SAMPLE QUESTION PAPER - 2

BUSINESS STUDIES (054)

CLASS XII (2024-25)

Time Allowed: 3 hours Maximum Marks: 80

General Instructions:
1. This question paper contains 34 questions.
2. Marks are indicated against each question.
3. Answers should be brief and to the point.
4. Answers to the questions carrying 3 marks may be from 50 to 75 words.
5. Answers to the questions carrying 4 marks may be about 150 words.
6. Answers to the questions carrying 6 marks may be about 200 words.
7. Attempt all parts of the questions together.
1. In order to enter into a profession, one has to acquire an educational degree by [1]
clearing a specified examination conducted by registered institutes. Which feature of
the profession is being revealed?

a) Ethical code of conduct b) Well defined body of knowledge

c) Professional association d) Restricted entry

2. To be listed on OTCEI, the minimum capital requirement for a company is: [1]

a) Rs. 10 crores b) Rs. 25 crore

c) Rs. 5 crores d) Rs. 3 crores

3. Which one of the following is not a limitation of planning? [1]

a) Dynamic environment b) Top management approach

c) Costly process d) Rigidity

4. Financial leverage is called favourable if: [1]

a) If the degree of existing b) Return on Investment is lower

financial leverage is low than the cost of debt
 c) ROI is higher than the cost of d) Debt is easily available
debt

5. ________ is not included in the controlling process. [1]

a) Comparison of actual b) Doing work of financial

performance with standards management

c) Measurement of actual d) Analysing deviations

performance

6. Identify the principle of scientific management being ignored in the given picture, [1]
where boss is eating food whereas workers are not allowed to take lunch.

a) Mental revolution b) Science, not rule of thumb

c) Co-operation not individualism d) Harmony not discord

7. In the ________ market, prices are determined and decided by the management of the [1]
company.

a) Primary b) Money

c) Stock d) Secondary

8. The CEO of SCT Services, Rajan Gopinaths compensation includes salary, [1]
commission and other allowances. The company also pays for his insurance and
vacations. Identify one indirect payment being made by the company to the CEO.

a) Allowances b) Salary

c) Employer paid Insurance d) Commission

9. Which of the following statement is true? [1]

a. A higher tax rate makes debt relatively costlier.
b. A company cannot use debt beyond a point.
 c. For maximisation of shareholder’s wealth, debt can be used up to any level if ROI
is greater than cost of debt.
d. During a bearish phase, equity shares are more easily sold even at a higher price.

a) option (c) b) option (a)

c) option (b) d) option (d)

10. Assertion (A): Delegation has four major elements. [1]

Reason (R): Delegation is necessary so that the top-level management gets enough
time to relax in that time.

a) Both A and R are true and R is b) Both A and R are true but R is
the correct explanation of A. not the correct explanation of A.

c) A is true but R is false. d) A is false but R is true.

11. Which of the following is not a function of Securities and Exchange Board of India [1]
(SEBI)?

a) Registration of brokers and sub- b) Training of intermediaries of the

brokers and other players in the securities market
market

c) Controlling insider trading d) Pricing of securities

12. Public issue of shares and debentures have to be made under SEBI guidelines. Raising [1]
funds from banks and other financial institutions require fulfillment of other norms.
The relative ease with which these norms can be met or the procedures completed may
also have a bearing upon the choice the source of finance. The factor affecting the
choice of capital structure is ________.

a) Capital structure of other b) Regulatory framework

countries

c) Stock market conditions d) Flexibility

13. Statement I: Under the Consumer Protection Act 2019, a consumer also includes any [1]
user of goods if such use is made with the approval of the buyer.
 Statement II: Any person who obtains goods or avails services for resale or
commercial purpose is nottreated as a consumer and is outside the scope of Consumer
Protection Act 2019.

a) Both the Statements I and II are b) Statement II is correct and

not correct. Statement I is not correct.

c) Both the Statements I and II are d) Statement I is correct and

correct. Statement II is not correct.

