1st PUC Business Studies Previous Year Question Paper March 2019 (South)

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Karnataka 1st PUC Business Studies Previous Year Question Paper March 2019 (South)

Time: 3.15 Hours
Max Marks: 100

Instructions to candidates:

1. Write the serial number of questions properly as given in the question paper while answering
2. Write the correct and complete answers.

Section – A

I. Answer any ten of following questions in a word or a sentence each. While answering Multiple Choice Questions, write the serial number/alphabet of the correct choice and write the answer corresponding to it. Each question carries one mark: ( 10 × 1 = 10 )

Question 1.
Give an example for extractive Industry.
Answer:
Mining / Fishing.

Question 2.
Karta in a Joint Hindu Family Business has.
(a) Limited liability
(b) Unlimited liability
(c) No liability for debts
(d) Joint liability
Answer:
(b) Unlimited liability.

Question 3.
State the minimum amount of capital to be held by government in a government company.
Answer:
51% is the minimum amount of capital.

Question 4.
Which Act Regulates Banking services in India?
Answer:
Indian Banking Regulation Act 1949.

Question 5.
The payment mechanism most typed to e-business is
(a) Cash on delivery
(b) Cheques
(c) Credit and debit card
(d) e-cash
Answer:
(d) e-cash

Question 6.
Mention the major source of Pollution.
Answer:
Industry is the major source for pollution.

Question 7.
Directors of which type of a company have to subscribe for qualification shares?
Answer:
Public Company.

Question 8.
Equity Shareholders are called
(a) Owners of the Company
(b) Partners of (he Company
(c) Executives of the Company
(d) Guardian of the Company
Answer:
(a) Owners of the Company

Question 9.
What is TAX Holiday?
Answer:
Giving Exemption from tax payment for 5 or 10 years given to industries established in rural area called Tax Floliday.

Question 10.
Expand AVM.
Answer:
Automated Vending Machine.

Question 11.
Which one of the following ¡s not amongst India’s major trading partner?
(a) USA
(b) UK
(c) Germany
(d) New Zealand
Answer:
(d) New Zealand.

Question 12.
Name any one document of export business.
Answer:
Certificate of origin.

Section – B

II. Answer any ten of the following questions in two or three sentences each. Each question carries 2 marks: ( 10 × 2 = 20 )

Question 13.
Give the meaning of Business.
Answer:
Business is an economic activity involving the production and sale of goods and services undertaken with a motive of earning profit by satisfying human needs is society.

Question 14.
Write any two contents of Partnership Deed.
Answer:
Name of the firm and names and addresses of the firm and each partner.

Question 15.
State any two merits of Departmental undertakings.
Answer:
The limitations of departmental undertaking are:

1. Departmental undertakings fail to provide flexibility, which is essential for the smooth operation of business.
2. The employees or heads of departments of such undertakings are not allowed to take independent decisions, without the approval of the ministry concerned. This leads to delays, in mailers where prompt decisions are required.

Question 16.
What is e-Banking.
Answer:
It means conducting of banking operation through electronic means or devices such as computers mobile, ATM, etc.

Question 17.
State any two limitations of e-Business.
Answer:
Two limitation of e-business are:

1. Dependent on internet.
2. Less security.

Question 18.
State any two arguments against Social Responsibilities of Business.
Answer:
The arguments against social responsibilities are

1. Burden on consumers.
2. Violation of profit maximization objective.

Question 19.
Name any two stages in the formation of a company.
Answer:

1. Promotion stage.
2. Incorporation stage.

Question 20.
State any two Sources of Funds Short term Business.
Answer:

1. Trade credit
2. Banks.

Question 21.
What is ‘Village Industry’?
Answer:
Village industry has been defined as any industry located in a rural area which produces any goods, renders any service with or without the use of power and in which the fixed capital investment per head or artisan or worker does not exceed Rs. 50,000.

Question 22.
Give the meaning of Super Market.
Answer:
Super Market is a large scale retail store that sells a wide variety of products like food items, vegetables, fruits, groceries, utensils, clothes, electronic appliances, household goods, etc. all under one roof.

