XAT Decision making Questions 2009
Read
the following caselet and choose the best
alternative
(Questions 11 to 14):
Shekhar,
an MBA from Singapore returned to his hometown-Jamshedpur. Jamshedpur had a
population of 10 lacs with one of the highest per capita income among Indian
cities. Shekhar loved music. While listening to his favourite song on “satellite
radio”, he wondered if he could mix his passion with business. Incidentally, a
few weeks later, while browsing the Internet, he came across an advertisement
from Music World, which called for expression of interest from potential
franchisees. Jamshedpur did not have a single good music outlet, where its
residents could buy quality, variety and the latest from the world of music. Music
World wanted the potential franchisees to own minimum 1200 square feet space
and invest Rs. 30 lacs. Profits were to be shared in the ratio of 3:7 between
Music World and the franchisee. While Shekhar was excited about working with a
renowned brand, he was worried if Rs. 30 lacs was too high an amount to shell
out. He did not have the entire amount with him and was thinking of borrowing
from the bank. He made enquiries with other Music World franchisees located in
towns like Patna and Ranchi, as he expected similar football in Jamshedpur. A franchisee
in Patna had sales revenue varying from 1-2
lacs
rupees per month with profit margin in the range of 25-30%. Satisfied, Shekhar
decided to proceed.
Soon,
he was on a look out for the space. Jamshedpur had three main areas – Bistupur,
Sakchi and Sonari. All areas were inter-connected by good roads. Bistupur was a
business area where most of the high-end retail formats were located. Most
upper middle class and higher-class customers shopped there. It was also the
education hub of the city. On the other hand, Sakchi was a growing lower
middle
class business area and Sonari had mostly residential population.
Shekhar
was in favour of choosing Bistupur as it was the place where he shopped.
However, he soon stumbled across problems. Not only it was difficult to obtain
space in Bistupur but property rentals touch 30-40 rupees per square feet per
month. Rentals at Sakchi and Sonari were in the range of 15-20 rupees per
square feet per month. Also, Shekhar’s friend, who stayed in Sakchi, told him that
a few branded outlets were opening in Sakchi and it seemed to be the fastest
growing market in Jamshedpur,
with
highest ratio of teenagers. But, Shekhar was not in favour of Sakchi due to its
low image. He expected to target the growing crowd in Bistupur. High real
estate prices in Bistupur and his low assessment of the Sakchi market created
confusion in Shekhar’s mind. To give the decision some serious and fresh
thought, he decided to hit the Jamshedpur-Ranchi highway in his newly acquired
car.
11. Suppose sales in Patna and Bistupur
are likely to be same, how many years would it take for Shekhar
to recoup the investment (consider Zero
inflation)?
A.
Less than five years.
B.
Less than Seven years.
C.
Less than eight years.
D.
Less than nine years.
E.
Maybe never.
12. What could be the most likely reason for
Shekhar’s bias in favour of Bistupur?
A. Presence of a college going crowd, as
he felt
they
were the customers for the latest music.
B.
Crowded (hoi polloi) image of Sakchi.
C.
It was difficult for Shekhar to associate non-
Bistupur
areas with good quality products.
D.
Higher rentals in Bistupur.
E.
Patronage of Bistupur shops by executives
and
their families
.
13. How best should Shekhar resolve his
confusion?
A.
By investing in the franchise.
B.
Do not invest in the franchise and look for
different
brand name(s).
C.
Go back to Singapore and start looking for a
job.
D.
Do a further in-depth study to find the drivers
and
potential of the business.
E.
Approach another music company for setting
up a
franchise.
14. Which one of the following is the most
important decision criterion in such a business situation?
A.
Financial capability of entrepreneur.
B.
Changes in music industry.
C.
Future market growth.
D.
Profitability of business in first couple of years.
E.
Real Estate prices.
