Business Studies 66/5/1 2025-2026 Commerce (English Medium) Class 12 Question Paper Solution

The top management of a smartphone manufacturing company recently observed that the government has ordered new safety standards for batteries used in smartphones to prevent overheating. It also noticed that the government announced a reduction in import duties on components used in mobile phones.

The dimensions of business environment highlighted in the above case are:

Technological and legal environments

Political and technological environments

Legal and social environments

Political and legal environments

‘Tangy Beverages Ltd.’ was known for its popular tangy fruit drinks. It had recently introduced a new range of fruit drinks that became an instant hit among consumers and led to a significant increase in the company’s profits. As a result, the Board of Directors wanted to declare a higher dividend for the year. The Chief Finance Officer suggested that they should evaluate the impact of dividend on the share price of previous years before taking a decision. An analysis was done, which showed how the company’s share price had risen in previous years whenever the dividend was increased. On the other hand, even a small decrease in dividend had led to a noticeable dip in the share price.

Which of the following factors affecting dividend decision was suggested by the Chief Finance Officer to the Board of Directors in the above case?

Access to capital market

Stock market reaction

Shareholders preference

Cash flow position

One of the factors affecting price determination of a product is ‘Pricing Objectives’. Which of the following pricing objectives will result in a higher price being fixed for the product?

Obtaining market share leadership

Surviving in a competitive market

Attaining product quality leadership

Profit maximisation in the long run

“The application of principles of management is dependent upon the prevailing situation at a particular point of time.” This statement highlights which of the following features of principles of management?

General guidelines

Flexible

Mainly behavioural

Contingent

‘Renew Ltd.’ was the pioneer in the Electric Vehicles segment and presently has 70% market share. Keeping in mind the rapidly increasing demand for Electric Vehicles due to the rising environment consciousness among people and lower operating costs, the company set a target to increase its market share to 80% in the current year. However, the incentives provided by the government to encourage manufacturing of Electric Vehicles attracted many new players in the market. As this change in the business environment happened suddenly, the company was not able to accurately assess future trends. As a result, the market share of ‘Renew Ltd.’ fell from 70% to 55% in the current year.

Which limitation of planning has been discussed in the above case?

Planning may not work in a dynamic environment

Planning leads to rigidity

Planning does not guarantee success

Planning involves huge costs

Which of the following statements is incorrect with reference to Maslow’s Need Hierarchy Theory of motivation?

People’s behaviour is based on their needs.

Рeople’s needs are in hierarchical order, starting from basic needs to other higher level needs.

Only a satisfied need can motivate a person.

A person moves to the next higher level of the hierarchy only when the lower need is satisfied.

Which of the following is not a factor affecting capital structure of a company?

Cash flow position

Return on investment

Financing alternatives

Stock market conditions

Identify the shift in the marketing management philosophy from Picture I to Picture II.

From Production concept to Product concept

From Production concept to Societal marketing concept

From Societal marketing concept to Production concept

From Product concept to Production concept

‘Deccan Motors Ltd.’ is a renowned name in the automobile sector in India. It deals in both commercial vehicles like bus, truck and lorries, as well as passenger vehicles like cars, scooters, etc. It presently has a functional organisational structure. The Board of Directors have now decided to shift to divisional structure, with separate divisions for commercial vehicles and passenger vehicles.

Identify the benefit the company will get as a result of shifting to divisional structure:

It will promote flexibility and initiative because each division will function as an autonomous unit.

It will lead to minimal duplication of effort, which will result in economies of scale.

It will make training of employees easier as the focus will be on limited range of skills.

It will lead to occupational specialisation since emphasis will be placed on specific functions.

Obligation of a subordinate to properly perform the assigned duty is known as ______.

Delegation

Acсountability

Responsibility

Authority

A software company wants to expand its business. For this, a it requires large number of fresh graduates with innovative ideas in the field of Artificial Intelligence and Data Analytics. The existing staff members do not possess these specialized skills, so a notice was put up at the reception of the office asking the present employees to introduce any friend or relative who could possibly be possessing the required skills for the jobs.

