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ACCOUNTING MANAGEMENT
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AVIATION MANAGEMENT
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SAP CONSUTANCY MANAGEMENT
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Business Communication
Multiple choice:
1. __________is an essential function of Business Organizations:
a. Information
b. Communication
c. Power
d. None of the above
2. Physiological Barriers of listening are:
a. Hearing impairment
b. Physical conditions
c. Prejudices
d. All of the above
3. Which presentation tend to make you speak more quickly than usual:
a. Electronic
b. Oral
c. Both „a‟ and „b‟
4. What is the main function of Business Communication:
a. Sincerity
b. Positive language
c. Persuasion
d. Ethical standard
5. The responsibilities of the office manager in a firm that produces electronics spares is:
a. Everything in the office runs efficiently
b. Furniture and other equipment in the office is adequate
c. Processing all the incoming official mail and responding to some
d. All of the above
6. Labov‟s Storytelling Model based on:
a. Communication through speech
b. Language learning
c. Group Discussions
7. Diagonal Communication is basically the:
a. Communication across boundaries
b. Communication between the CEO and the managers
c. Communication through body language
d. Communication within a department
8. How to make Oral Communication Effective?
a. By Clarity
b. By Brevity
c. By Right words
d. All of the above
9. Direct Eye contact of more than 10 seconds can create:
a. Discomfort & Anxiety
b. Emotional relationship between listeners and speakers
c. Excitement
10. Encoding means:
a. Transmission

b. Perception
c. Ideation
Part Two:
1. Define 7C‟s of effective communication.
2. Explain „Space Language‟.
3. Differentiate between good listeners and bad listeners.
4. List the different types of business report.
5. Define „Kinesics‟.
Business Communication
Caselet 1
Mr. and Mrs. Sharma went to Woodlands Apparel to buy a shirt. Mr. Sharma did not read the
price tag on the piece selected by him. At the counter, while making the payment he asked for
the price. Rs. 950 was the answer.
Meanwhile, Mrs. Sharma, who was still shopping came back and joined her husband. She was
glad that he had selected a nice black shirt for himself. She pointed out that there was a 25%
discount on that item. The counter person nodded in agreement.
Mr. Sharma was thrilled to hear that “It means the price of this shirt is just Rs. 712. That‟s
fantastic”, said Mr. Sharma.
He decided to buy one more shirt in blue color.
In no time, he returned with the second shirt and asked them to be packed. When he received the
cash memo for payment, he was astonished to find that he had to pay Rs. 1,900 and Rs. 1,424.
Mr. Sharma could hardly reconcile himself to the fact that the counter person had quoted the
discounted price which was Rs. 950. The original price printed on the price tag was Rs. 1,266.
Questions
1. What should Mr. Sharma have done to avoid the misunderstanding?
2. Discuss the main features involved in this case.
Caselet 2
I don‟t want to speak to you. Connect me to your boss in the US,” hissed the American on the
phone. The young girl at a Bangalore call centre tried to be as polite as she could. At another call
centre, another day, another young girl had a Londoner unleashing himself on her, “Young lady,
do you know that because of you Indians we are losing jobs?”
The outsourcing backlash is getting ugly. Handling irate callers is the new brief for the young
men and women taking calls at these outsourced job centres. Supervisors tell them to be „cool‟.
Avinash Vashistha, managing partner of NEOIT, a leading US-based consultancy firm says,
“Companies involved in outsourcing both in the US and India are already getting a lot of hate
mail against outsourcing and it is hardly surprising that some people should behave like this on
the telephone.” Vashistha says Indian call centre‟s should train their operators how to handle
such calls. Indeed, the furor raised by the Western media over job losses because of outsourcing
Examination Paper of Business Communication
has made ordinary citizens there sensitive to the fact that their calls are being taken not from
their midst, but in countries such as India and the Philippines.
The angry outbursts the operators face border on the racist and sexist, says the manager of a call
centre in Hyderabad. But operators and senior executives of call centres refuse to go on record
for fear of kicking up a controversy that might result in their companies‟ losing clients overseas.
“It‟s happening often enough and so let‟s face it,” says a senior executive of a Gurgaon call
centre, adding, “This doesn‟t have any impact on business.”
Questions
1. Suppose you are working as an operator in a call centre in India and receiving calls
from Americans and Londoners. How would you handle such calls?

2. Do you agree with the view such abusive happenings on the telephone do not have any impact on
business?
1. What do you by Communication Barriers? How and why do they occur? What can be done to overcome
the Barriers to Communication?
2. Define and explain the term Negotiation and also briefly explain the phases of Negotiation.
Corporate Governance Professional
1. Corporate Governance is-
a) About ethical conduct in business
b) Direct or indirect concerns in the organization
c) A manufacturing system
d) None of the above
2. The term corporate governance is derived from the-
a) Greek word
b) English word
c) French word
d) Latin word
3. The definition “Corporate Governance is the system by which business directed and controlled” is given
by-
a) SEBI committee
b) OECD committee
c) Cadbury committee
d) All of the above
4. Internal control is implemented by the-
a) Board of directors
b) Audit committee
c) Management
d) All of the above
5. OECD stands for__________________
6. Which of the following have the power to hire fire and compensate the top management?
b) Audit committee
c) Shareholders
d) Management
7. CII stands for ____________________
8. The managers are expected to act in the interest of-
a) Audit committee
b) Stakeholders

c) Employees
d) Customers
9. To endorse the organization strategy, develop directional policy, appoint, supervise and remunerate senior
executives and to ensure accountability of the organization to its owners and authorities is the responsibility
of
a) CEO
b) Manager
c) Top management
d) Board of directors
10. SEBI stands for_________________
11. The role of corporate governance is-
a) To ensure the efficient use of resources
b) It increases the shareholders value
c) Reduce the procurement and inventory cost
d) All of the above
12. Which of the following is not the issue of corporate governance?
a) Internal control
b) Compensation of CEO and other directors
c) Management of risk
d) Rights of corporation
13. The annual report should not include-
a) How decision are taken by the board
b) The name of the chairman, CEO and other directors
c) Ability to hire management
d) The number of meeting
14. _____________________ is equal to the market price of his holding in shares.
a) Stakeholders wealth
b) Ethical conduct
c) Shareholder’s wealth
15. The key element of good corporate governance principle include-
a) Honesty
b) Mutual respect
c) Performance orientation
d) All of the above
16. SOX stands for_____________________
17. The commonly accepted principle of corporate governance are-

a) Protection of shareholders right
b) Role and responsibilities of board
c) Interest of other stakeholders
d) All of the above
18. CII developed code of corporate governance in_____________________
a) 1997
b) 1996
c) 1994
d) 1878
19. The property right is views simply as ____________________
a) Planning right
b) Control right
c) Both a&b
d) None
20. In which type of model the supervisory board is elected by shareholders and labor unions
a) Japanese model
b) Anglo American model
c) German model
d) The Indian perspective
21. Which of the following come under the five principles of ethical power for organization?
a) Purpose
b) Pride
c) Patience
d) All of the above
22. Which of the following are the theories of corporate governance?
a) Shareholders theory vs. stakeholders theory
b) Stewardship theory
c) Property right theory
d) All of the above
23. The stewardship theory is-
a) Control oriented
b) Involvement oriented
c) Both a&b
d) None of these
24. ____________________ include government nominees and representatives of financial institutions

b) Creditors, suppliers
c) Nominee directors
d) Chief executive officer
25. The ____________________ oversees internal control and disclosure controls and procedures for
financial reporting.
a) Nominating committee
b) Audit committee
c) Board committee
d) Higgs committee
26. MDAR stands for_______________
27. Liaison committee designed to make a link between two groups or committees.
a) True
b) False
28. Cadbury committee established in______________
a) 1999
b) 1995
c) 1992
d) 2002
29. How many recommendation is made by CII code-
a) 17
b) 18
c) 16
d) 19
30. Kumar mangalam committee is appointed by the-
a) CII
b) SEBI
c) Government
d) None
31. The remuneration of the non-executive directors should be decided by the-
b) Top management
c) Stakeholders
d) Entire board
32. Which of the following committee was appointed by the SEBI to make recommendations on the
representation of independent directors on company board and the composition of audit committee

a) Cadbury committee
b) Kumar mangalam committee
c) Naresh Chandra committee
d) Board committee
33. Basic shareholders rights include the right to-
a) Secure methods of ownership
b) Convey or transfer shares
c) Participate and vote in general shareholder meetings
d) All of the above
34. Which of the following is use to ensure that the takeover bids are serious?
a) Disclosure
b) Trigger
c) Escrow
d) Creeping acquisition
35. Which of the following are the natures of complaints by shareholders?
a) Non receipt of dividend
b) Change of address
c) Transmission of shares
d) All of the above
36. The word “transmission” means-
a) Transfer by operation of law
b) Transfer by operation
c) Both a&b
37. Competition, debt covenants, takeover and media pressure are the-
a) Internal corporate governance controls
b) External corporate governance control
c) Both a&b
d) None
38. Simple directors who attends board meeting of a company and participate of a company and participate
in the matters before the board is-
a) Ordinary directors
b) Managing directors
c) Executive directors
d) Shadow directors

