Maharashtra Board Class 12 OCM Sample Paper Set 6 with Solutions

Maharashtra State Board Class 12th OCM Sample Paper Set 6 with Solutions Answers Pdf Download.

Maharashtra Board Class 12 OCM Model Paper Set 6 with Solutions

Time: 3 Hours
Max. Marks: 80

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) Answer in one sentence:

Question 1.
What is management?
Answer:
Management is a set of principles which relate to various functions such as planning, organising, staffing, directing, co-ordinating, controlling etc. which are helpful in achieving organisational goals.

Question 2.
What is e-business?
Answer:
E-business or electronic business, is the administration of conducting business via the internet.

Question 3.
Who can raise voice against business malpractices?
Answer:
Media can raise voice against business malpractices.

Question 4.
When do we observe World Consumer’s Rights Day?
Answer:
We observe World’s Consumer’s Rights Day on 15^th March.

Question 5.
What do you mean by ‘local market’?
Answer:
The market for commodities which are sold within the local geographical limits of a region is known as local market.

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

Question 1.
Last function of management.
Answer:
Controlling

Question 2.
The first step in online transaction
Answer:
Registration

Question 3.
Earning foreign exchange is the responsibility of the organisation towards this group.
Answer:
Government

Question 4.
The commission which entertains case where the value of the goods or services paid as consideration does not exceed ₹ one crore.
Answer:
District Commission

Question 5.
A market situation when there is a single buyer of a commodity or service.
Answer:
Monopsony

(C) Correct the underlined word and rewrite the following sentences: (5)

Question 1.
Management techniques are applied differently under different situations.
Answer:
Management principles are applied differently under different conditions.

Question 2.
Services are tangible in nature.
Answer:
Services are intangible in nature.

Question 3.
Social responsibility is narrower term than legal responsibility of business.
Answer:
Social responsibility is a broader term than legal responsibility of business.

Question 4.
According to Right to Choose, consumer can demand action against pollution causing business organisation.
Answer:
According to Right to Healthy Environment, consumer can demand action against pollution causing business organisation.

Question 5.
E-commerce is a broader concept than e-business.
Answer:
E-commerce is a narrower concept than e-business.

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

Question 1.
Each member of organisation should receive orders only from one superior.
Answer:
True

Question 2.
Applying for an Aadhaar card is an example of C2A.
Answer:
True

Question 3.
Businessmen are trustees of the society.
Answer:
True

Question 4.
The GOI has given safety standards in the form of AGMARK, ISI, BIS, Hallmark etc
Answer:
True

Question 5.
Successful businessman takes calculated risks
Answer:
True

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

Question 1.
Time Study
Answer:
Time study is a part of work study which is a technique of scientific management. The management should observe and record the time taken by an employee to complete a given task. With the help of time study, the precise time required for each element of work is determined. This will help to fix a standard time required to do a particular task under given condition. It is useful to measure the efficiency of an employee and to control the cost of work.

Question 2.
Insurance
Answer:
Insurance is a contract between the insurer and the insured, whereby the insurer agrees to compensate the insured against the loss on account of unforeseen future event. For this, insured pays certain fixed sum of money on timely basis to insurer. It is a form of risk management.

Question 3.
B2B
Answer:
B2B (Business to Business) is a form of e-business in which both the buyer and the seller are business entities and it does not involve individual consumers. The business firms interact with each other for a variety of services such as supply of components, provision of value added services etc.

Question 4.
4 R’s
Answer:
4 R’s are reduction, reuse, recycle and recovery. Wherever possible, waste reduction is the preferable option. If waste is produced, then every effort should be made to reuse it. Recycling should only be considered for waste which cannot be reduced or reused Finally, it may be possible to recover materials or energy from waste which cannot be reduced, reused or recycled.

Question 5.
Janahit Yachika
Answer:
Janahit Yachika or Public Interest Litigation means a legal action initiated in a court of law regarding a matter of general public interest. It is a legal facility under which any person can approach the court of law in the interest of the society. It aims is to provide legal remedy to unrepresented groups in the society. It is filed’in the High Court. In some cases, it is directly filed in the Supreme Court.

Question 6.
Place concept of market
Answer:
In the place concept of market, market is considered as the place where transaction of buying and selling of goods and services takes place in exchange of money or money’s worth. It is the place where buyers, sellers and other intermediaries come together and exchange goods or services.