The source of recruitment that has been used by the software company is:

Direct Recruitment

Recommendation of employees

Transfer

Promotion

Read the following statements carefully:

Statement I: The entry to a profession is not restricted either through an examination or through acquiring an educational degree.

Statement II: There is no restriction on anyone being designated or appointed as a manager in any business enterprise irrespective of the educational qualifications possessed.

In the light of the given statements, choose the correct alternative from the following:

Statement I is true and Statement II is false.

Statement I is false and Statement II is true.

Both Statement I and Statement II are true.

Both Statement I and Statement II are false.

A leading newspaper company noticed that many of its talented editors were resigning despite being paid competitive salaries. On conducting an internal survey, it was revealed that employees were dissatisfied as they were not being offered benefits over and above the salary, like the employees of other competitive firms. Realising that such additional benefits play an important role in motivating employees, the management decided to provide car allowance, housing facilities, medical benefits, etc. to retain employees in the organisation and improve their satisfaction.

Identify the incentive that the newspaper company decided to provide to their employees:

Bonus

Retirement benefits

Perquisites

Profit sharing

Match the type of plan given in Column - I with its meaning in Column - II:

Choose the correct alternative from the following:

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

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

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

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

The purpose of opening a Demat Account with a Depository Participant (DP) is ______.

For holding and transferring securities in the Demat form

For entering into an agreement with broker

For making payment to stock exchange for any purchase of securities

For enabling cash transactions in the securities market

The step of the staffing process in which an employee’s current and/or past performance is evaluated against certain pre-determined standards is ______.

Placement and orientation

Performance appraisal

Promotion and career planning

Recruitment

Which of the following will require higher working capital?

Trading organisations

Short processing cycles

High level of competition

Strict credit policy towards debtors

Read the following statements carefully:

Statement I: In democratic leadership style, the followers are given a high degree of independence to formulate their own objectives and ways to achieve them.

Statement II: In autocratic leadership style, communication is only one-way, with the subordinates only acting according to the command given by their managers.

In the light of the given statements, choose the correct alternative from the following:

Statement I is true and Statement II is false.

Statement I is false and Statement II is true.

Both Statement I and Statement II are true.

Both Statement I and Statement II are false.

Assertion (A): The investing public gets a safe and fair deal on the stock market.

Reason (R): The membership of stock exchange is well regulated and its dealings are well defined according to the existing legal framework.

Choose the correct alternative from the following:

Both Assertion (A) and Reason (R) are correct and Reason (R) is the correct explanation of Assertion (A).

Both Assertion (A) and Reason (R) are correct, but Reason (R) is not the correct explanation of Assertion (А).

Both Assertion (A) and Reason (R) are incorrect.

Assertion (A) is correct, but Reason (R) is incorrect.

‘Premier Ltd.’ is a clothing company known for its high quality apparel and strong commitment to environment sustainability. The company designs its clothing after carefully understanding the needs of its present and prospective buyers and satisfying them in an effective manner. It assumes that profit can be maximised only when all decisions are taken from the point of view of customer satisfaction. Along with meeting customer needs, ‘Premier Ltd.’ also shows a deep concern for the long-term well-being of the society. To reduce environmental pollution, the company is using organic cotton and recycled polyester. For reducing waste, they run a programme where customers can return old clothes for recycling and get a discount on new clothes. Not only this, they keep aside a portion of its profits for environmental education programmes in local schools.

Identify and explain two marketing management philosophies followed by ‘Premier Ltd.’.

State any three points of importance of financial planning.

State any three factors that determine the requirement of fixed capital of a company.

‘DF Telecom Ltd.’, which produces a range of mobile phones for the Indian market, set a target to produce 30,000 units of mobile phones in the month of December 2025. This was the benchmark against which actual performance would be measured. At the end of the month, it was found that only 27,000 units were produced.

Concerned with the shortfall, the General Manager asked the Production Manager to find out and resolve the problem.

State the steps related to the process of one of the functions of management which the Production Manager has to take to find out and resolve the problem.

Differentiate between the money market and the capital market.

State any three Development functions of Securities and Exchange Board of India.