ISC Commerce 2014 Class-12 Previous Year Question Papers

ISC Commerce 2014 Class-12 Previous Year Question Papers Solved for practice. Step by step Solutions with Questions of Part-1 and 2. By the practice of Commerce 2014 Class-12 Solved Previous Year Question Paper you can get the idea of solving.

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ISC Commerce 2014 Class-12 Previous Year Question Papers Solved

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Maximum Marks: 80
Time allowed: Three hours

  • Candidates are allowed additional 15 minutes for only reading the paper. They must NOT start
    writing during this time.
  • Answer Question 1 from Part I and seven questions from Part II.
  • The intended marks for questions are given in brackets [ ].

Part – I (20 Marks)

Answer all questions.

ISC Commerce 2014 Class-12 Previous Year Question Papers Solved

Question 1.
Answer briefly each of the questions (i) to (x). [10 × 2]
(i) What is the meaning of business environment?
(ii) Enumerate the main forms in which financial assistance from a commercial bank may be available.
(iii) Write any two features of principles of management.
(iv) What is factoring?
(v) Distinguish between gross working capital and net working capital.
(vi) State any two points of distinction between recruitment and selection.
(vii) Differentiate between bearer debentures and registered debentures.
(viii) In the context of right shares, bring out the meaning of pre-emptive right.
(ix) What is marketing research?
(x) Mention any two specific differences between product and service.
Answer 1:
(i) A business organization cannot exist a vacuum. It needs living persons, natural resources and places and things to exist. The sum of all these factors and forces is called the business environment.

(ii) Bank provides financial assistance in the following forms :

  • Loans and Advances to Priority and Non-Priority Sectors
  • Cash Credits to businessmen
  • Bank Overdrafts to businessmen and individuals
  • Discounting of Bills

(iii) (a) Principles of management are universal. They are applicable to all kinds of organizations- business and non-business. They are applicable to all levels of management.
Principles of management are flexible.
(b) Management principles are dynamic guidelines and not static rules.
(c) There is sufficient room for managerial discretion i.e., they can be modified as per the requirements of the situation.

(iv) Factoring is a transaction in which a business sells its accounts receivable, or invoices, to a third party commercial finance company, also known as a “factor.” This is done so that the business can receive cash more quickly than it would be waiting 30 to 60 days for a customer payment. Factoring is sometimes called “accounts receivable financing.”


Gross Working Capital Net Working Capital
Gross working capital is the sum of current assets of a company and does not account for current liabilities. Networking capital is the difference between current assets and current liabilities.
Net Working Capital = Current Assets Current Liabilities
It does not take into account the liabilities of the company and as such is not a true indicator of the financial health of a company. It reflects operational efficiency and the ability to generate more sales.


Recruitment Selection
Recruitment is the process of searching the candidates for employment and stimulating them to apply for jobs in the organization. Selection involves the series of steps by which the candidates are screened for choosing the most suitable persons for vacant posts.
Recruitment is a positive process i.e., encouraging more and more employees to apply. Selection is a negative process as it involves the rejection of the unsuitable candidates.


Bearer Debentures Registered Debentures
Bearer debentures are not recorded in the company’s debenture-holders’ register. Registered debentures are recorded in the company’s debenture-holders’ register with full details of every debenture holder.
Bearer debentures are negotiable. Registered debentures are not negotiable.

(viii) A privilege extended to select shareholders of a corporation that will give them the right to purchase additional shares in the company before the general public has the opportunity by the event there is a seasoned offering. A preemptive right is written in the contract between the purchaser and the company but does not function like a put option.

(ix) Marketing research is the process of planning, collecting and analyzing data relevant to a marketing decision. Marketing research is a broader term including market research Marketing research is concerned with all the major functions of marketing. Market research is primarily concerned with knowing the capacity of the market to absorb a particular product Marketing research is not only concerned with the jurisdiction of the market but also covers nature of the market, product analysis, sales analysis, time, place and media of advertising, personal selling and marketing intermediaries and their relationships etc.


Product Service
A product is tangible – means it can be seen and touched. Service is intangible – means it cannot be seen and touched.
A product is durable and can be stored. Service cannot be stored. It can be produced and consumed.

