2020 june

➢ Stackelberg Model was developed by Heinrich Von Stackelberg in the year 1934.
➢ This Model is a leadership model that allows the firms to dominate in the market by setting their own prices.
➢ In the Rational Decision-making model, the managers will try to have all the relevant information required to
take a
➢ decision, the different alternatives available, outcomes and ramifications to make a rational decision.
➢ Semantic Barriers refers to the misunderstanding created between the sender and receiver due to the
misinterpretation of different meaning of words and symbols used the process of communication.
➢ Paradigm is an example serving as a model, framework that contains basic assumption, methodology, and way
of thinking that are commonly accepted by the members.
➢ A team is a group of people or a collection of individuals. They have common goals and performance.
➢ Each member in a team have complementary skills i.e., a different type of skills some may have technical
skills,problem-solving skills, and so on.
➢ Team members work individually but they are mutually accountable.
➢ Demonstration type of training method is used to train the workers. It is used to show how a particular thing
can be done.
➢ Cardinal traits are so powerful and the rarest. These traits are tied up with a person that they become
synonymous with those traits. These traits are pervasive in nature and seem almost in every act of the person.
➢ The Bernreuter Personality Inventory is the first multi-score personality test.
➢ It is a kind of personality test used to measure individuals on six variables such as self-sufficiency,
➢ Career Plateau is a moment in the career when an individual reached a point where they are unable to
progress.
➢ Constant feeling of being stuck at a job or a position, feeling bored, and struggle in finding fulfillment.
➢ The balanced scorecard concept is a management’s measurement system which helps the organization to
develop their vision and related strategy for it to translate them into action.
➢ There are four perspectives for the implementations of this system are financial perspective, customer services
or perspective, business process, and learning and growth perspective.
➢ Thus, Option B is correct.
➢ Adjudication is the act of judging a legal case and making a final decision to settle an industrial dispute by a
labour court or a tribunal.
➢ DiMaggio and Powell have developed the Institutional Theory of Work- life Initiative.
➢ DiMaggio and Powell provided a related explanation to account for processes that make organizations more
similar without necessarily making them more efficient.
➢ A listed company in the ordinary course is required to report quarterly standalone financial results to the stock
exchange within 45 days of the end of the quarters.
➢ The responsibility of promulgation of Generally Accepted Accounting Principles (GAAP) and reporting practices
is of Financial Accounting Standard Board and not the International accounting Standards board (IASB).

➢ Q ratio compares a company’s market value to the total value of its assets.
➢ When the company’s market value to total value of assets is less than one then it is assumed the company’s
shares are undervalued and if the ratio is higher than one then it is assumed the value of the share to be fully
valued to overvalue.
➢ Behavioral Segmentation has based on benefits sought, usage, buyer’s readiness, and degree of loyalty for the
product. Toothpaste as a product is a variable of Behavioral Segment as it provides benefits like clean teeth,
fresh breath and to fight against cavity, plague.
➢ Demographic Segmentation is based on age, gender, family size, income, and so on.
➢ Psychological Segmentation is based on lifestyle, social classes, personal values, and attitudes.
➢ Geographical Segmentation is based on country, continent, climate, population.
➢ Turnaround accomplished through two-phase process.
➢ The first phase mainly focuses on the primary objective which involves an emergency plan to tame down the
firm’sfinancial crunch and a plan for stabilization to improve the core of operations.
➢ Retrenchment activities are liquidation, divestment, eradication of product, and reducing the workforce.
➢ The next phase is known as the recovery stage or return-to-growth stage. The turnaround process moves
fromretrenchment activity to the recovery phase i.e., growth and development.
➢ Porter's Generic Strategies Model involves the focus strategy to concentrate on the narrow segment and
attempts to achieve either cost advantage or differentiation.
➢ Vertical marketing system is the non-conventional distribution channel. In this system producer, wholesalers,
and retailers act as a unified system. These channels are professionally managed network curate to gain
technological, managerial and promotional economies by integration, co-ordination, and synchronization.
➢ Complex buying behavior is when there is high involvement of consumers in the buying process and there is a
significant difference between brands.
➢ In this case consumer must collect all the relevant information about the features of the product on the other
hand the marketer must provide all the necessary information regarding the product’s attributes.
➢ Brand extension is a marketing strategy where a new product is introduced under the current brand name.
➢ The newly launched product can be related or unrelated to the existing brand’s category.
➢ For example: Dettol has its antiseptic cream, sanitizers, liquid hand wash, shaving creams and so on.
➢ Thus, Option B is correct.
➢ Physical evidence is an element of the marketing mix, states that customers can actually experience or see the
services being offered to them which make the consumer notice the quality of the service.
➢ Coke has opened a parlor naming it as ‘the red lounge’ which will attract the youth to hang out where they
can surf on the internet, watch television on giant plasma.
➢ The CRM strategy adopted by big bazaar is Frequency Marketing Program. This involves rewarding customers
for the volume and frequently they make purchases to enhance customer profitability.
➢ Six Sigma is a quality control method introduced by Motorola in 1986.
➢ It emphasis on reducing manufacturing mistakes not more than 3.4 occurrences per million units or events.
➢ Automobile assembly or Manufacturing follows Product- Focused Layout also known as line layout. In this type
of layout, various facilities such as equipment, machines, and workforce are arranged based on the order of
operation on parts.
➢ The layout is used for continuous operations, where the production volume is higher than the part variety.
➢ Primary source of data collection is an immediate or first-hand account of data that has a direct connection
with the topic. In interview, there is an interaction with the respondents directly and the questionnaire is filled
by the respondent.
➢ Delphi method of collecting data from the panel of experts.
➢ Documents are journals, articles; academic books are not first-hand information.
➢ Regression line is an estimated line and the degree to which variables are correlated to each other depends
on the regression line.
➢ This gives an estimated value of Y from the given values of X.
➢ This gives an estimated value of X from the given values of Y.
➢ Wassily W. Leontief has studied US economy closely to find that the US is capital abundant and exporting
capital intensive goods or not.
➢ But after completing the research he found the US is importing more capital-intensive goods.
➢ Leontief paradox negated factor proportion theory.
➢ FDI in multi-brand retailing in India is capped to 51% but under automatic Route with few strings attached.