Question 23.
Write the meaning of Joint Venture.
Answer:
A joint venture means establishing a firm that is jointly owned by two or more otherwise independent firms. In the widest sense of the term, it can also be described as any form of association which implies collaboration for more than a transitory period.

Question 24.
What is “Bill of Lading”?
Answer:
Bill of lading is a document wherein a shipping company gives its official receipt of the goods put on board its vessel and at the same time gives an undertaking to carry them to the port of destination.

Section – C

III. Answer any seven of the following questions in 10-12 sentences. Each question carries 4 marks: ( 7 × 4 = 28 )

Question 25.
Explain briefly any four objective of business.
Answer:
Economic objectives:
Business is an economic activity so their primary objectives are economic.

1. Earning profits: One of the objectives of business is to earn profits on the capital employed. Profitability refers to profit in relation to capital investment. Every business must earn a reasonable profit which is so important for its survival and growth.

2. Market standing: Market standing refers to the position of an enterprise in relation to its competitors. A business enterprise must aim at standing on stronger footing in terms of offering competitive products to its customers and serving them to their satisfaction.

Social objectives:
Business is an economic activity which cannot be carried on in isolation; there arise the social objective of business. Important social objectives of modern businesses are:

1. Providing employment: One of the important social objectives of a business is to provide employment to the society. This can be achieved by establishing new business units, expanding market. etc.

2. Prevention of pollution: With the growth of industries, pollution has become a serious matter. Pollution affects the hygiene and the health of human beings and even animals. So, one of the social objectives and obligations of every business is to make efforts to prevent the pollution of air and water.

Question 26.
Explain any four features of statutory corporations.
Answer:

• Formation: Statutory corporations are set up under an Act of Parliament or state legislature. The objectives, powers, duties of these corporations are described in the act.
• Governmental control: This type of organisation is wholly owned by the state. The government has the ultimate financial responsibility (i.e. liable for all profit or loss).
• Management: The day-to-day administration is looked after by Board of Directors nominated by the government.
• Financial autonomy: This type of enterprise is usually independently financed. It obtains funds by borrowings from the government or from the public and other sources. They need not to depend on budget allocation.

Question 27.
Explain types of Banks.
Answer:
1. Commercial Banks: Commercial banks are institutions dealing in money. These are governed by Indian Banking Regulation Act 1949 and according to it banking means accepting deposits of money from the public for the purpose of lending or investment.

2. Cooperative Banks: Cooperative Banks are governed by the provisions of State Cooperative Societies Act and meant essentially for providing cheap credit to their members. It is an important source of rural credit i.e., agricultural financing in India.

3. Specialised Banks: Specialised banks are foreign exchange banks, industrial banks, development banks, export-import banks catering to specific needs of these unique activities. These banks provide financial aid to industries, heavy turnkey projects and foreign trade.

4. Central Banks: The Central bank of any country supervises controls and regulates the activities of all the commercial banks of that country. It also acts as a government banker. It controls and coordinates currency and credit policies of any country.

Question 28.
State any four differences between Traditional Business and E-Business.
Answer:

Point of differences	Traditional	E – Business
1. Formation	Difficult	Simple
2. Physical presence	Required	Not required
3. Cost of setting	High	Low
4. Operating cost	High	Low
5. Nature of contract with supplier and customer	Indirect	Direct
6. Opportunity for inter personal touch	More	Less
7. Level of going global	Less	More

Question 29.
Explain briefly the different types of pollution.
Answer:
The different type of pollution are:
1. Air Pollution: Air pollution refers to the presence of any unwanted gases, dust particles, etc. in the air, that can cause damage to people as well as nature.

Causes of Air Pollution:

• Emission of fumes from vehicles.
• Emission of smoke, dust and chemicals from manufacturing plants.
• Emission of gases and dust arising from atomic plants.
• Emission of smoke from oil refineries, burning of trees and plants in forests, burning of coal, etc.