14. A sanitizer manufacturing company wants to become a market leader. For this purpose [1]
the manager follows an activity with certain logical steps. The first step suggested by
him is to increase profits by at least 30% in the next quarter. What will be the last step
of the activity being followed by the manager.

a) Identifying alternative course of b) Evaluating alternative courses of

action action

c) Setting objectives d) Follow-up action

15. Which of the following is not an objective of financial planning? [1]

a) To choose the best investment b) All are the objectives of

and financing alternatives by financial planning.
focusing on their costs and
benefits.

c) To ensure availability of funds d) To see that the firm does not

whenever required. raise resources unnecessarily.

16. Statement I: Packaging refers to designing and developing the label to be put on the [1]
package.
Statement II: Customer support services include after sales services, handling
customer complaints and adjustments, procuring credit services, maintenance services,
technical services and consumer information.

a) Both the Statements I and II are b) Statement II is correct and

not correct. Statement I is not correct.
 c) Both the Statements I and II are d) Statement I is correct and
correct. Statement II is not correct.

17. It involves application of high order thinking skills and intellectual faculties, [1]
involving vision and foresightedness to decide the things to be done in the future.
Which feature of Planning is stated in the above line?

a) Planning is futuristic. b) None of these.

c) Planning is pervasive. d) Planning is a mental exercise.

18. Match the functions of management in Column I with their explanation in Column II: [1]
(a) (i) Leading, influencing and motivating employees to perform the tasks
Organising assigned to them.
(b) Staffing (ii) Recruitment and selection of the personnel.
(iii) Assigning duties, grouping tasks, establishing authority and
(c) Directing
allocating resources required to carry out a specific plan.

a) (a) - (ii), (b) - (i), (c) - (iii) b) (a) - (iii), (b) - (ii), (c) - (i)

c) (a) - (i), (b) - (iii), (c) - (ii) d) (a) - (i), (b) - (ii), (c) - (iii)

19. Which component of capital structure determines the overall financial risk? [1]

a) Financial need b) Equity

c) Debt d) Both Debt and Equity

20. Controlling is: [1]

a) both forward and backwards- b) Backward-looking

looking

c) neither forward nor backwards- d) Forward-looking

looking

21. XYZ Ltd. is a management oriented company. Time and again all the employees learn [3]
from their seniors various ways of dealing with diverse situations. They are provided
training whenever required. They are also given incentives both financial as well as
 non financial. The result is employees see their development in the organisation. The
organisation tries to behave as a responsible constituent of society and always creates
good quality products. It has a very good image in the market. The training modules
are superb and the employees always try to find unique ways of providing solutions in
the context of rapidly changing business environment. This has helped the
organisation to adjust frequently in a very good manner.
Which importance of management is highlighted here? Also identify the lines.

22. Which one is the most popular network in organisations under Grapevine network and [3]
what does it mean?

OR
Mention any two measures to improve communication effectiveness.

23. Explain briefly the steps involved in the process of financial planning. [3]

24. A ready-to-eat food manufacturing company uses lead in excess of the prescribed [3]
limits in its products. The usage of an excess quantity of lead in the products could
cause severe health issues to the consumers.
a. Identify and explain the consumer right violated by the company.
b. Identify any two values overlooked by the company.

OR
Describe the following rights of a consumer:
i. Right to be informed
ii. Right to seek Redressal
iii. Right to choose

25. What do you mean by a plan? [4]

OR
Give the meaning of ‘objectives’ and ‘procedure’ as types of plans.

26. “Controlling implies taking action”. Explain. [4]

OR
 Does control help in ‘judging the accuracy of standards’ and ‘improving motivation of the
employees’? Explain.

