Maximum Marks: 80 Time allowed: 3:00 hours;

● (Candidates are allowed an additional 15 minutes for only reading the paper. They must NOT start
writing during this time).
● Answer all questions in Section A, Section B and Section C .
● Section A consists of objective/very short answer type questions.
● Section B consists of short answer questions.
● Section C consists of long answer questions.
● The intended marks for questions or parts of question are given in the brackets. [ ].

SECTION A-16 MARKS

Question 1.
(i) These needs are most basic in the hierarchy of motivation theory and correspond to primary Needs. [1]
(a) Self-Actualisation Needs
(b) Basic Physiological Needs
(c) Security Needs
(d) Belonging Needs
(ii) Capital Structure refers to which of the following options? [1]
(a) Current assets and current liabilities
(b) Shareholders' equity
(c) Long-term debt, preferred stock and common stock options
(d) None of the above
(iii) Which of the following is not included in borrowed funds (as a source of finance for joint stock
company)? [1]
(a) Loan from financial institutions
(b) Customer advance
(c) Preferential share capital
(d) Public deposits
(iv) Which of the following is not a feature of RTGS? [1]
(a) Real time online fund transfer system
(b) Used for high value transactions
(c) Funds credited on a gross and one on one basis
(d) Maximum limit of fund transfer is 5,00,000
(v) 'Specialisation is the most efficient way to use the human efforts'. Which principle of Fayol's is highlighted
in this statement? [1]
(a) Unity of command
(b) Authority and Responsibility
(c) Division of work
(d) Discipline
(vi) Select and write the odd one out of the following: [1]
(a) The interaction between the business and is environment would identify opportunities for and
threats to the business.
(b) The interaction with the business environment leads to open the doors for more competition and
strengthen monopoly for the business firms.
(c) Environmental understanding helps the business organisations in improving their image by showing
their sensitivity to the environment within which they are working.
(d) Business environment helps the firms to analyse the competitors' strategies and formulate their own
strategies accordingly.
(vii) State whether the following statements are The or False. [4]
(a) Management is what management does. It is the task of planning, executing and controlling
(b) Management as a process implies a specialised branch of knowledge which involves the study of
principles and practices of administration
(c) Taylor advocated a complete mental resolution on the part of both management and workers
(d) According to Taylor, everything that increases the importance of subordinates' role is
decentralisation and everything that reduces it is centralisation.
(viii) ________ helps to develop loyalty and attachment on the part of employees. [1]
(ix) ________ means synchronising and unifying individual efforts towards the common objectives. [1]
(x) In urban areas people are becoming diet conscious. They go to gym and avoid eating junk food. Due to which
there is less sale of fast food chain stores. Identify the dimension of business environment. [1]
(xi) Samriddhi purchased a pack of biscuits. When she opened it, she felt the biscuits were stale. She carefully
read the label on the pack of biscuits which mentioned. "If you are not satisfied with the product quality, write
to our customer care call at: Bird's Nest Foods, Block A, Indira Nagar, Lucknow. The biscuit company has set
up its own consumer service and grievance cell to promote and protect which right of consumer. [1]
(xii) The consumer wants to purchase a two wheeler, the next question in his mind is with gear or
without gear, 100 cc or more than that, self- starter or kick starter, etc. This type is otherwise known as 'Product
form competition'. Which external factor influencing the business firm is referred hear? [1]
(xiii) Assertion(A): Labelling acts as a silent salesman.
Reason (R): It helps in the promotion of products by attracting the attention of customers and providing
required information. [1]
Alternatives:
(a) Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of Assertion (A).
(b) Both Assertion (A) and Reason (R) are true but Reason (R) is not the correct explanation of Assertion (A).
(c) Assertion (A) is true but Reason (R) is False
(d) Assertion (A) is False but Reason (R) is true.