Effects of Air Pollution:

• Presence of gases in air, which are not required by human beings, animals and birds, creates serious health problems. It can create diseases like asthma, cough and cold, blindness, hearing loss, skin disease, etc.
• It reduces natural visibility and irritates the eyes and respiratory tract.
• Ozone layer gets depleted because of air pollution and thereby causes gene mutation, genetic defects and skin cancer.

2. Water Pollution: Water pollution refers to contamination of water due to presence of unwanted and harmful substances thus, making water unfit for use.

Causes of Water Pollution:

• Drainage of human excreta into rivers, canals etc.
• Improper sanitation and sewage system.
• Dumping of wastes and effluents by various industrial units into the rivers and canals.
• Drainage of toxic substances like chemicals and fertilizers used in cultivation, into streams and rivers.

Effects of Water Pollution:

• It can create health hazards among human beings, animals and birds. Diseases like typhoid, jaundice, cholera, gastroenteritis, etc. are common.
• It can endanger lives of various aquatic species.
• It can lead to scarcity of drinking water as the water of rivers and canals as well as underground water get polluted.

3. Land Pollution: Land Pollution refers to dumping of useless, unwanted as well as hazardous substances on the land that degrades the quality of soil we use.

Causes of Land Pollution:

• Excessive use of fertilizers, chemicals and pesticides in cultivation.
• Disposal of solid waste of industries mines and quarries.
• Disposal of solid waste from construction of roads, buildings, etc.
• Effluents of some plants like paper, sugar, etc. which are not absorbed by soil.
• Excessive use of plastic bags, which are non-biodegradable.

Effects of Land Pollution:

• Reduces the quantum of cultivable land area.
• Causes health hazards as it contaminates the sources of food.
• Causes damage to the landscape.
• Leads to water and air pollution.

4. Noise Pollution: Noise simply means an unwanted sound that causes irritation. It is caused by modem machines and gadgets such as rail engines, loud speakers, generators, aeroplanes, vehicles, machineries, telephones, televisions, etc. Noise pollution can cause loss of hearing, headache, irritation, high blood pressure, neurological or psychological disorders, etc.

Question 30.
Explain briefly any four clauses of Memorandum of Association.
Answer:
1. Name Clause: It contains the name by which the company will be established. The approval of the proposed name is taken in advance from the Registrar of the companies.

2. Objects Clause: It contains detailed description of the objects and rights of the company, for which it is being established. A company can undertake only those activities which are mentioned in the objects clause of its memorandum.

3. Capital Clause: It contains the proposed authorised capital of the company. It gives the classification of the authorised capital into various types of shares, (like equity and preference shares) with their numbers and nominal value. A company is not allowed to raise more capital than the amount mentioned as its authorised capital. However, the company is permitted to alter this clause as per the guidelines prescribed by the Companies Act.

4. Liability Clause: It contains financial limit up to which the shareholders are liable to pay off to the outsiders on the event of the company being dissolved or closed down.

Question 31.
Explain briefly the different types of Financial needs.
Answer:
1. An activity of business concerned with the acquisition and conservation of capital fund in meeting the financial needs and overall objective of the business.

2. To purchase fixed assets: Every type of business needs some fixed assets like land and building, furniture, machinery, etc. A large amount of money is required for purchase of these assets.

3. To meet day-to-day expenses: After establishment of a business, funds are needed to carry out day-to-day operations.

4. To fund business growth: Growth of business may include expansion of existing line of business as well as adding new lines. To finance such growth, one needs more funds.

5. To bridge the time gap between production and sales: The amount spent on production is realised only when sales are made. Normally, there is a time gap between production and sales and also between sales and realisation of cash. Hence during this interval, expenses continue to be incurred, for which funds are required.

6. To meet contingencies: Funds are always required to meet the ups and downs of business and for some unforeseen problems.

