2nd PUC Business Studies Model Question Paper 4 with Answers

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Karnataka 2nd PUC Business Studies Model Question Paper 4 with Answers

Time: 3.15 Hours
Max Marks: 100

Instructions :

1. Write the serial number of questions properly as given in the question paper while answering.
2. Answer for a question should be continuous.

Section – A

I. Answer ALL the questions. Each question carries one mark. 10 x 1 = 10

Question 1.
What is the essence of management?
Answer:
Coordination is the essence of management.

Question 2.
Who proposed mental revolution?
Answer:
F W Taylor

Question 3.
Which of the following does not characterize the business environment?
a. Uncertainty
b. Employees
c. Relativity
d. Complexity
Answer:
b. Employees

Question 4.
What is planning?
Answer:
Planning is deciding in advance what to do and how to do.

Question 5.
Which of the following is not an element of delegation?
a. Accountability
b. Authority
c. Responsibility
d. Informal Organisation
Answer:
d. Informal Organisation.

Question 6.
Which of the following is on-the-job method of training?
a. Case Study
b. Coaching
c. Vestibule Training
d. Computer
Answer:
b. Coaching

Question 7.
The process of converting the message into communication symbols is known as
a. Media
b. Encoding
c. Feedback
d. Decoding
Answer:
b. Encoding

Question 8.
Expand PERT
Answer:
Program Evaluation and Review Technique

Question 9.
A fixed asset should be financed through
a. a long term liability
b. a short term liability
c. a mix of long and short term liabilities
d. none of the above a.
Answer:
a long term liability

Question 10.
The settlement cycle in NSE is
Answer:
T + 2

Question 11.
What is packaging?
Answer:
Packaging refers to designing and developing the package for the products.

Question 12.
What is the monetary limit of claim in National Consumer Disputes Redressal Commission?
Answer:
The National Commission is empowered to receive such complaints where the value of goods or services and the compensation claimed is exceeding one crore rupees.

Question 13.
What is Entrepreneurship?
Answer:
Entrepreneurship is the process of setting up one’s own business as distinct from pursuing any other economic activity.

Section – B

II. Answer any ten of the following questions in two or three sentences each. Each question carrier two marks: 10 x 2 = 20

Question 14.
Define Management.
Answer:
According to Harold Koontz, “Management is the process of designing and maintaining an environment in which individuals, working together in groups, efficiently accomplish selected aims”.

Question 15.
State any two differences between Unity of Command and Unity of Direction.
Answer:

Unity of Command	Unity of Direction
This principle advocates that there should be only one boss for every individual employee.	This principle advocates that all units of an organization should be moving towards the same objectives of the organization.
This principle is related to the people and their relationship in the organization.	This principles relates to the work and the direction of the work towards the objectives of the organization.

Question 16.
What is Globalization?
Answer:
Globalization means the integration of the various economies of the world leading towards the emergence of a cohesive global economy.

Question 17.
Give the meaning of Program.
Answer:
Programmes are detailed statements about a project which outlines the objectives, policies, procedures, rules, tasks, human and physical resources required and the budget to implement any course of action. Programmes will include the entire gamut of activities as well as the organization’s policy and how it will contribute to the overall business plan.

Question 18.
Define Organising.
Answer:
According to Henry Fayol,” To organize a business is to provide it with everything, useful to its functioning raw materials, machines, tools, capital and personnel”.

Question 19.
What is recruitment?
Answer:
Recruitment is a process of finding suitable applicants for employment.

Question 20.
Write any two features of leadership.
Answer:

• Leadership indicates ability of an individual to influence others.
• Leadership tries to bring change in the behavior of others.

Question 21.
Give the meaning of Budgetary Control.
Answer:
Budgetary control is a technique of managerial control in which all operations are planned in advance in the form of budgets and actual results are compared with budgetary standards.

Question 22.
What do you understand by Trading on Equity?
Answer:
Trading on Equity refers to the increase in profit earned by the equity shareholders due to the presence of fixed financial charges like interest.

Question 23.
What do you mean by consumer goods? Give an example.
Answer:
Products which are purchased by the ultimate consumers for satisfying their personal needs and desires are referred to as consumer products. Example: soap, textiles etc.

