Business Studies (319) - April' 2018 | NIOS SENIOR SECONDARY Solved Papers

BUSINESS STUDIES (April’ 2018)
(319)
NIOS SENIOR SECONDARY Solved Papers
Time: 3 Hours
Maximum Marks: 100

13. What is meant by bank overdraft?                   3

Ans: An Bank overdraft is an arrangement by which the customer is allowed to overdraw his account. It is granted against some collateral securities. The facility to overdraw is allowed through current account only. Interest is charged on the exact amount of overdrawn subject to the payment of minimum amount by way of interest.

14. Explain any three points of difference between marketing and selling.         3

Ans: Difference between selling & marketing concept

15. Explain a ‘documentary bill’ as a document used in external trade. 3

Ans: When the documents of title to goods are sent along with the bill of exchange drawn by the exporter on the importer, it is called a documentary bill. It may be of two types (a) Documentary bill against payment (b) Documentary bill against acceptance. In case of documentary bill against payment, the documents of title to exported goods are delivered to the importer only when the importer has paid the amount specified in the bill of exchange. In case of documentary bill against acceptance, the documents of title to the exported goods are delivered to the importer after he has accepted the bill of exchange drawn by the exporter.

16. Briefly explain the nature of principles of management.       4

Ans:  Characteristics/Nature of management principles are:

a)      Universal Application: Management principles are applied in every situation, where the objectives are attained through group efforts. All social, economic, political, cultural or even religious organizations apply management principles for the successful operations of their activities.

b)      Flexibility: The business situations and its social economic environment are always changing, so the management principles are dynamic enough to suit the size, nature, need and situation of the business.

c)       General statements: Management principles are concerned mostly with human behaviour, which cannot be tested under controlled conditions i.e., a laboratory.

d)      Influencing human behaviors: Human element is an essential factor of production. It activates and extracts work from other factors also. Every worker is individually different from other workers. Management is concerned with the integration of individual efforts and how to channeling them towards achieving the desired results.

e)      Based on cause and effect relationship: Management principles are based on cause and effect relationship that means these principles tells why a principle is applied in given situation and what are their effects.

17. Explain briefly any four limitations of planning function of management.    4

Ans: Limitations of Planning: The success of enterprise is possible only when plans are properly drawn up and implemented. The business environment is dynamic, nothing is constant. The organisation has to constantly adapt itself to the changes of in business environment. I agree with the statement” Though Planning is an important tool of management, yet it is not a remedy in business environment. Planning can’t prevent problem. It can only product them to prepare contingency plans to deal with them if and when they occur. Planning fails in spite of efforts of management because of its limitations which are stated below:

1. Planning does not work in dynamic environment: The business environment is dynamic, nothing is constant. The environment consists of a number of dimensions— economic, political, technological, legal and social dimensions. The organisation has to constantly adapt itself to the changes in business environment. However, it is not always possible to accurately assess future trends in the environment.

2. Planning is a time consuming process: Planning is a time consuming process. It requires collection of information, its analysis and interpretation. These activities may take considerable time.

3. Planning involves huge costs: Planning is an expensive process in terms of money. When plans are drawn up, huge costs are involved in the formulation of plans. If the costs are not justified by the benefits derived from the plan, it may have adverse effect on the enterprise.

4. Planning creates rigidity: Planning leads to rigid mode of functioning for managers. This has adverse effect on the initiative to be taken by them.

5. Planning does not guarantee success: The success of an enterprise is possible only when plans are properly drawn up implemental. Managers have a tendency to rely on previously tried and tested successful plans. But it is not always true that a plan which has worked before, will work effectively again.

6. Planning reduces creativity: Planning is an activity which is done by top management. 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.

18. Briefly explain any two factors that determine the capital structure of a company. 4

Ans: (a) Flexibility: Excess of debt may restrict the firm’s capacity to borrow further. To maintain flexibility it must maintain some borrowing power to take care of unforeseen circumstances.

