putting right person on the right job.

3. Continuous survival and growth: Proper staffing ensures continuous survival and growth of the enterprise, research & development, innovation.

4. Optimum utilization of human resources: Proper staffing helps to ensure optimum utilization of human resources. It prevents underutilisation of personnel and high labour costs. At the same time, it avoids disruption of work.

5. Improve job satisfaction: Proper staffing improves job satisfaction and morale of employee through objective assessment and fair rewarding of their contribution.

18. State any four objectives of financial planning.                          4

Ans: The main objectives of financial planning are:

(a)To ascertain the amount of fixed capital as well as the working capital required in a given period.

(b)To determine the amount to be raised through various sources using a judicious debt-equity mix.

(c)To ensure that the required amount is raised on time at the lowest possible cost.

(d)To ensure adequate liquidity so that there are no defaults in payments and allcontingencies (any unforseen expenditure) are met without difficulty.

19. Briefly explain the following functions of marketing.           4

A.      Branding and

B.      Pricing the product

Ans: A. Branding: Branding means giving an attractive name, symbol or identity mark to the product to make a product different from others so that it is known by that name or symbol or mark. For example, Surf is the brand name of a detergent powder produced by Hindustan Unilever Limited (HUL).

B. Pricing the Product: Pricing involves decisions regarding fixation of product prices, keeping in view the product costs, the capacity of customers to pay, and the prices of the competitive products. It is an important decision as it influences the sales and so also the profits. So pricing has to be done very carefully.

20. State the merits of consumer cooperative stores.               4

Ans: Merits of Consumer Cooperative Stores

(a)The consumer cooperative stores generally provide the goods at a lower price than the market, because they eliminate the profits of middlemen in the process of distribution.

(b)These stores sell the goods on cash basis. So the risk of bad debts is avoided.

(c)These stores are generally located near the residential area for the convenience of the members as well as general public.

(d)The profit earned by the consumer cooperative stores are distributed among the members as bonus.

21. Briefly explain the objectives of management.                   5

Ans: Management helps in efficient and effective use of available resources of an organisation. Objectives are the end results, towards which all managerial efforts and organisational activities are directed. Objectives of management include:

1. Optimum Utilisation of Resources: Management should try to secure maximum outlay with minimum efforts and resources by utilising the human and material resources available in an organisation for deriving the best results.

2. Increase in Productivity of All Factors of Production: Management should minimise the wastage of time, money and efforts through proper utilisation of various factors of production like capital and labour. This will lead to increase in efficiency of all factors of production. It should also try to set higher standards of productions every year and should strive higher to reach these targets.

3. Fair Return on Capital: Management has to provide a fair return to the owners on the capital invested by them. Management must maintain the investment and should also attract further investments for growth and expansion.

4. Create Goodwill: Management should aim at building the reputation of the firm through various activities like popularising products by advertising, reasonable price, good quality products etc. Business environment is dynamic and is influenced by a number of factors.

5. Meet Challenges of the Changing Environment: Enterprises which are unable to adopt itself to the changing situations, will not be able to survive. Management should frame steps to meet the challenges of the changing environment. Thus, management can help an organisation for its survival and growth.

22. Briefly describe the hierarchy of needs as given by Maslow.              5

Ans: Understanding and influencing the human behaviour requires understanding their needs. Need or the desire is a very important element in motivation because the employees get motivated only for their needs and if the needs are fulfilled completely then it is not possible to motivate the employees. According to Abraham Maslow, need can be classified in the following categories:

a)      Physiological needs: these needs include basic requirements for survival and maintenance of human life. The common physiological needs are food, shelter and clothing.

b)      Security needs: Once the present day physiological needs are fulfilled then the people start thinking about their future as they want to secure their future by making sure that in future also they continue to satisfy their physiological needs. Under safety and security there are two categories:

Ø  Physical security which means safety from illness, accident, fire etc.

