HBSE Class 12 Sample Paper 2024 Answers Entrepreneurship

HBSE
MODEL PAPER
2024
Practice Papers
MODEL PAPERS
Marking Scheme
ANSWER KEY

MARKING SCHEME (2023-2024)
ENTREPRENEURSHIP
CLASS XII
Time: 3Hrs Max Marks: 60

General instructions:
● The Question Paper is divided into 4 parts. There is no overall choice, though the internal choice is given
in selected sections.
● Section A has 15 objective questions carrying 1 mark each.
● Section B has 6 questions carrying 2 marks each. Answers may be within 50 to 75 words.
● Section C has 6 questions carrying 3 marks each. Answers may be about 100 words.
● Section D has 3 questions carrying 5 marks each. Answers may be about 150 words.

Section-A

Fill in the blank:

Q1. Central Level financing institutions for supporting entrepreneurs are: 1
A) SIDBI
B) IFCI
C) NABARD
D) All of the above.

Ans. D) All of the above.
Q2. The entrepreneur acts as: 1
A) A Worker
B) An Owner
C) A Worker as well as an Owner.
D) A Middleman

Ans. C) A Worker as well as an Owner.

Q3. SWOT refers to: 1
A) Strength, Weaknesses, Opportunities, Threats
B) Selling wonderful offers to customers
C) Sure, Working of Business
D) None of the above

Ans: A) Strength, Weaknesses, Opportunities, Threats

Q4. Budget Statement is related to: 1
A) Marketing Plan
B) Financial Plan
C) Production Plan
D) Human Resource Plan

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Ans: B ) Financial Plan
Q5. Workload refers to: 1
A) Total number of existing staff
B) Total number of staff required in future
C) Total number of job positions
D) None of the above

Ans: C) Total number of job positions

Q6. The apex body that controls the capital markets of our country is:
A) RBI
B) SBI
C) SEBI
D) None of the above
Ans: C) SEBI
Q7. Longer the operating cycle……………………. is the requirement of working 1
capital.
Ans: More

Q8. Service provider needs …………… working capital as compared to the 1
manufacturer.
Ans: Less

Q9. To promote and develop activities in the stock exchange, SEBI performs……. 1
functions.
Ans: Development

Q10. Define Break Even Point. 1
Ans: The break-even point is the point at which total cost and total revenue are equal,
meaning there is no loss or gain for the business.

Q11. What is EOQ? 1
Ans: EOQ represents the quantity of an item that is most economical to order when
fresh supplies are required. At this point, the ordering cost and carrying costs would
be minimal.

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Q12. Define ROE. 1
Ans: This ratio measures the profitability of the company from the point of view of
equity shareholders.

Q13. Assertion (A): Customers are part of the microenvironment. 1
Reason(R): Microenvironment does not operate in isolation and is one of the levels
of the business environment.
a. Both Assertion (A) and Reason (R) are true, and Reason (R) is the correct
explanation of Assertion (A)
b. Both Assertion (A) and Reason (R) are true but Reason (R) is not the correct
explanation of Assertion (A)
c. Assertion (A) is true but Reason (R) is false.
d. Assertion (A) is false but Reason (R) is true.

Ans. b. Both Assertion (A) and Reason (R) are true, but Reason (R) is not the correct
explanation of Assertion (A)

Q14. Assertion (A): In franchising there is usually a much higher likelihood of success 1
when an individual opens a franchise as opposed to a mom-and-pop business.
Reason (R): It runs on a proven business formula that is already in place.
a. Both Assertion (A) and Reason (R) are true, and Reason (R) is the correct
explanation of Assertion (A)
b. Both Assertion (A) and Reason (R) are true but Reason (R) is not the correct
explanation of Assertion (A)
c. Assertion (A) is true but Reason (R) is false.
d. Assertion (A) is false but Reason (R) is true.