39. The director who perform a specific role in a company under a service contract which requires a regular,
possibly daily, involvement in management is known as-
a) Non-executive director
b) Additional director
c) Executive director
d) Ordinary director
40. Which of the following is the duty of directors?
a) Statutory duties
b) Duties of general nature
c) Both a&b
d) None
41. Which of the following are the not the general duty of directors?
a) Duty of good faith
b) Duty of care
c) Duty not to delegate
d) To disclose interest
42. A document that specifies the regulations for a company’s operation is known as-
a) Memorandum of association
b) Articles of association
c) Both a&b
d) None
43. Any person, company, or other institution that owns at least one share in a company is known as-
a) Stakeholder
b) Employees
c) Shareholder
d) Customer
44. Nomination committee is appointed by the-
a) CEO
b) Board of directors
c) Management
d) Audit committee
45. The profit earned by the company with reference to the cost of capital in terms of economic profit is
referred to as-
a) Pay-performance
b) Organization bylaws
c) Economic value added

46. Which of the following are the types of the auditor?
a) Internal
b) External
c) Government
d) All of the above
47. The auditors specialize in crimes and are used by law enforcement organization when financial
documents are involved in a crime is known as-
a) Forensic auditor
b) Government auditor
c) External auditor
d) Internal auditor
48. Set of standards against which the quality of audits is performed and may be judges is-
a) Generally accepted accounting principles
b) General accepted auditing standards
c) Audit
d) None
49. A ______________ audit is a review in which an auditor analyzes and verifies various records and
processes relating to a company’s quality programs.
a) Cost audit
b) Forensic audit
c) Quality audit
d) none
50. The important aspects of cost audit are:
a) Property audit
b) Efficiency audit
c) Both a&b
d) Government audit
51. SICA stands for_______________
52. BIFR stands for_______________
53. Basic principles of audit are_______________
a) Integrity, objectivity & independence
b) Confidentiality
c) Documentation
d) All of the above

54. As per the SEBI guidelines, the audit committee shall meet at least-
a) Twice a year
b) Thrice a year
c) Once a year
d) None
55. _________________ opined that the chairman of the audit committee should be an independent director.
a) Cadbury committee
b) Board committee
c) KM Birla committee
d) Audit committee
56. An audit committee should aware of technological changes, which is_________________
risk/condition.
a) Internal
b) External
c) Both a&b
d) None
57. The committees of the board involve_________________
a) Supervisory committee
b) Risk management committee
c) Shareholders’ redressal committee
d) All of these
58. NBFCs stands for_________________
59. CSR stands for_________________
60. Which of the following is the essential of accord of Basel II?
a) Capital adequacy
b) Risk based supervision
c) Market disclosure
d) All of the above
61. Which of the following are the objectives of Basel II ?
a) To promote adequate capitalization of banks
b) To ensure better risk management
c) To strengthen the stability of banking system
d) All of the above

62. The ganguly committee is of the view that the draft minutes of the board meeting should be forwarded to
the director’s within_________________ hours of meeting.
a) 56
b) 64
c) 48
d) 32
63. In which ethical principle of the business ethics are measured by rightness of an act and depend little on
the results of this act?
a) Teleological ethical system
b) Deontological ethical system
c) Hybrid theory
d) Individual freedom
64. One of the major ethical issue in advertising is the use of______________
a) True
b) False
65. Major social responsibilities of business involve-
a) Optimum utilization of scarce national resources
b) Responsibility no to make losses
c) Improve quality of life
d) All of above
66. Government is thinking of making it mandatory for the companies to spend_________________% of
their net profits on CSR.
a) 2
b) 4
c) 6
d) 8
67. It is the responsibility of the firm towards its________________ to avoid any type of cartel formation
that a attempts to reap monopoly profits.
a) Shareholders
b) Customers
c) Employees
d) Management
68. Four important group that business are shareholders, employees, customers and_________________
a) Management
b) Board of director
c) Society
d) Stakeholder

69. NGO stands for_________________
70. Employees should get_________________ wages
a) Clear
b) Minimum
c) Maximum
d) Fair
71. Objectives of environmental audit are-.
a) Verification of legislative and regulatory compliance
b) Assessment of internal policy and procedural conformamance
c) Establishment of current practice status
d) All of the above
72. Review of documents and records, Review of policies, interviews are comes under which stage-
a) Pre-audit stage
b) Post-audit stage
c) Audit stage
d) None
73. Environment protection act was passed in________________ for the protection of environment.
a) 1988
b) 1999
c) 1986
d) 1990
74. The financial or non-financial support of an activity, used primarily to reach the given business goals is-
a) Media
b) finance
c) Both a&b
d) Sponsorship
75. A printed report giving news or information of interest to a special group.
a) Newsletter
b) Formal meeting
c) Mailing list
d) Media release
76. Media can be used to promote_______________ communication.
a) One way
b) Two way

c) Both a&b
d) None
77. Businesses arrange for______________ meetings with powerful stakeholders.
a) Information display
b) Public forum
c) Formal meeting
d) Informal meeting
78. MRTP stands for_________________
79. IRDA stands for_________________
80. It is said to be exist where there is a large number of procedures (firms) producing a same kind of
product.
a) Monopoly competition
b) Monopolistic competition
c) Perfect competition
d) None
81. Which of the following aspects of economic activity is not control by MRTP?
a) Restrictive on buying/selling
b) Unfair trade practices
c) Concentration of economic power
d) Restrictive trade practices
82. Price control is the restriction on maximum prices that is established and maintained by the government.
a) True
b) False
83. Public policy is an attempt by the government to address a private issue.
a) True
b) False
84. The SEBI was established on________________
a) March 12, 1992
b) September 14, 1992
c) April 12, 1992
d) June 15, 1993
85. The seller of the security is-.
a) Bear
b) Bull

c) Both a&b
d) none
86. Insider trading can be defined as the sale or purchase of securities by persons who possess price
sensitive information about the company.
a) True
b) False
87. _______________ makes a commitment to get the underwritten issue subscribed either by other or by
them.
a) Utilitarianism
b) Underwriters
c) Insider trading
d) None
88. The board of SEBI consists of_______________
a) 8
b) 7
c) 4
d) 6
89. SEBI has three functions rolled into one body quasi-legislative, quasi-judicial, and quasi-executive.
a) True
b) False
90. SEBI is the regulator for the securities market in India.
a) True
b) False
91. AMFI stands for_________________.
92. Buying a commodity at a low price and instantly selling it for a higher price in another market is known
as-
a) Hedging
b) Speculating
c) Arbitrage
d) Shifting of risk
93. An over-the-counter market where buyers and sellers conduct foreign exchange transaction.
a) Commodity exchange
b) Foreign direct investment
c) FOREX
d) None

94. Licensing grant a permit to aloe the use of something or to allow a business activity to take place.
a) True
b) False
95. Government often uses quotas to restrict export.
a) True
b) False
96. Private companies can enjoy the right to transfer shares.
a) True
b) False
97. India has 22 stock exchanges.
a) True
b) False
98. Foreign companies are those, which have been incorporated outside India and conduct business in India.
a) True
b) False
99. Clause 49 has been prepared by the Reserve Bank of India.
a) True
b) False
100. Corporate Governance ensures easy access to capital.
a) True
b) False
Distribution & Logistics Management
Part One:
Multiple Choices:
1. It deals with the movement of finished goods from the last point of production to the point of
consumption.
a. Marketing Channel Management
b. Logistics Management
c. Boundaries
d. Relationships
2. Which conflict is one of the major bottleneck in the development & maintenance of partnering channel
relationship
a. Channel conflict

b. Management conflict
c. Logistics conflict
d. Distribution conflict
3. The phase of externally integrated business function era (1990s onwards) is recognized as the era of
a. Logistics Management
b. Human Resource Management
c. Financial Management
d. Supply Chain Management
4. ___________ may be conducted from time-to-time or at least once in a year to know about change in
the expectation levels & actual performance
a. Customer Service Monitoring cell
b. Formal Customer Satisfaction Survey
c. Customer Conference
d. Customer Feedback System
5. The firm’s incomplete or inaccurate knowledge of customer’s service expectations is known as
a. Market Information Gap
b. Service Standards Gap
c. Service Performance Gap
d. Internal Communication Gap
6. This gap exist between the present level of customer service offered and the corporate vision about
customer service
a. Gap 1
b. Gap 2
c. Gap 3
d. Gap 4
7. This stock refers to window display of an inventory in order to stimulate demand and act as a silent
salesman
a. Decoupling stock
b. Psychic stock
c. Pipeline stock
d. None
8. This stock is also known as cycle or lot size stock
a. Working stock
b. Safety stock
c. Anticipation stock
d. None
9. In this system manufacturer is given the responsibility for monitoring & controlling inventory levels at
the retail store level
a. Quick Response
b. Continuous Replenishment
c. Vendor-managed Inventory
d. Customer Relationship

