See below CBSE Class 12 Business Studies Term 2 Sample Paper Set B with solutions. We have provided CBSE Sample Papers for Class 12 Business Studies as per the latest paper pattern issued by CBSE for the current academic year. All sample papers provided by our Class 12 Business Studies teachers are with answers. You can see the sample paper given below and use them for more practice for Class 12 Business Studies examination.
CBSE Sample Paper for Class 12 Business Studies Term 2 Set B
1. Identify and explain the source of recruitment which would be best for recruiting employees for technical, professional and managerial personnel for middle and top level.
Answer: The source of recruitment which can be used for recruiting employees for technical, professional and managerial personnel for middle and top level is management consultants and placement agencies. In technical and professional areas, private agencies and professional bodies appear to be doing substantive work. Placement agencies provide a nationwide service in matching personnel demand and supply.
These agencies compile bio-data of a large number of candidates and recommend suitable names to their clients. Such agencies charge fee for their services and they are useful where extensive screening is required.
2. RBL bank is short of funds this year to maintain their cash reserve ratio (CRR). So, they decided to raise a money market instrument which will help them to maintain its CRR. Identify the money market instrument used here.
Answer: The money market instrument used here is call money:
(a) Call money is a short-term money market instrument through which one bank may borrow money from another bank to maintain its cash reserve ratio as per the guidelines of RBI.
(b) Its maturity period may range from a single day to a fortnight.
(c) The rate at which the interest is paid on call money is called call money rate.
3. Explain the benefits of Training to the organisation.
Answer: Benefits of Training to the organisation are as follows:
(a) Training is a systematic learning, always better than hit and trial methods which lead to wastage of efforts and money.
(b) It enhances employee productivity both in terms of quantity and quality, leading to higher profits.
(c) Effective training helps in boosting the morale of the employees. Thereby, it helps in reducing the rate of absenteeism and employee turnover.
4.“A manager should focus on Key Result Areas (KRAs) that are critical to the success of an organisation”.
Identify and explain the step of controlling process highlighted here.
Answer: The step of Controlling process highlighted here is Analysing Deviations and Critical point control technique is used.
When actual performance is measured with standard performance, some deviation in performance can be expected. It is, therefore, important to determine the acceptable range of deviations. The deviations in key areas of business need to be attended more urgently as compared to deviations in certain insignificant areas. In this regard, Critical point control and Management by exception should be used by a manager.
5. Rajat works in McDonalds. This month, he over achieved his targets. This achievement was declared on the notice board and CEO of the company awarded him a trophy.
(a) Identify the types of incentive given to Rajat.
(b) Name one more incentive of same type which can be given to Rajat.
Answer: (a) The incentive which is being given to Rajat is Employee Recognition programmes (Non- financial Incentives). In Employee Recognition Programmes most people have a need for evaluation of their work and due recognition. They feel that what they do should be recognised by others concerned.
Recognition means acknowledgment with a show of appreciation. When such appreciation is given to the work performed by employees, they feel motivated to perform/work at higher level.
(b) Job Enrichment: Job enrichment is concerned with designing jobs that include greater variety of work content, require higher level of knowledge and skill; give workers more autonomy and responsibility; and provide the opportunity for personal growth and a meaningful work experience.
If jobs are enriched and made interesting, the job itself becomes a source of motivation to the individual.
6. Discuss Maslow’s Need Hierarchy Theory of Motivation.
Discuss the qualities of a good leader.
Answer: Abraham Maslow, a well-known Psychologist in a classic paper published in 1943, outlined the elements of an overall theory of motivation. His theory was based on human needs. These are:
(a) Basic Physiological Needs: These needs are the most basic in the hierarchy and corresponds to primary needs. Hunger, thirst, shelter, sleep and sex are some examples of these needs. In the organisational context, basic salary helps to satisfy these needs.
(b) Safety/Security Needs: These needs provide security and protection from physical and motional harm. Examples: job security, stability of income, pension plans etc.,
(c) Affiliation/Belonging Needs: These needs refer to affection, sense of belongingness, acceptance and friendship.
(d) Esteem Needs: These include factors such as self-respect, autonomy status, recognition and attention.
(e) Self Actualisation Needs: It is the highest level of need in the hierarchy. It refers to the drive to become what one is capable of becoming.
