Maharashtra Board Class 12 OCM Sample Paper Set 4 with Solutions

Maharashtra State Board Class 12th OCM Sample Paper Set 4 with Solutions Answers Pdf Download.

Maharashtra Board Class 12 OCM Model Paper Set 4 with Solutions

Time: 3 Hours
Max. Marks: 80

Note:

1. All questions are compulsory.
2. Figures to the right indicate full marks for the questions.
3. Figures to the left indicate question numbers.
4. Answer to every question must be started on a new page.

Question 1.(A)
Select the correct answer from the options given below and rewrite the statements: (5) [20]

Question 1.
The liability of Karta in a Joint Hindu Family Firm is ____.
a. unlimited
b. limited
c. joint
Answer:
a. unlimited

The liability of Karta in a Joint Hindu Family Firm is unlimited.

Question 2.
The term ‘e-business’ is derived from the term ____ and e-commerce.
a. cash
b. e-pay
c. e-mail
Answer:
c. e-mail

The term ‘e-business’ is derived from the term e-mail and e-commerce.

Question 3.
Business is a ___ activity.
a. socio-economic
b. service
c. charitable
Answer:
a. socio-economic

Business is a socio-economic activity.

Question 4.
___ are pillars of economic development as the entire economy revolves around them.
a. Sellers
b. Consumers
c. Owners
Answer:
b. Consumers

Consumers are pillars of economic development as the entire economy revolves around them.

Question 5.
The term market is derived from the ___ word ‘mercatus’.
a. French
b. Latin
c. Italian
Answer:
b. Latin

The term market is derived from the Latin word ‘mercatus’.

(B) State whether the following statements are true or false: (5)

Question 1.
Every function of management is not based on planning.
Answer:
False

Question 2.
It is easy to set up e-business as compared to traditional business.
Answer:
True

Question 3.
Social responsibility is broader than legal responsibility of business The seller has to recognise the rights of consumer.
Answer:
True

Question 4.
The seller has to recognise the rights of consumer.
Answer:
True

Question 5.
The market for the commodities which are produced in one country and sold in another countries is known as national market.
Answer:
False

(C) Find the odd one: (5)

Question 1.
Principle of Authority and Responsibility, Motion Study, Principle of Division of Work, Principle of Discipline.
Answer:
Motion Study

Question 2.
Primary credit co-operative society, State co-operative bank, District co-operative bank, Exchange bank
Answer:
Exchange bank

Question 3.
Flipkart, Amazon, Myntra, eBay
Answer:
eBay

Question 4.
Proper conduct of meeting, Careful use of capital, Fair prices of products, Maintain solvency and prestige ‘
Answer:
Fair Prices of Products

Question 5.
District Judge, High Court Judge, Commissioner, Supreme Court Judge
Answer:
Commissioner

(D) Give one word/phrase/term: (5)

Question 1.
Father of modern management.
Answer:
Henry Fayol

Question 2.
The account suitable for salaried people.
Answer:
Savings account

Question 3.
The form of e-business where both buyer as well as seller are business entities.
Answer:
B2B

Question 4.
Duties, obligations of business directed towards welfare of society.
Answer:
Social responsibility

Question 5.
The right of a consumer which allows him to express his views.
Answer:
Right to be Heard

Question 2.
Explain the following terms/ concepts: (Any Four) [8]

Question 1.
Motion Study
Answer:
Motion study is a part of work study which is a technique of scientific management. According to this technique, the management must study the body movement of an employee or the machines, while completing a particular task. If there are some movements which are unnecessary, they can be eliminated. It helps in improving the efficiency of the employees.

Question 2.
Banking
Answer:
According to Indian Banking Regulation Act, 1949, “Banking refers to accepting for the purpose of lending or investment of deposits of money from public, repayable on demand or otherwise, and withdrawable by cheque, draft and order or otherwise.” It is one of the important business services.

Question 3.
E-business
Answer:
E-business stands for electronic business and is derived from the terms e-mail and e-commerce. The term ‘e-business’ was first used by IBM in 1997. E-business uses web, internet, intranets, extranets or a combination of thereof for the purpose of conducting business. It has brought about fundamental change in the way the business is done.

Question 4.
Social responsibility
Answer:
Social responsibility of business refers to its obligation to take those decisions and perform those actions which are desirable in terms of the objectives and values of our society. It implies that the business activities should be performed in such a manner that they don’t harm any part of society: rather they will protect and contribute to the interest of society.

Question 5.
Right to Safety
Answer:
The right to safety protects the consumers against products, production processes and services which are hazardous to health or life. It includes concern for consumer’s long-term interests as well as their immediate requirements. According to this right, consumer must get full safety and protection to his life and health.

Question 6.
Market
Answer:
Market is the place where two or more parties are involved in buying and selling. These two parties are called buyer and sellers. The transaction of buying and selling takes place with exchange of money.

