Business Studies MCQ Quiz - Objective Question with Answer for Business Studies - Download Free PDF

The correct answer is - A-1, B-2, C-3, D-4

Key Points

• FICCI and CII (A-1)
  • The Federation of Indian Chambers of Commerce & Industry (FICCI) and the Confederation of Indian Industry (CII) are business associations that develop and promote a code of conduct for businesses.
  • These organizations ensure that businesses follow ethical practices and protect consumer rights.
• Consumer Organisations (B-2)
  • Consumer organizations educate and support consumers legally by providing information, raising awareness, and offering legal assistance to address consumer grievances.
  • They act as an intermediary between consumers and businesses/government to ensure fair practices.
• Jago Grahak Jago (C-3)
  • It is a government awareness campaign launched by the Ministry of Consumer Affairs to educate the public about their rights and responsibilities.
  • Through advertisements, workshops, and educational materials, it helps consumers make informed decisions.
• Grievance Redressal Cell (D-4)
  • This cell is designed to resolve customer complaints within companies, ensuring quick and efficient redressal of consumer grievances.
  • It enhances consumer trust and satisfaction by addressing issues like defective products or unsatisfactory services.

Additional Information

• Importance of Consumer Protection
  • Protects consumers from exploitation such as unfair trade practices, defective goods, and substandard services.
  • Empowers consumers to make informed decisions and enhances their confidence in the market.
  • Promotes fair competition among businesses, ensuring market growth and innovation.
• Consumer Rights under the Consumer Protection Act
  • Right to Safety: Protection against hazardous goods or services.
  • Right to Information: Access to accurate and truthful information about products and services.
  • Right to Choose: Freedom to select from a variety of goods and services.
  • Right to Redressal: Legal recourse for grievances and compensation for harm.
• Role of Government in Consumer Protection
  • Enforcement of the Consumer Protection Act through consumer courts and regulatory bodies.
  • Launching campaigns like Jago Grahak Jago to spread awareness.
  • Encouraging businesses to adopt ethical practices and redress consumer complaints promptly.

The correct answer is - Option 1: A-ii, B-iii, C-i, D-iv

Key Points

• Product Cost (A)
  • Sets the floor price of the product, i.e., the minimum price below which the product cannot be sold.
  • Directly relates to the cost of production, including fixed and variable costs.
• Utility and Demand (B)
  • Determines the price sensitivity and the buyer’s perception of the product’s value.
  • Higher demand and utility can justify higher pricing, while low demand may require competitive pricing strategies.
• Government Regulations (C)
  • Governments may control maximum retail prices for essential goods to protect consumer interests.
  • Key examples include fuel, medicines, and food grains, where strict price ceilings are often imposed.
• Competition (D)
  • Market supply and competitive forces affect pricing.
  • Businesses may use penetration pricing, skimming, or parity pricing depending on the competitive landscape.

Additional Information

• Factors Affecting Pricing Decisions
  • Internal Factors:
    • Product cost, marketing objectives, and organizational strategies play a significant role in pricing decisions.
  • External Factors:
    • Customer demand, market competition, economic conditions, and government regulations are critical external considerations.
• Pricing Strategies
  • Penetration Pricing: Setting a low price to enter a competitive market and gain market share.
  • Price Skimming: Introducing a product at a high price and gradually lowering it over time.
  • Value-Based Pricing: Pricing based on the perceived value to the customer rather than the cost of production.
• Government's Role in Pricing:
  • Price control mechanisms ensure affordability of essential goods for consumers.
  • Taxes, subsidies, and tariffs can also influence pricing decisions indirectly.

The correct answer is - A-i, B-iii, C-iv, D-ii

Key Points

• Fixed Capital
  • Refers to long-term assets used in production, such as machinery, land, and buildings.
  • These assets are essential for carrying out production activities but are not consumed immediately.
• Working Capital
  • Denotes short-term assets required for day-to-day operations, such as inventory, cash, and receivables.
  • It ensures smooth functioning of production and business activities.
• Owners' Funds
  • Represents funds provided by the owners of the business, including equity capital, preference capital, and retained earnings.
  • These funds are not liabilities and reflect the ownership stake in the company.
• Borrowed Funds
  • Includes funds borrowed from external sources like bank loans, debentures, and public deposits.
  • Such funds are liabilities and must be repaid over time with interest.

