3 Marks Question

Question 13 Marks

Mr. Vivek Vaswani, a foodpreneur combined his passion for food with his entrepreneurial skills and started his innovative fast food outlet OH CHILLI! in 2021. He had started his career as a food blogger and had noticed that numerous Indian consumers were looking for reasonable and pure vegetarian fast food options for dining out. The high end restaurants were not opted by many as they were exorbitantly priced. Though many global fast food chains were running across the country, yet not many outlets offered reasonable and healthy pure vegetarian fast food options to consumers. OH CHILLI! became a pioneer in offering a healthy and delicious variety of food.
What came as a surprise for consumers was that even without using onion or garlic in the pasta sauce, marinade and ketchup ,the food could actually taste great. The company witnessed an increase in net profit of 26% in its second financial year and became a market leader.
(I) State the concept of business environment.
(II) Identify and explain in what way, a good understanding of business environment enabled Mr. Vivek Vaswani to improve the performance of the enterprise.

Answer

(I) Business Environment means the sum total of all individuals, institutions and other forces that are outside the control of a business enterprise but that may affect its performance.
(II) It enables the firm to identify opportunities and getting the first mover advantage: Opportunities refer to the positive external trends or changes that will help a firm to improve its performance. Environment provides numerous opportunities for business success. Early identification of opportunities helps an enterprise to be the first to exploit them instead of losing them to competitors.

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Question 23 Marks

From the following information regarding Aditya Ltd. which is in the business of manufacturing green tea, calculate the Return on Investment and Interest Coverage Ratio of the company: $($Show working$)$
Earning before interest and tax
$₹ 15,00,000$
$10\%$ debentures
$₹ 12,00,000$
Equity Share Capital $(₹10$ each$)$
$₹ 18,00,000$
Tax Rate
$40\%$

Answer

Calculation of Return on Investment $(ROI)$
$ ROI =\frac{\text { Earnings before interest and tax }}{\text { Total investment }} \times 100$
$ ROI =\frac{1500000}{3000000} \times 100$
$ =50 \%$
Calculation of Interest Coverage Ratio $(ICR)$
$\text { Interest coverage ratio = }=\frac{\text { Earnings before interest and tax }}{\text { Interest }}$
$ ICR =\frac{1500000}{120000}$
$=12.5 \text { times }$

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Question 33 Marks

Explain the concept of leadership. Give two situations in which autocratic leadership style is most effective.

Answer

Communication is the process of exchange of information between two or more persons to reach common understanding.
Meaning of formal communication:
Formal communication flows through official channels designed in the organisation chart.
Meaning of Informal communication:
"Communication that takes place without following the formal lines of communication is said to be informal communication.

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Question 43 Marks

Explain the concept of leadership. Give two situations in which autocratic leadership style is most effective.

Answer

Leadership is the process of influencing the behaviour of people by making them strive voluntarily towards achievement of organisational goals.
Two situations in which Autocratic leadership is most effective:
• This leadership style is effective in getting productivity in many situations like in a factory where the supervisor is responsible for production on time and the supervisor has to ensure labour productivity.
• Quick decision-making is facilitated.

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Question 53 Marks

State how planning
(I) reduces creativity
(II) leads to rigidity.

Answer

Planning reduces creativity- Planning is an activity which is done by the top management. Usually the rest of the members just implement these plans. As a consequence, middle management and other decision makers are neither allowed to deviate from plans nor are they permitted to act on their own.Thus, planning in a way reduces creativity since people tend to think along the same lines as others.
Planning leads to rigidity- In an organisation, a well-defined plan is drawn up with specific goals to be achieved within a specific time frame. These plans then decide the future course of action and managers may not be in a position to change it. Following a pre-decided plan, when circumstances have changed, may not turn out to be in the organisation's interest.

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Question 63 Marks

State the meaning of single use plans and standing plans

Answer

Single Use plans- A single-use plan is developed for a one-time event or project. Such a course of action is not likely to be repeated in future, i.e., they are for non-recurring situations.The duration of this plan may depend upon the type of the project. It may span a week or a month or a day.
Standing plans- A standing plan is used for activities that occur regularly over a period of time. It is designed to ensure that internal operations of an organisation run smoothly. Such a plan greatly enhances efficiency in routine decision-making. It is usually developed once but is modified from time to time to meet business needs as required.

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Business Studies 3 Marks Question

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