Qualities of a Good Leader are:
(a) Physical features: Physical features like height, weight, health, appearance determine the physical personality of an individual. It is believed that good physical features attract people. Health and endurance help a leader to work hard which inspires others to work with same tempo.
(b) Knowledge: A good leader should have required knowledge and competence. Only such person can instruct subordinates correctly and influence them.
(c) Integrity: A leader should possess high level of integrity and honesty. He should be a role model to others regarding the ethics and value.
(d) Initiative: A leader should have courage and initiative. He should not wait for opportunities come to his way, rather he should grab the opportunity and use it to the advantage of organisation.
(e) Communication skills: A leader should be a good communicator.
7. List three factors which affect the requirement of fixed capital.
Answer: Factors affecting the requirement of Fixed Capital are:
(a) Nature of Business: A trading concern needs lower investment in fixed assets compared with a manufacturing organisation; since it does not require purchasing plant and machinery, etc.
(b) Scale of Operations: A larger organisation operating at a higher scale needs bigger plant, more space that is why requires higher investment in fixed assets as compared to small organisation.
(c) Choice of Technique: A capital-intensive organisation requires higher investment in plant and machinery that is why requires more fixed capital. On the other hand, Labour intensive organisations require less investment in fixed assets.
8. Raman is a production manager in a Cooler manufacturing company. Recently he noticed that his team could not achieve the target production of 90 units per day. Instead on an average the production touched the target of only 75 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 Raman how he should deal with the existing problem.
Answer: Raman should follow the following principles of managerial control while analysing deviations:
(a) Critical point control: According to this principle of managerial control, a manager should focus on Key Result Areas (KRAs) that are critical to the success of an organisation. A manager should not waste his precious time on checking each and every activity in the organisation.
In the above case, Raman should focus on improving the performance of the machinery either by repairing it or by replacing it with the new one.
(b) Management/Control by Exception: As per this principl e of managerial control a manager trying to control everything may end up controlling nothing. Therefore, only significant deviations that go beyond the permissible limit should be brought to the notice of management. In the given case
of cooler manufacturing company, poor performance of machinery needs immediate managerial attention.
9. Describe the various Redressal Agencies under Consumer Protection Act, 2019.
Discuss the ways and means of Consumer Protection.
Answer: As per Consumer Protection Act, 2019, the statue establishes a three–tier system for resolving consumer complaints, as follows:
(a) District Commission:
The state concerned establishes district forums in each district. The following are the key characteristics:
(i) It is made up of a President and two members, one of whom must be a woman, who are officially nominated by the state government.
(ii) The value of consumer complaints should not exceed ` 1 crore.
(iii) If any of the party is not satisfied with the district forum’s decision, they have 45 days to file an appeal with the state forum from the date of order.
(b) State Commission:
The government establishes a state commission in each state. The following are the key characteristics:
(i) Each commission has a president and at least two members appointed by the state governm ent, one of whom should be a woman.
(ii) The total worth of the products or services, including the compensation sought, is greater than ` 1 Crore but less than ` 10 crore.
(iii) If any of the parties is not pleased with the judgement of the state commission, they can file a complaint with the national commission within 30 days of the order being issued.
(c) National Commission:
The Central government sets the National commission. The provisions are:
(i) It is made up of a President and at least four members chosen by the central government, one of whom should be a woman.
(ii) All complaints relating to products and services with a compensation value above ` 10 crore can be filed with the national commission.
(iii) The National Commission has the authority to issue orders for product replacement and loss compensation, among other things.
(iv) If any of the parties is not pleased with the decision taken, they can file a complaint with the Supreme Court of India within 30 days of the order being issued.
The Consumer Protection Act of 2019 safeguard and promote consumers’ interests by resolving their complaints timely and cost-effectively. It came into force on July 20th 2020.
Ways and Means of Consumer Protection are:
(a) Self-regulation by businesses: Businesses should fulfill corporate social responsibility; adhere to ethical norms and practices while working with customers.
(b) Business associations: The FICCI and the CII have established codes of conduct for its members to follow while interacting with clients.
(c) Consumer Awareness: A consumer should have all knowledge because well-informed consumer will be able to speak out against any unethical business activities.
(d) Consumer Organisations: Consumer organisations play a vital role in informing consumers about their rights and protecting them against any exploitation.
(e) Government: The government safeguards consumers’ interests by establishing various consumer protection regulations.