(b) Tax rate: As interest on debt is treated as an expense, it is tax deductable. Dividend on equity is the distribution of profit so is not tax deductable. Thus if the tax rates are high, issue of debt is an attractive means as it is economical in nature.

19. Briefly explain any four factors that are taken into consideration while fixing the price of a product.              4

Ans: Factors determining Fixation of price:

i) Cost of the product: Cost of the product is the main component of the price. No company can sell its product or service at less than the cost of the product. A Fixed and variable cost are to be considered for determining the price.

ii) The utility and demand for the product: Intensive study for the demand for product and service in the market is to be undertaken before the fixation of the price of the product. If demand is relatively more than supply, higher price can be fixed.

iii) Extent of competition in the market: It is necessary to take into consideration prices of the product of the competing firms prior to fixing the price. In case of cut throat competition it is desirable to keep price low.

iv) Government and Legal Regulation: If the price of the commodity and service is to be fixed as per the regulation of the govt., it should also be borne in mind.

20. Briefly explain the following consumer rights as per the Consumer Protection Act, 1986:      4

(a) Right to Safety

(b) Right to be Informed

Ans: (a) Right to Safety: It is the right of the consumers to be protected against goods and services which are hazardous to health or life. For example, defective vehicles could lead to serious accidents. The same is true of electrical appliances with sub-standard material. Only recently, there were mass protests and boycott of soft drinks due to presence of hazardous pesticides beyond permissible limits. Thus, right to safety is an important right available to the consumer which ensures that the manufacturers shall not produce and sell sub-standard and dangerous products.

(b) Right to be Informed: The right to be informed is an important component of consumer protection. The consumer must be provided with adequate and accurate information about quality, quantity, purity, standard and the price of the goods and services. Now-a-days the manufacturers provide detailed information about the contents of the product, its quantity, date of manufacturing, date of expiry, maximum retail price, precautions to be taken, etc. on the label and package of the product. Such information helps the consumers in their buying decision and use of the product.

21. Is management a profession? Discuss.           5

Ans: Management is a Profession: Profession is an occupation for which specialized skills and training are required and these skills are used not for private profit but for the larger interests of the society.  There is a professional body to control the behaviour of its members.  At present management is not a full fledged profession but it is heading towards becoming a profession. Management is by and large becoming a profession. Management is emerging now as a profession because it has the following essential features of process:

a) Management is a specialised body of knowledge having its own principles, concepts and theories.

b) Proper training and education is essential for managers to improve managerial skills.

c) Indian Management Association and All India Management Development Association is set up in India to lays down the standards of education and training for that entering management profession.

d) Manager must strictly observe code of conduct and ethics.

e) There is dominance of service motive in any profession. Management aims at providing maximum efficiency at eh lowest cost so as to serve the interests of employers, consumers, society and nation at large.

In conclusion, it may be said that managers at the top level do not satisfy all the requirements of profession but management is becoming a profession.

22. Briefly explain the steps of the controlling function of management.       5   oct, 2017

Ans: Following are the steps of controlling process:

(i) Fixation of standards: the first step of controlling is to set performance standards. Standards are those criteria s on the basis of which the actual performance is measured. Thus, standards serve as benchmarks towards which an organization strives to work. Standards can be set in both quantitative as well as qualitative terms.

(ii) Measurement of Actual Performance: the second step in the controlling process is the measurement of actual performance. The measurement of actual performance is done on the basis of pre-determined standards. The measurement of actual performance tells the manager whether the work has been done according to the plan or not.

(iii) Comparison of Actual Performance with Standards: At this step, actual performance is compared with the standards and deviations are found out.