➢ Like fresh agricultural produce including vegetables, grains, fruits, flowers, pulses, fresh poultry, fishery, and
meat products must be unbranded. Mandatory sourcing of goods from MSME.
➢ Foreign Trade Policy (FTP) is the government actions majorly for quotas, tariffs, and subsidies for increasing
the net exports by encouraging exports and restricting imports.
➢ The current Foreign Trade Policy (FTP) announced by the Government of India covers the policy period of 2015
to 2020.
➢ Transaction Processing System is a basic business system use to serve the operational level of the business.
The system records daily routine transactions required to direct business.
➢ Executive Information System is a management support mechanism to facilitate the senior executive
informationand decision making needs.
➢ Decision Support System uses to judge the course of actions of the business.
➢ Expert System is a program using artificial intelligence to stimulate judgment.
➢ Sick industrial units or a company have been in existence for not less than five years and at the end of any
financial year, the accumulated losses it has incurred is equal or exceeding its entire net worth.
➢ Disruptive innovation is a type of innovation that helps in creating new markets, value network and also
prevents existing firms to continue and displaces well-established market-leading firms, products, or alliances.
➢ The assistance is provided for motivating and encouraging MSME use of bar codes.
➢ Marketing Support/assistance to MSMEs for bar code allows reimbursement of 75% of the one-time
registration fee and 75% of the annual recurring fee for the first three years paid by MSMEs to global standards
(GS1) India.
➢ Micro, Small and Medium Enterprise Development (MSMED) act was introduced in June, 2006.
➢ Thus, Option A is correct.
➢ System approach and contingency approach was developed during the second half of the 20th century.
➢ Globalization is not part of management approaches.
➢ Income elasticity of demand refers to how responsive consumers are to the quantity demanded due to change
in the income.
➢ In case of low- income elasticity, goods and services are generating low income to the firms. When the income
risesthe firm should make innovation in the products and extend the product line. So that the firms can
increase the income elasticity.
➢ Corporate Governance is a set of rules, practices and procedures that are used by a corporation to direct and
control its actions.
➢ The normally accepted Pillars of corporate Governance are Accountability, Responsibility, Transparency and
Fairness.
➢ HR decisions are concerned with employee’s procurement, development, compensation, integration, and
maintenance of the personnel of the organization.
➢ Thus, Option D is correct.
➢ The interviewer so avoid asking the leading question and should not directly force to the demanding questions
it can lead the respondent into making mistakes or providing wrong response.
➢ Strategic Human Resource Management helps the people in connecting with organizational goals. HR
departments try to build a link between companies’ most valuable assets i.e., its people to the strategic
directions like adapting organizational culture, workplace, and competitive advantage.
➢ The policies cohere both across policy areas and across hierarchies, integrated with the strategy.
➢ Sol. • As per section 2(b) of Industrial Dispute Act, 1947 defines Award as mean of final or interim
determination of any Industrial Dispute or of any question relating by any labor court.
➢ The Factories Act 1948 and the Mines Act 1952 is related to working hours, conditions of services, and
employment.
➢ Whereas, the Trade union act 1926 is related to the industrial relation of the labor and the Payment of wages
act 1963 is related to the compensation and wages of the laborers.
➢ As per IND AS 1, the financial statement is a structured representation of the financial position or performance
of any entity.
➢ It comprises of five components, Balance Sheet, Statement of profit and loss, Statement of change in equity,
Cashflow statement, and explanatory notes.
➢ The conflict between IRR and NPV is due to the evaluation of mutually exclusive projects for the reinvestment
purpose.
➢ In NPV, cash flow is reinvested at the cost of capital whereas in the case of IRR cash flows are reinvested at
theinternal rate of return.
➢ The conflicts arise due to differences in the timing of cash flow, differences in scales of operation, and life
disparityof the prospective project.
➢ Product life cycle disparity doesn’t put an impact on the investment opportunity of the business.
➢ Investors prefer current cash flows because of inflation, risk aversion, liquidity and return generation.
➢ Rising inflation is better for current cash flows but it is poor for long term cash flows, risk refers to the
uncertainty
➢ about the future: near money has the characteristics of risk aversion. Preference for present consumption also
satisfied
➢ by current money. Most of the persons and companies’ preference for current money because of the
availability. investment opportunities for earning additional cash flows.
➢ The pecking order theory states that the company should first try to finance itself internally using retained
earnings, which cheapest and most convenient source of financing.
➢ If this source is not sufficient, then the company should finance through debt over equity as the cost debt is
lowercompared to the cost of equity. The issue of new equity is the last option for financing. Therefore, when
considering the sources of financing, the cheapest through retained earnings, second
➢ The important dimensions of a firm’s credit policy are Credit standards, credit period, Cash discount and
collection
➢ policy. The credit policy can be lenient or stringent. Credit standards are basis of extension of credit to
customers.
➢ Credit period is the duration for which the credit is extended. Cash discount indicates the rate of discount
allowedto
➢ induce the customers to pay their bills regularly. Collection policy aims at accelerating collection from slow
payers and
➢ The Ansoff Product-Market expansion Grid is also known as Ansoff matrix is a tool to develop growth strategies
by
➢ examining the relationship between new market and existing market, new product and existing product by
considering
➢ risk associated with it.
➢ Market penetration refers to creates growth by introducing current products to existing markets.
Marketdevelopment.
➢ creates growth by introducing current products to new markets. Product development focuses on creating
growth by
➢ introducing new products into the existing markets.
➢ Marginal cost pricing is the practice of setting price of a product to equal the extra cost of producing an extra
unit of
➢ output. Cost plus pricing or markup pricing strategy Is the practice of adding a percentage of markup to the
cost of
➢ the product to determine selling Price.
➢ Absorption cost pricing or full cost pricing which takes in to accounts all the variable and fixed overhead
costassociated with a particular product such as direct material, direct labor, rent, insurance etc.
➢ Marketing logistics refers to the planning, implementing and controlling physical flow of materials, finished
goods and
➢ related information from the point of origin to the point of use to meet the consumer requirements at a profit.
➢ Physical distribution is the set of activities concerns with the planning, implementing and controlling the
movement
➢ of finished goods from the end of production operation to the consumer
➢ Thus, Option B is correct.