Part – II (60 Marks)
Answer any five questions

ISC Commerce 2014 Class-12 Previous Year Question Papers Solved

Question 2.
(a) Explain why management is considered to be an art. [4]
(b) State and explain any four principles of E W. Taylor. [8]
Answer 2:
(a) Art refers to the way of doing specific things: it indicates how an object can be achieved.
In the words of George R. Tern. “Art is bringing about a desired result through the application of skill.” Art is, thus, skilful application of knowledge which entirely depends on the inherent capacity of a person which comes from within a person and is learned from practice and experience. In this sense, management is certainly an art as a manager uses his skill, knowledge and experience in solving various problems, both complicated and non-complicated that arise in the working of his enterprise successful. In the words of Ernest Dale. “Management is considered as an art rather than science mainly because managerial skill is a personnel possession and is intuitive.”

(b) 1. Science, Not Rule of Thumb: This principle says that we should not get stuck in a set routine with the old techniques of doing work, rather we should be constantly experimenting to develop new techniques which make the work much simpler, easier and quicker.

2. Harmony, Not Discord: As per this principle, such an atmosphere should be created in the organisation that labour (the major factor of production) and management consider each other indispensable.
Taylor has referred to such a situation as a ‘Mental Revolution’. Taylor firmly believed that the occurrence of a mental revolution would end all conflicts between the two parties and would be beneficial to both of them.

3. Cooperation, Not Individualism: According to this principle, all the activities done by different people must be carried on with a spirit of mutual cooperation. Taylor has suggested that the manager and the workers should jointly determine standards. This increases involvement and thus, in turn, increases responsibility. In this way, we can expect miraculous results.

4. Development of Each and Every Person to His/Her Greatest Efficiency and Prosperity: According to this principle, the efficiency of each and every person should be taken care of right from his selection. A proper arrangement of everybody’s training should be made.
It should also be taken care that each individual should be allotted work according to his ability and interest. Such a caring attitude would create a sense of enthusiasm among the employees and a feeling of belongingness too.

Question 3.      (ISC Commerce 2014 Class-12)
(a) Distinguish between fixed capital and working capital of a business concern. [3]
(b) What are equity shares? Explain any three advantages of issuing equity shares from the point of view of a company. [4]
(c) Briefly explain any five factors to be considered while preparing a suitable capital plan. [5]
Answer 3:

S.No. Fixed Capital Working Capital
1. It is required for investment. It is required for investment in current assets.
2. It is for the long-time period. It is for a short time period.
3. It does not change its form. It remains fixed. Its forms keep on changing.
4. Fixed capital is raised from shares, debentures and long term loans. It is raised from public deposit, trade credit and banks.

(b) Equity shares are the main source of finance of a firm. It is issued to the general public. Equity shareholders do not enjoy any preferential rights with regard to the repayment of capital and dividend. They are entitled to the residual income of the company, but they enjoy the right to control the affairs of the business and all the shareholders collectively are the owners of the company.

Advantages to Company
1. Long-term and Permanent Capital: It is a good source of long-term finance. A company is not required to pay-back the equity capital during its life-time and so, it is a permanent source of capital.

2. No Fixed Burden: Unlike preference shares, equity shares suppose no fixed burden on the company’s resources, because the dividend on these shares is subject to availability of profits and the intention of the board of directors. They may not get the dividend even when the company has profits. Thus they provide a cushion of safety against unfavourable development.

3. Creditworthiness: Issuance of equity share capital creates no change in the assets of the company. A company can raise further finance on the security’ of its fixed assets.

4. Risk Capital: Equity capital is said to be the risk capital. A company can trade on equity in bad periods on the risk of equity capital.

5. Dividend Policy: A company may follow an elastic and rational dividend policy and may create huge reserves for its developmental programmes.

(c) Every’ good plan should include financial controls during implementation. Financial control is a system developed to allow the business to control and monitor the acquisition, allocation and utilization of the financial resources to ensure they are done in accordance with the plan.

Factors to be considered while preparing a suitable capital plan:
(i) Objective: All capital plans should be designed to achieve the financial objectives of a company. The basic financial objective is the procurement of funds at the lowest cost.

(ii) Size of the firm: Capital plan must take into account the size of the firm. A large enterprise aiming at steady growth will need more funds. Post record and credit standing of the firm reputation and attitudes of management and the degree of the risk the firm is willing to assume also influence capital planning.