Additional Information

• Classification of Capital
  • Fixed Capital: Investments in assets with a long life span that do not fluctuate frequently.
  • Working Capital: A measure of a company’s liquidity, operational efficiency, and short-term financial health.
  • Owners' Funds: Represents the internal source of finance contributed by the owners of the organization.
  • Borrowed Funds: External sources of finance that need repayment, often with interest.
• Importance of Matching Capital Types
  • Ensures proper allocation of resources for long-term and short-term needs.
  • Improves financial stability and operational efficiency of the organization.
• Examples of Capital in Real Businesses
  • Fixed Capital: Factories, manufacturing plants in industries like automobile or electronics.
  • Working Capital: Inventory management in retail businesses like supermarkets.
  • Owners' Funds: Start-up funding by founders in technology companies.
  • Borrowed Funds: Loans taken by small businesses for expansion purposes.

The correct answer is - A-iv, B-iii, C-ii, D-i

Key Points

• Semantic Barrier (A-iv)
  • Occurs due to ambiguity in language, use of jargon, or unfamiliar technical terms.
  • This type of barrier arises when the sender and receiver interpret words or phrases differently, leading to miscommunication.
• Psychological Barrier (B-iii)
  • Related to the mental state of individuals, such as prejudices, premature evaluation, or emotional disturbances.
  • These barriers often prevent a clear understanding of the intended message.
• Organisational Barrier (C-ii)
  • Caused by status differences, rigid rules, or hierarchical structures within an organization.
  • These barriers hinder the free flow of communication between different levels or departments.
• Personal Barrier (D-i)
  • Stems from personal traits such as distrust, fear of authority, or lack of confidence.
  • Such barriers arise when the sender or receiver has issues related to interpersonal relationships.

Additional Information

• Semantic Barriers
  • Examples include the use of technical jargon, complex sentence structures, or culturally specific terms.
  • Overcoming these barriers involves using simple, clear, and culturally neutral language.
• Psychological Barriers
  • Emotional factors such as stress, anxiety, or fear can negatively affect communication.
  • Active listening, empathy, and emotional intelligence are essential to address these barriers.
• Organisational Barriers
  • Rigid organizational policies, lack of transparency, and excessive formalities are common causes.
  • Solutions include promoting open communication, reducing hierarchy, and encouraging feedback.
• Personal Barriers
  • Personal attitudes, resistance to change, or lack of motivation can disrupt effective communication.
  • Building trust, encouraging collaboration, and providing training can help overcome these barriers.

The correct answer is - Option 1: A-iii, B-i, C-iv, D-ii

Key Points

• Performance Appraisal
  • Performance Appraisal refers to the evaluation of an employee's work performance against predefined standards.
  • The correct match is A-iii as it involves assessing the individual to measure their effectiveness and contribution to organizational goals.
• Promotion
  • A Promotion involves the upward movement of an employee to a higher position with increased responsibilities.
  • The correct match is B-i as it signifies assigning higher responsibilities and recognition to the employee.
• Compensation
  • Compensation includes financial (e.g., salary) and non-financial rewards (e.g., benefits) provided to employees in exchange for their services.
  • The correct match is C-iv, highlighting the rewards system in an organization.
• Orientation
  • Orientation is the formal introduction of a new employee to the organization, its culture, and work environment.
  • The correct match is D-ii as it helps new employees understand their roles and expectations within the organization.

Additional Information

• Elements of Staffing
  • Staffing is a key managerial function that ensures the right people are in the right roles at the right time.
  • It involves several steps, including recruitment, selection, training, performance appraisal, promotion, and compensation.
• Managerial Roles
  • Managerial roles in staffing help ensure employees are aligned with organizational goals and are motivated to perform effectively.
  • These roles include activities such as conducting appraisals, providing rewards, and offering opportunities for growth.
• Key Relationships
  • Performance Appraisal: Linked to evaluation and identifying areas for improvement.
  • Promotion: Associated with employee growth and motivation.
  • Compensation: Focuses on rewarding and retaining talent.
  • Orientation: Facilitates smooth onboarding and integration of new employees.