Question 3.
Study the following case/ situation and express your opinion: (Any Two) [6]

Question 1.
Ms. Harshali has started new business two years ago. Her customers are located in different parts of the country and hence they are directly depositing bill amount in her business account. At the same time she used to pay various payments from this account only.
i. Identify type of account maintained by Ms. Harshali.
ii. Suggest any one modem way of money transfer to Ms. Harshali.
iii. State any one facility she gets on her bank account.
Answer:
i. Ms. Harshali has current account. There is no restriction on deposits or number of withdrawals from this account and so, it is generally operated by business firms.

ii. Ms. Harshali can transfer money online by using modern e-banking services such as Immediate Payment Services (IMPS) Facility, National Electronic Fund Transfer (NEFT), internet banking and mobile banking.

iii. Ms. Harshali gets overdraft facility on her account which allows her to withdraw an amount in excess of the balance in her account for a certain duration.

Question 2.
Mr. Ashok visited a shop to buy a pair of shoes of ₹ 700. The salesman forced him to buy a pair of bigger size shoes of ordinary company by claiming this size would be suitable to him.
After reaching home, he discovered that shoes are still too big for him. He complained about the shoes to the shopkeeper. It was denied by the shopkeeper to replace the shoes despite of availability of stock.
In above case,
i. Which right has been violated?
ii. Is Ashok a buyer or end user?
iii. Where can Mr. Ashok file his complaint?
Answer:
i. In the above case, Mr. Ashok’s right to choose and right to redress has been violated.

ii. Ashok is a buyer as well as end user. This is because he is purchasing a pair of shoes for himself.

iii. Mr. Ashok can file his complaint with the District Commission since the value of goods is less than ₹ 1 crore. District Commission is a consumer dispute redressal forum at each district established by the State Government. It has jurisdiction to entertain complaints where the value of the goods or services paid as consideration does not exceed ₹ one crore.

Question 3.
Mr. X purchases goods from nearest shop. Mr. Y purchases mobiles from Tokyo. Mr. Z of Nandurbar purchases electronic goods from Delhi.
i. From which type of market does Mr. X – purchase?
ii. Name the type of market from where Mr. Y deals.
iii. State the type of market from where Mr. Z purchases goods.
Answer:
i. Mr. X purchases from local market.
ii. Mr. Y deals with international market.
iii. Mr. Z purchases goods from national market.

Question 4.
Distinguish between the followings: (Any Three) [12]

Question 1.
Planning and Organizing
Answer:

Planning	Organising
i. Meaning
Planning is deciding in advance what to do, how to do it, when to do it, and who is to do it.	Organising is the process of defining and grouping the activities of the enterprise and establishing the authority relationships among them.
ii. Objective
To set goals and choose the ways to achieve these goals.	To identify and bring together all required resources.
iii. Area of function
Planning includes setting objectives by identifying the ways of attaining the goal and selecting the best plan.	Organising includes identification an grouping of activities, assigning the work and establishing the authority relationship.
iv. Order
Planning is the basic and first function of management process.	Organising follows planning function.
v. Resources
Planning is done as per the requirement and availability of resources.	All available resources i.e. men, money, material, machine and method are arranged in a systematic manner.
vi. Nature
Planning is continuous in nature. It exists in the whole life of organisation.	Organising takes place till the time all the resources are collected and arranged.
vii. Level of Management
Top level management is concerned with planning the activities.	Top and middle level management ¡s related with organising the required resources.

Question 2.
Central Bank and Commercial Bank
Answer:

Central Bank	Commercial Bank
i. Function
The main function of the central bank is to regulate the money supply in the country.	The main function of commercial banks is to accept deposits from public and lend it to industry and others.
ii. Printing of currency
The central bank can print currency notes.	The commercial banks cannot print currency.
iii. Acceptance of deposits
The central bank does not accept deposits from public.	The commercial banks accept deposits from public.
iv. Loans
The central bank provides loans to bankers and financial institutions.	The commercial banks provide loans to industry and commerce.
v. Ownership
The central bank (RBI) is owned and controlled by the government of India.	The commercial banks can be owned by private and/or the government agencies.
vi. Number of banks
There is only one central bank (RBI) in India.	There are many commercial banks in India.
vii. Monetary policy
The central bank frames the monetary and credit policy.	The commercial banks do not frame any monetary policy.
viii. Control
The central bank keeps a check on the commercial banks.	The commercial banks do not keep check on the central bank.

Question 3.
Traditional business and E-Business
Answer:

Traditional business	E- Business
i. Formation
Traditional business takes lengthy and complicated procedure to form.	E-business is easy to form.
ii. Setting up cost
It takes a huge capital to setup a traditional business.	It takes a very nominal cost to setup an e-business.
iii. Risk involved
Less risk is involved in traditional business as there is a direct contact between the buyer and the seller.	High risk is involved in e-business as there is no direct contact between the buyer and the seller.
iv. Area covered
Traditional business is limited to a particular area and has limited scope.	E-business covers the entire world and has a vast scope.
v. Customer interaction
In traditional business, face-to face interaction is possible.	In e-business, there is absence of face-to-face interaction.
vi. Physical inspection
In traditional business, goods can be inspected physically before purchase.	In e-business, goods cannot be inspected physically before purchase.
vii. Resource focus
In traditional business, resources are focused on supply side.	In e-business, resources are focused on demand side.
viii. Delivery of goods
In Traditional, delivery of goods is instant.	In e-business, delivery of goods takes time.
ix. Usage
Traditional business is ancient and still in usage where digital network is not reachable.	E-business is used to save valuable time and money.
x. Accessibility
Traditional business is available during a limited time.	E-business is available around the clock.
xi. Scope
It is difficult to perform more business in traditional format.	More business can be done easily done through e-commerce.