SECTION B-32 MARKS

Question 2 [4]
(i) 'Planning provides the foundation for the effective management for business enterprise'. In light of this
statement explain any four importance of planning.
OR
(ii) A person can delegate authority only when he himself has the authority. In light of this statement explain
any four importance of delegation of authority.
Question 3 [4]
Financial planning is the process of estimating the. financial requirements of an organisation specifying the
sources of funds and ensuring that enough funds are available at the right time. Explain any four features of
financial planning.
Question 4 [4]
(i) Explain customer advance and inter cooperate deposits as sources of finance for a business enterprise.
OR
(ii) Explain any two advantages and any two disadvantages of retained earnings.
Question 5 [4]
Why is management considered as a profession?
Question 6 [4]
Explain the nature of principles of management. [4]
Question 7
'Directing is the heart of management process'. Do you agree? Give any four reasons in support of your answer.
Question 8 [4]
Apritim bought a bottle of disinfectant spray from the nearby market. It had a knob which was to be opened in
a particular way. However, there was no instruction on its package in this regard. Therefore, when he tried to
open the knob in a casual way, some of the spray flew in his eyes. This affected his vision.
In context of the above case:
1. Name the rights of consumer being violated by the company.
2. State any two directions which the consumer court can issue to the company after being satisfied with
the genuineness of the complaint.
Question 9 [4]
(1) A label plays an important role in making the packaging and branding function meaningful. In light of this
statement state any four advantages of Labelling.
OR
(ii) Choice of suitable distribution channel is an important policy decision and great care should be exercised
in selecting the channel of distribution. Describe the various channels of distribution.

SECTION C -32 MARKS

Question 10
(i) Explain any five importance of business environment. [5]
(ii) What is meant by political environment? Explain any two components of political environment. [3]
Question 11
(i) What are equity shares? Explain any four advantages of raising funds through issue of such shares. [5]
(ii)
[5] State any three features of a debit card.
[3]
[3] OR
(i) State any five differences between preference shares and equity shares.
(ii) Mention any three limitations of institutional financing.
Question 12 (i) Briefly explain the various steps in planning process. (ii) State any three differences between
functional structure and divisional structure. Question 13 Read the case given below and answer the [5]questions
that follow. Mr. Neeraj Srivastava, a sales representative of Onida Ltd. has changed seven jobs in the [3]last one
year. He is a hardworking person but is not able to finalise deals with customers due to his inadequate
vocabulary and omission of needed words. Sometimes, he uses wrong words because of which the intended
meaning is not conveyed. All this creates misunderstandings between him and his clients. (i) Identify the
communication barrier discussed above. (ii) State the category of this communication barrier. (iii) Explain any
other communication barriers of the same category.

[1]
[2]
[3]
(iv) 'Objective is the end which an organisation seeks to achieve by its operations'. In light of this statement
explain the term objective as a type of plan. [2]
 SECTION A-16 MARKS

Question 1 competition and strengthen for the business

(i) (b) Basic Physiological Needs firms.
(ii) (c) Long—term debt, preferred stock and (vii) (a) True (b) False (c) True (d) False
common stock options (viii) Stability of tenure
(iii) (c) Preferential share capital (ix) Coordination
(iv)
(v) (d) Maximum limit of fund transfer is ₹ (x) Social
(vi) 5,00,000 (xi) Right to be heard
(c) Division of work (xii) Competitors
(b) The interaction With the business (xiii) (a) Both Assertion (A) and (R) are true and
environment leads to the doors for more Reason (R) is the correct explanation of
Assertion (A).