Question 32.
What are public deposits? Explain briefly any three merits of public deposits.
Answer:

Merits:

• The deposits that are raised by organisations directly from the public are known as public deposits.
• The procedure of obtaining deposits is simple and does not contain restrictive conditions as are generally there in a loan agreement.
• Cost of public deposits is generally lower than the cost of borrowings from banks and financial institutions.
• Public deposits do not usually create any charge on the assets of the company. The assets can be used as security for raising loans from other sources.
• As the depositors do not have voting rights, the control of the company is not diluted.

Question 33.
Briefly explain any four common incentives to attract small scale industries in rural area by the Government.
Answer:
Some of the common incentives provided by the Government for industries in backward and hills areas are as follows:

1. Land: Every state offers developed plots for setting up of industries. The terms and conditions may vary. Some states don’t charge rent in the initial years, while some allow payment in installments.
2. Power: It is supplied at a concessional rate of 50%, while some states exempt such units from payment in the initial years.
3. Water: It is supplied on no-profit, no-loss basis or with 50% concession or exemption from water charges for a period of 5 years. Sales Tax: In all union territories, industries are exempted from sales tax, while some states extend exemption for 5 years period.
4. Octroi: Most states have abolished octroi.
5. Raw materials: Units located in backward areas get preferential treatment in the matter of allotment of scarce raw materials like cement, iron and steel, etc.
6. Finance: Subsidy of 10-15% is given for building capital assets. Loans are also offered at concessional rates.
7. Industrial estates: Some states encourage setting up of industrial estates in backward areas.
8. Tax holiday: Exemption from paying taxes for 5 or 10 years is given to industries established in backward, hilly and tribal areas.

Question 34.
Explain briefly any four services of wholesalers to manufactures.
Answer:
Wholesalers services to producer are:

1. Facilitating large scale production: Wholesalers collect small orders from number of retailers and pass on the pool of such orders to manufacturers and make purchases in bulk quantities. This enables the producers to undertake production on a large scale.

2. Bearing risk: The wholesale merchants deal in goods in their own name, take delivery of the goods and keep the goods purchased in large lots in their warehouses. In the process they bear lots of risks such as the risk of fall in prices, theft, pilferage, spoilage, fire, etc.

3. Financial assistance: The wholesalers provide financial assistance to the manufacturers in the sense that they generally make cash payment for the goods purchased by them. To that extent, the manufacturers need not block their capital in the stocks.

4. Expert advice: As the wholesalers are in direct contact with the retailers, they are in a position to advice the manufacturers about various aspects including customer’s tastes and preferences, market conditions, competitive activities and the features preferred by the buyers.

Section – D

IV. Answer any four of the following questions in 20-25 sentences each. Each question carries 8 marks: ( 4 × 8 = 32 )

Question 35.
Explain any four merits and four demerits of Partnership form of business.
Answer:
Merits:

• Ease of formation and closure: Like sole proprietorship, the partnership business can be formed easily without any legal formalities.
• More funds: In a partnership, the capital is contributed by a number of partners. This makes it possible to raise larger amount of funds as compared to a sole proprietor and undertake additional operations when needed.
• Sharing risks: The risks involved in running a partnership firm are shared by all the partners. This reduces the anxiety, burden and stress on individual partners.
• Secrecy: A partnership firm is not legally required to publish its accounts and submit its reports. Hence it is able to maintain confidentiality of information relating to its operations.

Demerits:

• Limited capital: Since the total number of partners cannot exceed 20, the capital to be raised is always limited. It may not be possible to start a very large business in partnership form.
• Lack of continuity of business: A partnership firm comes to an end in the event of death, lunacy or retirement of any partner. Even otherwise, it can discontinue its business at the will of the partners. At any time, they may take a decision to end their relationship.
• Lack of public confidence: There is no governmental supervision over the affairs of the business of a partnership and publishing accounts is also not necessary. Hence, public may not have full confidence in them.
• Unlimited liability: The liability of each partner is not limited to the amount invested but his private property is also liable to pay the business obligations.

