CBSE Class 12 Business Studies Question Paper 2025 (Available)- Download Answer Key and Solution PDF

The definition in the question refers to the coordinated effort of individuals working in groups to efficiently achieve specific goals. This aligns with the concept of **management**, which is a comprehensive function in any organization.
Management is the process of planning, organizing, staffing, directing, and controlling an organization's resources—including human resources—to achieve specific objectives effectively and efficiently.

In the given context, keywords like *designing and maintaining an environment*, *individuals working together in groups*, and *accomplishing selected aims* point toward a broad, goal-oriented function. Among the four options, only **management** encapsulates all these elements.
- **Organising** refers to arranging tasks and resources.
- **Staffing** is about recruiting and maintaining a workforce.
- **Directing** focuses on leading and motivating.

However, **management** covers all these aspects. It is the umbrella term for all processes aimed at organizational efficiency and goal achievement. Therefore, the correct answer is (1) Management.
Quick Tip: Management is the umbrella function that integrates planning, organizing, staffing, directing, and controlling to achieve desired goals efficiently.

The scenario explains that Kavi, the Marketing Manager, forecasts the sales of stationery products and compares actual sales to expected ones, using numerical values. This clearly indicates the use of a **budget**, which is a type of plan expressed in quantitative terms.

Let us evaluate all options:
- **Strategy** refers to the broad, long-term plan to achieve objectives, usually qualitative and abstract. It involves decision-making at the highest level, like entering a new market or launching a new product line.
- **Policy** is a general guideline that helps in decision-making within an organization, like customer return policies or employee behavior protocols.
- **Programme** is a complex plan involving a series of steps and actions, such as launching a new educational campaign, where both objectives and resources are defined.
- **Budget**, on the other hand, is a **quantitative plan**—expressed in numbers—used for comparing actual results with expected targets. It helps in planning, controlling, and evaluating financial performance.

Kavi is performing **forecasting**, and the sales figures are quantified for each month and school, which allows for performance measurement. This is the hallmark of budgeting.

Hence, the most appropriate and accurate answer is (4) Budget.
Quick Tip: A budget is a numerical plan that provides a basis for performance comparison and financial control.

Let us understand the meaning and role of directing in management. **Directing** involves guiding, leading, supervising, and motivating employees toward achieving organizational goals. A key role of directing is to bring about desired changes by effectively communicating and motivating employees to embrace new goals, technologies, or methods.

Now let’s evaluate the two statements:
- **Assertion (A):** Correct. Directing indeed facilitates the introduction of needed changes in the organization. This is because it includes leadership and communication, which are essential in overcoming employee resistance and ensuring successful change management.
- **Reason (R):** Incorrect. The statement that “Directing increases resistance to changes” is contradictory to the function of directing. Rather than increasing resistance, directing helps **reduce resistance** through motivation, clear communication, and support systems.

Thus, Assertion is true, but Reason is false.
Quick Tip: Directing plays a key role in change management by guiding and motivating employees to accept and adapt to change.

The dividend decision depends on various factors like earnings, liquidity, stability, and growth prospects. In this case, CVX Ltd. decided to withhold part of their profits to fund **new product development** and **entry into new international markets**, both of which require significant investment.

The key reason for reducing the dividend payout and retaining earnings was the company’s decision to invest in **future expansion and growth**. This directly relates to the factor called **Growth Opportunities**, which refers to the potential avenues for expansion where the company can reinvest its earnings to generate higher future returns.

Explanation of other options:
- **Amount of Earnings:** Though relevant, the company already had sufficient earnings; the decision was not due to limited profits.
- **Stability of Earnings:** Not applicable here; the firm had stable profits.
- **Stability of Dividends:** The company actually reduced the dividend, so it wasn't maintaining stable payouts.

Hence, the correct answer is (4) Growth Opportunities.
Quick Tip: Companies with high growth prospects prefer to retain earnings rather than distribute high dividends.

**Statement I** correctly defines the essence of staffing. It involves recruiting the right people, utilizing their skills effectively, and ensuring their satisfaction through good working conditions, fair compensation, and development opportunities.

**Statement II** is also true because staffing is not a one-time activity. People may retire, resign, or be promoted, and new projects may require additional human resources. Thus, staffing is a **continuous process** of analyzing needs, filling roles, and maintaining the workforce.

Hence, both statements correctly represent essential aspects of staffing.
Quick Tip: Staffing is a never-ending process that aligns human resource supply with organizational demand.

**Internal sources of recruitment** refer to filling job vacancies using existing employees of the organization. Examples include promotions, transfers, and internal job postings.

One of the key advantages of internal recruitment is that it **simplifies the selection process**:
- The candidates are already known to the organization.
- Their performance, behavior, and work ethics are documented.
- Less time and effort are required for training and orientation.

Let us evaluate the options:
- **Option 1** is correct as internal candidates make the process more straightforward.
- **Option 2** is false; wider choice is offered by external sources, not internal.
- **Option 3** is false; internal recruitment does not bring “new blood” or new ideas.
- **Option 4** is incorrect; internal recruitment is generally cost-effective and quicker.

Therefore, the correct answer is (1) It helps in simplifying the process of selection.
Quick Tip: Internal recruitment is faster, cheaper, and more reliable since the candidates are already familiar with the organization.