Question 4.
Marketing and Selling
Answer:

Marketing	Selling
i. Meaning
Marketing is a social process by which a need is created and satisfied by offering and exchanging products.	Selling refers to providing the customer with the goods he/she needs in exchange of a price.
ii. Scope
Marketing is a wider concept. It includes selling and other functions.	Selling is a narrower concept. It is a part of the marketing concept.
iii. Objective
The main objective of marketing is satisfaction of consumers.	The main objective of selling is transfer of title and possession of the product from one person to another.
iv. Orientation
Marketing is consumer oriented. It emphasises on consumers and the maximisation of their satisfaction.	Selling is production oriented. It emphasises on production and its efficiency.
v. Approach to customer
Marketing views the customer as the very purpose of business.	Selling views the customer as a last link in business.
vi. Planning process
Planning in marketing is long-term oriented and in terms of tomorrow’s market and future growth.	Planning in selling is short-term oriented and in terms of today’s products and markets.
vii. Overall approach
Marketing follows customer-oriented approach.	Selling uses production-oriented approach.
viii. Nature of activity
Marketing is an indirect activity.	Selling is a direct activity.

Question 5.
Answer in brief: (Any Two) [8]

Question 1.
Explain any four points of importance of organising.
Answer:
Organising is the process of identifying the required resources, bringing them together, grouping and arranging them properly for achieving the objectives. It assigns organisational activities among different departments and workforce. The importance of organising can be explained with the help of following points:

i. Administration and Operation is Facilitated
Organising involves identifying various activities and grouping them together. Grouping and assigning activities is the task of administration. Organising also involves processing which is an operational activity. Thus, organising facilitates administration as well as operation of the organisation.
Due to proper grouping of tasks and employees, wastage is reduced while production increases. Moreover, duplication of work is restricted and effective delegation becomes possible.

ii. Brings Specialisation
Organising involves division of work between different departments of the organisation. This division helps in bringing specialisation in various organisational activities. Such specialisation leads to increase in work efficiency.

iii. Clarifies Authority and Responsibility
Organising involves defining the role of every manager by delegating the authority and clarifying the way this power can be exercised. It helps to avoid the misuse of power. Managers are able to work more effectively since their authority and responsibilities are clearly defined. It helps to increase productivity.

iv. Defines the Jobs Properly
Organising helps in putting right men on the right job. It can be done by selecting people for different departments based on their qualification, skills and experience. It aids in defining the jobs properly and clarifies the role of each employee.

v. Establishes Co-Ordination
Organising function establishes co-ordination among different departments of the organisation. It also creates clear cut relationships among positions. This ensures mutual co-operation among different level of managers as well as employees. Such co-ordination or synchronisation is crucial for smooth functioning of the organisation.

vi. Facilitates Effective Administration
Organising function determines different positions, departments, activities, as well as ensures that the roles are clearly structured. Utmost care is taken while placing right person on the right job with right authorities and responsibilities. There is proper division of work and delegation of authorities. All of this results in efficient and effective administration.

vii. Growth and Diversification is Achieved
Well-defined organisational structure enables smooth and efficient functioning and thereby, contributes to organisational growth. The clearly defined roles and responsibilities, co-ordination among all levels of management, use of appropriate control techniques, etc. increase work efficiency and contribute to organisation’s growth.

viii. Helps in Optimum Utilisation of Resources
Organising function gives different jobs to different employees based on their skills and enables specialisation of work. Due to specialisation, these employees use other resources of the organisation at its optimum level and desired results are achieved within a defined period.

ix. Scope for Innovation
Organising function clarifies the role of every person and activities to be performed. The employees are allowed to work by using their new ideas, which provides space for the manager to develop new talent. Thus, it becomes possible to adopt new changes in the methods of work. This scope for innovation is possible only through a set of organisational structure.

x. Creates Sense of Security
Organisational structure clarifies the job positions, i.e., clearly states the duties and responsibilities, so that everyone can work accordingly. This clarity in jobs and powers increases mental satisfaction and creates a sense of security among the employees.

Question 2.
State any four features of business services.
Answer:
Business services refer to those services which help in successful running of business. The features of these services are as follows:

i. Intangibility
Services do not have any physical (material) form. They are intangible in nature i.e. they cannot be seen and touched. However, services can be experienced by the buyer or the receiver, i.e., their benefits can be felt.

E.g.: Although insurance services provided by an insurance company cannot be seen, their benefits can be experienced. Due to intangibility, service providers must create a good impact on customers by delivering timely and quality services.

ii. Perishability
The provision (production) and acceptance (consumption) of the service has to happen simultaneously. Since services are intangible, they cannot be stored for future use.