10. This mode of transport is a very significant one but with a very restricted scope. It is used primarily for
the shipment of liquid & gas
a. Airways
b. Railways
c. Pipelines
d. Seaways
Part Two:
1. What is Containerization and also mention the main features of Containerization.
2. What is Third Party Logistics?
3. Differentiate between Public & Private Warehouse.
4. What is Logistics Information System?
Caselete 1
Superior Medical Equipment Company supplies electrical equipment that is used as components in the
assembly of MRI, CAT scanners, PET scanners, and other medical diagnostic equipment. Superior has
production facilities in Phoenix, Arizona, and Monterrey, Mexico. Customers for the components are
located in selected locations throughout the United States and Canada. Currently, a warehouse, that
receives all components from the plants and redistributed them to customers, is located at Kansas City,
Kansas. Superior’s management is concerned about location of its warehouse since its sales have declined
due to increasing competition and shifting sales levels among the customers. The lease is about to expire
on the current warehouse, and management wishes to examine whether it should be renewed or
warehouse space at some other location should be leased. The warehouse owner has offered to renew the
lease at an attractive rate of $2.75 per sq. ft. per year for the 200,000 sq. ft. facility. It is estimated that any
other location would cost $3.25 per q. ft. for a similar-size warehouse. A new or renewed lease will be for
five years. Moving the inventory, moving expenses for key personnel, and other location expenses would
result in a one-time charge of $3, 00,000. Warehouse operating costs are expected to be similar at any
location.
In the most recent year, Superior was able to achieve sales of nearly $70 million. Transportation costs from
the plants to the Kansa warehouse were $2,162,535, and from the warehouse to customers were
$4,819,569. One million dollars was paid annually as warehouse lease expenses. To study the warehouse
location question, data shown in Tables 1 and 2 were collected.
Although transport costs are not usually expressed on a $/cwt./mile basis, given that the outbound
transportation costs for the most recent year were $4,819,569, the weighted average distance of the
shipments was 1128 miles, and the annual volume shipped was 182,100 cwt., the estimated average
outbound rate from a warehouse is $0.0235/cwt./mile.
Table 1
Volume,
Rate,
Distance, and
Coordinate
Data for
Shipping
from Plants
ANNUAL
VOLUME,
CWT.b
TRANSPORT
RATE,
$/CWT.
DISTANCE,
MILES
GRID
Coordinatesa
X
Y

to the Kansas
City
Warehouse
in Truckload
Quantities
(Class 100)
for the Most
Recent Year.
PLANT
LOCATION
Phoenix 61,500 16.73 1163 3.60 3.90
Monterrey 120,600 9.40 1188 6.90 1.00
Total 182,100
Enterprise Resource Planning
Part One:
Multiple Choices:
1. Enterprise Resource Planning is:
a. Computer System
b. Manufacturing organization
c. Method of effective planning of all the resources in an organization
2. Enterprise Resource Planning vendors are those people:
a. Who are experts in administration and management of projects
b. Who have developed the ERP packages
c. Who uses the ERP system
3. Interviewing and cost justification is tool and technique of:
a. Design step of ERP
b. Implementation step of ERP
c. Requirement analysis of ERP
d. Planning step of ERP
4. Support re-engineering processes to fit the software systems best practice is approach of:
a. Re-engineering approach
b. Customizing approach
c. Rational approach
5. Process of tracking customer contacts and providing the customer with a price quote is:
a. Inventory sourcing
b. Sales order processing
c. Pre-sales
6. The difficulty in creating an audit trial of transactions when multiple transactions use multiple
database is associated with:
a. Product profitability sub-system
b. Finished goods inventory sub-system
c. Management reporting sub-system
d. Creating an audit trial sub-system
7. Differences occur between standard costs and actual costs is problem associated with:
a. Accounting

b. Production
c. Purchasing / Materials Management
8. MRP in Enterprise resource planning stands for:
a. Maximum retail price
b. Material requirement planning
c. Management requirement planning
9. Process of providing status of purchase order comes in a category of:
a. Purchase order follow-up
b. Source determination
c. Determine requirement
d. Invoice verification
10. Resource failure occurs when:
a. People clashes
b. Inability to communicate with the system user
c. Poor specification of requirements
d. Conflicts of people, time and project scope due to insufficient personnel
Part Two:
1. What are the advantages of the re-engineering method of implementing ERP?
2. What are the benefits reported from implementing ERP?
3. Write a short note on “Credit Management”.
4. Define Material Requirements Planning.
Caselet 1
Tech Knowledge is a start-up founded in 1997 by Robert Thyer. The company is a distributer of
presentation technologies, including computer based projection systems, video equipment, and
display technologies. The firm has 25 employees and does $5 million in sales. It is growing rapidly.
The owner, Robert Thyer, would like to net source the back-office functions of the firm because the
company does not have an internal IT capability. The applications to be net sourced would include
sales and distribution, financial accounting, and inventory management.
Tech Knowledge would like to source SAP or another ERP vendor via a hosting arrangement. It
does not expect to do much customization, and it does not have any legacy systems.
Questions:
1. What factors should it use to evaluate each of these potential hosts?
2. What controls should be in place to monitor the hosting arrangement?
Caselet 2
ITM is a company specializing in network implementation and management. It provides networking
services to mid-sized companies, which do not have an internal networking analyst or IT, manager.
These organizations include real estate companies, law offices, medical practices, architectural /
engineering firms, construction companies, business services providers, country clubs, community
organizations, and churches.
ITM uses a legacy accounting system to handle its financial accounting and financial management
functions. It has added on a billing package for client services. The next step is to obtain a CRM
capability to manage information about current and prospective customers more effectively.
You have been assigned to identify potential sources for a net-sourcing arrangement with an ERP
vendor, which provides CRM capabilities.
Questions:
1. Identify potential sources of software.
2. Determine five criteria you will recommend be used to evaluate each of alternative providers.
1. Explain in brief Sales and Marketing Modules in ERP System.

2. What are the different development process in ERP systems and write a detailed note on it?
Financial Management
Multiple choices:
1. The approach focused mainly on the financial problems of corporate enterprise
a. Ignored non-corporate enterprise
b. Ignored working capital financing
c. External approach
d. Ignored routine problems
2. These are those shares, which can be redeemed or repaid to the holders after a lapse of the
stipulated period
a. Cumulative preference shares
b. Non-cumulative preference shares
c. Redeemable preference shares
d. Perpetual shares
3. This type of risk arise from changes in environmental regulations, zoning requirements, fees,
licenses and most frequently taxes
a. Political risk
b. Domestic risk
c. International risk
d. Industry risk
4. It is the cost of capital that is expected to raise funds to finance a capital budget or investment
proposal
a. Future cost
b. Specific cost
c. Spot cost
d. Book cost
5. This concept is helpful in formulating a sound & economical capital structure for a firm
a. Financial performance appraisal
b. Investment evaluation
c. Designing optimal corporate capital structure
d. None
Examination Paper Semester I: Financial Management
IIBM Institute of Business Management
6. It is the minimum required rate of return needed to justify the use of capital
a. From investors
b. Firms point
c. Capital expenditure point
d. Cost of capital
7. It arises when there is a conflict of interest among owners, debenture holders and the management
a. Seasonal variation
b. Degree of competition
c. Industry life cycle
d. Agency costs
8. Some guidelines on shares & debentures issued by the government that are very important for the
constitution of the capital structure are
a. Legal requirement
b. Purpose of finance
c. Period of finance
d. Requirement of investors
9. It is that portion of an investments total risk that results from change in the financial integrity of
the investment
a. Bull- bear market risk
b. Default risk

c. International risk
d. Liquidity risk
10. _____________ measure the systematic risk of a security that cannot be avoided through
diversification
a. Beta
b. Gamma
c. Probability distribution
d. Alpha
Part Two:
1. What is Annuity kind of cash flow?
2. What do understand by Portfolio risk?
3. What do you understand by ‘Loan Amortization’?
4. What is the Difference between NPV and IRR?
Case let 1
This case provides the opportunity to match financing alternatives with the needs of different companies.
It allows the reader to demonstrate a familiarity with different types of securities. George Thomas was
finishing some weekend reports on a Friday afternoon in the downtown office of Wishart and Associates,
an investment-banking firm. Meenda, a partner in the firm, had not been in the New York office since
Monday. He was on a trip through Pennsylvania, visiting five potential clients, who were considering the
flotation of securities with the assistance of Wishart and Associates. Meenda had called the office on
Wednesday and told George's secretary that he would cable his recommendations on Friday afternoon.
George was waiting for the cable. George knew that Meenda would be recommending different types of
securities for each of the five clients to meet their individual needs. He also knew Meenda wanted him to
call each of the clients to consider the recommendations over the weekend. George was prepared to make
these calls as soon as the cable arrived. At 4:00 p.m. a secretary handed George the following telegram.
George Thomas, Wishart and Associates STOP Taking advantage of offer to go skiing in Poconos STOP
Recommendations as follows: (1) common stock, (2) preferred stock, (3) debt with warrants, (4)
convertible bonds, (5) callable debentures STOP. See you Wednesday STOP Meenda. As George picked
up the phone to make the first call, he suddenly realized that the potential clients were not matched with
the investment alternatives. In Meenda's office, George found folders on each of the five firms seeking
financing. In the front of each folder were some handwritten notes that Meenda had made on Monday
before he left. George read each of the notes in turn. APT, Inc needs $8 million now and $4 million in
four years. Packaging firm with high growth rate in tri-state area. Common stock trades over the counter.
Stock is depressed but should rise in year to 18 months. Willing to accept any type of security. Good
management. Expects moderate growth. New machinery should increase profits substantially. Recently
retired $7 million in debt. Has virtually no debt remaining except short-term obligations.
Sandford Enterprises
Needs $16 million. Crusty management. Stock price depressed but expected to improve. Excellent growth
and profits forecast in the next two year. Low debt-equity ratio, as the firm has record of retiring debt
prior to maturity. Retains bulk of earnings and pays low dividends. Management not interested in
surrendering voting control to outsiders. Money to be used to finance machinery for plumbing supplies.
Sharma Brothers., Inc.
Needs $20 million to expand cabinet and woodworking business. Started as family business but now has
1200 employees, $50 million in sales, and is traded over the counter. Seeks additional shareholder but not
willing to stock at discount. Cannot raise more than $12 million with straight debt. Fair management.
Good growth prospects. Very good earnings. Should spark investor's interest. Banks could be willing to
lend money for long-term needs.
Sacheetee Energy Systems
The firm is well respected by liberal investing community near Boston area. Sound growth company.
Stock selling for $16 per share. Management would like to sell common stock at $21 or more willing to
use debt to raise $ 28 million, but this is second choice. Financing gimmicks and chance to turn quick
profit on investment would appeal to those likely to invest in this company.