(iii) Market Conditions: Capital plan depends on the cost of alternative sources of finance and attitudes of financial institutions and banks. Availability of alternative sources of funds and their merits and demerits affects the choice of the type of securities to be issued.

(iv) Degree of risk: Degree of risk is another important factor while formulating a capital plan for an enterprise. The degree of risk which an enterprise is willing to assume influences capital planning. If an enterprise raises funds by issuing shares, there is a risk because it is not necessary to pay a dividend if profits are inadequate. However, too much dependence on shares may dilute control of the company.

Question 4.    (ISC Commerce 2014 Class-12)
(a) What are sweat equity shares? [3]
(b) List any four features of NEFT. [4]
(c) Briefly explain any five external factors of the microenvironment of business. [5]
Answer 4:
(a) Sweat equity shares are equity shares issued by a company to its employees or directors at a discount, or as a consideration for providing know-how or a similar value to the company.
A company may issue sweat equity shares of a class of shares already issued if these conditions are met:
The issue of sweat equity’ shares should be authorised by a special resolution passed by the company in a general meeting. The resolution should specify the number of shares, current market price, consideration if any, and the section of directors/employees to whom they are to be issued. As on the date of issue, a year should have elapsed since the company was entitled to commence business.

(b) National Electronic Fund Transfer (NEFT) is a nationwide payment system used in India allowing bank’s customer to transfer fund easily on one to one basis. Under the system of NEFT any individual, firm or corporate can transfer funds electronically to another individual, firm or corporation. This facility is provided by banks across the country and allows remittance to Nepal as well.

Features of NEFT

  • NEFT is a paperless mode of remitting funds intra-bank, interbank, intra-city and intercity.
  • It is a very fast mode of getting credits into the accounts. An NEFT gets credited to the account after 2 hours on the same day or by the next morning.
  • NEFT is a cost-effective service as compared to Drafts or Cheques. Banks charge a very nominal fee for sending NEFT to the other accounts.
  • Banks do not charge any fee for inward credits into the accounts.

(c) External factors of the microenvironment of business are as follows:
Customers: As all businesses need customers, they should be customers-oriented. The firm’s marketing plan should aim to attract and retain customers through products that meet their “wants and needs” and excellent customer service.

Employees: Employing staff with relevant skills and experience is essential. This process begins at the recruitment stage and continues throughout an employee’s employment via ongoing training and promotion opportunities. Training and development play a critical role in achieving a competitive edge; especially in Service Sector Marketing. If a business employs staff without motivation, skills or experience it will affect customer service and ultimately sales.

Suppliers: Suppliers provide businesses with the materials they need to carry out their business activities. A supplier’s behaviour will directly impact the business it supplies. For example, if a supplier provides a poor service this could increase timescales or product quality. An increase in raw material prices will affect an organization’s Marketing Mix strategy and may even force price increases. Close supplier relationships are an effective way to remain competitive and secure quality products.

Shareholders: As organizations require investment to grow, they may decide to raise money by floating on the stock market i.e. move from private to public ownership. The introduction of public shareholders brings new pressures as public shareholders want a return from the money they have invested in the company. Shareholder pressure to increase profits will affect organizational strategy. Relationships with shareholders need to be managed carefully as rapid short term increases in profit could detrimentally affect the long term success of the business.

Media: Positive media attention can “make” an organization (or its products) and negative media attention can “break” an organisation. Organizations need to manage the media so that the media help promote the positive things about the organisation and reduce the impact of a negative event on their reputation. Some organizations will even employ public relations (PR) consultants to help them manage a particular event or incident.

Consumer television programmes with a wide and more direct audience can also have a very powerful impact on the success of an organisation. Some businesses recognize this and will change their reaction when consumers mention that they are going to contact a consumer television programme or the newspapers about the business.

Question 5.    (ISC Commerce 2014 Class-12)
(a) Distinguish between centralisation and decentralisation. [3]
(b) Write four methods by which the objectives of consumer protection can be achieved. [4]
(c) Describe any five qualities of a good leader. [5]
Answer 5:
(a) Centralization and decentralization both are organizational structures which are followed in various organizations across the world. Both are quite opposite of each other and therefore it is important to know about the differences between centralization and decentralization:

1. While under centralization the decision making power is in the hands of top management. In other words all major decisions are taken at top management while lower management has no or very little power to make decisions regarding the company matters whereas under decentralization decision making authority is delegated to lower levels of the management, in simple words under this method all decisions are not taken by top management rather some decision making authority is delegated to middle and lower-level management.