(iv) Ascertaining reasons for deviation: Deviations are examined the light of pre-determined Deviation Tolerance Limits. If the deviations are within limits they can be avoided. But if they cross the limits, they should be reported to the higher level managers without any delay. There are two important principles regarding this:

(a) Principle of Critical Point Control: According to this principle, those activities should be determined in the very outset which have an important role to play in ensuring the actual work progress in accordance with the plans. These are known as Key Result Areas – KRAs. It means that the managers should not be involved in small insignificant activities but should pay more attention to those activities where unfavourable results can cause heavy loss to the enterprise.

(b) Management by Exception; Management by exception, is an important principle of management control based on the belief that an attempt to control everything results in controlling nothing. Thus, only significant deviations which go beyond the permissible limit should be brought to the notice of management.        

(v) Taking Corrective Action: The last but the most important step in the controlling process is taking corrective action. By now the deviations and their causes become known. Now is the turn of removing the hurdles in the actual work progress. The purpose of corrective action is to bring the actual work progress to the level of expected progress.

23. State any five features of mutual funds.        5

Ans: Features of Mutual Funds: The essential features of mutual funds are as follows:

1. It is a trust into which a number of investors invest their money in the form of units to form a large pool of funds.

2. The amount is invested in securities by the managers of the fund.

3. The amount is invested in different securities of reputed companies to ensure definite and regular income. Thus, it helps in minimizing the risk.

4. The mutual fund schemes often have the advantages of high return, easy liquidity, safety and tax benefits to the investors.

5. The net income received on the investments of the fund is distributed over the units held.

24. What is meant by consumer goods? Briefly describe the different types of consumer goods.    5

Ans: Consumer goods: Goods meant for personal consumption by the households or ultimate consumers are called consumer goods. This includes items like toiletries, groceries, clothes etc. Based on consumers’ buying behaviour the consumer goods can be further classified as:

(i) Convenience Goods: Do you remember, the last time when did you buy a packet of butter or a soft drink or a grocery item? Perhaps you don’t remember, or you will say last week or yesterday. Reason is, these goods belong to the categories of convenience goods which are bought frequently without much planning or shopping effort and are also consumed quickly. Buying decision in case of these goods does not involve much pre-planning. Such goods are usually sold at convenient retail outlets.

(ii) Shopping Goods: These are goods which are purchased less frequently and are used very slowly like clothes, shoes, household appliances. In case of these goods, consumers make choice of a product considering its suitability, price, style, quality and products of competitors and substitutes, if any. In other words, the consumers usually spend a considerable amount of time and effort to finalise their purchase decision as they lack complete information prior to their shopping trip. It may be noted that shopping goods involve much more expenses than convenience goods.

(iii) Speciality Goods: Because of some special characteristics of certain categories of goods people generally put special efforts to buy them. They are ready to buy these goods at prices at which they are offered and also put in extra time to locate the seller to make the purchase. The nearest car dealer may be ten kilometers away but the buyer will go there to inspect and purchase it. In fact, prior to making a trip to buy the product he/she will collect complete information about the various brands. Examples of speciality goods are cameras, TV sets, new automobiles etc.

25. It is a type of a large-scale retail shop where similar ranges of commodities at the same price are sold at different localities in a city or in different cities. These stores generally have a single brand name. Identify the type of retail stores and state any four benefits of these stores.   5

Ans: Multiple shops deal with similar types of goods mostly of everyday use e.g., shoes, textiles, watches, automobile products, etc. The price is uniform for similar items in all the shops. These shops are usually conveniently located in the main market place or in busy shopping centers. These shops are also called ‘Chain Stores’. They sell similar range of commodities at the same price in all their shops. These shops are usually owned and run by big manufacturers/producers. They open a number of branches at different localities in a city or in different cities andtowns in a country.

Merits of Multiple Shops: The multiple shops offer the following advantages to buyer and sellers:

(a)All multiple shops are often built alike, that helps customers to recognise the shops easily. They have similar window display, interior decoration of the shop and arrangement of the counter, furniture, sign boards etc.

(b)They facilitate elimination of middlemen (wholesalers and retailers) in the process of distribution.