27. Factory system of production implies that managers serve as a link between the [4]
owners and the workers. Since as managers they had the mandate to get work done
from the workers, there always exist the possibility of a kind of class conflict, the
managers versus workers. Taylor recognised that this conflict helped none, the
workers, the managers or the factory owners. Both should realise that each one is
important. In such a situation even trade unions will not think of going on strike etc.
According to Taylor, Scientific management has for its foundation the firm
conviction that the true interests of the two are one and the same; that prosperity
of the business cannot exist for a long time unless it is accompanied by
prosperity/well-being of its workers. Japanese work culture is a classic example of
such a situation. In Japanese companies, paternalistic style of management is in
practice. There is complete openness between the management and workers. If at all
workers go to strike they wear a black badge but work more than normal working
hours to gain the sympathy of the management.
a. Identify and explain the principle of scientific management highlighted in the above
paragraph.
b. To achieve a state like that of Japanese work culture, Taylor called for an important
concept. Identify and explain that concept.

28. Explain assumptions of Maslow’s need hierachy theory. [4]

29. Keeping in mind the emerging nature of the securities market in India, Securities and [4]
Exchange Board of India was entrusted with the twin task of both regulation and
development of the securities market.
State any two regulatory and two development functions of it.

30. Vastra Ltd. is engaged in the manufacturing of apparel. Over the years, it has became a [4]
popular brand due to its good product quality and exclusive designing. The company
plans to open its own retail showrooms in metropolitan cities in India. In order to meet
its financial needs it has offered for subscription an IPO of Rs.4 lakh equity shares in
the price band of Rs.430 - Rs.445 each. As per the guidelines of SEBI, the company
has provided a complete disclosure of the relevant details in its prospectus.
 a. Identify and explain the right of the consumer being fulfilled by the directives of
SEBI in the above mentioned case.
b. Briefly explain any two points highlighting the importance of consumer protection
from the point of view of the businessmen.

31. Describe briefly the steps involved in the process of staffing. [6]

OR
A newly appointed Personnel Manager is of the view that there is no need for training the
workers. Do you agree with this statement? Give reasons in support of your answer.

32. A good understanding of the environment by business managers enables them not [6]
only to identify and evaluate but also to react to the forces external to their firm.
How would you argue that the success o f a business enterprise is significantly
influenced by its environment?

OR
Identify the dimensions of business environment in the following cases:
i. Hand-woven carpets are banned in some European countries as they think there can be
involvement of child labour in the manufacturing of these carpets. Products produced
through the involvement of child labour are banned in these countries.
ii. With the winning of a new party in a particular country an automobile company has
decided to take back its plan of opening 15 plants in that country.
iii. In the month of October a greeting card manufacturing company has decided to increase
its scale of production of New Year Greeting Cards.
iv. A chocolate making company has decided to make more sweetened chocolates for
people living in a particular country.
v. A super bike producing company has decided to withdraw its earlier proposal of
opening 10 new plants in a country as it finds the per capita income of that country too
low to purchase its bikes in large numbers.
vi. Advertising of a particular brand is taken back as it is expected to hurt the sentiments of
a particular section of society. The company takes this decision on a conscientious level.

