MS Business Studies Set 66 5 1,2,3 2019

-Strictly Confidential: (For Internal and Restricted Use Only)
Senior School Certificate Examination

March -----2018-19
Marking Scheme---Business Studies 66/5/1, 66/5/2, 66/5/3
General Instructions:
1. You are aware that evaluation is the most important process in the actual and correct
assessment of the candidates. Small mistakes in evaluation may lead to serious problems
which may affect the future of the candidates, education system and teaching profession. To
avoid mistakes, it is requested that before starting evaluation, you must read and understand
the spot evaluation guidelines carefully. Evaluation is a 10-12 days mission for all of us.
Hence, it is desired from you too give your best in this process.
2. Evaluation is to be done as per instructions provided in the marking scheme. It should not
be done according to one’s own interpretation or any other consideration. Marking scheme
should be strictly adhered to and religiously followed. However, while evaluating answers
which are based on latest information or knowledge and innovative may be assessed and
marks be awarded to them.
3. The head examiner has to go through the first five answer scripts evaluated by each
evaluator to ensure that evaluation has been carried out as per instructions given in the
marking scheme. The remaining answer scripts meant for evaluation shall be given only
after ensuring that there is no significant variation in the marking and encircled.
4. If a question has parts, please award marks on the right hand side for each part. Marks
awarded for different parts of the question should then be totalled up and encircled in the left
hand margin.
5. If a question does not have any parts marks must be awarded in the left hand margin and
encircled.
6. If a student has attempted an extra question ,answer of the question deserving more marks
should be retained and other answer scored out
7. In a question, if two features/ characteristics/ points are asked but an examinee writes
more than two features/ characteristics/ points, say, five, of which first is correct, second is
incorrect, the first two should be assessed and the remaining should be ignored.
8. The examiners should acquaint themselves with the instructions given in the Guidelines
for Spot Evaluation before starting the actual evaluation.
9. Every examiner should stay full working hours i.e. 8 hours every day and evaluate 25
answer books.
10. It is expected that the marking scheme should be followed objectively to ensure quality
evaluation. For instance, if an examinee scores 24 marks, then the marks should not be
1
inflated to 27 simply to pass him/ her.
11. Avoid the following common type of errors committed by the examiners in the pat-
Ø Leaving answers or parts thereof unassessed in the answer script.
Ø Giving more marks for an answer than assigned to it or deviation from the marking
scheme.
Ø Wrong transference of marks from the inside pages of the answer books to the title
page.
Ø Wrong question wise totaling on the title page.
Ø Wrong totaling of marks of the two columns on the title page.
Ø Wrong grand total.
Ø Marks in words and figures not tallying.
Ø Wrong transference of marks from answer books to award list.
Ø Answer marked as correct but marks not awarded.
Ø Half or a part of answer marked correct and the rest as wrong but no marks awarded.
12. Marks should be awarded keeping in view the total marks of a particular question
and not the total marks of the question paper. For example, if one mark is given to a 3
marks question even if nothing is correct, then that one mark constitutes 33% of the total
marks for this answer.
13. The examiner shall also have to certify in the answer book that they have evaluated
the answer book strictly in accordance with the value points given in the marking
scheme and correct set of question papers.
14. While evaluating the answer scripts, if the answer is found to be totally incorrect,
it should be marked as (x) and awarded zero (0) marks.
15. A full scale of marks 0-80 has to be used. Please do not hesitate to award full marks
if the answer deserves it. Similarly, wherever an examinee writes an answer upto the
mark, his/ her marks should not be deducted unnecessarily.
16. As per the orders of Hon’ble Supreme Court, the candidates would now be permitted
to obtain photocopy of the Answer Book on request on payment of the prescribed
fee. All examiners/ Head Examiners are once again reminded that they must ensure
that evaluation is carried out strictly as per value points for each answer as given in the
Marking Scheme.

2
ZONE 5
66 66 66 MARKING SCHEME – 2018-19 Distribution
/5 /5 /5 BUSINESS STUDIES of Marks
/1 /2 /3 66/5/1
EXPECTED ANSWERS / VALUE POINTS
SECTION A
1 4 3 Q. Various input resources are required by management
to complete a task effectively and efficiently. Name any
two.
Ans. Following are the input resources required by ½ mark

management to complete a task effectively and efficiently:
(Any two) +
(i) Money
(ii) Materials ½ mark
(iii) Equipment =
(iv) Persons 1 mark
2 - - Q. Define ‘Organising’.
Ans. Organising is defined as the process of identifying and

grouping the work to be performed, assigning duties to job
positions and establishing relationships for the purpose of 1 mark
accomplishing objectives.
(or any other correct definition)
OR OR
Q. What is meant by ‘Delegation’?
Ans. Delegation is the transfer of authority from superior to

subordinate, entrustment of responsibility and creation of 1 mark
accountability for performance.
(or any other correct meaning including all the three

elements)
3 5 5 Q. All business firms would like to increase their sales

and earn profits to be successful. All managers dream of
these. To turn their dreams into reality, managers need
to work hard in thinking about the future, in making
business predictions and achieving targets.
The above lines describe one of the functions of
3
management. Identify and define this function.
Ans. Planning ½ mark
Planning is defined as the process of setting objectives for a +

given time period, formulating various courses of action to
achieve them and then selecting the best possible alternative ½ mark
from among the various courses of action available. =
1 mark
4 - - Q. Differentiate between ‘Democratic’ and ‘Laissez-faire’

style of leadership.
Ans. ‘Democratic’ style of leadership
In the ‘Democratic’ style of leadership, the leader develops

action plans and makes decisions in consultation with his ½ mark
subordinates and encourages them to participate in decision
making.
+
‘Laissez-faire’ style of leadership
In ‘Laissez-faire’ style of leadership, the leader does not

believe in the use of power unless it is absolutely essential ½ mark
and gives a high degree of independence to the followers to
formulate their own objectives and ways to achieve them. =
(or any other correct difference) 1 mark
OR OR
Q. Differentiate between ‘Formal communication’ and

‘Informal communication‘ on the basis of ‘Meaning’.
Ans. Formal communication is the communication which ½ mark

flows through official channels designed in the organisation
chart. +
Informal communication is the communication that takes ½ mark

place without following the formal lines of communication.
=
1 mark
4
5 - - Q. How does ‘Cost of Debt’ affect the capital structure of
an enterprise?
Ans. ‘Cost of debt’ affects the choice of capital structure of a

company as low interest rates increase a firm’s capacity to 1 mark
employ higher debt.
OR OR
Q. How does ‘Cost of Equity’ affect the capital structure
of an enterprise?
Ans. Use of higher debt increases the cost of equity as the

financial risk faced by the equity shareholders increases;
debt can therefore be used only upto a level.
1 mark
or
Lesser is the debt in the capital structure, lesser is the cost of

equity as financial risk faced by the equity shareholders will
decrease.
6 1 2 Q. ‘XY Ltd.’ is registered with an authorised capital of

Rs. 10 crore. The paid-up capital of the company is Rs. 6
crore. The company was facing shortage of funds. The
management of the company decided to raise funds by
issue of 1,00,000 equity shares of Rs. 100 each. The issue
was fully subscribed. After this it was realised that the
funds raised were in excess of the actual requirement.
Identify and define the concept which was not considered
by the company before deciding the amount of funds to
be raised.
½ mark for
Ans. Financial Planning identifying
the conept
The process of estimating the fund requirements of a
business and specifying the sources of funds is called +
financial planning.
or ½ mark for
Financial planning is the preparation of a financial blueprint its
of an organisation’s future operations. definition
(or any other correct definition) =