The situation describes **Leadership**, which is the ability to influence others to willingly follow guidance and achieve desired outcomes. Atul's behavior clearly showcases leadership in action:

- He understood that merely using formal authority doesn't ensure productivity.
- Instead of giving orders, he inspired and guided his team.
- Workers who were earlier reluctant became efficient under his leadership.
- He created a motivating and disciplined environment using behavioral understanding.

Let us analyze the options:
- **Option 1 (Leadership)** is correct because Atul demonstrated the traits of an effective leader—motivating others through personal example and psychological insight.
- **Option 2 (Financial Incentives)** is incorrect; there's no mention of monetary motivation.
- **Option 3 (Motivation)** is a related term but too broad. Leadership is a more specific and accurate term in this context.
- **Option 4 (Non-financial Incentives)** is incorrect; there’s no mention of perks like recognition, awards, etc.

Hence, the concept shown is Leadership.
Quick Tip: Leadership means inspiring people to work willingly, not forcing them with authority.

The passage clearly states that the **rising prices of raw materials** increased the cost of preparing sweets, which in turn led to a higher working capital requirement. This is a direct result of **inflation**.

Let us analyze the options:
- **Option 2 (Inflation)** is correct because the increased prices directly caused the need for more funds.
- **Option 1 (Availability of raw material)** is not the issue; availability isn't mentioned as a problem.
- **Option 3 (Scale of business)** is unchanged.
- **Option 4 (Production cycle)** is not discussed.

Hence, the correct answer is **Inflation**.
Quick Tip: Inflation = Increase in price levels, leading to higher working capital needs.

The passage discusses how organizing helps businesses **modify structure to adapt to changes in the environment**, ensuring smooth transitions. This directly points to **adaptation to change**.

Let us analyze the options:
- **Option 4 (Adaptation to change)** is correct as the passage focuses on accommodating business environment changes.
- **Option 1 (Benefits of specialization)** is unrelated here.
- **Option 2 (Clarity in relationships)** is not emphasized.
- **Option 3 (Optimum utilization of resources)** is not the focus of the passage.

Hence, the correct answer is **Adaptation to change**.
Quick Tip: Organizing helps the business stay flexible and adjust to changes.

The three types of benefits that a consumer seeks from a product are:
- **Functional benefits** (practical use),
- **Social benefits** (status or recognition), and
- **Psychological benefits** (emotional satisfaction, personal value).

Let us analyze the options:
- **Option 3 (Psychological benefits)** is correct because it completes the classic trio of consumer benefit categories.
- **Options 1, 2, and 4** are not standard classifications in this model.

Hence, the correct third benefit is **Psychological benefits**.
Quick Tip: Consumers look for usefulness, social image, and emotional connection.

The delay in approval was due to **rigid rules and cumbersome procedures**, which are part of an organization's internal system and structure. This is a classic example of an **Organizational Barrier** to communication.

Let us analyze the options:
- **Option 3 (Organizational barrier)** is correct as it relates to delays due to formal structure and processes.
- **Option 1 (Semantic barrier)** relates to language or meaning issues.
- **Option 2 (Psychological barrier)** relates to emotions or mental state.
- **Option 4 (Personal barrier)** relates to personal issues of the communicator.

Therefore, the delay was due to an **Organizational barrier**.
Quick Tip: Delays due to systems or hierarchy = Organizational barriers.

**Authority** is the official right given to a manager to command and take action in an organization. It is linked to the position held and allows the person to issue instructions and expect compliance.

Let us analyze the options:
- **Option 2 (Authority)** is correct as it defines the right to give orders and enforce obedience.
- **Option 1 (Decentralization)** is the systematic delegation of authority.
- **Option 3 (Responsibility)** is the obligation to perform a task.
- **Option 4 (Accountability)** is being answerable for the outcome.

Hence, the correct concept is **Authority**.
Quick Tip: Authority = Right to give orders. Responsibility = Duty to do work.

As per the **Consumer Protection Act, 2019**, the pecuniary jurisdiction of the commissions was revised:

- **District Commission**: Can hear cases where the value of goods/services **does not exceed ₹50 lakhs**.
- **State Commission**: For cases exceeding ₹50 lakhs but **not exceeding ₹2 crore**.
- **National Commission**: For cases exceeding ₹2 crore.

Let us analyze the options:
- **Option 1** is outdated. The threshold for State Commission has changed.
- **Option 2** is correct and aligned with the latest amendment.
- **Option 3** is incorrect; the limit for National Commission is now ₹2 crore, not ₹10 crore.
- **Option 4** is completely incorrect; the District Commission is the first-level consumer dispute forum.

Hence, the correct statement as per the Act is Option (2).
Quick Tip: Always check for the updated monetary jurisdiction in law-based questions; acts often get amended.

The image shows a robotic news anchor with the label "AI", reflecting advancements in artificial intelligence and automation. This directly connects to Technological changes in the business environment, showing how technology is transforming industries and roles.

Let's evaluate:

Option C (Technological) is correct as it reflects automation and AI in business.

Option A (Social) relates to cultural and demographic shifts.

Option B (Political) involves government policy and regulation.

Option D (Economic) is about inflation, interest rates, etc.

So, the right dimension is Technological. \ Quick Tip: Technology changes the way businesses operate — from machines to AI.

Planning is a forward-looking function — it is based on forecasting and setting goals. The Reason correctly explains why: to tackle future events for organizational benefit.

