Meerut Institute of Technology (PC), Meerut

Model Question Paper

BBA 1st SEM. SUBJECT NAME: BUSINESS ORGANIZATION AND ETHICS

Time Allowed :3 hours Maximum Marks: 75

Section- A ( Answer in 50 - 75 words)

(This section contains 5 questions. Attempt all five questions. Each question carries 3 mark) 5x3= 15
Ques. Course
Question
No. Outcome
Q1: Describe Business ? CO 1
A1: Business:- Business refers to those economic activities which are connected
with the production, purchase , sale of goods or services with the main aim of
earning profit. For Ex- Fishing, mining, Farming, Manufacturing and
wholesales etc…
It include all occupation in which people are busy in earning income either by
producing or purchase and sale of the goods and services. Business is
considered as an economic activity as it is undertaking with the objective of
earning money and livelihood ,not for psychological satisfaction.

Q2: Write a short note about business unit? CO 2

A2: A business unit is an organization or the subset of an organization which is
independent in its accounting and operational functions . A business unit is
basically a profit making centre which has a prime focus to segment the
market. Business unit are a smaller entity like a department or a functional
group within a company which is responsible for handling the issues and
affairs of that specific activity. Examples of business units include Marketing
,finance ,operations ,accounting, sales ,human resources and research and
development division.
Companies have multiple independent business unit into itself and each one
of them is responsible for their own profitability .

Q3 Give any three advantages of Business Ethics ? CO 4

A3: Business Ethics refers to the application of ethics to business operations. To
be more specific , business ethics is the study of good and evil , right and
wrong , just and unjust actions of a businessman.
Advantages of Business Ethics:
1). To be transparent in terms of charges of the commodity : Value system
companies always have the fair trade policy which makes the background or
workplace more ethical , transparent and healthy relationship with all social
groups.

2). Promotes the Customer Service : It is the support you offer to the
customers after buying the products which helps them to have an happy
experience with you. Ethics assist the company in growing the customers by
rendering services.
3). Enhance Organizational culture : If an Organization behaves in an ethical
manner , then the organization create long – lasting trusting relationships
 with inside and outside of the organization that positively impact to the
society.

Q4: Explain Corporate Mission Statement ? CO 4

A4: A company’s mission describes the purpose or its reason for existence
including ( Who we are , what we do & why we are here ) . It announce what
is company is providing to society.
Vision – Statement of future
It provides the framework within which company’s decisions , strategies,
overall goal are formulated or we can say it provide a path and guide
decision-making. Corporate Mission Statement include the following
information:

Q5: What is joint Stock Company? CO 3

A5: A company means a voluntary association of persons who have come
together for carrying on some business and sharing the profits.
Joint stock company is an organization of persons for making profits , whose
capital is divided into transferable shares ,the liability of members is
ordinarily limited , separate legal entity with a perpetual succession. The
person who contributes its capital are called members of the company.
A joint Stock Company is an artificial person having separate legal existence ,
Perpetual succession and common seal.

The company form of organization is considered to be most suitable for

organizing business activities on a large scale . It has advantage of attracting
huge capital from the public . With adequate capital it can employ trained
and experienced managers to run the business activities efficiently.

Section- B ( Answer in 150 - 200 words)

(This section contains 3 questions. Attempt any two questions. Each question carries 7.5mark).7.5 x 2=15