E.g.: If an insurance agent is going on a vacation for 7 days, he cannot store his work (i.e., service he provides). That work will have to be either done by somebody else or will have to be done by him on his return.

iii. Inseparability
It is not possible to separate the service and the service provider. In other words, service provider is always present when the services are being delivered to customers. The production and consumption of services take place at the same time.

iv. Non-Transferability
Unlike goods, services are non-transferable in nature. The ownership of the service does not get transferred from service provider to the customer.

E.g.: Once the mobile bill is paid for a month, it does not mean that a customer owns the service. He again has to pay the bill in the next month as well.

v. Consumer Participation
Provision of services requires participation of both, the service provider and the customer. Without customer, service provider won’t be able to provide the service. Similarly, without the service provider, the customer won’t be able to take benefit of the service.

E.g.: An airline will be able to offer its services to only those customers who are present in the aircraft. Similarly, any person who wants to avail the service of the airline will have to book a ticket and travel in the aircraft.

vi. Heterogeneous (Inconsistency)
Services are heterogeneous in nature, i.e. there is no perfect standardisation of services. Even if the service provider remains the same, the quality of service may differ from time to time.

E.g.: A banker may give better service to customers during afternoon time when there is less rush in the bank. Similarly, the banker might give better service to a high value customer as compared to a customer who keeps low balance in the account.

Question 3.
Explain any four needs of consumer protection.
Answer:
The consumer is the one who consumes or uses any commodity or service available from natural resources or through a market. Consumer protection means safeguarding the rights and interests of the consumers. It comprises of all measures aimed at protecting the rights and interests of consumers. Consumer protection is needed for the following reasons:

i. Need of Participation of Consumers
Many decisions that directly affect consumer’s interests are taken by business organisations without the consumers’ or consumer organisations’ consent. These decisions are generally one sided where the consequences of the decisions on consumers are not considered at all. A strong consumer organisation can pressurise business organisations and takes measures to ensure consumer participation in the decision making process.

ii. Lack of Information
It is practically impossible to establish a direct contact between the manufacturers and consumers because the consumers are widely scattered.
Also, today’s markets are full of domestic as well as imported products. Therefore, consumers find it difficult to get reliable and correct information about the products before purchase.

iii. Spurious Goods
There is increasing supply of many duplicate products in the market. It is not possible for an ordinary consumer to differentiate between an original product and it’s duplicate. The use of duplicate products may even cause harm to the consumer. Therefore, it is crucial to protect the consumers from such products by complying with prescribed quality and safety standards.

iv. Unorganised Consumers
Sellers as well as traders have their own associations. However, consumers do not have any union. They are widely scattered and unorganised. A single consumer cannot fight against the powerful and united sellers. Thus, it becomes easy for sellers to exploit the consumers.

v. Misleading Advertisements
Since consumers cannot directly get in touch with the manufacturers, they mainly rely on the advertisements of a product and then decide whether to purchase it. However, some businessmen give false and misleading information about the quality, safety and utility of their products. Consumers need to be protected from such misleading advertisements.

vi. Malpractices of Businessmen
Some businessmen exploit consumers through fraudulent, unethical and monopolistic trade practices with a view to earn more profit. They give defective or low quality goods and services to the consumers. Certain measures are required to protect the consumers against such malpractices.

vii. Ignorance
Ignorance of consumers is the main cause of their exploitation by business organisations. Indian consumers are mostly ignorant about their rights, market conditions, price levels, product details etc. This enables businessmen to take undue advantage and exploit the consumers. Therefore, a system is required to protect them.

viii. Trusteeship
According to Gandhian philosophy, businessmen are trustees of the society’s wealth. Therefore, they should use this wealth for the benefit of people. However, in reality, they focus on their own benefit and hence, consumers need to be protected from exploitation by business firms.

Question 6.
Justify the following statements: (Any Two) [8]

Question 1.
Market can be classified on the basis of competition.
Answer:

1. On the basis of competition, Markets can be classified into Perfect market and imperfect market.
2. Perfect market is a market where a large number of buyers and sellers buy and sell their products which are homogeneous.
3. The buyers and sellers have perfect knowledge about the market conditions and hence one single price prevails in the market.
4. Imperfect market is a market situation where market imperfections exist like single seller, maladjustment in demand and supply, imperfect knowledge on the part of buyers and sellers etc.
5. Thus, markets can be classified on the basis of competition.

Question 2.
The Consumer Protection Act was passed in the interest of consumers.
Answer:

1. Consumers are widely scattered and unorganised. They do not have any union.
2. They are also ignorant about their rights, market conditions, price levels and product details.
3. It is difficult for consumers to get direct, reliable & correct information before buying a product or service.
4. There is an increased supply of duplicate products in the market.
5. Some businessmen give misleading information about the quality, safety and utility of products.
6. There are a number of laws to safeguard the interests of the consumers. But these acts could not provide complete and fair justice to consumers.
7. Hence, the Consumer Protection Act was passed in the interest of the consumers.

Question 3.
Business organisations have certain social responsibilities.
Answer:

1. Social responsibility of business implies the obligation of the management to protect the interest of society.
2. No business exists in isolation. Every organ of the society contributes towards the success of business.
3. So, it becomes important that business should do something for the society in return.
4. The commitment to society is important along with the motive of maximising profits.
5. Hence, business organisations are said to have certain social responsibilities.