SECTION B-32 MARKS

Question 2 [4]
(i) Importance or Significance of Planning [any four points]
1. Direction for action: planning is directed towards enterprise objectives. If the objectives are laid
down and clearly; all the business plans will work towards the achievement of objectives. Thus,
planning provides clear cut direction for all the departments and individuals.
2. Reduction of Uncertainty: Planning involves forecasting of future events. This helps to reduce
uncertainty of business. By determining in prior the tasks to completed, planning notes the way to deal
with changes and unpredictable effects. Sufficient provisions can made in the plan to Meet the
uncertainties.
3. Facilitates decision making: Planning is an intellectual activity which involves collection of
data, finding alternative and selection of the best alternative. Thus, decision making is inherent in
planning.
4. Promotes innovation and creativity: Planning is a thinking function of management. It involves
innovative and creative thinking. Many new ideas come to the mind of manager when they plan.
5. Improves efficiency: It determines as to when and how various tasks are to be performed by different
departments. It helps to increase organisational effectiveness by reducing the wastage and needless
efforts are avoided by advanced planning. It ensures that resources are used as per the specified plan.
6. Planning reduces overlapping and wasteful Activities: Planning evaluates the alternatives uses of
the available and resources of the business and makes their most appropriate use.
OR
(ii) Importance of Delegation of Authority [any four points]
1. Reducing the workload of executives: It relieves the executives from the heavy load of work as the
work is sub divided and enables him to concentrate on important function of management.
2. Check decision making: Subordinate is granted sufficient authority to take decisions. This increases
the speed of work.
3. Satisfaction to subordinates: It provide satisfaction to subordinates in terms of recognition and
opportunity given to use their authority. It satisfies the subordinates and helps to produce better
performance.
4. Better coordination: A manager can delegate. different types of authority to different subordinates.
He tries to enterprise. It maintains a balance which serves as basis of coordination in the organisation.
5. Opportunity for development: It provides a very good opportunity to subordinates to grow. Effective
delegation of authority helps subordinates to accept responsibility and exercise their authority
properly. It improves their self-confidence.
6. Facilitation of growth: Delegation helps in the expansion of an organisation by providing a ready
workforce to take up leading positions in new ventures. Trained and experienced employees are able to
play significant roles in the launch of new projects by replicating the work ethos they have absorbed
from existing units, in the newly set up branches.

Question 3 [4]
Features of Financial Planning (any four points)
1. Simplicity: A financial plan should be so simple that it may be easily understood even by a layman.
A complicated financial structure creates complications and confusion.
2. Based on Clear-cut Objectives: Financial planning should be done by keeping in view the overall
objectives of the company. It should aim to procure funds at the lowest cost so that profitability of the
business is improved.
3. Less Dependence on Outside Sources: A long-term financial planning should aim to reduce
dependence on outside sources. This can be possible by retaining a part of profits for ploughing back.
The generation of own funds is the way of financial operations. In the beginning, outside funds may be
a necessity but financial planning should be such that dependence on such funds may be reduced in
due course of time.
4. Flexibility: The financial plan should not be rigid. It should allow a scope for adjustments as and
when new situations emerge. There may be a scope for raising additional funds if fresh opportunities
occur. Similarly, idle funds, if any, may be invested in short- term and low-risk bearing securities.
Flexibility in a plan will be helpful in coping with the demands of the future.
5. Solvency and Liquidity: Financial planning should ensure solvency and liquidity of the enterprise.
Solvency requires that short-term and long-term payments should be made on dates when these are
due. This will ensure credit worthiness and goodwill to the concern.
6. Cost: The cost of raising capital is an important consideration in selecting a financial plan. The
selection of various sources should be such that the cost burden should be minimum. As and when
possible interest bearing securities should be returned so that this burden is reduced.
Question 4 [4]
(1) Customer Advance
Sometimes businessmen insist on their customers to make some advance payment. It is generally asked when
the value of order is quite large or things ordered are very costly. Customers' advance represents a part of the
payment towards price on the product(s) which will be delivered at a later date. Customers generally agree to
make advances when such goods are not easily available in the market or there is an urgent need of goods. A
firm can meet its short-term requirements with the help of customers' advances.
Example: In the case of automobile booking, new gas or telephone connection booking. Sometimes, the
advances by customers form a part of the price and are adjusted with a nominal interest on such advance when
the goods are finally delivered.
Inter Corporate Deposit
Inter corporate deposit is the deposit made by a company that has surplus funds, to another company for a
maximum of 6 months. It is a source of short- term financing.
An Inter-Corporate Deposit (ICD) is an unsecured borrowing by corporates and Fls from other corporate
entities registered under the Companies Act 1956. The corporate having surplus funds would lend to another
corporate in need of funds. This lending would be an uncollateralised basis and hence a higher rate of interest
is demanded by the lender. The short- term credit rating of the borrowing corporate would determine the rate
at which it would be able to borrow funds. Further the credit spreads demands even for the top rated corporates
would be higher than similar rated banks and the rates on ICDs would higher than those in the Certificate of
Deposit (CD) market. The tenor of ICD may range from 1 day to 1 year, but the most common tenor of borrowing
is for 90 days.