Ques. Question Course

No. Outcome
Q6: Define Sole Proprietorship ? Write features and advantages of sole proprietorship? CO 3
A6: The sole proprietor is the a person who carries business exclusively by and
for himself. He is not only the owner of the capital of the business, but is
usually the organizer and manager and takes all the profits or responsibilities
for losses. Def by (James Stephenson)
Sole Proprietorship :-
It is a single entrepreneurship and that form of business organisation in
which an individual brings his own capital , owns or manages the business
himself and is solely responsible for the results of its operations be it loss or a
profit.
Features of Sole Proprietorship :-
1.Single ownership : The sole proprietorship firm is owned by a single
individual only. All the capital is supplied by the single individual from its own
wealth or from borrowed fund.
 2 :-Single Risk Bearer: In sole proprietorship firm whole risk is borne by a
single individuals only . The sole beneficiary of all the reward is one individual
only. Likewise ,if there are losses ,he and she alone has to bear them .
3. Unlimited Liability :- In this form of business ,the sole trader is personally
liable for all the debts of the business. In case of business losses, if the
business assets are not sufficient to meet all business liabilities , the
proprietor may have to sell his personal property to pay off the liabilities.
4. One man Control :- The proprietor is the sole owner of the firm and has
full control over it. The ownership and management lies in the hands of one
person only. Some manager may be employed to help the owner but
ultimate control lies with the sole trader itself.
5. Independent Control :- Total management of a sole proprietorship firm
lies in the hands of the proprietor only. He enjoys complete freedom of
actions. He has all the authority to take decisions and run the business in his
own way.
6. Small Size :- The sole proprietorship firms operates on a very small scale.
As all the funds are arranged by one single person , total management lies in
the hands of one person only. Therefore the scale of operation is generally
limited.
Merits of Sole Proprietorship :-
1.Secrecy : A sole proprietor can keep all business-related information to
themselves as the business’s only decision-maker. The law does not bind
them to make the accounts of a sole proprietorship public.
2. Profit sharing : A sole proprietor has complete ownership of profits arising
from business operations. They are not obligated to share profits with
anyone else.
3. Easy to form and dissolve : A sole proprietorship organization is easy to
form . No legal formalities are involved by any specific law The sole
proprietor can close the business whenever he desires without any legal
formality.

4. Direct Motivation : The profits earned belong to the sole proprietor alone
and he bears the risk of losses as well. Thus, there is a direct link between
effort and reward. If he works hard, then there is a possibility of getting more
profit and of course, he will be the sole beneficiary of this profit.

5. Flexibility : In sole proprietor firm all the decisions are taken by the
proprietor himself. He is not supposed to consult any one and waste time. By
quick decisions , immediate actions can be taken which bring flexibility of
operation. There are no delays and business can quickly adopt itself to the
changing environment.
6. Suitable for small scale business:-The sole proprietorship business is the
most suitable form of business for small scale business enterprise. It is a
suitable enterprise for business which manage small business and
management as well.

Q7: Describe corporate Excellence ? Why it is necessary to implement in the CO 4

company?
A7: When company has specific , measurable, attainable & right approach
towards goal than it can be said that the company is achieving in terms of
Excellence . All future growth of company is directed through corporate
Excellence .In other we can say , if companies wants to grow so it is must for
every organization to have corporate excellence. Companies should have
positive mindset and set of principle which is related to ethics.
Following are the important areas that help the company to have corporate
excellence :
a). Resource Utilization : Company can achieve corporate excellence by
utilizing resources in a proper manner . Resource include – human , physical
and financial resources as these are scarce so must be utilized in the best
possible manner so that business can get maximum benefit from human ,
money and assets.
b). Focused on Functional areas : All the operating areas or department need
to be checked, analyzed and explored to ensure that all the important
business activities are carried out efficiently .

c). E-commerce: “Buying and selling of goods through Internet” or

“commercial transaction over the internet” is called E-commerce . Now
companies has adopted new concept to reach globally. Amazon , Flipkart ,
Shopify , Myntra , Ebay are the examples of online stores .

d).CRM ( Customer Relationship Management) : In order to achieve

corporate excellence in the competitive scenario , companies are adopting
scientific approach for building & sustaining long term business with
customer to satisfy them .Customer require – Availability of product in better
quality , fast delivery and fair price.

