1. The newly appointed Production Manager of Saheb Ltd., a firm manufacturing toys, Mr Ahrawat noticed that the workers in the factory were not giving their best as the physical conditions in the factory were not good. He conducted an experiment to see the effect of improvement in the physical conditions in the factory on the performance of the workers, by providing adequate ventilation and water facilities. He observed that the fatigue level of the workers reduced. The nature of management being highlighted in the above case is:
A. Management as science
B. Management as profession
C. Management as art
D. Both A and C
Answer: D. Both A and C
Explanation: The experiment conducted by Mr. Ahrawat and its observation indicates both scientific observation (management as science) and practical application (management as art).
2. Jasmine Ahluwalia is the manager of an artefacts museum’s marketing team, responsible for promoting exhibitions and events. In the previous season, she defined the total work of managing the events into graphic designing, registration inquiries, bill payments, etc., in order to facilitate specialization. However, instead of allocating work, she had assigned each team member the full responsibility of managing the promotion of an entire event. Despite holding regular team meetings to take feedback, Jasmine found problems throughout the events season in the quality of graphic design, registration inquiry, bill payments, etc. For the upcoming events season, Jasmine has decided to divide these responsibilities on the basis of her observation of the areas in which the individual team members have excelled in the previous season and allocate the roles based on their skills and competencies. Identify the step in the organizing process which was not properly performed in the previous season but has been duly performed for the upcoming season.
A. Identification and division of work
B. Establishing reporting relationships
C. Departmentalisation
D. Assignment of duties
Answer: A. Identification and division of work
Explanation: Jasmine’s mistake was not properly dividing the work based on the skills of the team members. Now, she is focusing on the proper identification and division of work based on individual competencies.
3. Read the following statements: Assertion (A) and Reason (R). Choose the correct alternative from those given below:
Assertion (A): Financial Planning aims at enabling the company to tackle the uncertainty in respect of the availability and timing of the funds.
Reason (R): Capital structure refers to the mix between owners’ and borrowed funds.
A. Both Assertion (A) is false and Reason (R) is true.
B. Both Assertion (A) and Reason (R) are false.
C. Both Assertion (A) and Reason (R) are true, but Reason (R) is not the correct explanation of the Assertion.
D. Both Assertion (A) and Reason (R) are true, and Reason (R) is the correct explanation of the Assertion.
Answer: D. Both Assertion (A) and Reason (R) are true, and Reason (R) is the correct explanation of the Assertion.
Explanation: Financial planning does indeed help in managing the timing and availability of funds, and capital structure is about the mix of owner’s equity and borrowed funds, which directly relates to the company’s ability to manage finances effectively.
4. Read the following statements carefully:
Statement I: Secondary Market directly promotes capital formation.
Statement II: Capital market deals in medium and long-term securities such as equity shares and debentures.
In the light of the given statements, choose the correct alternative from the following:
A. Both the statements are true.
B. Both the statements are false.
C. Statement I is true, Statement II is false.
D. Statement II is true, Statement I is false.
Answer: D. Statement II is true, Statement I is false.
Explanation: The secondary market does not directly promote capital formation as it deals with the buying and selling of existing securities, while the primary market contributes directly to capital formation by issuing new securities.
5. Choose the statement that correctly highlights the benefit of using external sources of recruitment.
A. Competitive spirit among the existing staff
B. Reduction in employees turnover
C. Helps in increasing employees satisfaction
D. Develops a sense of security amongst employees
Answer: A. Competitive spirit among the existing staff
Explanation: External recruitment brings in new talent and diverse perspectives, creating a competitive spirit among existing employees to improve their performance.
6. Goodwill Enterprises is a large-scale automobile manufacturer, who fulfills the needs of both industrial users and consumers. The company is providing easy finance facilities at a low rate of interest, which has considerably increased the demand for the product. The company has installed a new branch management software to efficiently manage and coordinate activities across their multiple branches and locations. Identify the components of the business environment from the above case study.
A. Political and economic environment
B. Economic and social environment
C. Technological and legal environment
D. Economic and technological environment
Answer: D. Economic and technological environment
Explanation: The company’s financial facilities relate to the economic environment, while the installation of new software relates to the technological environment.