So:

Both A and R are true.

R is a valid explanation of A.
Quick Tip: Planning = Future + Preparation = Success.

Let's match:

% Option

(a) Method Study → (iv) Best way to do the job.

% Option

(b) Motion Study → (i) Movements while performing a task.

% Option

(c) Time Study → (iii) Standard time to complete the task.

% Option

(d) Fatigue Study → (ii) Rest intervals to reduce tiredness.

Hence, correct sequence is: (iv), (i), (iii), (ii). \ Quick Tip: Taylor’s studies = Ways + Time + Movement + Rest.

Management is considered a dynamic function because it must adapt to the changing environment. In the given case, Akshara changed her business model from just providing conference halls to creating temporary libraries and study centres due to the flood situation. This decision shows responsiveness to external changes and a proactive approach to meet emerging needs. By doing so, AK Solutions not only helped students but also gained goodwill and expanded its business. This ability to modify plans and align operations according to external factors like social conditions, economic shifts, and natural disasters illustrates the dynamic nature of management. Quick Tip: Management adapts to external factors like disasters, market trends, or policy changes — this makes it a dynamic function.

Trading on equity refers to the use of fixed interest-bearing securities (like debentures and preference shares) to increase the return on equity. When a company borrows funds at a fixed cost (interest), and the return on total investment exceeds this cost, the surplus benefits equity shareholders, leading to higher earnings per share (EPS). This concept leverages debt to magnify profits for owners. It is a financial strategy that enhances shareholders' returns during favorable business conditions, but it also involves higher financial risk. Quick Tip: Trading on equity = Using fixed cost funds (like debt) to boost returns for equity holders.

Statement I is false because the cost of debt is generally lower than the cost of equity. Debt involves fixed interest payments and has tax benefits (interest is tax-deductible), making it a cheaper source of finance. Equity shareholders, on the other hand, demand higher returns due to the higher risk they bear.

Statement II is true. Lenders (such as banks or bondholders) are promised fixed payments and are repaid before equity shareholders in case of liquidation. This makes their investment less risky compared to that of equity shareholders, who receive returns only after all other obligations are met and face uncertainty in dividends. Quick Tip: Cost of debt < Cost of equity due to tax advantages and fixed returns. Less risk = less return.

Financial planning involves estimating the required capital and determining its competition. It ensures that funds are available when needed and are used efficiently. It prevents situations of over-capitalization (excess funds leading to idle money) and under-capitalization (shortage of funds affecting operations). Good financial planning supports smooth operations, timely fulfillment of commitments, and successful execution of strategies. Quick Tip: Financial Planning = Right amount of funds at the right time for smooth business functioning.

The stock exchange provides a platform where existing securities can be bought and sold. This ensures liquidity, meaning that investors can quickly convert their securities into cash. The marketability aspect ensures that securities can be sold at any time, allowing for easy buying and selling.

The existence of a vibrant market with active trading helps in the constant adjustment of prices, ensuring that securities are always tradable.

Thus, the correct explanation for the function is that stock exchanges provide liquidity and marketability to securities, thus allowing investors to convert their investments into cash easily. Quick Tip: Liquidity refers to the ease with which an asset can be bought or sold in the market, and marketability refers to how frequently assets are traded in the market.

The stock exchange plays a crucial role in the price discovery process. The prices of securities are determined through the forces of demand and supply in the market.

Stock exchanges ensure that securities are priced transparently and fairly, reflecting the real-time demand for and supply of those securities.

Thus, pricing of securities in stock exchanges ensures transparency, and the price reflects the true market value of the securities. Quick Tip: Price discovery is the process through which market prices are determined by the interactions between buyers and sellers.

The stock exchange ensures that transactions are conducted securely and are transparent. It regulates all trading activities, preventing fraudulent practices and ensuring fair and honest transactions.

The exchange provides a regulated environment where brokers and investors can safely buy and sell securities with confidence, knowing that their transactions are protected by rules and regulations.

Thus, the function of ensuring the safety of transactions provides trust in the market, encouraging investor participation. Quick Tip: Stock exchanges are regulated entities that ensure that trading is fair, transparent, and secure for all participants.

The primary market is where new securities are issued for the first time. This is where companies raise capital by issuing stocks or bonds to the public. On the other hand, the secondary market deals with the buying and selling of existing securities that have been previously issued in the primary market.

In the primary market, the issuer of the securities directly benefits from the sale, as the funds raised go to the company or government. In the secondary market, investors trade among themselves, and the issuing company does not receive any funds from these transactions.

The primary market is focused on raising funds for new ventures or projects, whereas the secondary market provides liquidity, allowing investors to buy and sell securities.

Thus, the key differences between the primary and secondary markets can be summarized as follows:

1. The primary market deals with new securities, while the secondary market deals with existing securities.

2. In the primary market, the funds go to the issuer, while in the secondary market, the funds are exchanged between investors.

3. The primary market helps raise capital, whereas the secondary market provides liquidity.
Quick Tip: The primary market is where securities are first issued, and the secondary market provides a platform for these securities to be traded among investors.

The concept discussed in the above case is \textit{Communication. In the case, Radhika's business faced issues due to ineffective communication between the in-charge of Kagpur city and the employees at the parlours. Without clear communication, employees failed to understand the benefits and features of the products, which affected the business.