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

Question 1.
Mr. Harshad is an entrepreneur and engaged in production of eco-friendly utensils. Both male and female workers are working in his factory. All male employees are directly working on machines whereas female employees are working in Packaging Department. Mr. Sharath is working as Finance Manager while Mrs. Naina is working as HR Manager who. is responsible for recruiting employees in the factory. On this basis:
i. Identify any one principle of management in above case.
ii. What is the designation of Mrs. Naina in this organisation?
iii. Who is responsible for overall planning of the organisation?
Answer:
i. In the above case, we can observe the ‘principle of division of work’ since work is divided into different kinds such as production, accounting, HR etc.
ii. Mrs. Naina is the HR Manager in the organisation.
iii. As per the Principle of Unity of Direction, there should be one head and one plan in every organisation. Mr. Harshad is the entrepreneur / head of the organisation and hence, he is responsible for the overall planning of the organisation.

Question 2.
Mr. Jagan is a salaried person. He wants to take policy for his two children which assures them protection as well as completes their financial needs once they become major-by age.
i. Suggest him a policy which can satisfy requirements of his children.
ii. Who are beneficiaries of policy?
iii. In above case which principle is involved?
Answer:
i. Mr. Jagan can satisfy requirements of his children by taking child insurance policy. It is saving cum investment plan that will meet his children’s future financial needs.
ii. Two children of Mr. Jagan will be beneficiaries of this policy.
iii. The principle of insurable interest is involved here as Mr. Jagan has insurable interest in the subject matter of insurance, i.e., his children.

Question 3.
Mrs. Meera, a resident of Nagpur District, bought a washing machine worth ₹ 50,000 without cash memo with a warranty period of 2 years. After 1.5 years she noticed some defect and asked the company to repair or replace it. The company did not accept her complaint despite of the defective product.
In the above case,
i. Suggest suitable redressal machinery to protect her right.
ii. If she is not satisfied with the decision given by redressal machinery, where should she appeal?
iii. What was the negligence of Mrs. Meera while buying the washing machine?
Answer:
i. In the above case, Mrs. Meera can approach District Commission in her district to protect her right.
ii. If she is not satisfied with the decision given by the District Commission, she should appeal to the State Commission.
iii. Mrs. Meera purchased the washing machine without a cash memo or invoice. She also may not have checked the details mentioned on the warranty card. These documents are useful to settle all kinds of disputes with the seller. Thus, she was negligent in fulfilling her responsibility as a consumer

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

Question 1.
Organising and Staffing
Answer:

Organising	Staffing
i.Meaning
Organising is the process of defining and grouping the activities of the enterprise and establishing the authority relationships among them.	Staffing function pertains to the recruitment, selection, development. training and compensation of subordinate managers.
ii. Objective
To identify and bring together all required resources.	To appoint right type of people at the right positions and the right time.
iii. Area of function
Organising includes identification and grouping of activities, assigning the work and’ establishing the authority relationship.	Staffing includes recruitment, selection, training, development and compensation of human resources.
iv. Factors
Internal and external factors are considered in arrangement of resources, i.e. organising.	Staffing is mostly concerned with internal factors, i.e. human resources.
v. Order
Organising follows planning function.	Staffing follows organizing function.
vi. Resources
All available resources i.e. men, money, material, machine and method are arranged in a systematic manner.	Staffing is the process relating to organisation of human resources.
vii. Nature
Organising takes place till the time all the resources are collected and arranged.	Staffing is a continuous process as it deals with employees i.e. human resources.
viii. Level of Management
Top and middle level management is related with organising the required resources.	Middle level management is related with recruitment, training and selection. Top level is concerned with promotion and compenstion.

Question 2.
Current Account and Saving Account
Answer:

Current account	Saving account
i. Meaning
Current account is maintained by businessmen and others who regularly perform banking transactions.	Saving account is opened by individuals in order to save a part of their income.
ii. Withdrawls
Customers can withdraw money by cheques.	Customers can withdraw money either by cheques or withdrawal slips.
iii. Documents
The bank gives passbook, cheque book, statement of account and pay-in-slip book to the customers.	The bank gives passbook, cheque book and pay-in-slip book to the customers.
iv. Who takes it?
It is suitable for traders, businessmen, firms and institutions.	It is suitable for fixed income group such as wage or salary earners.
v. Restrictions
There are no restrictions on the operation of a current account.	The customers have certain restrictions on withdrawals.
vi. Interest rate
Normally, interest is not given.	Interest rate is low.
vii. Facilities
Temporary overdraft facility is given.	No overdraft facility is given.