Question 24.
Mention any two people who can file a complaint before the appropriate consumer forum?
Answer:

• A Consumer
• Any Registered Consumer Association

Question 25.
Expand KASH as explained in the context of Entrepreneurship.
Answer:
K = Knowledge
A = Attitude
S = Skills
H = Habits

Section – C

III. Answer any seven of the following questions in 10 – 12 sentences. Each question
carrier 4 Marks : 7 x 4 = 24

Question 26.
Describe Co-ordination . Explain the characteristics of coordination.
Answer:
Co-ordination is the process of integrating the individual and group efforts in pursuit of common goals.Coordination is the essence of Management. Its main features include:

• Coordination integrates group efforts: Coordination unifies unrelated interests into purposeful work activity. It provides common direction to ensure the work to be performed is done in accordance to the plans and schedules.
• Coordination ensures unity of action: the purpose of coordination is to secure unity of action to achieve common organisational goals. It acts as the binding force between various departments.
• Coordination is a continuous process: Coordination is an on going process. It begins with planning and continues till controlling. It is not a one time function.
• Coordination is an all pervasive function: Coordination is required at all levels of management because these is interdependence among various activities performed by various departments. Coordination integrals the efforts of different departments and at different levels. If coordination is absent, it results in overlapping of activities. Hence it is an all pervasive function.

Question 27.
Explain the Principles of Management contributed by F.W. Taylor?
Answer:
Scientific management refers to the use of scientific and standardized tools, methods and trained workers in all organisational activities in order to increase the total production with minimum cost and wastage. Following are the principles conventicle management contributed by FW Taylor.

(i) Science not Rule of Thumb : Taylor was the first person to introduce the method of scientific inquiry into the domain of management practice. He believed that there was only one best method to maximise efficiency i.e.. by scientific way Scientific management includes scientific selection of workers, placement and training, work study motion study fatigue study, time — study, gradation of equipments and machinery, payment to wages according to work done etc.

(ii) Harmony. Not discord: There should be harmonious relationship between management and workers. Both should realise that each one is important This avoids class—conflict.To achieve this, Taylor introduced mental revolution. Both management and workers should transform their thoughts in order to achieve harmonious relationship amongst them.

(iii) Cooperation, Not individualism : There should be complete cooperation between the labour and the management instead of individualism. Competition should be replaced by cooperation. Both should realise that they need each other. To achieve this fact, the management should consult their employees while taking important decisions. There should be a two way communication between management and workers. According to Taylor, there should be almost equal division of work and responsibility between workers and management.

(iv) Development of each and every person to his or her greatest efficiency and prosperity: Industrial efficiency depends on personnel competences. According to Taylor, efficiency could be achieved from the beginning i.e., from the time of selection of employees. Each person must be scientifically selected. Work should be assigned according to his mental and intellectual capabilities Proper training should be given to improve his/her skill. This will contribute to their greatest efficiency and prosperity for both organisation and workers.

Question 28.
Explain the importance of planning with any four points.
Answer:
Planning is very important as it tells us where to go; it provides direction and reduces the risk of uncertainty by preparing forecasts. The importance of planning is explained as follows:

a. Planning provides direction: Planning provides direction for action. Planning ensures that the goals are clearly stated so that they act as a guide for deciding what action should be taken and in which direction. Planning ensures coordination in the work of individuals and various departments of the organization.

b. Planning reduces the risk of uncertainty: Planning is an activity which enables a manager to look ahead and anticipate changes. By deciding in advance, the tasks to be performed, planning shows the way to deal with changes and uncertain events. Changes cannot be eliminated but they can be anticipated and managerial responses to them can be developed.

c. Planning reduces overlapping and wasteful activities: Planning serves as the basis of coordinating the activities and efforts of different divisions, departments and individuals. It helps in avoiding confusion and misunderstanding. Planning ensures clarity in thought and action, work is carried on smoothly. It helps to detect the inefficiency and unwanted repetition in work and to take corrective measures to minimize the wasteful activities.