➢ Customer relationship management (CRM) are the strategies techniques tools and practices used by the
enterprises to manage and analyze the interactions with the past, present, as well as potential customers
➢ CRM system software identifies upselling and cross selling opportunities, builds customer relationship there
by
➢ increase sales, profitability and customer loyalty.
➢ A departmental store is a large retail outlet that handles wide variety of lines of product. It has a wide
assortment in each line and is organized in to separate departments for the purposes of buying, promotion,
services and control.
➢ It is sometimes called mass merchandising departmental store.
➢ Convenient stores are located in near residential areas, offers a limited range of products at premium prices
due tothe added value of service. They are small establishments open for long hours having limited length in
their product line.
➢ Superstores are very large supermarkets or shops selling household goods and equipment. They are usually
builtoutside city centers away from shops. They meets customers routinely purchased food and non-
➢ The assumptions of calculating mean from grouped data is that all the class interval to be closed, width of the
interval should be equal and mid-value should must represent all the average values of the class.
➢ This assumption is based on the fact that when trying to estimate the mean of each observation lies precisely
at themidpoint of interval. These assumptions are made in order to make reasonable estimates as grouping
data in to intervals may lead to an information loss.
➢ A Linear Programming problem may be defining as the problem of maximizing or minimizing a linear function
subject to system of linear constraints. The constraints may be equalities or inequalities. The linear function is
called objective function.
➢ The Objective function or criterion of a Linear Programming Problem (LPP) is a function which is to be
optimized.
➢ It has either a maximum or minimum value. In the real world it could be cost of the project, profitability, sales
etc.
➢ Social enterprise is a organization whose primary purpose is to improve social objectives and serve the society.
Social enterprise seeks to maximize profits while maximizing improvements in financial, social and
environment wellbeing.
➢ A social enterprise exists to achieve social missions such as introducing renewable energy, providing
healthcare,creating jobs for the unemployed etc. Their profits are generally used to fund these programs.
➢ .
➢ While sending goods from one country to another the exporter has to submit various documents for the
customs clearance of the goods. Shipping bill is the important document for customs clearance of goods. It
contains particulars of good being exported, country of final destination, name of the vessel, exporters name,
address etc.
➢ Airway bill is a receipt issued by an international airline for goods on board its aircraft and for the evidence
ofcontract of carriage, it is a document of title of goods which is freely transferable by endorsement and
delivery.
➢ Invoice is the buyers bill of merchandise which contains the information about goods such as quantity,
value,packages, packaging, port of destination, terms of delivery etc.
➢ Marine insurance policy is type of insurance that provides coverage to the insured against any loss or damage
inrespect to the goods exposed to the perils of sea.
➢ Artificial neural network (ANN) is the foundation of Artificial Intelligence (AI) is an information processing
model. It is an interconnected group of nodes, inspired by the simplification of human brain.
➢ Fuzzy models are mathematical means of representing vagueness and imprecise information. These models
arecapable for recognizing, representing, manipulating, interpreting and utilizing data and information which
are vague and lack certainty.
➢ Genetic algorithm is a search heuristic that is inspired by Charles Darwin theory of natural evolution.
Thisalgorithm reflects the process of natural selection where the fittest individuals are selected for
reproduction in order to produce offspring of next generation.
➢ International Cooperation scheme is a demand driven scheme under which financial assistance is provided on
reimbursement basis to the eligible state/Central government organizations and Registered Industry
Associations, societies/trusts associated with promotion and development of MSME sector. The scheme
covers the following activities.
➢ Visit of MSME business delegations to other countries to international exhibitions/trade fairs etc. for exploring
newareas of technology infusion/up-gradation, facilitating of joint ventures, improving market for MSMEs
products, foreign collaborations amongst others.
➢ Visit and participation by Indian MSMEs in international exhibitions, trade fairs and buyer seller meets in
foreigncountries.
➢ Participation of Indian MSMEs in in international exhibitions, trade fairs in India in which there is
internationalparticipation.
➢ Holding international conferences and seminars on topics and themes interest to Indian MSMEs
➢ Holding/organizing international conferences/seminars/workshops in India by Ministry of MSME or
itsorganisations.
➢ According to Richard Cantillon, Entrepreneurship is the matter of foresight and willingness to assume risks,
which is not necessarily connected with employment of labor in some productive purpose.
➢ According to William diamond, Entrepreneurship is equivalent to ‘enterprise’ which involves the willingness
toassume risks in undertaking an economic activity particularly new one.
➢ Thus, Option A is correct.
➢ 66. B
➢ Sol. • Consumer clinics are laboratory experiments in which the participants are given a Sum of money and
asked to spend it in a simulated store to see how they react to changes.
➢ Market experiments is the act of conducting an investigation or test, they are conducted in the actual market
placewith similar socio-economic characteristics to record consumer responses consequent to given changes
in demand determinants.
➢ In Virtual shopping Consumers shop in a store simulated on the computer screen by touching product image
on thescreen and purchasing it by touching the picture of a shopping cart.
➢ Virtual management is the simulation of consumer behavior using computer models based on the theory
ofcomplexity to assess the impact of managerial decisions.
➢ I am Not OK, you are Not OK occurs where people unsuccessfully project their bad objects to others is avoidant
position.
➢ I am OK, you are Not OK here people feel themselves superior in some way to others is bossing position.
➢ I am OK, you are OK here the person is comfortable with other people and with himself is a competent position.
➢ I am Not OK, you are OK here people have low self-esteem and will put others before them is a diffident
position.
➢ The Total concept of labor welfare is a desirable state of existence comprehending physical, mental, moral and
emotional health wellbeing of workers.
➢ The social concept of welfare states in the planning of welfare man alone should not be taken in to
consideration.
➢ The relative concept of welfare states, welfare work differs over time and place
➢ Positive concept of Welfare denotes at least minimum desirable conditions of existence biologically and
sociallydetermined
➢ Ind.AS 8 intended to enhance relevance and reliability of financial statements, deals with Accounting Policies,
changes in accounting estimates and errors
➢ Ind. AS 110 deals with Consolidated Financial Statements
➢ Ind. AS 7 prescribes the requirements for the preparation of Statement of cash flows• Ind. AS 24 deals with
Related Party Disclosure
➢ Value creation is the goal driver of mergers and acquisitions it creates value by increase in market share,
enhanced product offerings, research and development etc.
➢ The concept of time value of money refers to value protection as it states that money available today is worth
morethan the identical sum in the future.