The correct answer is D2D (Distributor-to-Distributor).Key Points

• B2C (Business-to-Consumer):
  • Business-to-consumer marketing describes the practice of companies selling goods and services directly to customers without the use of a middleman.
  • B2C mainly refers to online merchants who use the internet to sell goods and services to customers.
• C2C (Consumer-to-Consumer):
  • A business model known as "consumer to consumer" (C2C) allows for private customers to deal for goods or services without the involvement of a business on either end of the transaction.
  • Today, online businesses handle the majority of C2C transactions.
• B2B (Business-to-Business):
  • Business-to-business (B2B) refers to a deal or transaction made between two companies, like a wholesaler and a retailer.
  • B2B transactions typically take place in the supply chain, where one business buys raw materials from another in order to utilise them in the production process.
  • Companies in the auto business, as well as those in property management, housekeeping, and industrial cleanup, frequently engage in B2B transactions.

Additional Information

• E-commerce is the electronic purchase or sale of goods through online stores or the Internet.
• E-commerce makes use of technology like supply chain management, mobile commerce, electronic payments transfer, Internet marketing, etc.
• Online retail, electronic markets, and online auctions are the three subfields of e-commerce.
• Electronic business provides a foundation for e-commerce.
• There are five essential categories of E-commerce:
  • Business to Business
  • Business to Consumer
  • Business to Government
  • Consumer to Business
  • Consumer to Consumer

The correct answer is Wholesaler.

Key Points

• Wholesalers 
  • They buy goods in large quantities from the manufacturers and sell them in smaller units to industrial units and/or retail traders. Hence, Option 2 is correct.
  • The wholesaler buys goods on a large scale to sell them at a profit in smaller quantities.
  • He buys from the producers that are the extractor or manufacturer and sell to the retailers and are, therefore, the connecting link between these two.

Additional Information 

The logic is the process of the production of an item.

2. Manufacturer

4. Wholesaler

3. Retailer

5. Customer

1. Consumption

Hence, "2, 4, 3, 5, 1" is the correct answer.

Calculation:

A retailer buys 20 pens for Rs. 40.

So, the cost price of 1 pen = 40/20 = Rs. 2

A retailer sells the pens at the rate of Rs. 40 for 15 pens.

So, the selling price of 1 pen = 40/15 = Rs. 8/3

Profit percent = [(Selling Price - Cost Price)/Cost Price] × 100

Profit percent = [(8/3 - 2)/2] × 100

Profit percent = (2/6) × 100

Profit percent = 100/3 = 33%

So, the profit margin is 33%.

Hence, option 3 is correct.

The correct answer is Manufacturer.

Key Points

• The manufacturer's job is to produce goods that would be consumed by the consumers.
  • They can sell their products directly to customers or to middlemen.
  • Since they are the ones who are making the products, they cannot be a 'reseller' since there is nothing to "re"-sell.

Important Points

• A supply chain typically features various middlemen between the manufacturer and the consumer.
  • The most common in the supply chain are distributors, wholesalers, and retailers. 
• A middleman plays the role of an intermediary in a distribution or transaction chain that facilitates interaction between the involved parties.
  • They enable manufacturers to concentrate on the primary function of production by handling the ancillary functions of warehousing, distribution, advertising, insurance, etc.
• A distributor works closely with a manufacturer in order to sell more goods and gain better visibility on these goods. They sell the products to wholesalers and sometimes directly to retailers when requested.
• Wholesalers: They are the people who buy in bulk from the producers or distributors and sell in small quantities to the retailers.
• Retailers: They are the people who buy in small quantities from the wholesalers and sell to the ultimate consumers.

Given :

Cost price to the retailer is 1000 rupees 

He first increased price by 30% and then gives discount of 15% 

Calculations :

Price after 30% increment = 1000 + 30% of 1000 

⇒ 1000 + 300 = 1300 rupees 

Now price he provides discount at this price so,

Price after 15% discount on increased price = 1300 - 15% of 1300 

⇒ 1300 - 195 

⇒ 1105 rupees 

∴ final selling price will be 1105 rupees 

Retail Supply Chain Management

All the processes that you utilize to ensure your products reach the customers, starting from obtaining the raw materials, managing inbound materials & production processes to last-mile delivery of those products at your customer’s doorstep, are together known as a retail supply chain.

Players in the supply chain

The correct answer is to Make the customer’s problem the retailer’s problem.