33. Decentralisation is an optional policy. Explain why an organisation would choose to [6]
be decentralised.
34. Two years ago Suruchi completed her BBA course. As she had knowledge of the [6]
business she began taking interest in her parental business. Her father used to do the
wholesale business of wheat. Suruchi suggested to her father why not they should also
go in for the retail business of wheat. Her father agreed. He entrusted full
responsibility for the new business to Suruchi. First of all, she conducted a market
survey and tried to obtained information regarding the kind of wheat, price, and
weight of its packing, that the people liked desi wheat the most. Many varieties of
wheat were already available in the market. In order to show that her wheat was
distinct from that of other traders, she gave it the name of Sharbati Healthy Food.
Wheat was packed in attractive plastic bags. Weight of each packed wheat bag was
either 10kg and 20kg so that it is easily carried and moved from one place to the other.
Suruchi pasted a label on each bag giving full information about the wheat packed in.
While deciding the price of her product she kept in mind, the expectation of the
people, price of competitor's products and reasonable rate of profit. Thus a new
business came into being. Within a few days, Suruchi was known as a successful
trader.
With reference to the above paragraph identify four functions of marketing.
 SOLUTION
SAMPLE QUESTION PAPER - 2
BUSINESS STUDIES (054)
CLASS XII (2024-25)
1.
(d) Restricted entry
Explanation:
Restricted entry feature of the profession is revealed here.
2.
(d) Rs. 3 crores
Explanation:
The minimum capital requirement for a company to be listed on the OTCEI is Rs 3 crores
and the maximum is Rs 50 crores.
3.
(b) Top management approach
Explanation:
Top management approach is not a limitation of planning.
4.
(c) ROI is higher than the cost of debt
Explanation:
Financial leverage is the degree to which a company uses fixed-income securities such as
debt. Therefore, financial leverage is favourable when the uses to which debt can be put
generate returns (ROI) greater than the interest expense associated with the debt (Cost of
Debt).
5.
(b) Doing work of financial management
Explanation:
Measurement of actual performance, Comparison of actual performance with standards and
Analyzing deviations are part of the controlling process.
6.
(c) Co-operation not individualism
Explanation:
Cooperation, not individualism being ignored in the given picture.
7. (a) Primary
Explanation:
 Primary
8.
(c) Employer paid Insurance
Explanation:
Employer paid Insurance
9.
(c) option (b)
Explanation:
A company cannot use debt beyond a point.
10.
(c) A is true but R is false.
Explanation:
Delegation is necessary so that the top-level management can focus on more important and
critical work at that time.
11.
(d) Pricing of securities
Explanation:
Pricing of securities
12.
(b) Regulatory framework
Explanation:
Regulatory framework
13.
(c) Both the Statements I and II are correct.
Explanation:
Both the Statements I and II are correct.
14.
(d) Follow-up action
Explanation:
Follow-up action
15. (a) To choose the best investment and financing alternatives by focusing on their costs and
benefits.
Explanation:
The main objectives of financial planning is to ascertain the amount of fixed capital as well
as the working capital required in a given period, to determine the amount to be raised
 through various sources using a judicious debt-equity mix and to ensure that the required
amount is raised on time at the lowest possible cost.
16.
(b) Statement II is correct and Statement I is not correct.
Explanation:
Statement II is correct and Statement I is not correct.
17.
(d) Planning is a mental exercise.
Explanation:
Planning requires application of the mind involving foresight, intelligent imagination and
sound judgement. It is basically an intellectual activity of thinking rather than doing, because
planning determines the action to be taken.
18.
(b) (a) - (iii), (b) - (ii), (c) - (i)
Explanation:
(a) - (iii), (b) - (ii), (c) - (i)
19.
(c) Debt
Explanation:
Debt is cheaper but is more risky for a business because the payment of interest and the
return of principal is obligatory for the business.
20. (a) both forward and backwards-looking
Explanation:
Planning based on facts makes controlling easier and effective. controlling improves future
planning by providing information derived from past experience. This way, controlling is
both forward and backwards-looking.
21. The importance of management highlighted here are:
i. Development of personnel. They are also given incentives both financial as well as non
financial. The result is employees see their development in the organisation.
ii. Development of society. The organisation tries to behave as a responsible constituent of
society and always creates good quality products.
iii. Helps in becoming dynamic organisation. The training modules are superb and the
employees always try to find unique ways of providing solutions in the context of rapidly
changing business environment. Management strives to change and adapt to maintain
competitiveness and remain relevant.
22. Cluster network: In this form of communication a person tells something to selected
indviduals. Those who receive the information further pass it on to another set of selected
individuals. In this way this chain moves on. In every organisation, some people have good