d. Planning promotes innovative ideas: Planning is the first function of management. New ideas can take the shape of concrete plans. Planning is basically the thinking function of management. It encourages the managers for innovative and creative thinking. Thus, planning helps the managers to be more creative and innovative in shaping new courses of action.

e. Planning facilitates decision making: Planning helps the manager to look into the future and make a choice from amongst various alternative courses of action. Decision making is a process of selecting the best course of action from various available alternatives after evaluating each one of them.

f. Planning establishes standards for controlling: Planning facilitates control. It determines goals and standards forevery individuals and departments ofthe organization. This makes it easy to compare the actual performance of the individuals and departments with the standards fixed. In case, there are deviations, corrective measures are taken to remove them. Thus, planning is a prerequisite of controlling.

Question 29.
Explain the steps in the process of organising.
Answer:
The following are the steps in the process of organizing:
a. Identification and Division of work: The process of organizing starts with the identification and division of work. The work is divided into manageable activities so that duplication of work can be avoided. The burden of work can be shared among the employees.

b. Departmentalization l It refers to the process of grouping the activities of similar nature under same departments. This helps specialization and co-ordination. Departments can be created generally on the following basis:

• On the basis of function
• On the basis of type of product manufactured
• On the basis of territory

c. Assignment of duties: it is necessary to define the work of different job positions and allocate the work accordingly to various employees. Once departments are formed, it is necessary to assign the work to the employees according to their skill and competence. It is essential that a balance is created between the nature of the job and the ability of the employee.

d. Establishment of reporting relationships: Mere allocation of work is not enough. Each individual should know from whom he has to take orders and to whom he is accountable. The establishment of such clear relationship helps to create a hierarchal structure and helps in co-ordination among various departments.

Question 30.
Explain any four types of tests used for selection of employees.
Answer:
After screening the applications, eligible candidates are asked to appear for selection tests. The following tests are usually conducted to measure the intelligence, aptitude. proficiency personality etc,

a. Intelligence tests: These tests are used to judge the mental capacity of the applicant.Intelligence tests evaluate the ability of an individual to understand instructions and make decisions.

b. Aptitude tests: Aptitude means the potential which an individual has for learning new skills Aptitude test indicate the person’s capacity and his potential for development.

c. Trade or proficiency tests: These tests are designed to measure the skills already acquired by the individuals. They measure the level of knowledge and proficiency in the area of profession or technical training.

d. Personality tests: These tests probe be the overall qualities of a person as a while. They provide clues to a person’s emotional reactions, maturity level, value system etc.

e. Interest tests: These tests identify the areas in which a candidate has special concern, fascination; involvement etc. These tests suggest the nature of job liked by a candidate which may bring him job satisfaction.

Question 31.
Explain briefly any four points which emphasise the importance of Directing.
Answer:

• Initiating action: Directing helps to initiate action by people in the organization towards attainment of desired objectives.
• Integrates efforts of the employees: Directing integrates employees efforts in the orginization in such a way that every individual effort contributes to the organizational performance.
• Guidance to Employees: Directing guides employees to fully realize their potential and capabilities by motivating and providing effective leadership.
• Facilitates charges: Directing facilitates introduction of needed changes in the organization. Generally, people are resistance to change. Directing, through effecting motivation, communication and leadership helps to reduce such resistance and develop required cooperation among the people in the organization.

Question 32.
Explain briefly any four points on the importance of financial planning.
Answer:
The importance of financial planning can be explained as below:
a. Means to face uncertainty: Financial Planning is a tool to face uncertainties. It helps in forecasting different business situations and develops alternative financial plans to meet different situations. This makes the business better prepared to face the future.

b. Ensuring sufficient funds: Financial planning avoids the situations of both surplus and shortage of funds and thereby ensures optimum funds.

c. Ensuring liquidity: Financial planning would ensure liquidity of funds throughout the year for meeting various financial commitments, and thereby, would create confidence in the minds of the suppliers of funds to the enterprise.

d. Elimination of waste: Good financial planning, through proper financial policies and procedures would contribute to the elimination of wastes resulting from complexity of operations and lack of coordination among the various functions of the enterprise.