Thus, the correct concept discussed is Communication. Quick Tip: Effective communication is essential in business to ensure that employees and clients are aligned with the business objectives and product value.

The process of communication includes several key elements. The first five elements are:


1. \textit{Sender: The individual or entity who initiates the message. In the case above, Radhika and the marketing manager are the senders.

2. \textit{Message: The information or idea being communicated. Here, it was the understanding of the product features and benefits.

3. \textit{Encoding: The process of putting the message into a form that can be understood by the recipient, e.g., explaining product benefits clearly.

4. \textit{Channel: The medium through which the message is transmitted, such as face-to-face communication, emails, or meetings.

5. \textit{Receiver: The individual or group who receives and interprets the message. In this case, it was the employees at the parlours.

Thus, the first five elements of the communication process are \textit{Sender, Message, Encoding, Channel, and Receiver. Quick Tip: Communication is a process involving multiple elements, and clear communication can significantly impact the success of a business.

\textit{Capital Market refers to the market where long-term financial instruments such as stocks, bonds, and debentures are bought and sold. It helps in mobilizing funds for businesses and governments for long-term investment.

The differences between Capital Market and Money Market based on the following points are:

(i) Participants:

- In the \textit{Capital Market, the participants are investors, brokers, institutional investors, and issuers of long-term securities.

- In the \textit{Money Market, the participants include banks, financial institutions, and government bodies.

(ii) Instruments:
- In the \textit{Capital Market, the instruments traded are stocks, bonds, debentures, and equity shares.
- In the \textit{Money Market, the instruments are short-term debt instruments like Treasury bills, commercial papers, and certificates of deposit.

Thus, the main difference is that Capital Markets deal with long-term securities, while Money Markets handle short-term instruments. Quick Tip: The Capital Market is focused on long-term investments and securities, while the Money Market is concerned with short-term borrowing and lending.

The Securities and Exchange Board of India (SEBI) is responsible for regulating the securities market in India to protect investors' interests. Three key regulatory functions of SEBI are:

1. \textit{Regulation of Stock Exchanges: SEBI supervises the functioning of stock exchanges in India, ensuring that transactions and practices remain transparent and fair.

2. \textit{Protection of Investors: SEBI aims to protect the interests of investors by ensuring that companies provide accurate information about their performance and practices.

3. \textit{Control of Insider Trading: SEBI monitors and takes action against illegal insider trading, ensuring that no individual gains unfair advantage from unpublished sensitive information.

Thus, SEBI plays a vital role in regulating and ensuring a fair and transparent market. Quick Tip: SEBI’s role in regulating the securities market ensures that it operates smoothly, with fair practices for all participants.

The concept discussed in the above case is \textit{Consumer Responsibility. The case illustrates how Aman took steps to ensure the quality, safety, and proper usage of the microwave oven, fulfilling his responsibilities as a consumer. This includes conducting research, verifying product quality, ensuring safety standards, and following instructions for proper use.

Consumer responsibility encompasses both pre-purchase and post-purchase actions, ensuring the consumer selects quality products, understands their usage, and takes steps to minimize risks. This responsible approach helps ensure both personal safety and satisfaction with the purchased product.

Although Aman took many responsible actions while purchasing and using the microwave oven, he still failed to fulfill some important responsibilities. These are:

1. \textit{Environmental Responsibility:

- Aman did not consider the environmental impact of the microwave oven's disposal. A responsible consumer should consider the recyclability of the product or its disposal in an environmentally friendly manner. Products like electronics can be harmful to the environment if not properly recycled.

- Example: He could have inquired about the recycling policies of the manufacturer or ensured that the product was properly disposed of at the end of its life cycle.

2. \textit{Post-Purchase Support:

- While Aman checked the quality of the oven and followed the manufacturer's instructions, he did not engage with post-purchase support to ensure the product’s proper performance over time. Consumer responsibility includes using customer support services to resolve issues and maintain the product's functionality.

- Example: He could have contacted customer support to inquire about maintenance tips or service schedules for his microwave.

3. \textit{Energy Efficiency:

- Aman did not inquire about the microwave's energy consumption. Responsible consumers should consider the long-term energy costs of appliances, as it affects both the environment and their utility bills.

- Example: He could have checked the energy efficiency rating of the product or chosen an energy-efficient model to minimize power usage.

Thus, Aman failed to fulfill these key consumer responsibilities that go beyond the initial purchase. Quick Tip: A responsible consumer not only chooses the best product but also takes into account long-term implications such as environmental impact, energy consumption, and proper use and disposal of the product.

The principle of \textit{Division of Work suggests that work should be divided into smaller tasks, and each task should be assigned to an individual who is best suited for that particular job. Specialization results from this division, as workers become more skilled and efficient in their specific tasks.

Dividing work increases efficiency and productivity, as individuals can focus on specific tasks, reducing the time and effort needed to complete them.

Thus, Division of work ensures specialization and improves productivity. Quick Tip: By dividing work into smaller tasks, individuals gain expertise, leading to greater efficiency and better outcomes.

The principle of \textit{Authority and Responsibility states that authority (the right to give orders) and responsibility (the obligation to perform tasks) should go hand-in-hand. If an individual is given the authority to make decisions, they must also be held accountable for the results.