➢ Capital Asset Pricing Model (CAPM) and Arbitrage Pricing theory (ABT) are asset pricing models used to
describeprice or expected rate of return of financial assets.
➢ Futures and options are contracts derive their value from underlying stocks or indices, over the short
periodderivatives contracts can affect the stock prices also.
➢ Corporate strategy refers to a parenting strategy which defines the corporate overall goals and directions and
the way in which will be achieved within strategic management.
➢ Directional strategy are growth strategies in which a company decides to grow business, increases profits
andaccomplish goals and objectives.
➢ Turnaround strategy is a retrenchment strategy implanted by an organization when it feels that the decision
madeearlier is wrong and needs to be undone before making any damages.
➢ Pause/caution strategy is stability strategy is corporate strategy where a company focuses on maintaining
currentmarketing position without any significant change in direction.
➢ Product is created by the company and purchased by the customer for money while brand is built by the
customers through perceptions, experiences etc.
➢ Everyday Low Price (EDLP) is a pricing strategy which allows the retail marketers to offer products at low price
onregular basis.
➢ Disintermediation refers to the reduction in the use of intermediaries between producers and consumers by
doing sovalue change of a product or service is improved.
➢ Click or mortar companies is an integrated model which uses a range of channel to promote business. It
offerscustomers the benefits of fast online transaction and traditional face to face transactions.
➢ Coefficient of range is the ratio difference between the highest and lowest value of frequency to the sum of
highest and lowest value of frequency.
➢ Coefficient of quartile deviation compares dispersion for two or more sets of data.
➢ Mean absolute deviation (MAD) of a data set is the average of the absolute deviations from the mean. MAD is
theway to describe variation in a data set.
➢ Coefficient of variation or relative standard deviation is a standard statistical measure of dispersion. It is the
ratio ofthe standard deviation to the mean.
➢ Ninth WTO (World Trade Organization) ministerial conference held in Bali, Indonesia from 3 to 7 December
2013, ministers adopted “Bali package”.
➢ Fourth Ministerial Conference held in Doha, Qatar provides the mandate for negotiations on a range of
subjects,and other work including issues concerning the implementation of the present agreements.
➢ Uruguay Round,8 th round of multilateral trade negotiations within the frame work of GATT (General
Agreementon Trade and Tariff) from 1986 t0 1993.
➢ Bretton woods Conference, formally United Nations Monetary and Financial Conference was the gathering
ofdelegates from 44 nations, 1944 in Bretton woods, New Hampshire.
➢ Innovative and improved products and services from entrepreneurs enable new markets to be developed and
wealth to be created.
➢ Harvest strategy involves reduction or termination of investments in a established product or business, used
onoutdated products as profits are reinvested in newer products.
➢ Earnings management strategy uses accounting methods to present company’s business activities or
financialpositions overly positive.
➢ Total reward strategy combines compensation, well-being, benefits, recognition and development. This
strategyprovides monetary, beneficial and developmental rewards to employees who achieve specific
business goals.
➢ F.W. Taylor's Scientific Management Theory was established in 1911
➢ Henri Fayol’s Administrative Management Theory was established in 1916
➢ Max Weber’s Bureaucracy Management Theory was established in 1920
➢ Henri Fayol’s Administrative Management Theory was established in 1932
➢ Bertalanffy's Systems Theory was established in 1950
➢ The architecture of an ideal manufacturing process involves a sequential step. The first step concentrates on
core competencies and outsourcing all the operations, next learning organization facilitating cross-fertilization
of ideas operating factories that are efficient and plants, then operating factories that are efficient, integrate
the physical and the virtual resources and at last enterprise to respond to changes in its business quickly.
➢ Order of precedence is a sequential hierarchy of nominal importance.
➢ Generally Accepted Accounting Principles represent the broad principles and accounting concepts. The
firstassumption is that business entity is separate and that business is going concern.
➢ Conservatism suggests that the business should anticipate all future losses. Revenue recognition states that
revenueis recognized when a critical event occurs.
➢ Matching principle states that the related expenses and revenues should be matched. Full disclosure states
that allthe material facts should be disclosed by the company to the stakeholders.
➢ The Sharpe Single Index Model is developed for the analysis of financial assets. The risk-return tradeoff is
calculated here.
➢ The first step is to identify investment opportunities, then ranking them, cut off point is ascertained,
investmentweightages are determined, and at last the financial resources are allocated.
➢ ● Problem recognition/Need recognition: The buying problem arises only when need arises, the need may
arise due to internal stimulus such as comfort, curiosity, safety etc. and an external stimulus which includes
external factors.
➢ ● The interested users will try to collect information from one or various sources
➢ ● After collecting the information, the consumer will select the best brand which will offer maximum
satisfaction,● Consumers make purchase decisions by selecting the most promising brand which offers
maximum benefits.
➢ ● The consumers must have certain expectations about the product. The post purchase decision involves the
stepstaken by the marketers to reduce the dissatisfaction among consumers.
➢ Free Trade Area is the most basic form of cooperation. Member countries remove all barriers to trade between
themselves but are free to independently determine trade policies with nonmember countries. An example is
North American Free trade Agreement (NAFTA).
➢ Customs unions provides for economic cooperation as in free trade zone. Barriers to trade are removed
betweenmember countries. The primary difference from the Free Trade Area is that members agree to treat
trade with nonmember countries in a similar manner.
➢ Common Market allows for the creation of economically integrated markets between member countries.
Tradebarriers, as are any restrictions on the movement of labor and capital between member countries are
removed. Like customs union, there is a common trade policy for trade with nonmember countries. Example
is the Common Market for Eastern and South Africa (COMESA).
➢ Economic union is created when countries enter into an economic agreement to remove barriers to trade and
adoptcommon economic policies. Example is European Union (EU).
➢ A business plan is a written document describes the nature of the business, its marketing, financial and
operational standpoint. The business plan serves as a guide and helps the entrepreneurs to stay on the right
track towards the goals and objectives.
➢ Marketing details clearly defines the market the size of the market opportunity, amount of growth, trends.
Humanresource details consist of human resources capabilities and needs, number of employees, estimated
personal costs.
➢ Financial details provide an overview about the sales, profit cash flow analysis, sensitivity analysis.