Ranbaxy Industry
Needs $25 million. Manufactures boat canvas covers and needs funds to expand operations. Needs longterm
money. Closely held ownership reluctant surrender control. Cannot issue debt without permission of
bondholders and First National Bank of Philadelphia. Relatively low debt-equity ratio. Relatively high
profits. Good prospects for growth Strong management with minor weaknesses in sales and promotion
areas. As George was looking over the folders, Meenda's secretary entered the office. George said, "Did
Meenda leave any other material here on Monday except for these notes?” She responded, "No, that's it,
but I think those notes should be useful. Meenda called early this morning and said that he verified the
facts in the folders. He also said that he learned nothing new on the trip and he sort of indicated that, he
had wasted his week, except of course, that he was invited to go skiing at the company lodge up there".
George pondered over the situation. He could always wait until next week, when he could be sure that he
had the right recommendations and some of the considerations that outlined each client's needs and
situation. If he could determine which firm matched each recommendation, he could still call the firms by
6:00 P.M. and meet the original deadline. George decided to return to his office and match each firm with
the appropriate financing.
Question:
1. Which type of financing is appropriate to each firm?
2. What types of securities must be issued by a firm which is on the growing stage in order to meet
the financial requirements?
Case let 2
This case has been framed in order to test the skills in evaluating a credit request and reaching a correct
decision. Perluence International is large manufacturer of petroleum and rubber-based products used in a
variety of commercial applications in the fields of transportation, electronics, and heavy manufacturing.
In the northwestern United States, many of the Perluence products are marketed by a wholly-owned
subsidiary, Bajaj Electronics Company. Operating from a headquarters and warehouse facility in San
Antonio, Strand Electronics has 950 employees and handles a volume of $85 million in sales annually.
About $6 million of the sales represents items manufactured by Perluence. Gupta is the credit manager at
Bajaj electronics. He supervises five employees who handle credit application and collections on 4,600
accounts. The accounts range in size from $120 to $85,000. The firm sells on varied terms, with 2/10, net
30 mostly. Sales fluctuate seasonally and the average collection period tends to run 40 days. Bad-debt
losses are less than 0.6 per cent of sales. Gupta is evaluating a credit application from Booth Plastics, Inc.,
a wholesale supply dealer serving the oil industry. The company was founded in 1977 by Neck A. Booth
and has grown steadily since that time. Bajaj Electronics is not selling any products to Booth Plastics and
had no previous contact with Neck Booth. Bajaj Electronics purchased goods from Perluence
International under the same terms and conditions as Perluence used when it sold to independent
customers. Although Bajaj Electronics generally followed Perluence in setting its prices, the subsidiary
operated independently and could adjust price levels to meet its own marketing strategies. The Perluence's
cost-accounting department estimated a 24 per cent markup as the average for items sold to Pucca
Electronics. Bajaj Electronics, in turn, resold the items to yield a 17 per cent markup. It appeared that
these percentages would hold on any sales to Booth Plastics. Bajaj Electronics incurred out-of pocket
expenses that were not considered in calculating the 17 per cent markup on its items. For example, the
contact with Booth Plastics had been made by James, the salesman who handled the Glaveston area.
James would receive a 3 per cent commission on all sales made Booth Plastics, a commission that would
be paid whether or not the receivable was collected. James would, of course, be willing to assist in
collecting any accounts that he had sold. In addition to the sales commission, the company would incur
variable costs as a result of handling the merchandise for the new account. As a general guideline,
warehousing and other administrative variable costs would run 3 per cent sales. Gupta Holmstead
approached all credit decisions in basically the same manner. First of all, he considered the potential
profit from the account. James had estimated first-year sales to Booth Plastics of $65,000. Assuming that
Neck Booth took the, 3 per cent discount. Bajaj Electronics would realize a 17 per cent markup on these
sales since the average markup was calculated on the basis of the customer taking the discount. If Neck
Booth did not take the discount, the markup would be slightly higher, as would the cost of financing the

receivable for the additional period of time. In addition to the potential profit from the account, Gupta was
concerned about his company's exposure. He knew that weak customers could become bad debts at any
time and therefore, required a vigorous collection effort whenever their accounts were overdue. His
department probably spent three times as much money and effort managing a marginal account as
compared to a strong account. He also figured that overdue and uncollected funds had to be financed by
Bajaj Electronics at a rate of 18 per cent. All in all, slow -paying or marginal accounts were very costly to
Bajaj Electronics. With these considerations in mind, Gupta began to review the credit application for
Booth Plastics.
Question:
1. How would you judge the potential profit of Bajaj Electronics on the first year of sales to Booth
Plastics and give your views to increase the profit.
2. Suggestion regarding Credit limit. Should it be approved or not, what should be the amount of
credit limit that electronics give to Booth Plastics.
1. Honey Well Company is contemplating to liberalize its collection effort. Its present sales are Rs.
10 lakh, its average collection period is 30 days, its expected variable cost to sales ratio is 85 per
cent and its bad debt ratio is 5 per cent. The Company’s cost of capital is 10 per cent and tax are
is 40 per cent. He proposed liberalization in collection effort increase sales to Rs. 12 lakh
increases average collection period by 15 days, and increases the bad debt ratio to 7 percent.
Determine the change in net profit.
2. Explain the concept of working capital. What are the factors which influence the working capital?
CASE STUDY ANSWERS
ISBS / LPU / ISM&RC

ARAVIND
09901366442 - 09902787224
Human Resource Management
Multiple choices:
1. It is a cultural attitude marked by the tendency to regard one’s own culture as superior to others
a. Geocentrism
b. Polycentrism
c. Ethnocentrism
d. Egocentrism
2. It is the systemic study of job requirements & those factors that influence the performance of
those job requirements
a. Job analysis
b. Job rotation
c. Job circulation
d. Job description
3. This Act provides an assistance for minimum statutory wages for scheduled employment
a. Payment of Wages Act, 1936
b. Minimum Wages Act, 1948
c. Factories Act, 1948
d. Payment of Gratuity act, 1972
4. __________ is the actual posting of an employee to a specific job
a. Induction
b. Placement
c. Attrition
d. None
5. Broadening an individual’s knowledge, skills & abilities for future responsibilities is known as
a. Training
b. Development
c. Education
d. Mentoring
Examination Paper Semester I: Human Resource Management
6. Change that is designed and implemented in an orderly and timely fashion in anticipation of
future events
a. Planned change
b. Technology change
c. Structural change
d. None
7. It is a process for setting goals and monitoring progress towards achieving those goals
a. Performance appraisal
b. Performance gap
c. Performance factor
d. Performance management system
8. A method which requires the rates to provide a subjective performance evaluation along a scale
from low to high
a. Assessment centre
b. Checklist
c. Rating scale
d. Monitoring

9. It is the sum of knowledge, skills, attitudes, commitment, values and the liking of the people in an
organization
a. Human resources
b. Personal management
c. Human resource management
d. Productivity
10. A learning exercise representing a real-life situation where trainees compete with each other to
achieve specific objectives
a. Executive development
b. Management game
c. Programmed learning
d. Understudy
Part Two:
1. Explain the importance of Career Planning in industry.
2. Write the features of HRM.
3. Briefly explain the concept of Performance Appraisal.
4. Explain On-Job and Off Job Training.
Case let 1
Trust them with knee-jerk reactions," said Vikram Koshy, CEO, Delta Software India, as he looked at the
quarterly report of Top Line Securities, a well-known equity research firm. The firm had announced a
downgrade of Delta, a company listed both on Indian bourses and the NASDAQ. The reason? "One out
of every six development engineers in the company is likely to be benched during the remaining part of
the year." Three analysts from Top Line had spent some time at Delta three weeks ago. Koshy and his
team had explained how benching was no different from the problems of excess inventory, idle time, and
surplus capacity that firms in the manufacturing sector face on a regular basis, "Delta has witnessed a
scorching pace of 30 per cent growth during the last five years in a row," Koshy had said, "What is
happening is a corrective phase." But, evidently, the analysts were unconvinced.
Why Bench?
Clients suddenly decide to cut back on IT spends Project mix gets skewed, affecting work allocation
Employee productivity is set to fall, creating slack working conditions. High degree of job specialization
leads to redundancy
What are the options?
Quickly cut costs in areas which are non-core look for learning’s from the manufacturing sector Focus on
alternative markets like Europe and Japan Move into products, where margins are better. Of course, the
Top Line report went on to cite several other "signals," as it said: the rate of annual hike in salaries at
Delta would come down to 5 per cent (from between 20 and 30 per cent last year); the entry-level intake
of engineers from campuses in June 2001, would decline to 5 per cent (unlike the traditional 30 per cent
addition to manpower every year); and earnings for the next two years could dip by between 10 and 12
per cent. And the loftiest of them all: "The meltdown at Nasdaq is unlikely to reverse in the near future."
"Some of the signals are no doubt valid. And ominous," said Koshy, addressing his A-Team, which had
assembled for the routine morning meeting. "But, clearly, everyone is reading too much into this business
of benching. In fact, benching is one of the many options that our principals in the US have been pursuing
as part of cutting costs right since September, 2000. They are also expanding the share of off-shore jobs.
Five of our principals have confirmed that they would outsource more from Delta in India-which is likely
to hike their billings by about 30 per cent. At one level, this is an opportunity for us. At another, of
course, I am not sure if we should be jubilant, because they have asked for a 25-30 per cent cut in billing
rates. Our margins will take a hit, unless we cut costs and improve productivity." "Productivity is clearly a
matter of priority now," said Vivek Varadan, Vice-President (Operations). "If you consider benching as a
non-earning mode, we do have large patches of it at Delta. As you are aware, it has not been easy to
secure 70 per cent utilization of our manpower, even in normal times. I think we need to look at why we
have 30 per cent bench before examining how to turn it into an asset." "There are several reasons,"
remarked Achyut Patwardhan, Vice-President (HR). "And a lot of it has to do with the nature of our

