Business Studies 66/5/3 2025-2026 Commerce (English Medium) Class 12 Question Paper Solution

Assertion (A): General forces such as social, political, legal and technological conditions affect an individual firm only indirectly.

Reason (R): General forces have an impact on all business enterprises, in contrast to, specific forces that affect individual firms directly and immediately in their day-to-day working.

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 (A).

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

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

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

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 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

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.

Right of an individual to command his subordinates and to take action within the scope of his position is known as ______.

Authority

Responsibility

Accountability

Delegation

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.

“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.

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

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.

‘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.’.

Differentiate between the money market and the capital market.

State the protective functions of the Securities and Exchange Board of India.

Explain the following point of importance of coordination:

Growth in size

Explain the following point of importance of coordination:

Specialisation

Explain the following technique of scientific management:

Fatigue Study

Explain the following term/concept.

Motion Study

State any three features of ‘Demonetization’.

State any four functions performed by middle level managers.

Rishabh purchased a car for ₹ 8,00,000. He insured the car on the same day from Alex Insurance Company. Rishabh’s car was stolen in Kedwan while he was on vacation with his family. He promptly filed a First Information Report (FIR), informed the insurer and submitted all the required documents.

To Rishabh’s shock, the insurance company rejected his claim, alleging he had failed to take due care and had parked the car in an unsafe manner. Determined to challenge this, Rishabh wrote multiple letters to the insurance company, but the insurance company refused to pay the compensation.

Rishabh filed a case with District Commission. The District Commission was satisfied with the genuineness of the complaint and ordered the insurance company to pay a reasonable amount.

Identify and explain two consumer rights which have been exercised by Rishabh.

Hitesh started a garment manufacturing company recently. However, he soon began facing several problems like targets not met, conflicts among managers, high labour turnover, etc. He hired a management consultant to find out what was going wrong. The consultant conducted investigations and gave the following observations:

1. In Production Department, workers were receiving instructions from both, the Production Manager and the Marketing Manager. As a result, there was a lot of confusion regarding tasks to be done.
2. Promotions were given only to women employees. Other employees did not get equal opportunities in the company to rise.

Identify and explain the two principles of management given by Fayol which are not being followed in Hitesh’s company.

The students of class 11 of ‘AL Public School’ decided to host a farewell party to students of class 12. A core team was formed that brainstormed and identified various activities that needed to be performed for the same. It was decided that the arrangements for refreshments, sound and music, tentage, gifts, invitations and cultoural programme are required to be made. The students then divided the work into manageable activities so that duplication is avoided and burden of work is shared.

The students were excited that they were managing the whole event themselves.

1. The students of class 11 have performed one of the steps in the process of organising. Identify the step.
2. State the next three steps that the students need to perform to complete the process of organising successfully.

‘Ratan Ltd.’ and ‘Lara Ltd.’ are two companies, each with a capital employed of 20,00,000. Ratan Ltd.’ had raised funds by issuing shares whereas Lara Ltd.’s’ capital has 60% equity (in shares of 100 each) and 40% debt (comprising of 8% debentures). Both the companies have a Return on Investment of 10% and the tax rate is 40%.

State with reason which company will be able to give a better return to the shareholders. Show your calculations clearly.

‘Novel Stores’ is a chain of grocery stores that has built its reputation on customer satisfaction. It is known for its high-quality products, including a wide variety of bakery, dairy products and ready-to-cook meal kits, etc. catering to diverse customer needs. The store regularly takes feedback from the customers and stocks items accordingly.

The store is popular among the customers for its attractive schemes such as ‘buy one get one free’ offers and weekly discounts, etc. which are advertised on its website.

Once the goods are manufactured, packaged, branded and promoted, ‘Novel Stores’ ensures that they are made available to customers at the right place, in the right quantity and at the right time. Customers can place orders online and choose to get them delivered at their home or pick them up from the store at a selected time. As a result, the revenues of ‘Novel Stores’ are growing every year and profits are increasing.

Identify and explain the elements of marketing mix highlighted in the above case.

Explain any two points highlighting the importance of ‘controlling’ function of management.

Explain briefly any three semantic barriers to communication.

‘Yummi Foods’, a fast-growing snacks chain has been in business for the last 13 years. Realising that there is a growing demand for nutritious food, the company planned to enter the healthy snacks segment. They decided to hire a Marketing Manager with an experience in this segment. For this, they gave an advertisement in a leading newspaper and received more than 200 applications.

The Human Resource Manager carefully went through all the application forms and removed the application forms of those applicants who did not meet the basic qualifications. Short introductory interactions were also held to filter out candidates who did not match the job requirements. The shortlisted candidates were then asked to take a test designed to measure their intelligence, personality traits, etc. Candidates who performed well in the test were invited for a formal in-depth conversation to be evaluated on their suitability for the job. A job offer was made to a candidate for the role of a Marketing Manager through an appointment letter mentioning the joining date.

But before the job offer was made, ‘Yummi Foods’ had performed three steps in the process of selection which are not mentioned above.

Identify and explain the steps.