➢ Executive summary is the brief overview of the business plan. It can be complied only when business plan
isfinished. It provides the short overview over the basic contents of the plan.
➢ When the work output is low a group development is necessary to eliminate a task that curtails the output.
➢ The first step is defining the goals and tasks, then clarify all the misunderstandings related to the work, then
theissues are resolved, and this will lead to formation of group norms to increase the productivity and when
the productivity is increased the unnecessary tasks are terminated.
➢ Six Sigma method follow an approach called DMIAC which stands for define, measure, analyze, improve and
control.
➢ It is statistically driven methodology that companies implement as a framework for business process
improvement.The ideology behind DMAIC is that a business may solve any seemingly unsolvable problem
following the DMAIC steps.
➢ Target market is the market of customers that the business particularly targets. The first step in targeting a
market is to identify the segment, and each segment should be seen as a different marketing opportunity and
then analyze the unique characteristics of the market segment.
➢ Then, the characteristics, benefits, needs, preferences buying behavior etc. should be profiled. After that,
findsegments which is dissatisfied with current offers of the competitors.
➢ After introduction and growth stages, a product passes into the maturity stage. The third stage of the product
life cycle stages are quite challenging time for the manufacturers. In the first two stages companies try to
establish a market and then grow sales of their product to achieve as large as large a share of market as
possible.
➢ During the maturity stage, the primary focus of the moat companies will be maintaining their market share in
theface of number of different challenges. With sales reaching their peak and market becoming saturated, it
can be difficult for companies to maintain their profits, the organizations look for innovative ways to make
their product more appealing to the customer that will maintain, and perhaps even increase, their market
share.
➢ Environmental, Social and governance investing has grown rapidly over the past decade, the finance industry
is creating more products and services related to environment, social and governance ratings, indices, equity
and fixed income funds and ETFs (Exchange Traded Funds) are continuing to expand.
➢ Investors are seeking to position themselves for a transition to a low carbon economy can invest in green
transitionand renewables fund. The European Investment bank issued its first green bond in 2007,
➢ Job dissatisfaction affect both employees and organization. There is level of job satisfaction for each persons
and each job performed. Making clear set of goals, providing varieties of work, constant communication etc.
will reduce job dissatisfaction.
➢ Trade union has positive work impact as it performs various activities such as agency functions, trade union
voiceemployee grievances and complaints, helps to identify work hazards, improves quality of work life of
employees, brings certainty and discipline to the work force.
➢ Psychographic segmentation is a marketing strategy that leverages customer data and, with a foundation in
psychology, uses data to create customer segments based on psychological characteristics.
➢ Psychographic segmentation is the process of creating clusters of customers who share similar characteristics
andthe grouping them together. These clusters will form subsets (or segments) of customers based on their
social class, lifestyle, values, personality, social status, religion, opinion, attitudes.
➢ Quota sampling is a type of non-random sampling or non-probability sampling. Under quota sampling, the
researcher selects the sample based on certain qualities and traits. The standard error is utilized to refer to
the standard deviation of different sample statistics, for example mean or median.
➢ The standard error is inversely proportional to the sample size, the smaller the standard error closer
themeasurement will move toward the actual value.
➢ Marketing plays a critical role in organizations. It is considered as an entrepreneurial and strategic function of
the business.
➢ Main goal of marketing is to understand customer needs and wants and meet those needs efficiently.
➢ Marketing plays a critical role in organizations. It is considered as an entrepreneurial and strategic function of
the business.
➢ Marketing's main function is to generate profit by meeting customer need and building relationship
➢ Marketing concept’s main function is to meet customer needs and provide greater satisfaction to customers
to generate profit. It is the philosophy that firms should analyze the needs of their customers and then make
decisions to satisfy those needs.
➢ Selling concept focuses to sell what the company makes rather than making what the market wants.
Productconcept states that customers will prefer products that have better quality, performance and
➢ The value-delivery process involves selecting the value to be offered, creating the value, and capturing the
value back from the market through pricing, enhancing, and sustaining the value. and ‘value delivery’ must be
a corporatelevel concern.
➢ Concepts other than the marketing concept result in, marketing myopia, which signifies a narrow perception
of marketing and a short-sighted view of the business.
➢ It is a short sighted and inward-looking approach which focuses on the fulfillment of the immediate needs of
thecompany rather than focusing on consumer’s point of view.
➢ Fringe benefits are benefits that is given in addition to the compensation for workers or employees, fringe
benefits are also called perquisites, these are usually non-cash benefits.
➢ The club membership is the only perquisites here.
➢ Incentive include monetary and non-monetary additions that attracts a worker and stimulates to work. It act
as extra financial and non- financial motivation. So, incentive is an unavoidable part of business necessary to
drive growth as a result of motivation of employees. Wages, reward salary comes under incentives.
➢ The reinforcement theory and expectancy theory is based on the assumption that the behavior that involves
reward earning is likely to be repeated, that is the employee will do the same thing again and again which he
earned a reward. In the case of expectancy theory by Vroom, the employee is motivated to do something with
the expectation of reward.
➢ Description, hierarchy or levels, and evaluation is the systematic steps that is involved in deciding a
remuneration.
➢ Job analysis involves only studying the job to study about the activities and responsibilities of a job. It is
theprocess where judgments are made about data collected on a job.
➢ A compensation plan decided by a HR executive should be easily understandable that means all the employees
should easily understand how compensation is calculated, easily workable that means should be fair and
should be acceptable by all. These three factors are to be considered first to plan a compensation.

2019 dec

✓ Developmental counselling mode is a counselling approach developed by Allen Ivey which focuses on
understanding and helping people. Managers under this approach try to find out the employee's strengths
and weaknesses, try to understand their performance-related problems and prepare an appropriate action
plan for them accordingly.
✓ People skills involve the ability to listen, to communicate and to understand an individual on a personal or
professional level. Good people skills include Problem-solving abilities, empathy for others. Therefore, in the
situation described above, Peoples skills are the most appropriate skill that is required for Dinesh.