1 mark
5
7 3 1 Q. Vivek purchased a bike from Saranath Automobiles
with a written guarantee to repair or replace, if
necessary, within six months or 5,000 kms of distance
travelled whichever is earlier. After covering the distance
of 400 kms in two months, the gears of the bike started
giving problems. Vivek took the bike to the dealer who
refused to listen to his complaint. He was confused about
what he should do.
Suggest the rights that Vivek may exercise in the above ½ mark for
case. naming
each
Ans. (a) Right to Safety right
=
(b) Right to seek redressal ½x2
=
1 mark
8 2 4 Q. ‘Nayan Medicare Equipment Ltd.’ manufactures

equipment for surgeons having a unique laser technique.
The equipment can be used by the surgeons only after
proper training. Even their maintenance requires
guidance of specialised engineers. Because of this, the
equipment is used in a limited number of hospitals. The
company wants to increase the sale of the equipment.
Suggest the promotion tool to be used by the company
giving reason in support of your answer.
½ mark for
Ans. Personal Selling. naming
the tool
+
This is because it is a complex product requiring technical ½ mark for
details and is best sold through shorter channels. the reason
=
1 mark
SECTION B
9 - - Q. Explain any three limitations of ‘Planning’ function of
management.
Ans. Brief explanation of any three of the following

limitations of ‘Planning’ function of management: ½ mark for
heading
(i) Leads to rigidity +
½ mark for its
(ii) May not work in a dynamic environment explanation
6
1x3
(iii) Reduces creativity =
3 marks
(iv) Involves huge costs
(v) Time consuming
(vi) Does not guarantee success
(If an examinee has not given the headings as above but

has given the correct explanation, full credit be given)
OR OR
Q. Explain any three points of importance of ‘Planning’.
Ans. Brief explanation of any three of the following points

of importance of ‘Planning’:
(i) Provides directions.
(ii) Reduces the risk of uncertainty.

½ mark for
(iii) Facilitates decision making. heading
+
(iv) Reduces overlapping and wasteful activities. ½ mark for its
explanation
(v) Promotes innovative ideas. 1x3
=
(vi) Establishes standards for controlling. 3 marks

have given the correct explanation, full credit should be
given)
10 - - Q. Explain ‘critical point control’ and ‘management by

exception’.
Ans.
(a) Critical point control
Critical Point Control’ is a technique of managerial control

which focuses on key result areas that are critical to the 1 ½ marks
success of an organisation.
7
The key result areas are set as critical points since it is
neither economical nor easy to keep a check on each and +
every activity of the organisation.
(b) Management by Exception
Management by Exception is a technique of managerial 1 ½ marks

control which involves identifying only significant
deviations which go beyond the permissible limit and =
bringing them to the notice of the management. 3 marks
It is based on the belief that an attempt to control everything

results in controlling nothing.
OR OR
Q. Explain ‘setting performance standards’ and

‘measurement of actual performance’ as steps of
‘controlling process’.
Ans. (i) Setting performance standards
- It refers to setting the criteria against which actual

performance will be measured. 1 ½ marks
- Standards can be set in both qualitative and quantitative

terms and should be flexible enough to be modified +
whenever required.
(ii) Measurement of actual performance
- Actual performance should be measured in an objective 1 ½ marks

and reliable manner and in the same units in which standards
are set. =
3 marks
- Measurement is normally done after the task is completed
but wherever possible, it should be done during the
performance.
11 10 10 Q. Shiv has recently joined an industrial unit

manufacturing low cost LED bulbs. He has five workers
working under him. He gives them instructions to ensure
optimum utilization of resources and achievement of
work targets. He provides good on-the-job training to the
workers to build an efficient team. He also analyses the
work performed by them and gives feedback.
8
The work performed by Shiv may be described as an
important element of directing. Name the element and
state two other functions which may be performed by
Shiv in addition to those highlighted above.
Ans. Supervision 1 mark
Other supervisory functions which may be performed by +

Shiv in addition to those highlighted above are: (Any two)
(i) Maintains day-to-day contact and friendly relations with

the workers.
(ii) Links the workers and the management by conveying

management ideas to the workers and workers problems to
the management. 1x2
=
(iii) Helps in maintaining group unity by sorting out their 2 marks
internal differences. =
1+2
(iv) To oversee the efforts of the workforce. =
3 marks
(v) To ensure that the quality of output is maintained and
wastage of material is minimized.
(vi) To ensure safety standards are maintained.
12 11 9 Q. ‘Financial markets are classified on the basis of the

maturity of financial instruments traded in them.’ Name
the market in which the instruments with more than one
year maturity are traded. Also state any two features of
this market.
Ans. Capital Market 1 mark
Any two of the following features of Capital Market:
(a) It facilitates arrangement of long term and medium term +

funds
(b) In this market, funds are raised through both - debt and
equity i.e. equity shares, preference shares, bonds,
debentures etc. 1x2
=
(c) It includes Primary and Secondary market. 2 marks
=
9
(d) The participants in this market are financial institutions,
banks, corporate entities, foreign investors and ordinary
retail investors. 1+2
=
(e) Investment in this market does not necessarily require a 3 marks
huge financial outlay.
(f) The securities traded in this market are considered liquid

as they are marketable on the stock exchange.
(g) The instruments traded in this market are risky because

of higher duration of investing.
(h) The returns in this market are generally higher as the

investment can earn capital gains, dividend as well as bonus
issues.
13 9 11 Q. Gopal, Mohan and Shyam are three friends having

their separate small manufacturing units in an industrial
estate. They are hard-working and honest and undertake
their respective production activities following the good
practices of business. They use good quality raw
materials and adopt standardised process. They fix the
prices of their products with a reasonable profit margin.
But all of them are worried about the malpractices like
manufacturing sub-standard, duplicate and defective
goods by the fellow manufacturers. Therefore, they
decided to form an organisation with a constitution of its
own which is free from government interference. This
organisation would encourage consumers to strongly
protest and take action against unscrupulous,
exploitative and unfair trade practices of sellers.
State three other functions which may be performed by
this organisation in addition to those mentioned above.
Ans. Three other functions which may be performed by this

organisation in addition to those mentioned above are: (Any
three)
(i) Educating the general public about consumer rights by

organising training programmes, seminars and workshops.
(ii) Publishing periodicals and other publications to impart

knowledge about consumer problems.
1x3
10
(iii) Carrying out comparative testing of consumer products =
in accredited laboratories. 3 marks
(iv) Providing legal assistance to consumers.
(v) Filing complaints in appropriate consumer courts on

behalf of the consumers.
(vi) Taking an initiative in filing cases in the interest of

general public.
SECTION C
14 18 17 Q. Define ‘Management’. Explain how management is a
multidimensional activity.
Ans. Management is the process of getting things done with

the aim of achieving goals effectively and efficiently. 1 mark
(or any other correct definition) +
Management is a multidimensional activity as it has three ½ mark for

main dimensions: heading
+
(a) Management of work ½ mark for its
explanation
(b) Management of people 1x3
=
(c) Management of operations 3 marks
=
(1+3)
=
4 marks
OR
OR
Q. Give the meaning of ‘Business Environment’. Explain
any three features of Business Environment.
Ans. Business environment refers to sum total of all

individuals, institutions and other forces that are outside the
control of a business enterprise but that may affect its 1 mark
performance.
+
(or any other correct meaning)
Characteristics of Business Environment: (Any three)
11
(a) Totality of all external forces affecting a business. ½ mark for
heading
(b) Includes both general and specific forces +
(c) Inter-relatedness ½ mark
(d) Dynamic nature for its
(e) Uncertainty explanation
(f) Complexity 1x3
(g) Relativity =
3 marks
(If an examinee has given only the headings, ½ mark for =
each heading should be awarded) (1+3)
=
4 marks
15 17 16 Q. One of the questions that needs to be answered in the
organizing function is ‘At what level are decisions
made’? Decision making authority in an organization can
be pushed down to the lower levels or it may lie with the
top management. However it is not an ‘either or’
concept.
When an organization grows in size or complexity, there
is tendency towards sharing decision making authority
with the lower levels. This is because in large
organizations, employees who are closely involved with
certain operations tend to have more knowledge about
them than the top management.
An important concept of organizing function is discussed
above. Identify the concept and state any three points of
its importance.
1 mark
Ans. Decentralisation
+
Importance of decentralisation: (Any three)
(i) It gives relief to the top management as, when the