Question 33.
Explain any four methods of floating new issues in the primary market.
Answer:
There are various methods of floating new issues in the primary market which are as follows:

1. Offer through Prospectus: it is the most popular method of raising funds by the public companies in the primary market. This involves inviting subscription from the public through the issue of prospectus.

2. Offer for Sale: Under this method, securities are not issued directly to the public but are
offered for sale through intermediaries like issuing’houses or stock brokers. In this case, a company sells securities en bloc at an agreed price to brokers who, in turn, resell them to the investing public.

3. Private Placement: It is the allotment of securities by a company to institutional investors and some selected individuals. It helps to raise capital more quickly than a public issue. As the primary market can be expensive, some companies choose to use private placement.

4. Rights Issue: This is a privilege given to existing shareholders to subscribe to a new issue of shares according to the terms and conditions of the company. The shareholders are offered the right to buy new shares in proportion to the number of shares they already possess.

5. E-IPOs: A company proposing to issue capital to the public through the on-line system of the stock exchange has to enter into an agreement with the stock exchange which is known as IPO (Initial Public Offer). The lead manager coordinates all the activities amongst intermediaries connected with the issue.

Question 34.
Explain briefly the elements of marketing mix.
Answer:
Marketing mix is described as the set of marketing tools that a firm uses to pursue its marketing objectives in a target market. This term ‘marketing mix’ is given by Neil Il Borden. It refers to aggregate of strategies formulated to achieve various marketing objectives. Marketing mix is the combination of four inputs that revolve around the consumer satisfaction as the focal point. These four element are product, price, promotion and the place physical distribution.

These elements are popularly known as 4 Ps of marketing.

Element of marketing mix:

The marketing mix consists of various elements, which have been broadly classified into four categories popularly known as four Ps of marketing which are as follows:
i. Product mix : Product means anything of value’ which is offered to the market for sale.Product is one of the main elements of marketing mix. In marketing terms, product refers to anything that satisfies the needs of the consumers. It may be a good, a service or an idea. The product mix has the following important components: Brand, Style, colour, design, product line, Package, warranty etc. The concept of product also include the extended product or what is offered to the customers by way of after sale services, handling complaints, availability of spare parts etc

ii. Price mix : Price represents the value of a product expressed in terms of money it is the amount of money customers have to pay to obtain the product. The price mix is concerned with fixing a reasonable price to the product or services that covet’s the cost and distribution expenses as well gets reasonable profits to the manufacture. The basic variables related to price mix include pricing strategy, pricing policy, credit terms. discounts, allowances etc,

iii. Promotion mix : Promotion of product and services include activities that communicate availability, features, merits etc, of the products to the target customer and persuade them to buy it. The promotion mix includes personal selling, publicity, advertising and sales promotion. Most marketing organisations, undertake various promotional activities and spend money on the promotion of their goods using promotional tools such as advertising, personal selling etc, the success of a market offer will depend on how well these ingredients are mixed to create superior value for the customers and also achieve their sale and profit objective.

iv. Place : Place or physical distribution include activities that make firm’s products available to the target customers. It is concerned with making available of the goods and services at right time, at right place, in right quantity. It enables for the smooth flow of goods and services from the producers to the customers. It creates place, time and possession utilities. The place mix includes distribution channels like agents, wholesalers retailers etc. and physical distribution which includes transport, warehousing, inventory etc.

Conclusion: The process of marketing involves creating a market offering, to satisfy the needs and wants of the present and potential buyers. From a number of alternatives available a firm chooses a particular combination to develop a market offering the combination of variables chosen by a firm to prepare its market offering is called as marketing mix.

Question 35.
Bring out the differences between entrepreneurship and management.
Answer:

Entrepreneurship	Management
The focus is on business start-up	The focus is on ongoing operations of an existing business
The entrepreneur does not feel constrained by resource. Entrepreneur mobilises the resources.	A manager is constrained by the resources at his disposal.
The approach to the task is informal.	The approach to the task is formal.
The primary motive is achievement.	The primary motive is power
The status of ah entrepreneur is that of the owner.	The status of an entrepreneur is that of the employee.
Profit is the primary economic reward.	Salary is the primary economic reward.
He is the risk-taker.	He is generally risk-averse.
Generally related to small scale of business operations.	Generally related to large scale of business operations,
He is a generalist.	He is a specialist.