Ø  Economic security which means having sufficient funds to meet the future physiological needs and to come out of physical security threat.

c)       Social needs: It means the need for love, affection, companionship, friendship etc. Once the people satisfy their physiological and safety needs then the social need becomes more active and to fulfill the social needs.

d)      Esteem needs: These needs are related to the respect and recognition. When the above three needs are satisfied then people start demanding respect for themselves in a group. This need is more common in higher level employees.

e)      Self actualization: This need refers to realizing or reaching to the aim of your life. Once the employee becomes what he wants to become it means satisfaction of his actualization need. For example, need to grow, sense of fulfillment.

23. State the functions of special financial institutions.           5

Ans: The main functions of special financial institutions are:

(i) to grant loans for a longer period to industrial establishment;

(ii) to help the establishment of business units that require large amount of funds and have long gestation period;

(iii) to provide support for the speedy development of the economy in general and backward regions in particular;

(iv) to offer specialized services operating in the areas of promotion, project assistance, technical assistance services and training and development of entrepreneurs and

(v) to provide technical and professional management services and help in identification, evaluation and execution of new projects.

24. State any five points of importance of marketing.                         5

Ans: Marketing is a unique function of business which satisfies social values, needs and wants of an individual. It serves as the springboard for all industrial production. The importance of marketing are stated below:

A. Uses to the Society

(1)   Employment of Various Persons: Since the things are manufactured or produced due to marketing, hence many people get employment through the production activities. Transport, storage and wholesale and retail services cover many persons. In this way, it might be said that by marketing the employment is created.

(2)  Availability of Various Products for Use: Today, the sphere of marketing has become worldwide or international. Due to it, the products manufactured in the foreign lands too become avail­able for consumption. All this could become possible due to the growth of the marketing and its development.

(3)  Increase in the National Income of Country: If the marketing activities are efficiently undertaken and things are produced in accordance with the needs or requirements of the cus­tomers, there must be some increase in the demand of the things. The production goes up which leads to the increase in the national income.

(4) Getting Information Regarding Demand. By the study of marketing, the producers are able to get information regard­ing the changing demands.

(5)  Reduction in Distribution Costs. By the wide studies of distribution, it is also known that the products be passed on to the consumers on the minimum possible costs.

25. Briefly explain the following rights of consumers as provided in the Consumer Protection Act 1986.       5

A.      Right to safety

B.      Right to be informed

Ans: A. Right to Safety: It is the right of the consumers to be protected against goods and services which are hazardous to health or life. For example, defective vehicles could lead to serious accidents. The same is true of electrical appliances with sub-standard material. Only recently, there were mass protests and boycott of soft drinks due to presence of hazardous pesticides beyond permissible limits. Thus, right to safety is an important right available to the consumer which ensures that the manufacturers shall not produce and sell sub-standard and dangerous products.

B. Right to be Informed: The right to be informed is an important component of consumer protection. The consumer must be provided with adequate and accurate information about quality, quantity, purity, standard and the price of the goods and services. Now-a-days the manufacturers provide detailed information about the contents of the product, its quantity, date of manufacturing, date of expiry, maximum retail price, precautions to be taken, etc. on the label and package of the product. Such information helps the consumers in their buying decision and use of the product.

26. ‘Management principles have considerable importance in all group efforts’. Do you agree? Give any four reasons in support of your answer.                  6

Ans: Significance of Principles of Management: Management principles have considerable importance in all group efforts. Following are the points of importance of management principles.

1. Act as a Guide for Research in Management: The principles so far developed can be tested in new situations and management practices can be made more effective. For example, in earlier days workers were motivated by their remuneration. But now a days family health, education of the children etc. should be considered by the organisation in order to motivate and retain the workers.

2. Improve Understanding: The knowledge of principles of management help the managers to manage an enterprise properly. The principles of management help the managers for taking correct decisions. Managers can handle situations smoothly.

3. Identify the Areas for Training of Managers: The principles of management help in identifying the areas where the managers should be trained.

4. Act as Reference for Managers: Principles act as reference for the managers and help to evaluate whether the decision taken by him are appropriate and accurate.