8. Read the following statements: Assertion (A) and Reason (R). Choose the correct alternative from those given below:
Assertion (A): Controlling can prevent deviations.
Reason (R): Controlling helps in minimizing deviations by taking actions and decisions that reduce their recurrence.
A. Both Assertion (A) and Reason (R) are true, and Reason is the correct explanation of Assertion.
B. Both Assertion (A) and Reason (R) are true, and Reason is not the correct explanation of Assertion.
C. Assertion (A) is true, Reason (R) is false.
D. Assertion (A) is false, Reason (R) is true.
Answer: A. Both Assertion (A) and Reason (R) are true, and Reason is the correct explanation of Assertion.
Explanation: Controlling ensures that deviations from the plan are detected and corrective measures are taken. By reducing or preventing the recurrence of deviations, controlling helps in improving performance over time.
9. ‘Joining a job marks the beginning of socialisation of employees at the workplace. The employee should be given a post for which he has been selected.’ Place the subsequent steps of staffing in a small organisation in the correct order:
A. Training and development, promotion and career planning, performance appraisal, compensation
B. Performance appraisal, training and development, promotion and career planning, compensation
C. Training and development, performance appraisal, promotion and career planning, compensation
D. Training and development, performance appraisal, compensation, promotion and career planning
Answer: C. Training and development, performance appraisal, promotion and career planning, compensation
Explanation: The process starts with training and development to equip employees with necessary skills. Performance appraisal helps in assessing their progress, followed by promotion and career planning. Finally, compensation is provided.
10. Spiceworks, a company providing financial services to its clients, is keeping a close check on employees’ activities by using biometric and retina scanning as modes of accessing the office premises to ensure greater security of information in the organisation.
Choose the correct point of significance of controlling highlighted above:
A. Controlling helps in achievement of organisational goals
B. Controlling helps in ensuring order and discipline
C. Controlling helps in improving employees motivation
D. Controlling enables optimum utilisation of resources
Answer: B. Controlling helps in ensuring order and discipline
Explanation: The use of biometric and retina scanning ensures proper access control and prevents unauthorized access, which maintains order and discipline in the organisation.
11. Identify the incorrect statement with respect to ‘Investment decision’:
A. Net working capital refers to the excess of current assets over current liabilities.
B. Current assets are those assets which get converted into cash within one year.
C. Capital budgeting decisions are irreversible.
D. Size of the assets, profitability, and competitiveness are not affected by capital budgeting decisions.
Answer: D. Size of the assets, profitability, and competitiveness are not affected by capital budgeting decisions.
Explanation: Capital budgeting decisions directly impact the size of assets, profitability, and competitiveness of an organisation as these decisions involve investing in long-term assets.
12. State Commission has the jurisdiction to entertain complaints where the value of goods and services paid as consideration is ________
A. More than ₹1 crore and not more than ₹5 crore
B. More than ₹10 crore
C. Less than ₹1 crore
D. More than ₹1 crore and not more than ₹10 crore
Answer: D. More than ₹1 crore and not more than ₹10 crore
Explanation: The State Commission handles complaints where the value of the goods and services exceeds ₹1 crore but does not exceed ₹10 crore.
13. Match the statements given in column I with the characteristic of business environment given in column II:
| COLUMN I | COLUMN II |
|---|---|
| (a) Increased demand of Khakhra and Thepla in the region of Gujarat as compared to Delhi region | iii. Relativity |
| (b) Digital academic certificates are issued to students accessible in a secured manner to eliminate undesirable practices like corruption and manipulation of records under Digital India Initiative. Such technological improvements are happening at a very fast pace. | ii. Dynamic |
| (c) Fashion market is facing both opportunities and challenges. Therefore it is difficult to predict the future of the fashion market. | i. Uncertainty |
| (d) A new government will result in changing government rules, fiscal policies, market conditions, etc | iv. Interrelatedness |
Answer: A. (a)-(iii), (b)-(ii), (c)-(i), (d)-(iv)
Explanation: The statements match their respective business environment characteristics correctly.
