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SAMPLE PAPER -01 SOLUTIONS

(2023-24)
BUSINESS STUDIES

MBA WT (ANALYTICAL WRITING

TEST) AT IIM

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SAMPLE PAPER -01 SOLUTIONS (2023-24)

BUSINESS STUDIES
1. (a) Management is a dynamic function objectives: This has led to the increase in their
2. (b) 1 to 15 days salaries. Management must motivate and guide
Maturity of 1 to 15 days used for inter-bank transaction. individuals to work towards personal development
3. (b) Only iii and ensure group success.
Evaluating alternative courses is the step where all pros and 22. (i) Clarify the ideas before communication. The problem to
cons of various alternative are examined. be communicated to subordinates should be clear in all
4. (d) Proportion of debt in the total capital its perspective to the executive himself. The entire
The overall financial risk depends upon the proportion of problem should be studied in depth, analysed and
debt in the total capital. stated in such a manner that is clearly conveyed to
5. (b) Capital expenditure subordinates.
Sale expenses are related to Marketing standard. Quantity (ii) Consult others before communicating. Before actually
is related to Production standard. Labour turnover is communicating the message, it is better to involve
related to Human Resource management. others in developing a plan for communication.
6. (b) Division of Work Participation and involvement of subordinates may
7. (a) All of these help to gain ready acceptance and willing cooperation
8. (b) Campus Recruitment of subordinates.
9. (b) Option (i) OR
Higher level of competitiveness may necessitate larger (i) Supervision
stocks of finished goods to meet urgent orders from (ii) Motivation
customers. This increases the working capital (iii) Leadership
requirement. Competition may also force the firm to 23. a. Fixed capital includes the assets and capital
extend liberal credit terms. investments—such as property, plant, and equipment
10. (a) Both A and R are true and R is the correct explanation of (PP&E)—that are needed tostart up and conduct business,
A. even at a minimal stage. These assets are considered fixed
11. (a) Preference share in that they are not consumed or destroyed during the actual
12. (b) Cash flow position production of a good or service but have a reusable value.
13. (b) Both the Statements I and II are correct. Fixed-capital investments are typically depreciated on the
14. (c) a and b company's accounting statements over a long period of
15. (c) 9% time—up to 20 years or more. The fixed capital
16. (b) Both the Statements I and II are correct. requirements of Wooden Peripheral Pvt. Ltd. for opening
17. (d) Planning does not guarantee success new showrooms in Bangalore will be relatively less as its
18. (b) (a) - (iii), (b) - (ii), (c) - (i) taking space on the lease, so only rentals have to be paid.
19. (a) Amount of earnings Similarly, its fixed capital requirement for opening
20. (b) Last showrooms in Mumbai will be reduced as it's going to
The sequence is Planning, Organizing, Staffing, Directing share the costs with another company through
and controlling. Controlling is the last function of collaboration.
management. b. It's true that" With an increase in the investment in
21. The importance of management highlighted here are: fixed assets, there is a commensurate increase in the
(i) Management increases efficiency: A floor manager of working capital requirement." Like in the above case,
a mall is a very good manager as he utilizes all the Wooden Peripheral Pvt. Ltd. is planning to invest in new
functions of management to minimize cost of showrooms. Consequently, its requirement of working
maintenance of his area. Efficiency means using capital will increase as it will need more money to stock
minimum resources and achieving highproductivity. goods, pay electricity bills and salaries to staff. Also, it
(ii) Management helps in achieving group goals: He intends to take the space for the showrooms in Mumbai on
directs all the staff members under him to follow the the lease so it will have to pay rentals.
targets and advises them to put their efforts in the 24. Under the provisions of the Consumer Protection Act, a cash
direction of achievement of these targets. The memo is the legal proof of purchase. In the absence of a cash
management guides all the individuals towardsthe set memo, it would be impossible for Chhavi to make any
common goals and objectives of an organisation. complaint. Further, Chhavi did not use the medicine as per
(iii) Management helps in achieving personal instructions are given on the pack.

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OR
A consumer must also be responsible while purchasing,
using, consuming goods and services. This is one of the ways
in whichconsumer protection can be strengthened.
The responsibilities of a consumer are as follows:
(i) The consumer must have knowledge about the
products available in the market so that a wise choice
can be made.
(ii) They must buy only standardized goods as they provide
quality assurance. Hence, they must look for
certification marks likeISI mark for electrical goods,
FPO mark on food products, Hallmark on jewellery,
etc.
(iii) They should learn about the risks associated with
products and services.