business, which is more project-driven than product-driven. When you are managing a number of
overseas and domestic projects simultaneously, as we do at Delta, people tend to go on the bench. They
wait, as they complete one project, and are assigned the next. There are problems of coordination between
projects, related to the logistics of moving people and resources from one customer to another. In fact, I
am fine-tuning our monthly manpower utilization report to provide a breakup of bench costs into
specifics-leave period, training programmes, travel time, buffers, acclimatization period et al." "It would
be worthwhile following the business model used by US principal Techno Inc," said Aveek Mohanty,
Director (Finance). "The company has a pipeline of projects, but it does not manage project by project.
What it does is to slice each project into what it calls 'activities'. For example, communication
networking; user interface development; scheduling of processes are activities common to all projects.
People move from one project to another. It is somewhat like the Activity Based Costing. It throws up the
bench time straightaway, which helps us control costs and revenue better." "I also think we should reduce
our dependence on projects and move into products," said Praveen Kumar, Director (Marketing). "That is
where the opportunity for brand building lies. In fact, now is the time to get our technology guys involved
in marketing. Multiskilling helps reduce the bench time." "Benching has an analogy in the manufacturing
sector," said Girish Shahane, Vice-President (Services). "We could look for learning's there. Many firms
have adopted Just-In-Time (JIT) inventory as part of eliminating idle time. It would be worthwhile
exploring the possibility of JIT. But the real learning lies in standardization of work. It is linked to what
Mohanty said about managing by activities." "At a broader level, I see several other opportunities," said
Koshy, "We can fill in the space vacated by US firms and move up the value chain. But before we do so,
Delta should consolidate its position as the premier outsourcing centre. Since there are only two ways in
which we can generate revenue-sell expertise or sell products-we should move towards a mix of both.
Tie-ups with global majors will help. Now is the time to look beyond the US and strike alliances with
firms in Europe- and also Japan-as part of developing new products for global markets."
Questions
1. Should benching be a matter of concern at Delta?
2. What are the risks involved in moving from a project-centric mode to a mix of projects and products?
Case let 2
The contexts in which human resources are managed in today's organizations are constantly, changing.
No longer do firms utilize one set of manufacturing processes, employ a homogeneous group of loyal
employees for long periods of time or develop one set way of structuring how work is done and
supervisory responsibility is assigned. Continuous changes in who organizations employ and what these
employees do require HR practices and systems that are well conceived and effectively implemented to
ensure high performance and continued success.
1. Automated technologies nowadays require more technically trained employees possessing multifarious
skills to repair, adjust or improve existing processes. The firms can't expect these employees (Gen X
employees, possessing superior technical knowledge and skills, whose attitudes and perceptions toward
work are significantly different from those of their predecessor organizations: like greater self control,
less interest in job security; no expectations of long term employment; greater participation urge in work
activities, demanding opportunities for personal growth and creativity) to stay on without attractive
compensation packages and novel reward schemes.
2. Technology driven companies are led by project teams, possessing diverse skills, experience and
expertise. Flexible and dynamic organizational structures are needed to take care of the expectations of
managers, technicians and analysts who combine their skills, expertise and experience to meet changing
customer needs and competitive pressures.
3. Cost cutting efforts have led to the decimation of unwanted layers in organizational hierarchy in recent
times. This, in turn, has brought in the problem of managing plateau employees whose careers seem to
have been hit by the delivering process. Organizations are, therefore, made to find alternative career paths
for such employees.
4. Both young and old workers, these days, have values and attitudes that stress less loyalty to the

company and more loyalty to oneself and one's career than those shown by employees in the past,
Organizations, therefore, have to devise appropriate HR policies and strategies so as to prevent the flight
of talented employees
Question
1.Discuss that technological breakthrough has brought a radical changes in HRM.

1. Several types of interviews are commonly used depending on the nature & importance of the
position to be filled within an organization. Explain the different types of Interviews.
2. Explain the legal provisions regarding safety of workers.
Managerial Economics
Multiple choices:
1. It is a study of economy as a whole
a. Macroeconomics
b. Microeconomics
c. Recession
d. Inflation
2. A comprehensive formulation which specifies the factors that influence the demand for the
product
a. Market demand
b. Demand schedule
c. Demand function
d. Income effect
3. It is computed when the data is discrete and therefore incremental changes is measurable
a. Substitution effect
b. Arc elasticity
c. Point elasticity
d. Derived demand
4. Goods & services used for final consumption is called
a. Demand
b. Consumer goods
c. Producer goods
d. Perishable goods
5. The curve at which satisfaction is equal at each point
a. Marginal utility
b. Cardinal measure of utility
c. The Indifference Curve
d. Budget line
Examination Paper Semester I: Managerial Economics
6. Costs that are reasonably expected to be incurred in some future period or periods
a. Future costs
b. Past costs
c. Incremental costs
d. Sunk costs
7. Condition when the firm has no tendency either to increase or to contract its output
a. Monopoly
b. Profit
c. Equilibrium
d. Market
8. Total market value of all finished goods & services produced in a year by a country’s residents is
known as
a. National income

b. Gross national product
c. Gross domestic product
d. Real GDP
9. The sum of net value of goods & services produced at market prices
a. Government expenditure
b. Product approach
c. Income approach
d. Expenditure approach
10. The market value of all the final goods & services made within the borders of a nation in an year
a. Globalization
b. Subsidies
c. GDP
d. GNP
Part Two:
1. Define ‘Arc Elasticity’.
2. Explain the law of ‘Diminishing marginal returns’.
3. What is ‘Prisoner’s Dilemma’, of non cooperative game?
4. What is ‘Third degree Discrimation’?
Case let 1
The war on drugs is an expensive battle, as a great deal of resources go into catching those who buy or
sell illegal drugs on the black market, prosecuting them in court, and housing them in jail. These costs
seem particularly exorbitant when dealing with the drug marijuana, as it is widely used, and is likely no
more harmful than currently legal drugs such as tobacco and alcohol. There's another cost to the war on
drugs, however, which is the revenue lost by governments who cannot collect taxes on illegal drugs. In a
recent study for the Fraser Institute, Canada, Economist Stephen T. Easton attempted to calculate how
much tax revenue the government of the country could gain by legalizing marijuana. The study estimates
that the average price of 0.5 grams (a unit) of marijuana sold for $8.60 on the street, while its cost of
production was only $1.70. In a free market, a $6.90 profit for a unit of marijuana would not last for long.
Entrepreneurs noticing the great profits to be made in the marijuana market would start their own grow
operations, increasing the supply of marijuana on the street, which would cause the street price of the
drug to fall to a level much closer to the cost of production. Of course, this doesn't happen because the
product is illegal; the prospect of jail time deters many entrepreneurs and the occasional drug bust ensures
that the supply stays relatively low. We can consider much of this $6.90 per unit of marijuana profit a
risk-premium for participating in the underground economy. Unfortunately, this risk premium is making a
lot of criminals, many of whom have ties to organized crime, very wealthy. Stephen T. Easton argues that
if marijuana was legalized, we could transfer these excess profits caused by the risk premium from these
grow operations to the government: If we substitute a tax on marijuana cigarettes equal to the difference
between the local production cost and the street price people currently pay – that is, transfer the revenue
from the current producers and marketers (many of whom work with organized crime) to the government,
leaving all other marketing and transportation issues aside we would have revenue of (say) $7 per [unit].
If you could collect on every cigarette and ignore the transportation, marketing, and advertising costs, this
comes to over $2 billion on Canadian sales and substantially more from an export tax, and you forego the
costs of enforcement and deploy your policing assets elsewhere. One interesting thing to note from such a
scheme is that the street price of marijuana stays exactly the same, so the quantity demanded should
remain the same as the price is unchanged. However, it's quite likely that the demand for marijuana would
change from legalization. We saw that there was a risk in selling marijuana, but since drug laws often
target both the buyer and the seller, there is also a risk (albeit smaller) to the consumer interested in
buying marijuana. Legalization would eliminate this risk, causing the demand to rise. This is a mixed bag
from a public policy standpoint: Increased marijuana use can have ill effects on the health of the
population but the increased sales bring in more revenue for the government. However, if legalized,
governments can control how much marijuana is consumed by increasing or decreasing the taxes on the
product. There is a limit to this, however, as setting taxes too high will cause marijuana growers to sell on
the black market to avoid excessive taxation. When considering legalizing marijuana, there are many
economic, health, and social issues we must analyze. One economic study will not be the basis of
Canada's public policy decisions, but Easton's research does conclusively show that there are economic

