PREVIOUS YEAR SOLVED PAPERS - November 2017
- Option : B
- Explanation : The concept of sustainability is commonly believed to come from the World Conservation Strategy (IUCN, 1980) but was later more fully developed and publicised in the Brundtland Report, Our Common Future by the World Commission on Environment and Development (WCED) wherein it is stated that the present generation should develop in such a way that meets their needs ‘without jeopardising the ability of future generations to fulfil their needs’. There is a dual emphasis on fulfilling the ‘needs’ of the present generation and the ‘ability’ of future generations to do so. Both concepts are subject to different interpretations depending on society norms over time. In particular, ‘ability’ is difficult to measure and quantify for informing government policies and inducing changes in the behaviour of the present generation.
Therefore, comprehensive sustainability is a broad concept or vision with shared principles and meanings across the globe, but the specific objectives and plans are often place-based and diverse. Comprehensive sustainability aims to balance different needs of the human race in the three major domains of the environment, society and economy. The balance between achieving economic growth and environmental preservation is best described as sustainable development. The balance between environmental preservation and social equity is best illustrated by community liveability.
The balance between economic growth and social equity is crystallised in social and economic equity. However, comprehensive sustainability only exists in the small but important overlapping areas of the three domains of environment, economy and society.
| List-I | List-II |
| (a) Economic environment | (i) Ethical issues |
| (b) Political and government environment | (ii) Trade and transport policies |
| (c) Socio - cultural environment | (iii) Economic stratification of population |
| (d) Demographic environment | (iv) Judiciary powers |
CODES
| Â | (a) | (b) | (c) | (d) |
| 1 | (ii) | (iv) | (i) | (iii) |
| 2 | (i) | (iii) | (ii) | (iv) |
| 3 | (iv) | (ii) | (iii) | (i) |
| 4 | (iii) | (i) | (iv) | (ii) |
4. Match the items of List-I with List-II and indicate the correct code of matching:
| List-I | List-II |
| (a) Micro external environment | (i) Economic and political factors |
| (b) Macro external environment | (ii) Competition among diverse products targetting disposable income of consumers |
| (c) Non-price competition | (iii) Input suppliers |
| (d) Desire competition | (iv) Sponsoring of events like sports |
CODES
| Â | (a) | (b) | (c) | (d) |
| 1 | (iii) | (i) | (iv) | (ii) |
| 2 | (ii) | (iii) | (iv) | (i) |
| 3 | (iv) | (ii) | (iii) | (i) |
| 4 | (iv) | (i) | (ii) | (iii) |
- Option : A
- Explanation : Classification of External Environment: The external environment can be further classified into two categories: micro environment and macro environment.
Micro Environment: The micro environment consists of different types of stakeholders outside the organisation. The constitutions or stakeholders of the micro environment include customers, suppliers, creditors, distributors, dealers, etc. Although these constituents are not under the direct control of the organisation, still they can be influenced by the organisation through its policies and strategies. Any change in the micro environment affects and impinges on the organisations activities directly. That is why it is also termed as Specific (Task) Environment.
Macro Environment: The macro environment consists of constituents that are beyond the control of a business organisation. These constituents are socio-cultural, technological, economical and political (STEP) factors which constitute their own individual environments. The effect of changes in the macro environment on the business is indirect. Therefore, it is also termed as General (Societal) Environment. An example of a change in the macro environment is the passing of a legislation, which bans smoking in public places. This legislation indirectly affects the business of pubs and restaurants.
Constituents of Macro Environment: The main constituents of the macro environment are: global business environment, socio-cultural environment, technological environment, economic environment, political environment, demographic environment, legal environment and environmental concerns.
- Option : A
- Explanation : Long Term Solvency Ratio: The long term solvency ratio indicates the ability of the firm to meet its long term obligations. It includes the loan taken from the financial institutions, banks and issues of debentures and bonds. It is very much essential to study the long term liabilities, consists of the following ratios:
(i) Debt-Equity Ratio
(ii) Proprietary Ratio/Equity Ratio
(iii) Solvency Ratio
Debt Equity Ratio: It indicates the relationship between the outsider funds and shareholder’s funds in the business. Outsiders funds includes both the long-term as well as short-term liabilities. The shareholder’s fund includes the equity share capital, preference share capital, capital reserves, accumulated profits and surpluses, etc. The formula use to calculate the Debt-Equity Ratio is as follows:
There is no rules of thumb to measure the ratio. Usually 1 : 1 ratio may be considered as satisfactory ratio.
Higher debt equity ratio shows lesser margin for long term lenders. This ratio indicates to what extent the firm depends on outsiders’ funds for existence.
Purpose of Debt to Equity Ratio: The purpose of debt equity ratio is to measure the long term solvency of the business. A higher debt to equity ratio is not considered good for the business.