25. Planning is required at all the levels of management as well
as in all departments of the organisation. It is not an
exclusive function of top management nor of any particular
department. But the scope of planning differs at different
levels and among different departments.Thus,planning is
pervasive and it explains:
A. The top level plans policies and rules for whole
organization.
B. Middle level of management plans the proper
implementation of the policies designed by the top level
of management.
C. Lower or operational level of management plans for
assignment of tasks and duties to the non managerial
level of managementand assures smooth completion of
tasks and activities.
D. At the lowest level, day-to-day operational planning is
done by supervisors.
Planning is required not only in business organizations
but is needed in all types of organization whether it is a
school, college orhospital.Thus planning is pervasive.
OR
While making plans every manager has to make certain
assumptions related to the future. These assumptions are
known aspremises.
 Plann ing premises are assumptions relating to future
conditions and events which are likely to have an effect
on theachievement of organizational goals.
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 These are the bases upon which the entire structure of
planning is built.
 Every plan is drawn with certain assumptions. To
make planning effective, it is necessary that the
premises should bebased on accurate forecasts.
 For example, demand for a product, the cost of raw
materials, interest rates, state of technology, the
intensity ofcompetition, government policies etc.
26. Yes, controlling is a systematic process which involves the
following steps:
(i) Establish the Standards: Within an organization’s
overall strategic plan, managers define goals for
organizational departments in specific, precise,
operational terms that include standards of
performance to compare with organizational
activities. However, for some of the activities the
standards cannot be specific and precise. Standards,
against which actual performance will be compared,
may be derived from past experience, statistical
methods and benchmarking (based upon bestindustry
practices). As far as possible, the standards are
developed bilaterally rather than top management
deciding unilaterally, keeping in view the
organization’s goals. Standards may be tangible (clear,
concrete, specific, and generally measurable) –
numerical standards, monetary, physical, and time
standards; and intangible (relating to human
characteristics) – desirable attitudes, high morale,
ethics, and cooperation.
(ii) Measure Actual Performance: Most organizations
prepare formal reports of performance
measurements both quantitative and qualitative
(where quantification is not possible) that the
managers review regularly. These measurements
should be related to the standards set in the first step
of the control process.
(iii) Compare Performance with the Standards: This
step compares actual activities to performance
standards. When managersread computer reports or
walk through their plants, they identify whether actual
performance meets, exceeds, or falls short ofstandards.
Typically, performance reports simplify such
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comparison by placing the performance standards for
the reporting period alongside the actual performance
for the same period and by computing the variance—
that is, the difference between each actual amount and
the associated standard. The manager must know of the
standard permitted variation (both positive and
negative). Management by exception is most
appropriate and practical to keep insignificant
deviations away. Timetable for the comparison
depends upon many factors including importance and
complexity attached with importance and complexity.
(iv) Take Corrective Action and Reinforcement of
Successes: When performance deviates from
standards, managers must determine what changes, if
any, are necessary and how to apply them. In the
productivity and quality-centered environment,
workers and managers are often empowered to
evaluate their own work. After the evaluator
determines the cause or causes ofdeviation, he or she
can take the fourth step— corrective action. The
corrective action may be to maintain status quo
(reinforcing successes), correcting the deviation, or
changing standards. The most effective course may be
prescribed by policies or may be best left up to
employees’ judgment and initiative. The corrective
action may be immediate or basic (modifying the
standards themselves).
OR
The function of Management is Controlling. The first three
steps of the controlling process are as follows:
i. Setting up of standards: Standard means target or the
yardstick against which the actual performance is
measured.
ii. Measuring of Performance: After setting up of
standards, the performance of the employees is
measured by evaluating theactual work done by the
employees.
iii. Compare performance against standard: After
measuring the performance the Manager compares
the actual performance withthe planned performance
and standard.
27. Time Study:- One of the techniques helps to determine the
number of workers to be employed; framesuitable
incentive schemes and labour costs. It circumscribes the
conventional time taken to complete a well-defined job.
Differential Piece Wage System:- Another technique
recognises those workers who are able
toaccomplish/exceed the fair days work and is based on the
premise that efficiency is the result of the joint effortsof the
managers and the workers.
28. The assumptions of Maslow’s need hierachy theory are as
follow:
1. People’s behaviour is based on their needs.
Satisfaction of such needs influences their behavior.
2. People’s needs are in hierarchical order, starting from
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basic needs to other higher level needs.
3. A satisfied need can no longer motivate a person; only
next higher level need can motivate him.
4. A person moves to the next higher level of the hierarchy
only when the lower need is satisfied.