benefits in the legalization of marijuana. With governments scrambling to find new sources of revenue to
pay for important social objectives such as health care and education expect to see the idea raised in
Parliament sooner rather than later.
Questions
1. Plot the demand schedule and draw the demand curve for the data given for Marijuana in the case above.
2. On the basis of the analysis of the case above, what is your opinion about legalizing marijuana in Canada?
Case let 2
Companies that attend to productivity and growth simultaneously manage cost reductions very differently
from companies that focus on cost cutting alone and they drive growth very differently from companies
that are obsessed with growth alone. It is the ability to cook sweet and sour that under grids the
remarkable performance of companies likes Intel, GE, ABB and Canon. In the slow growth electrotechnical
business, ABB has doubled its revenues from $17 billion to $35 billion, largely by exploiting
new opportunities in emerging markets. For example, it has built up a 46,000 employee organization in
the Asia Pacific region, almost from scratch. But it has also reduced employment in North America and
Western Europe by 54,000 people. It is the hard squeeze in the north and the west that generated the
resources to support ABB's massive investments in the east and the south. Everyone knows about the
staggering ambition of the Ambanis, which has fuelled Reliance's evolution into the largest private
company in India. Reliance has built its spectacular rise on a similar ability to cook sweet and sour. What
people may not be equally familiar with is the relentless focus on cost reduction and productivity growth
that pervades the company. Reliance's employee cost is 4 per cent of revenues, against 15-20 per cent of
its competitors. Its sales and distribution cost, at 3 per cent of revenues, is about a third of global
standards. It has continuously pushed down its cost for energy and utilities to 3 per cent of revenues,
largely through 100 per cent captive power generation that costs the company 4.5 cents per kilowatt-hour;
well below Indian utility costs, and about 30 per cent lower than the global average. Similarly, its capital
cost is 25-30 per cent lower than its international peers due to its legendary speed in plant commissioning
and its relentless focus on reducing the weighted average cost of capital (WACC) that, at 13 per cent, is
the lowest of any major Indian firm.
A Bias for Growth
Comparing major Indian companies in key industries with their global competitors shows that Indian
companies are running a major risk. They suffer from a profound bias for growth. There is nothing wrong
with this bias, as Reliance has shown. The problem is most look more like Essar than Reliance. While
they love the sweet of growth, they are unwilling to face the sour of productivity improvement.
Nowhere is this more amply borne out than in the consumer goods industry where the Indian giant
Hindustan Lever has consolidated to grow at over 50 per cent while its labour productivity declined by
around 6 per cent per annum in the same period. Its strongest competitor, Nirma, also grew at over 25 per
cent per annum in revenues but maintained its labour productivity relatively stable. Unfortunately,
however, its return on capital employed (ROCE) suffered by over 17 per cent. In contrast, Coca Cola,
worldwide, grew at around 7 per cent, improved its labour productivity by 20 per cent and its return on
capital employed by 6.7 per cent. The story is very similar in the information technology sector where
Infosys, NIIT and HCL achieve rates of growth of over 50 per cent which compares favorably with the
world's best companies that grew at around 30 per cent between 1994-95. NIIT, for example, strongly
believes that growth is an impetus in itself. Its focus on growth has helped it double revenues every two
years. Sustaining profitability in the face of such expansion is an extremely challenging task. For now,
this is a challenge Indian InfoTech companies seem to be losing. The ROCE for three Indian majors fell
by 7 per cent annually over 1994-96. At the same time IBM Microsoft and SAP managed to improve this
ratio by 17 per cent. There are some exceptions, however. The cement industry, which has focused on
productivity rather than on growth, has done very well in this dimension when compared to their global
Examination Paper Semester I: Managerial Economics
counterparts. While Mexico's Cemex has grown about three times fast as India's ACC, Indian cement
companies have consistently delivered better results, not only on absolute profitability ratios, but also on
absolute profitability growth. They show a growth of 24 per cent in return on capital employed while
international players show only 8.4 per cent. Labour productivity, which actually fell for most industries
over 1994-96, has improved at 2.5 per cent per annum for cement.

The engineering industry also matches up to the performance standards of the best in the world.
Companies like Cummins India have always pushed for growth as is evidenced by its 27 per cent rate of
growth, but not at the cost of present and future profitability. The company shows a healthy excess of
almost 30 per cent over WACC, displaying great future promise. BHEL, the public sector giant, has seen
similar success and the share price rose by 25 per cent despite an indecisive sensex. The only note of
caution: Indian engineering companies have not been able to improve labour productivity over time,
while international engineering companies like ABB, Siemens and Cummins Engines have achieved
about 13.5 per cent growth in labour productivity, on an average, in the same period. The pharmaceuticals
industry is where the problems seem to be the worst, with growth emphasized at the cost of all other
performance. They have been growing at over 22 per cent, while their ROCE fell at 15.9 per cent per
annum and labour productivity at 7 per cent. Compare this with some of the best pharmaceutical
companies of the world – Glaxo Wellcome, SmithKline Beecham and Pfizer –who have consistently
achieved growth of 15-20 per cent, while improving returns on capital employed at about
25 per cent and labour productivity at 8 per cent. Ranbaxy is not an exception; the bias for growth at the
cost of labour and capital productivity is also manifest in the performance of other Indian Pharma
companies. What makes this even worse is the Indian companies barely manage to cover their cost of
capital, while their competitors worldwide such as Glaxo and Pfizer earn an average ROCE of 65 per
cent. In the Indian textile industry, Arvind Mills was once the shining star. Like Reliance, it had learnt to
cook sweet and sour. Between 1994 and 1996, it grew at an average of 30 per cent per annum to become
the world's largest denim producer. At the same time, it also operated a tight ship, improving labour
productivity by 20 per cent. Despite the excellent performance in the past, there are warning signals for
Arvind's future. The excess over the WACC is only 1.5 per cent, implying it barely manages to satisfy its
investor’s expectations of return and does not really have a surplus to re-invest in the business.
Apparently, investors also think so, for Arvind's stock price has been falling since Q4 1994 despite such
excellent results and, at the end of the first quarter of 1998, is less than Rs 70 compared to Rs 170 at the
end of 1994. Unfortunately, Arvind's deteriorating financial returns over the last few years is also typical
of the Indian textile industry. The top three Indian companies actually showed a decline in their return
ratios in contrast to the international majors. Nike, VF Corp and Coats Viyella showed a growth in their
returns on capital employed of 6.2 per cent, while the ROCE of Grasim and Coats Viyella (India) fell by
almost 2 per cent per annum. Even in absolute returns on assets or on capital employed, Indian companies
fare a lot worse. While Indian textile companies just about cover their WACC, their international rivals
earn about 8 per cent in excess of their cost of capital.
Questions
1. Is Indian companies running a risk by not giving attention to cost cutting?
2. Discuss whether Indian Consumer goods industry is growing at the cost of future profitability.
3. Discuss capital and labour productivity in engineering context and pharmaceutical industries in India.
4. Is textile industry in India performing better than its global competitors?
1. Free trade promotes a mutually profitable regional division of labour, greatly enhances the
potential real national product of all nations and makes possible higher standards of living all
over the globe.” Critically explain and examine the statement.
2. What role does a decision tree play in business decision-making? Illustrate the choice between
two investment projects with the help of a decision tree assuming hypothetical conditions about
the states of nature, probability distribution, and corresponding pay-offs.
CASE STUDY ANSWERS

ISBS / LPU / ISM&RC
ARAVIND
09901366442 - 09902787224
Marketing Management
Multiple choices:
1. It is a concept where goods are produced without taking into consideration the choices or tastes of
customers
a. Marketing mix
b. Production concept
c. Marketing concept
d. Relationship marketing
2. It involves individuals who buys products or services for personal use and not for manufacture or
resale
a. Environment analysis
b. Macro environment
c. Micro environment
d. Consumer
3. It is the groups of people who interact formally or informally influencing each other’s attitudes&
behavior
a. Consumer behavior

b. Culture
c. Reference groups
d. Primary groups
4. The concept of the product that passes through various changes in its total life known as
a. Product life cycle
b. Line stretching
c. Consumer adoption
d. Product
5. It refers to unique set of brand associations that brand strategist aspires to create or maintain
a. Branding
b. Packaging
c. Brand identity
d. Brand image
Examination Paper Semester I: Marketing Management
6. It involves a pricing strategy that charges customers different prices for the same product or
service
a. Promotional pricing
b. Price discrimination
c. Non price competition
d. None
7. It refers to an arrangement where another company through its own marketing channel sells the
products of one producers
a. End customer
b. Wholesaler
c. Retailing
d. Strategic channel alliance
8. It involves facility consisting of the means & equipments necessary for the movement of
passengers of goods
a. Logistics
b. Warehousing
c. Transportation
d. None
9. The advertising which is used to inform consumers about a new product or feature & to build
primary demands is known as
a. Advertising
b. Informative advertising
c. Persuasive advertising
d. Advertising strategy
10. An art that predicts the likelihood of economic activity on the basis of certain assumptions
a. Compensation
b. Sales forecasting
c. Sales budgeting
d. Selling policy
Part Two:
1. Write a note on importance of consumer behavior for a business firm?
2. Define the term ‘Price’.
3. Distinguish between Marketing Concept and Selling Concept?
4. What are the new trends in advertisement?
5. Briefly explain the following :
a) Socio –culture environment
b) Marketing environment interface.
Case let 1
Ask the company top brass what ‘almost there’ means. The answer: a premier Indian retail company that
has come to be known as a specialty chain of apparel and accessories. With 52 product categories under