14. The process of classification of products into different groups, on the basis of some of the important characteristics such as quality, size, etc. is known as:
A. Branding
B. Standardisation
C. Grading
D. Marketing planning
Answer: C. Grading
Explanation: Grading involves classifying products based on certain standards like size, quality, or other characteristics.
15. Shiwakumar runs a legal consultancy firm in Chhattisgarh. Whenever the firm hires new employees, on the first day of joining, they are welcomed to the organisation and are given details about the dress code, lunch timings, introduction to daily operations and fellow colleagues. They are also familiarised with the organisational policies and procedures, emergency exits, evacuation procedure, etc.
Name the type of training provided by Shiwakumar in his firm:
A. Apprenticeship training
B. Vestibule training
C. Induction training
D. Internship training
Answer: C. Induction training
Explanation: Induction training is given to new employees to help them adjust to the organisation’s environment and culture.
16. Identify the incorrect statement with respect to Consumer Protection in India:
A. It not only includes educating consumers about their rights and responsibilities but also helps in getting their grievances redressed.
B. It not only requires a judicial machinery for protecting the interest of consumers but also requires the consumers to get together and form themselves into Consumer associations for protection and promotion of their interests.
C. It is the moral duty of any business to take care of consumers’ interest and avoid any form of exploitation.
D. The provisions of Consumer Protection Act came into force from 1981.
Answer: D. The provisions of Consumer Protection Act came into force from 1981.
Explanation: The Consumer Protection Act came into force in 1986, not 1981.
17. Identify the decision which is not taken under financial management:
A. Dividend Decision
B. Capital Budgeting Decision
C. Pricing Decision
D. Both B. and C.
Answer: C. Pricing Decision
Explanation: Pricing decisions are part of marketing management, not financial management. Financial management focuses on investment, financing, and dividend decisions.
18. What are the factors that affect financing decisions?
(a) Cash flow position of the company
(b) Stability of earnings
(c) Degree of financial risk
(d) Contractual constraints
(e) State of capital market
(f) Level of competition
Choose the correct alternative from the following:
A. (b), (c), and (f)
B. (d), (e), and (f)
C. (a), (c), and (d)
D. (a), (c), and (e)
Answer: D. (a), (c), and (e)
Explanation: Financing decisions are primarily influenced by the company’s cash flow, the financial risk it is willing to take, and the state of the capital market.
19. Consumers can ask anything regarding the date of manufacturing, MRP, etc., about the product that they intend to buy.
Identify the consumer right highlighted in the above lines:
A. Right to be informed
B. Right to be assured
C. Right to be heard
D. Right to safety
Answer: A. Right to be informed
Explanation: The right to be informed ensures that consumers can access relevant information about the products they intend to buy, including the date of manufacture, MRP, etc.
20. Read the following statements carefully:
Statement I: Cost of debt is lower than cost of equity for a company.
Statement II: The objective of financial management is to increase shareholder’s wealth.
In light of the given statements, choose the correct alternative from the following:
A. Both the statements are true.
B. Both the statements are false.
C. Statement I is true, Statement II is false.
D. Statement II is true, Statement I is false.
Answer: A. Both the statements are true.
Explanation: Cost of debt is generally lower than the cost of equity, and the main objective of financial management is to maximize shareholder wealth.
21. (A)
Question:
State the meaning of single-use plans and standing plans.
Answer:
- Single-use plans: These are plans formulated for specific, non-recurring events or projects. Once the event is over, the plan is no longer used. Examples include budgets, projects, and programs.
- Standing plans: These are plans that provide guidelines for activities that are repeated regularly. They are ongoing and used over a long period. Examples include policies, procedures, and rules.
21. (B)
Question:
State how planning:
(I) Reduces creativity
(II) Leads to rigidity
Answer:
- (I) Reduces creativity:
Planning can sometimes reduce creativity by imposing a structured approach that limits flexibility. When employees strictly follow predetermined plans and procedures, there may be little room for innovation and out-of-the-box thinking. - (II) Leads to rigidity:
Planning leads to rigidity because once a plan is set, it may be followed without considering changing circumstances. It can make organizations less adaptable to new opportunities or unforeseen changes in the business environment.