e). Business Ethics : In order to get excellence in corporate ,the companies

should have basic set of rules and principles . Ethics deals with fair and unfair
activities for all working in the organizations . The organization should
develop and formulate the right strategies and plan to excel .
Corporate Excellence in the Modern Business World :-
There are many areas in which corporate excellence is needed in the
competitive world to run a business efficiently .
1.Excellence in Human Resource Management : Human resource
Management plays a very crucial role in managing the working system of the
organization.
 Proper Training Program
 Strong Ethics
 Problem –Solving
 Effective Communication

2. Excellence in Marketing :
 Using trade shows , exhibitions
 Sales promotions and Discounts
 Innovation in products
 3. Excellence in Production :
 Ensure better quality products
 No to adulterations
 Product Testing

Q8: What is Organizational Culture ? What are Different types of Organizational CO 5

Culture in organizations ?
A8:- Organizational Culture can be defined as the norms, values , beliefs, language
,procedures ,routines and assumption that’s is shared and followed by the
people and groups in an organization.
There are many elements which makes organizational culture
a). Visible elements : These elements are seen by the outer world. Ex- dress
code & activities etc…
b). Invisible elements : These inner elements of the group can not be seen by
people outside the group or firm. Ex- Values, norms and assumptions etc…
c). Language: A common language that can be followed by all.
d). Symbol: The logo or signature or the style statement of a company.
e). Values and Norms : The idea over which a company is based or the
thought of the firm is considered as its value and the condition to adopt
them are called norms.
Different Types of Organizational Culture
The culture a firm follows can be further classified into different types. They
are:
1. Mechanistic Culture
2. Authoritarian Culture
3. Participative Culture
4. Strong Culture
5. Weak culture
6. Entrepreneurial culture

1. Mechanistic culture : This culture follows chain of command and

roles and responsibilities of each and every individual are clearly
defined. It increases employee efficiency .In addition to this less time
consumed in decision making as the decisions are made at higher
level.
2. Authoritarian : Authoritarian culture means power of one. In this
culture, power remains with the top level management. All the
decisions are made by the top management with no employee
involvement in the decision making as well as goal shaping process.
The authority demands obedience from the employee and warns
them for punishment in case of mistake or irregularity. This type of
culture is followed by military organization.
3. Participative culture : employees actively participate in the decision
making and goal shaping process. As the name suggests, it believes in
collaborative decision making. In this type of culture, employees are
perfectionist, active and professional. Along with group decision
making, group problem solving process is also seen here.
4. Strong Culture: In a strong culture, the employees are loyal and have
 a feeling of belongingness towards the organization. They are proud
of their company as well as of the work they do and they slave
towards their goal with proper coordination and control. Perception
and commitment are two aspects that are seen within the employees.
In this culture, there is less employee turnover and high productivity.
5. weak culture: the employees hardly praise their organization. There is
no loyalty towards the company. Thus, employee dissatisfaction and
high labour turnover are two aspects of this culture.
6. Entrepreneurial culture :Entrepreneurial culture is a flexible and risk-
taking culture. Here the employees show their innovativeness in
thinking and are experimental in practice. Individual initiations make
the goal easy to achieve. Employees are given freedom in their
activity. The organization rewards the employees for better
performance.

Section- C ( Answer in 300 - 400 words)

(This section contains 5 questions. Attempt any three questions. Each question carries 15mark).15 x 3=45