2. Under centralization the chances of conflict among middle and lower-level managers is less because decisions are taken by higher management and all have to abide by it irrespective of their opinion whereas under decentralization chances of conflict increases because of multiple decision-making authorities due to delegation of power.

3. Centralized organizational structure is best suited for a small company which is operating in a limited geographical area because of its simplicity while decentralized organizational structure is ideal for big MNC companies which are operating in different geographical locations as in huge organizations it is not possible to have single or centralized decision making authority.

(b) 1. Self Regulation by Business: Enlightened business firms realise that it is in their longterm interest to serve the customers well. Socially responsible firms follow ethical standards and practices in dealing with their customers. Many firms have set up their customer service and grievance cells to redress the problems and grievances of their consumers.

2. Business Associations: The associations of trade, commerce and business-like Federation of Indian Chambers of Commerce of India (FICCI) and Confederation of Indian Industries (CII) have laid down their code of conduct which lay down for their members the guidelines in their dealings with the customers.

3. Consumer Awareness: A consumer, who is well informed about his rights and the reliefs available to him, would be in a position to raise his voice against any unfair trade practices or unscrupulous exploitation. In addition to this, an understanding of his responsibilities would also enable a consumer to safeguard his interests.

4. Consumer Organisations: Consumer organisations play an important role in educating consumers about their rights and providing protection to them. These organisations can force business firms to avoid malpractices and exploitation of consumers.

Qualities of a good leader:
(c) Mental Strength: Some people have a misconception that only those people who are physically strong can become good leaders, but this is not the fact. A leader may not be physically strong but he needs to be mentally strong and firm in decisions.
Leadership is a quality which cannot be acquired by any person from the other but it can be acquired by self-determination of a person. Leadership can best be called the personality of the very highest ability-whether in the ruling, thinking, imagining, innovation, warring, or religious influencing.

Communication: A great communicator is some way or the other is always a great leader. These are skills need to be learned from childhood, to be a great leader a child has to be trained in vocabulary, grammar etc. The history reveals that the world’s greatest leaders are exceptionally great communicators. An effective leader should be a mesmerizing orator. His words should be effective enough to motivate your followers. The majority of the time of a leader is spent in communication or interacting with people so interpersonal skills is a must. While communicating with people always make sure that you are giving the right message so, simplify the message in order to give the intended message.
Intelligence and Alertness: The most important quality which a leader should possess is intelligence and alertness. A leader has to use his/her brain every time and also has to remain alert with eyes and ears open otherwise he/she could easily be carried by any fraud or enemy.

Action-Oriented approach: The other qualities of a leader include impartiality, action-oriented approach and positive attitude. A good leader should always be impartial towards all his followers, because the moment he becomes partial, he no longer remains a leader as he loses the confidence of others. The duty of a leader is to encourage and raise the standard of all his followers and not just a few of them, and he should always remember his duty.

Optimist perspective: A leader should also be an optimist having a positive attitude. He should not think negatively or plan something showing a negative attitude. A person who thinks or plans something’s showing his negative attitude never be a Leader. A leader should always be courageous. He should have the courage to face the troubles or problems and solving the problems by himself in place of blaming and embarrassing others.

Question 6.    (ISC Commerce 2014 Class-12)
(a) Explain any three barriers to communication. [3]
(b) Explain the features of planning as a function of management. [4]
(c) Explain the various steps involved in the process of organising. [5]
Answer 6:

1. Semantic Barriers: There is always a possibility of misunderstanding the feelings of the sender of the message or getting a wrong meaning of it. The words, signs, and figures used in the communication are explained by the receiver in the light of his experience which creates doubtful situations. This happens because the information is not sent in simple language.

2. Psychological or Emotional Barriers: The importance of communication depends on the mental condition of both parties. A mentally disturbed party can be a hindrance in communication.

3. Organisational Barriers: Organisational structure greatly affects the capability of the employees as far as communication is concerned.