22. (A)
Question:
Explain the concept of leadership. Give two situations in which autocratic leadership style is most effective.
Answer:
- Leadership refers to the ability to influence, motivate, and guide individuals or groups towards the achievement of organizational goals.
- Autocratic leadership style is one in which the leader makes decisions unilaterally, without seeking input from others. This style is most effective:
- In situations requiring quick decision-making: For example, during a crisis when immediate action is needed.
- When the team is inexperienced or lacks knowledge: For instance, when new employees need clear direction and supervision.
22. (B)
Question:
Explain the concept of communication. Give the meaning of formal and informal communication.
Answer:
- Communication is the process of transferring information, thoughts, or feelings between people.
- Formal communication: Communication that follows the established structure and hierarchy of the organization, often written and official, such as emails, memos, and meetings.
- Informal communication: Unofficial communication that takes place outside the formal structure, often referred to as the “grapevine.” It can be casual conversations or informal discussions.
23.
Question:
From the following information regarding Aditya Ltd., calculate the Return on Investment (ROI) and Interest Coverage Ratio:
Earnings Before Interest and Tax (EBIT): ₹ 15,00,000
10% Debentures: ₹ 12,00,000
Equity Share Capital (₹10 each): ₹ 18,00,000
Tax Rate: 40%
Answer:
- Interest Coverage Ratio = EBITInterest\frac{EBIT}{Interest}InterestEBIT
= 15,00,00012,00,000×10%\frac{15,00,000}{12,00,000 \times 10\%}12,00,000×10%15,00,000
= 15,00,0001,20,000=12.5\frac{15,00,000}{1,20,000} = 12.51,20,00015,00,000=12.5 - Return on Investment (ROI) = NetProfitTotalInvestment\frac{Net Profit}{Total Investment}TotalInvestmentNetProfit
Net Profit = EBIT×(1−TaxRate)EBIT \times (1 – Tax Rate)EBIT×(1−TaxRate) = 15,00,000×(1−0.4)=9,00,00015,00,000 \times (1 – 0.4) = 9,00,00015,00,000×(1−0.4)=9,00,000
Total Investment = Equity Share Capital + Debentures = ₹ 18,00,000 + ₹ 12,00,000 = ₹ 30,00,000
ROI = 9,00,00030,00,000×100=30\frac{9,00,000}{30,00,000} \times 100 = 30%30,00,0009,00,000×100=30
24.
Question:
Mr. Vivek Vaswani’s OH CHILLI! –
(I) State the concept of business environment.
(II) Identify and explain in what way a good understanding of business environment enabled Mr. Vivek Vaswani to improve the performance of the enterprise.
Answer:
- (I) Business Environment refers to the external factors like economic, social, political, and technological forces that affect the functioning of a business.
- (II) Mr. Vaswani understood the changing consumer preferences for healthy eating and affordable vegetarian food. This insight helped him create a unique product offering, filling a gap in the market and leading to increased profits and market leadership.
25.
Question:
The General Manager of a reputed organization, Mr. Agastaya Lokhande, made the following announcement at the Annual General Meeting of the company:
“When we think of a brand, we think of reputation, but the reputation is made or broken by the quality of products and customer representation. If people are miserable, they can’t give their best work and the brand suffers. On the contrary, positive results can be observed if there is job satisfaction, effective and efficient functioning.”
(I) Identify and explain the feature of management discussed by Mr. Agastaya in his announcement.
(II) Explain any three reasons that make management important to any organization.
Answer:
- (I) Feature of Management: Management is goal-oriented. Mr. Agastaya emphasized the importance of customer satisfaction and job satisfaction in achieving the company’s goals.
- (II) Importance of Management:
- Helps in achieving organizational goals by aligning resources with objectives.
- Increases efficiency by reducing waste and optimizing the use of resources.
- Improves decision-making through effective planning and control.