Question 36.
Explain briefly the features of Joint Stock companies.
Answer:
1. Artificial person: Just like an individual, who takes birth, grows, enters into relationships and dies, a joint stock company takes birth, grows, enters into relationships and dies. However, it is called an artificial person as its birth, existence and death are regulated by law and it does not possess physical attributes like that of a normal person.

2. Legal formation: No single individual or a group of individuals can start a business and call it a joint stock company. A joint stock company comes into existence only when it has been registered after completion of all formalities required by the Indian Companies Act, 2013.

3. Separate legal entity: Being an artificial person a company has its own legal entity separate from its members. It can own assets or property, enters into contracts, sue or can be sued by anyone in the court of law. Its shareholders cannot be held liable for any conduct of the company.

4. Perpetual existence: A joint stock company continues to exist as long as it fulfills the requirements of law. It is not affected by the death, lunacy, insolvency or retirement of any of its members.

5. Common seal: A joint stock company has a seal, which is used while dealing with others or entering into contracts with outsiders. It is called a common seal as it can be used by any officer at any level of the organisation working on behalf of the company. Any document, on which the company’s seal is put and is duly signed by any official of the company, become binding on the company.

6. Association of persons: A company is a voluntary association of persons established for profit motive. A private company must have at least 2 persons and the public limited company must have at least 7 persons to get it registered. The maximum number of persons required for the registration in case of private company is 50 and in case of public company there is no maximum limit.

7. Limited liability: The liability of the shareholders is limited to the extent of the face value of the shares held by them. The shareholders are not liable personally for the payment of debt of the company.

8. Transferability of shares: The shares of a public limited company are freely transferable and can be purchased and sold through the stock exchanges. A shareholder of a public limited company can transfer his shares without the consent of other except in case of private companies.

9. Large capital: A joint stock company can raise large amount of capital because the number of persons contributing towards capital are more in number when compared to sole proprietorship or partnership.

10. Democratic management: Joint stock companies have democratic management and control. That is, even though the shareholders are owners of the company, all of them cannot participate in the management of the company. Normally, the shareholders elect representatives from among themselves known as ‘Directors’ to manage the affairs of the company.

Question 37.
Explain the principles of Insurance.
Answer:
1. Principle of utmost good faith: According to this principle, the insurance contract must be signed by both parties (i.e. insurer and insured) in an absolute good faith or belief or trust. The person getting insured must willingly disclose and surrender to the insurer his complete true information regarding the subject matter of insurance.

Example: If any person has taken a life insurance policy by hiding the fact that he is a cancer patient and later on if he dies because of cancer then Insurance Company can refuse to pay the compensation as the fact was hidden by the insured.

2. Principle of insurable interest: As per this principle, the insured must have insurable interest in the subject matter of insurance. It means insured should gain by the existence or safety and lose by the destruction of the subject matter of insurance.

Example: If a person has taken the loan against the security of a factory premises then the lender can take fire insurance policy of that factory without being the owner of the factory because he has financial interest in the factory premises.

3. Principle of indemnity: According to the principle of indemnity, an insurance contract is signed only for getting protection against unpredicted financial losses arising due to future uncertainties. Insurance contract is not made for making profit else its sole purpose is to give compensation in case of any damage or loss.

Example: A person insured a car for 5 lakhs against damage or an accident case. Due to accident he suffered a loss of 3 lakhs. then the insurance company will compensate him 3 lakhs not only the policy amount i.e., 5 lakhs as the purpose behind it is to compensate not to make profit.

4. Principle of contribution: According to this principle, the insured can claim the compensation only to the extent of actual loss either from all insurers in a proportion or from any one insurer.

Example: A person gets his house insured against fire for 50,000 with insurer A and for 25,000 with insurer B. A loss of 37,500 occurred. Then A is liable to pay 25,000 and B is liable to pay 12,500.

5. Principle of subrogation: According to the principle of subrogation, when the insured is compensated for the losses due to damage to his insured property, then the ownership right of such property shifts to the insurer.

Example: If a person receives Rs. 1 lakh for his or her damaged stock, then the ownership of the stock will be transferred to the insurance company and the person will hold no control over the stock.