OR
(ii) Advantages or Merits of Retained Earnings (any two points)
(a) Convenience: Retained profits are the most economical and convenient source of finance. No
advertisement or prospectus has to be issued. No expenses or legal formalities are involved.
(b) No Charge on Assets: No charge or mortgage is created on the company's assets. The company is
free to use its assets for raising loans in future.
(c) Accelerated capital formation: Corporate savings accelerate the rate of capital formation in the
country.
(d) Better quality and improved standard of living: Business enterprise can produce better quality of
goods at lower costs. Society at large is benefitted due to increase in the standard of living.

Disadvantages or De-merits of Retained Earnings (any two points)

(a) Low Dividends: Ploughing back of profits reduces the current rate of dividends. This may result in
dissatisfaction among the shareholders as they do not get the expected rate of dividend..
(b) Speculation: A company having large reserves may prompt its directors to indulge in speculation in
the prices of its shares. The directors may change the dividend rate to create price changes in their
favour. Such price fluctuations may result in loss for the shareholders. The directors may also misuse
the funds for personal benefits.
(c) Unbalanced Growth: Retained profits may interfere in the balanced industrial growth of the
country. The profits which might have been invested in other industries are reinvested in the same
industry.
 (d) Over-capitalisation: Too much ploughing back of profit may prompt management to issue bonus.
shares. Frequent capitalisation of reserves may result in over-capitalisation.

Question 5 [4]
Management as a Profession
The term 'profession' may be defined as an occupation backed by specialised body of knowledge and training
and to which entry is regulated by a representative association.
A profession has the following characteristics:
1. Well-defined body of knowledge: All professions are based on a well-defined body of knowledge that
can be acquired through instruction.
2. Restricted entry: The entry to a profession is restricted through an examination or through acquiring
an educational degree. For example, to become a chartered accountant in India a candidate has to clear
a specified examination conducted by the Institute of Chartered Accountants of India.
3. Professional association: All professions are affiliated to a professional association which regulates
entry, grants certificate of practice and formulates and enforces a code of conduct. To be able to practice
in India lawyers have to become the members of the Bar Council which regulates and controls their
activities.
4. Ethical code of conduct: All professions are bound by a code of conduct which guides the behaviour
of its members. All doctors, for example, take the oath of ethical practice at the time they enter the
profession.
5. Service motive: The basic motive of a profession is to serve their client's interests by rendering
dedicated and committed service. The task of a lawyer is to ensure that his client gets justice.