29. It Checks Price Rigging:
Price rigging refers to manipulating the prices of securities
with the main objective of inflating or depressing the market
price ofsecurities. SEBI prohibits such practice because this
can defraud and cheat the investors.
30. In India, the protection of the rights of the consumers is
administered by the Consumer Protection Act, 2019. The
Consumer
Protection Act, 2019 was introduced to replace the
Consumer Protection Act, 1986. The new Act contains
various provisionswhich incorporate the challenges faced
by modern and technology-dependent consumers. The Act
also contains various provisions for the protection and
promoting the rights of the consumers.
Any five remedies which are available to a consumer under
the provisions of The Consumer Protection Act, 2019 are as
follows:
(i) To remove the defect in goods or deficiency in service.
(ii) To replace the defective product with a new one, free
from any defect.
(iii) To refund the price paid for the product, or the
charges paid for the service.
(iv) To pay a reasonable amount of compensation for any
loss or injury suffered by the consumer due to the
negligence of theopposite party.
(v) To pay punitive damages in appropriate
circumstances.
31. Mr Naresh is working as a Human Resource manager. The
duties of Human Resource Managers are:
(i) Training and development of employees for efficient
performance.
(ii) Maintaining labour relations and union-management
relations.
(iii) Handling grievances and complaints.
(iv) Providing for social security and welfare of employees.
Thus, their work, which is often decidedly administrative
in nature, involves documenting grievances, terminations,
absences, performance reports, and compensation and
benefits information. Beyond administrative duties,
however, HR assistants are alsooften involved in recruiting,
hiring, and training new employees.
OR
1. Apprenticeship training:Under this method, the
students get practical training while they study Thus. this
method is based onthe cooperation between the employers
and the vocational or technical institutions A few large
undertakings have their owntraining institutes Under this
method a balance between theory and practice is
maintained.
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2. Vestibule training: This method is contrast to the on-
the-job method. Under this method, new workers are
trained for specific jobs on special machines or equipment in
a separate room located in the plant or workshop itself. An
experienced workman is entrusted with the task of training.
He should actually demonstrate the machine. Besides, other
devices such as lecture, conference, group discussion, role
playing, etc, are also used to impart training. This method is
suitable only when a largenumber of new recruit are to be
trained simultaneously.
3. Internship: Under this method, the students get
practical training while they study Thus. this method is
based on the cooperation between the employers and the
vocational or technical institutions A few large
undertakings have their own training institutes Under this
method a balance between theory and practice is
maintained.
This method is highly suitable to train skilled and technical
personnel and not for others Besides, it is also a time
consumingprocess.
32. Liberalization: Liberalization means removal of all
unnecessary controls and restrictions on business and
industry. Liberalization (or liberalisation) is any process
whereby a state lifts restrictions on some private individual
activities. Liberalization occurs when something which
used to be banned is no longer banned, or when government
regulations are relaxed.
The main features of liberalization are:
(i) Government removed all unnecessary controls and
requirement for obtaining licenses for most of the
industries. Only a few industries were required to
obtain license from the government. licenses would
be given for steel, electrical power and
communications. License owners built up huge
powerful empires.
(ii) Rigid procedures of import and exports were
removed by the government.
(iii) Increase in the investment limit of small industries
(iv) Freedom to import technology and capital goods.
(v) It was decided by the government to hand over the
control of sick industrial units to private sector.
(vi) Freedom in fixing the prices of goods and services.
(vii) No restriction on expansion of industries.
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(viii) Concession from MRTP (Monopolistic and
Restrictive Trade Practice) Act.
(ix) Income Tax Department and Customs Department
became efficient in checking tax evasion.
Privatization: Privatization means the transfer of
ownership, property or business from the government to
the private sector. Thegovernment ceases to be the owner
of the entity or business. The process in which a publicly-
traded company is taken over by a few people is also called
privatization.
The main features of privatization are:
i. Private sector is encouraged to come forward for
establishing industries and to take over the sick public
industrial units.
ii. Increasing the share of private sector investment.
iii. The Board of Industrial and Financial Reconstruction
was set up to review sick units in public sector.
iv. Government adopted the policy of disinvestment. It
means transferring the management and control of
public sector to private sector for the growth and
development of the country.
v. The control and management of public sector was
handed over to private sector. It is possible only
where private sectoracquires more than 51% share.
Globalization: Globalization means the integration of one
economy with the world economy and entire world is
treated as onemarket.Globalization is the free movement of
goods, services and people across the world in a seamless
and integrated manner.Globalization can be thought of to be
the result of the opening up of the global economy and the
concomitant increase in trade between nations.