A balance between authority and responsibility ensures that decision-making power is accompanied by accountability, preventing misuse of authority and ensuring proper task completion.

Thus, authority and responsibility must be properly balanced for effective management. Quick Tip: For successful management, authority and responsibility should always be aligned to prevent confusion and ensure clear accountability.

The principles of management provide a practical framework that helps managers understand and tackle real-world organizational challenges. They provide guidelines that assist managers in addressing complex situations and making informed decisions.

By applying these principles, managers can better understand the dynamics of the workplace, the nature of their teams, and the overall goals of the organization, which improves decision-making.

Thus, principles of management provide critical insights that guide managers in the practical aspects of running an organization. Quick Tip: The application of management principles offers managers clarity and direction, leading to more effective decision-making.

The principles of management ensure that resources (human, financial, physical) are used effectively to achieve organizational goals. By focusing on optimizing resource allocation, organizations can avoid wastage and maximize productivity.

Additionally, the principles help in ensuring that administration is carried out efficiently. By following these principles, managers can streamline processes, reduce inefficiencies, and improve overall performance.

Thus, applying these principles helps in making the best use of available resources while maintaining effective administration. Quick Tip: Efficient resource utilization is key to maximizing productivity and achieving organizational goals while minimizing costs.

The feature of co-ordination integrates the efforts of individuals or departments within an organization, ensuring that everyone is working towards a common goal. It helps synchronize various activities and tasks performed by different teams, avoiding duplication of work.

Effective co-ordination leads to the smooth functioning of the organization as it brings together the efforts of all the employees and integrates them to achieve organizational goals.

Thus, co-ordination integrates group efforts by aligning the actions of all team members. Quick Tip: Co-ordination ensures that all teams and departments are aligned and work together efficiently towards shared goals.

Co-ordination is not just the responsibility of one person or department but is a shared responsibility. Every manager, irrespective of their role or level, must ensure that their team’s efforts are well-coordinated with other teams and departments within the organization.

Managers need to foster effective communication and resolve conflicts between departments to maintain smooth co-ordination across the organization.

Thus, co-ordination is a shared responsibility that must be managed by all managers in the organization. Quick Tip: Effective co-ordination requires collective responsibility from all levels of management to ensure seamless integration of efforts.

Management is focused on achieving specific goals or objectives. Every action taken by managers should be directed towards fulfilling these goals, whether they are related to increasing profits, improving operational efficiency, or achieving customer satisfaction.

A goal-oriented approach ensures that all efforts in the organization are aligned towards common objectives, which guides the decisions and actions of management.

Thus, management is inherently focused on achieving predetermined goals, providing clear direction to all organizational activities. Quick Tip: Setting clear goals ensures that all actions and decisions in the organization are aligned and contribute towards achieving these goals.

Management is not a one-time activity but a continuous process. It involves regular activities such as planning, organizing, directing, and controlling that take place continuously to ensure the organization achieves its goals.

As the organization grows and changes, management adapts to the new environment, constantly reviewing strategies and adjusting plans. This ensures the organization remains aligned with its objectives over time.

Thus, management is an ongoing, continuous process that adapts to the evolving needs of the organization. Quick Tip: Management is a continuous cycle, with regular adjustments to strategies and goals, ensuring the organization stays on track in a changing environment.

The management concepts discussed in the case can be identified as:

1. Group I: \textit{Efficiency – Group I met its target of refurbishing 150 dresses at the planned cost of Rs. 30 per dress. This shows that the group worked efficiently, achieving its target within the expected cost.

2. Group II: \textit{Cost Control and Planning – Group II met its target but at a higher cost (Rs. 35 per dress). This indicates that while the group was able to complete the task, it did not control costs effectively. The increase in cost suggests a lack of planning or inefficiency in using resources.

3. Group III: \textit{Resource Utilization and Cost Management – Group III could refurbish only 140 dresses, which is below the target. However, they did so at a lower cost (Rs. 27 per dress). While they were more cost-efficient, they failed to meet the quantity target, indicating issues with resource utilization and planning.

Thus, the management concepts discussed are Efficiency, Cost Control, and Resource Utilization. Quick Tip: Efficiency is achieved when an organization meets its goals with the least amount of resources, while cost control ensures that tasks are completed within budget.

The meaning of the concepts identified in part (i) are:

1. Efficiency: This refers to achieving the desired output (refurbishing 150 dresses) using the least amount of resources (costs). It is a measure of how well resources are utilized to achieve the target.

2. Cost Control: This concept involves managing and reducing costs while still achieving the required output. It is essential in ensuring that the process stays within budget without compromising quality.

3. Resource Utilization: This refers to how effectively the available resources (sewing machines, workers, etc.) are used. Proper resource utilization ensures that the organization can achieve its goals without wastage or inefficiency.

The most important concept for management is Efficiency. While cost control and resource utilization are also crucial, efficiency ensures that the organization achieves its goals with the least amount of effort and resources. In the given case, Group I exemplifies efficiency by meeting both the target and cost expectations, making it the most important factor for management. Quick Tip: Efficiency is the cornerstone of effective management. By achieving goals with optimal resources, organizations can maximize productivity and minimize waste.