Ans. a. Both Assertion (A) and Reason (R) are true, and Reason (R) is the correct
explanation of Assertion (A).
Q15. Assertion (A): For a trading organization, the operating cycle will be shorter. 1
Reasoning (R): There is no manufacturing in a trading organization.
a. Both Assertion (A) and Reason (R) are true and Reason (R) is the correct
explanation of Assertion (A)
b. Both Assertion (A) and Reason (R) are true but Reason (R) is not the correct
explanation of Assertion (A)
c. Assertion (A) is true but Reason (R) is false.
d. Assertion (A) is false but Reason (R) is true.

Ans: a. Both Assertion (A) and Reason (R) are true and Reason (R) is the correct
explanation of Assertion (A).

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Section- B

Q16. Explain the concept of sustainable development. 2
OR
State the role of an angel investor in an entrepreneurial pursuit.

Ans: Sustainable development is the idea that human societies must live and meet 1
their needs without compromising the ability of future generations to meet their
own needs. Marks for each role
defined
OR
i. Angel investors bear the extremely high risk and are usually subject to dilution
from future investment rounds.

ii. Apart from investing funds, most angels provide proactive advice, guidance,
industry connections, and mentoring start-ups in their early days.

iii. Their objective is to create great companies by providing value creation and
simultaneously helping investors realize a high return on investments.

iv. They have a sharp inclination to keep abreast of current developments in a
particular business arena, mentoring entrepreneurs by making use of their vast
experience.
(Any Two)
Q17. Define Financial Plan. 2

Ans A financial plan is a critical section of a business plan as it translates all the 2
other parts of the business into anticipated financial results. A financial plan
helps to know whether the business plan is viable or not. This plan helps to Marks for definition
know whether your business will attract investors or not. A financial plan
consists of the analysis of financial statements such as the income statement, the
cash flow projections, the projected balance sheet, and sources and uses of
funds.

Q.18. Who is a Vendor? 2
Ans. A vendor, also known as a supplier, is an individual or company that sells goods 2
or services to someone else in the economic production chain.
Marks for
definition/Meaning

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Q.19. What is Re-ordering Level? 2

Ans. Reordering Level: It is the level of inventory at which purchase requisition 1
should be issued, and purchase order should be made. The ordering level is Marks for Meaning
fixed somewhere between the maximum and minimum levels. When this level
is reached, the storekeeper will issue the purchase requisition. 1
Reorder level = (Max. Consumption during the period) x (Max. Period required Marks For Formula
for delivery)

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Q.20. Explain two features of Venture Capital. 2
OR
State any two characteristics of partnership form of business organization.

Ans. The main features of venture capital are as follows: 1 mark for
each
1. Investments are made in those enterprises which are new and use new Feature
technology to produce new products, having an expectation of higher profits.
2. Generally, the investments are in equity instruments.
3. The venture capital investment is highly illiquid.
4. Investor's return is taxed as capital gain rather than an ordinary income.

(Any Two)
OR
1. Liability: The liability of all the members of a partnership firm is unlimited. The
partners are individually and collectively liable to pay back the debts of the firm.
At the time of loss, if the firm's assets are not sufficient to pay back the debts, then
the creditors can have a claim over the personal property of the partners also. ½ mark for
heading and
2. Decision Making: All the partners are allowed to manage the partnership firm. ½ for each
They may specify the work area of each partner in the partnership deed also. explanation
Generally, day-to-day management is carried on by one or two partners, whereas
for crucial decisions, all the partners are consulted.

3. Risk Bearing. The partners of the partnership firm share the profits of the firm in
the ratio specified in the agreement. In case no ratio is specified in the agreement,
then the profit is divided equally among all the members.
(Any Two)

Q.21. What is the significance of ROI? 2

Ans. Significance of ROI 1markfor
1. ROI can be compared with the previous year's ROI to see the progress. Each
2. ROI can be compared with the ROI of other firms in the same industry to find out significance
firm's position.
3. It provides an indication of the productivity of the capital.
4. High ROI attracts more investors to invest in the firm.
5. This indicates how well management has used its assets.
(Any Two)
Section-C

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Q.22. State three features of a Creative Person. 3
OR
Deepak, an entrepreneur, was short of capital. He was worried about the fact as to
how he will reach out to his customers. He met his friend, who is at present working
in a start-up firm. He explained to Deepak a way to reach customers without any
middlemen which would help him overcome the shortage of cash. So, Deepak
decided to keep his distribution channel simple as advised by his friend.
1. Identify the channel of distribution adopted by Deepak.
2. Explain the channel of distribution mentioned above.
3. Give any two of advantages of this type of channel.