one roof, Shoppers’ Stop has a line-up of 350 brands. Set up and headed by former Corona employee, B.
S. Nagesh, Shoppers’ Stop is India’s answer to Selfridges and Printemps. As it proudly announces, ‘We
don’t sell, we help you buy.’ Back in 1991, there was the question of what to retail. Should it be a
supermarket or a departmental store? Even an electronics store was considered. Finally, common sense
and understanding won out. The safest bet, for the all-male team was to retail men’s wear. They knew the
male psyche and felt that they had discerning taste in men’s clothing. The concept would be that of a
lifestyle store in a luxurious space, which would make for a great shopping experience. The first
Shoppers’ Stop store took shape in Andheri, Mumbai, in October 1991, with an investment of nearly Rs.
20 lakh. The original concept that formed the basis of a successful marketing campaign for seven years is
here to stay. And the result is an annual turnover of Rs. 160 crores and five stores, nine years later.
Everything went right from the beginning, except for one strange happening. More than 60 per cent of the
customers who walked into Shoppers’ Stop in Mumbai were women. This gave rise to ideas. Soon, the
store set up its women’s section. Later, it expanded to include children’s wear and then, household
accessories. The second store in Bangalore came in 1995. The store at Hyderabad followed in 1998 with
the largest area of 60,000 sq. ft. The New Delhi and Jaipur stores were inaugurated in 1999. All this
while, the product range kept increasing to suit customer needs. The most recent experiment was home
furnishings. Secure in the knowledge that organised retailing in global brands was still in its infancy in
India, Shoppers’ Stop laid the ground rules which the competition followed. The biggest advantage for
Shoppers’ Stop is that it knows how the Indian consumer thinks and feels while shopping. Yes, feeling –
for in India, shopping remains an outing. And how does it compare itself to foreign stores? While it is not
modeled on any one foreign retailer, the ‘basic construct’ is taken from the experience of a number of
successfully managed retail companies. It has leveraged expertise for a critical component like technology
from all over the world, going as far as hiring expatriates from Littlewoods and using state-of-the-art ERP
models. Shoppers’ Stop went a step further by even integrating its financial system with the ERP model.
Expertise was imported wherever it felt that expertise available in-house was inadequate. But the store felt
there was one acute problem. A shortage of the most important resource of them all was trained humans.
Since Indian business institutes did not have professional courses in retail management, people were hired
from different walks of life and the training programme was internalized. By 1994, the senior executives
at Shoppers’ Stop were taking lectures at management institutes in Mumbai. The Narsee Monjee Institute
of Management Studies (NMIMS) even restructured its course to include retail management as a subject.
Getting the company access to the latest global retail trends and exchange of information with business
greats was an exclusive membership to the Intercontinental Group of Department Stores (IGDS). It allows
membership by invitation to one company from a country and Shoppers’ Stop rubs shoulders with 29 of
the hottest names in retailing – Selfridges from the UK, C.K. Tang from Singapore, Lamcy Plaza from
Dubai and the like. With logistics I in place, the accent moved to the customer. Shoppers’ Stop conducted
surveys with ORG-MARG and Indian Market Research Bureau (IMRB) and undertook in-house
wardrobe audits. The studies confirmed what it already knew. The Indian customer is still evolving and is
very different from, say, a European customer, who knows exactly what he wants to purchase, walks up
to a shelf, picks up the merchandise, pays and walks out. In India, customers like to touch and feel the
merchandise, and scout for options. Also, the majority of Indian shoppers still prefer to pay in cash. So,
transactions must be in cash as against plastic money used the world over. Additionally, the Indian
customer likes being served – whether it is food, or otherwise. The company’s customer profile includes
people who want the same salesperson each time they came to the store to walk them through the shop
floors and assist in the purchase. Others came with families, kids and maids in tow and expected to be
suitably attended to. Still others wanted someone to carry the bags. So, the shops have self-help counters,
with an assistant at hand for queries or help. The in-house wardrobe audit also helped with another facet
of the business. It enabled Shoppers’ Stop to work out which brands to stock, based on customer
preferences. In fact, the USP of Shoppers’ Stop lies in judiciously selected global brands, displayed
alongside an in-house range of affordable designer wear. The line-up includes Levi’s, Louis Philippe,
Allen Solly, Walt Disney, Ray Ban and Reebok, besides in-house labels STOP and I. Brand selection is
the same across the five locations, though the product mix may be somewhat city-based to accommodate
cuts and styles in women’s wear, as well as allowing for seasonal variations (winter in Delhi, for instance,
is a case in point). Stocking of brands is based on popular demand – recently, Provogue, MTV Style, and
Benetton have been added. In-house labels are available at competitive prices and target the value-formoney

customer and make up around 12 per cent of Shoppers’ Stop’s business. Sometimes in-house
brands plug the price gap in certain product categories. To cash in on this, the company has big plans for
its in-house brands: from re-branding to repositioning, to homing in on product categories where existing
brands are not strong. Competition between brands is not an issue, because being a trading house, all
brands get equal emphasis. The in-house brand shopper is one who places immense trust in the company
and the quality of its goods and returns for repeat buys. And the company reposed its faith in regular
customers by including them in a concept called the First Citizen’s Club (FCC). With 60,000 odd
members, FCC customers account for 10 per cent of entries and for 34 per cent of the turnover. It was the
sheer appeal of the experience that kept pulling these people back. Not one to let such an opportunity
pass, the company ran a successful ad campaign (that talks about just this factor) in print for more than
eight years. The theme is still the same. In 1999, a TV spot, which liked the shopping experience to the
slowing down of one’s internal clock and the beauty of the whole experience, was aired. More recently,
ads that spell out the store’s benefits (in a highly oblique manner) are being aired.
The campaign is based on entries entered in the Visitors’ Book. None of the ads has a visual or text – or
any heavy handedly direct reference to the store or the merchandise. The ads only show shoppers having
the time of their lives in calm and serene locales, or elements that make shopping at the store a pleasure –
quite the perfect getaway for a cosmopolitan shopper aged between 25 and 45. The brief to the agency,
Contract, ensured that brand recall came in terms of the shopping experience, not the product. And it has
worked wonders. Value-addition at each store also comes in the form of special care with car parks,
power backup, customer paging, alteration service and gift-wrapping. To top it all, cafes and coffee bars
make sure that the customer does not step out of the store. In Hyderabad, it has even created a Food
Court. Although the food counter was not planned, it came about as there was extra space of 67,000 sq. ft.
Carrying the perfect experience to the shop floor is an attempt to stack goods in vast open spaces neatly.
Every store has a generic structure, though regional customer variances are accounted for. Each store is
on lease, and this is clearly Shoppers’ Stop’s most expensive resource proposition – renting huge spaces
in prime properties across metros, so far totaling 210,000 sq. ft of retail space. Getting that space was easy
enough for Shoppers’ Stop, since its promoter is the Mumbai-based Raheja Group, which also owns 62
per cent of the share capital.
Questions
1. What are the significant factors that have led to the success of Shoppers’ Stop?
2. Draw the typical profile(s) of Shoppers’ Stop customer segments.
3. How are Indian customers visiting Shoppers’ Stop any different from customers of developed
western countries?
4. How should Shoppers’ Stop develop its demand forecasts?
Case let 2
The rise of personal computers in the mid 1980s spurred interest in computer games. This caused a crash
in home Video game market. Interest in Video games was rekindled when a number of different
companies developed hardware consoles that provided graphics superior to the capabilities of computer
games. By 1990, the Nintendo Entertainment System dominated the product category. Sega surpassed
Nintendo when it introduced its Genesis System. By 1993, Sega commanded almost 60 per cent of Video
game market and was one of the most recognized brand names among the children. Sega’s success was
short lived. In 1995, Saturn (a division of General Motors) launched a new 32-bit system. The product
was a miserable failure for a number of reasons. Sega was the primary software developer for Saturn and
it did not support efforts by outside game developers to design compatible games. In addition, Sega’s
games were often delivered quite late to retailers. Finally, the price of the Saturn system was greater than
other comparable game consoles. This situation of Saturn’s misstep benefited Nintendo and Sony greatly.
Sony’s Play Station was unveiled in 1994 and was available in 70 million homes worldwide by the end of
1999. Its “Open design” encouraged the efforts of outside developers, resulting in almost 3,000 different
games that were compatible with the PlayStation. It too featured 32-bit graphics that appealed to older
audience. As a result, at one time, more than 30 per cent of PlayStation owners were over 30 years old.
Nintendo 64 was introduced in 1996 and had eye-popping 64-bit graphics and entered in more than 28
million homes by 1999. Its primary users were between the age of 6 and 13 as a result of Nintendo’s
efforts to limit the amount of violent and adult-oriented material featured on games that can be played on