The two points of importance of the ‘Planning’ function of management highlighted in the above paragraph are:

1. Setting Clear Goals:
- Planning helps in setting clear and specific goals for an organization or team. In the given case, Prachi ensures that the goals are clearly stated for each teacher. This helps in providing direction and clarity for the work that needs to be done. Having clear goals is essential as it allows individuals to align their efforts and resources toward achieving them. It reduces ambiguity and provides a sense of purpose to all involved parties.

Example: By setting clear goals for teachers, Prachi helps them understand what is expected and how to approach their tasks, improving performance and focus.

2. Coordination of Activities:
- Planning provides a framework for coordinating the activities and efforts of different individuals or teams. In the case mentioned, Prachi's plans help in coordinating the work of teachers teaching different subjects to the specially-abled students. It ensures that all teachers are on the same page and working toward a common objective. Coordination is vital to avoid duplication of efforts and to ensure that resources are used effectively.

Example: Prachi’s planning serves as a guide for all teachers, ensuring that their teaching efforts are aligned and contribute to the holistic development of the students.

Thus, planning is crucial as it provides direction through clear goals and ensures coordination among various activities within an organization. Quick Tip: Effective planning enables an organization to set clear goals and align all activities to achieve them, ensuring optimal use of resources and efficient coordination.

The element of the marketing mix discussed in the above case is \textit{Promotion. Promotion refers to the strategies used by businesses to communicate with potential customers, raise awareness, and attract them to the product or service.

In this case, the gym used promotional strategies such as an attractive poster and time-limited offers (50% discount, free coach facility, and free protein diet) to entice Anika to join.

Promotion aims to increase visibility and stimulate customer interest, which ultimately leads to higher sales and business growth. By offering discounts and free services, the gym was using promotional tools to persuade Anika to take action.

Thus, the concept of \textit{Promotion in the marketing mix is used to attract customers through discounts and special offers. Quick Tip: Promotion involves communicating and persuading potential customers through tools like advertising, discounts, offers, and events to stimulate demand.

The tools of communication used in the promotion of the gym are:

1. Advertising:
- Anika saw an attractive poster about the gym’s weight loss programme. Advertising is a powerful tool used to raise awareness about a product or service to a wide audience. Posters are a form of visual advertising, which helps in drawing attention and conveying key messages.

2. Sales Promotion:
- The gym offered a 50% discount on the weight loss programme and free coach facility. These are examples of sales promotions, which are short-term incentives used to encourage customers to make a quick purchase or sign up for a service.

3. Public Relations:
- The gym provided free protein diets, which can also be considered part of public relations efforts, aiming to build a positive image and foster customer loyalty. Offering additional services for free enhances customer satisfaction and can help in building a good reputation.

These promotional tools combined help in informing potential customers (like Anika) about the gym’s offerings, creating interest, and persuading them to take immediate action (joining the gym).

Thus, advertising, sales promotion, and public relations are the primary tools used for communication in this scenario. Quick Tip: Communication tools like advertising, sales promotions, and public relations help businesses convey their message, engage customers, and drive purchases or sign-ups.

Identifying the Financial Decision:
In the above paragraph, the financial decision that is discussed is \textit{Investment Decision. Investment decisions involve allocating significant financial resources towards acquiring assets, which are expected to generate future returns. In this case, the decision to invest in machines costing Rs. 12 crores each is an example of an investment decision.

Meaning of Investment Decision:
An investment decision refers to the process of deciding where to invest substantial amounts of money in assets that will yield future returns, such as machinery, infrastructure, or property. These decisions are typically long-term and irreversible because once made, the money is committed to the investment, and it cannot be easily recovered.

Why Investment Decisions are Critical:
Investment decisions are critical because they have a lasting impact on the company’s future. For instance, in the case above, the decision to purchase advanced machines to maintain hygiene and quality at all branches is a large financial commitment. It requires careful consideration of several factors, such as expected returns, financial stability, and the potential risks associated with the investment.

Thus, the financial decision described is the \textit{Investment Decision related to acquiring expensive machines for the expansion of the business. Quick Tip: Investment decisions require a thorough evaluation of future benefits, costs, and risks. They often involve large sums of money and have a long-term impact on the financial health and growth of the business.

Two Factors Affecting Investment Decisions:
There are several factors that influence investment decisions, but the two most significant factors in this case are:

1. Cost of Investment:
The cost of each machine is Rs. 12 crores, which is a considerable financial outlay. When making such an investment, the business owners need to evaluate whether they can afford this large cost without adversely affecting the company's cash flow or financial stability.

This factor involves assessing the company's current financial health, understanding the potential financing options available (such as loans or equity financing), and evaluating the company's ability to generate enough returns to justify the investment. A careful cost-benefit analysis is required to ensure that the long-term gains outweigh the immediate financial strain of purchasing the machines.

Example: If the business expansion results in increased sales and improved customer satisfaction, it could provide a strong return on investment. However, if the demand does not meet projections, the business could be financially strained due to the high upfront cost.

2. Irreversibility of the Decision:
Investment decisions, once made, are typically irreversible. In this case, once the decision to purchase the machines is finalized, the money is spent, and the machines cannot easily be sold or returned. This makes the decision especially critical, as it cannot be undone without significant losses.

The irreversibility of the decision means that the business owners must carefully assess the long-term implications of the investment. This includes considering market conditions, future consumer demand, and potential competition. Since the decision is permanent, the owners must be confident that it will provide sustained value over time.