✓ ● Human Resource is a Strategic approach to effectively manage people in a company so as to achieve the
desired objectives. It focuses on maximizing employees performance.
o Contingency approach states that there is no specific style of management or no one best way to manage that
isuniversally applicable. It depends upon the context of the situation.
o Systems Approach provides a holistic view of the organization. It views an organization as an open
systemsapproach which must interact with the environment in order to survive.
o Interactionalism approach is a theoretical perspective that studies how individuals shape society and are
shaped bysociety through interactions. It is a face to face process of action, reaction, mutual adaptation
between two or more individuals. Therefore, Interactionalism is the appropriate approach for Dinesh in order
to understand him and improve his morale.
✓ ● The company should base its promotion policy on Merit which means considering an employee for vacant
positions on the basis of personal merit.
o Work assigned to an employee that falls within the scope of his duties and if over time, the position
developsgradually to include higher-level duties, an accretion of duties may be appropriate. Therefore, both
of these promotion policies may be adopted in the mentioned case.
✓ ● I'm Ok, You are Ok is a life position wherein people have the ability to solve their problems easily and they
value other people in their lives. It is based on the adult ego.
o I'm Ok, You are not Ok is a life position wherein an individual is of the opinion that only he is right and others
arewrong. Individuals in this life position possess the rebellion child ego.
o I'm not Ok, You are Ok is a life position wherein an individual feels inferior to others. Individuals in this
positionalways complain about things and remain dissatisfied with their lives.
o I'm not Ok, You are not Ok is a life position wherein people think very negatively and even feel that life is
notworth living.
o Since Dinesh feels depressed and emotionally stressed. Therefore, it is important for him to be positive, solve
hisproblems and gain his self-confidence.
✓ Direct Material Price Variance = (Actual price - Standard price) * Actual
✓ Overhead Spending Variance = Fixed Overhead Spending Variance + Variable Overhead Spending Variance
Fixed Overhead Spending Variance = Actual Fixed Overhead - Standard Fixed Overhead
✓ Variable Overhead Spending Variance = Actual Variable Overhead - Standard Variable Overhead
✓ Material Quantity Variance = (Actual Quantity - Standard Quantity) *
✓ Labour Efficiency Variance = (Actual Labour Hours - Standard Labour Hours) * Standard
✓ Overhead Volume Variance = (Actual Unit - Expected Unit) * Standard Fixed
✓ Strategic decision making is one of the very important tasks to be done by senior management. In the process
of strategic management, the basic thrust or push is to make a wise choice regarding the courses of actions
to adopt so as to answer the very objective or goals of business as to what it currently is and what actions
need to be taken or adapted so as to take it to an expected level(i.e. answering what it should be?).
✓ Identification and selection of an appropriate business strategy play a vital role in an organization. Sources of
opportunity identification are Employees, customers, dealers, distributors, friends and relatives, competitors,
technology etc.
✓ ● Dangling: Dangling means an event which is not connected to another event by any activity.
o Looping: It is also known as cycling error. It denotes the endless loop in a network diagram.
o Dummy: A dummy activity is an imaginary activity that is represented by a dotted arrow. It shows the
connectivitybetween two or more activities.
o Slack: It is the amount of time a task can slip before going to the subsequent task.
✓ ● Delphi technique is a forecasting technique wherein opinions of a panel of experts are gathered who are
physically dispersed and are anonymous to one another.
o Brainstorming technique is a group activity wherein people generate creative ideas and come up with
creativesolutions to the problems.
o Heuristic Ideation: This technique was developed by Edward Tauber. It is a technique of generating new
productideas that help to explore combinations of attributes for new product ideas.
o Decision Tree: It is a tree-like structure that includes decisions and their possible consequences. It includes
aninternal node that represents a test on an attribute, each branch represents an outcome of the test and
each lead represents a class label.
✓ Segment Invasion Plan provides marketers with a competitive assessment of current market segment
activities. It also represents the probable market segment activities of the evaluating organization.
✓ Hubris means excessive self-confidence. Hubris hypothesis implies when the company managers become
overoptimistic in evaluating potential targets because of their own over-confidence about their ability to
make accurate decisions.
✓ Modes of entry in the foreign market involve:
o Exporting: It involves selling goods and services produced in one country to another country.
o Licensing: Under licensing, companies sign contracts with foreign businesses called 'licensees' which
furtherallows the foreign companies to manufacture the company's products and sell them.
o Franchising: It is a foreign market entry strategy wherein the franchisee(company granted a license to do
businessunder franchisor's trademark)pays fees and royalties to the franchisor as a result of using its
trademark.
o Partnering: Partnering means when two or more companies agree to invest in a new opportunity in a
foreignmarket.
o Strategic Alliance: It is a formal voluntary agreement between two or more companies to use their resources
so asto achieve a common objective.
✓ ● The range of values in which the null hypothesis is rejected is called the rejection or critical region.
o If the value falls under the critical region’s area then it is termed as statically significant or critical and
nullhypothesis is, therefore, rejected.
✓ ● Concept testing is used in the new product development process so as to assess the viability of a new product
idea before executing it. It is also referred to as Idea screening.
o Test marketing: Under test marketing, the product is distributed to a carefully chosen sample of the population
soas to check it's viability. This is done just before the full-scale launch of the product.
o Product testing: It involves measuring the performance of the new product.
✓ ● The Gaps model of service quality helps to understand customer satisfaction.
o Gap 1 is the Gap of knowledge that represents the difference between the customer's expectations and how
themanagement understands those expectations.
o Gap 2 represents the difference between management's perception of customer expectations and actual
servicespecifications given by customers.
o Gap 3 represents the difference between the service specifications adopted and service quality actually
delivered.● Gap 4 represents the difference between the service delivered and the promise
✓ ● Customer Relationship Management refers to managing the relationship of an organization with its
customers. Four marketing activities that comprise Customer Relationship Management are customer
selection, customer acquisition, customer retention and customer extension.
o Manufacturing Resource Planning: It is a system that effectively plans a manufacturer's resources. It
includesfunctions such as business planning, capacity requirements planning and other related functions.
o Enterprise Resource Planning: It is a software system that helps organizations to use a system of
integratedapplications to manage the business. It provides and organization with sophisticated planning and
control functionalities, greater connectivity to its suppliers, business partners and customers.
o Economic Order Quantity: EOQ is used in inventory management. It represents the optimal quantity of
inventory acompany should order each time so as to minimize the total holding costs and ordering costs.