4. Personal Barriers: The above-mentioned organisational barriers are important in themselves but there are some barriers which are directly connected with the sender and the receiver. They are called personal barriers.

(b) Planning as a Function of Management: In the world of management, planning is as fundamental as it gets. If you recall, the first of the managerial function is planning. Many believe planning is the most fundamental of the managerial functions because all other functions, including organizing, leading, controlling and staffing, stem from the planning function. Planning prepares organizations for tomorrow today by assessing what an organization wants to accomplish and how it will go about achieving that goal.

Managers will spend much of their time planning for all sorts of things that may or will occur in the organization. Typically a manager will create a plan that is aimed at accomplishing some organizational goal such as increasing sales or improving customer service. However, it is important to note that planning is an ongoing step that can be highly specialized based on an organization’s goals, division goals, departmental goals and team goals. It is up to the manager to recognize what goals need to be planned within their individual area.

For example, let’s say Erin the enrollment manager has noticed a steady decline in the number of students enrolling in the business program, so she creates a goal to increase enrollments in that area. Erin must first spend time mapping out the necessary steps she and her team of enrollment advisors need to take to increase the enrollment numbers of undergraduate business students. These steps might include things like increasing online advertisements on business-related sites, creating a new advertisement for television or radio, asking current business students to talk to their friends and family about enrolling in the program or going out to local high schools or community colleges to speak directly with students who may be enrolling at the university in the next semester. The steps are then organized into a logical pattern so that Erin and her team can follow it.

(c) 1. Identification and Division of work: The organising function begins with the division of total work into smaller units. Each unit of total work is called a job.

And an individual in the organisation is assigned one job only. The division of work into smaller jobs leads to specialization because jobs are assigned to individuals according to their qualifications and capabilities. The division of work leads to systematic working. For example, in a bank, even an individual is assigned a job. One cashier accepts cash, one cashier makes payments, one person issues cheque books, one person receives cheques, etc. With the division of work into jobs, the banks work very smoothly and systematically.

2. Grouping the Jobs and Departmentalisation: After dividing the work in smaller jobs, related and similar jobs are grouped together and put under one department. The departmentation or grouping of jobs can be done by the organisation in different ways. But the most common two ways are:

(a) Functional departmentation: Under this method, jobs related to common function are grouped under one department. For example, all the jobs related to production are grouped under the production department; jobs related to sales are grouped under the sales department and so on.

(b) Divisional departmentation: When an organisation is producing more than one type of products then they prefer divisional departmentation. Under these jobs related to one product are grouped under one department. For example, if an organisation is producing cosmetics, textile and medicines then jobs related to production, sale and marketing of cosmetics are grouped under one department, jobs related to textile under one and so on.

3. Assignment of Duties: After dividing the organisation into specialised departments each individual working in different departments are assigned a duty matching to his skill and qualifications. The work is assigned according to the ability of individuals. Employees are assigned duties by giving them a document called job description. This document clearly defines the contents and responsibilities related to the job.

4. Establishing Reporting Relationship: After grouping the activities in different departments the employees have to perform the job and to perform the job every individual needs some authority. So, in the fourth step of the organising process all the individual’s arc assigned some authority matching to the job they have to perform.

The assignment of the authority results in the creation of the superior-subordinate relationship and the question of who reports to who is clarified. The individual of higher authority becomes superior and with less authority becomes the subordinate.
With the establishment of authority, the managerial hierarchy gets created (chain of command) and principle of scalar chain follow s this hierarchy. The establishment of authority also helps in the creation of managerial level.

The managers with maximum authority are considered as top-level managers, managers with little less authority become part of middle-level management and managers with minimum authority are grouped in lower-level management. So with the establishment of the authority the individuals can perform their jobs and everyone knows who will report to whom.

Question 7.    (ISC Commerce 2014 Class-12)
Write short notes on:
(a) Maslow’s theory of needs. [4]
(b) Line and staff organisation. [4]
(c) Modem concept of marketing. [4]
Answer 7:
(a) Physiological needs include the most basic needs that are vital to survival, such as the need for water, air, food, and sleep. Maslow believed that these needs are the most basic and instinctive needs in the hierarchy because all needs become secondary until these physiological needs are met.
For example, an employer provides lunch breaks, rest breaks, and wages that are sufficient to purchase essentials. These address an employee’s physiological needs.