Question 3.
E-business and E-commerce
Answer:

E- business	E-commerce
i. Meaning
E-business is conduct of business processes on the internet.	E-commerce involves commercial transactions done over Internet.
ii. What is it?
E-business is a superset of e-commerce.	E-commerce is a subset of e-business.
iii. Features
E-business covers all business transactions; including all kinds of pre-sale and post-sale efforts.	E-commerce only involves buying and selling of goods and services.
iv. Scope
E-business is a brooder concept that involves market surveying, supply chain and logistics management as well as using data mining.	E-commerce is a narrower concept and restricted to buying and selling.
v. Transaction
It is used in the context of B2B transactions.	It is more appropriate in B2C context.
vi. Which network is used?
E-business can involve the use of internet, intranet or extranet.	E-commerce involves the mandatory use

Question 4.
Staffing and Directing
Answer:

Staffing	Directing
i. Meaning
Staffing function pertains to the recruitment, selection, development, training and compensation of subordinate managers.	Directing is the guidance, the inspiration, the leadership of those men and women that constitute the real case of responsibilities of management.
ii. Objective
To appoint right type of people at the right positions and the right time.	To direct the subordinates to get the things done in the right manner.
iii. Area of function
Staffing includes recruitment, selection, training, development and compensation of human resources.	Directing includes instructing, guiding, inspiring, communicating and motivating the human resources.
iv. Order
Staffing follows organising function.	Directing follows organising and staffing for execution of planning.
v. Resources
Staffing is the process relating to organisation of human resources.	Directing gives direction to the employees regarding the use of other resourceš.
vi. Level of Management
Middle level management is related with recruitment, training and selection. Top level is concerned with promotion and compensation.	Middle level management is involved in directing the employees.

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

Question 1.
What is service? Explain in detail different business services.
Answer:
MEANING

1. No business can operate effectively in an isolated manner. Every business requires the support of some activities. These supporting activities are basically services. They play a crucial role in facilitating the growth of business.
2. Business services are those services which help in successful running of business. They help businesses to function seamlessly and grow over time.
3. Business services are intangible, inseparable, heterogeneous (inconsistent) and perishable in nature. These services require consumer participation.

TYPES
There are various types of services depending upon their nature and purpose. Some of the important services are as follows:

1. Banking: Banking refers to accepting money deposits from public for the purpose of lending or investment. The deposits are repayable on demand (or otherwise) and withdrawable by cheque, draft and order (or otherwise).
2. Insurance: Insurance is a contract between the insurer and the insured, whereby the insurer agrees to compensate the insured against the loss on account of unforeseen future event.
3. Transport: Transportation refers to the movement of people, animals and goods from one location to another.
4. Warehousing: Warehousing is a group of activities connected with storing and preserving of goods from the time of production till the time of consumption.
5. Communication: Communication is an art of exchanging ideas, facts, information etc. from one person or entity to another.

Question 2.
State any four responsibilities of the consumer.
Answer:
The consumer is the one who consumes or uses any commodity or service available from natural resources or through a market. The Consumer Protection Act has given some rights to consumers. At the same time, consumers have certain responsibilities too. The government cannot help the consumers if they do not act responsibly.

The following are responsibilities of consumers:

i. Consumer Should Use His Rights
Consumers have many rights relating to goods and services. They must be aware of their rights and use (exercise) them while buying.

ii. Demand of Invoice and Guarantee. Warranty Card
At times, the seller may avoid giving an invoice in order to save tax. It is the responsibility of the consumer to demand an invoice and check it properly before making payment. Also, he should check all details mentioned on the guarantee or warranty card properly. If the goods purchased are of inferior quality, then these documents will help to settle all kinds of disputes with the seller.

iii. Organised Efforts
Consumers should undertake the responsibility of protecting their own rights and safeguarding their interests. Consumers can work for as well as support the various consumer protection and welfare associations.

iv. Filing of Complaint
A major reason of consumers’ exploitation is their ‘chalta hain’ attitude. Being aware of their rights but still not filing a complaint is the biggest mistake of consumers. It is the responsibility of a consumer to approach the concerned officer if he has any complaint regarding the goods and services. A delay in complaint may result in the expiry of guarantee or warranty. Sometimes, consumers ignore the dishonest acts of businessmen which encourage unethical business practices.

v. Pre-Planned Buying
When consumers buy any good or service in haste, they may ignore its quality and price. Therefore, it is the responsibility of consumers that they should not buy in hurry and plan their purchase properly. They should make an estimate of the goods required in near future and their approximate quantity. This will give them enough time to check the quality, price and other details. The consumers should also take into consideration the place from where to buy the goods.

vi. Cautious Consumer
It is always better to take precautions rather than regretting later. The consumers should understand their responsibilities while purchasing goods and services. Therefore, a consumer should enquire about the quality, quantity, price, utility while buying goods and services.

vii. Beware of Exaggerated Advertisements
The seller informs the consumer about his goods and services through advertisement. However, in order to boost sales, the seller may exaggerate the quality of goods in ads. It is the responsibility of the consumer to beware of such advertisements and identify the truth.