Question 4.
The production and consumption of services has to happen simultaneously.
Answer:

1. Services are intangible in nature.
2. Being an intangible transaction, there cannot be an inventory of services.
3. The seller cannot offer a service without the presence of the customer and customer cannot accept service unless the seller is present to offer a service.
4. Thus, the production and consumption of services has to happen simultaneously.

Question 7.
Attempt the following: (Any Two) [10]

Question 1.
Define the term planning and explain the importance of planning. (Any five points).
Answer:
Planning is the basic function of management. Every function of management is based on planning. Planning is an intellectual process of logical thinking and rational decision making.

According to James Stoner, “Planning is the process of establishing goals and a suitable course of action for achieving these goals.”

The importance of planning can be explained with the help of following points:

i. Helps in Decision Making
There are many alternative ways for achieving any goal. Planning helps the management to select the best alternative by considering all positive and negative aspects of different alternatives. It also helps managers to take rational decisions.

ii. Facilitates Co-Ordination of All Activities
Planning facilitates the co-ordination of various activities. All activities of the organisation are closely linked with each other; which is considered in the process of planning. It reduces overlapping among different activities. Various departments work as per the overall plan of an organisation and hence, co-ordination is achieved.

E.g.: When you are planning a party, you and your friends may distribute the tasks to be done. If there is no planning, two people may end up doing the same task i.e. there may be overlapping. Thus, planning helps in co-ordination of all activities.

iii. Can Help to Set Clear Objectives
Planning deals with setting objectives, targets, and formulating plans in order to achieve the set targets. It helps managers to analyse the organisation’s present condition and accordingly identify the ways of attaining the desired position in future. Planning helps in making the objectives more clear and specific. This enables the employees to work efficiently towards achieving the goals.

iv. Optimum Utilisation of Resources
Planning considers the availability of resources in the organisation and various uses to which they can be put. Planning ensures that resources are properly allocated and optimally utilised. It helps to avoid wastage of resources. Hence, it results in higher organisational efficiency and improved results.

E.g.: When an IT company gets a new project and starts planning for it, it will not immediately hire new people. It will first check if any other project is going to be completed soon so that people on that project can be utilised for a new project. Thus, the resources are optimally utilised through planning.

v. Minimises the Risk
Planning involves looking into the future and anticipating future changes. It is based on the technique of forecasting. Planning enables the organisation to deal with uncertain events by deciding in advance the tasks to be performed in such instances. Although future changes or risks cannot be completely controlled or eliminated, planning helps to minimise the risk.

vi. Provides Path of Action
Planning not only involves setting goals or objectives but also involves preparation of an action plan to achieve these goals. It serves as a guide and provides direction for doing the right things at the right time in a right way. Thus, planning provides a path of action to employees and makes their role in the organisation clearer.

vii. Useful in Setting the Standards for Controlling
Controlling involves a comparison of actual performance with the standard performance. Planning involves setting the standards for performance. So, it enables managers to compare actual performance with standard performance and find out the deviation, if any. In case of such deviation, controlling steps can be taken. Hence, planning provides the basis for control and helps in maintaining discipline at work place.

viii. To Facilitate Other Management Functions
Planning facilitates all other functions of management such as organising, staffing, directing, co-ordinating, controlling etc. The various goals of the organisation are set out at the planning stage. Only when the plan is ready, other management functions can be undertaken.

ix. Encourages Innovative Ideas
Planning is the most challenging activity for the management as it guides all future actions. At times, the goals of the organisation are very ambitious and require out-of-the box-thinking. Therefore, planning involves promotion of innovative ideas after critical thinking. The innovative plans enable the organisation to attain its goals, leading to organisational growth and prosperity.

x. Results in Improved Performance
Planning enables managers to improve future performance of employees. They can do so by establishing objectives, selecting a proper course of action and providing timely guidance to employees. It results in efficient working patterns and thereby, contributes to achievement of targets. Such improved performance results into higher organisational profitability.

In short, planning is the basic requirement for the survival, growth and success of any organisation. Planning also plays an important role in the day-to-day life of individuals by enabling them to minimise risks and uncertainties.

Question 2.
Define entrepreneur. Explain functions of entrepreneur.
Answer:
According to Webster Dictionary, “An entrepreneur is a person who starts a business and is willing to risk loss in order to make money.”
The following are the functions of an entrepreneur:

i. Determination of Objectives
An entrepreneur has to determine the aims and objectives of the business. There may be a difference between primary and secondary objectives. He can change these objectives as per the market situations.

ii. Innovation
An entrepreneur is basically an innovator. He introduces innovation in the products, in business processes and also in solving problems. He understands that customers are satisfied only when the new products or radically new features in existing products are introduced. Therefore, an entrepreneur is constantly innovating.

iii. Development of Market
The entrepreneur has to constantly find out different ways for marketing the products and services of his enterprise. He may conduct marketing surveys or engage in research to understand the customers’ demand. When the markets are developed constantly, the consumers’ demand will increase.

iv. New technology
In global world, there is a constant invention of new technology. An entrepreneur has to adapt to new technology for the growth of his business. New technology may be used for manufacturing the products, automating business processes, sales and marketing etc.