liaison with other persons. Such people pass on this information to the persons of their choice
with the purpose of getting some favour from them.
OR
(i) Clarify the ideas before communication. The problem to be communicated to subordinates
should be clear in all its perspective to the executive himself. The entire problem should be
studied in depth, analysed and stated in such a manner that is clearly conveyed to
subordinates.
(ii) Consult others before communicating. Before actually communicating the message, it is
better to involve others in developing a plan for communication. Participation and
involvement of subordinates may help to gain ready acceptance and willing cooperation of
subordinates.
23. Following are the steps involved in the process of financial planning:
i. Determining financial objectives- The financial manager has to estimate the amount of
capital needed. The financial manager has to determine the sources of finance, the amount
to be raised from various sources and the types of securities to be issued.
ii. Formulating the policies- The financial manager lays down the suitable policies and
procedures for the administration of capital to achieve the objectives of the firm. Financial
policies serve as a guide posts for acquisition, allocation and control of the funds of the
firm.
iii. Reviewing financial plans- A financial manager has to review the financial policies in the
light of changed economic, social and business situations.
24. a. Right to Safety- According to this right, the consumer has a right to be protected against
goods and services which are hazardous to health, life and property.
b. Values-
i. Health and safety of its customers.
ii. Business ethics.
OR
i. Right to be informed: The consumer has a right to have complete information about the
product he/she intends to buy including its ingredients, date of manufacture, price,
quantity, directions for use, etc.
ii. Right to seek Redressal: The consumer has a right to get reliefs against unfair trade
practice or restrictive trade practices or unscrupulous exploitation in case the product or a
 service falls short of his expectations.
iii. Right to choose: The consumer has the freedom to access variety of products at
competitive prices. This implies that the marketers should offer a wide variety of products
in terms of quality, brand, prices, size, etc. and allow the consumer to make a choice from
amongst these.
25. A plan is a formulation of certain steps and actions which are essential for achieving
specific results.
Plans can be classified on the basis of what they focus to achieve and the methods
adopted viz. objectives, strategy, policy etc.
On the basis of usage, plans are of two types i.e. single use plans and standing plans.
For example, if the planned output for a week is 1,000 units and actual output is 580
units, the planners have to critically review their plans and modify them.
OR
Objectives
These are defined as end results which the management seeks to achieve by its
operations.
They are set by the top management of the organisation.
There must be a time limit for the achievement of objectives.
These are expressed in quantifiable terms.
For e.g. increasing sales by 10%
Procedure
It is a stipulated sequence of a course of action for handling activities.
They are specified in chronological order.
Procedures are designed to execute policies and achieve objectives.
For example, the procedure may be for the purchase of raw material, selection of
employees, redressal of grievances, etc.
26. Controlling is a process under which:
(i) After setting the targets actual performance is compared with the standard or planned
performance.
(ii) This is done in order to identify the deviations or difference between the two.
(iii) Finally, the aim of doing controlling is to remove these deviations after identifying the
causes and taking action to correct or match the actual and planned performance.
OR
Controlling is the last step in the management process. When the staffing is done, the
employee controlling is helpful in evaluating their performance and trying to remove the
 flaws in their work, if we talk about motivation, their performance needs some additional
external push to get them working on a particular task. If your control over your employees is
good you can achieve the desired goals in minimal time.
27. a. Harmony Not Discord: The principle emphasises that there should be complete harmony
between the management and the workers. Management should share gains of the
company with the workers and workers should work hard and be willing to embrace
change for the good of the company. This requires 'Mental revolution' on the part of both
management and workers. Both management and the workers should transform their
thinking. Both should realise that they require one another. : Factory system of
manufacturing meant that managers worked as a connection between the owners and the
employees.
b. To achieve this state, Taylor called for Mental Revolution.
28. The assumptions of Maslow’s need hierachy theory are as follow:
1. People’s behaviour is based on their needs. Satisfaction of such needs influences their
behavior.
2. People’s needs are in hierarchical order, starting from basic needs to other higher level
needs.
3. A satisfied need can no longer motivate a person; only next higher level need can motivate
him.
4. A person moves to the next higher level of the hierarchy only when the lower need is
satisfied.
29. Regulatory Functions
i. Registration of brokers and sub brokers and other players in the market.