Question 6 [4]
Nature or Characteristics of Principles of Management [any four points: Examples may be used for
explanation]
1. Universal applicability: The principles management are intended to apply to all types of
organisations, business as well as non-business, small as well as large, public sector as well as private
sector, manufacturing as well as the services sectors. However, the extent of their applicability would
vary with the nature of the organisation, business activity, scale of operations and the like.
For example, for greater productivity, work should be divided into small tasks and each employee
should be trained to perform his/her specialised job. This principle is applicable to a government office
where there is a diary/despatch clerk whose job is to receive and send mail or documents, a data entry
operator whose task is to input data on the computer, a peon and an officer etc. This principle is also
applicable to a limited company where there are separate departments like Production, Finance,
Marketing and Research and Development etc. Extent of division of work, however, may vary from case
to case.
2. General guidelines: The principles are guidelines to action but do not provide readymade, straitjacket
solutions to all managerial problems. This is so because real business situations are very complex and
dynamic and are a result of many factors. However, the importance of principles cannot be
underestimated. because even a small guideline helps to solve a given problem.
For example, in dealing with a situation of conflict between the two departments, a manager may
emphasise the primacy of the overall goals of the organisation.
 3. Formed by practice and experimentation: The principles of management are formed by experience
and collective wisdom of managers as well as Experimentation.
For example, it is a matter of common experience that discipline is indispensable for accomplishing
any purpose. This principle finds mention in management theory. On the other hand, in order to
remedy the problem of fatigue of workers in the factory, an experiment may be conducted to see the
effect of improvement of physical conditions to reduce stress.
4. Flexible: The principles of management are not rigid prescriptions, which have to be followed
absolutely. They are flexible and can be modified by the manager when the situation so demands. They
give the manager enough discretion to do so.
For example, the degree of concentration of authority (centralisation) or its dispersal (decentralisation)
will depend upon the situations and circumstances of each enterprise. Moreover individual principles
are like different tools serving different purposes; the manager has to decide which tool is to use under
what circumstances.
5. Mainly behavioural or Application in Directing Human Behaviour: Management principles aim at
influencing behaviour of human beings. Therefore, principles of management are mainly behavioural
in nature. It is not that these principles do not pertain to things and phenomenon at all; it is just a matter
of emphasis. Moreover, principles enable a better understanding of the relationship between human
and material resources in accomplishing organisational purposes.
For example, while planning the layout of a factory, orderliness would require that workflows are
matched by flow of materials and movement of men.
6. Cause and effect relationships: The principles of management are intended to establish relationship
between cause and effect so that they can be used in similar situations in a large number of cases. As
such, they tell us if a particular principle was applied in a particular situation, what would be its likely
effect. The principles of management are less than perfect since they mainly apply to human behaviour.
In real life, situations are not identical. So, accurate cause and effect relationships may be difficult to
establish. However, principles of management assist managers in establishing these relationships to
some extent and are therefore useful. In situations of emergencies, it is desirable that someone takes
charge and others just follow. But in situations requiring cross-functional expertise, such as setting up
of a new factory, more participative approaches to decision-making would be advisable.

Question 7 [4]
Importance of Directing [any four points]
1. Initiates Action: Directing helps to initiate action by people in the organisation towards attainment
of desired objectives. For example, if a supervisor guides his subordinates and clarifies their doubts in
performing a task, it will help the worker to achieve work targets given to him.
2. Integrates Employees Efforts: Directing integrates employees efforts in the organisation in such a
way that every individual effort contributes to the organisational performance. Thus, it ensures that the
individual's work is for organisational goals. For example, a manager with good leadership abilities will
be in a position to convince the employees working under him that individual efforts and team effort
will lead to achievement of organisational goals.
3. Means of Motivation: Directing guides employees to fully realise their potential and capabilities by
motivating and providing effective leadership. A good leader can always identify the potential of his
employees and motivate them to extract work up to their full potential.
 4. Facilitates Implementing Changes: A business has to operate or work in a changing environment
around. Directing facilitates introduction of needed changes in the organisation. Generally, people
have a tendency to resist changes in the organisation. Effective directing through motivation,
communication and leadership helps to reduce such resistance and develops required cooperation in
introducing changes in the organisation. For example, if a manager wants to introduce new system of
accounting, there may be initial resistance from accounting staff. But, if manager explains the
purpose, provides training and motivates with additional rewards, the employees may accept change
and cooperate with manager. 5. Creates Balance in the Organisation: Effective directing helps to
bring stability and balance in the organisation since it fosters cooperation and commitment among the
people and helps to achieve balance among various groups, activities and the departments. 6.
Facilitates Discipline: Employees are made to work in discipline manner by proper supervision and
guidance from time to time. Employees are motivated to follow the directions given by the superiors.