(c)These shops enjoy the benefits of large-scale purchase or production of goods(centralised purchase/production). Also, due to common advertisements these shops are able to save on the cost of advertising.

(d)The customers can get the goods at a cheaper rate because of low operating cost and elimination of middlemen in the process of distribution.

(e)Since the customers get genuine and standardised goods directly from the manufacturers, chances of duplication of goods and cheating does not arise in these shops. Also, standard quality and uniform price of products help in winning the confidence of customers.

26. “It is the orderly arrangement of group efforts to provide unity of action for the attainment of a common purpose.” Identify the concept and give the meaning of the concept so identified. Also explain its features.          6

Ans: In every organisation, different types of work are performed by various groups and no single group can be expected to achieve the goals of the organisation as a whole. Hence, it becomes essential that the activities of different work groups and departments should be harmonised. This function of management is known as ‘co-ordination’. It ensures unity of action among individuals, work groups and departments, and brings harmony in carrying out the different activities and functions so as to achieve the organisational goals efficiently. In other words, coordination is the orderly arrangement of individual and group efforts to provide unity of action in the pursuit of a common goal. In an organisation, for example, the purchase department buys raw materials for production, the production department produces the goods, and the marketing department procures orders and sells the products. All these departments must function in an integrated manner so that the organisational goal can be duly achieved. Thus, coordination involves synchronisation of different activities and efforts of the various units of an organisation so that the planned objectives may be achieved with minimum conflict.

 In the words of Henry Fayol, ”To co-ordinate is to harmonise all the activities of a person in order to facilitate its working and its success.”

The key features of coordination are as follows:

a)      Coordination is not a distinct function but the very essence of management.

b)      It is the result of conscious and concerted action by management.

c)       Coordination is a continuous, never ending or on-going process. It is also a dynamic process.

d)      Coordination is required in group efforts not in individual effort.

e)      Coordination has a common purpose of getting organizational objectives accomplished.

Or

In every organization, there are certain levels of management with varying degree of authority and responsibility. Briefly explain these levels with the help of a diagram, stating the position and functions to be performed at each level.         6

27. According to Maslow, “An individual has many needs and their order can be determined”. In the light of this statement, briefly explain ‘Maslow’s hierarchy of needs’ and state its assumptions.     6                              Oct’ 2017

Ans: Abraham Maslow’s Need Hierarchy Theory

Each employee has some needs of his own that he wants to fulfill. While directing, it is essential to ensure that any of the unfulfilled need of the individual is being taken care of. A need is a feeling of lack of something and every person tries to take care of that feeling by satisfying/fulfilling what he lacks. The needs of the individual differ from person to person. However, there are certain common needs which are known to exist in most cases. These are known as Physiological needs. People generally work so as to be able to earn money to satisfy such needs. Once the basic needs are satisfied, people wish to satisfy higher category of needs. They want safety and security and desire to be protected against loss of employment, sickness, accident etc. These are known as Safety and Security needs. Thereafter, people want to have a sense of belonging to the organisation and to be accepted by fellow workers. These are known as social needs. Similarly, there are people who wish to be considered important and expect that their opinions should be recognised by others. These needs are known as ego needs. Further, a person may wish to achieve what he thinks is due to him, i.e., he wants to realise his ambition fully. These needs are known as self-actualisation needs. This is called hierarchy of needs concept of motivation developed by Maslow. According to Maslow, an individual has many needs and their order can be determined. If a person satisfies his first need, then he thinks about his next need. After satisfying the second need, he tries to satisfy third need and so on. So needs are the motivators.

Assumptions of Maslow’s Need Hierarchy Theory

a) Behaviour of people depends upon their need. Human behaviour can be changed or motivated by fulfilling their needs.

b) Generally the needs follow the hierarchy i.e., starting from physiological need. As soon as needs on lower levels are fulfilled, those on the next level will emerge and demand satisfaction.

c) The whole organisation can be motivated at a time.

d) People in different cultures are motivated by the same basic needs.

e) Motivation is complex and unconscious motives often underlie behaviour.