✓ ● Following are the steps under Personal Selling:
o Prospecting: The first step is to identify potential customers. Marketers can identify the prospects through
emails,websites or other referral sources.
o Pre-Approach: The next step is to decide how to approach prospective customers. Whether to make a visit,
send aletter or make a phone call.
o Approach: Under this stage, the salesperson properly approaches the customer, greets him/her and gives a
start tothe conversation.
o Presentation and demonstration: Under this step, the salesperson gives detailed information about the
product orservice, it's use, benefits etc and if required, demonstrates how to use the product.
o Overcoming objections: After presentation and demonstration, customers may have objections relating to
price,product features etc. Therefore, at this stage, the salesperson clarifies the doubts and tries to convince
the customer to buy the product.
o Closing the sale: The next step is to close the sale wherein the salesperson requests the customer to buy
theproduct and place the order.
o Follow up: Under this step, the salesperson ensures satisfaction and assures delivery at the right time, after-
salesservice etc.
✓ ● An indifference curve is a graph that shows a combination of two goods which gives the consumers equal
satisfaction as well as utility.
o Higher Indifference curve and not Lower represents a higher level of satisfaction.
✓ Behavioural Segmentation is the process of dividing the market into small homogeneous groups based on
their behaviour, the way they respond etc. Types of Behavioral Segmentation include Benefit sought (what
different benefits are customers seeking during their purchase), purchase occasion, usage rate, user status,
brand loyalty etc.
✓ ● Merger: A merger is an agreement wherein two companies join together to form a new one. Example:
✓ DaimlerChrysler-AG
o Acquisition: Acquisition occurs when a company purchases a portion or all of another company's shares so as
togain control of the acquired company. Example: HUL-TOMCO
o Takeover: A takeover is the purchase of one company by another company. Example: Kelvinator-Whirlpool.
o A hostile bid is a takeover bid wherein one company takes control of another company without the consent
orcooperation of the target company. Example: L&T Technology-Mind Tree.
✓ The Shanghai Cooperation Organization (SCO) comprises eight states namely, India, Russia, China, Pakistan,
Kazakhstan, Kyrgyzstan, Tajikistan and Uzbekistan.
✓ ● Charity Principle states that the rich people in the world must donate to the less fortunate people so as to
give them a better standard of living.
o Stewardship Principle states that managers have an obligation towards society. Therefore, they should make
surethat their actions are providing benefits to society as well.
✓ ● Net present value method helps in analyzing the profitability of a project or an investment. It is considered
as the best method for leveraged projects because of the following reasons:
o It gives importance to the time value of money.
o It helps in determining how much cash will flow in a company as a result of the investment.
o Internal rate of return is used to measure an investment's rate of return. It helps in evaluating the
attractiveness ofan investment or project.
o Accounting rate of return, also known as the average rate of return is used to measure the annual earnings
thatinvestment is anticipated to make.
o Profitability Index, also known as Profit Investment or Value Investment Ratio helps in measuring the
ratiobetween the present value of future cash flows and the initial investment.
✓ ● Primary data refers to the data that is collected directly by the researcher from first-hand sources.
o Primary data collection methods include Observation, Interviews, Experimentation, Survey etc.
o Secondary data refers to the data collected from other sources. Methods include Books, Magazines, Published
orUnpublished Data, Journals etc.
✓ According to Ricardo's Theory of competitive advantage, a country should produce and export that commodity
in which it has a comparative advantage, whereas it should import that commodity in which it has a
comparative disadvantage. Two Countries, Two Commodities and One Factor (2×2×1 model) is one of the
assumptions of this theory.
✓ Decision Making itself is the process of identifying opportunities and choosing alternatives. In the case of
problemsolving, decision making involves resolving it by choosing the best solution to the problem.
✓ Plant location is often oriented toward dominant factors such as labour availability and cost, favourable
climate aspects, raw material sources, overhead costs etc because the aim while deciding the location of the
plant is to reduce factor costs related to production, while the warehouse location is distribution oriented as
the main object of warehousing is to cope with availability hindrance.
✓ Customer Life Time Value (CLV) in the first year is

✓
✓ Where m = profit contribution or customer margin per year
✓ d = discount rate
✓ r = retention rate per year
✓ ● Collusion is a secret agreement between two or more parties to deceive others i.e limit the competition. It
occurs when rival companies cooperate for their mutual benefit.
o Collusion may be illegal in many countries. It may be explicit or tacit. Explicit collusion occurs when, in the
sameindustry, two or more firms formally agree to control the market. Tacit Collusion, on the other hand, is
when firms indirectly or covertly agree to control the market.
✓ ● Point estimators are used finding the best approx value from random samples.
o Properties of point estimation are:
o Efficiency: It is a quick method of testing the two unbiased estimators for a parameter so as to which of the
two isbetter.
o Consistency: It defines the intimacy of the point estimator to the real value of the parameter as it(point
estimator) gets large.
o Unbiasedness: unbiasedness in point estimator is when the expected value of the point estimator is equal to
thepopulation parameter.
✓ ● Management Information System: A management information system is an information system that gathers
data, analyzes the information and reports it so as to help in decision making.
o Artificial Intelligence System: It is a computer system that includes building intelligent machines to
performvarious tasks.
o Executive Support System: It is a system that provides support to non-programmed decisions. It also serves
thefunctions of planning, controlling and decision making by providing a routine summary and exception
reports.
o Decision Support System: It is an information system that provides support to the decision-making activities
of anorganization. It analyzes the business data and presents it to the users so that they can easily make
business decisions.
✓ ● The statistical distribution of customer's inter-arrival times is the pattern by which customers arrive over a
period of time. This pattern follows the Poisson process in the distribution of the time until the next customer
arrival is independent of the last arrival.
✓ ● Off-the-job training is the training method in which employees get to learn their job roles away from their
place of work.
o Various off-the-job training methods include:
o Lectures: Employees are given lectures about the job requirements and skills required.
o Simulations: under this, the employees get to learn to operate tools and machinery.
o Lab training: It involves providing situation to the employees so that they try to understand and experience it
ontheir own.
o Role-playing: Under this, the trainees are assigned different roles and they are required to enact according to
thegiven situation.
o Vestibule training: It is given to the technical staff, the office staff, as well as employees, focused on learning
theoperation of tools and equipment.
o Video presentation: It involves using videos so as to make the trainees better understand the job role by seeing
andlearning.
