RADIANT CENTRAL CHILDREN ACADEMY SET-2

TERM 1 MARKING SCHEME-2024-25

BUSINESS STUDIES (054)-XII

Time: 3 Hours Max. Marks: 80

S. Answers Marks
No
1. (a) Harmony, not discord 1
2 (a) Contingent 1
3. (b) Employee recognition program 1
4. (a) Planning 1
5. (a) Estimating manpower requirements 1
6. (d) Controlling 1
7. (a) Dematerialisation 1
8. (c) Inflation 1
9. (d) Establishing authority relationship 1
10. (d) Management help to increase efficiency 1
11. (a) Both the statements (A) and (R) are correct and (R) is the right explanation of (A) 1
12. (c) Chief Operating Officer 1
13. (b) Coordination ensures unity of action 1
14. (c) Capital structure decision 1
15. (b) Financial Planning 1
16. (a) More 1
17. (a) Favourable financial leverage 1
18. (b) (ii),(i),(iii)
19. True
20. (c) Management is all pervasive
21. (a) Laissez-Faire style of leadership is being referred to in the above lines. 1+1+1
(b) The two features of the Laissez-Faire style of leadership
(i) Under the style of leadership the subordinates are given high degree of autonomy so as to
enable them formulate their own objectives and also determine the ways to achieve them.
(ii) The leader does not believe in use of authority unless it is absolutely essential.
22. The three points which highlight the importance of delegation for an organisation are as follows: 1+1+1
(a) Facilitation of Growth
(b) Basis of Management Hierarchy
(c) Better Coordination
Or
(a) The elements of delegation of authority stated below:
(a) Authority 1+1+1

