BUSINESS STUDIES (Oct’ 2019)
(319)
NIOS SENIOR SECONDARY Solved Papers
Time: 3 Hours
Maximum Marks: 100
14. Name the process in which marketers give a name to their
product. How is it advantageous to the customers? Explain. 3
Ans:
15. What are benefits derived from Retained Profit? 3
Ans: Benefits of retention of profit.
1. Cheap Source of Capital: No
expenses are incurred when capital is available from this source. There is no
obligation on the part of the company either to pay interest or pay back the
money. It can safely be used for expansion and modernisation of business.
2. Financial Stability: A company
which has enough reserves can face ups and downs in business. Such companies
can continue with their business even in depression, thus building up its
goodwill.
3. Benefits to the Shareholders: Shareholders
are assured of a stable dividend. When the company does not earn enough profit
it can draw upon its reserves for payment of dividends.
16. “Decentralization is not same as Delegation.” How are they
different from each other? 4
Ans: Difference between delegation and
decentralisation:
Basis |
Delegation of Authority |
Decentralisation |
Meaning/Name |
Sharing
of the task with the subordinate and granting authority in a prescribed limit
by the superior is Delegation. |
The
systematic delegation to the lowest level of management is called
decentralization. |
Freedom
in action |
Less
freedom to the subordinate Final authority lies with the delegator. |
More
freedom given to the subordinate. |
Status |
This
is a process done as a result of Division of work. |
This
is the result of the policies framed by higher officials. |
Purpose |
Its
purpose is reduction of workload of the officer. |
The
purpose is expansion of the authority in the organization. |
17. Explain the terms of trade : 4
1. COD (Cash on Delivery)
2. FOB (Free on Board)
3. CIF (Cost Insurance Freight)
4.
Mate’s
Receipts
Ans: 1. Cash on Delivery (COD): It is a
type of transaction in which payment for goods is made at the time of delivery.
If the purchaser does not make payment when the goods are delivered, then the
goodwill be returned to the seller.
2. Free on Board (FOB): This
include all charges at the post of shipment upto the loading of goods on board
the ship and export duty, if any.
3. Los, Insurance and Freight (CIF): This
includes the cost of goods all expenses incurred for taking the goods to the
post of destinations and insurance charges.
4. Mate’s receipt: The
captain or mate will issue a receipt known as “mate’s receipt” after the goods
have been loaded. This receipt contains particulars like quantity of goods,
number of packets, condition of packing, etc.
18. State the cases of upward, downward, horizontal and diagonal
communication. 4
Ans: On the basis of the flow or direction of
communication in organisations, it can be classified as upward, downward,
horizontal or diagonal. When employees make any request, appeal, report,
suggest or communicate ideas to the superior, the flow of communication is upward
i.e., from bottom to top. For instance, when a typist drops a suggestion in
the suggestion box, or a foreman reports breakdown of machinery to the factory
manager, the flow of communication is upward.
When communication is made from superiors down the hierarchy it is
called a downward communication. For instance, when superiors issue orders and
instructions to subordinates, it is known as downward communication.
Communication can also be amongst members at the same level in the
organisation. For instance, production manager may communicate the production
plan to the sales manager. This is known as horizontal flow of communication.
Here, the communication is among people of the same rank and status. Such
communication facilitates coordination of activities that are interdependent.
When communication is made between people who are neither in the
same department nor at the same level of organisational hierarchy, it is called
diagonal communication. For example, cost accountant may request for
reports from sales representatives not the sales manager for the purpose of
distribution cost analysis. This type of communication does take place under
special circumstances.
19. Explain the services provided by retailers for
consumers. 4
Ans: Services of Retailers to
Consumers
1) As
retailer holds stocks of goods ready for immediate use and he is prepared to
sell in small quantities, the individual or household consumer is relieved of
the burden of storing large quantities of every article of daily use.
2) Retailer
provides consumers with a wide variety of choice. Retailers, by assembling
products of different variety from different manufactures, enable consumers to
make choice from a large variety of goods displayed in their stores.