ii. Registration of collective investment schemes and Mutual Funds.
Development Functions
i. Training of intermediaries of the securities market.
ii. Conducting research and publishing information useful to all market participants.
30. a. The Right to information is being fulfilled by the directives of SEBI in the above
mentioned case.
According to the Right to information, the consumer has the right to get complete
information about the product that he/she may propose to buy including its contents, date
of manufacture and expiry, maximum retail price, quantity, directions for use etc.
Moreover, as per law, it is mandatory for the marketers to provide complete information
about the product/service to buyers.
 b. An analysis of marketing management has made it clear that consumer is a king pin in the
market. The producer should produce goods keeping in mind the requirements of
consumers and satisfy the consumer but it is observed that this obligation is neglected by
some businessmen and they are involved in the unfair practices such as supply of
substandard quality, adulteration etc. So there is need for consumer protection. Hence
consumer protection means protecting the interest of consumer.The importance of
consumer protection from businessmen's point of view is outlined below:
i. Long - term interest of business: In order to ensure long term interest of business it is
important that businessmen strive to earn profits only through consumer satisfaction.
This will not only ensure the survival of business but also lead to its growth in the
future.
ii. Business uses society's resources: Since a business employs society's resources to create
offerings so they need to safeguard the consumer's interests.
31. Staffing is referred as both line and a staff activity. Steps involved in the staffing process are:
Manpower Planning: The organization estimates the total manpower requirement by
considering all the departments of the organization. It is not only about the number of people
but also the type of people. Three steps are involved in manpower planning; a) Workload
analysis,b) Workforce analysis and c) Comparing both to find out requirement.
Recruitment: Recruitment refers to the process of inducing people to apply for the job. The
requirements can be fulfilled from inside the organisation by promotions and transfers. To
recruit people from outside the organisations contact various placement consultants or
advertise in the newspaper.
Selection: Selection refers to selecting the most suitable candidate to fill the vacant job
position. It involves test, interviews,etc. Selected candidates are less than the number of
rejected candidates, that's why this method is also called a negative process.
Placement and Orientation: Placement refers to occupying of the post for which he is
selected. Orientation refers to the introduction of new employee to the existing employees.
Induction: it is concerned with the process of introduction of a new employee to the
organization.
Training and development: To improve the competency of employees and to motivate them.
It is more accurately considered as a process of skill formation and behavioural change.
Performance appraisal: Promotion and Compensation are given on the basis of performance
appraisal.
OR
 No, I do not agree with this statement. Proper training is required to the workers because of
following reasons:
i. Addressing Weaknesses: Most employees have some weaknesses in their workplace
skills. A training program allows you to strengthen those skills that each employee needs
to improve
ii. Systematic learning: Training is a systematic learning which improves knowledge and
skills of employees. It helps in reducing the wastage of efforts and money.
iii. Higher profits: Training helps in increasing the efficiency and productivity of the workers
which lead to high quality products and higher profits.
iv. More efficient: Training makes the employee more efficient and more technical. They can
handle any machine easily. Thus, less prone to accidents.
v. Increases Morale of employees: Training increases the satisfaction and morale of
employees.
vi. Increased job satisfaction and morale among employees.
vii. Increases capacity to adopt new technologies and methods.
viii. Increases innovation in strategies and products.
32. Business Environment: It means sum total of all individuals, institutions and other forces that
are outside the control of business enterprise but that may affect its performance.
The importance of the business environment is highlighted by the following facts:
i. First Mover Advantage: The business environment provides many opportunities for the
firms to improve their performance. The firms which are able to scan these opportunities at
an early stage get maximum benefit and can leave their competitors behind.
ii. Warning Signal: Environment understanding helps an enterprise to recognize qualitative
information in advance, which can be used to prepare it for facing likely challenges.
iii. Tapping Useful Resources: Business requires many resources like raw materials, tools,
types of equipment, finance, labour etc. for performing business activities. These resources
are known as inputs. The business environment provides all these inputs to the business
firms for carrying out their activities and also expects something in return.
iv. Coping with Rapid Changes: The business environment is very dynamic. One can see