subordinates are given the freedom to act, the top
management gets more time to devote on important policy
decisions rather than handling operational decisions.
1x3
(ii) It develops initiative amongst subordinates by promoting =
self reliance and confidence among them. This is because 3 marks
when lower managerial levels are given freedom to take their =
own decisions they learn to depend on their own judgement. 1+3
=
(iii) It develops managerial talent for the future by giving the 4 marks
subordinates a chance to prove themselves, thus, creating
reservoir of qualified manpower to fill up challenging
12
positions in future.
(iv) It facilitates growth by fostering competition amongst

the departments leading to increase in productivity, thereby
generating to higher profits which can be used for growth
and expansion.
(v) It helps in quick decision making as there is no

requirement for approval from many levels. There are also
less chances of information getting distorted as it doesn’t
have to go through many levels.
(vi) It leads to better control by evaluating performance at

each level of management. The departments can be held
accountable for their results.
(If an examinee has given only the headings, ½ mark for

each heading should be awarded)
16 - - Q. State any four points of importance of staffing

function of management.
Ans. Importance of staffing: (Any four)
(i) It helps in discovering and obtaining competent personnel

for various jobs.
(ii) It makes for higher performance by putting the right

person on the right job.
(iii) It ensures continuous survival and growth of the 1x4

enterprise through succession planning for managers. =
4 marks
(iv) It helps to ensure optimum utilisation of human
resources by avoiding overmanning.
(v) It improves job satisfaction and morale of employees
OR OR
Q. State any four benefits of training to employees.
Ans. Benefits of training to employees are:
(i) It helps in career growth due to improved skills and
13
knowledge.
1x4
(ii) It helps them to earn more due to improved performance. =
4 marks
(iii) It reduces accidents as the employees are more efficient
to handle machines.
(iv) It increases the morale of the employees as the

employees are more satisfied.
(or any other correct benefit)
17 14 15 Q. Ganesh was concerned about the sedentary lifestyle

people are leading nowadays. Their dependency on
outside food is also increasing because corporate work
culture demands working till late night at offices. So, he
decided to start a restaurant, ‘Healthy Eating Point’ to
provide healthy food options to customers. After
completing planning and organising functions, he
identified the various job positions that are required to
be filled i.e. a General Manager, an Accountant, two
Chefs, two boys for serving the food in the restaurant
and three boys for home delivery of food. He decided that
his father, Karan, would be the General Manager of the
restaurant. He would be paid ₹50,000 per month for his
services. His father requested him to appoint his friend’s
son, Prem as an accountant who is well qualified for this
post. Ganesh agreed to this proposal. Earlier, Prem had a
business of providing unskilled workers to different
organisations from remote areas of the country. Prem
took permission from Ganesh to continue with the old
business. Ganesh happily agreed and asked him to
provide five boys for serving and delivering the food. For
the appointment of the two Chefs, Ganesh approached a
renowned Hotel Management Institute and was satisfied
with the Chefs provided by the institute.
(a) Quoting the lines from the above paragraph, explain
the two sources of recruitment being used by Ganesh for
filling up the various job positions.
(b) Also, give the meaning of the function of management
discussed in the above case.
Ans. (a) Sources of recruitment being used by Ganesh for

filling up the various job positions are: (Any two)
(i) Recommendation of employees
14
‘His father requested him to appoint his friend’s son, Prem
as an accountant who is well qualified for this post’
In this source of recruitment, applicants are introduced by ½ mark

present employees or their friends and relatives. Such for
employees are likely to be good employees as their identifying
background is sufficiently known. the source
+
(ii) Labour Contractors ½ mark
for
‘Earlier, Prem had a business of providing unskilled workers quoting the line
to different organisations from remote areas of the country’ +
½ mark for
It is a source of recruitment in which the labour contractor its
maintains a close contact with the labourers and can provide explanation
the required number of unskilled workers at short notice. =
1½x2
(iii) Campus Recruitment =
3 marks
‘For the appointment of the two Chefs, Ganesh approached
a renowned Hotel Management Institute and was satisfied
with the Chefs provided by the institute’
It is a source of recruitment in which organisations maintain +

a close liaison with educational institutions like universities,
vocational schools and management institutes to recruit
qualified personnel for technical, professional and
managerial jobs.
(b) The function of management discussed above is Staffing

which means filling and keeping filled the positions in the 1 mark
organisation structure. =
3+1
=
(or any other correct meaning) 4 marks
18 16 14 Q. Nayar is working as P.G.T. Commerce in a CBSE

affiliated school of Kerala. One day he was teaching
about capital market in the class. He informed the class
that during 1980’s the capital market in India witnessed
a tremendous growth because of increasing participation
of the public. This ever increasing investors’ population
and market capitalisation led to a variety of malpractices
15
on the part of the companies, brokers, merchant bankers,
investment consultants and others involved in the
securities market. These malpractices and unfair trading
practices eroded investor confidence and multiplied
investors’ grievances. The Government of India and the
stock exchanges were helpless in redressing the investors’
problems because of lack of proper penalty provisions in
the existing legislation. In view of this the Government of
India decided to set up a regulatory body.
(a) Name the regulatory body which the Government of
India decided to set up.
(b) Also state any three objectives of the regulatory body
identified in part (a) above.
Ans. (a) Regulatory body - SEBI (Securities and Exchange 1 mark

Board of India)
(b) Objectives of SEBI are: (Any three)
(i) To regulate stock exchanges and the securities industry to

promote their orderly functioning.
(ii) To protect the rights and interests of investors,

particularly individual investors and to guide and educate
them.
(iii) To prevent trading malpractices and achieve a balance 1x3

between self regulation and statutory regulation. =
3 marks
(iv) To regulate and develop a code of conduct and fair
practices by intermediaries like brokers, merchant bankers
etc., with a view to making them competitive and
professional.
(If an examinee has given only the heading, ½ mark for =

each heading should be awarded) 1+3
=
4 marks
19 15 18 Q. Jay is working as the Chief Executive Officer of a soft

drinks company. The company is doing its business in
collaboration with a soft drinks company of France.
Jay’s friend, Swami a teacher of Business Studies in a
reputed college was discussing the ‘Marketing’ chapter
with his students. He wanted clarity from Jay about the
16
factors which affect the marketing decisions. Jay
explained that there were a large number of factors
affecting marketing decisions which may be divided into
two categories:
(i) controllable factors, and (ii) non-controllable factors.
Jay further explained that controllable factors became
marketing tools that can be constantly shaped and
reshaped by marketing managers, to achieve marketing
success.
Identify and explain the set of marketing tools that can
be constantly shaped and reshaped by marketing
managers.
Ans. Set of marketing tools that can be constantly shaped

and reshaped by marketing managers are:
(i) Product
Product is a mixture of tangible and intangible attributes

which are capable of being exchange for a value with ability ½ mark for
to satisfy customer needs. naming
each tool
+
(ii) Price ½ mark
for
Price may be defined as the amount of money paid by the each
buyer (or received by the seller) in consideration for the explanation
purchase of a product or a service. =
1x 4
(iii) Place or Physical Distribution =
4 marks
Place or Physical Distribution is concerned with making the
goods and services available at the right place, in right
quantity and at the right time so that the consumers can
purchase the same.
(iv) Promotion
Promotion refers to the use of communication with the

objective of informing potential customers about the product
and persuading them to buy the same.
SECTION D
17
20 21 20 Q. ‘Scientific Management means knowing exactly what
you want men to do and seeing that they do it in the best
and the cheapest way.’ Taylor developed various
techniques for application of Scientific Management
principles and was able to achieve a three-fold increase in
productivity in Bethlehem Steel Company, where he
worked. One of the techniques helps to determine the
number of workers to be employed; frame suitable
incentive schemes and labour costs. Another technique
recognises those workers who are able to
accomplish/exceed the fair day’s work and is based on
the premise that efficiency is the result of the joint efforts
of the managers and the workers.
Quoting the lines from the above paragraph, identify and
explain the two techniques of Scientific Management.
Ans. Time Study (½ mark