3) Retailers
buy and stock goods suitable to the consumers.
4) Retail
shops are situated in convenient localities, usually very near to the
consumers' residence.
5) Retailers
stock fresh goods to meet daily demands of their customers.
6) They sell
to consumers in quantities, which suit the pockets of different individuals.
7) Retailers
make available to their customers goods of the sizes, styles, types, qualities
and prices they prefer.
20. Explain briefly nature of Principle of Management. 4
Ans: Nature of Principles of Management
1. Universal: The management principles are
applicable to all types of organisations like government enterprises,
educational institutions, business enterprises etc.
2. Flexible: Management principles are
modified and applied according to the changing situations. For example, when an
organisation started its functioning, it may have adopted principle of
centralisation. When the organisation became a large enterprise, it will apply
principle of decentralization.
3. Aimed to Influence Human
Behaviour: Human behaviour is complex and unpredictable. Management principles
influence human behaviour so that human resources give their best to an
organisation. For example, principle of order is followed, so that wasteful
movement of workers can be avoided.
4. Cause and effect relationship:
Management principles indicate clearly the cause of various actions and
consequences of various decisions. For example, according to the principle of
discipline, smooth running of business is the result of discipline.
21. State in brief the features of planning. (any five) 5
Ans:
Following are the features of Planning:
A) Planning
contributes to objectives: Planning starts with the process of setting up the
objectives. We cannot think of planning without objectives. After setting up
the objectives various activities are decided which would help in the
achievement of the same.
B) Pervasive:
Planning is required at all levels of management. It is not a function
restricted to top level managers only but planning is done by managers at every
level.
C) Primary
Function: Planning is the first function of the management (primacy).On the
basis of planning; the other functions of organizing, staffing, directing and
controlling are performed.
D) Forward
looking: planning is looking ahead. It is done for the future and not for the
past. All the managers try to make assumptions for the future and act
accordingly.
E) Continuous:
Planning goes on continuously. It does not stop after a particular period. If
plans are made for a month, after one month new plans are made. So Planning
goes on without halt.
22. How is the amount of
working capital required by business unit is assessed? Describe in brief any
three factors determining working capital requirement. 5
Ans: Adequate working capital is very necessary for maintenance of
liquidity and running the business smoothly and efficiently. However, the
amount of working capital required varies from business to business and from
period to period. The various factors that influence such requirement are as
follows:
1.
Scale of operations: There is a direct link
between the scale of business and working capital. Larger business needs more
working capital as compared to the small organizations.
2.
Nature of Business: The manufacturing
organizations are required to purchase raw materials, convert them into
finished goods, maintain the stock of raw materials; semi finished goods and
finished goods before they are offered for sale. They have to block their
capital for labour cost, material cost etc, so they need more working capital.
In the trading firm processing is not performed. Sales are affected immediately
after receiving goods for sale. Thus they do no block their capital and so
needs less working capital.
3.
Credit allowed: If the inventory is sold only
for cash, it requires less working capital as money is not blocked in debtors
and bills receivable. But due to increased competition, credit is usually
allowed. A liberal credit policy results in higher amount of debtors, so needs
more working capital.
4.
Credit availed: If goods are purchased only
for cash, it requires more working capital. Similarly if credit is received
from the creditors, the requirement of working capital decreases.
5. Availability
of Raw materials: If the raw materials are easily available in the market and
there is no shortage, huge amount need not be blocked in inventories, so it
needs less working capital. But if there is shortage of materials, huge
inventory is to be maintained leading to larger amount of working capital.
23. “Many people consider advertising to be wasteful activity.”