The main features of Globalization are:
i. Increase in foreign trade.
ii. Devaluation of Rupee.
iii. Increase in foreign investment.
iv. Abolition of export duty.
v. Reduction of import duty.
vi. FERA (Foreign Exchange Regulation Act) was
replaced by FEMA (Foreign Exchange Management
Act).
vii. Encouragement to healthy and open competition.
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OR
i. Technological Environment: 'With rapid
advancements in the field of replacing manual work with
machines, a robot named\Sujan has been invented and
developed'. It consists of scientific improvements and
innovations which provide new ways ofproducing goods,
rendering services, new methods and techniques to operate
a business.
ii. Social Environment: ‘However, this issue has to be
carefully looked into keeping in mind the consumer attitude
towards product innovations, problem of unemployment
and its impact on the quality of life'. Social Environment
consists of social forces like traditions, values, social trends,
level of education, the standard of living etc. All these forces
have a vast impact onbusiness.
iii. Legal environment: ‘Through the orders and
decisions of various commissions and agencies at Centre,
State or local levelthe Indian Government is playing a very
significant role in balancing the use of human and machine
power.' It includes various laws passed by the government,
administrative orders issued by government authorities,
court judgments as well as decisions rendered by the
central, state or local governments.
33. Organizing is a function by which the concern is able to
define the role positions, the jobs related and the co-
ordination between authority and responsibility.
Organizing is the next important function of management
after the planning. In case of planning the management
decides what is to be done in future. Importance of
Organising
1. Specialization - Organizational structure is a network
of relationships in which the work is divided into units and
departments.This division of work is helping in bringing
specialization in various activities of concern.
2. Clarity in working relationships:The process of
organising clarifies the authority of the managers of
different departments.Each manager knows whom can he
order and for which tasks. This minimises the conflict and
confusion ahout the respective powers and privileges of
managers.
3. Optimum utilization of resources: Organising leads
to the proper usage of all material, financial and human
resources.Theproper assignment ofjobs avoids overlapping
of work and also makes possible the best use of resources.
Avoidance of duplication of work helps in preventing
confusion and minimising the wastage of resources and
efforts.
4. Adaptation to change:Flexible organisation structure
facilitates adaptation in the sense that it ensures the ability
to adapt and adjust the activities in response to the changes
taking place in the external environment with respect to
technology, market, product, process etc.Organizing helps
the enterprise to adjust itself as per changing circumstances
by suitably modifying the organisation structure like duties,
rights and responsibility of employee. For example, if one
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employee leaves the organisation,then his work may easily
be taken up by the another employee.
5. Development of personnel: In the process of
organising, managerial personnel are trained to acquire
wide experience in diverse activities through delegation of
authority.Delegation allows the managers to reduce their
workload by assigning routine jobs tp their subordinates. It
gives them time to concentrate on strategic issues and
explore new areas for growth.Delegation also develops in
the subordinate the ability to deal effectively with
challenges and helps them to realisetheir full potential.
34. a. Marketing management is the art and science of
choosing target markets and getting, keeping, and growing
customers throughcreating, delivering, and communicating
superior customer value.
b. The various elements of the marketing mix being
pursued by Mr. Jaiprakash are as follows:
i. Product: "his business is not only restricted to
designing web sites according to the specifications of the
clients but also providing continuous online assistance to
them and handling their grievances' effectively."
A product is anything of value i.e. a product or service
offered to a market to satisfy needs or wants. A product
includes physical product, after sale service, handling
grievances etc. Every marketer needs to constantly review
and revise his products in order to enhance customer's
satisfaction and have a competitive edge.
ii. Price: "doing all this at a profit. He provides these
services at competitive prices."
Price is the monetary value paid in consideration for
the purchase of a product or service by a buyer to its seller.
It is a very crucial decision for the marketers as consumers
are very sensitive to the pricing. The factors affecting price
determination are the cost of the product, the utility and
demand, the extent of competition in the market,
government and legal regulations, pricing objectives and
marketing methods used.
iii. Place: "Anybody interested in getting web solutions can
contact him through his website. "
It is considered an important element of the marketing
mix because it includes all those activities that help in
making the goods and services available to the prospective
buyers in the right quantity, at the right time and in the right
condition. Two main decisions involved in physical
distribution are physical movement of goods from
producers to consumers and choice of channels of
distribution.
iv. Promotion: "Moreover, whenever the market is
sluggish he tries to create demand by offering short-term
incentives to thebuyers."
Promotion refers to the set of activities undertaken by a
marketer to inform the prospective buyers about the product
and persuading them to make a purchase. The various
components of the promotion mix are advertising, sales
promotion,personal selling and public relation.
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