+
‘One of the techniques helps to determine labour costs’ ½ mark
§ It is a technique to determine the standard time taken by a +

worker of reasonable skill and efficiency to perform a
well-defined job. 1 ½ marks
§ It helps in deciding the number of workers to be

employed, frame suitable incentive schemes and =
determine labour costs.
2 ½ marks)
Differential Piece Wage System (½ mark

+
‘Another technique recognises those workers who are able

to accomplish/exceed the fair day’s work and is based on the ½ mark
premise that efficiency is the result of the joint efforts of the
managers and the workers’ +
§ Differential Piece Wage System is a technique which

differentiates between efficient and less efficient workers. 1 ½ marks
It rewards the efficient workers and motivates the less
efficient ones to improve their efficiency.
18
§ In this plan, there are two piece rates – a higher piece rate
for those workers who produce the standard output or
more, and a lower one for those who produce less than =
the standard output. 2 ½ marks)
=
2½+2½
=
5 marks
21 20 21 Q. Matta Auto Ltd. is manufacturing different types of
commercial vehicles. Their sales were rupees two
hundred crores in the previous year. The company
decided to increase sales by 20% during the current year.
It conducted internal as well as external audits for the
same. Through internal audit, they analysed the
strengths and weaknesses of the business across all
departments. External audit focused on the opportunities
and the threats in the constantly changing business
environment. Thus, a comprehensive plan was prepared
taking into consideration the business environment and
the necessary resources were allocated to achieve the
target. The company directed its offices throughout the
country to follow the plan. The company’s commitment
to develop effective plans to achieve a consistent increase
in sales has ensured its continual growth over the past
one decade.
Identify and explain the two types of plans discussed
above. 1 mark for
identifying
Ans. The two types of plans discussed above are: each type
(a) Objectives of plan
(b) Strategy (1 x 2)
=
2 marks
Objectives
+
§ Objectives are the ends, which the management seeks to
achieve.
§ Objectives needs to be expressed in specific terms that is 1 ½ marks
quantified and is to be achieved within a given time
period.
§ They are usually set by top management of the
organisation and focus on broad, general issues.
Strategy
§ A strategy is a comprehensive plan for accomplishing an

19
organisation’s objectives taking business environment into
consideration.
§ It provides the broad contours of an organisations business
and defines the organisation’s direction and scope in the 1 ½ marks
long run.
§ It includes determining long term objectives, adopting a
particular course of action, and allocating resources
necessary to achieve the objectives. =
1½+1½
=
3 marks
=
2+3
=
5 marks
22 - - Q. Explain any five points of importance of ‘directing’

function of management.
Ans. Importance of directing:

½ mark for
(a) Initiates action. each
heading
(b) Integrates employees’ efforts. +
½ mark for
(c) Guides employees to realize their potential. explanation
=
(d) Facilitates changes. 1x 5
=
(e) Brings stability and balance in the organisation. 5 marks
(or any other correct point of importance)

has given the correct explanation, full credit should be
given)
OR OR
Q. Explain any five non-financial incentives.
Ans. Non- financial incentives are: (Any five)

(a) Status
½ mark for
(b) Positive organisational climate. naming
each
20
(c) Career advancement opportunity. incentive
+
(d) Job enrichment. ½ mark for
explanation
(e) Employee recognition =
1x 5
(f) Job security. =
5 marks
(g) Employee participation.
(h) Employee empowerment.

given)
SECTION E
23 - - Q. Explain any four characteristics of coordination.
Ans. Characteristics of co-ordination are: (Any four)
(i) Integrates group efforts

½ mark for
(ii) Ensures unity of action each
heading
(iii) Continuous process +
1 mark for
(iv) Pervasive function explanation
=
(v) Responsibility of all managers 1½x4
=
(vi) Deliberate function 6 marks

given)
OR OR
Q. Explain any four points highlighting the nature of
principles of management.
Ans. Nature of principles of management: (Any four)

½ mark for
(i) Universal applicability. each
heading
(ii) General guidelines. +
21
1 mark for
(iii) Formed by practice and experimentation. explanation
=
(iv) Flexible. 1½x4
=
(v) Mainly behavioural. 6 marks
(vi) Cause and effect relationship.
(vii) Contingent

given)
24 24 23 Q. Chintamani is the Production Manager of ‘Global

India Ltd.’ manufacturing and exporting steel. During
the year 2017-18, the company could not meet its
production targets. The Chief Executive Officer of the
company constituted a committee of experts to find out
the reasons and give its recommendation so that the
production target could be met in the future. The
company analysed the production related records and
found out that there were problems due to
communication. ‘Global India Ltd.’ had rigid rules and
would insist on communication through prescribed
channels, which led to delays, the company also had a
number of managerial levels causing further delay and
distorted communication.
Moreover, the Production Manager, Chintamani, was
using a tone that quite often offended the sentiments of
the workers. Also, Chintamani and the workers did not
believe in each other and so could not understand each
other’s messages in the original sense.
(a) Identify and give the meaning of the types of
communication barriers discussed above.
(b) Quoting lines from the above, state two
communication barriers under each of the types
identified in part (a) because of which ‘Global India Ltd.’
could not meet its production targets.
(c) State any two recommendations that might have been
given by the committee to improve communication
effectiveness.
Ans. (a) Types of communication barriers discussed above

are: (½ mark for
22
identifying
(i) Organisational barrier each barrier
½x2
(ii) Psychological barrier = 1 mark)
(½ mark
Organisational barriers are barriers related to organisational for
structure, authority relationships, rules and regulations. explaning
each
Psychological barriers are concerned with the state of mind barrier
of both the sender and the receiver =
½ x2
=
1 mark)
(b) Organisational barriers: +
(i) Rigid Rules and regulations may delay communication.
‘Global India Ltd.’ had rigid rules and would insist on

communication through prescribed channels, which led to (½ x 2
delays’ = 1 mark)
(ii) Complexity in organization structure leads to delayed

and distorted communication. +
‘The company also had a number of managerial levels

causing further delay and distorted communication’
(If an examinee has given only the heading, ½ mark for

Psychological barriers:
(i) Loss by transmission and poor retention may act as a

barrier to communication.
(½ x 2
‘The company also had a number of managerial levels =1 mark)
(ii) Distrust between the sender and the receiver acts as a

barrier.
23
‘Chintamani and the workers did not believe in each other
and so could not understand each other’s messages in the
original sense’
+
Recommendations that might have been given by the

committee to improve communication effectiveness:
(i) Be aware of the language, tone and content of the

message so that it does not offend the sentiments of listeners.
(ii) Be a good listener so as to unerstand each others message

in its original sense.
1x2
(iii) Ensure proper feedback to make communication more =
responsive. 2 marks
(iv) Follow up communications to remove hurdles in

implementing the instructions.
(v) Consult others before communicating as participation of

subordinates may help to gain ready acceptance and willing
cooperation.

each heading should be awarded) 6 marks
25 23 24 Q. ‘Monisha Consumer Goods’ is a leading consumer

goods chain with a network of 46 stores primarily across
Mumbai, Delhi and Pune. It was started by Monisha
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 to
decide on what new resources it will invest in so that it is
able to earn the highest possible return for its 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
24
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 manager.
Ans. (a)
(i) Investment decision/ Capital budgeting decision/ Long (½ mark for
term Investment decision identifying the
decision
It involves deciding about how the funds are invested in +
different assets so that they are able to earn the highest ½ mark for
possible return for the investors. stating
=
(ii) Financing decision 1x2
=
It refers to the decision about the quantum of finance to be 2 marks)
raised from various long term sources.
+
(½ mark for
Factors affecting Investment decision: (any two) each
heading
(i) Cash flows of the project +
½ mark for
(ii) The rate of return of the project explanation
=
(iii) The investment criteria involved 1 x2
=
(iv) Financing alternatives 2 marks)
(If an examinee has not given the headings as above but +

has given the correct explanation, full credit should be (½ mark for
given) each
heading
Factors determining financing decision: (any two) +
(i) Interest coverage ratio ½ mark for
(ii) Debt service coverage Ratio explanation
(iii) Return on Investment =
(iv) Tax rate 1 x2
(v) Fixed operating costs =
(vi) Flexibility 2 marks)
(vii) Control =
(viii) Regulatory framework 2+2+2
25
(ix) Stock market conditions/ State of capital markets =
(x) Capital structure of other companies 6 marks

given)
26
66/5/2
66 MARKING SCHEME – 2018-19 Distribution

/5 BUSINESS STUDIES of Marks
/2 66/5/2
SECTION A
be raised.
½ mark for
the conept
financial planning.
OR ½ mark for

1 mark

giving reason in support of your answer. ½ mark for
naming
the tool
Ans. Personal Selling.
+

27
=
1 mark

travelled whichever is earlier. After covering the distance
of 400 kms in two months, the gears of the bike started
giving problems. Vivek took the bike to the dealer who
refused to listen to his complaint. He was confused about
what he should do.
case. naming
each
=
=
1 mark

two.