Or

 “The selection procedure consists of a number of steps in logical order to identify the candidates who are to be finally appointed.” Briefly explain these steps.                              6                              April 2018

Ans: The selection process usually includes a number of steps:

1. Preliminary screening: In this step the candidates who do not fulfill the required basic qualification are eliminated.

2. Selection test: Though these tests, ability and skill of the candidates are measured. Common types of tests conducted by organisation are Intelligence test, Aptitude test, Personality test, Trade test, Interest test.

3. Employment interview: The candidates who qualify the test are called for interview.

4. References & background checks: After the candidate declared successful in the interview then information related to back ground, social relation, and character are indentified.

5. Selection decision: The candidate who passed the test, interview, reference check is included in selection list & the manager’s select most suitable candidate from the list.

6. Medical examination: Before giving appointment letter, the candidates are selected for medical fitness.

7 job offer: For job offer the appointment letter in hand over & a date in the appointment letter is mentioned on which one has to report for the duty.

8. Contract of employment: After the acceptance of job offer by a selected candidate required to sign various documents.

28. Many functions are being performed by an association whether incorporated or not, which is established for the purpose of assisting, regulating and controlling business of buying, selling and dealing in securities. Explain these functions briefly.                             6                             

Ans: As indicated above, stock exchange is the term commonly used for a secondary market, which provide a place where different types of existing securities such as shares, debentures and bonds, government securities can be bought and sold on a regular basis. A stock exchange is generally organised as an association, a society or a company with a limited number of members. It is open only to these members who act as brokers for the buyers and sellers. The Securities Contract (Regulation) Act has defined stock exchange as an “ association, organisation or body of individuals, whether incorporated or not, established for the purpose of assisting, regulating and controlling business of buying, selling and dealing in securities”.

Functions of stock exchange                     

As the barometer measures the atmospheric pressure, the stock exchange measures the growth of the economy. It performs the following vital functions:

1.       Ready market and liquidity: Stock exchange provides a ready and continuous market where investors can convert their money into securities and securities into money easily and quickly. It provides a convenient meeting place for buyers and sellers of securities.

2.       Evaluation of securities: Stock exchange helps in determining the prices of various securities that reflect their real worth. The forces of demand and supply act freely in the stock exchange and help in the valuation of securities.

3.       Mobilisation of savings: Stock exchange helps in mobilising surplus funds of individuals and institutions for investment in securities. In the absence of facilities for quick and profitable disposal of securities, such funds may remain idle.

4.       Capital formation: Stock exchange not only mobilises the existing savings but also induces the public to save money. It provides avenue for investment in various securities which yield higher returns. It helps in allocation of available funds into the most productive channels.

5.       Regulation of corporate sector: Stock exchanges frame their rules and regulations. Every company which wants its securities to be dealt in at the stock exchange has to follow the rules framed by the stock exchange in this regard.

6.       Economic barometer: Stock exchange is very sensitive barometer of business conditions in the country. Booms, depressions and other important events affect prices of securities. Price trends on the stock exchange reflect the economic climate in the country. One can easily analyse the cause of change in the business climate by the ups and downs on the stock exchange.

Or

 “While preparing a financial plan for any business unit, certain aspects should be kept in view so as to ensure the success of such exercise in meeting the organizational objectives.” Briefly describe these aspects.  6   Oct’ 2017

Ans: Financial Planning is the process of estimating the capital required and determining its composition. It is the process of framing financial policies in relation to procurement, investment and administration of funds of an enterprise. In simple words, it refers to determination of firm’s financial objectives, financial policies and financial procedure. While preparing a financial plan for any business unit, the following aspects should be kept in view so as to ensure the success of such exercise in meeting the organisational objectives.

(a) The plan must be simple: Now-a-days you have a large variety of securities that can be issued to raise capital from the market. But it is considered better to confine to equity shares and simple fixed interest debentures.