Section – D

IV. Answer any four of the following questions in 20 – 25 sentences each. Each question
carrier 8 marks: 4 x 8 = 32

Question 36.
Explain the nature of principles of management.
Answer:
Principles are general propositions, which are applicable when certain conditions are present. Thus, principles are developed on the basis of observation and experimentation as well as personal experiences of the managers.

The following points summarise the nature of principles of management:

i. Universal Applicability: The principles of management are applicable to all types of organisations, business as well as non-business, small as well large, public sector as well as private sector, manufacturing as well as the services sectors. However, their extent of their applicability varies with the nature of the organization, business activity, and scale of operations and so on. Thus, the principles of management are universally applicable.

ii. General Guidelines: The principles are guidelines to action but do not provide ready made 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.

iii. Formed by practice and experimentation: The principles of management are formed by experience and collective wisdom of managers as well as experimentation.

iv. 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.

v. Mainly behavioral: Management principles aim at influencing behaviour of human beings. Therefore, principles of management are mainly behavioral in nature. These principles enable a better understanding of the relationship between human and material resources in accomplishing organizational purposes.

vi. Cause and Effect relationship: 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.

vii. Contingent: The application of principles of management is contingent or dependent upon the prevailing situation at a particular point of time. The application of principles has to be changed as per requirements.

Nature of Principles of Management

Conclusion: Principles of management are guide lines to action. They denote a cause and effect relationship. While functions of management, namely, planning, organising, staffing, directing and controlling are the actions to be taken while practicing management, principles help managers to take decisions while performing these functions.

Question 37.
Explain with examples, the various dimensions of business environment.
Answer:
Dimensions of business environment include economic, social, technical, logical, political and legal conditions which are considered relevant for decision-making and improving the performance of an enterprise.

(a) Economic Environment: Interest rates, inflation rates, changes in disposable income of people, stock market indices and the value of rupee are some of the economic factors that can affect management practices in a business enterprise.

(b) Social Environment: The social environment of business include the social forces like customs and traditions, values, social trends, society’s expectations from business etc.,Values refer to concepts that a society holds in high esteem. In India, individual freedom, social justice, equality of opportunity and national integration are examples of major values cherished by all of us. Social trends present various opportunities and threats to business enterprise.

(c) Technological Environment: This includes forces relating to scientific improvements and innovations which provide new ways of producing goods and services and new methods and techniques of operating a business. This technological advancement creates shifts in demand and also has been responsible for creating new business.

(d) Political Environment: Political environment include political conditions such as general stability and peace in the country and specific attitudes the elected government representatives hold towards business. If political unrest prevails, there may be uncertainty of business activities. Political stability builds up confidence among business people to invest in the long term projects and assist in the growth of the economy.

(e) Legal Environment: Legal environment includes various legislation passed by the Government administrative orders issued by government authorities, court judgements, decisions given by various commissions and agencies at every level of the government Centre, state or local. An adequate knowledge of rules and regulations framed by the Government is a prerequisite for better business performance.

Question 38.
Explain any four types of plans.
Answer:
In order to accomplish the targets, the management of a business organization chalks out different types of plans. The important types of plans are explained below:

Types of plans
1. Single-use plans: A single-use plan is developed for a one-time event or project. The examples are

• Budgets
• Programmes
• Projects

2. Standing Plans: A standing plan is used for activities that occur regularly over a period of time. The examples are

• Policies
• Procedures
• Methods
• Rules

3. The other plans Include strategies and objectives.

Brief explanation of the various types of plans are as follows:

1. Objectives:

• Objectives are the end points towards which the activities of an organization are directed. They are said to be the desired future position that the management would like to reach.
• Objectives are very basic to the organization which the organization wants to achieve by its operations.
• Objectives are set by the top management. They lay down guidelines for the activities and serves as a bench mark for measuring the performance of an organization.
• Objectives need to be expressed in specific terms. They should he expressed in quantitative and measurable terms. They are also to he put in the form of written statements and they represent the desired results to be achieved in a given period.