6. Principle of mitigation of loss: According to the Principle of mitigation of loss, insured must always try his level best to minimize the loss of his insured property, in case of uncertain events like a fire outbreak or blast, etc. The insured must not neglect and behave irresponsibly during such events just because the property is insured.

Example: If a person has insured his house against fire, then, in case of fire, he or she should take all possible measures to minimise the damage to the property exactly in the manner he or she would have done in absence of the insurance,

7. Principle of Causa Proxima: Principle of Causa Proxrna (a Latin phrase), or in simple English words, the Principle of Proximate (i.e. Nearest) Cause, means when a loss is caused by more than one causes, the proximate or the nearest cause should be taken into consideration to decide the liability of the insurer.

Example: If an individual suffers a loss in A fire accent, then this should already he a part of the contract in order for this person to claim the insurance amount.

Question 38.
Explain any Eight factors that affect the choice of appropriate source of Business Finance.
Answer:
1. Cost: There are two types of costs., the cost of procurement of funds and cost of utilizing the funds. Both these costs should be taken into account while deciding about the source of funds that will be used by an organisation.

2. Financial strength and stability of operations: The financial strength of a business is also a key determinant. In the choice of source of funds business should be in a sound financial position so as to he able to repay the principal amount and interest on the borrowed amount.

3. Form of organisation and legal status: The form of business organisation and status influences the choice of a source for raising money.

4. Purpose and time period: Business should plan according to the time period for which the funds are required. A short-term need for example can be met through borrowing funds at low rate of interest through trade credit, commercial paper, etc. For long term finance, sources such as issue of shares and debentures are more appropriate.

5. Risk profile; Business should evaluate each of the sources of finance in terms of the risk involved. For example, there is a least risk in equity as the share capital has to be repaid only at the time of winding up and dividends need not be paid if no profits are available.

6. Control: A particular source of fund may affect the control and power of the owners on the management of a firm. Issue of equity shares may mean dilution of the control.

7. Effect on credit worthiness: The dependence of business on certain sources may affect its credit worthiness in the market.

8. Flexibility and ease: Another aspect affecting the choice of a source of finance is the flexibility and ease of obtaining funds. Restrictive provisions, detailed investigation and documentation in case of borrowings from banks and financial institutions.

9. Tax benefits: Various sources may also be weighed in terms of their tax benefits. For example, while the dividend on preference shares is not tax deductible, interest paid on debentures and loan is tax deductible and may, therefore, be preferred by organisations seeking tax advantage.

Question 39.
Explain the merits and limitations of chain stores.
Answer:
Merits:

• Economics of scale: As there is central procurement/manufacturing, the multiple-shop organisation enjoys the economies of scale.
• Elimination of middlemen: By selling directly to the consumers, the multiple-shop organisation is able to eliminate unnecessary middlemen in the sale of goods and services.
• No bad debts: Since all the sales in these shops are made on cash basis, there are no losses on account of bad debts.
• Transfer of goods: The goods not in demand in a particular locality may be transferred to another locality where it is in demand. This reduces the chances of dead stock in these shops.
• Diffusion of risk: The losses incurred by one shot may be covered by profits in other shops, reducing the total risk of an organisation.
• Low cost: Because of centralised a purchasing, elimination of middlemen, centralised promotion of sales and increased sales, the multiple shops have lower cost of business.
• Flexibility: Under this system, if a shop is flot operating at a profit, the management may decide to close it or shift it to some other place without really affecting the profitability of the organisation as a whole.

Limitations:

• Limited selection of goods: The multiple shops deal only in limited range of products, mostly those produced by the marketers. They do not sell products of other manufacturers.
• Lack of initiative: The personnel managing the multiple shops have to obey the instructions received from the head office. This makes them habitual of looking up to the head office for guidance on all matters, and takes away the initiative from them to use their creative skills to satisfy the customers.
• Lack of personal touch: Lack of initiative in the employees sometimes leads to indifference and lack of personal touch in them.
• Difficult to change demand: If the demand for the merchandise handled by multiple shops change rapidly, the management may have to sustain huge losses because of large stocks lying unsold at the central depot.