E.g.: We have seen many ads of fairness creams which assure fairer skin tone within a month. It is the responsibility of consumers to identify the truth and not get misled by such advertisements.

viii Quality Conscious
Sometimes consumers buy inferior or low quality products out of greed for lower prices. If the consumers behave like this, then no government agency can protect them. The consumers should never compromise on the quality of goods. It is their responsibility to buy quality goods. Before buying, consumers should check for symbols such as ISI, AGMARK, Hallmark, FPO, FSSAI etc. which indicate good quality of products.

Question 3.
Explain the importance of marketing to the firm.
Answer:
The prime objective of production by any organisation is to distribute products and services through effective marketing. Without marketing, it is difficult to reach the potential customers. Effective marketing helps organisations to survive in the competitive environment. The role of marketing is too diverse in the modern world.

The following points explain the importance of marketing to the Firm.

i. Increases Awareness
Marketing helps in creating awareness about the existing products, new arrivals as well as the company which sells a particular product in the market. This helps to raise awareness among the potential customers and to create a brand image.

ii. Creates Trust
People prefer to buy from businesses that have a trustworthy reputation. Creating trust among the customers is a time consuming process. Such trust helps the business to earn loyal customers. If customers are happy, the brand image of the company enhances in the market.

E.g.: Some companies in India which have earned consumer trust are TATA, Godrej, Amul, Parle-G etc. Effective marketing plays a crucial role in building relationship between customers and organisation. Effective pricing policy and timely after sales services help to improve image of the organisation. A majority of marketing efforts are directed towards building the brand equity of the business.

iii. Tackling the Competition
There is increasing competition in almost all sectors of the economy. In such a situation, it is difficult for any business to create monopoly. Marketing creates a brand image in the minds of potential customers.
It not only helps in communicating about the products and services to the consumers but also motivates them to buy the same. Sound marketing strategies help businesses to create a better image of their business than that of their competitors. Businesses can also take the help of modern technology to make their marketing more effective.

iv. Increases Sales
Marketing creates awareness among the potential consumers regarding the products and services. This attracts them to purchase the same. Successful marketing campaign helps in increasing the sales of the organisation which in turn increases the profits. These profits are reinvested into the business which helps the business to earn more profits in future. In modern times, survival of any business depends on the effectiveness of the marketing function.

v. Basis for Making Decisions
From inception of an idea to delivering the final product to consumer, a businessman has to take several decisions. He has to take decisions such as what, how, when, how much and for whom to produce. With an increase in the scale of operations, these decisions become more complex. Marketing helps the businessman to take the right decisions at right time.

vi. Source of New Ideas
Marketing helps a business to understand the needs of the consumers. Feedbacks from the consumers enable the companies to make improvements in the existing products. Marketing enables a business to understand the rapid changes in tastes and preferences of people. It also helps to understand any new emerging demand pattern in the market. Research and Development department develop products accordingly. The 4Ps of the marketing mix i.e. product, price, place and promotion play a huge role in the product development. The Research and Development department undertakes inventions and innovations as needed.

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

Question 1.
Marketing helps in increasing consumer awareness.
Answer:

1. Marketing creates awareness in the society as it informs and- educates the customer.
2. It helps the customer to know about a new product or service available in the market and also creates awareness about its usefulness to the customer.
3. Marketing enables consumers to compare product features, price, availability and other essentials.
4. It also provides practical information that helps the consumer in making a purchase such as information about addresses, phone numbers, product release dates, store hours and web addresses.
5. Thus, marketing helps in increasing consumer awareness.

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.
Role of media has major influence on business organisation.
Answer:

1. In today’s time, media is very active and vibrant.
2. It plays an important role in public life.
3. Due to internet connectivity, it is easier for the media to reach out to the masses and influence them.
4. Media can easily raise voice against business malpractices or exploitation of consumers.
5. Hence, role of media has major influence on business organisation.

