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.

E. He should have checked the production levels in the shift to see if it was as required.