2. Strategies:

• A strategy provides the broad contours of an organization’s business.
• Strategies are the specific programmed of action [or achieving the objectives o the organization by employing the organizations resources efficiently and effectively.
• A strategy is a comprehensive plan which acts as a guideline to handle specific problems.
• Major strategic decisions will include decisions like whether the organization will continue to be in the same line of business, or combine new lines of activity with the existing business or seek to acquire a dominant position in the same market.

3. Policy:

• Policies are general statements that guide thinking.
• Policies provide a basis for interpreting strategy.
• Policy is a guide to managerial action and decision in the implementation of strategy

Strategies are formulated by the top management. Formulation of strategy involves the following aspects:

• Determination of the long term objectives
• Adopting a course of action to achieve the objectives and
• Allocating resources necessary to achieve the objectives.

4. Procedure: Procedures are routine steps on how to carry out activities. They detail the exact manner in which any work is to be performed. Procedures are the guidelines to action and they are usually intended to the works which are repetitive in nature. Examples of procedure include procedure for execution of the customer’s order for supply of goods and procedure for recruitment of employees in an organisation.

5. Methods: Methods provide the prescribed ways in which a task has to be performed considering the objective. It deals with a task comprising one step of a procedure and specifies how this step is to be performed. Method has a limited scope compared to the procedure. Examples of methods include training the employees under off the job training method. remunerating the sales men under bonus and commission method etc.

6. Rules: Rules are specific statements that inform what is to be done. Every organization likes to operate in an orderly way. For this purpose it is necessary for the business organization to lay down certain rules.

Rules are the specific statements which prescribe the code of behavior to the people of an organization. Rules are rigid. Their violation attracts penalty and disciplinary action. An example of a rule is ‘wear identity cards compulsorily at the work placet.

7. Programmes : Programmes are detailed statements about a project which outlines the objectives, policies, procedures, rules, tasks, human and physical resources required. A program is a precise plan which lays down the operations to be carried out to accomplish a given task within a specified period of time. Programmes are framed for the works which are non – repetitive in nature. An example for a programme includes sale of 5000 cars in the month of March, 2019.

8. Budget: Budget is a statement of expected results expressed in numerical terms.
Budget is a plan which expresses the future facts and figures in quantitative terms for a specified period.
Budget is considered a control device. An example for a budget is a sales budget which forecasts the sales of different products in each area for a particular period.

Conclusion: The success of the business depends to a large extent on the effective planning. Thus, the logical and scientific planning must go through the above steps.

Question 39.
Explain the stages in staffing process.
Answer:
Following are the steps involved in Staffing Process:

• Estimating the manpower requirements! Man Power Planning:
• Recruitment
• Selection
• Placement and Orientation
• Training and Development
• Performance appraisal(Evaluation)
• Promotion and Career Planning
• Compensation (Wage and Salary administration)

1. Man power Planning: It is the estimation of human resources required by an organization. Its main focus will be on getting right number of qualified people at the right time. While estimating the man power requirement, the management generally keeps in mind, the available infrastructure including the technology, production schedule, market
fluctuation, demand forecasts. etc.

2. Recruitment: It is the process of finding the candidates for employment and motivating them to apply for the jobs in the organization.

3. Selection: It is a process of choosing the best candidate from the large pooi of applicants. It aims at finding the right person for the right job.

4. Placement: It is a process of assigning job to the selected candidates. Assigning jobs to employees may involve a new job or different job. it also includes assignment of job to a new employee, transfer, promotion and also demotion of existing employee. Placement involves striking a fit between the requirements of a job and the qualifications of a candidate.

5. Orientation: It is a process of introducing the selected employee to other employees and familiarizing him with the rules and policies of the organization. This process will help the new entrants to know about their superiors, subordinates, colleagues and about the organization.

6. Training: Training is the process which is under taken to increase the knowledge and skills of an employee to perform the present job accurately.

7. Development: It refers to the process of not only building up the skill and abilities for specific purpose, but also the overall competence of managerial executives to undertake more difficult and challenging tasks. Development refers to the training of managers and executives.