26. (A)
Question:
In order to streamline the selection procedure, so as to minimize the margin of errors, certain tests are carried out that attempt to measure the characteristics of individuals. Explain any four such tests.
Answer:
- Aptitude Tests: Measure the potential of candidates to perform specific tasks or learn new skills.
- Personality Tests: Assess a candidate’s behavior, attitude, and compatibility with organizational culture.
- Skill Tests: Measure specific skills required for a particular job, like typing speed or technical abilities.
- Intelligence Tests: Evaluate the cognitive abilities and problem-solving skills of candidates.
26. (B)
Question:
Since jobs have become more complex, the importance of employee training has increased. Training programs provide numerous benefits to workers. Explain any four points that support this statement.
Answer:
- Improves performance: Training helps employees develop new skills and improve their performance.
- Boosts morale: Well-trained employees feel more competent and motivated.
- Reduces turnover: Offering training programs enhances employee satisfaction, making them less likely to leave.
- Increases organizational productivity: Trained employees work more efficiently, leading to better results.
27.
Question:
When Bhaanupriya joined as technical head of Logic Lotus Innovators, she was keen on increasing the productivity and profitability of the company. However, she observed that the employees were demotivated as no attention was given to their work. Also, the workers were given little freedom to make decisions. Bhaanupriya decided to stimulate the employees by giving each worker T-shirts with their name on it. She also decided to include workers in work committees. This helped in improving the performance of the workers.
(I) On the basis of the understanding of Maslow’s Need Hierarchy Theory of motivation, identify the human need that Bhaanupriya has recognized in order to make the subordinates act towards achievement of organizational goals.
(II) Identify and explain two incentives that have been provided by Bhaanupriya to improve the performance of the employees.
Answer:
- (I) Maslow’s Need Hierarchy: Bhaanupriya recognized the esteem needs of employees (recognition and respect) by giving personalized T-shirts, which helped boost their motivation.
- (II) Incentives provided:
- Recognition: Giving personalized T-shirts with names.
- Inclusion in decision-making: Involving employees in work committees.
28. (A)
Question:
Explain how planning and controlling are both backward looking, as well as forward looking functions.
Answer:
- Planning is forward-looking as it involves setting future goals and deciding on the steps to achieve them. It’s also backward-looking when past data is analyzed to forecast future outcomes.
- Controlling is forward-looking because it helps ensure that activities are aligned with goals, and backward-looking as it involves evaluating past performance to make adjustments.
28. (B)
Question:
The first step in the controlling process is setting up performance standards. Explain the subsequent two steps in the process of controlling.
Answer:
- Measurement of Performance: Regularly comparing actual performance with established standards.
- Taking Corrective Actions: If performance deviates from the standards, corrective measures are taken to align actual performance with the set goals.
29.
Question:
When Chandrashekhar Shukla returned to India after completing a Certificate course in Food Quality Assurance and Quality Control from the Netherlands, he was convinced that he would fulfill his grandfather’s dream of converting their 58-acre land into a fertile farm. He started by setting out specific goals and laid down related activities to be performed to achieve the goals. Soon he launched his own company ‘Food and Agribusiness Solutions Private Limited’. He sought to ensure that the future events effectively meet the best interest of the company. He prepared an annual statement for production and sales, based on sales forecasting. He noticed that the farmers grew only paddy, due to which land remained idle for the subsequent 8 to 9 months of the year. He identified and assessed various alternatives through which farms could be utilized for the remaining months of the year. Through his accurate vision, judgment, and systematic thinking based on the analysis of the facts, he presented a scheme to the farmers where both paddy and vegetables could be grown.
Identify and explain the features of one of the functions of Management highlighted above.
Answer:
The function of Planning is highlighted here. It involves setting goals, identifying alternatives, and making decisions to achieve these goals. Chandrashekhar used his foresight and analytical skills to create a plan for sustainable farming by utilizing land throughout the year, not just for paddy cultivation.
30.
Question:
Give any four points of difference between advertising and personal selling.