Ques. Course
Question
No. Outcome
Q9: What is code of Conduct ? Why it is necessary for the organization to follow CO 4
code of conduct ?
Ans:
A code of conduct (=set of rules) = ethics
It is the established parameters or general principles in the business
environment . In other words it is “the values and principles” designed to
help in managing the business. In addition to this it describes proper
procedure to carry out the business functions. These days companies are
adopting this concept to sustain an ethical culture within an organization.
It is crucial to enforce code of ethics in the organization for the following
reasons :-
1). It helps employees to behave Ethically : Ethically behaved companies
train their employees to be trustworthy for their assigned work which
improves work culture and directly leads to higher performance at work
place.
2). Strong relations between employee and employer : When companies
frame a proper code of conduct and work ethics than it gives a birth of strong
relationship between employees and employer which gives best output with
great performance.
3). Proper Training : Ethics training programs boosts morale so that
employees work more effectively with their co-workers and can make a
difference to shape values to make a healthy environment of the business.
4). It helps in wide variety of matters like “Discriminations & harassments at
the workplace by imposing a strict code of Ethics by implementing anti-
harassment policy.
5). Define proper procedure and rules : Code of Ethics covers many rules and
procedures –
 Educate all your workers about Discrimination
  Proper dress code
 Policy on Data Protection
 Policy on Health and Safety at work
 Employee complain policy
 Attendance and time off policy
 Assisting with fair treatment of employees
6). Equal Opportunity policy : A code of conduct impart equal opportunity
to all the employees in terms of participating in management decision
making ,skills training and attending seminars and workshops etc…
7). Grievance solving pattern : Ethics and code of conduct says - Any thing
unfair or unjust issue arise in connection with companies are addressed by
“conflict management processes” before they become serious issues or any
unforeseen liability.
8) Code of Conduct ( Employee Ethics) : A code of conduct for employees
frames the procedures to be used in certain situations , such as reward,
recognition and praising the best performance etc…

Q10:- What do you understand by business? What are its characteristics, describe in CO 1
detail?
A10:- Business :- Business is a wide term . It include all occupation in which
people are busy in earning income either by producing or purchase and sale
of the goods and services.
Characteristics of Business
1. Economic Activity:- Business is considered as an economic activity as it
is undertaking with the objective of earning money and livelihood ,not for
psychological satisfaction.
2. Production or Procurement of goods and Services :- Every business
enterprises either produce goods or services or procure goods and services
from Producers/ Manufacture .Goods may consist of consumer and industrial
goods and services include Transportation , Banking , Insurances etc…
3.Sale or Exchange of goods and services :-The production of goods and
services for self-consumption is not business. A farmer cultivating crop for
himself will not come in business. But the farmer who is cultivating crop for
sale is involved in bus activity.

4. Dealing of goods and services on a regular basis :- Another important

feature of business is that it must sell or exchange goods and services on a
regular basis . Once single transaction of sale does not come in the business
.For Ex- if a person sells his house to buy new house , he is not doing
business . But if a person buys and sells houses on a regular basis to earn
commission , than it will be considered as business. Regular business
transaction is must in business.

5.Profit Motive. The profit is defined as the amount gained by selling a

product, and it should be more than the cost price of the product. In other
words, the profit is a gain obtained from any business activities. No profit can
survive without earning profit.
6.Risk and Uncertainties :- Business always has risk factor. There is always
a possibility of losses. It is not certain that a business will always
earn adequate profit as market conditions may change , customer’s taste
 may change . All these can lead to loss.

Q11 Explain various factors while setting up a new business Enterprises? CO 2

A11: In modern business world competition is very tough and risks are very high.
Before starting a business various problems and factors associated with the
business must be analyzed and scanned properly.
The basic factors to be kept in mind before starting a business are
1.Idea Generation :- To start operations ,entrepreneurs must be imbued
with rich ideas that can work .In order to generate ideas , entrepreneurs
need to have an eye for detail. They should keep a close watch over changing
trends in the market place and identify gaps.
2. Nature of business:-
The entrepreneurs should be clear about the nature of type of business that
he wants to be in :
a. What type of business –wholesale or retail, independent business or
trading business.
b. What to offer :-Products or services or mix of both ; he wants to trade in
these or wants to produce and distribute.
c. Sector – Entertainment , software , hardware and fashion Industry etc…
d. Is it profitable business or a risky one-carefully studying the prospects of
chosen business.
e. Whether inputs ,resources and manpower available.
f. Whether the idea will actually work or not – he has to conduct a feasibility
study examining the pros and cons of everything.
g. Prepare the business plan and move ahead with other steps that follow the
decision.
3. Determine Financial Requirements:-
Here it is a question of calculating the fixed amount of capital and working
capital needs of the firms, keeping the present and future plans of the
business in mind. The entrepreneur should be clear about the types of
expenses that are going to eat up resources at different points of time. The
sources of funds also needs to be calculated well in advance. How much
through bank financing ,how much from the long term lending institutions ,
how much from the general public and how much from the other sources
etc…