Example: If the market for take-away food changes dramatically or if a new competitor enters the market, the business may struggle to recover the cost of the machines. Therefore, the business must consider whether the investment will lead to future growth or whether the financial risk is too high.

Thus, the two critical factors influencing the investment decision are the cost of investment and the irreversibility of the decision. Quick Tip: Investment decisions involve careful consideration of the cost, expected returns, and long-term consequences. Since these decisions are irreversible, businesses must evaluate risks and benefits thoroughly before proceeding.

The first step in the selection process is \textit{Preliminary Screening. This involves reviewing applications and resumes to shortlist candidates who meet the basic qualifications for the job. Preliminary screening ensures that only qualified candidates are moved forward in the recruitment process.
During this step, recruiters typically look for basic requirements such as educational qualifications, experience, skills, and other eligibility criteria. Candidates who don’t meet the initial requirements are rejected.
This process helps in saving time and resources by focusing on candidates who are likely to be a good fit for the role. Quick Tip: Preliminary screening helps to filter out unqualified candidates early in the process, ensuring that time and resources are focused on the best candidates.

\textit{Selection Tests are designed to assess the suitability of candidates for the specific role. These tests are typically structured to evaluate skills, intelligence, personality, and other attributes that are important for the job.
Common types of selection tests include aptitude tests, psychometric tests, technical skills assessments, and personality tests. Each type of test is tailored to measure particular attributes required for the role.
These tests help employers objectively evaluate the candidates and reduce biases in the selection process. Quick Tip: Selection tests offer an objective measure of a candidate’s abilities and suitability for the role, ensuring a more accurate and fair hiring decision.

The \textit{Employment Interview is a critical step in the selection process. During the interview, the employer has the opportunity to assess the candidate’s skills, experience, and fit for the organization in person.
Interviews can be structured (with predefined questions), semi-structured, or unstructured. The interview is not just about asking questions but also about gauging the candidate’s attitude, communication skills, and cultural fit within the company.
This step helps employers understand whether a candidate’s qualifications and personality match the job and organizational culture. Quick Tip: The interview process provides an opportunity for employers to assess candidates in real-time, evaluating both their technical skills and interpersonal qualities.

\textit{Reference and Background Checks are conducted to verify the information provided by the candidate during the interview process. This includes checking employment history, educational qualifications, criminal record (if any), and professional references.
Reference checks typically involve contacting previous employers, colleagues, or academic institutions to confirm the candidate’s qualifications, work ethic, and reliability.
Background checks are important for ensuring the integrity and credibility of the candidate, reducing the risk of hiring someone with a false or misleading background. Quick Tip: Reference and background checks provide an additional layer of assurance by confirming the candidate’s qualifications and work history before a final offer is made.

\textit{Status as a non-financial incentive refers to the prestige or respect that an employee gains through their position, role, or recognition in the organization. Status boosts morale and motivates employees to perform well in their roles.
Employees who feel valued and respected are often more productive and committed to their work. Providing employees with status (such as a managerial title or public recognition) helps them feel appreciated and motivated.
Status as an incentive can be highly effective in driving positive employee behavior, encouraging them to take on more responsibilities and perform at their best. Quick Tip: Status can significantly enhance job satisfaction and motivation, as employees feel valued and recognized for their contributions.

\textit{Organisational Climate refers to the overall atmosphere or culture within an organization. It encompasses the values, attitudes, and behaviors that are prevalent in the workplace, shaping how employees interact and work together.
A positive organizational climate can increase job satisfaction, improve collaboration, and reduce turnover. A work environment that values communication, trust, and mutual respect creates a sense of belonging and encourages high performance.
Employees are more likely to stay motivated and engaged in an organization with a supportive and inclusive climate, which directly impacts productivity and morale. Quick Tip: A positive organizational climate enhances employee motivation, engagement, and loyalty, ultimately leading to improved performance.

\textit{Employee Participation refers to involving employees in decision-making processes, particularly in matters that affect their work or the organization as a whole. This participatory approach helps employees feel valued and more invested in the success of the organization.
When employees have a say in the decisions that impact their work environment, it increases their sense of ownership and responsibility. This leads to higher levels of motivation and engagement.
Employee participation fosters a collaborative and inclusive environment, which can lead to improved problem-solving, innovation, and overall job satisfaction. Quick Tip: Involving employees in decision-making enhances their motivation and commitment, leading to better productivity and a stronger sense of ownership.

Identifying the Function of Management:
The function of management discussed in this passage is \textit{Controlling. Controlling is a crucial management function that ensures that activities are performed as planned, and resources are being utilized effectively and efficiently to achieve the predetermined goals.

Meaning of Controlling:
Controlling refers to the process of monitoring and evaluating the progress of activities, comparing actual performance with planned performance, and making adjustments when necessary to ensure the achievement of organizational objectives. In this case, Asha noticed that despite hiring more workers, production was low. She took corrective actions by appointing a supervisor (Nabita) to monitor and address the issues of inefficiency.

Application in the Case:
In the given scenario, Asha’s concern regarding the low production despite having more workers reflects the need for controlling. By appointing a supervisor and identifying that workers were distracted, she took corrective action to bring the production back on track. This is an example of the controlling function at work. Quick Tip: Controlling is essential to ensure that deviations from the plan are identified and corrected promptly. It helps in achieving the goals by ensuring resources are used efficiently.