Give the arguments against advertising. (any five)5
Ans:
Several objections have been raised against advertising and some people
criticize advertising as a social waste. The main point of criticism is as
follows:-
a) Creates
Monopoly in the Market: Advertisement leads to promotion and cover mass level
of customers at a time. Large firms can bear the advertisement expenditure but
not the small firms, due to that it can eliminate the small firms from the
market and creates its monopoly authority in the market.
b) Higher the
Prices of Product: Investment of money in advertisement leads to increase in
the price of goods and services for which consumer has to face high prices and
pay for it. Hence, more the advertisement cost- more the product cost.
c) Misleading
the consumers: Now days, advertisement misleads the consumers on false
representation regarding their goods. Consumer attracts to those goods which
are not necessary for them. Thus, advertisement misleads the consumer and sale
goods to them.
d) Wasteful
Consumption by the Consumers: Advertisement attracts the consumers for wasteful
products which are not necessary for consumers. Due to advertisement
businessmen takes undue advantage from them. They sale unhealthy and artificial
goods to them and exploits consumer emotions.
e) Wastage of
National Resources: There will be wastage of national resources, valuable
stationary, time and energy used by the people or is ignored by them. Here,
Valuable resources that can be used to create new industries are wasted in the
production of needless varieties and designs.
24. What is a departmental store? Explain any four merits of
departmental stores. 5
Ans: Departmental Stores: Departmental Store is a large-scale
retail shop where a large variety of goods are sold in a single building. The
entire building is divided into a number of departments or sections. In each
department specific type of goods like stationery items, books, electronic
goods, garments, jewellery etc. are made available. All these departments are
centrally controlled under one management.
Merits of Departmental Stores
(a) They sell a large variety of goods to
consumers, under one roof. So it saves time and effort of the customers.
(b) Departmental stores offer wide variety of
goods produced by different manufacturers.
(c) They buy large volumes of goods, at a time
directly from manufacturers, and get good amount of discount from them. They
are able to reap the benefits of economies of large-scale operations.
(d) Since these stores are organised on a
large-scale basis, they can afford to employ efficient and competent staff to
provide the best services.
25. Explain “Management as a Discipline” and “Management as a
Group”. 5
Ans: Management as a Discipline: Discipline
is a subject that can be studied, organized and taught. It should meet
the basic requirements such as It should be acceptable and It should be capable
of discovering knowledge, which can be verified, passed on to others and can be
successfully applied.
A
large number of schools, colleges & universities have introduced management
courses. It has got experts, thinkers and philosophers of the subject. These
experts are devoted to impart their skill of the subject to learners of the
discipline. They follow a code of conduct prescribed for them. As such we can
conclude that management is a discipline.
Management as a Group: Management
as a GROUP refers to the Board of Directors or Executive Directors who are
responsible for effectively managing the affairs of the business by guiding and
controlling the work of other managers such as production, sales, finance,
personnel, quality control managers, etc. This approach focuses on a team
rather than individuals. This is because it is believed that management as a
team can contribute more effectively and efficiently than an individual.
26. Both wholesalers and
retailers are important link between producer and consumer but are different
from each other because of the nature of their functions. Differentiate between
the two giving any four points of difference. 6
Ans: Wholesale trader is one
who sales to other middlemen, institutions and individuals a fairly large
quantity. According to American Management Association, wholesalers sells to
retailers or other merchants and/or individual, institutional and casual users
but they do not sell in significant amounts to ultimate consumers. Wholesale
trade is to do with marketing and selling merchandise to retailers, wholesalers
or to individuals commercial and professional or other institutional contrast
to household consumers, to individuals for personal use.
Retailer is one
whose business is to sell to consumers a wide variety of goods that are
assembled at his premises as per the needs of final users. The term retail
signifies sale for final consumption rather than for resale or for further
processing. A retailer is the last link between the final user and the
wholesaler or the manufacturers.
In the words of Professor William Staton,
”Retailing includes all activities directly related to the sale of goods and
services to the ultimate consumers for personal or non-business use”
Thus, retailer is that merchant intermediary
who buys goods from preceding channel members in small assorted lots and sells
them in the lot requirements of final users.