Question 4.
Entrepreneurship is the best source for self-employment.
Answer:

1. Entrepreneurship means the willingness of an individual to start a new business venture by taking risk and managing it in competitive global environment.
2. The entrepreneurs are passionate to innovate, lead, invent, or pioneer with ground-breaking product or technology.
3. The size of business, the type of work involved, the age or the formal education of the entrepreneur etc. does not restrict the entry of the entrepreneur.
4. Similarly, the label of success or failure also does not matter.
5. Hence, entrepreneurship is the best source for self-employment.

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

Question 1.
Explain nature of principles of management.
Answer:
The principles used for management of business organisations are called as principles of management. These principles provide guidelines to managers while taking business decisions. Management principles are formed to guide and influence the behaviour of employees. They focus on improving the overall efficiency of the organisational resources. The nature of principles of management is explained as follows:

i. Principles are Formed by Practice and Experiment
The management principles are developed gradually with thorough research work. Systematic observations and experiments are conducted before developing them. The results of such experiments are practiced in organisations and then developed as principles.

ii. Universal Application
The principles of management are universal in nature. They can be applied to:

a. All types of organisation, irrespective of their size and nature
b. All levels of management

Their results may vary and application may be modified but these are suitable for all kinds of organisations.

E.g.: Management is required in big companies like Reliance and also in a small book store.

iii. Behavioural in Nature
Management is a group activity which aims at achieving certain goal through a group of human beings. Management principles are designed to influence behaviour of human beings. These principles control a group of people and direct them to achieve the objectives.

iv. General Guidelines
Management principles provide general guidelines to wisely handle the organisational situations and solve the problems. They are not rigid. Which management principles are to be applied depends upon the situation, size and nature of organisation.

E.g.: When we say fair remuneration, the term ‘fair’ can vary as per the nature, size and financial condition of the organisation.

v. Flexibility
Management principles are flexible in nature. They can be modified according to the situation. As business situations keep on changing, these principles can be modified and used in the organisation as per its need. In other words, managers can be flexible while implementing these principles.

E.g.: With a change in technology, application of management principles changes.

vi. Cause and Effect Relationship
Principles of management help to determine the cause or reason for a particular effect. Therefore, they are the base for taking business decisions.

E.g.: Payment of good wages and incentives (cause) helps in increasing the output of workers (effect) or making effective advertisement (cause) increases the sale of a product. (effect).

vii. All Principles Are of Equal Importance
All principles of management are of equal importance. They have to be practiced simultaneously for complete achievement of predefined goals. If any specific principle is focused more while others are not followed with the same focus, then it affects the working of organisation.

Management principles are the principles of social science. The nature of principles of management is not absolute like pure sciences. With some modifications as per the requirement, organisation needs to apply these principles.

Question 2.
Describe any five points of importance of staffing.
Answer:
Staffing is the process of attracting, recruiting, selecting, placing, appraising, remunerating, developing and retaining the best workforce. Overall growth and success of every organisation is based on appropriateness of staffing function. According to Theo Haimann, The staffing function pertains to the recruitment, selection, development, training and compensation of subordinate managers.”

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

i. Effective Managerial Function
The outcome of other functions of management (such as planning, organising, directing and controlling) is based on the effectiveness of staffing. In simple words, staffing is the key to effective performance of other management functions. The competent workforce can work effectively in different areas like production, sales, finance etc.

ii. Leads to Effective Utilisation of Human Resources
Staffing function results in effective utilisation of workforce i.e. human resources. Proper care is taken at every stage of staffing such as recruitment, selection, placement, remuneration, training, development etc.
Also, it is ensured that there is no excessive work burden. Optimum utilisation of workforce leads to improved performance and organisational growth.

iii. Builds Cordial Relationship
A cordial (harmonious) relationship among all levels of employees is essential for healthy working environment. Staffing involves hiring the right people who fit the culture of the organisation. Thus, staffing helps to build cordial relationship in the organisation. A smooth human relation is the key to better communication and co-ordination of managerial efforts in any organisation.

iv. Helps Human Resource Development
A skilled and experienced employee is an asset of a business organisation. Staffing trains and develops the existing workforce. It inculcates the organisational culture into employees. Staffing also ensures smooth functioning of all the managerial aspects of an organisation.

v. Helps in Effective Use of Technology and Other Resources
Trained employees are able to appropriately use the latest technology, capital, material and methods of work. It contributes to building the competitive strength as well as improving standards of work and productivity in terms of quality and quantity.

vi. Improves Efficiency
With the help of right selection strategies, the organisation gets quality employees. Their performance level can be improved further through proper training. Training and development programmes not only result in organisational development but also contribute to self-development of employees. It raises overall efficiency of the organisation.