(Any two) +
(i) Money
(iii) Equipment =
(iv) Persons 1 mark


28
1 mark
- 6 - Q. What is meant by ‘Formal Organisation’?
Ans. Formal organisation refers to the organisation structure

which is deliberately created by the management to 1 mark
accomplish a particular task. It specifies clearly the
boundaries of authority and responsibility and there is
systematic co-ordination among the various activities to
achieve organisational goals. OR

1 mark
OR
Q. What is meant by ‘Informal Organisation’?
Ans. Informal organisation is a network of personal and

social relations within the formal organisation arising
spontaneously as people associate with one another. It has
no written rules, is fluid in form and scope and does not
have fixed lines of communication.
- 7 - Q. Differentiate between an ‘Aptitude Test’ and a

‘Personality Test’.
½ mark
Ans. Aptitude Test is a measure of individuals potential for +
learning new skills ½ mark
Personality Test provides clues to a person’s emotions, =

reactions, maturity, value system etc. 1 mark
OR
OR
Q. Differentiate between ‘Recruitment’ and ‘Selection’.

½ mark
Recruitment is the process of searching for prospective +
employees and stimulating them to apply for jobs in the ½ mark
organisation.
=
Selection is the process of identifying and choosing the best 1 mark
person(s) out of a number of prospective candidates for the
29
job.
(or any other correct difference)
- 8 - Q. How does Interest Coverage Ratio affect the capital

structure of an enterprise?
Ans. High Interest Coverage ratio affects the capital 1 mark

structure of an enterprise as it lowers the risk of company
failing to meet its interest payment obligations
OR OR
Q. How does Debt Service Coverage Ratio affect the

capital structure of an enterprise? 1 mark
Ans. High debt service coverage ratio affects the caputal

structure of an enterprise as it indicates better ability to meet
the debt service obligations.
SECTION B

three)

30
1x3


general public.



the workers.

the management. 1x2
=
1+2
3 marks
31

this market.

funds
debentures etc. 1x2
=
=
=



issues.
- 12 - Q. Explain the first three steps in the process of

‘organising’.
Ans. First three steps in the process of organising are: ½ mark for
each
(i) Identification and division of work heading
+
32
(ii) Departmentalisation ½ mark
for each
(iii) Assignment of duties explanation
=1 x3
(If an examinee has not given the headings as above but 3 marks
has given the correct explanation, no marks should be
deducted)
OR OR
Q. Explain any three points of importance of
‘organising’ function of management.
Ans. Importance of organising: (Any three)
(a) Benefits of specialisation ½ mark for

each
(b) Clarity in working relationships. heading
+
(c) Optimum utilisation of resources. ½ mark
for each
(d) Adaptation to change. explanation
=1 x3
(e) Effective administration. 3 marks
(f) Development of personnel.
(g) Expansion and growth.

deducted)
- 13 - Q. Explain the following points of importance of

‘controlling’:
(i) Accomplishing organisational goals;
(ii) Judging accuracy of standards; and
(iii) Making efficient use of resources.
Ans. (i) Accomplishing organisational goals;
- Controlling function measures the progress towards the

organisational goals by bringing to light, deviations if any
and indicating corrective action.
- It thus guides the organisation and keeps it on the right

track so that organisational goals can be achieved.
33
(ii) Judging accuracy of standards
- A good control system enables management to verify 1x3

whether the standards set are accurate and objective.
=
- It keeps a careful check on the changes taking place in the
organisation and the environment and helps to review and 3 marks
revise the standards in the light of such changes.
(iii) Making efficient use of resources
- Controlling seeks to reduce wastage and spoilage of

resources as each activity is performed in accordance with
predetermined standards and norms.
- It thus, ensuring that resources are used in the most

effective and efficient manner.
OR OR
Q. Explain the steps in the controlling process after

‘measurement of actual performance’.
½ mark for
Ans. Steps in the controlling process after measurement of each
actual performance are: heading
+
(a) Comparison of actual performance with the standards ½ mark
for each
(b) Analysing deviations explanation
=1 x3
(c) Taking corrective action. 3 marks
SECTION C
34
and three boys for home delivery of food. He decided
that his father, Karan, would be the General Manager of
the restaurant. He would be paid ₹50,000 per month for
his services. His father requested him to appoint his
friend’s son, Prem as an accountant who is well qualified
for this post. Ganesh agreed to this proposal. Earlier,
Prem had a business of providing unskilled workers to
different organisations from remote areas of the country.
Prem took permission from Ganesh to continue with the
old business. Ganesh happily agreed and asked him to



+
for
‘Earlier, Prem had a business of providing unskilled quoting the line
workers to different organisations from remote areas of the +
country’ ½ mark for
its
It is a source of recruitment in which the labour contractor explanation
maintains a close contact with the labourers and can provide =
the required number of unskilled workers at short notice. 1½x2
=
(iii) Campus Recruitment 3 marks
35
+
It is a source of recruitment in which organisations maintain
managerial jobs.
(b) The function of management discussed above is Staffing 1 mark

which means filling and keeping filled the positions in the =
organisation structure. 3+1
=
4 marks

two categories:
success.
managers.

(i) Product

36
each tool
+
(ii) Price ½ mark
for
1x 4
4 marks
purchase the same.
(iv) Promotion


on the part of the companies, brokers, merchant
bankers, investment consultants and others involved in
the securities market. These malpractices and unfair
trading practices eroded investor confidence and
multiplied investors’ grievances. The Government of
India and the stock exchanges were helpless in
redressing the investors’ problems because of lack of
proper penalty provisions in the existing legislation. In
view of this the Government of India decided to set up a
regulatory body.
37
Ans. (a) Regulatory body - SEBI (Securities and Exchange 1 mark
Board of India)


them.
(iii) To prevent trading malpractices and achieve a balance 1x3

between self regulation and statutory regulation. =
3 marks
professional.

each heading should be awarded) 1+3
=
4 marks

made’? Decision making authority in an organization
can be pushed down to the lower levels or it may lie with
the top management. However it is not an ‘either or’
concept.
its importance.
Ans. Decentralisation 1 mark
Importance of decentralisation: (Any three) +
38
(ii) It develops initiative amongst subordinates by promoting 1x3

self reliance and confidence among them. This is because =
when lower managerial levels are given freedom to take 3 marks
their own decisions they learn to depend on their own =
judgement. 1+3
=

and expansion.






