CHENNAI SAHODAYA SCHOOL COMPLEX

COMMON EXAMINATION
Class-12
BUSINESS STUDIES [054]
Answer Key

Max. Time: 3 Hours Max. Marks: 80

Q.No. Answers Marks
1 Brand Name, the part that is spoken 1
2 a. (i), (ii), (iii) 1
3 b. Coordination ensures unity of action 1
4 b. Management is an art 1
5 a. Science not rule of thumb 1
6 a. To avoid delay in communication 1
7 d. Legal Environment 1
8 Inter – relatedness 1
[or]
c. Changes in fashion
9 d. No effect on public sector wealth and private wealth decreased. 1
10 a. Regulatory 1
11 b. Protective 1
12 c. Developmental 1
13 d. Training of intermediaries 1
14 Assertion (A) is false and Reason (R) is true. 1
15 a. Initiates action 1
16 d. Ensuring Order and discipline 1
17 c. Deciding the brand name of the registers and exercise books 1
18 a. Advertising 1

19 d. All the above 1

20 d. Both b and c 1
21 The quality which is lacking in the above case is ‘Coordination’. The manager is able to 3
execute all the functions but he is unable to coordinate these functions and coordination is a
mere function of manager but it is the essence of management.
22 Internship Training – It is a joint programme of training in which educational institutions and 3
business firms cooperate. It is the on-the-job training.
Vestibule Training – Employees learn their jobs on the equipment they will be using, but the
training is conducted away from the actual work floor. It is the off-the-job training.
[OR]
TRAINING DEVELOPMENT
It is a process of increasing knowledge and It is a process of learning and growth.
skills.
It is to enable the employee to do the job It is to enable the overall growth of the
better. employee.
It is a job-oriented process. It is a career-oriented process.
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23 Features of Money Market: 3
i. It is a market for short term funds which deals in monetary assets whose period of
maturity is up to one year
ii. Money market instruments are highly liquid
iii. Money market instruments are less risky
[OR]
Certificate of Deposit:
It is a short term, unsecured, negotiable instrument issued by commercial banks or
developmental financial institutions to individuals, corporations and companies.
It issued during periods of tight liquidity when the deposit growth of banks is slow but the
demand for credit is high.
24 1. Accomplishing organisational goals: It helps in accomplishing organisational goals by 3
bringing to light, deviations if any and indicating corrective action
2. Making efficient use of resources: It helps in making efficient use of resources by
ensuring that each activity is performed in accordance with pre – determined
standards.
3. Ensuring order and discipline: It ensures order and discipline among employees by
4keeping a close check on their activities.
25 Maslow’s theory is based on the following assumptions: 4
(i) People’s behaviour is based on their needs. Satisfaction of such needs influences
their behaviour.
(ii) (ii) People’s needs are in hierarchical order, starting from basic needs to other
higher level needs.
(iii) A satisfied need can no longer motivate a person; only next higher level need can
motivate him.
(iv) (iv) A person moves to the next higher level of the hierarchy only when the lower
need is satisfied.
26 Objectives of financial planning: 4
a. To ensure availability of funds whenever required which involves estimation of the
funds required, the time at which these funds are to be made available and the sources
of these funds.
b. To see that the firm does not raise resources unnecessarily as excess funding is almost
as bad as inadequate funding. Financial planning ensures that enough funds are
available at right time.
27 a. External source of recruitment/Labour contractor 4
b. Disadvantages of external source of recruitment (Any one)
i. It may lead to dissatisfaction among exiting employees as they may feel that
their changes of promotion are reduced.
ii. It is a lengthy process as the vacancies have to be notified and applications
received before selection.
iii. It is a costly process as a lot of money is spent on advertisement and
processing of applications
c. Basic physiological needs
28 Following persons are not considered as Consumers under Consumer Protection Act: 4
a. The person who obtains goods for re -sale
b. The person who uses the goods without the approval of the buyer
c. The person who avails of the services without the approval of the hirer
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 d. The person who obtains goods without consideration.
e. The person who hires or avails any services without any consideration.
[OR]
1. A. Right to safety and right to be heard with explanation.
B. District commission
29 The various elements of Directing mentioned in the above case are as follows: 4
a. Communication – “He is very clear and specific in issuing instructions to his
subordinates in order to ensure smooth working of the department.”
b. Supervision – “He personally oversees the method followed by the workers for
production of each item.”
c. Motivation – “He misses no opportunities to praise his subordinates for their good
work.”
d. Leadership – “He provides constant guidance to them in order to improve upon the
quality and also encourages them to innovate and be more creative at their work.”
30 Factors affecting investment or capital budgeting decision 4
1. Cash flow of the project: whenever a company is investing huge funds in an investment
proposal it expects some regular amount of cash flow to meet day to day expenses. The
amount of cash flow of an investment proposal will be able to generate must be assessed
properly before investing in the proposal
2. Return on investment: the most important criteria to decide the investment proposal is rate
of return it will be able to bring back for the company in the form of income.
3. Investment criteria: along with returns, risk, cash flow there are various other criteria
which helps in selecting an investment proposal such as availability of labour, technologies
input machinery, etcetera. The decision to invest in a particular project involves number of
calculations regarding the amount of investment, interest rate, cash flow and rate of return.
[OR]
Factors affecting dividend decision are as follows
(a) Shareholders’ Preference: While declaring dividends, managements must keep in
mind the preferences of the shareholders in this regard. If the shareholders in general
desire that at least a certain amount is paid as dividend, the companies are likely to
declare the same. There are always some shareholders who depend upon a regular
income from their investments
(b) Amount of Earnings: Dividends are paid out of current and past earning. Therefore,
earnings is a major determinant of the decision about dividend.
(c) (b) Stability Earnings: Other things remaining the same, a company having stable
earning is in a better position to declare higher dividends. As against this, a company
having unstable earnings is likely to pay smaller dividend
(d) Cash Flow Position: The payment of dividend involves an outflow of cash. A
company may be earning profit but may be short on cash. Availability of enough cash
in the company is necessary for declaration of dividend.
31 Following are the steps in the planning process. 6
a. Identifying alternative course of action – Once objectives are established and
assumptions are made, then the next step is to determine alternative courses of action
which may be used to achieve the set objectives. There is hardly any plan for which
alternatives do not exist. Generally, there are many alternatives to achieve the
objectives and the manager must know all the ways to reach the objectives.
b. Evaluating alternative courses: The next step is to weigh the pros and cons of each
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 alternative. The positive and negative aspects of each proposal are evaluated in the
light of the objective to be achieved.
c. Selecting alternative – This step involves selection of the best alternative. This is the
real point of decision making.
d. Implementation of plan – This is the step where other managerial functions also come
into the picture. Implementing the plan is concerned with putting the plan into action.
e. Follow – up action: It means o see whether plans are being implemented and activities
are performed according to the plans.