5. Increases efficiency: Principles are guidelines for managers for taking accurate decisions. Principles help the manager for solving problems of an enterprise.

OR

‘This function of management harmonises group efforts so as to achieve common objectives’. Identify this function and briefly explain any four characteristics.       April, 2018

Ans: In every organisation, different types of work are performed by various groups and no single group can be expected to achieve the goals of the organisation as a whole. Hence, it becomes essential that the activities of different work groups and departments should be harmonised. This function of management is known as ‘co-ordination’. It ensures unity of action among individuals, work groups and departments, and brings harmony in carrying out the different activities and functions so as to achieve the organisational goals efficiently. In other words, coordination is the orderly arrangement of individual and group efforts to provide unity of action in the pursuit of a common goal. In an organisation, for example, the purchase department buys raw materials for production, the production department produces the goods, and the marketing department procures orders and sells the products. All these departments must function in an integrated manner so that the organisational goal can be duly achieved. Thus, coordination involves synchronisation of different activities and efforts of the various units of an organisation so that the planned objectives may be achieved with minimum conflict.

 In the words of Henry Fayol, ”To co-ordinate is to harmonise all the activities of a person in order to facilitate its working and its success.”

The key features of coordination are as follows:

a)      Coordination is not a distinct function but the very essence of management.

b)      It is the result of conscious and concerted action by management.

c)       Coordination is a continuous, never ending or on-going process. It is also a dynamic process.

d)      Coordination is required in group efforts not in individual effort.

e)      Coordination has a common purpose of getting organizational objectives accomplished.

27. ‘Training is an organized activity for increasing the knowledge and skill of the people for a specific purpose’. In the light of this statement state the importance of training for the organization.

Ans: Importance of Training and Development

Benefits of training for organisations

1.Less wastage, as a trained worker takes less time in learning and doing a job.

2.Better employee performance leading to higher profits.

3.Better utilisation of men, machines and materials.

4.Develop positive attitude in the mind of workers and motivate work force to take new ventures.

5.Reduce labour turnover and absenteeism.6.Trained worker will adopt fast to the environmental changes compared to untrained worker.

Benefits of Training to the Employee

1.Improved skills acquired from training bring better career options for workers.

2.Better performance by the worker help him to earn more.

3.Trained worker will have better awareness to handle problems and he will be capable to deal with complex type of work.

4.Training increases the moral of workforce.

OR

Briefly explain the relationship between planning and controlling.

Ans: The relationship between planning and controlling can be divided into the following two parts.

(i) Interdependence between Planning and Controlling.

(ii) Difference between Planning and Controlling.

(i) Interdependence between Planning and Controlling. Planning is meaningless without controlling and controlling is blind without Planning. Both the aspects of the interdependence of planning and control have been discussed below:

(a) Planning is meaningless without Controlling: if the process of controlling is taken away from management no person working in the enterprise will take it seriously to work according to the plans and consequently, the plans will fail.

(b) Controlling is blind without Planning: Under the system of controlling actual work performance is compared with the standards. Hence, if the standards are not determined there is no justification left for control and the standards are determined under planning.

(ii) Difference between Planning and Controlling: Yes, planning and controlling are incomplete and ineffective without each other but it doesn’t mean that both are not independent. Reasons are:

(a) Planning is looking Ahead whereas Controlling is Looking Back: Plans are always formulated for future and determined the future course of action for the achievement of objectives laid down. On the contrary, controlling is looking back because under it a manager tries to find out, after the work is completed, whether it has been done according to the standards or not.

(b) Planning is the first function and Controlling is the last function of Managerial Process: the managerial process moves in a definite sequence- like planning, organizing, staffing, directing and controlling happens to be the last step.

28. ‘The choice of an appropriate capital structure becomes a very important decision for the finance manager of a company’. In the light of this statement briefly explain any four factors that affect the capital structure of a company.    6

Ans: Capital structure refers to the mix of sources from where long term funds required by a business may be raised i.e. what should be the proportion of equity share capital, preference share capital, internal sources, debentures and other sources of funds in total amount of capital which an undertaking may raise for establishing its business. In simple words, capital structure means the proportion of debt and equity used for financing the operations of business and it is calculated by the following formula:             Capital structure = Debt/Equity.