+
39
explanation
=
=
(1+3)
=
4 marks
OR
OR

individuals, institutions and other forces that are outside the
control of a business enterprise but that may affect its 1 mark
performance.
+
Characteristics of Business Environment: (Any three)

(a) Totality of all external forces affecting a business. ½ mark for
heading
(b) Includes both general and specific forces +
(c) Inter-relatedness ½ mark
(d) Dynamic nature for its
(e) Uncertainty explanation
(f) Complexity 1x3
(g) Relativity =
3 marks
(If an examinee has given only the headings, ½ mark for =
each heading should be awarded) (1+3)
=
4 marks
- 19 - Q. State any four benefits of training to the organisation.
Ans. Benefits of training to the organisation:
(i) It avoids wastage of efforts and money as training is

systematic learning, better than hit and trial methods.
(ii) It enhances employee productivity both in terms of

quantity and quality leading to higher profits. 1x4
(iii) It equips the future manager to take over in an =
40
emergency.
(iv) It reduces employees’ turnover as it increases employee 4 marks

morale and reduces absenteeism.
(v) It helps in obtaining effective response in a fast changing

environment OR
OR
Q. State any eight specialised activities and duties

performed by Human Resource Manager
Ans. Specialized activities and duties performed by Human 1x4

resource manager are: (Any eight)
=
(i) Recruitment i.e. search for qualified people
(ii) Analysing jobs, collecting information about jobs to
prepare job descriptions 4 marks
(iii) Selection i.e. choosing the best candidate out of the
number of prospective job candidates
(iv) Developing compensation and incentive plans
(v) Training and development of employees for efficient
performance and career growth
(vi) Maintaining labour relations and union management
relations.
(vii) Handling grievances and complaints.
(viii) Providing for social security and welfare of employees.
(ix) Defending the company in law suits and avoiding legal
complications.
SECTION D
decided to increase sales by 20% during the current
year. It conducted internal as well as external audits for
the same. Through internal audit, they analysed the
41
one decade.
above. 1 mark for
identifying
=
2 marks
Objectives
+
achieve.
period.
Strategy

consideration.
1 ½ marks
and defines the organisation’s direction and scope in the
long run.
=
necessary to achieve the objectives.
1½+1½
=
3 marks
=
2+3
=
5 marks

principles and was able to achieve a three-fold increase
in productivity in Bethlehem Steel Company, where he
42

+


2 ½ marks)

+


differentiates between efficient and less efficient 1 ½ marks
workers. It rewards the efficient workers and motivates
the less efficient ones to improve their efficiency.
=
2½+2½
43
=
5 marks
- 22 - Q. Explain the steps in the selection proess after
‘Employment Interview’.
Ans. Steps in the Selection process after Employment

Interview are: ½ mark for
each
(a) Reference and background checks heading
(b) Selection decision +
(c) Medical Examination ½ mark
(d) Job offer for each
(e) Contract of Employment explanation
=
(If an examinee has not given the headings as above but 1x5
has given the correct explanation, no marks should be =
deducted) 5 marks
(In case the examinee has not written the steps in the
right sequence, ½ mark may be deducted)
OR OR
Q. Explain the steps in the staffing process after

‘Selection’.
½ mark for
Ans. Steps in the staffing process after Selection are: each
heading
(a) Placement and Orientation +
½ mark
(b) Training and Development for each
explanation
(c) Performance Appraisal =
1x5
(d) Promotion and Career planning =
5 marks
(e) Compensation

deducted)
(In case the examinee has not written the steps in the
right sequence, ½ mark may be deducted)
SECTION E
44
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.
above situation.
(b) Explain any two factors affecting each of the
decisions that still have to be considered by the finance
manager.
Ans. (a) (½ mark for

(i) Investment decision/ Capital budgeting decision/ Long identifying the
term Investment decision decision
+
It involves deciding about how the funds are invested in ½ mark for
different assets so that they are able to earn the highest stating
possible return for the investors. =
1x2
(ii) Financing decision =
2 marks)
It refers to the decision about the quantum of finance to be
raised from various long term sources. +
(½ mark for
each
Factors affecting Investment decision: (any two) heading
+
(i) Cash flows of the project ½ mark for
explanation
(ii) The rate of return of the project =
1 x2
45
(iii) The investment criteria involved =
2 marks)
(iv) Financing alternatives
+
(If an examinee has not given the headings as above but (½ mark for
has given the correct explanation, full credit should be each
given) heading
+
Factors determining financing decision: (any two) ½ mark for
(i) Interest coverage ratio explanation
(ii) Debt service coverage Ratio =
(iii) Return on Investment 1 x2
(iv) Tax rate =
(v) Fixed operating costs 2 marks)
(vi) Flexibility =
(vii) Control 2+2+2
(viii) Regulatory framework =
(ix) Stock market conditions/ State of capital markets 6 marks
(x) Capital structure of other companies

given)

46
identified in part (a) because of which ‘Global India
Ltd.’ could not meet its production targets.
effectiveness.

are: (½ mark for
identifying each
(i) Organisational barrier barrier
½x2
(½ mark
each
½ x2
=
1 mark)

delays’ = 1 mark)



47
(½ x 2

barrier.

original sense’
+


message so that it does not offend the sentiments of
listeners.
(ii) Be a good listener so as to unerstand each others

message in its original sense. 1x2
=
(iii) Ensure proper feedback to make communication more 2 marks
responsive.


cooperation.
=
(If an examinee has given only the heading, ½ mark for 6 marks
- 25 - Q. Explain any four points that highlight the significance of

principles of management.
Ans. Significance of principles of management (Any four)
(a) Provide the managers with useful insights into reality.
48
½ mark for
(b) Help in optimum utilisation of resources and effective the heading
administration. +
1 mark
(c) Help in taking scientific decisions. for its
explanation
(d) Help in meeting changing environment requirements. =
1½ x 4
(e) Help in fulfilling social responsibility. =
6 marks
(f) Used as a basis for management training, education and
research.
(if an examinee has not given the headings as above but

has given the correct explanation, full credit be given)
OR OR
Q. Explain any four points that highlight the significance of

management.
½ mark for
Ans. Significance of management: (Any four) the heading
+
(a) Helps in achieving group goals. 1 mark
for its
(b) Increases efficiency. explanation
=
(c) Creates a dynamic organisation. 1 ½x4
=
(d) Helps in achieving personal objectives. 6 marks
(e) Helps in the development of society.

given)
49
66/5/3
66 MARKING SCHEME – 2018-19 Distribution
/5 BUSINESS STUDIES of Marks
/3 66/5/3
SECTION A
travelled whichever is earlier. After covering the
distance of 400 kms in two months, the gears of the bike
started giving problems. Vivek took the bike to the
dealer who refused to listen to his complaint. He was
confused about what he should do.
case. naming
each
=
=
1 mark

be raised.
½ mark for
the conept
financial planning.
OR ½ mark for

1 mark
50
two.

(Any two) +
(i) Money
(iii) Equipment =
(iv) Persons 1 mark

giving reason in support of your answer. ½ mark for
naming
the tool
Ans. Personal Selling.
+

=
1 mark


51
1 mark
- - 6 Q. Give the meaning of ‘Functional Structure’.
Ans. Functional structure is an organisational structure

formed by grouping of jobs of similar nature under functions 1 mark
and organising these major functions as separate
departments like production, finance etc.
OR OR
Q. Give the meaning of ‘Divisional Structure’.
Ans. Divisional structure is an organisation structure

comprising of separate business units or divisions created on
the basis of different products, geographical area, customer 1 mark
groups etc. Each division is multifunctional because within
each division, functions like production, marketing , finance,
purchase etc are performd together to achieve a common
goal.
- - 7 Q. Differentiate between a ‘Trade Test’ and an ‘Interest

Test’.
Ans. Trade Test measures the existing skills of an individual

whereas Interest Test is used to know the pattern of interest 1 mark
or involvement of a person for performance of a job.
OR OR
Q. Differentiate between ‘Placement’ and ‘Orientation’.
Ans.
Placement refers to the employeeoccupying the position by
the employee for which he has been selected.
1 mark
Orientation refers to introducing the selected employee to
other employees and familiarising him with the rules and
policies of the organisation.
52
- - 8 Q. How does ‘Cash Flow Position’ affect capital
Ans. Cash Flow Position affects capital structure of an 1 mark

enterprise as projected cash flows need to be considered to
meet fixed payment obligations associated with debt.
OR OR
Q. How does ‘Return on Investment’ affect capital

Ans. Return on Investment affects the capital structure of an

enterprise as a higher Return on Investment will increase the 1 mark
ability of the company to use more debt.
SECTION B
this market.

funds
debentures etc. 1x2
=
=
=

53

issues.



the workers.

the management. 1x2
=
1+2
3 marks

54

three)