(b) Responsibility
© Accountability
23. Components of the internal environment; ½+½+
(i) Objective ½+½+
(ii) Policies ½
(iii) Production Capacity +½
(iv) Production Method
(v) Organizational structure
(vi) Management Information system
or
Impacts of technological environment of business. 1+1+1
 (i) With the advent of television, cinema and radio were affected.
(ii) With the arrival of Photostats, the carbon industry suffered a lot.
(iii) The digital watch eliminated the market of traditional watche.
24. a) (i) In the first situation cooperation is there, but coordination is lacking. 1.5+1.
(ii) In the first situation coordination is there, but there is no cooperation. 5
b) (i) In the first situation, on account of the absence of coordination, the effort of
cooperation receives a big blow.
(ii) In the second situation, on account of the absence of cooperation, the feeing of dissatisfaction
come in the player
25. (a) Directing 1+1+1
Directing initiate Action (Maslow’ theory) +1
Limitation
 It is essential to note that not all employees are governed by same set of needs. Different
individuals may be driven by different needs at same point of time. It is always the most
powerful unsatisfied need that motivates an individual.
 The theory is not empirically supported.
 The theory is not applicable in case of starving artist as even if the artist’s basic needs are
not satisfied, he will still strive for recognition and achievement.
Or
“Taking it for granted that the company. …………………. the previous year.” 1+1+1
Developing Premises +1
Setting Objectives
“All the departmental Manages ……………………..preparation to achieve this target.”
Implementing Plans
. “After some time, he felt that the ……………….. business but was planning for improvement
in it.”
Follow up
26. Business Environment’ means the sum total of those factors which influence the business; 1+1+1
Importance of Business Environment; +1
1. First Mover Advantages
2. Warning signals
3. Tapping useful resources
or
Micro environment means that environment which includes those factors with which business is 1+1+1
closely related. +1
Following are the Components of it;
1. Customers
2. Suppliers
3. Competitor
27. (i) Divisional Organization structure 1+1+1
(ii) Differential wage system +1
(iii) Promotion
 Casual Caller
(iv) Development of backward area
Rise in employment opportunities
28. Art is the skillful and personal application of existing knowledge to achieve desired results. 4
Science is a systematized body of knowledge that explains certain general truths. It goes without
saying that management in practice is a judicious blend of both Science and art. The prerequisite
to becoming a successful manager is that firstly one should only possess the core knowledge of
various theories and principles of management (management as science). Secondly he/she should
have the skill to apply such knowledge in the light of given situation in order to accomplish the
desired goals (management as an art)..
29. (a)Organizing and Controlling 1+1+1
(b) importance of Organizing ; +1
(i) Benefit of specialization
 (ii) Clarity in Working Relationship
importance of Controlling;
(i)Accomplishing Organizational Goal
(ii)Judging Accuracy of standard
30. If anything goes wrong with the performance of key activities, the entire organisation suffers. 4
Therefore, the organisation should focus on them. The related concept is Critical point control.
Critical Point Control: All the deviations may not be significant. Moreover, it may not be either
economical or easy to monitor each and every activity in the organisation. Therefore, every
organisation identifies and states its specific key result areas (KRAs) or critical points which
require tight control are likely to have a significant effect on the working of the business.
31. The remaining steps that Nisha and Ritika will have to undertake in order to obtain a satisfactory 1+1+1
workforce for their new manufacturing unit are described below: +1+1+
(a) Selection: Selection is the process of choosing from among the pool of the Prospective job 1
candidates who have applied for the job.
(b) Placement and Orientation: The term placement refers to the process by which an employee
takes charge of his job position. At the same time, the process of orientation is important in order
to familiarise the new employees with the various aspects related to the organisation and the
workers. It is also referred to as induction training.
( c) Training and Development: Training as a process aims at increasing the Knowledge and skill
of an employee for doing a particular job. Development is a much wider term as compared to
training because it seems to improve upon an individuals in all spheres be it human or technical
and foster their growth.
(d) Performance Appraisal: Performance appraisal seeks to measure the worth of An employee to
an organisation. The work of an employee needs be evaluated against certain predetermined
standards.
(e) Promotion and Career Planning: Every employee aspires to rise high in his career and
Promotions are a fundamental part of a person’s career. Promotion Results in an increases the
status and a higher pay package for the employee.
(f) Compensation: Compensation refers to the remuneration given to an employee in return for
his/her services to the organisation. Compensation, consists of all Forms of pay or rewards going
to employees.
The Direct financial payments can be divided into two categories namely;
(i) Time rate wage plan
(ii) Piece rate/performance based wage plan
Or
(a) Web publishing is the source of external recruitment being adopted by the Company. 2+1+1
(b) The advantages of using external sources of recruitment are as follows: +1+1
(1) Qualified Personnel: By exploring external sources of recruitment an Organisation is able
to attract qualified and competent persons for the vacant positions in the organisation.
(2) Wider Choice: External sources of recruitment offer a wider choice to the organisation
unlike internal sources which provide only a limited choice.
The limitations of using external sources of recruitment are as follows:
(1) Dissatisfaction Among Existing Staff: Many a times use of external sources Of
recruitment creates a feeling of unhappiness and discontentment among the present employees.
(ii) Lengthy Process: The use of external sources of recruitment is a lengthy and tedious
process as it involves a series of time consuming steps.
32. Explain the following principles of management: 2+2+2
(i) Science, not the Rule of Thumb-
This rule focuses on increasing the efficiency of an organisation through scientific analysis of
work and not with the ‘Rule of Thumb’ method. Taylor believed that even a small activity like
loading paper sheets into boxcars can be planned scientifically. This will save time and also
human energy. This decision should be based on scientific analysis and cause and effect
relationships rather than ‘Rule of Thumb’ where the decision is taken according to the manager’s
 personal judgment.

2. Harmony, Not Discord-

Taylor indicated and believed that the relationship between the workers and management should
be cordial and completely harmonious. Difference between the two will never be beneficial to
either side. Management and workers should acknowledge and understand each other’s
importance. Taylor also suggested the mental revolution for both management and workers to
achieve total harmony.

3. Scalar Chain; Scalar chain is a chain of all supervisors from the top management to the person
working in the lowest rank