vii. Long-Term Effect
Proper selection of employees leads the organisation towards the path of success. This is because selection of qualified, efficient and skilful workforce improves the organisational efficiency and thereby, results in better long-term performance.

viii. Essential Contribution
Staffing takes into consideration the future requirements of organisation. Selection is based on the ability of prospective employees so that organisation can meet the future challenges wisely. It means contribution of the staff in their future roles is taken into account in staffing function. In this manner, staffing ensures the continuity and growth of the organisation.

ix. Provides Job Satisfaction
Various factors such as training and development programmes, fair remuneration, job security etc. are important in providing job satisfaction. Employees can be motivated to perform better through financial and non-financial incentives. Adequate remuneration increases their job satisfaction and morale.

x. Maintains Harmony
In the process of staffing, individuals are recruited, selected and placed. Also, their performance is regularly appraised and promotions are given on the basis of merit. The criteria for promotion are fixed and duly communicated to concerned employees. It results in peace and harmony in the organisation.

Question 3.
What is road transport? State its advantages & disadvantages.
Answer:
Meaning
Road transport refers to transportation of goods and passengers via land routes. Vehicles like bullock cart, cycles, autos, buses, cars, trucks, bikes, vans, lorries etc. are means of road transport. Most of the people in India are dependent on public road transport. Roads provide all over connectivity in any terrain as compared to other modes of transport.

Indian Scenario

1. In India, Ministry of Road Transport and Highways (MoRTH) looks after the development of surface transport throughout the country.
2. India has a network of village roads, district roads, state highways and national highways. All of these form the economic backbone of the country.
3. Bus Rapid Transit (BRT) systems have been introduced in many states to improve the public transport system in the country.

Advantages

1. Cost: Road transport is cheap as compared to other modes of transport.
2. Speed: It is a fast mode of transport, especially for short distances. Perishable goods can be transported quickly by road carriers over short distances.
3. Flexibility: It is flexible mode as loading and unloading can be done at any destination.
4. Door-to-door service: It provides door-to-door service and functions as feeder transport to other modes.
5. Availability: It enables people to travel and carry goods to the places where any other mode is not available.

Disadvantages

1. Non-economical for long distances: Road transport is not economical for long distances since it has limited carrying capacity.
2. Non-suitability for heavy and bulky goods: Transportation of heavy and bulky goods by road results in high cost.
3. Affected by weather: It is affected by adverse weather conditions such as floods, rain, landslides etc.
4. Accidents: There is a possibility of road accidents. Such accidents are common.
5. Pollution: It causes pollution due to emission of gases and has adverse health consequences.

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

Question 1.
What is insurance? Explain principles of insurance.
Answer:
Insurance is a contract between the insurer and the insured, whereby the insurer agrees to compensate the insured against the loss on account of unforeseen future event. It serves as a means of protection from financial loss. The principles of insurance are as follows:

i. Principle of Utmost Good Faith
As per this principle, there must be utmost good faith and honesty between the insurer and the insured. Both of them must disclose all material facts accurately. Insured must provide complete, clear and correct information of the subject matter while insurer must provide all relevant information regarding terms and conditions of the contract. If complete, correct and clear information is not provided by either sides of the contract, it may result in non-settlement of claim.

E.g.: Suppose a person takes a life insurance policy of ₹ 1 crore and dies a year later due to medical problem which he had not disclosed at the time of taking policy. In this case, the insurer can refuse to give compensation to family members as the person had not disclosed all facts.

ii. Principle of Insurable Interest
As per this principle, the insured must have insurable or financial interest in the subject matter of insurance. Such insurable interest exists when insured derives financial benefit from the insured object/person (i.e. subject matter of insurance). Insurable interest is applicable to all insurance contracts.

E.g.:
a. A person has insurable interest in his own life and property.
b. A businessman has insurable interest in the goods he deals as well as in his business property.
c. In life insurance, the insurable interest refers to the life assured.
In case of life insurance policy, insurable interest must exist at the time of taking policy.

iii. Principle of Indemnity
To indemnify means to compensate. In insurance terms, indemnity means an assurance (promise) to put the insured in the same financial position as he was immediately before the happening of the uncertain event. So, under this principle, insurer agrees to compensate insured for the actual loss suffered. The applicability of principle of indemnity is as follows!

a. In case of fire, marine and general insurance, the amount of compensation is limited to the amount assured or actual loss incurred, whichever is less.