(b) It must take a long term view: While estimating the capital needs of a firm and raising the required funds, a long-term view is necessary. It ensures that the plan fully provides for meeting the capital requirement on long term basis and takes care of the changes in capital requirement from year to year.

(c) It must be flexible: While the financial plan is based on long term view, one may not be able to properly visualise the possible developments in future. Not only that, the firm may also change its plans of expansion for various reasons. Hence, it is very necessary that the financial plan is capable of being adjusted and revised without any difficulty and delay so as to meet the requirements of the changed circumstances.

(d) It must ensure optimal use of funds: The plan should provide for raising reasonable amount of funds. As stated earlier, the business should neither be starved of funds nor have surplus funds. It must be strictly need based and every rupee raised should be effectively utilised. There should be no idle funds.

(e) The cost of funds raised should be fully taken into account and kept at the lowest possible level : It must be ensured that the cost of funds raised is reasonable. The plan should provide for a financial mix (combination of debt and equity) that is most economical in terms of cost of capital, otherwise it will adversely affect the return on shareholders’ funds.

29. “Different producers lay different emphases on different aspects of the concept of marketing. The marketing concept is characterized according to the philosophy of the producer.” Briefly explain any four such concepts. 6 April’ 2017 and 2018

Ans: According to the modern concept, marketing is concerned with creation of customers. Creation of customers means identification of consumer needs and organising business to satisfy these needs. Marketing in the modern sense involves decisions regarding the following matters

1. Products to be produced

2. Prices to be charged from customers

3. Promotional techniques to be adopted to contact and influence existing and potential customers.

4. Selection of middlemen to be used to distribute goods & services.

Different producers lay different emphasis of different aspects of the concept of marketing. The making concept is characterised according to the philosophy of the producer. Seeing the outlook of the producers of the marketing concept may be looked at in the following works:

i) Production concept: As per this concept, companies assume that consumer will always respond to the product made available to them.

ii) Product concept: As per this concept companies realize that the quantity of the product is not sufficient, it is the product quality which is also very important.

iii) Selling concept: Now a days, as the technology advances along with the quantity and quality of the goods, the art of selling the goods are also very essential.

iv) Marketing concept: As consumer is treated as “KING” today. So it is essential for the company to produces and markets the product which the consumer wants. It focuses on consumer satisfaction.

v) Consumer concept: As per this concept, companies’ aims at providing consumers separate offers or services. This is possible through one to one marketing.

vi) Societal marketing concept: This concept requires that company should deliver superior value to the consumer to improve the consumer and the society. It focuses on consumer welfare.

Or

According to Philip Kotler, “Marketing mix is a set of controllable variables that the firm can use to influence buyer’s response”. Briefly explain these variables.                         6

Ans: According to Philip Kotler “Marketing Mix is the set of controllable variables that the firm can use to influence the buyer’s response”. The controllable variables in this context refer to the 4 ‘P’s [product, price, place (distribution) and promotion]. Each firm strives to build up such a composition of 4‘P’s, which can create highest level of consumer satisfaction and at the same time meet its organisational objectives. Thus, this mix is assembled keeping in mind the needs of target customers, and it varies from one organisation to another depending upon its available resources and marketing objectives.

 4 P’s of Marketing Mix are stated below:

1. Product: Product is one of important part of marketing mix because it reflects the good or bad reputation of any organization.  The products represent any business efficiently.  Successful organizations always search out the buying habits of their customers and designed their products based on those buying habits in order to meet the customer’s requirements. They also design their products based on important factors such as purchasing power and geographical locations etc.  

2. Price: It is the worth of product on which customers are agreed to buy the products.  Price of the product should be according to the range of regular customers.  Prices are fluctuating according to seasonal requirements. Marketers always try to satisfy their clients at any cost.  