32 Basis of Differentiation Henri Fayol F W Taylor 6

1. Perspective Top Level Management Shop floor level of a
factory
2. Unity of Taylor did not follow He was strict follower of
command this principle and the principle of unity of
stressed on minimum command.
eight bosses.
3. Applicability Applicable universally Applicable to specialised
situations.
4. Basis of Personal experience Observations and
formation experimentation
5. Focus Improving overall Increasing productivity
administration
6. Personality Practitioner Scientist
7. Expression General Theory of Scientific Management
Administration
33 a. Decentralization 6
Importance of Decentralization:
i. Develops Initiative among the subordinates: Decentralisation helps the lower
level managers to take all those decisions, which are for the improvement of
enterprise, on their own and to develop appropriate solutions for solving
different kinds of difficulties or problems they face.
ii. Develop managerial talent for future: Under decentralisation, managers
working at middle level and lower level learn the art of taking independent
decisions. It provides them a chance to prove their talent by handling various
assignments independently.
iii. Quick Decision Making: It helps in quick decision – making as there is no
requirement for approval from many levels.
iv. Relief to top management: Decentralisaiton diminishes the amount of direct
supervision exercised by a superior over the activities of a subordinate because
they are given the freedom to act within the prescribed limits
v. Facilitates Growth: Decentralisation provides considerable liberty to the
managers at lower level. This allows them to do the work in a manner best
suited to their department.
vi. Better Control: It leads to better control by evaluating performance at each
level of management.


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34 Packaging refers to the act of designing and producing the container, 6
box or a wrapper of a product.
Levels of Packaging –
1. Primary Packaging- It refers to the product’s immediate container. Like- Toothpaste
tube.
2. Secondary Packaging- It refers to the additional package, which provides additional
layer protection to the product. Like-Cardboard box or toothpaste.
3. Transportation Packaging-it refers to further packing, which is necessary to protect
the product in the process of transportation and storage.
Functions of packaging.- (any TWO)
1. Product identification – Packaging helps in identification of the product out of various
products. It contains brand, features of the product etc.
2. Product protection – Packaging protects the products from spoilage, damage, leakage,
pilferage, humidity etc.
3. Facilitating use of the product-The size and shape of the package should be
convenient to open, handle and use for consumers.
4. Product promotion – Packaging acts as a good salesman as it promotes the product
and increases it sale.

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