E.g.: The use of social media i.e. FB, Twitter, Instagram etc. for marketing products and services is a great example of use of new technology by business enterprises.

v. Good Relations
An entrepreneur has to ensure that a healthy working atmosphere is maintained at the workplace. It depends upon the good (cordial) relations between superiors and subordinates. Co-ordination among employees is the key to organisational success.

vi. Organising Funds
A business continually needs funds for smooth functioning. Finance is like lifeblood for the business. The entrepreneur has to find out different financial resources to be able to raise adequate funds. He has to maintain good and honest relations with investors for this purpose.

vii. Taking Decisions
A major part of entrepreneur’s work is taking decisions. He has to take timely and correct decisions in order to ensure the success of business. He should always consider all the associated pros and cons before taking any business decision.

Question 3.
Define marketing and explain in detail the concepts of marketing.
Answer:
Marketing is a key function of modern management as it provides a competitive edge to the business over rivals. It helps a business to gain loyal customers. The meaning of marketing differs depending upon the audience, media platform and business in changing market.

Definition
According to Philip Kotler, “Marketing is a societal process by which individuals and groups obtain what they need and want through creating, offering and freely exchanging products and services of value with others.”

Concept Of Market
The term ’Market’ is derived from the Latin word ’mercatus’ which means ’to trade’, ’to trade merchandise’ or ’a place where business is transacted’. In simple words, market is a place where two or more parties are involved in buying and selling. These two parties involved in the transaction are called buyers and sellers and the transaction between them takes place with exchange of money.

There are many concepts associated with the word ‘market’. According to these concepts, different definitions of the term market are given below:

i. Place Concept of Market
The term market is commonly understood as a place where buyers, sellers and other intermediaries come together to exchange goods or services for money or money’s worth. Traditionally, place played an important role in defining market. However, in the age of information technology, ‘market’ has a wider meaning than just a place.

ii. Commodity Concept of Market
In commodity concept of market, importance is given to the process of ‘buying and selling of goods or services’ and not the place of exchange. In this process, not only the buyers and sellers but also the commodity exchanged plays an important role.

iii. Exchange Concept of Market
Exchange concept of market gives emphasis on the exchange of goods or services between buyer and seller done with free consent as well as mutual trust. There should not be any fraud or misrepresentation or coercion (force) or undue influence during the exchange. The exchange should be done voluntarily between the buyer and seller.

iv. Area Concept of Market
The area concept of the market is related to exchange concept. It gives emphasis on free association between buyers and sellers to fix the price for the exchange of goods or services. The price fixed implies in the certain area only. In this concept, it is not necessary for buyers and sellers to meet in person. The buyers and sellers can fix the price by taking the help of different modern communication media and exchange the goods or services.

v. Demand or Customer Concept of Market
Customer is the king of the market. Hence, one of the important factors of the market to be assessed is the need or demand of the customer. Market can be studied from the perspective of demand or customer. According to this concept, the aggregate demand by potential buyers for any product is market.

vi. Space or Digital Concept of Market
Emergence of information technology has given rise to the new concept of market called space or digital concept. The new and sophisticated e-commerce portals and mobile applications have made buying and selling easy as well as convenient for buyers and sellers. (E.g.: Amazon, Flipkart, Myntra, Snapdeal etc.)

Moreover, communication media like telephones, mobiles, computers, internet etc. has enabled direct contact between buyers and sellers. It is easy for the customers to know about quality, features, price, terms and conditions etc. of any products of any company.

Digital market can be defined as “market which uses information technology for buying and selling of the products or services and facilitate communication of quality, features, price and terms of exchange among them.”

Question 8.
Answer the following: (Any One) [8]

Question 1.
Explain 14 principles of Henry Fayol in detail.
Answer:
Henry Fayol (1841-1925) was a French mining engineer who rose to the position of the Chief Managing Director. He became a leading industrialist and a successful manager. He conducted many experiments in management and proposed fourteen principles of management. These principles have been explained in his book “General and Industrial Administration”. Due to his contribution to management, he is called the “Father of Modern Management”. His principles serve as a guideline for decision-making and management actions.

The following are the principles of management laid down by Fayol:

i. Principle of Division of Work
As per this principle, the work in an organisation should be divided into small sub parts. The work could be divided into different kinds such as technical, financial, commercial, security operations, accounting and managerial. This work should be assigned to employees depending on their interest, skill, qualities and capabilities. This helps in increasing efficiency, leads to specialisation and ultimately increases productivity level.

E.g.: In a college, there are different professors for different subjects. Each professor teaches the subject assigned to him/her according to his qualification and interest.

ii. Principle of Authority and Responsibility
Authority is the right to take decisions, i.e., the right to give orders and get work done from subordinates. A manager can work properly only if he is given authority to take decisions. However, authority comes with responsibility. When authority has been given to the manager, he is responsible for that work. If the work is not completed in time or not done properly, the manager is to be held responsible.