1x3


general public.
- - 12 Q. Explain the three essential elements of ‘delegation’.
Ans. Essential elements of delegation are:
(a) Authority.
- Authority refers to the right of an individual to command ½ mark

his subordinates and to take action within the scope of his for naming
position. each
element
- It flows from top to bottom. +
½ mark for
55
(b) Responsibility. its explanation
=
- Responsibility refers to the obligation of a subordinate to 1x3
properly perform the assigned duty. =
3 marks
- It flows upwards.
(c) Accountability.
- Accountability refers to answerability for the final outcome

of the assigned task.
- It flows upwards.
OR
OR
Q. Explain how effective delegation leads to: (i) Effective

management; (ii) Employee development; and (iii) Better
co-ordination.
Ans. (i) Effective management
- Effective delegation helps in effective management as the

managers get more time to concentrate on important
matters. 1x3
- Freedom from doing routine work provides them with =

opportunities to excel in new areas
3 marks
(ii) Employee development
- Effective delegation helps in development of employees as

the employees get more opportunities to utilize their talent.
- This gives rise to latent abilities in them and allows them

to perform complex tasks.
(iii) Better co-ordination
- Elements of delegation, namely, authority, responsibility

and accountability help to define powers, duties and
answerability related to various positions in an organisation.
- This helps in better co-ordination by avoiding overlapping
56
of duties and duplication of effort.
- - 13 Q. Explain the following points of importance of

‘controlling’:
(a) Improving employe motivation;
(b) Ensuring order and discipline; and
(c) Facilitating co-ordination in action.
Ans.
(a) Improving employee motivation
Controlling improves employee motivation as the

employees’ know well in advance what they are expected to
do and the standards of performance on the basis of which
they will be appraised.
This motivates them and helps them to give better

performance. 1x3
(b) Ensuring order and discipline =
Controlling creates an atmosphere of order and discipline in 3 marks

the organisation.
It helps to minimise dishonest behaviour on the part of the

employees by keeping a close check on their activities.
(c) Facilitating co-ordination in action
Controlling provides direction to all activities and efforts for

achieving organising goals. OR
Each department and employee is governed by pre-

determined standards which are well coordinated with one
another to ensure that overall organisational objectives are
accomplished. ½ mark for the
heading
OR +
½ mark for
Q. Explain the relationship between ‘planning’ and its explanation
‘controlling’ functions of management. =
1x3
Ans. Relationship between planning and controlling: (Any =
three) 3 marks
(i) Controlling takes place on the basis of standards
57
developed by planning.
(ii) Planning without controlling is meaningless.
(iii) Planning is prescriptive whereas controlling is

evaluative.
(iv) Planning and controlling both are forward-looking.
(v) Planning and controlling both are looking back.
(In case the candidate has not given the relationship in

the form of points but has explained the points, full
credit be given)
SECTION C
on the part of the companies, brokers, merchant
bankers, investment consultants and others involved in
the securities market. These malpractices and unfair
trading practices eroded investor confidence and
multiplied investors’ grievances. The Government of
India and the stock exchanges were helpless in
redressing the investors’ problems because of lack of
proper penalty provisions in the existing legislation. In
view of this the Government of India decided to set up a
regulatory body.
1 mark
Ans. (a) Regulatory body - SEBI (Securities and Exchange
Board of India)

58
them.
1x3
(iii) To prevent trading malpractices and achieve a balance =
between self regulation and statutory regulation. 3 marks

professional.
=
(If an examinee has given only the heading, ½ mark for 1+3
each heading should be awarded) =
4 marks

and three boys for home delivery of food. He decided
that his father, Karan, would be the General Manager of
the restaurant. He would be paid ₹50,000 per month for
his services. His father requested him to appoint his
friend’s son, Prem as an accountant who is well qualified
for this post. Ganesh agreed to this proposal. Earlier,
Prem had a business of providing unskilled workers to
different organisations from remote areas of the country.
Prem took permission from Ganesh to continue with the
old business. Ganesh happily agreed and asked him to
59


+
for
‘Earlier, Prem had a business of providing unskilled quoting the line
workers to different organisations from remote areas of the +
country’ ½ mark for
its
It is a source of recruitment in which the labour contractor explanation
maintains a close contact with the labourers and can provide =
the required number of unskilled workers at short notice. 1½x2
=
(iii) Campus Recruitment 3 marks

+
It is a source of recruitment in which organisations maintain
managerial jobs.
(b) The function of management discussed above is Staffing 1 mark

which means filling and keeping filled the positions in the =
organisation structure. 3+1
=
4 marks
60
made’? Decision making authority in an organization
can be pushed down to the lower levels or it may lie with
the top management. However it is not an ‘either or’
concept.
its importance.
Ans. Decentralisation 1 mark
Importance of decentralisation: (Any three) +

(ii) It develops initiative amongst subordinates by promoting 1x3

self reliance and confidence among them. This is because =
when lower managerial levels are given freedom to take 3 marks
their own decisions they learn to depend on their own =
judgement. 1+3
=

and expansion.

61




+
explanation
=
=
(1+3)
=
4 marks
OR OR


individuals, institutions and other forces that are outside the 1 mark
control of a business enterprise but that may affect its
performance. +
Characteristics of Business Environment: (Any three) ½ mark for

(a) Totality of all external forces affecting a business. heading
+
(b) Includes both general and specific forces ½ mark
(c) Inter-relatedness for its
(d) Dynamic nature explanation
62
(e) Uncertainty 1x3
(f) Complexity =
(g) Relativity 3 marks
=
(If an examinee has given only the headings, ½ mark for (1+3)
each heading should be awarded) =
4 marks
two categories:
success.
managers.

(i) Product

each tool
+
(ii) Price ½ mark
for
1x 4
4 marks
63
purchase the same.
(iv) Promotion

- - 19 Q. State any four benefits of internal sources of

recruitment.
Ans. Benefits of internal sources of recruitment:
(a) Employees are motivated to improve their

performance as promotion at a higher level may lead to a
chain of promotions at lower levels in the organisation.
(b) It simplifies the process of selection as the candidates

are already known to the organisation. 1x4
(c) There is no need for induction training as the

employees are already familiar with the organisation. =
(d) It helps in adjustment of surplus staff in those

departments where there is shortage of staff. 4 marks
(e) It is an economical source of recruitment.

OR OR
Q. State any four limitations of internal sources of

recruitment.
Ans. Limitations of internal sources of recruitment: (Any

four)
(a) It reduces the scope for induction of fresh talent by

stopping infusion of new blood into the organisation.
1x4
64
(b) The employees may become lethargic if they are sure
of time bound promotions.
=
(c) A new enterprise cannot use internal sources of
recruitment. Also, all vacancies in any organsiation cannot
be filled through internal sources. 4 marks
(d) It hampers the spirit of competition among the

employees.
(e) Frequent transfers may reduce productivity.

SECTION D
principles and was able to achieve a three-fold increase
in productivity in Bethlehem Steel Company, where he

+


2 ½ marks)
65
+

+


differentiates between efficient and less efficient 1 ½ marks
workers. It rewards the efficient workers and motivates
the less efficient ones to improve their efficiency.
=
2½+2½
=
5 marks
decided to increase sales by 20% during the current
year. It conducted internal as well as external audits for
the same. Through internal audit, they analysed the
one decade.
above. 1 mark for
identifying
66
=
2 marks
Objectives
+
achieve.
period.
Strategy +
consideration.
1 ½ marks
and defines the organisation’s direction and scope in the
long run.
=
necessary to achieve the objectives.
1½+1½
=
3 marks
=
2+3
=
5 marks
- - 22 Q. Define ‘Directing’ as a function of management.