Key Points

Creating a good rapport with the customers is very important for maintaining a healthy relationship with the customers. We try to see the most suitable option for the question above:

1. Keep the priority of profit while dealing with the customer- It is not a suitable part to keep the priority of profit while dealing with the customers. If the retailer will keep the profit as a priority then it will only see the customer from the point of view of the business. Treating the customer's needs should always be a priority for any organization. This helps in creating a "pro-customer" environment.
2. See the problem from the point of view of business- Seeing any problem from the point of business will never be able to support a customer. It is important to keep customers' needs and expectations as the key. Customer is the king should be the policy that should be followed.
3. Making the customer's problem the retailer's problem-  This is the key for any organization, only if the firms treat the customer's problem as their own will they be able to solve the problem from the frontline. It shows how the firm values its customers and the satisfaction of their needs as a priority for them. Treating customers in such a manner helps in the betterment of the goodwill of the firm also.
4. Keep the customer stand corrected when he/she makes bad choices- This is not a great idea to create a good rapport with the customers. Making choices are the right of the customers, to correct them will never serve the purpose of creating a strong customer base.

The correct answer is Personalisation of goods or services

Key PointsFollowing are the customer expectations:

Price

• A good way to maintain the constant demands to match the lower prices is to offer a level of service that customers can’t get elsewhere.
• This can include supplying exclusive goods, extraordinary satisfaction guarantees, and friction-free return policies.
• If price matching is still the only option, it is important to balance these losses with products that generate enough profit to cover them.

Stock

• Customers expect items to be well stocked in the store.
• Largely, modern inventory systems and streamlined logistics are able to control and fix stock issues when they arise.

Mobile Commerce

• Savvy retailers are creating mobile optimized shopping experiences that are able to deliver on their brand’s promises.
• Customers expect the same high-quality service that they get on a website, or in the store, on their mobile devices.

Community

• Customers are looking for social connections while they are shopping.
• From peer reviews to chatting with friends on the latest styles and trends, today’s shoppers are tapping into their friends and virtual communities for help in navigating product offerings.

Experiences, not "things"

• People, especially Millennials, want to buy experiences, not “things.”
• They want their money to be spent on a life well-lived, and digital has a big place in their lives.
• Digital experiences add new layers to the ways these millennials experience the retail world.
• Even the smallest of experiences can connect to customers on an emotional level to tell a powerful story.

Speed

• Lastly, we want to touch on a very significant undercurrent of customer expectation in retail: speed. 

The correct answer is Judicial Activism.

Key Points

• Public Interest Litigation (PIL) in India was initiated as a result of judicial activism, which aimed to make justice accessible to disadvantaged and marginalized sections of society.
• The concept of PIL was first introduced in India during the early 1980s by judges like Justice P.N. Bhagwati and Justice V.R. Krishna Iyer.
• Judicial activism enabled courts to relax traditional rules of locus standi, allowing individuals or groups to file cases on behalf of those unable to approach the court themselves.
• PIL became a powerful tool to address issues such as environmental protection, human rights violations, corruption, and social injustices.
• Judicial activism ensures that the judiciary plays a proactive role in safeguarding constitutional rights and promoting social welfare through PILs.

Additional Information

• Public Interest Litigation (PIL)
  • PIL allows any individual or organization to file a petition in court for the enforcement of public interest or general welfare.
  • It is often used to address issues affecting larger sections of society rather than individual grievances.
  • PILs are filed under Articles 32 (Supreme Court) and 226 (High Courts) of the Indian Constitution.
• Judicial Activism
  • Judicial activism refers to the proactive role of the judiciary in interpreting laws and addressing societal issues beyond traditional legal boundaries.
  • It often involves judges stepping in to fill gaps in legislative or executive actions.
  • While judicial activism can lead to progressive change, critics argue that excessive activism may encroach upon the domain of the legislature and executive.
• Locus Standi
  • Locus standi refers to the legal standing or ability of a person to bring a case before a court.
  • Judicial activism in India relaxed locus standi rules, enabling PILs to be filed by individuals or groups not directly affected by the issue at hand.
• Landmark PIL Cases
  • Hussainara Khatoon v. State of Bihar (1979): Focused on the rights of undertrial prisoners.
  • Olga Tellis v. Bombay Municipal Corporation (1985): Addressed the rights of pavement dwellers.
  • M.C. Mehta v. Union of India: Focused on environmental issues such as pollution in the Ganga River.