E.g.: A captain of Indian Cricket Team is given the authority to choose his team and decide the batting order. However, when the team loses a match, he is held responsible for the defeat.

iii. Principle of Discipline
According to Fayol, discipline is the most essential thing in the organisation. Employees must obey and respect the rules of the organisation. Discipline helps to achieve the goals set in the organisation. Good discipline is the result of effective leadership. There must be a clear understanding between management and employees regarding the organisation’s rules so that the discipline is maintained. Discipline should be observed at all levels of management.

E.g.: Management should clearly convey office timings to its employees and the employees need to adhere to these.

iv. Principle of Initiative
Initiative means taking the first step and volunteering to do the work in an innovative way. Managers should encourage employees to take initiative and come up with new ideas. According to this principle, managers should welcome such ideas and conduct thorough discussion on these ideas. This approach helps to build a healthy organisational culture.

v. Principle of Subordination of Individual Interest to Organisational Interest
According to this principle, the interest of an individual must be given lesser importance as compared to the interest of the organisation. The manager should always consider the interest of the whole organisation rather than the interest of a single employee while taking any decision. Similarly, the employees should also give higher importance to the interest of the organisation than their own self.

E.g.: M. S. Dhoni stepped down as the captain of the Indian Cricket Team in 2017 and allowed Virat Kohli to take over as the captain in spite of still being in the team. He gave more importance to the team’s interest rather than his individual interest.

vi. Principle of Order
This principle is based on ‘A place for everything and everything in its place’. Human resources and materials should be in the right place at the right time for maximum efficiency. The principle focuses on the proper utilisation of physical and human resources.

E.g.: An accounts expert should be in accounts department and not in marketing department.

vii. Principle of Unity of Command
Each employee of an organisation should receive orders from only one superior. This principle helps in managing conflicts and solving disputes among people in the organisation. If an employee receives orders from more than one superior, he will get confused. He will not understand whose orders to follow. This will hamper the work. Each employee should know his immediate superior and should receive orders only from him. For this, the organisational hierarchy should be well defined.

E.g.: If an employee is working on two projects with two different superiors, both of them may ask him to finish work on the same day. In that case, employee will either have to work long hours which will affect his efficiency or he may have to finish the task in an improper manner. To avoid this, he should receive order from only one superior.

viii. Principle of Stability of Tenure
When an employee is recruited, the management should assure him about the stability of his tenure (job security). It helps to create a sense of belongingness among the employees. An employee who is secured about his job will put his maximum efforts. It will also help to minimise employee turnover ratio.

ix. Principle of Remuneration
As per this principle, employees must be paid a fair amount of salary/wages for the services rendered by them. Fair remuneration keeps employees financially satisfied and retains them for a longer period of time with the organisation. It also helps to increase their productivity and efficiency. The remuneration should be fixed by taking into consideration the skill, expertise, knowledge, tenure, cost of living, market trend, profitability of organisation etc.

x. Principle of Equity
Management should be fair as well as friendly to the subordinates. While allocating any work, delegating the authorities, deciding the monetary terms etc., there should not be any discrimination between the employees. Also, the remuneration should not depend on the department but the level on which subordinates are working. It implies that salary/wages of employees working at the same level should be the same even though they belong to different departments. This will help to avoid conflicts within the organisation.

E.g.: Sr. Executive – Accounts, Sr. Executive – Production, Sr. Executive – Sales should all have equal pay.

xi. Principle of Scalar Chain
Scalar chain refers to the hierarchy of authority from the top level to the lower level, for the purpose of communication. This helps to ensure the orderly flow of information. Traditionally, organisations used to frame large scalar chain which is time consuming.

E.g.: If any financial decision taken by the top management requires a change in the accounting system, then the CFO will first inform the Manager-Accounts and Manager-Accounts will inform the Head-Accounts. The Head-Accounts will then inform the Account Executive and finally the work will get done.

However, in order to avoid this longer chain and to take speedy decisions; cross communication or direct communication is followed by various organisations. It is known as Gang Plank. For direct communication, it is essential to take proper permission of authorities.

xii. Principle of Centralisation
Centralisation refers to the concentration of powers and authorities in one or few hands. This situation usually occurs in small organisations. However, if the size of organisation is large, there is a decentralisation of power and authority. According to this principle, there must be a proper balance between centralisation and decentralisation in the organisation. This is to be done according to the size of the organisation, nature of the activity etc.

xiii. Principle of Unity of Direction
This principle states that ‘there should be one head and one plan’ in every organisation. Each group in the organisation should have the same objective and the group should be directed by one manager using single plan.

xiv. Principle of Esprit De Corps (Team Work)
Esprit de Corps means union is strength. Power of many is always more than power of one. The manager should create a spirit of team work and understanding among the employees. They should be made to realise that the organisational goals are achieved only due to the combined efforts of all employees. When all employees work as a team, the difficulties can be solved quickly and organisational goals can be achieved easily.

Above 14 principles of Henry Fayol are very useful to manage the organisation efficiently and effectively. These principles are also supportive to the functions of management. These principles are very logical and hence, applicable in modern management era.