E.g.: If goods worth ₹ 3 Lac are destroyed and insured value is ₹ 4 Lac, then the insurance company shall pay the insured only ₹ 3 Lac. However, if the insured value is ₹ 2 Lac; the company shall pay only ₹ 2 Lac and not ₹ 3 Lac.

b. Principle of indemnity does not apply to life insurance as the value of human life cannot be assessed in monetary terms. In case of death of insured, the actual sum assured is paid to the nominee.

iv. Principle of Subrogation
This principle is applicable to all contracts of indemnity. As per this principle, after the insurer pays compensation to the insured, legal right (ownership right) of the insured property gets transferred to the insurer. This principle is applicable only when the damaged property has any value after the event causing the damage.

E.g.: Suppose Mr. Sharma owns a two-wheeler, which gets stolen. Upon receiving report from police, insurance company would compensate Mr. Sharma for the loss. Later on, if the stolen vehicle is recovered by police, insurer has right to sell or to scrap the said vehicle. This is because Mr. Sharma has already subrogated i.e. transferred the ownership rights of the vehicle to the insurer.

v. Principle of Contribution
This principle is an extension to or supplementary to the principle of indemnity. If a person has taken insurance for one property from more than one insurance company, even then the compensation paid to him cannot exceed the actual loss suffered. If one insurer pays full compensation, then that insurer can claim proportionate share from other insurers. Similarly, insured himself can claim for proportionate amount from all the insurers.

E.g.: Mr. A had insured his stock worth ₹ 50 lacs with three insurers; GIC for ₹ 25 lacs, Bajaj Allianz for ₹ 10 Lacs and ICICI Prudential for ₹ 15 Lacs. Suppose there was a fire in the warehouse and stock worth ₹ 20 lacs was destroyed. In this case, there are two options:

Option 1: Mr. A can claim full loss from 6IC and GIC can claim proportionate amount from Bajaj Allianz and ICICI Prudential.
Option 2: Mr. A can claim the loss of ₹ 20 lacs in the ratio of value of the policy i.e. ₹ 10 lacs from GIC, ₹ 4 lacs from Bajaj Allianz and ₹ 6 lacs from ICICI Prudential.

In any case, Mr. A can get a maximum compensation of ₹ 20 lacs only. Also, all three insurance companies need to make proportionate contribution towards actual loss.

vi Principle of Mitigation of Loss
As per this principle, insured must try his best to minimise the loss to the insured property on the occurrence of uncertain event. He should not be negligent or inactive just because the property is insured. It is his responsibility to take all the possible measures and necessary steps to control and reduce the losses.

E.g.: If there is a fire in the office of a company, then the officials should use the fire extinguishers and call the fire brigade immediately to reduce further loss. They should not be inactive just because the property is insured.

vii. Principle of Causa-Proxima
As per this principle, when a loss is caused by more than one causes, then the most proximate or nearest cause should be considered to decide the liability of the insurer. This is because the property may be insured against the risk of loss from certain causes and not against all causes. If the proximate cause is the one against which the property is insured, the insurance company is bound to pay compensation and vice versa.

E.g.: A cargo of rice was destroyed by sea water which flooded the ship when it collided with an iceberg. In this case, there are two possible causes for loss: collision of the ship with the iceberg and sea water which flooded the ship. However, the nearest cause of damage is sea water. If the cargo is insured against loss due to sea water, then the insurance company is bound to compensate for the loss caused by sea water. However, if the cargo was insured against loss due to collision, then insurance company is not liable to compensate for the loss caused by sea water.

Question 2.
Explain the functions of marketing in detail.
Answer:
Effective marketing is needed for any business to survive and succeed. The different functions of marketing help to study the needs of consumers and also facilitate to satisfy them. The important functions of marketing are as follows:

i. Marketing Research
Effective marketing is possible when a business takes initiative to identify the consumers’ needs. Marketing research is the process of collecting and analysing the information from the consumers in order to identify their needs. Analysis of the information helps in finding out the need of the market. It helps to find out what the consumers want to buy, when do they buy, In what quantity they want to buy and at what price. Marketing research helps a business to take various decisions regarding successful marketing of the product.

ii. Buying and Assembling
This function involves collecting raw materials from different sources at one place for production. This is an important function as the quality and price of the raw materials determine the quality and cost of the final product.

iii. Market Planning
After assessing the need of the market, a business needs to formulate marketing plans and strategies to achieve the desired objective. Market planning is the process of organising and defining the marketing objectives of the business and creating strategies to achieve them. It is a comprehensive blueprint (detailed plan) that helps to draw an outline of the business’s overall marketing efforts.

iv. Product Development
Product development and design play an important role in selling the product. A business has to develop a product that meets the needs of the consumers. Product design includes decisions related to quality, standard, shape, packaging, colour etc. of the product. Consumers always prefer better and attractively designed products. Good design of the product gives competitive advantage to the business over rivals. Product development is a continuous process as the requirements of the consumer change from time to time.

v. Standardisation and Grading
Standardisation means setting of standards related to process, size, quality, design, weight, colour etc. of the product. It helps in ensuring uniformity in different units of the same product and achieving customers’ loyalty towards the product.