Here is another example. Have you ever had a hard time paying attention to what the professor is saying when you are hungry? Some students may not have had breakfast or even dinner the night before. Free and reduced breakfast and lunch programs have been implemented in schools to help students meet some of their physiological needs.
The next level of needs is safety needs. These include needs for safety and security. These are important for survival, but they are not as demanding as physiological needs.

An example in the business world is when employers provide a safe working environment, retirement benefits, and job security. In schools, an example of addressing safety needs include providing a safe and secure classroom and having a school resource officer on grounds. This reduces threats to student’s physical, mental, and emotional security.

We now come to our third level, social needs. Sometimes these are referred to as the love and belonging needs. These include needs for belonging, love, and affection. Maslow considered these needs to be less basic than physiological and security needs.
Relationships such as friendships, romantic attachments, and families help fulfill this need for companionship and acceptance, as does involvement in social, community, or religious groups. In the workplace, employers help fulfil these needs by creating a sense of community via team-based projects and social events. When people’s social needs are not met, they tend to be unhappy. This leads to loneliness, social anxiety, and depression.

After the first three needs have been satisfied, esteem needs become increasingly important. These include the need for things that reflect on self-esteem, personal worth, social recognition, and accomplishment.

(b) Line and staff organisation refer to a pattern in which staff specialists advise line managers to perform their duties.

  • Managers are of two types – Line Managers and Staff Managers.
  • Line Managers perform the functions of decision-making, issuing orders and controlling while Staff Managers perform the functions of advising, assisting and providing expert and specialised services.
  • There is unity of command.
  • There is a scalar chain.

Merits: This form of the organisation came to existence as an improvement over the line organisation. Line and staff organisation has removed serious drawbacks of the line organisation.
Specialization: It is based on planned specialisation, line managers get the benefit of specialized knowledge of staff specialists at various levels.

Encouragement to research and development programmes: The growth of an enterprise depends largely on various research and development programmes. The staff provides this service to the line departments.

Balanced decisions: Line managers may not have specialised knowledge in all areas and due to this line managers may sometimes give wrong orders or pass the wrong judgement. The suggestions and advice are given by the staff manager help them in making a rational judgement and balanced decisions.

Less burden on line managers: Staff managers relieve the line managers from the botheration of concentrating on the specialised functions like accounting, selection and training of employees, public relations etc. Thus there is a less burden online managers. Many problems that are ignored or poorly handled in the line organisation, can be properly covered. It is more flexible.

(c) Modern Marketing: Its main motive is customer satisfaction that is building a relationship with MIS customer and is achieved through an integrated, corporate-wide set of marketing activities. This technique understands the needs and desires of the customer and product is designed accordingly.

In modern marketing, consumers are more conscious as well as cautious about the product they consume. Their expectations always keep on increasing; even their consumption habits are changed. So to cope up with, marketing managers need to have the latest information which will be met by the MIS. Simultaneously, there is a growing consumerism. Peoples are not passive. They don’t want to have any exploitation by the marketer. They are ready to agitate immediately, which not good on the part of any progressive and developing marketing firm. Therefore, marketing managers need to avoid. Thereby acquiring the latest information through MIS.

Question 8.  (ISC Commerce 2014 Class-12)
(a) Explain any three elements of Promotion Mix. [3]
(b) Explain the meaning of [4]
(i) SMS alert
(ii) Fayol’s principle of centralization.
(c) Explain any five sources of external recruitment. [5]
Answer 8:
(a) Promotion mix: It refers to all the decisions related to the promotion of sales of products and services. The important decisions of promotion mix are selecting advertising media, selecting promotional techniques, using publicity measures and public relations etc.
There are various tools and elements available for promotion. These are adopted by firms to carry on their promotional activities. The marketer generally chooses a combination of these promotional tools.
Following are the tools or elements of promotion. They are also called elements of promotion mix:

  1. Advertising
  2. Sales promotion
  3. Personal selling
  4. Public relation

1. Advertising: Advertisement can be defined as the “paid form of non-personal presentation and promotion of the idea, goods or services by an identified sponsor”.