Question 2.
Define bank. Explain different types of banks.
Answer:
Meaning and Definition

i. The term ‘Bank’ comes from the French word ‘Banco’ meaning ‘bench’.

ii. A bank is a financial institution which deals with deposits and advances as well as other related services. It offers several money related services to fulfil financial requirements of consumers.

iii. As per the Indian Banking Regulation Act, 1949, a banking company means “any company which transacts the business of banking in India”.

The word banking has been defined as “accepting for the purpose of lending or investment of deposits of money from public, repayable on demand or otherwise, and withdrawable by cheque, draft and order or otherwise.”

Types of Banks

i. Central Bank
The central bank is the apex financial institution of banking industry in the country. Every country has its own central bank.

Example: Reserve Bank of India (RBI) is the central bank in India. The RBI was established in 1935 under the Reserve Bank of India Act, 1934.

Some functions of RBI:
a. Framing monetary policy
b. Issuing currency notes Acting as a banker to the Government
c. Acting as a banker’s bank to commercial and other banks in India

ii. Commercial Banks
The banks with which individuals and business organisations transact are called commercial banks. These banks perform various primary functions (i.e. accepting deposits and lending money) as well as secondary functions (i.e. agency functions and utility functions). These banks play a vital role in country’s economic and social development.

Three groups: In India, commercial banks are divided into three groups:

a Public sector banks: Here, a majority of capital is held by government.
E.g.: Bank of India, State Bank of India etc.

b. Private sector banks: These banks are owned by a group of individuals.
E.g.: AXIS bank, HDFC bank etc.

c. Foreign banks: These banks are established outside India but have branches in
India. E.g.: Citi bank, HSBC, Standard Chartered etc.

iii. CO-OPERATIVE BANKS
Co-operative banks provide credit mainly to economically backward people, farmers and small scale units. Hence, they are popular in semi-urban and rural areas. In India, co-operative banks are registered under Indian Co-operative Societies Act and regulated under Banking Regulation Act.

Three levels: Generally, co-operative banks work at three different levels:

a. Primary Credit Co-operative Societies at village level: They collect deposits from members and common public. They also get funds from the State Co-operative Bank and District Co-operative Banks for the purpose of lending.

b. District Central Co-operative Banks at district level: They collect deposits from the public at the district level and also get funds from the State Co-operative Bank for the purpose of lending.

c. State Co-operative Bank at state level: This bank provides funds to district
central co-operative banks and primary credit societies as required. State co-operative bank also performs the function of monitoring over district banks and credit co-operative societies.

iv. INDUSTRIAL DEVELOPMENT BANKS
Industrial development banks are financial institutions that provide medium and long-term funds to business firms.

E.g.: Industrial Finance Corporation of India (IFCI), State Finance Corporation (SFC), Maharashtra State Financial Corporation (MSFC) etc.

Functions:

a. Providing medium and long-term funds to business units for expansion and modernisation
b. Underwriting of shares issued by public limited companies
c. Purchasing debentures and bonds

v. REGIONAL RURAL BANKS (RRBs)
Regional Rural Banks (RRBs) are sponsored by large public sector banks. These banks were established in 1975.

Functions:

a. Mobilise (collect) deposits mainly from rural and semi-urban areas
b. Provide loans and advances mainly to small and marginal farmers, agricultural labourers and rural artisans

Capital structure:

Particulars	Capital contribution
1. Central Government	50%
2. Sponsored Banks (Commercial bank)	35%
3. State Government (of that state)	15%

vi. INVESTMENT BANKS
Generally, investment banks do not directly deal with general public. Their clients usually include business firms and government organisations.

Functions:

a. Provide financial and advisory assistance to customers
b. Provide advice on investment decisions
c. Facilitate mergers and acquisitions by undertaking research

vii. SAVINGS BANK
The main objective of savings bank is to encourage savings amongst people, especially in rural areas.
Example: Postal saving bank, commercial banks and co-operatives banks

viii. EXCHANGE BANKS
Exchange banks (as well as large commercial banks) facilitate foreign exchange transactions.
Example: Barclays Bank, Deutsche Bank, HSBC Bank etc.

Functions:

a. Financing foreign trade transactions
b. Issuing Letter of Credit (LC)
c. Discounting bills of exchange
d. Remittances of dividend, interests and profits etc.

ix. SPECIALISED BANKS
Specialised banks provide overall support for setting up business in specific areas.

Examples:

i. Export and Import Bank (EXIM): It provides financial assistance to exporters and importers. It functions as the principal financial institution for co-ordinating the working of institutions engaged in financing export and import transactions. It aims to promote international trade.

ii. Small Industries Development Bank of India (SIDBI): It was set up on 2nd April 1990 under an Act of Indian Parliament. SIDBI acts as the principal financial institution for promotion, financing and development of the Micro, Small and Medium Enterprise (MSME) sector. It also co-ordinates the functions of institutions engaged in similar activities.

iii. National Bank for Agriculture and Rural Development (NABARD): It is an apex institution for financing agricultural and rural sector. NABARD provides short-term and long-term credit through Regional Rural Banks (RRBs). It provides finance to financial institutions and not to individuals. NABARD also engages in policy planning and operations relating to agricultural credit and
credit for other activities in rural India.

Maharashtra Board Class 12 OCM Previous Year Question Papers