changes like new technologies, fragmented markets, more demanding customers, heavy
global competition and so on. Thus, in order to efficiently cope with these changes,
managers must understand the environment and should adopt appropriate courses of action
at the right time. It helps management become more sensitive to the ever-changing needs
of customers. As a result, they are able to respond to such changes effectively.
OR
 The various dimensions of business environment highlighted above are:
i. Legal Environment.
ii. Political Environment.
iii. Social Environment.
iv. Social Environment.
v. Economic Environment.
vi. Social Environment.
Since nothing is preventing the company legally, the decision is taken after taking into
consideration the social feelings of the people.
33. Decentralization is an optional policy but it increases the importance of a subordinate’s role.
It spreads the decision-making process to all the levels of management. It develops
managerial talent and facilitates growth by providing enough opportunities for all the
subordinates to show their decision-making ability. Decentralization must always be balanced
with centralization in areas of major policy decisions. The major policy decisions cannot be
totally decentralized as the onus of such decisions lies on the top-level management.
An organization may choose decentralization because of following reasons:
i. Develops initiative among subordinates: Decentralisation motivates lower level
employees to take decisions in favor of organization regarding the problems they face. It
promotes self-reliance and confidence among the subordinates and encourages them to
take initiative and show their talent and skills. When employees at the lower level get the
freedom to take their own decisions and to develop the solutions for the various problems
they encounter, they learn to depend on their own judgments and are always ready to
accept accountability of their decisions. Decentralization highlights those subordinates
who have talent and potential to become dynamic leaders.
ii. Develops managerial talent for the future: When authority is decentralized, employees
get a chance of using their own judgments. They learn and understand how to take
decisions in crunch situations. This leads to developing their managerial skills. They get
experience by completing the given tasks independently which help in the smooth
functioning of an enterprise. They get a chance to prove themselves for the managerial
positions. Thus, they develop as managerial talent for the future.
iii. Quick decision-making: In a way, the subordinates are independent to take their
decisions, therefore, their dependence on their superiors is no longer in the picture. They
take the decisions in no time if they believe that the decisions would be beneficial for the
organization.
 iv. Relief to top management: In the process of decentralization top-level managers are not
overburdened with the responsibilities and authority. Decentralization improves
managerial efficiency because managers get more time to concentrate on important matters
and in strategic planning and policy making. By empowering the employees, managers get
freedom from routine work and they get opportunities to explore new areas. However,
initially, the managers must decentralize only those tasks which are not of strategic
importance.
v. Facilitates growth: Decentralisation results in the growth and diversification of the
enterprise. It provides more freedom to the subordinates which motivate them to do the
work in an effective manner best suited for their department. As a result, each department
doing its best which help in increasing the productivity and organization is able to make
more returns which can be used for the expansion of the organization.
vi. Better control: Decentralisation provides better control because performance can be
evaluated at each level and the departments can be individually held accountable for their
results. It is the process of making subordinate accountable or answerable to the superior
for final results. It flows top to downwards i.e. subordinate is answerable or accountable to
his superior. A subordinate is fully answerable to his superior for the performance of the
task assigned to him. In no way, the subordinates must believe that their decisions will not
be questioned, and they will not be held accountable in case a decision backfires.
34. Following four functions of marketing have been highlighted in this paragraph:
i. Gathering and Analysing Market Information: It refers to the identification of
consumers requirements and their expectations so that various decisions relating to the
marketing of goods and services are taken successfully. (Before commencing her retail
trade of wheat, Suruchi gathered various information from the market and analysed the
same)
ii. Branding: It refers to the process by which special identity of the product is established.
(To have a distinct identity of her product from other competitors, Suruchi named it
Sharbati Healthy Food)
iii. Packing and Labelling: Packaging refers to those activities which are related to designing
and production of the containers in which the products are packed. Labelling refers to the
process of preparing a label. (Suruchi is doing the job of packaging and labelling)
iv. Pricing: It refers to all those decisions which are concerned with the price fixation of any
product or service. (Suruchi is taking all those decisions which are related to the fixation of
price of wheat)