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Ans. 1. The channel of distribution mentioned above is Direct channel-zero level. 1markfor
every
2. This is the simplest and shortest channel in which no middlemen are involved, and point/Featur
producers directly sell their products to the consumers. es
3. This channel of distribution is fast and economical.

Q.23. State three features of a good Business Plan. 3

Ans. A good business plan must: 1markeachf
(a) Determine the direction of the company. eature
(b) Highlight the challenges in the path of business.
(c) Be directed towards achievement of goal or objectives.
(d) Formulate strategies and contingencies to keep the business on track.

Q.24. Explain three tools of Public Relation. 3

Ans. Ways/Methods and tools of public relations: 1markfor
The companies can use the following tools to improve their relations with public: each tool
1. News: Sometimes companies get involved in such kind of activities or make such
policies so that they get some positive coverage in news. For example, a company's
name may be covered in news for reservation of jobs for women or for introducing
new technology etc.
2. Speeches: The speeches given by the leaders of corporate sector influence
various members of public specially banks, shareholders etc. Public relations
department creates occasion when the speeches are delivered by the leader of
company.
3. Events: Events refer to organizing press conferences, multimedia presentation,
etc.
4. Written materials: Sometimes written materials such as Balance Sheet, Annual
Reports, Special documents, Brochures etc. are circulated to various parties to
improve and maintain public image of the company.
5. Public service activities: Big business houses often associate themselves with
various social service projects such as women welfare programmes, charity shows,
up-keeping of parks, planting trees on road side, training schools, running schools,
colleges, hospitals etc.
(Any Three)

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Q.25. Why do Merger and Acquisition fail? 3
OR
Explain the first three steps involved in preparing the marketing plan.

Ans. 1. Overstated synergies: Mergers and acquisitions are carried on for synergies 1 mark for
through increased revenue, reduced cost and reduction in networking capital and each point/
improvement in investment. Over estimation for these can lead to failure of mergers.
2. Integration difficulties: Companies very often go for mergers with integration
strategy. However, if the information available on related issues is inadequate or
inaccurate then integration becomes difficult.
3. Poor business fit: Mergers and acquisitions may fail when the products and
business of acquired company may not fit in the business plan of acquiring company.
4.Inadequate due diligence: While acquiring any firm the acquiring company has to
apply due diligence to find out the risk associated with the mergers but sometime this
due diligence fails to estimate the risk associated with mergers.
5. High leverage: The Acquiring company may overburden itself with interest while
arranging money for acquiring the company; this increased interest cost may
consume the big portion of the earning and defeat the purpose of acquisition.
6. Boardroom split: Personality crashes between the directors and managers of both
the companies may result in failure of mergers and acquisition.
7. Regulatory issues: If any stakeholder of company is not in favor of merger, he may
create legal obstacles and slow down the whole process of merger and acquisition.
8. Human resources issues: Mergers and acquisitions may create uncertainty, anxiety
and resentment among company's employees. Then, positive human resource
intervention may be required for success of mergers and acquisition.
(Any Three)
OR
Procedure for preparing the marketing plan involves following steps:
1. Business Situation Analysis: This helps in finding out "where we have been".
Existing organizations review past performance and achievements of the enterprise
but new venture needs to focus on:
(a) Personal profile of the entrepreneur.
(b) Emphasis on product development.
(c) What 'need' it satisfies.
(d) Any other enterprise/experience of the entrepreneur.
(e) Any other market segmentation, if planned.
2. Identify the Target Market: Target market refers to group of customers who will
be our potential buyers. Divide the target customers into smaller groups as per
consumer's characteristics and buying situations and then develops a marketing plan
integrating product, price, place and promotion.
3. Conduct SWOT Analysis: The entrepreneur must consider in the target market
his/her enterprise's:
(a) Strengths
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(b) Weakness
(c) Opportunities
(d) Threats
4. Establish Goals: Goal is the aim of an enterprise. A firm must set SMART goals
i.e., specific, measurable, Attainable, Relevant, and Time bound goals.
5. Define Marketing Strategy: The marketing strategies involve action plan and
decisions related to four P's i.e. product, price, place and promotion.
6. Implementation and Monitoring of the Plan: It is important for an entrepreneur
to be flexible and be prepared to make adjustments if necessary in the plan.
(Explain first three points)
Q.26. What is the difference between Gross Working Capital and Net Working Capital? 3
Ans. Gross working capital is the sum total of all the current assets of a company, whereas 1.5marks
net working capital is the difference between the current assets and the current
liabilities of a company. for each
Gross working capital cannot be negative but net working capital can be negative. difference