Explain its features.
Ans. Directing is defined as the process of instructing,

guiding, counselling, motivating and leading people in the 1 mark
organisation to achieve its objectives.
Features of directing: ½ mark for the

heading
(i) Directing initiates action +
½ mark for
(ii) Directing takes place at every level of management. its explanation
67
=
(iii) Directing is a continuous process. 1x4
=
(iv) Directing flows from top to bottom. 4 marks
=
1+4
=
5 marks
OR
OR
Q. Define ‘Training’. Explain the following methods of

training:
(i) Induction Training;
(ii) Vestibule Training;
(iii) Apprenticeship Training; and
(iv) Internship Training.
Ans. 1 mark
Training is the process by which the aptitudes, skills and
abilities of the employees to perform specific jobs are +
improved.
(i) Induction Training
It is a type of training given to help the new employee in

settling down quickly into the job by becoming familiar with
the people, the surroundings, the job and the business.
1x4
(ii) Vestibule Training =
4 marks
§ Vestibule Training is a method of training which is
imparted with the help of equipment & machine identical
to those at the place of work.
§ The training is conducted away from actual work floor and
is is generally used where the employees are required to
handle sophisticated machinery.
(iii) Apprenticeship Training
§ Apprenticeship Training is a method of training in which

the trainee is kept under guidance of a master worker for a
prescribed period of time.
§ It is designed to acquire a higher level of skill; so people
who want to enter skilled trades e.g. plumbers &
68
electricians are often required to undergo such
programme.
(iv) Internship Training

=
§ Internship Training is a joint programme of training 1+4
between educational institutions and business firms. =
§ Besides carrying out regular studies, the trainees also work 5 marks
in some factory or office to acquire practical knowledge
and skills
SECTION E
identified in part (a) because of which ‘Global India
Ltd.’ could not meet its production targets.
effectiveness.

are: (½ mark for
identifying each
(i) Organisational barrier barrier
½x2
69
(½ mark
each
½ x2
=
1 mark)

delays’ = 1 mark)




(½ x 2

barrier.

original sense’
70
+


message so that it does not offend the sentiments of
listeners.
(ii) Be a good listener so as to unerstand each others

message in its original sense. 1x2
=
(iii) Ensure proper feedback to make communication more 2 marks
responsive.


cooperation.
=
(If an examinee has given only the heading, ½ mark for 6 marks

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.
71
above situation.
(b) Explain any two factors affecting each of the
decisions that still have to be considered by the finance
manager.
Ans. (a) (½ mark for

(i) Investment decision/ Capital budgeting decision/ Long identifying the
term Investment decision decision
+
It involves deciding about how the funds are invested in ½ mark for
different assets so that they are able to earn the highest stating
possible return for the investors. =
1x2
(ii) Financing decision =
2 marks)
It refers to the decision about the quantum of finance to be
raised from various long term sources. +
(½ mark for
each
Factors affecting Investment decision: (any two) heading
+
(i) Cash flows of the project ½ mark for
explanation
(ii) The rate of return of the project =
1 x2
(iii) The investment criteria involved =
2 marks)
(iv) Financing alternatives
+
(If an examinee has not given the headings as above but (½ mark for
has given the correct explanation, full credit should be each
given) heading
+
Factors determining financing decision: (any two) ½ mark for
(i) Interest coverage ratio explanation
(ii) Debt service coverage Ratio =
(iii) Return on Investment 1 x2
(iv) Tax rate =
(v) Fixed operating costs 2 marks)
(vi) Flexibility =
(vii) Control 2+2+2
(viii) Regulatory framework =
(ix) Stock market conditions/ State of capital markets 6 marks
72
(x) Capital structure of other companies

given)
- - 25 Q. Explain the following principles of management:

(i) Division of work;
(ii) Unity of command; and
(iii) Scalar chain.
Ans. Division of Work
§ The principle of Division of work suggests that work can

be performed more efficiently if it is divided into
specialised tasks. 2 marks
§ A trained specialist who is competent, is required to

perform each job leading to specialization which results
in efficient and effective output.
Unity of command
§ The principle of unity of command states that each

employee in an organisation should receive orders from 2 marks
one superior only and he should be responsible to only one
superior.
§ It prevents confusion regarding tasks to be done
Scalar chain
§ The chain of authority and communication that runs from 2 marks

top to bottom and is followed by both the managers and =
the subordinates is called scalar chain. 2+2+2
=
§ In case of any emergency, a shorter route named gang 6 marks
plank may be used to avoid delay in communication.
OR
OR
Q. Explain the following principles of scientific

management:
(i) Science, not rule of thumb;
(ii) Harmony Not Discord; and
(iii) Development of Each and Every Person to His or Her
73
Greatest Efficiency and Prosperity.
Ans. (i) Science not rule of thumb
§ Taylor believed that there was only one best method to 2 marks
maximise efficiency.
§ This method can be developed through scientific study

and analysis of each element of a job and should
substitute ‘Rule of Thumb’. This standard method then
should be followed throughout the organisation.
(ii) Harmony Not Discord
§ The principle emphasises that there should be complete

harmony between the management and the workers.This 2 marks
requires ‘Mental revolution’ on the part of both
management and workers. Both management and the
workers should transform their thinking.
§ Management should share gains of the company if any

with the workers and workers should work hard and be
wiling to embrace change for the good of the company.
(iii) Development of Each and Every Person to His or

Her Greatest Efficiency and Prosperity
§ This principle is concerned with efficiency of employees

which could be built in right from the process of
employee selection.
§ The work assigned to employees should suit their

capabilities. They should be given the required training to 2 marks
increase their efficiency. Efficient employees would
produce more and earn more. This will ensure their
greatest efficiency and prosperity for both the company =
and the workers. 2+2+2
=
6 marks
74

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Senior School Certificate Examination

Ans. Following are the input resources required by ½ mark

Ans. Organising is defined as the process of identifying and

(or any other correct definition)

Q. What is meant by ‘Delegation’?

Ans. Delegation is the transfer of authority from superior to

(or any other correct meaning including all the three

3 5 5 Q. All business firms would like to increase their sales

Ans. Planning ½ mark

Planning is defined as the process of setting objectives for a +

4 - - Q. Differentiate between ‘Democratic’ and ‘Laissez-faire’

Ans. ‘Democratic’ style of leadership

In the ‘Democratic’ style of leadership, the leader develops

‘Laissez-faire’ style of leadership

In ‘Laissez-faire’ style of leadership, the leader does not

(or any other correct difference) 1 mark

Q. Differentiate between ‘Formal communication’ and

Ans. Formal communication is the communication which ½ mark

Informal communication is the communication that takes ½ mark

Ans. ‘Cost of debt’ affects the choice of capital structure of a

Ans. Use of higher debt increases the cost of equity as the

Lesser is the debt in the capital structure, lesser is the cost of

6 1 2 Q. ‘XY Ltd.’ is registered with an authorised capital of

(or any other correct definition) =

8 2 4 Q. ‘Nayan Medicare Equipment Ltd.’ manufactures

Ans. Brief explanation of any three of the following

(v) Time consuming

(vi) Does not guarantee success

(If an examinee has not given the headings as above but

Q. Explain any three points of importance of ‘Planning’.

Ans. Brief explanation of any three of the following points

(i) Provides directions.

(ii) Reduces the risk of uncertainty.

(If an examinee has not given the headings as above but

10 - - Q. Explain ‘critical point control’ and ‘management by

Critical Point Control’ is a technique of managerial control

(b) Management by Exception

Management by Exception is a technique of managerial 1 ½ marks

It is based on the belief that an attempt to control everything

Q. Explain ‘setting performance standards’ and

Ans. (i) Setting performance standards

- It refers to setting the criteria against which actual

- Standards can be set in both qualitative and quantitative

(ii) Measurement of actual performance

- Actual performance should be measured in an objective 1 ½ marks

11 10 10 Q. Shiv has recently joined an industrial unit

Ans. Supervision 1 mark

Other supervisory functions which may be performed by +

(i) Maintains day-to-day contact and friendly relations with

(ii) Links the workers and the management by conveying

(vi) To ensure safety standards are maintained.

12 11 9 Q. ‘Financial markets are classified on the basis of the

Ans. Capital Market 1 mark

Any two of the following features of Capital Market:

(a) It facilitates arrangement of long term and medium term +

(f) The securities traded in this market are considered liquid

(g) The instruments traded in this market are risky because

(h) The returns in this market are generally higher as the

13 9 11 Q. Gopal, Mohan and Shyam are three friends having

Ans. Three other functions which may be performed by this

(i) Educating the general public about consumer rights by