Following factors are to be considered before determining capital structure.

1.       Cash flow position: If cash flow position of the company is sound, then debt can be raised and if cash flow is not sound debt should be avoided and it must employ more of equity in its capital.

2.       Interest coverage ratio: It is the ratio that expresses the number of times the Net profit before interest and tax covers the interest liabilities. Higher the ratio better is the position of the firm to raise debt.

3.       Control: Issue of Equity shares dilutes the control of the existing shareholders, whereas issue of debt does not as the debenture holders do not participate in the management. Thus if control is to be retained, equity should be avoided.

4.       Stock market conditions: If the stock market is bullish, the investors are adventurous and are ready to invest in risky securities. In this case, equity can be issued even at a premium. Whereas in the Bearish phase, when the investors become cautious, debt should be issued as there is a demand for fixed cost security.

OR

‘SEBI has vested with necessary powers concerning various aspects of capital market’. State any six powers of SEBI.

Ans: SEBI has been vested with necessary powers concerning various aspects of capital market such as:

(i)regulating the business in stock exchanges and any other securities market;

(ii)registering and regulating the working of various intermediaries and mutual funds;

(iii)promoting and regulating self regulatory organisations;

(iv)promoting investors education and training of intermediaries;

(v)prohibiting insider trading and unfair trade practices;

(vi)regulating substantial acquisition of shares and take over of companies;

(vii)calling for information, undertaking inspection, conducting inquiries and audit of stock exchanges, and intermediaries and self regulation organisations in the stock market.

29. According to the modern concept of marketing the products and services are planned according to the needs of the customers rather than according to the availability of material and machinery’. Briefly explain the implications of this concept.       6

Ans: The modern concept of marketing considers the consumers’ wants and needs as the guiding spirit and focuses on the delivery of such goods and services that can satisfy those needs most effectively. Thus, marketing starts with identifying consumer needs, then plan the production of goods and services accordingly to provide him the maximum satisfaction. In other words, the products and services are planned according to the needs of the customers rather than according to the availability of materials and machinery. Not only that, all activities (manufacturing, research and development, quality control, distribution, selling etc.) are directed to satisfy the consumers. Thus, the main implications of the modern concepts are:

(a)The focus of this concept is on customer orientation. The marketing activity starts with an assessment of the customers needs and plan the production of items that satisfy these needs most effectively. This also applies to all other marketing activities like pricing, packaging, distribution and sales promotion.

(b)All marketing activities like product planning, pricing, packaging, distribution and sales promotion are combined into one as coordinated marketing efforts. This is called integrating marketing. It implies:

(i)developing a product that can satisfy the needs of the consumers;

(ii)taking promotional measures so that consumers come to know about the products, its features, quality, availability etc.;

(iii)pricing the product keeping in mind the target consumers’ purchasing power and willingness to pay;

(iv)packaging and grading the product to make it more attractive and undertaking sales promotion measures to motivate consumers to buy the product; and

(v)taking various other measures (e.g., after sales service) to satisfy the consumers’ needs.

(c)The main aim of all effort is to earn profit through maximisation of customer satisfaction. This implies that, if the customers are satisfied, they will continue to buy, and many new customers will be added. This will lead to increased sales and so also the profits.

It may be noted that with growing awareness of the social relevance of business, marketing has to take into account the social needs and ensure that while enhancing consumer satisfaction, it also aims at society’s long-term interest.

OR

‘The manufacturer has to be careful while finalizing the channel of distribution to be used’. In the light of this statement briefly explain the factors that the manufacturer must keep in mind while deciding the channel of distribution.

Ans: Factors Affecting the Selection of the Channel of Distribution

Every producer, in order to pass on the product to the consumer, is required to select a channel for distribution. The selection of the suitable channel of distribution is one of the important factors of the distribution decisions. The following factors affect the selection of the channel of distribution:

(1)    Price of the Product: The products of a lower price have a long chain of distributors. As against it, the products having higher price have a smaller chain. Very often, the producer himself has to sell the products to the consumers directly.