Difference
between Wholesaler and Retailer:
1. Link: Wholesaler
servers as a link between producers and retailers on the other hand, a retailer
provides a link between wholesalers and consumers. Wholesaler is the first
link, whereas retailer is the last link in the chain of distribution of goods.
2. Scale of operations:
A
wholesaler carries on business on a large scale and requires huge capital. A
retailer, on the other hand, deals generally on a small scale and capital
invested in retail trade in relatively small.
3. Range of goods:
A
wholesaler generally deals in one commodity. But a retailer deals in a large
variety of goods and caters to the diverse needs of his customers.
4. Dealings: A
wholesaler generally sells goods to retailers on credit. But a retailer usually
sells goods to consumers on cash basis.
OR
External trade is an
important indicator of economic condition of Nation. Explain briefly the
importance of external trade giving any four importances.
Ans: Business transaction taking place within the geographical
boundaries of a nation is known as domestic or national business. It is also
referred to as internal business or home trade. Manufacturing and trade beyond
the boundaries of one’s own country is known as international business.
International or external business can,
therefore, be defined as those business activities that take place across the
national frontiers. It involves not only the international movements of goods
and services, but also of capital, personnel, technology and intellectual
property like patents, trademarks, know-how and copyrights.
Importance
of External Trade:
(a) Promotes Specialisation: External
trade promotes specialisation. When there is expansion in the demand for a
particular commodity, its producer is encouraged to specialise in its
production.
(b) Improves Standard of Living: On account
of import trade, a country can consume goods, which it does not produce. On the
other hand, it earns foreign exchange through export trade. The import and
export trade thus, help in raising standard of living of a country.
(c)Enhances Competition: External
trade enhances competition, which compels the domestic firms to improve
technology of production, production process and quality of the products. It
ultimately benefits the consumers in getting better quality products at
competitive prices. It also provides a large variety of goods.
(d) Generates Employment Opportunities: External
trade facilitates the growth of agricultural, commercial as well as industrial
activities, which in turn generates more and more employment opportunities for
the people.
27. What are the
different aspects that have to be kept in view while preparing a sound
financial plan. Explain any four such aspects. 6
Ans: 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 planfully 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.
OR
What are the factors to
be kept in view while deciding the appropriate capital structure. Explain any
four such factors.
Ans: Ans:
Capital structure refers to the mix of sources from where long term funds
required by a business may be raised i.e. what should be the proportion of
equity share capital, preference share capital, internal sources, debentures
and other sources of funds in total amount of capital which an undertaking may
raise for establishing its business. In simple words, capital structure means
the proportion of debt and equity used for financing the operations of business
and it is calculated by the following formula: Capital
structure = Debt/Equity.
Following factors are to be considered
before determining capital structure.
1. Cash flow
position: If cash flow position of the company is sound, then debt can be
raised and if cash flow is not sound debt should be avoided and it must employ
more of equity in its capital.
2. Interest
coverage ratio: It is the ratio that expresses the number of times the Net
profit before interest and tax covers the interest liabilities. Higher the
ratio better is the position of the firm to raise debt.
3. Control:
Issue of Equity shares dilutes the control of the existing shareholders,
whereas issue of debt does not as the debenture holders do not participate in
the management. Thus if control is to be retained, equity should be avoided.
4. Cost of debt:
If firm can arrange borrowed fund at low rate of interest then it will prefer
more of debt as compared to equity.
5. Stock
market conditions: If the stock market is bullish, the investors are
adventurous and are ready to invest in risky securities. In this case, equity
can be issued even at a premium. Whereas in the Bearish phase, when the
investors become cautious, debt should be issued as there is a demand for fixed
cost security.
6. Regulatory
framework: Before determining the capital structure of a company, the
guidelines of SEBI and concerned regulatory authority is to be considered.
7. 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.