its systems. Because the company exercised considerable control over software development, Nintendo
64 had only one-tenth the number of compatible games as Sony’s PlayStation did. By 1999, Sony had
captured 56 per cent of the video game market, followed by Nintendo with 42 per cent. Sega’s share had
fallen to a low of 1%. Hence, Sega had two options, either to concede defeat or introduce an innovative
video machine that would bring in huge sales. And Sega had to do so before either Nintendo or Sony
could bring their next-generation console to market. The Sega Dreamcast arrived in stores in September
1999 with an initial price tag of $199. Anxious gamers placed 300,000 advance orders, and initial sales
were quite encouraging. A total of 1.5 million Dreamcast machines were bought within the first four
months, and initial reviews were positive. The 128-bit system was capable of generating 3-D visuals, and
40 different games were available within three months of Dream cast’s introduction. By the end of the
year, Sega had captured a market share to 15 per cent. But the Dreamcast could not sustain its
momentum. Although its game capabilities were impressive, the system did not deliver all the
functionality Sega had promised. A 56K modem (which used a home phone line) and a Web browser
were meant to allow access to the Internet so that gamers could play each other online, surf the Web, and
visit the Dreamcast Network for product information and playing tips. Unfortunately, these features either
were not immediately available or were disappointing in their execution. Sega was not the only one in
having the strategy of adding functionality beyond games. Sony and Nintendo followed the same
approach for their machines introduced in 1999. Both Nintendo’s Neptune and Sony’s PlayStation 2
(PS2) were built on a DVD platform and featured a 128-bit processor. Analysts applauded the move to
DVD because it is less expensive to produce and allows more storage than CDs. It also gives buyers the
ability to use the machine as CD music player and DVD movie player. As Sony marketing director
commented, “The full entertainment offering from Play Station 2 definitely appeals to a much broader
audience. I have friends in their 30s who bought it not only because it’s a gaming system for their kids,
but also a DVD for them.” In addition, PlayStation 2 is able to play games developed for its earlier model
that was CD-based. This gives the PS2 an enormous advantage in the number of compatible game titles
that were immediately available to gamers. Further enhancing the PS2’s appeal is its high-speed modem
and allows the user’s easy access to the Internet through digital cable as well as over telephone lines. This
gives Sony the ability to distribute movies, music, and games directly to PS2 consoles. “We are
positioning this as an all-round entertainment player,” commented Ken Kutaragi, the head of Sony
Computer Entertainment. However, some prospective customers were put off by the console’s initial
price of $360. Shortly after the introduction of Neptune, Nintendo changed its strategies and announced
the impending release of its newest game console, The GameCube. However, unlike the Neptune, the
GameCube would not run on a DVD platform and also would not initially offer any online capabilities. It
would be more attractively priced at $199. A marketing vice president for Nintendo explained the
company’s change in direction, “We are the only competitor whose business is video games. We want to
create the best gaming system.” Nintendo also made the GameCube friendly for outside developers and
started adding games that included sports titles to attract an older audience. Best known for its extra
ordinary successes with games aimed at the younger set, such as Donkey Kong, Super Mario Bros, and
Pokemon, Nintendo sought to attract older users, especially because the average video game player is 28.
Youthful Nintendo users were particularly pleased to hear that they could use their handheld Game Boy
Advance systems as controllers for the GameCube. Nintendo scrambled to ensure there would be an
adequate supply of Game Cubes on the date in November 2001, when they were scheduled to be available
to customers. It also budgeted $450 million to market its new product, as it anticipated stiff competition
during the holiday shopping season. With more than 20 million PlayStation 2 sold worldwide, the
GameCube as a new entry in the video game market would make the battle for market share even more
intense. For almost a decade, the video game industry had only Sega, Nintendo, and Sony; just three
players. Because of strong brand loyalty and high product development costs, newcomers faced a
daunting task in entering this race and being competitive. In November 2001, Microsoft began selling its
new Xbox, just three days before the GameCube made its debut. Some observers felt the Xbox was aimed
to rival PlayStation 2, which has similar functions that rival Microsoft’s Web TV system and even some
lower level PCs. Like the Sony’s PlayStation 2, Xbox was also built using a DVD platform, but it used an
Intel processor in its construction. This open design allowed Microsoft to develop the Xbox in just two
years, and gave developers the option of using standard PC tool for creating compatible games. In
addition, Microsoft also sought the advice of successful game developers and even incorporated some of

their feedback into the design of the console and its controllers. As a result of developers’ efforts,
Microsoft had about 20 games ready when the Xbox became available. By contrast, the GameCube had
only eight games available. Microsoft online strategy was another feature that differentiated of the Xbox
from the GameCube. Whereas Nintendo had no immediate plans for Web-based play, the Xbox came
equipped with an Ethernet port for broadband access to Internet. Microsoft also announced its own Webbased
network on which gamers can come together for online head-to head play and for organised online
matches and tournaments. Subscribers to this service were to pay a small monthly fee and must have
high-speed access to the Internet. This is a potential drawback considering that a very low percentage of
households world over currently have broadband connections. By contrast Sony promoted an open
network, which allows software developers to manage their own games, including associated fees charged
to users. However, interested players must purchase a network adapter for an additional $39.99. Although
game companies are not keen on the prospect of submitting to the control of a Microsoft-controlled
network, it would require a significant investment for them to manage their own service on the Sonybased
network. Initially the price of Microsoft’s Xbox was $299. Prior to the introduction of Xbox, in a
competitive move Sony dropped the price of the PlayStation 2 to $299. Nintendo’s GameCube already
enjoyed a significant price advantage, as it was selling for $100 less than either Microsoft or Sony
products. Gamers eagerly snapped up the new consoles and made 2001 the best year ever for video game
sales. For the first time, consumers spent $9.4 billion on video game equipment, which was more than
they did at the box office. By the end of 2001 holiday season, 6.6 million PlayStation 2 consoles had been
sold in North America alone, followed by 1.5 million Xbox units and 1.2 million Game Cubes. What
ensued was an all out price war. This started when Sony decided to put even more pressure on the
Microsoft’s Xbox by cutting the PlayStation 2 price to $199. Microsoft quickly matched that price.
Wanting to maintain its low-price status, Nintendo in turn responded by reducing the price of its the
GameCube by $50, to $149. By mid 2002, Microsoft Xbox had sold between 3.5 and 4 million units
worldwide. However, Nintendo had surpassed Xbox sales by selling 4.5 million Game Cubes. Sony had
the benefit of healthy head start, and had shipped 32 million PlayStation 2s. However, seven years after
the introduction of original PlayStation, it was being sold in retail outlets for
a mere $49. It had a significant lead in terms of numbers of units in homes around the world with a 43 per
cent share. Nintendo 64 was second with 30 per cent, followed by Sony PlayStation 2 with 14 per cent.
The Xbox and GameCube each claimed about 3 per cent of the market, with Sega Dreamcast comprising
the last and least market share of 4.7 per cent. Sega, once an industry leader, announced in 2001 that it
had decided to stop producing the Dreamcast and other video game hardware components. The company
said it would develop games for its competitors’ consoles. Thus Sega slashed the price of the Dreamcast
to just $99 in an effort to liquidate its piled up inventory of more than 2 million units and immediately
began developing 11 new games for the Xbox, four for PlayStation 2, and three for Nintendo’s Game Boy
Advance. As the prices of video game consoles have dropped, consoles and games have become the
equivalent of razors and blades. This means the consoles generate little if any profit, but the games are a
highly profitable proposition. The profit margins on games are highly attractive, affected to some degree
by whether the content is developed by the console maker (such as Sony) or by an independent game
publisher (such as Electronic Arts). Thus, the competition to develop appealing, or perhaps even
addictive, games may be even more intense than the battle among players to produce the best console. In
particular, Nintendo, Sony, and Microsoft want games that are exclusive to their own systems. With that
in mind, they not only rely on large in-house staffs that design games but they also pay added fees to
independent publishers for exclusive rights to new games. The sales of video games in 2001 rose to 43
per cent, compared to just 4 per cent increase for computer-based games. But computer game players are
believed to be a loyal bunch, as they see many advantages in playing games on their computers rather
than consoles. For one thing, they have a big advantage of having access to a mouse and a keyboard that
allow them to play far more sophisticated games. In addition, they have been utilizing the Internet for
years to receive game updates and modifications and to play each other over the Web. Sony and
Microsoft are intent on capturing a portion of the online gaming opportunity. Even Nintendo has decided
to make available a modem that will allow GameCube users to play online. As prices continue to fall and
technology becomes increasingly more sophisticated, it remains to be seen whether these three companies
can keep their names on the industry’s list of “high scorers”.

Questions
1. Considering the concept of product life cycle, where would you put video games in their life cycle?
2. Should video game companies continue to alter their products to include other functions, such as e-mail?
1. What is meant by sales promotion? Describe briefly the various methods of sales promotional
tools used by business organizations to boost the sales. Explain any four methods of sales
promotion?
2. Write notes on the fowling :
a) Explain right to safety.
b) What is right to consumer protection?
Organizational Behavior
Multiple choices:
1. It is the degree to which a person identifies with a particular organization and its goals, & wishes
to maintain membership in the organization
a. Job involvement
b. Terminal value
c. Attitude
d. Value
2. _________ means moving information from the hidden area to the open area
a. blind area
b. unknown area
c. public area
d. self disclosure
3. An approach in which the goals of one party are in direct conflict with the goals of the other party
a. Negotiation
b. Distributive bargaining
c. Stress
d. None
4. The measure of a person’s ability to operate within business organizations through social
communication & interactions
a. Transactional analysis
b. Interpersonal skill
c. Life position
d. Johari window
5. Where the source of power is in person’s control over rewarding outcomes, that power is called
a. Coercive power
b. Referent power
c. Legitimate power
d. Reward power
Examination Paper Semester I: Organizational Behaviour
6. It means melting resistance to change; the people who will be affected by the change come to
accept the need for it
a. Organization
b. Unfreezing
c. Changing
d. Refreezing
7. This training is also known as laboratory training, encounter groups & T-groups
a. Sensitivity
b. Survey
c. Process
d. Team building

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