Q.27. Define regulatory functions of SEBI. 3
Ans. Regulatory Functions: These functions are performed by SEBI to regulate the 0.5 mark
business in stock exchange. To regulate the activities of stock exchange following each for six
functions are performed: functions
(1)SEBI has framed rules and regulations and a code of conduct to regulate the
intermediaries such as merchant bankers, brokers, underwriters, etc.
(2)These intermediaries have been brought under the regulatory purview and private
placement has been made more restrictive.
(3)SEBI registers and regulates the working of stock brokers, sub-brokers, share
transfer agents, trustees, merchant bankers and all those who are associated with
stock exchange in any manner.
(4) SEBI registers and regulates the working of mutual funds etc.
(5) SEBI regulates takeover of the companies.
(6) SEBI conducts inquiries and audit of stock exchanges.
(Any Three)
Q.28. What is Marketing Mix and define its elements. 3
OR
What is pricing? And also explain any two methods of pricing.

Ans. THE MARKETING MIX 1mark for
Meaning: The marketing mix refers to the ingredients or the tools or the variables each point
which the marketer mixes in order to interact with a particular market.
Definitions of marketing mix:
"Marketing mix is the term used to describe the combination of the four inputs
which constitute the core of a company's marketing system, the product, the price
structure, the promotional activities and the distribution system". -William J.
Stanton
Marketing mix are the set of marketing tools that firm uses to pursue its marketing
objectives in the target market".-Philip Kotler
The marketing mix is the essence of any marketing endeavor. It is the main building
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block of marketing efforts of a firm.
In the concept of marketing, on one side, there is customer and on the other side,
there is producer or marketer. The firm looks for having transaction with the
customer but to have a transaction the firm has to develop a product or service,
design it, pack it, name it, price it, promote it and distribute it. All these decisions
are the core of marketing mix. The elements of marketing mix can be classified into
four categories and through fine mixing of these elements the superior value
products or services are created for customers.
Elements of Marketing Mix
The four main elements of marketing mix as classified by McCarthy are:
A. Product
B. Price
C Place/Physical Distribution
D. Promotion
These elements are more popularly known as four P's of the marketing.

OR
Pricing is the act of determining the value of a product or service. Pricing
determines the cost paid by a customer, but it may or may not be tied to the cost
paid by the business to produce the product or service.

Methods of Pricing
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1. Cost Plus Pricing: This is the most common technique of pricing where a
manufacturer covers the cost and reasonable profit to fix the price. All types of costs
are included i.e., material, labor and equipment cost. With the estimated cost of
factors of production, the cost of total manufacturing process is assessed.

Advantages of Cost-Plus Pricing:
1. This method helps the enterprise to collect the total amount of expenditure and
they can add profit margin accordingly. For example, If company has included
expenditure of 5000 and they plan to earn profit margin of 10% then the price can
be fixed at 5,500.
2. It is a simplest form of calculating the price for a product.
3. It helps the company to find reasons for increase in expenses and can take action
to minimize the expenses.