28. Communication can be
made more meaningful and effective if its barriers are removed. How can the
various barriers of communication in the Organization be removed? Give and
explain any four suggestions. 6
Ans: The barriers to an effective communication
can be reduced by following measures:
a) Use of
proper people language: Sender should try to make the message meaningful and
understandable by using appropriate words.
b) Message
should be precise: Lengthy and unwarranted elaboration makes message less
meaningful this should be avoided.
c) Ensure
proper feedback: The sender of the message should take the feedback from the
receiver. Feedback of the conveyed message is an essential tool to the check
that the message is duly understood. Facilities like suggestion box complaint
box secret box helps in making the communication effective.
d) Good
Listener: The sender must listen to receiver’s words carefully on the other
hand receiver must also listen with due attention. Attentive listening solves
many problems.
OR
What is meant by Monetary Incentive? State five types of
monetary incentives.
Ans:
Financial or monetary Incentives: Incentives which are directly or indirectly
associated with monetary benefits are called financial incentives. Examples for
financial Incentives — Pay, allowances productivity linked wage incentives,
Bonus, Retirement benefits, Co partnership, commission.
The
incentives that have a monetary and financial benefit are called financial
incentives. They are:
a) Profit
sharing: It has been accepted that the profit earned by the firm is also due to
the effort put by the workers. So they have a full right to receive a share in
it. It is an effective incentive which satisfies the workers.
b) Co-partnership:
Under this system, employees share the capital as well as the profits. It
motivates them as they share the profits too.
c) Suggestion
system: Valuable suggestions are accepted and the most valuable ones are also
rewarded with cash money.
d) Retirement
benefits: Every employee wants his future to be secured. The firm provides
retirement benefits, pension, provident fund, gratuity etc.
e) Perks:
various perks such as housing, car allowance foreign trips etc can be given to
the managers to boost up his morale.
29. “Management is both Science and Art”. Explain. 6
Ans: Ans: Management As a Science: Science is
defined as a systematized body of knowledge and it uses scientific methods of
observation measurement, experimentation etc. Science may be normative and
positive both. Its principles are exact and university applicable. Similarly,
Management has systematized body of knowledge and its principles are evolved on
the basis of observation and are applicable universally. Management is also
considered as a science since it is based on certain definite principles and
particular methods are applied to solve various problems before the management
personnel. But at the same time it should also be born into mind that
management cannot be given the place of science like Physics, Chemistry etc. It
is not as true and full of facts as the natural sciences are in their subject
matter. There are several reasons which do not allow management to be
considered as pure science. These are:
a)
Universally
unverifiable: Management principles are not universally verifiable.
b)
Modified
plans and policies: Unlike science, managers are deals with government,
employees, customers etc. who are human beings and it is not possible to hold
human beings constant and any prediction about these factors is impossible.
c)
Based on imaginary
considerations: Management principles and concepts are based
on imaginary considerations like human behaviour, etc. Its principles when
executed do not provide exact results.
d)
Incomprehensive:
Various
managerial techniques are new and not known to each and every manager due to
lack of proper training. A manager prefers other ways to solve managerial
problems.
Management As an Art: Art refers to the way of doing
specific things i.e. it indicates “how an objective is to be achieved. It is
the skill and ability to achieve the desired results. Art is the practical application of skill and
ability guided by certain principles or truths. Management is an art in the
sense that it calls for ability and skill to translate scientific management
knowledge into meaningful practice. The art of management consists in
understanding the diverse managerial and organisational situations and in
applying relevant management concepts and methods to the practical realities.
Managers have to be creative and innovative in their thinking and have to rely
on their own previous experience in every situation. Management is also an art
in the sense that management involves blending and balancing diverse interests
and concerns, at a point of time and over a period of time. In short,
Management is considered as an art because of the followings reasons:
a) The
process of management involves the use of ability and skills.
b) The
process of management is directed towards the accomplishment of organisational
objectives.
c) It is
creative in the sense that it is the function of creating productive situations
needed for further improvements.
d) Management
is personalized in the sense that every manager has his own approach to
problems.
Management
is both a science as well as an art. The
science of management provides certain principles that can guide managers in
the professional efforts, while the art of management deals with tackling every
situation in an effective manner.
