Business Studies Worksheet Complete Answers

1. Define business. Describe its important characteristics.

Business refers to an economic activity where goods and services are produced, distributed, and

exchanged for profit. Characteristics of business include:

1. Economic Activity: Aimed at earning profit.

2. Production and Exchange: Involves manufacturing and selling goods/services.

3. Profit Motive: Essential for business survival and growth.

4. Risk and Uncertainty: Involves financial and market risks.

5. Continuity: Business runs continuously and is not a one-time activity.

6. Customer Satisfaction: Focused on fulfilling customer needs.

7. Innovation: Required to remain competitive in the market.

8. Social Responsibility: Businesses must contribute to society ethically.

2. Define industry. Explain various types of industries.

Industry refers to the production of goods and services using labor and capital. It is classified into:

1. Primary Industry: Involves natural resource extraction (e.g., agriculture, mining, fishing).

2. Secondary Industry: Includes manufacturing and construction industries (e.g., automobile, textile).

3. Tertiary Industry: Provides services rather than goods (e.g., banking, transport, IT services).

3. What do you understand by a sole proprietorship firm? Explain its merits and limitations.

A sole proprietorship is a business owned and managed by a single individual.

Merits:

1. Easy Formation: Requires minimal legal formalities.

2. Full Control: Owner has complete decision-making power.

3. Quick Decision Making: No need for consultation.

4. Retention of Profits: Entire profit goes to the owner.

Limitations:

1. Limited Capital: Funds depend on the owner's savings.

2. Unlimited Liability: Owner bears all losses personally.

3. Lack of Continuity: Business ends with the owner's death.

4. Limited Managerial Ability: One person may lack expertise in all areas.

4. Why is it important to choose an appropriate form of organisation? Explain the factors that

determine the choice of form of organisation.

Choosing the right form of business organisation is crucial as it affects ownership, control, liability,

and operations.

Factors determining the choice of organisation:

1. Nature of Business: Large businesses require a company setup, while small ones may be sole

proprietorships.

2. Capital Requirement: High investment needs may favor partnerships or corporations.

3. Liability: If owners want limited liability, they opt for a company or LLP.

4. Control and Decision Making: Sole proprietors have full control, while companies require a board.

5. Continuity: A company enjoys perpetual succession, whereas sole proprietorship ends with the

owner's death.

6. Legal Formalities: More formalities are involved in companies, while proprietorships have fewer.

5. What are the benefits of entering into joint ventures?

A joint venture (JV) is a partnership between two or more businesses to achieve a common goal.

Benefits of joint ventures:

1. Access to New Markets: Helps companies expand internationally.

3. Risk Sharing: Losses are divided among partners, reducing individual risk.

4. Innovation and Efficiency: Collaboration leads to new ideas and improved productivity.

5. Competitive Advantage: Allows companies to strengthen their market position.

6. Explain some important features of global enterprises.

Global enterprises, also known as multinational corporations (MNCs), operate in multiple countries.

Features:

1. Large Scale Operations: Operate in several countries with high production levels.

2. Advanced Technology: Use cutting-edge technology for efficiency.

3. Centralized Control: Headquarters control international operations.

4. Huge Capital Investment: Require significant financial resources.

5. Global Market Reach: Cater to customers worldwide.

6. Professional Management: Employ skilled professionals for operations.

7. Explain briefly the principle of insurance with a suitable example.

The principle of insurance is based on risk management and financial protection.

Example: A car owner buys an insurance policy. If the car gets damaged in an accident, the

insurance company compensates the repair cost as per policy terms.

Key Principles:

1. Utmost Good Faith: Both parties must disclose all relevant information.

2. Insurable Interest: The insured must have a financial stake in the insured object.

3. Indemnity: Compensation is given to cover actual losses.

4. Subrogation: After compensation, the insurer can claim damages from third parties.

5. Contribution: If multiple insurers exist, they share the liability.

20. 'International business is more than international trade.' Comment.

International trade refers to the exchange of goods and services between countries, whereas

international business includes various commercial activities beyond trade.

International business includes:

1. Import and Export: Selling and buying goods/services globally.

2. Foreign Direct Investment (FDI): Companies investing in businesses abroad.

3. Licensing and Franchising: Granting rights to use brands or business models.

4. Global Marketing: Strategies designed for international customers.

5. Joint Ventures: Collaboration between businesses from different nations.

Thus, international business encompasses more than just trade, covering investment, technology

transfer, and cross-border operations.

8. What are services? Explain its characteristics.

Services are intangible economic activities that satisfy human needs without producing physical

goods.