Five Points of Importance of Controlling:
The controlling function of management plays a vital role in the success of any organization. The five points highlighting its importance are:

1. Ensures Goal Achievement:
Controlling helps in ensuring that the activities are performed according to the plan, thus ensuring that the set goals are achieved. In Asha's case, controlling was necessary to ensure that production targets were met and resources were effectively utilized.

2. Identifies Deviations:
By monitoring actual performance and comparing it with planned performance, controlling helps identify deviations or discrepancies. When Asha discovered that production was not up to the mark, controlling helped her identify that workers were being distracted.

3. Improves Efficiency:
Controlling helps identify inefficient practices or resource utilization, allowing for corrective actions to improve efficiency. In the scenario, by supervising and correcting the activities of the workers, Asha improved the efficiency of her operations.

4. Provides Basis for Decision-Making:
The controlling function provides managers with the information necessary for informed decision-making. Asha used the information about worker productivity to make the decision to appoint a supervisor and guide the operations more effectively.

5. Maintains Organizational Standards:
Controlling ensures that the set standards of quality, performance, and productivity are maintained. In this case, controlling helped Asha ensure that the workers followed the planned activities, which led to meeting the desired production levels. Quick Tip: Controlling is an ongoing process that ensures plans are being followed, objectives are met, and corrective measures are taken to align the organization’s performance with its goals.

Advantages of Formal Organization:

1. Clear Authority and Responsibility:
A formal organization clearly defines the roles, duties, and responsibilities of each member. This helps prevent ambiguity and confusion regarding the scope of authority and ensures that everyone knows their specific roles, leading to efficient task execution.

2. Facilitates Communication:
Formal organizations establish formal channels of communication. Information flows in a structured manner, ensuring that instructions, reports, and feedback reach the right people at the right time. This structured communication enhances organizational efficiency and reduces the chances of errors.

3. Promotes Coordination:
A formal organization helps in coordinating the activities of various departments and individuals. It ensures that all activities are aligned with the overall objectives and that various departments work together toward achieving the organization’s goals.


Limitations of Formal Organization:

1. Inflexibility:
Formal organizations can be rigid due to their hierarchical structure. This rigidity can slow down decision-making and make it difficult for the organization to adapt to changes in the environment. Employees might feel restricted by the formal rules and procedures.

2. Lack of Innovation:
Since formal organizations operate within strict rules and guidelines, employees may be discouraged from thinking creatively. The rigid structure can stifle innovation, as workers might feel their ideas are not welcome or would be too risky to implement within the established norms.

3. Increased Bureaucracy:
A formal organization often leads to an increase in bureaucracy. This can result in excessive paperwork, slow decision-making, and unnecessary complexity, making the organization less responsive and more cumbersome. Quick Tip: While formal organizations provide structure, they can also lead to rigidity, reduce creativity, and increase bureaucracy, which can hinder organizational growth.

Advantages of Functional Structure:

1. Specialization:
Functional structure groups employees based on their specialized skills and expertise. This leads to greater specialization in specific areas, improving efficiency and the quality of work.

2. Clear Roles and Responsibilities:
In a functional structure, each employee has a clear role based on their expertise. This reduces role ambiguity and helps employees focus on their specific tasks, making them more efficient.

3. Improved Coordination within Departments:
Functional structure enhances coordination within each department since employees with similar skills and responsibilities work together. This leads to better communication and faster decision-making within departments.

4. Efficient Use of Resources:
By grouping people with similar functions, the organization can allocate resources more effectively. This leads to economies of scale and better utilization of resources like human capital and equipment.

5. Better Control and Supervision:
Managers in a functional structure have better control over their departments as they oversee specialists in their fields. This enhances supervision and ensures high standards within the department.

6. Clear Career Progression:
Since employees are grouped according to their functions, they can see a clear career path within their department. This structure helps employees focus on skill development within their area of expertise, leading to better career growth. Quick Tip: Functional structure helps organizations achieve efficiency, specialization, and clear roles, leading to better performance and employee growth.

Three Pricing Factors Considered by Ravi and Megha:

1. Cost of Manufacturing:

"Manufacturing high-quality LED lights with some unique features required substantial investment in technology and high-grade materials. This pushed up their cost of manufacturing."


Explanation: Ravi and Megha considered the cost of manufacturing as a key factor in determining the price. They needed to cover the expenses related to production, including investments in technology and high-grade materials. This would help them set a price that ensures they recover all costs and earn a reasonable profit.

2. Demand and Utility of the Product:

"The high demand and the utility provided by these lights will set the upper limit of the price."


Explanation: They took into account the high demand for LED lights and the utility it provides to customers. The more utility a product offers and the higher its demand, the higher the price it can command. In this case, the utility of their unique LED lights, coupled with strong market demand, helped Ravi and Megha set the upper price limit.

3. Product Differentiation and Unique Features:

"They justified the higher price because of product differentiation and unique methods of advertising and sales promotion."


Explanation: Ravi and Megha justified charging a higher price for their LED lights by emphasizing the product's unique features, such as energy efficiency and differentiation from competitors. They also considered their advertising and sales promotion strategies, which helped build the brand value and allowed them to price their products higher than the competition. Quick Tip: When determining the price of a product, factors such as manufacturing costs, demand, utility, and differentiation play a critical role. Pricing should reflect both the cost and the perceived value by customers.