4.Determine the size and scale of operations:

The entrepreneur should be clear about the size of the business in which he
is going to operate.
5. Select a place for business:- The entrepreneur must pick up a location that
is closer to all the inputs ,resources and material that the business world
require. Availability of manpower and transport links also need to be looked
into. Other services like banking, telecommunications, and power supply
needs closer attention of course.

6.Choose the form of ownership :-

The entrepreneur must be clear about the form of ownership that is closer to
his heart . He could think of a small business the venture in partnership with
 someone or create a company with diversified shareholding .To start with ,
he can pick up the entity that is easy to form , simple to operate ,allows
freedom to implement his ideas without any legal or taxation problems and
gives him enough room to expand further.
7.Plan for Physical Facilities:- It include decision regarding machines
,equipments, factory and office design , choosing furniture , space planning
,providing for repair and maintenance the plant in every way.
8. Determine Human Resource Requirements: Finding out human resource
requirements in terms of physical numbers and also in terms of physical
numbers and also in terms of quality such as technical sill sets, managerial
competencies , degree of expertise , necessity for people possessing latest
knowledge in a high-tech area etc…
9.Keep an eye on legal and procedural Requirement: All taxation matters be
carefully looked into at this stage . If required , the owner must carry out a
drill looking into each and every detail personally.
10. Launch the business
The owner should get ready to launch the business formally after acquiring
physical and financial resources, providing for infrastructure facilities and
hiring the people needed.

Q12 What is Promotion ? Write different types of Promotions for sale? CO 4

A12: Promotion :- It refers to a combination of promotional tools used by the
business to inform and persuade the customers about the products. This is
done by the company through the medium of Advertising , Personal Selling ,
Sales Promotion and Publicity. Decisions with regards to all these elements
directly influence the sale of the product. Different (types or Elements) of
promotional mix are :-
1. Advertising :- By the way of Advertising the seller makes available
adequate info about its product . Such an info motivates the potential
consumers and as a result sale increases. Main media used for
advertising are newspaper, posters , radio , T.V ,Cinema
etc…Marketing management should take into consideration the
following factors while selecting the medium of adv ;nature of
products , the market and Cost of media etc…
2. Personal Selling:- The seller conveys his version of the products but
cannot know the reaction of the consumers. It is thus one way system
of promotion. This deficiency is made good by the personal selling . In
this system both the buyers and sellers come into contact with each
other face to face . The seller tries to attract the consumers to his
product by narrating its characteristics to the latter.
3. Sales Promotion :- All other measures than advertising , publicity and
personal selling taken to increase the sales are included in sales
promotion for ex-giving gifts ,facilities of payment in installments ,
fall in prices ,consumers contests ,exhibitions and fairs ,coupon
system etc…All the measures of sales promotion are temporary.
These are used for a short-period.
4. Publicity :- It is a medium of providing info about a particular product
to the customer for which no effort is made by the producer. For Ex-
if the editor of a newspaper or magazine himself publishes
 information about the product of a company it is called publicity.
Such an info has a salutary effect on the customers.
Features of Promotion
1.It communicates marketing information to consumers, users and
resellers.
2. It persuades and convinces the buyer and influences his/her
behavior to take the desired action
3.Promotional efforts act as powerful tools of competition, providing the
cutting edge of its entire marketing program.
4.It helps to move the goods and services from the Producers to
Consumers
5.It Enhances the sales of the Product by adopting various types of
Advertising Techniques .