Characteristics of Services:

1. Intangibility: Services cannot be touched or seen, only experienced.

2. Inseparability: Services are produced and consumed at the same time.

3. Variability: Quality of service may vary depending on who provides it and how.

4. Perishability: Services cannot be stored for future use.

5. Ownership: Customers do not own services, only experience them.

9. Explain the scope of E-business.

Scope of E-business:

1. E-commerce: Buying and selling goods online.

2. E-banking: Online financial transactions like fund transfers.

3. E-marketing: Advertising and selling products via digital channels.

4. E-procurement: Businesses sourcing raw materials online.

5. Online Customer Support: Providing customer assistance via chat, email, or AI bots.

10. Differentiate between e-business and traditional business.

E-business and traditional business differ in multiple aspects:

| Aspect | E-Business | Traditional Business |

|--------|-----------|------------------|

| Medium | Conducted online | Conducted offline |

| Location | No physical location needed | Requires a physical store |

| Cost | Lower operational costs | Higher due to rent, staff, etc. |

| Reach | Global | Limited to a specific area |

| Time | Operates 24/7 | Limited working hours |

11. 'A business owes certain obligations towards different groups.' Identify those groups and

explain the obligations of business towards those groups.

Businesses have responsibilities toward various stakeholders:

1. Customers: Provide quality products at fair prices.

2. Employees: Offer fair wages, a safe workplace, and growth opportunities.

3. Investors: Ensure transparency and reasonable returns on investments.

4. Government: Follow laws and pay taxes.

12. Explain the role of business in environment protection.

Businesses play a crucial role in environmental protection through:

1. Sustainable Production: Using eco-friendly raw materials and processes.

2. Waste Management: Recycling and reducing industrial waste.

3. Energy Conservation: Using renewable energy sources.

4. Reducing Pollution: Controlling emissions and waste disposal responsibly.

5. Corporate Social Responsibility (CSR): Initiating green projects and awareness programs.

13. Describe in brief the merits of equity shares.

Equity shares represent ownership in a company and offer several advantages:

1. Permanent Capital: No repayment obligation, ensuring long-term funds.

2. Voting Rights: Shareholders can participate in company decisions.

3. Higher Returns: Potential for high dividends and capital appreciation.

4. Limited Liability: Shareholders are not liable for company losses beyond their investment.

5. Liquidity: Easily traded in stock markets.

14. The directors of a company have decided to set up a new plant at an estimated cost of

rupees ten crore. State the source of finance available along with its merits.

Sources of finance for a Rs.10 crore plant:

1. Equity Shares: Raising funds from public investors.

- Merits: No repayment, ownership rights.

2. Debentures: Borrowing through fixed-interest bonds.

- Merits: Fixed interest cost, no dilution of ownership.

- Merits: Easy availability, structured repayment.

15. Describe the role of small business in rural India.

Small businesses play a vital role in rural India by:

1. Generating Employment: Provides jobs to local people.

2. Reducing Migration: Prevents rural-to-urban migration.

3. Promoting Self-Reliance: Encourages entrepreneurship.

4. Supporting Agriculture: Supplies tools and markets for farm produce.

5. Utilizing Local Resources: Uses local raw materials and talent.

16. Explain the characteristics of entrepreneurship.

Entrepreneurship is the process of starting and managing a business.

Characteristics:

1. Innovation: Introducing new products or services.

2. Risk-taking: Entrepreneurs bear financial and market risks.

3. Vision: A strong goal and future-oriented approach.

4. Leadership: Ability to manage and inspire teams.

5. Persistence: Overcoming challenges and setbacks.

17. Describe the features of departmental stores.

A departmental store is a large retail outlet with various sections.

Features:

1. Large Scale: Operates on a wide area with multiple departments.

2. Centralized Management: Single management controls all sections.

4. Customer Services: Provides after-sales services and assistance.

5. High Operating Costs: Requires significant capital and staff.

18. Differentiate between departmental stores and multiple shops.

Key differences between departmental stores and multiple shops:

| Feature | Departmental Stores | Multiple Shops |

|---------|---------------------|----------------|

| Structure | One large outlet | Several small branches |

| Ownership | Single entity | Chain of shops |

| Variety | Wide range of products | Limited to specific items |

| Pricing | Higher due to luxury setup | Standardized and uniform pricing |

| Example | Shoppers Stop | Bata, Reliance Trends |

19. State the major objectives of WTO.

The World Trade Organization (WTO) promotes global trade with the following objectives:

1. Trade Liberalization: Reducing trade barriers between nations.

2. Fair Competition: Ensuring equal opportunities in global trade.

3. Dispute Resolution: Settling international trade disputes.

4. Economic Growth: Encouraging trade to boost global economy.

5. Special Assistance: Helping developing nations integrate into world trade.