Grading is the process of classification of products according to similar characteristics and/or quality. It is done on the basis of their features like size, shape, quality etc. Generally, grading is done in case of agricultural products like wheat, rice, potatoes etc.

vi. Packaging and Labelling
Package and label create the first impression about the product on consumers. Attractive packaging and labelling can make the product more successful.

a. Packaging means designing the package for the product. It helps to avoid breakage, damage and destruction of the product. The packaging material includes bottles, containers, plastic bags, tins, wooden boxes, jute bags, bubble bags, packing foam etc.

E.g.: Any delicate article is normally wrapped in a bubble wrap to protect it from damage.

b. Label refers to a slip found on the product which provides all the information regarding the product and its producer. The process of displaying a label on the product is called labelling.

c. Packaging and labelling not only provide protection to the product but also act as an effective marketing tool.

vii. Branding
Branding is a process of giving special identity to a product with the help of a unique brand name in order to differentiate it from competitor’s products. It is a process of giving a distinct name to one’s product. Branding helps the businessman to create a special identity for his product in the market. Branding also helps to get recognition among the consumers. Moreover, it aids to get new business and increase brand awareness in the market. Registered brands are called as trademarks and they cannot be copied.

E.g.: Zomato, Ola, Swiggy, Cafe Coffee Day, Peter England, Royal Enfield, Marie Biscuit, Good Day Biscuit, Parle-G are some of the most popular Indian brands.

viii. Customer Support Service
Customer is the king of the market and hence, business has to take every step to ensure customer satisfaction. Business has to take all necessary steps to provide timely customer support services as it helps to gain customer loyalty. The businessman can provide support services like pre-sales service, consumer helpline, after sales service, technical assistance, product demo etc. to the customers. These services help in getting, retaining and growing the customers.

ix. Pricing of Product
Pricing is one of the most important and challenging functions of marketing. The price plays an important role in deciding the success or failure of a product; especially in a highly competitive market. While fixing the price of a product, a businessman has to consider various factors like cost, desired profit, price of the competitor’s product, demand for the product, market conditions etc. If the prices are too high, a business may lose customers and if the prices are too low, it might suffer losses. Therefore, it is important to decide the right price through extensive market research.

x. Promotional Channels
Promotion is the process of informing the consumers about the products, their features, uses, prices etc. and encouraging them to buy these products.

Advertising, personal selling, publicity and sales promotion are the main tools of promotion. A business uses a combination of all or some of these four methods for promotion as per the needs of the business. Promotional activities help to increase brand awareness in the market.

E.g.: The big hoardings that we see on the highways, railway stations or market places are an example of promotional activity.

xi. Distribution
Distribution refers to the set of activities undertaken for the efficient movement of finished goods from the place of production to the consumer. It includes transportation, warehousing, material handling, inventory control, order processing, market forecasting, packaging, plant and warehouse location and customer service. Distribution accounts for a major part of marketing budget of the business. The level of customer satisfaction depends on the efficiency of physical distribution.

xii. Transportation
Transportation means physical movement of goods from the place of production to the place of consumption. It includes transportation of finished goods as well as raw materials. Transportation is important as the activities of production, sale and consumption may not happen at the same place. Place utility is created by transportation activity. Various factors like geographical boundaries, nature of the product, cost, target market, speed, reliability, frequency, safety etc. help in deciding the modes of transportation. Road, air, water, railways, pipelines are some of the important modes of transportation used by business.

xiii. Warehousing
There is a time gap between the production of a product and its sale. Hence, it is important to store the goods at a safe place during this time lag. Any negligence during this period may damage the product and result in losses. Warehouse helps to maintain a smooth flow of goods and to stabilise the prices in the market. The function of warehousing is performed by retailers, wholesalers and manufacturers. Warehousing creates time utility.

Maharashtra Board Class 12 OCM Previous Year Question Papers