It is an impersonal presentation where a standard or common message regarding the merits, price and availability of product or service is given by the producer or marketer. The advertisement builds a pull effect as advertising tries to pull the product by directly appealing to the customer to buy it.

Advertisement can be defined as the “paid form of non-personal presentation and promotion of the idea, goods or services by an identified sponsor”.

It is an impersonal presentation where a standard or common message regarding the merits, price and availability of product or service is given by the producer or marketer. The advertisement builds a pull effect as advertising tries to pull the product by directly appealing to the customer to buy it.

2. Sales Promotion: Sales promotion refers to short-term use of incentives or other promotional activities that stimulate the customer to buy the product. Sales promotion techniques are very useful because they bring :

  • The short and immediate effect on the sale.
  • Stock clearance is possible with sales promotion.
  • Sales promotion techniques induce customers as well as distribution channels.
  • Sales promotion techniques help to win over the competitor.

3. Personal- Selling: Personal selling means selling personally. This involves face to face interaction between seller and buyer for the purpose of sale.
The personal selling does not mean getting the prospects to desire what the seller wants but the concept of personal selling is also based on customer satisfaction.

4. Public Relations: Apart from four major elements of the marketing mix, another important tool of marketing is maintaining Public Relations. In simple words, public relations means maintaining public relations with the public. By maintaining public relations, companies create goodwill.
Public relations evaluate public attitudes; identify the policies and procedures of an organisation with the public interest to earn public understanding and acceptance.

The public does not mean only customers, but it includes shareholders, suppliers, intermediaries, customers etc. The firm’s success and achievement depend upon the support of these parties, for example, a firm needs the active support of middlemen to survive in the market, it must have good relations with existing shareholders who provide capital. The consumers’ group is the most important part of the public as the success of a business depends upon the support and demand of customers only.


(i) An SMS alert is a service by which an SMS is sent to someone to alert him of an event.
From case to case, the SMS alert is set up based on a specific request of the recipient who will specify’ an alert threshold (stock exchange prices for instance) or it is directly sent out by a company (overdraft situation, flight delays, etc.).

(ii) Fayol believed that all employees of his company, from the foremen to the CEO. should receive some type of managerial training. He developed a list of principles of management. He believed that there were more than fourteen of them, but chose to focus on those he found to be the most useful in his own career. The fourteen principles that Fayol concentrated on were:

  • Division of Work
  • Authority’ & Responsibility
  • Discipline
  • Principle of One Boss
  • Unity of direction
  • Subordination of individual interests to the general interest
  • Fair Remuneration
  • Centralization & Decentralization
  • Scalar chain
  • Order
  • Equity
  • Stability of tenure of personnel
  • Initiative
  • Esprit de corps (building harmony and unity)

(c) External Sources of Recruitment
1. Campus Recruitment: These candidates are directly recruited by the company from their college/educational institution. They are inexperienced as far as work experience is concerned.

2. Private Employment Agencies/Consultants: Public employment agencies or consultants like ABC Consultants in India perform recruitment functions on behalf of a client company by charging fees. Line managers are relieved from recruitment functions and can concentrate on operational activities.

3. Public Employment Exchanges: The Government set up Public Employment Exchanges in the country to provide information about vacancies to the candidates and to help the organization in finding out suitable candidates. As per the Employment Exchange act 1959, makes it obligatory for the public sector and private sector enterprises in India to fill certain types of vacancies through public employment exchanges.

4. Professional Organizations: Professional organizations or associations maintain complete bio-data of their members and provide the same to various organizations on requisition. They act as an exchange between their members and recruiting firm.

5. Data Banks: The management can collect the bio-data of the candidates from different sources like Employment Exchange, Educational Training Institutes, candidates etc. and feed them in the computer. It will become another source and the company can get the particulars as and when required.

6. Casual Applicants: Depending on the image of the organization its prompt response participation of the organization in the local activities, level of unemployment, candidates apply casually for jobs through mail or handover the application in the Personnel dept. This would be a suitable source for temporary and lower-level jobs.

Question 9.
(a) Write the meaning of the following types of plans: [3]
(i) Policy
(ii) Procedure
(iii) Method
(b) Explain any four functions of a supervisor. [4]
(c) What is packaging? Explain three functions of packaging. [5]
Answer 9:   (ISC Commerce 2014 Class-12)
(a) Policies: Policies are those general statements which are decided for the guidance of the employees while taking a decision. Their purpose is laying down a limit within which a particular work can be done or decision taken. Objectives decide what is to be achieved and the policies tell us how it can be achieved.