Read
following caselet and choose the best
alternative
(Question 15 to 18)
Om
Chowdhury was one of the supervisors in the Fire and Safety (F&S)
department of Maqsood Textile Mills. He was a distant cousin to Mr. Bhiwani,
General Manager (Personnel & Administration). Personnel &
Administration department was given the responsibility of all personnel related
decisions. It was often rumoured that Om had obtained the job due to his cousin’s
influence. However,
Om
was meticulous in the performance of his duties and didn’t give anyone a reason
for complaint. It was known
that
Om was not much given to talking and kept to himself and to his duties. All
F&S supervisors reported to Mr. Rabindra, the shopfloor manager. The mill
operated on a three-shift basis and Rabindra allocated the supervisors to
different shifts. They were required to be present at all times during the
shift
operation and carry out scheduled checks of machinery and fire fighting
equipments. For some reasons, Om was allotted the night shift more often than
other supervisors. Om accepted these allocations without anyobjection, while it
was known that other supervisors would often plead and bargain with Rabindra to
be allocated the day shifts. During the night shift keeping awake and
remaining
mentally alert were some of the major challenges faced by the supervisors.
Of
late, Rabindra observed signs of indifference from Om. On two occasions he
found Om absent from his cabin. Rabindra heard from others that Om was often
found in different parts of the shop floor talking to employees. Rabindra
called him to his office and reminded Om of his responsibilities. Om did not
counter Rabindra. He promised that he would not be lax in his duties again.
Rabindra also broached the subject with Mr. Bhiwani. Mr. Bhiwani called Om to
his office and talked on a very personal basis. He reminded Om that their
family relations made it uncomfortable to all concerned. Om nodded and agreed to
do better. Soon his performance became that of a model
supervisor.
It was often found he went beyond his official duties to sort out the problems
of employees. About three months later, Rabindra happened to visit the plant
during the night. As he looked into F&S office, he found Om playing
solitaire on the office computer. Mr. Rabindra immediately fired Om.
The
next morning Mr. Bhiwani called Mr. Rabindra and asked how he can fire an
employee. He suggested that Mr. Rabindra reconsider Om’s dismissal. “This
decision has already been made. There will be no turning back” replied
Rabindra.
15. Out of the options below, which one
best summarizes the learning from solitaire incident?
A.
Managers often do not take any responsibility towards training juniors.
B.
People tend to become relaxed during night shift and require surprise checks to
keep them on their toes.
C.
Certain roles would have different ways of carrying out their duties.
D.
Having relatives in the same organisation can be a source of potential problems.
E.
Managers tend to allocated silent people to difficult positions.
16. The options below give combinations
of possible root causes of the problem and the justifications thereof. Given
the details in the case, which one can be inferred to be the best option?
A.
Hiring of Om. Reason: That ensured Om was perpetually casual towards his
duties.
B.
Om favouring to work during the night shift.
Reason:
Absence
of Rabindra ensured that Om could relax.
C.
Rabindra bias against Om. Reason: Rabindra had been assigning too many
night shifts to
Om
while for other supervisors he was lenient.
D. Rabindra jumping
to conclusions. Reason: He should have investigated whether Om had carried
out his duties.
E. Rabindra’s firing
of Om. Reason: It led to clash between Rabindra and Mr. Bhiwani.
17. The details of the entire episode have
become common knowledge among all the employees of the company. Out of the
options below, which one presents the best way for the top management to resolve
the issue so as to benefit the organization as a whole?
A. Revoke Rabindra’s
order. It can be communicated to others that firing was too
severe a punishment
for such a small incident of indiscipline
.
B. Ask Om for
clarification. It can be communicated that since Om had clarified regarding his
duties,
the order has been
taken back
.
C. Declare Rabindra’s
order as void. Reiterate officially the disciplinary processes that need
to be followed by
mangers along with their scope of authority.
D. Ask feedback from
other employees on the shop-floor regarding Om’s performance. This can
be used to revoke
Rabindra’s order.
E. Take the feedback
of other F&S supervisors as to the work involved during night shift. This
would
better explain Om’s
behaviour.
18.
Of the options below, which could have been a better response from Mr. Rabindra
when he saw Om
playing?
A. He should have
clarified about his authority to fire employees.
B. He should have
informed Mr. Bhiwani about the incident and asked him to take necessary
action.
C. He should have
asked the employees of the shift regarding Om’s performance of his duties.
D. He should have
checked if Om had done his duties or not.
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