Planning and organizing emphasize the science of management while
direction, communication motivation coordination and control emphasize art of
management. Getting work done through
people is an art of management.
OR
The concept of management can be best understood through its
characteristics. Explain any four characteristics of management.
Ans:
Management is the coordination of all resources through the process of
planning, organizing, directing, staffing and controlling in order to attain
stated objectives effectively and efficiently.
Effectively means doing the right task, completing activities and
achieving goals and efficiently means to attain objectives with least amount of
resources at a minimum cost.
Characteristics/Features of
Management:
a)
Management
is goal oriented: Every management activity is directed towards
achieving predetermined objectives of the organisation.
b)
Management
deals with several functions: Management includes several functions such as
planning, organizing, staffing, directing, co-ordinating, controlling,
motivating or actuating, controlling, decision making, leadership and
communication.
c)
Management is intangible: It cannot
be seen but it can be felt through the performance of the workers.
Mismanagement if any is quickly noticed and is a sign of poor management.
d)
Management is a continuous process: It is a never ending
process. It is concerned with constantly identifying the problem and solving
them by taking adequate steps. It is an on-going process.
e)
Management
is dynamic: Under dynamic environment management faces several challenges
hence efforts are made to develop and use new techniques for managing the
organizations effectively and efficiently.
As social change takes place, management also changes to overcome the
problems whenever they arise.
30. Marketing Manager wants to fix the price of a product of his
company which should neither be too high nor to be too low. Describe four
factors which are to be considered while fixing price. 6
Ans: Price is defined as the amount we pay for goods or a service or an
idea. Price is the only element in the marketing mix of a firm that generates
revenue. The term ― Price need not be confused with the term ― Pricing. Price
is the value that is put to a product or service. But pricing is different from
price. It refers to decisions related to fixing of price of a commodity. A
pricing strategy takes into account segments, ability to pay, market
conditions, competitors price etc while fixing price. It is targeted at the
defined customers and against competitors.
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.
v)
Pricing objective: Usually at the time of price fixation a certain amount of
profit is added to the cost of the product. Objective is to earn higher profit,
it may it may add amount of it.
vi)
Marketing method used: - Price also influenced by the marketing method used by
the company. Example – Commission which is to be paid to the middlemen for the
sale of the goods is also added to the price.
OR
In Marketing the
consumer is the king whose needs must be satisfied. In selling the product is
supreme and the entire focus is on his sale. Explain how selling is different
from marketing?
Ans: 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. The firms
which follow the selling concept believe that in order to motivate a customer
to buy his product, he must be convinced by aggressive selling and promotional
efforts. Firms following selling concept make use of advertising powers and
other persuation techniques to influence the customers.
Marketing
Concept: The marketing concept emerged in the mid 1950’s. The business
generally shifted from a product – centered, make and sell philosophy, to a
customer centered, sense and respond philosophy. The marketing concept
concentrates on the need of the customers. This concept says than product
should be designed and produced keeping in mind the need of the customers and
try to satisfy the need better than the competitor. The marketing concept holds
that the key to achieving organizational goals consist of the company being
more effective than competitors in creating, delivering and communicating superior customers value.
From the
above discussion we find the following differences between selling and marketing:
Selling |
Marketing |
a) Selling starts and ends with the seller. |
a) Marketing starts and ends with the consumers. |
b) Seeks to quickly convert products into
cash. |
b) Seeks to convert customer ‘needs’ into
products. |
c) Seller is the centre of business
universe. |
c) Buyer is the centre of the business
universe |
d) Views Business as a goods producing
process. |
d) Views businesses as a customer satisfying
process. |
e) Seller preference determines the
formulation of marketing mix. |
e) Buyer determines the shape marketing mix
should take. |
f) Selling is product oriented. |
f) Marketing is customer oriented. |
h) Selling concept is short term
perspective. |
h) Marketing concept is a long term
perspective. |
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