Procedures: Procedures are those plans which determine the sequence of any work performed. For example, the recovery’ of money from the debtors can be done in the following order:

  • Writing letters
  • connecting on telephone
  • Meeting personally
  • taking legal action.

This is the procedure of collecting money from all the debtors. There is a difference between policies and procedures. There can be two policies of the organization regarding the recovery of money from the debtors. (A) Tight collection policy, and (B) Lenient collection policy. Under the first policy, an effort is made to recover money from debtors is by treating him harshly. Under the second policy, the debtors will be given enough time for the payment of money while treating him leniently.

Methods: Methods is that plan which determines how different activities of the procedure are completed. Methods is not related to all steps but only to one step of the procedure, it is more detailed than procedure. There may be many methods to do a particular work. After extensive study, a method has to be selected from which a worker feels minimum fatigue, increase in productivity’ and there is a reduction in costs.

(b) Supervisor, being the manager in direct contact with the operatives, has got multifarious function to perform. The objective behind the performance of these functions is to bring stability’ and soundness in the organization which can be secured through an increase in profits which is an end result of higher productivity. Therefore, a supervisor should be concerned with performing the following functions:

1. Planning and Organizing: Supervisor’s basic role is to plan the daily work schedule of the workers by guiding them the nature of their work and also dividing the work amongst the workers according to their interests, aptitudes, skills and interests.

2. Provision of working conditions: A supervisor plays an important role in the physical setting of the factory and in arranging the physical resources at the right place. This involves providing the proper sitting place, ventilation, lighting, water facilities etc. to workers. His main responsibility is here to provide healthy and hygienic condition to the workers.

3. Leadership and Guidance: A supervisor is the leader of workers under him. He leads the workers and influences them to work their best. He also guides the workers by fixing production targets and by providing them with instruction and guidelines to achieve those targets.

4. Motivation: A supervisor plays an important role by providing different incentives to workers to perform better. There are different monetary and non-monetary incentives which can inspire the workers to work better.

5. Controlling: Controlling is an important function performed by the supervisor. This will involve

  • Recording the actual performance against the time schedule.
  • Checking the progress of work.
  • Finding out deviations if any and making solutions.
  • If not independently solved, reporting it to top management.

(c) The packaging is the process of enclosing or containing the product in bottles, plastic bags, wrappers. lubes, paper cartons and boxes etc. For the purpose of displaying useful information regarding the product, its contents, weight, size, price, constituents, usage necessary instruction about the usage and storing the product must be recorded on the package. The package reduces the risk of wastage, spoilage, leakage, metage and evaporation etc. in the process of transportation and storage.

Function of Packaging Protection
The fundamental functions of packaging are to protect it from sun, rain, moisture, insects and atmospheric contracts etc. Packaging maintains the product fresh and enhances its life. So, we use air-tight containers for certain products.

Easy identification
Every producer has its own distinct packaging, different from others with respect to design, size, colour and other specification packaging helps-us in the easy identification and immediate picking up of the product.

Packaging provides convenience in the transportation and storage of the product. It is convenient for consumers to use these products. Packaging of Tropicana Real and Frooti Juices facilitates their consumption. Packaging, no doubt helps us in the safe and convenient handling and storing of the product.

Sales promotion
It is rightly said that packaging works as a silent, salesman. It catches the attention of customers, who pick up the product, go through its description and are induced to purchase the product. Self-service is becoming more and more common in the field of shopping, where the customer picks up the product himself and makes its payment on the counter. Packaging in these circumstances promotes sales.

Innovative ideas
The producers sometimes develop innovative ideas about the packaging which promotes their sales. For examples, shampoo, tomato ketchup, surf, sugar, milk, oil etc., are sold in small pouches. In addition to the above functions packaging facilities branding of the product. Empty packages have their resale value for customers. Packaging builds an image of the product and its producers. Effective packaging is the source of prestige to its producers. Packaging continues to be more important in the modem growing completion, open, display of the product and self-service of the customers.

-: End of ISC Commerce 2014 Class-12 Solved Paper :-

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