Question 40.
Explain the benefits of International business both to Nations and Firms.
Answer:
Benefits of international business to nation:

1. Earning of foreign exchange: International business helps a country to earn foreign exchange which it can later use for meeting its imports of capital goods, technology, petroleum products and fertilisers, pharmaceutical products and a host of other consumer products which otherwise might not be available domestically.

2. More efficient use of resources: As stated earlier, international business operates on a simple principle produce what your country can produce more efficiently, and trade the surplus production so generated with other countries to procure what they can produce more efficiently. When countries trade on this principle, they end up producing much more than what they can when each of them attempts to produce all the goods and services on its own.

3. Improving growth prospects and employment potentials: Producing solely for the purposes of domestic consumption severely restricts a country’s prospects for growth and employment. Many countries, especially the developing ones, could not execute their plans to produce on a larger scale, and thus create employment for people because their domestic market was not large enough to absorb all that extra production.

4. Increased standard of living: In the absence of international trade of goods and services, it would not have been possible for the world community to consume goods and services produced in other countries that the people in these countries are able to consume and enjoy a higher standard of living.

5. Greater variety of goods available for consumption: International trade brings in different varieties of a particular product from different destinations. This gives consumers a wider array of choices which will not only improve their quality of life but as a whole it will help the country to grow.

6. Consumption at cheaper cost: International trade enables a country to consume things which either cannot be produced within its borders or production may cost very high. Therefore it becomes cost cheaper to import from other countries through foreign trade.

7. Reduces trade fluctuations: By making the size of the market large with large supplies and extensive demand, international trade reduces trade fluctuations. The prices of goods tend to remain more stable.

Benefits of international business to firms:

1. Prospects for higher profits: International business can be more profitable than the domestic business. When the domestic prices are lower, business firms can earn more profits by selling their products in countries where prices are high.

2. Increased capacity utilization: Many firms setup production capacities for their products which are in excess of demand in the domestic market. By planning overseas expansion and procuring orders from foreign customers, they can think of making use of their surplus production capacities and also improving the profitability of their operations.

3. Prospects for growth: Business firms find it quite frustrating when demand for their products starts getting saturated in the domestic market. Such firms can considerably improve prospects of their growth by plunging into overseas markets. This is precisely what has prompted many of the multinationals from the developed countries to enter into markets of developing countries.

4. Way out to intense competition in domestic market: When competition in the domestic market is very intense, internationalization seems to be the only way to achieve significant growth. Highly competitive domestic market drives many companies to go international in search of markets for their products.

5. Improved business vision: The growth of international business of many companies is essentially a part of their business policies or strategic management. The vision to become international comes from the urge to grow, the need to become more competitive, the need to diversify and to gain strategic advantages of internationalization.

Section – E

V. Answer any two of the following questions: ( 2 × 5 = 10 )

Question 41.
As a customer of bank, list out any five e-banking services enjoyed by you.
Answer:
The five e-banking services are:

1. Electronic fund transfer.
2. Automated teller machines.
3. Electronic data Interchange.
4. Credit cards electronic or digital cash.
5. Tele banking / Mobile banking.
6. Any where banking (or) core banking.

Question 42.
Suggest any five important sources of Finance available for a business organisation.
Answer:
Five important sources of finance available for a business organization:
1. Owner’s fund:

• Equity shares
• Retained earnings.

2. Borrowed funds:

• Debenture
• Loans from banks
• Loans from financial institution
• Public deposit
• Lease financing.

Question 43.
Give a list of any five institutions which support small business in India.
Answer:
Five institutions which support small business in India are:

1. National Bank for Agriculture and Rural Development (NABARD).
2. National Small Industrial Corporation (NSIC).
3. Small Industrial Development Bank of India (SIDBI).
4. Rural and Women Entrepreneurship Development (RWED).
5. District Industries Centres (DICs).