Question 8 [4]
1. The two rights of consumer being violated in the above case are Right to Information and Right to Safety
2. The two directions which the consumer court can issue to the company after being satisfied with the
genuineness of the complaint are as follow:
• Not to offer hazardous goods for sale.
• To pay a reasonable amount of compensation for any loss or injury suffered by the consumer due to the
negligence of the marketer.

Question 9 [4]
(i) Advantages or Merits of labelling [any four points]
1. It helps advertising.
2. It is a social service to customer.
3. It avoids price variations by putting the price label on the product.
4. It helps the customers to know the superiority of a product over other in same product line.
5. It is a guarantee for the standard of the product.
6. It adds to the prestige / brand loyalty of the product and the manufacturer.
OR
(ii) Types of Channel of Distribution:
1. Direct channel or Direct marketing: Direct channel is the "Zero Level Channel". It implies direct sale
of goods and services by the producer to the consumer. The producer creates a link with the consumers
directly through door to door salesmanship, direct mail, telly marketing. internet marketing (e-
business), chain stores etc.
Example Eureka Forbes is an example of door to door selling, Bata India is an example of chain store.
Direct selling has gained popularity in recent years as it eliminates wasteful expenditure/ cost due to
various intermediaries in selling process. It assists small producers and selling process. It assists small
producers and producers of perishable commodities also sell their products directly to local consumers.
2. Indirect channel or Indirect marketing: In indirect channel a producer sells his product indirectly
to the consumers through middlemen. A producer may use the services of any or all the agents,
wholesalers, retailers, C & F etc.
Indirect channel is of three types:
a. One Level channel (producer, retailers and consumer): Under this the manufacturer sells the
product to retailer who in turn sells it to ultimate consumers. This channel enables the manufacturer to
cover wide market area and at the same time. to retain control over the channel. Example- Departmental
stores, automobile showroom etc.
b. Two Level channels (producer, wholesaler, retailer and consumer): This is considered as
traditional channel of distribution. It involves two middlemen in channel namely the wholesaler and
the retailer. This channel enables the producers or manufacturers to cover a large market. E.g..
Consumer durables.
c. Three Level channels (producer, wholesaler, agent, retailer and consumer): In this channel a
manufacturer appoints his own selling agent in addition to the wholesalers and retailers. This channel
is used when the manufacturer has limited products and wants to cover wide market area. Example:
Pharmaceutical products.

SECTION C -32 MARKS

Question 10
(i) Importance of Business Environment (any five points) [5]
1. Determining Opportunities and Threats:
The interaction between the business and its environment would identify opportunities for and threats to the
business. It helps the business enterprises for meeting the challenges successfully.
For examples of first movers include innovative companies such as eBay and Coca-Cola. eBay was the first
company to take the auction process online, kicking off operations in 1995. Coca Cola was the first cola
producer, and began selling its product to the public in 1886; it has been a perennial powerhouse in the industry
ever since.
2. Giving Direction for Growth:
The interaction with the environment leads to open up new frontiers of growth for the business firms. It enables
the business to identify the areas for growth and expansion of their activities.
3. Continuous Learning:
Environmental analysis makes the task of managers easier in dealing with business challenges. The managers
are motivated to continuously update their knowledge, understanding and skills to meet the predicted changes
in realm of business.
4. Image Building:
Environmental understanding helps the business organisations in improving their image by showing their
sensitivity to the environment within which they are working.
For example, in view of the shortage of power, many companies have set up Captive Power Plants (CPP) in their
factories to meet their own requirement of power.
For example, Earlier GE (General Electric Company) had various products including air-conditioners,
computers, etc. But it discontinued production of air conditioners, computers as it could not achieve a
reasonable market share in these segments. GE had the policy that it should either capture a major market
share for their products, supplying the best to its customers or else get out of the concerned business.
5. Meeting Competition:
It helps the firms to analyse the competitors' strategies and formulate their own strategies accordingly.
6. Identifying Firm's Strength and Weakness:
Business environment helps to identify the individual strengths and weaknesses in view of the technological
and global developments.
7. Identification of Threats or Early Warning Signals:
Threats refer to the negative or unfavourable external factors that are likely to create hurdles for a business.
Environmental scanning is must as it helps the organisation to identify possible threats in future.
For example, an Indian firm finds that an MNC is entering in the Indian market with new substitute. This should
be worked out as a warning signal for the Indian firm. Based on this information the Indian firm can improve
the quality of its product, reduce its cost of production, apply aggressive advertising, etc. The proposal of TATA
Motors to launch small segment cars by2008 was a warning signal for then dominant Maruti Suzuki to cut its
cost or introduce economic models.