Disadvantages of Cost-Plus Pricing Method
1. The biggest drawback of this method is that it does not take into account the
future demand for a product.
2. It ignores the reaction of competitors.
3. Sometimes this method may result in over pricing as it includes sunk cost and
ignores opportunity cost.

2. Penetrating Pricing: This strategy means using lower initial price to capture a
large market. These forces the customers to buy the product and company can
capture a very big share and leave very small share for competitors. Penetration
pricing is attractive when following conditions are satisfied:
(i) The price elasticity of demand is high and easy substitutes of that product are
available.
(ii) The firm can increase its production capacity with increase in demand.
(iii) When customers are highly price sensitive which means customers easily shift
to another brand if it is available at low price.
(iv) When company has to face high competition while launching the product. The
Reliance company followed penetration pricing strategy when it introduced mobile
phone. It offered it at so low price that it captured big share of mobile phone market.

Advantages of Penetration Pricing

1. It can help in capturing a bigger share in the market.
2. It can create goodwill among the early adapters.
3. It discourages the entry of competitors.
4. It can create high stock turnover throughout the distribution channel.

Disadvantages of Penetrating Price

1. It makes it difficult to raise the prices later on.
2. Equality conscious customers go away from company.
3. Low profit margin affects the growth of the company.

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Q.29. What do you mean by Idea Field? Explain briefly any three Idea Fields. 5
OR
What is Creativity and explain its process.

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Ans. The sources of spotting trends are termed as idea fields. By analyzing the idea 2 mark for
fields, an entrepreneur can enlarge his scope of thinking. The common idea fields meaning and 3
are: marks for
(a) Natural Resources: The most common way of generating ideas is natural steps/ .5 marks
resources. For example, from the natural resources such as forest, one can get ideas for each
regarding bio-products, wood-based products, fertilizers, etc. Similarly, from process step
horticulture, we can get the ideas regarding food preservation, canning juices,
squashes, jams, pickles etc.

(b) Existing Products and Services: Another field to generate new ideas can be
improving the existing products and services. We can use the latest technology in
existing products or make them cheaper by producing them with cost saving method
etc., thinking about innovative ways of packaging etc. Many new ideas are generated
every day from existing products. For example, converting black and white TV or
monitor into color TV or color monitor, automatic watches with digital watches,
carbon paper gave the idea of photocopier machine. Ideas can be to extend business
by producing the raw materials or marketing of finished products. For example, a
perfume manufacturing firm may plan to plant aromatic plants or manufacture oils
which are used in manufacturing perfumes.

It is necessary to change or improve existing products.
(a) To keep up with competition
(b) To increase sales

(c) Market-driven or Demand-driven Ideas: An important method for generating
ideas is to carry out market research. While assessing the market, an entrepreneur has
to prepare details on the following lines:
(i) Demand: Demand assessment will help to know the size of the market. to study
the target group, the taste, fashion, trend and frequencies of the customers.

(ii) Supply and nature of competition: In this, the entrepreneur may try to find out
the complete picture of quantity supplied by existing suppliers. All these suppliers
act as competitors of entrepreneur. They must take into account, the excess supply
and short supply of different products.

(iii) Cost and price of products: Cost and price of any product depends upon its
cost. Cost variables such as transportation, storage, wastage, delays etc. must also be
studied in detail. Keeping in mind the above details, firms can make various
strategies to cover the gap between demand and supply.

(d) Trading-related Ideas: Trading refers to buying and selling of goods and
services for profit. Compared to manufacturing business, it is easier to do trading as
it involves lesser risk. Today, scope of trade has enlarged to local trade, import,
export, e-commerce etc. The trader must be aware of trend in the market. The basic
concept is satisfaction of customer, supply of the product conveniently whenever
desired by the customer is must in today's competitive world. The traders must study
in detail the needs and wants of customers to win over the competitors. The key to
success in trading business is to supply right product at right time to right person at
right price.
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OR
Creativity is the ability to develop new ideas and to discover new ways of looking at
a problem and opportunities. It refers to "thinking new things" or "doing things
differently."
The entrepreneur must try to get first mover advantage by trying new inventions and
applying creativity in the organization.