Q13: Discuss classification of Business Activities ? CO 5

A13: Scope of Business

Industry :-It is refers to an activity which converts raw material into

useful products . Industry includes activities related to production and
processing as well as activities related to rearing and reproduction of
animals or other living species.
Industries may produce consumer goods and capital goods . Goods
such as butter, bread ,cloth , radio etc…are consumer goods . These
goods are directly consumed by the customers. Goods such as
machineries , tools and equipments etc.. are called capital goods as
these are used further in the production process to make useful
products.
Industry can be divided into three parts:-
1.Primary Industry
2.Secondary Industry
3. Tertiary Industries
Primary Industry:- Primary industry is a type of industry which deals
with extraction of natural resources and it also deals with breeding and
reproduction of plants and animals. These industries can be further sub
divided into two:

(a) Extractive industries: An industry that draws out or extracts

something from natural resources is known as the extractive
industry such as minerals from earth, timber from forest,
agriculture etc… It supplies basic raw material to other
industries.
(b) Genetic industry: The industries involved in the activities of
rearing & breeding of living organism i.e. birds, plants, animals
etc. are known as a genetic industry. For example, rearing of
cattle for milk, dairy farms, poultry farms, rearing of plants in the
nursery, growing fish in ponds etc.

Secondary Industry :- industry that converts the raw materials

provided by primary industry into commodities and products for the
consumer is known as secondary industry.For ex- Mining of ore is
done In primary industry but steel manufacturing is done in Secondary
Industries . There are two kinds of Secondary Industry:-
(a) Manufacturing Industry
(b) Constructive Industry

(a) Manufacturing Industry :- Production of goods in large quantities

after conversion of raw materials to useful products comes in
manufacturing” for ex-Timber is converted into Furniture , Iron
into Steel , Sugarcane into Sugar, Cotton into Cloth etc…
(b) Constructive Industry :- These industries are concerned with the
construction of buildings, dams, roads etc. These industries use
the products of manufacturing industries such as cement, iron &
steel, lime etc.
Tertiary Industry :- These are those that provide essential services
and support to Primary and Secondary Industries. This industries also
known as Service Industry. The various types of Service provided by
Tertiary Industry are:-
1. Transportation
2. Finance and Banking
3. Insurances
4. Warehousing
5. Advertising
Commerce :-
Commerce refers to all those activities which are concerned with the
transfer of goods and services from the producers to the consumers. It
embraces all those activities which are necessary for maintaining a
free flow of goods and services. These help directly or indirectly in the
distribution of goods to the ultimate consumers.
Trade
Trade is an internal part of commerce. It refers to buying and selling of
goods and services. The trade segment or part of commerce brings
together the Manufacturer and consumer. The Trade act as a link
Between producer and Consumer. There are two types of Trade:-
(a) Internal Trade
(b) External Trade
Internal Trade :- Internal trade is defined as buying and selling of
products and services within the geographical boundaries of a nation. It
is also known as Home Trade. The internal Trade of two types :-
1.Wholesale trade
2.Retail Trade
Wholesaler involve in Wholesale Trade who buys goods and
products from the producers and sells to the Retailer within the national
boundaries of the country in large quantity . Wholesaler directly buys
goods from producer and sell to the Retailer. Retailer acts as the final
seller to consumers as they deal directly with consumers. He maintains
large stock and large amount of capital is required in wholesale trade.
Retailer involve in Retailing trade who buys and sells goods in small
quantity. He buys goods from producers and sells to the ultimate
consumer within the national or geographical area of the county.
External Trade :- When buying and selling of goods take place across
the national boundaries of different countries called External trade. It is
also known as Foreign trade or International trade or trade between
two or more countries. External Trade has two Types :
(a) Export Trade
(b) Import Trade
Export Trade :- It refers to sale of goods to a foreign country.