(ii)
[3]
Political factors or Political environment: These are the factors that take into account the political situation of
a country and the world in relation to the country. For example, what sort of government leadership is affecting,
what decisions of a country? All the policies, all the taxes laws and every tariff that a government levies over a
trade falls under this category of factors.
The major components of political environment are:[any two points]
• Present political system.
• Constitutional framework.
• Political structure center- state relations.
• Political philosophy and stability of the government.
• Political process party system, election and their funding.
• Profile of Politicisation of business and economic system.
• Foreign policy of the government.

Question 11
(i) [5]
An Equity share is the most important source of raising long-term capital by a company. Equity shares represent
the ownership of a company and thus the capital raised by issue of such shares is known as ownership capital
or owner's funds. Equity share capital is a prerequisite to the creation of a company Equity shareholders do not
get a fixed dividend but are paid on the basis of earnings by the company. They are referred to as 'residual
owners' since they receive what is left after all other claims on the company's income and assets have been
settled. They enjoy the reward as well as bear the risk of ownership. Their liability, however, is limited to the
extent of capital contributed by them in the company. Further, through their right to vote, these shareholders
have a right to participate in the management of the company.
Advantages from the Shareholders' Point of View (any two points)
(a) Equity shares are very liquid and can be easily sold in the capital market.
(b) In case of high profit, they get dividend at higher rate.
(c) Equity shareholders have the right to control the management of the company.
 (d) The equity shareholders get benefit in two ways, yearly dividend and appreciation in the value of
their investment.

Advantages from the Company's Point of View (any two points)

(a) They are a permanent source of capital and as such; do not involve any repayment liability.
(b) They do not have any obligation regarding the payment of dividend.
(c) Larger equity capital base increases the credit worthiness of the company among the creditors and
investors.

(ii) Features of a Debit Card [any three points] [3]

1. Debit Card offers the convenience of cashless transaction.
2. It can be used for cash withdrawals at ATM and shopping online or at Point of Sale (POS).
3. It ensures instant payment as well as transfer of Funds.
4. Unlike credit cards, which are a loan in disguise, debit card encourages judicious spending.
5. It lets you redeem the reward points obtained from certain services like insurance coverage, bonus
points, cash back offers that are offered by banks.
6. Debit cards are safer than carrying cash.
OR
(i) Distinction between Preference Shares and Equity Shares [5]
(Any five points)
Point of Distinction Preferential Shares Equity Shares

Nominal value High Low

Degree of risk Comparatively low Very high risk

Right to dividend Prior to equity shares After dividend on preference

shares
Repayment
Refund of capital Prior to equity shares all after other
obligations are refunded
Fluctuating
Rate of dividend Generally fixed
Full voting right
Voting right Limited voting right

Appeal To cautious and conservative To bold and Adventurous

investors investors
May accumulate Never accumulate
Arrears to dividend

(ii) Limitations or De-merits of Institutional Financing [any three points] [3]

● Financial institutions follow rigid criteria for grant of loans. Too many formalities make the procedure
time consuming and expensive.
 ● Certain restrictions such as restriction on dividend, payment are imposed on the powers of the
borrowing company by the financial institutions.
● Sometimes these institutions place restrictions on the autonomy of management. They lay down a
convertible clause in loan agreements. In some cases, they insist on the appointment of their nominees
on the Board of Directors of the borrowing company.
● Many deserving concerns may fail to get assistance for want of security and other conditions laid down
by these institutions.