or 1+1+1
Financial Planning pertains to functions of finance and includes the determination of firm financial +1+1+
objectives, financial policies, and financial procedure. 1
The main six points of importance of sound financial planning for the success of business enterprise are
given below
(i) Helps to face the eventualities: It forecasts the future business situations which help in preparing
alternative financial plans to face the eventual situations.
(ii) Helps in avoiding business shocks and surprises: Proper provision regarding shortage or surplus of
funds is made by anticipating future receipts and„payments. Hence, it helps in avoiding business shocks
and surprises.
(iii) Helps in coordination: It helps in coordinating various business activities, such as sales, purchase,
production, finance, etc.
(iv) Helps in avoiding wastage of finance In the absence of financial planning, wastage of financial
resources may take place. This arises due to the complex nature of business operations such as, excessively
over or underestimation of finance for a particular business operation. Such types of wastages can be
avoided through financial planning.
(v) Helps to link the present with the future: It makes efforts to link the present with the future. By doing
so, it helps to minimize the risks of future uncertainties.
(vi) Helps in creating a link between investment and financing decisions: It helps in deciding that where to
invest and from where the required funds will be made available. Under it, the mix of share capital and
debt capital is made in such a manner that the cost of capital is reduced to a minimum.
33. i. Nancy gave the suggestion of Profit-Sharing. 2+2+2
Profit-Sharing: The earned profit of a business organisation is the outcome of the efforts of two
parties, namely owners and employees. The owners invest money and employees provide services
to fulfil the objectives. Consequently, the owners get profit in lieu of their investment whereas the
employees get salary/wages for providing services. Although the employees naturally get their
remuneration as a reward of their services yet sometimes they are made part of the profit earned
by the company with the hope that they will provide services with full potential, labour, and
honesty. The plan of profit thus given is known as profit sharing.
ii. Poonam gave the suggestion of Job Security.
Job Security: Job security is an important non-monetary motivator. Security of a job means a
feeling of permanence and stability. For example, if an employee has a sense of fear or insecurity
in his mind, that he can be removed from his job any time, he will never work wholeheartedly and
this worry continues troubling him. On the other hand, if he has a feeling that his job is secure and
permanent and he cannot be removed from his job easily, he will work without any worry and with
an easy mind. Consequently, his efficiency increases. This is the reason why people prefer a
permanent job with less salary to a temporary job with more salary.
iii. CEO gave the suggestion of Employee Participation: Employees get encouraged to notice
their participation in managerial works. Therefore, they offer their full cooperation in making
successful the policies prepared with their help.
34. The financial decision is concerned with determining how much money will be raised from which 1+1+1
long-term source, such as shareholder cash or borrowed funds. Borrowed funds comprise +1+1+
debentures, long-term loans, and public deposits, whereas shareholders’ funds include share 1
capital, reserves, surplus, and retained earnings.
Factors Affecting Financial Decision(Any five)
The following are some of the most critical factors that impact the financial decisions of the
company:
(a) Cost: The allocation of finances and cost-cutting are at the heart of all financing decisions. The
costs of obtaining finances from various sources fluctuate. A prudent financial manager would
generally choose the cheapest source. The most cost-effective option should be chosen.
(b) Risk: The risk associated with various sources varies. The finance manager weighs the risk
against the cost and favours securities with a low-risk factor. The risk associated with borrowed
funds is higher than that associated with equity funds. One of the most important parts of funding
decisions is risk assessment.
(c) Floatation Costs: The source becomes less appealing as the flotation cost rises. It refers to
charges associated with the issuance of securities, such as broker commissions, underwriters’ fees,
prospectus expenses, and so on. The higher a source’s flotation cost, the less appealing it appears
to management.
(d) Cash Flow Position of the Business:Debt financing may be more attractive than equity
financing due to a higher cash flow situation. Companies with consistent cash flow can readily
afford borrowed fund securities, but when cash flow is scarce, they must rely solely on owner’s
fund securities. A positive or negative cash flow position encourages or discourages investors to
invest in the company.
(e) Level of Fixed Operating Costs: If a company’s fixed operating costs are high, it’s a good
sign (e.g., building rent, Insurance premium, Salaries, etc.). It must choose fixed financing
expenses that are lower. As a result, debt financing with a lower interest rate is preferable. In the
same way, if the fixed operational costs are lower, greater debt financing may be selected.
(f) Control Considerations: More equity issues may result in a dilution of management’s
influence over the company. Debt finance, on the other hand, has no such implications. As a
result, companies that are fearful of a takeover proposal may prefer debt to stock. Existing
shareholders prefer borrowed fund securities to raise more funds if they want to keep the entire
control of the company.
(g) Tax Rate: The cost of debt is influenced by the tax rate because interest is a deductible item.
Because interest is a tax-deductible expense, a higher tax rate lowers the cost of debt and makes it
more appealing than equity. Debt financing becomes more appealing when the tax rate is greater.
(h) Condition of the market:The state of the market has a significant impact on financing
decisions. During a boom, equity is the most common issue, but during a downturn, a company
will have to rely on debt. These decisions are crucial in the funding process.