(2)    Perishability: The products which are of a perishable nature need lesser number of the intermediaries or agents for their sale. Under this very rule, most of the eatables (food items), and the bakery items are distributed only by the retail sellers.

(3)    Size and Weight: The size and weight of the products too affect the selection of the middlemen. Generally, heavy industrial goods are distributed by the producers themselves to the industrial consumers.

(4)    Number of Customers: If the number of customers is large, definitely the services of the middlemen will have to be sought for. As against it, the products whose customers are less in number are distributed by the manufacturer himself.

(5)    Objective of Purchase: If the product is being purchased for the industrial use; its direct sale is proper or justified. As against it, if the products are being purchased for the general consumption, the products reach the consumers after passing innumerable hands.

(6)    Attitude of Agents towards the Producers' Policies: The producers generally prefer to select such middlemen who go by their policies. Very often when the distribution and supply policies of the producers being disliked by the middlemen, the selection of middlemen becomes quite limited.

(7)    Financial Resources of the Company: From the financial point of view, the stronger company needs less middlemen.

(8)     Social Viewpoint: What is the attitude of society towards the distribution, this fact too must be kept into consideration while selecting the middlemen. 

30. In internal trade both wholesalers and retailers provide service to each other. Briefly explain any three services each provided to the other.        6

Ans: Functions or services of wholesaler to Retailers

1)      The retailers are relieved of maintaining huge stock of goods because the wholesaler fills up the stock regularly. The wholesaler buys in large quantities and sell them at convenient lots to the retailers.

2)      The wholesaler provides finance and credit facilities to the retailer and thereby relieves the financial difficulties of the retailer.

3)      The wholesaler saves retailers from many types of risks. The retailer is not required to carry huge stock as he can get them from the wholesaler at regular interval. By extending credit has saved the retailers a lot.

Services or functions of Retailer to Wholesalers and Manufacturers

1)      Retailers give manufacturers or producers access to markets by offering them the opportunity to present their products to consumers.

2)      Retailers supply valuable and reliable information to wholesalers and manufacturers about the consumers' demands and the changes occurring in their likes and dislikes.

3)      Information about the consumers' likes and dislikes received from the retailers through the wholesalers enable the manufactures to make suitable adjustments in the design, size and contents of their products. Thus they can manufacture right types of goods at right time.

OR

Is mail order retailing a popular form of trade in India? Give reasons in support of your answer.

Ans: Mail order business is suffered from various limitations due to which it is not very much popular in India. Some of its limitations are stated below:

(a)Since there is no opportunity for the customer to personally examine the goods that he/she is buying, there is a probability that the customer may not get the desired product. The product may vary in size, color, design etc. from the one that shows in the advertisement or catalogue.

(b)There is no personal, face-to-face contact between the customer and the retailer. As a result, the customer is unable to clear all his doubts regarding the product, its use and its maintenance.

(c)Products that are ordered through this mode take some time to reach the customer. The customers have to wait till the order reaches the retailer, then the procurement and dispatch of goods by him and finally the goods reach the customer. Hence, this is not suitable for perishable products or products required immediately or on a short notice.

(d)Mail order retailing is not suitable for all products. Items of daily consumption, bulky or voluminous articles and perishable goods cannot be bought and sold through it.

(e)Mail order retailing is conducted mainly on cash basis. Credit facility is not provided to the customer.

Apart from its limitations that have been discussed above, there are certain other reasons why this business has not been very popular in India. A large section of our population is still illiterate due to which they are neither able to read the advertisements/catalogues of mail order retailing nor place an order for such goods. Due to some instances of fraud and other malpractices by certain retailers, customers do not have much confidence in mail order retailers. Possibility of fraud is more in this case than in face-to-face purchase of products from shops. Also, lack of credit facility dissuades a large section of our population from purchasing goods through the mail order system.

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