Answer:
| Basis | Advertising | Personal Selling |
|---|---|---|
| Definition | A mass communication tool to promote products or services | Direct interaction between salesperson and customer |
| Personal Touch | No personal interaction with customers | Direct personal interaction with customers |
| Cost | Generally lower cost due to mass communication | Higher cost due to individual attention |
| Flexibility | Less flexible as the message is standardized | Highly flexible based on the needs of the customer |
31.
Question:
It was established by the Government of India on 12 April 1988 as an interim administrative body to promote orderly and healthy growth of the securities market and for investor protection. It was given statutory status in 1992 through an Act of Parliament.
(I) Identify the regulatory body which has been highlighted above.
(II) State the three objectives of the regulatory body identified in part (I).
(III) State any two functions that are performed for the development of the securities market by the regulatory body identified in part (I).
Answer:
- (I) The regulatory body is the Securities and Exchange Board of India (SEBI).
- (II) Three objectives of SEBI:
- Protect investors’ interests.
- Promote and regulate the securities market.
- Facilitate the development of the securities market.
- (III) Two functions of SEBI:
- Regulating stock exchanges.
- Registering and regulating market intermediaries like brokers and merchant bankers.
32. (A)
Question:
Differentiate between functional structure and divisional structure on the basis of:
(I) Formation
(II) Specialization
(III) Responsibility
(IV) Managerial Development
(V) Cost
(VI) Coordination
Answer:
| Basis | Functional Structure | Divisional Structure |
|---|---|---|
| Formation | Based on specialized functions (e.g., marketing, finance) | Based on divisions (e.g., products, geography) |
| Specialization | High specialization within functions | Specialization within each division |
| Responsibility | Centralized responsibility in functional heads | Decentralized responsibility in divisional heads |
| Managerial Development | Limited, focused on function-specific skills | Broader, as managers must handle diverse operations |
| Cost | Generally lower due to economies of scale in functions | Higher due to duplication of resources in divisions |
| Coordination | More challenging across functions | Easier within divisions, harder between divisions |
32. (B)
Question:
‘Delegation helps a manager to extend his area of operations as without it, his activities would be restricted to only what he himself can do.’
In light of the above statement, explain how effective delegation helps the organization in achieving objectives.
Answer:
Effective delegation enables managers to assign tasks to subordinates, increasing overall efficiency. It helps extend a manager’s operational capacity, fosters team growth, and empowers employees. By delegating, managers can focus on strategic decisions while subordinates handle routine tasks, leading to better goal achievement.
33.
Question:
Leena has been appointed as the Operations Manager in a small trading company dealing in garments, with growing online sales. The company has recently rented space in a warehouse to store garments and mail out orders. In order to take over the responsibilities of order fulfillment, Leena promotes an associate, Kushagra to the post of Inventory and Order Fulfillment Supervisor. Kushagra has been given the task to assess whether it is best to process orders as they come in or let them accumulate and then process them in batches. He concludes that accumulating and then processing them in batches is the best way of fulfilling orders, in order to minimize cost and maximize customer satisfaction.
Through several readings, Leena finds that the standard time taken from the placement of the order to the delivery of garments for a batch of 100 pieces is 72 hours. This helped her to determine the labor cost.
On the basis of the understanding of concepts of scientific management, identify and explain the techniques used by Leena and Kushagra to improve the performance of the employees.
Answer:
- Time Study: Leena uses time analysis (72 hours for 100 garments) to optimize processes.
- Batch Processing: Kushagra uses batch processing for order fulfillment to minimize costs, which aligns with scientific management principles of task specialization and efficiency.
34. (A)
Question:
Explain the four elements of the marketing mix.
Answer:
- Product: The goods or services offered by the company.
- Price: The cost that customers pay for the product.
- Place: The distribution channels through which the product reaches customers.
- Promotion: The activities used to inform customers and persuade them to buy the product.
34. (B)
Question:
Explain any four factors affecting the determination of the price of a product or service.
Answer:
- Cost of Production: The total cost incurred in producing the product influences its pricing.
- Demand: High demand allows for higher prices.
- Competition: The prices set by competitors influence the product’s pricing strategy.
- Government Policies: Regulations, taxes, and subsidies affect pricing decisions.