Question 40.
What is stock exchange? Explain the functions of stock exchange.
Answer:
Stock Exchange means any body of individuals, whether incorporated or not, constituted be the purpose of assisting, regulating or controlling the business of buying and selling or dealing in securities.

The following are the important functions of stock exchange:

i. Providing liquidity and marketability to existing securities: The basic function of a stock exchange is the creation of a continuous market where securities are bought and sold. It gives investors the chance to dis invest and reinvest. This provides both liquidity and easy marketability to already existing securities in the market.

ii. Pricing of Securities: share prices on a stock exchange are determined by the forces of demand and supply. A stock exchange is a mechanism of constant valuation through which the prices of securities are determined. Such a valuation provides important instant information to both buyers arid sellers in the market.

iii. Safety of Transaction: The membership of a stock exchange is well regulated and its dealings are well defined according to the existing legal framework. This ensures that the investing public gets a safe and fair deal on the market.

iv. Contributes to Economic Growth: A stock exchange is a market in which existing securities are resold or traded. Through this process of disinvestment and reinvestment, savings get channelized into their most productive investment avenues. This leads to capital formation and economic growth.

v. Spreading of Equity Cult: The stock exchange can play a vital role in ensuring wider share ownership by regulating new issues, better trading practices and taking effective steps iii educating the public about investments.

vi. Providing scope for speculation: The stock exchange provides sufficient scope within the provisions of law for speculative activity in a restricted and controlled mannet . It is generally accepted that a certain degree of healthy speculation is necessary to ensure liquidity and price continuity in the stock market.

vii. Regulates company management: Listed companies have to comply with rules and regulations of concerned stock exchange authorities. Thus, stock exchanges put the burden on the company to have healthy practices.

Question 41.
Explain the advantages and limitations of advertising.
Answer:
Advertising is the most commonly used tool of promotion. h is an impersonal from of communication, which is paid for by sponsors to promote some goods or service.

Merits of Advertising

i. Mass Reach: Advertising is a medium through which a large number of people can be reached over vast geographical area.

ii. Enhancing customer satisfaction and confidence: Advertising creates confidence amongst prospective buyers as they feel more comfortable and assured about the product quality and hence feel more satisfied.

iii. Expressiveness: with the help of computer designs, graphics, etc, advertising has developed into one of the most forceful medium of communication. With the special effects created, even simple product and messages look very attractive.

iv. Economy: Advertising is a very economical mode of communication. A large number of people can be reached at a time. Because of its wide reach, the overall cost of advertising gets spread over numerous communication links established. As a result, the per- unit cost of reach comes low.

Limitations of advertising

• Less Forceful: Advertising is an impersonal form of communication. It is less forceful than personal selling as there is no compulsion on the prospects to pay attention to the message.
• Lack of feedback: The evaluation of the effectiveness of the advertising message is very difficult as there is no immediate feedback mechanism of the message that is delivered.
• Inflexibility: Advertising is less flexible as the message is standardized and cannot be altered according to the requirements of the different customer groups.
• Low Effectiveness: As the volume of advertising is getting more and more expanded, it is becoming difficult to make advertising messages heard by the target customers. This affects the effectives of advertising.

Section – E
(Partical oriented Questions)

V. Answer any two of the following questions. Each question carrier five marks: 2 x 5 = 10

Question 42.
Draw a chart representing the elements of business environment.
Answer:

Question 43.
State any ten qualities of a successful leader?
Answer:
(a) Rebate
(b) Discount
(c) Refunds
(e) Product Combinations
(f) Quantity gift

• Rebate: Offering products at special prices
• Discount: Offering products at less than list price
• Refunds: Refunding a part of price paid by customer
• Product Combinations: Offering another product as gift along with the purchase of a product.
• Quantity Gift: Offering extra quantity of the product.

Question 44.
As a marketing manager, suggest any five sales promotion activities to boost up the sales.
Answer:
(a) Rebate
(b) Discount
(c) Refunds
(e) Product Combinations
(f) Quantity gift

• Rebate: Offering products at special prices
• Discount: Offering products at less than list price
• Refunds: Refunding a part of price paid by customer
• Product Combinations: Offering another product as gift along with the purchase of a product.
• Quantity Gift: Offering extra quantity of the product