3. Place: Products always design based on geographical place because customers buy products according to their traditions and seasons.  Companies which are going to spread their business networks throughout the world must visit the place where they want to open their branches. They need to study the traditions and seasonal changes of the country where they want to initialize their products.

4. Promotion: Promotion activities involve marketing and advertising.  Promotional activities are used to create awareness about the products.  Customers know about products and their specification through social marketing media. Companies adopt social marketing media in order to create awareness about their products and services.  Promotional activities and techniques are important if companies initialize new products or make some changes in product’s specifications. Promotional activities include advertising, selling, public relations and sales promotions.  

30. “There are various ways and means of consumer protection followed in India because various arguments are given in favour of consumer protection.” Explain any four such arguments. 6

Ans: Arguments in favour of consumer protection: The necessity of adopting measures to protect the interest of consumers arises mainly due to the helpless position of the consumers. There is no denying fact that the consumers have the basic right to be protected from the loss or injury caused on account of defective goods and deficiency of services. But they hardly use their rights due to lack of awareness, ignorance or lethargic attitude. However in view of the prevailing malpractices and their vulnerability there to, it is necessary to provide them physical safety, protection of economic interests, access to information, satisfactory product standard, and statutory measures for redressal of their grievances. The other main arguments in favour of consumer protection are as follows:

 (a)Social Responsibility: The business must be guided by certain social and ethical norms. It is the moral responsibility of the business to serve the interest of consumers. Keeping in line with this principle, it is the duty of producers and traders to provide right quality and quantity of goods at fair prices to the consumers.

(b)Increasing Awareness: The consumers are becoming more mature and conscious of their rights against the malpractices by the business. There are many consumer organisations and associations who are making efforts to build consumer awareness, taking up their cases at various levels and helping them to enforce their rights.

(c)Consumer Satisfaction: Father of the Nation Mahatma Gandhi had once given a call to manufactures and traders to “treat your consumers as god”. Consumers’ satisfaction is the key to success of business. Hence, the businessmen should take every step to serve the interests of consumers by providing them quality goods and services at reasonable price.

(d)Principle of Social Justice: Exploitation of consumers is against the directive principles of state policy as laid down in the Constitution of India. Keeping in line with this principle, it is expected from the manufacturers, traders and service providers to refrain from malpractices and take care of consumers’ interest.

(e)Principle of Trusteeship: According to Gandhian philosophy, manufactures and producers are not the real owners of the business. Resources are supplied by the society. They are merely the trustees of the resources and, therefore, they should use such resources effectively for the benefit of the society, which includes the consumers.

(f)Survival and Growth of Business: The business has to serve consumer interests for their own survival and growth. On account of globalisation and increased competition, any business organisation which indulges in malpractices or fails to provide improved services to their ultimate consumer shall find it difficult to continue. Hence, they must in their own long run interest, become consumer oriented.

Or

In internal trade, buyers and sellers meet together and transactions take place. But in external trade, it is not possible. The business people face various problems. Explain any four such problems. 6 April, 2017,18

Ans: Problems of International business: In internal trade generally buyers and sellers meet together and transactions take place as per their convenience. But in external trade the situation is completely different. It takes a long procedure to buy and sell the goods and services. The business people generally face a number of problems in the process of foreign trade. The various difficulties, which are faced by the buyers and sellers engaged in external trade are described below:

1. Different currencies: Every country has its own currency. So importer has to make payment in the currency of exporter’s country.

2. Legal Formalities: International business is subject to a large number of legal formalities and restrictions.

3. Distance Barriers: Due to large distance between countries, it is difficult to establish quick and personal contacts between traders from different countries.

4. Language Barrier: Due to different languages in different countries, it becomes difficult for traders to understand the terms and conditions of the contract.

5. Difference in Laws: International business transactions are subject to laws, rule and regulations of multiple countries. International business transactions are subject to laws, rule and regulations of multiple countries.

6. Information Gap: It is difficult to obtain accurate information about foreign markets and about the financial position of foreign merchants.

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