10. Discuss the various methods of floating new issues in the primary market.
Answer: Methods of floatation are:
(a) Offer through Prospectus: Offer through prospectus is the most popular method of raising funds by public companies in the primary market. This involves inviting subscription from the public through issue of prospectus. A prospectus makes a direct appeal to investors to raise capital, through an advertisement in newspapers and magazines.
(b) Offer for Sale: Under this method, securities are not issued directly to the public but are offered for sale through intermediaries like issuing houses or stock brokers.
(c) Private Placement: Private placement is the allotment of securities by a company to institutional investors and some selected individuals. It helps to raise capital more quickly than a public issue.
(d) Rights Issue: This is a privilege given to existing shareholders to subscribe to a new issue of shares according to the terms and conditions of the company.
11. Abhay is a skilled electrician worker. He joined the company and he has to go under training for gaining high skills in electrical field. In that training, he had to spend prescribed amount of time working with an experienced guide, or trainer. A uniform period of training is offered to trainees, in which both type of work skills are offered, i.e., fast and slow and all trainees are placed together.
(a) Identify the type of training which has been taken by Abhay.
(b) Discuss three more training of similar type identified in.
Answer: (a) Abhay has taken the Apprenticeship Programmes (On the job training). In this, the trainee is put under the guidance of a master worker. These are designed to acquire a higher level of skill. People seeking to enter skilled jobs, to become, for example, plumbers, electricians or iron-workers, are
often required to undergo apprenticeship training.
(b) (i) Coaching: In this method, the superior guides and instructs the trainee as a coach. The coach or counsellor sets mutually agreed upon goals, suggests how to achieve these goals, periodically reviews the trainees progress and suggests changes required in behaviour and performance.
(ii) Internship Training: It is a joint programme of training in which educational institutions and business firms cooperate. Selected candidates carry on regular studies for the prescribed period. They also work in some factory or office to acquire practical knowledge and skills.
(iii) Job Rotation: This kind of training involves shifting the trainee from one department to another or from one job to another. This enables the trainee to gain a broader understanding of all parts of the business and how the organisation as a whole functions. The trainee gets fully involved in the departments operations and also gets a chance to test his own aptitude and ability.
12. Suppose there are two companies “A Ltd.” and B Ltd. Both the companies has raised ` 20 lakh Capital.
A Ltd. has raised the capital through equity whereas B Ltd. has raised ` 8 lakh through equity and ` 12 lakh through Debt bearing 10 % fixed interest rate. The EBIT of both the companies is 4 lakh each and tax rate is 30 %. From both the companies, whose shareholders will get better return on equity shares? Show the workings clearly.
Shalini, after acquiring a degree in Hotel Management and Business Administration, took over her family food processing company of manufacturing pickles, jams and squashes. The business had been of the business were high and the cash flow position was weak. She wanted to undertake modernisation of the existing business to introduce the latest manufacturing processes and diversify into the market of chocolates and candies. She was very enthusiastic and approached a finance consultant, who told her that approximately 50 lakh would be required for undertaking the modernisation and expansion programme. He also informed her that the stock market was going through a bullish phase. Identify the source of finance which Shalini should not choose for financing the modernisation and expansion of her food processing business. Give one reason in support of your answer. Discuss any three other factors,
apart from those stated in the above situation, which Shalini should keep in mind while taking this decision.
In both the companies, shareholders of B Ltd. will get better return on equity shares. As, EPS of B Ltd. is 2.45 and A Ltd has 1.40.
Shalini should not choose debt capital for financing the modernisation and expansion of her food processing business because the fixed operating cost of the company is high. It cannot take the additional burden of fixed commitments in terms of payment of interest and repayment of capital by issuing debt.
The other three factors that Shalini must keep in mind while taking this decision are stated below:
(a) Risk: Financial risk refers to a situation when a company is unable to meet its fixed financial charges. Financial risk of the company increases with the higher use of debt. This is because issue of debt involves fixed commitment in terms of payment of interest and repayment of capital.
(b) Flexibility: Too much dependence on debt reduces the firm’s ability to raise debt during unexpected situations. Therefore, it should maintain flexibility by not using debt to its full potential.
(c) Regulatory framework: Every company operates within a regulatory framework provided by the law, e.g., public issue of shares and debentures has to be made under SEBI guidelines. Raising funds from banks and other financial institutions require fulfillment of other norms.