Question 12
(i) Steps in the process of Planning [All must be covered in same sequence] [5]
1. Setting objectives: The first step in the planning process is the establishment of the objectives.
Specific objectives have to be laid down which can be achieved with the help of policies, procedures,
rules, budgets, strategies and programs. They help the employees to understand what is expected by
them.
2. Developing planning premises: Giving shape to future events is planning premises. They serve as
the basis of planning. It is essential to be based on systematic forecasting.
Planning premises may be internal or external. The internal premises include the sale forecast, the
policies and programs, the capital investment, philosophy of management etc. While the external
factors include the political, economical, social and technological sources.
3. Identifying alternatives: Search of alternatives plan is an important step in planning. Without which
a plan is likely to be guided by his limited imagination. The manager should try to screen out the most
unviable alternatives so that he has small number for final selection.
4. Evaluating alternatives: The alternatives generated at the previous stage are evaluated in the light of
objectives, cost involved, availability of capital, material and personnel. Their merits and demerits
should be compared before selection.
5. Selection for the best alternative: Various techniques of decision making are applied to choose a
particular course of action. This may lead to the conclusions that no single alternative course of action
is optimum (best). Thus, the management has to decide to select two or more options or combinations
of feasible.
6. Implementation of plan: After choosing a particular plan, it is put into practice by formulation of
derivative plans. These derivative plans are subsidiary plans formulated for various departments,
selections or activities in light of master plan.
7. Follow up action and review: After a plan has been put to practice, it is essential to follow it up so as
to remove the difficulties if any. If needed the plan may even be modified to achieve the objectives.
Continuous review helps to detect the difficulties and act accordingly.
(ii) Difference between Functional Structure and Divisional Structure [3]
[Any three points]
Basis of Comparison Functional Structure Divisional Structure
Basis Functional areas Specialized divisions
 Responsibility Difficult to fix responsibility on a Easy to fix responsibility for
particular department. performance.

Autonomy of Managers do not have autonomy Managers have autonomy of

decisions of decisions. decisions.
Cost
Economical, as the functions are Expensive as it involves repetition
not repeated. of resources.
Small and simple organizations. Large and dynamic organizations.
Appropriate for
Simple Difficult
Control

Question 13
Read the case given below and answer the questions that follow.
(i) The communication barrier discussed above is badly expressed message. [1]
(ii) This kind of barrier falls in the category of semantic barriers. Semantic barriers are concerned with
problems and obstructions in the process of encoding and decoding of message into words or
impressions. [2]
(iii) A few of these are discussed below: [3]
● Symbols with different meanings: Sometimes, a word may have several meanings. The
communication will be effective only if the receiver perceives it in the same manner as intended
by the communicator.
● Faulty translations: Many a times it has been noted that, if the translator is not proficient with
both the languages, mistakes may creep in causing different meanings to the communication.
● Technical jargon: It is usually seen that specialists use technical jargon while explaining
something. If the people with whom they are communicating. are not specialists in the
concerned field, they may not be able to understand the actual meaning of many such words.
● Body language and gesture decoding: While speaking, one may tend to move his/her body in a
certain manner. If there is no match between what is said and what is expressed in body
movements, communications may be wrongly perceived by the receiver.

(iv) The first step in planning is setting objectives. Objectives, therefore, can be said to be the desired
future position that the management would like to reach. A good management is always the
"Management by objectives'. They guide decision making and action in the organisation. Clear cut
objectives encourage consistency in decision making in the long run.
Objectives are very basic to the organisation and they are defined as ends which the management seeks
to achieve by its operations. Therefore, an objective simply stated is what you would like to achieve, i.e.,
the end result of activities. [2]