The Creative and Innovative Process:
Brilliant ideas do not come out of blue, they evolve through a creative process,
where in ideas are germinated, matured and developed by imaginative persons. The
creative process involves six stages:

Stage I. Idea Generation: The creative ideas emerge from deep interest or curiosity
about something. A person should have a burning desire to discover something. The
seed of curiosity takes the form of a focused idea. If the perceived problem is
motivation enough to capture the individual's attention, it leads to stage II.

Stage II. Preparation: It deals with search for solution, seeking information about
the problem and finding how others' have solved it. At this stage, market research is
often conducted for a new product or service. Generation of knowledge leads to
stage III.

Stage III. Incubation: It is a state of creative thinking, using the information
gathered with human fantasies and universal knowledge. This unusual thinking and
knowledge lead to stage IV.

Stage IV. Illumination: Multiple ideas and solutions are generated at this stage.
Various approaches to problem are evaluated and a feasible approach is selected.
With idea generation, the creative person waits for opportunity to trigger the idea.

Stage V. Verification: In this stage, idea generated is verified as realistic and
useful. This stage converts thinking and knowledge into application. In this stage,
each potential solution is tested against the problem.

Stage VI. Innovation: In this stage, the assessment is done for the whole process. It
may lead to achievement of desired result or no progress. In both the cases, an
Individual returns back to stage I to start again. It involves translation of idea into
Application which has commercial value.

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Q.30. What is the difference between Business, Profession and Employment? 5
OR
Define the Joint Stock Company and Differentiate Public and Private Company.

Ans Differentiate Among Business, Profession & Employment 1 Mark for
each
Basis of Business Profession Employment difference
Difference
1. Commencement Starts after Starts after getting Starts after getting
completing some certified from the appointment letter.
legal formalities if institution
needed. concerned.
2. Investment Capital is needed Generally, a little There is no need
according to its capital is required. of capital.
nature and size.
3. Risk It involves high The degree of risk There is no risk in
risk. is low. it.
4. Objective To earn profit To earn profit To earn income
through service through salary or
wages.
5. Test of Profit earned Quality of service Dedication of job
Efficiency provided

A company is that form of business organization which is willingly established by 2 marks for
some persons for earning profit under the Companies Act. Many persons jointly definition and
invest capital in a company and, therefore, it is also called Joint Stock Company. Its .5 marks for
capital is divided into transferable shares, which means that its shares can be each
generally bought and sold. Liability of its members is limited. The business of a difference.
company is stable and its business is run through a Common Seal. Till now in India
the incorporation of companies is done under the Indian Companies Act, 1956. But
now Companies Act, 2013 came into existence.

Definitions of Company

That group of people which is incorporated under the Companies Act, whose
creation is due to a special purpose, the liability of the members is generally limited,
whose existence is separate from its members and is continuous or perpetual and
which has a common seal, is called a company.

Following are the major definitions of a company:

(i) According to Prof. L.H. Haney, "Company is an artificial person created by law
having separate entity with a perpetual succession and common seal."

(ii) According to the Indian Companies Act, 1956, "A company means a company
formed and registered under this Act (Companies Act, 1956) or any previous Act."

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Distinction between Private Company and Public Company
Basis of Difference Private Company Public Company

1. Number of Members Minimum-02 Minimum-07 (As per
Maximum-200 Companies Act, 2013)
Maximum-No limit
2. Name It is necessary to add the It is essential to add the
word 'Private Limited' word 'Limited’ after the
after the name of the name of the public
private company. company

3. Number of Directors A minimum number of A minimum number of
two directors is essential. three director is essential.

4. Invitation to Public Private company cannot Public company can
invite public for issuing invite public for issuing
shares and debentures. its shares and debentures.

5. Transfer of Shares There is no freedom to There is no restriction on
transfer shares in a the transfer of shares.
private company.

6. Issue of Prospectus Private company cannot It is essential to issue
issue prospects and statement in lieu of
statement in lieu of prospectus in the absence
prospects of prospectus and send it
to the Registrar.

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