✓ ● Foreign exchange exposure is classified into three types: Transaction, Translation and Economic Exposure.
o Transaction exposure deals with actual foreign currency transactions. It is short-term in nature (less than a
year).
✓ Examples include credit purchase and sales etc.
o Translation exposure is of accounting nature. It is the risk of loss suffered when stocks, assets or
liabilitiesdenominated in foreign currency changes with the movement of the foreign exchange rates.
o Economic exposure refers to the impact caused on a company's cash flows as a result of unexpected
fluctuations incurrency rate.
✓ ● Brand extension or brand stretching is a marketing strategy in which a firm launches its product under the
existing brand name.
o Brand rejuvenation refers to changing the elements of an existing brand, adding value to it by improving
itsattributes. It helps in regaining the attention of consumers towards the product.
o Brand relaunch: It refers to restarting a brand. The brand is launched in the market with more focus and a
morespecific target group.
o Brand Proliferation: It includes launching new items altogether with new brand names, whereas brand
extension,rejuvenation and relaunch focus on how to keep the brand alive, contemporary and relevant.
✓ ● Theory of absolute advantage was propounded by Adam Smith. The theory shows how countries can enjoy
the absolute advantage in the production of goods. It refers to the capacity of an economy to produce a
greater quantity of goods or services as compared to its competitors.
o Factor Proportion Theory was given by Heckscher Ohlin. According to this theory, some countries have
largepopulations and some have large labour resources. Therefore, it holds that countries will produce and
export those products that use large amounts of production factors available with them in abundance and will
import those products requiring large amounts of production factors that they lack.
o Country Similarity Theory was given by Steffan Under. This theory is based on the belief that countries
withsimilar qualities most likely trade with each other.
o Product Life Cycle Theory was given by Raymond Vernon. It includes four stages of the life cycle of a
productfrom introduction to decline. The first stage is Introduction of a product, second is Growth, Third is
Maturity and Fourth is Decline.
✓ ● Ansoff matrix provides four growth strategies namely, Market Penetration, Market Development, Product
Development and Diversification.
o Diversification is the riskiest strategy as compared to the other three because it requires the introduction of a
newproduct into an entirely new market. A company may use Mergers and Acquisitions to diversify its
operations by entering into new markets or by offering new products or services.
✓ ● Psychological barriers refer to the psychological aspects i.e. attitudes, opinions, beliefs of a person that
create communication barriers.
o The main kinds of Psychological Barriers are:
o Premature Evaluation: It involves forming judgements about a situation without considering all the aspects
relatedto it. This premature evaluation of the information, therefore, acts as a barrier to communication.
o Lack of attention: Lack of attention creates a barrier in communication when one person does not listen
carefullyto the other person.
o Poor retention: Retention includes the ability of the brain to store information in the memory. The brain does
notstore all the information that a person comes across and therefore, this loss of information creates barriers
in communication.
o Lack of reliance: It is important for a sender and receiver to trust each other for effective communication. If
thereceiver does not trust the sender, he/she won't listen and believe the sender and it would result in
meaningless communication.
✓ To evaluate the performance of the employees is an objective of Performance Evaluation. Performance
Evaluation is the process of assessing the performance of an employee so as to know how effectively he/she
is performing his/her duties.
✓ ● International negotiation is defined as a process to conduct dialogues to achieve certain goals, which may
or may not dissolve disputes between the parties.
o Steps in the process of international negotiation are:
o Preparation: It involves gathering information about the problem, understanding the people with
whomnegotiation is going to take place, to have the clarity of objectives to be achieved through negotiation.
o Strategy: The next step is to build appropriate strategies for a successful negotiation.
o Building a relationship: It is important to understand the people involved in the negotiation process so as to
betterhandle the situation during the negotiation.
o Information exchange and offer: This step involves face to face interaction of the negotiating parties. Under
this,each party tries to influence the other party.
o Persuasion: Persuasion is the process of making others do what you want them to do. It involves convincing
theother side of the suitability of the demand and then persuading the party to accept the offer.
o Concession: It is called trade-offs which include compromising on issues either willingly or unwillingly.
o Agreement: The last step is that of making an agreement between the parties. It includes sealing the
agreement ina written contract or letter of intent.
✓ According to Mintzberg, modes of strategic decision making are:
o Entrepreneurial: It includes the formulation of a strategy which is done by a single person with authority.
Itfocuses on new opportunities.
o Adaptation: It includes reactive solutions to the problems that exist after they occur.
o Planning: It includes systematic information for case analysis, finding appropriate strategic alternatives.
o Incrementalization: It is a combination of the above three approaches and is used when the environment
changesrapidly so as to build a consensus among the members before making a specific strategy.
✓ Force-field theory of the change process was Developer by Kurt Lewin. This model is an important contribution
to the theory of change management. This model includes forces that drive change and forces that restrain it.
There will be no change if there is an equilibrium between the two sets of forces. So, for change to occur, the
driving force must be greater than the restraining force.
✓ ● Gordon's theory on dividend policy is also called Bird in the hand argument which states that, in order to
determine the value of the firm, current dividends are very important. It helps in calculating the market value
of a company
✓ using its dividend policy.
o Irrelevance of dividends (M-M Theory) represents that when a company declares and pays dividends, it
shouldhave a little or no impact on the stock price. The investment decision is dependent on the investment
policy and not on the dividend policy of the company.
o The interdependence of investment and dividend decisions (Walter Model) states that the dividend policy of
thecompany has an effect on its valuation.
o Tax considerations in dividend Decisions (Lintner model) state that tax considerations are a major driver of
payoutdecisions. Corporate taxes affect dividends directly as well as indirectly.
✓ ● Row minima method involves choosing the lowest element in the row and deducting it from all the
elements. Column minima method involves choosing the lowest element and deducting from all the
other elements in the column.
o Degeneracy refers to the situation of simultaneous satisfaction of row minima and column minima rule. It
canoccur at two stages: at the initial solution and during the testing of the optimal solution.
✓ Replacement charts are used in Succession Planning (the process of identifying and developing new leaders
to replace old leaders when they retire or leave the company). It lists the critical job roles in a company,
employee's competencies as well as current vacancies in the company.
✓ . ● Whereas Automation is completing a task with machines and minimal human efforts, Autonomation is
“intelligent automation" or "Automation with a human touch. Kaizen means “improvement” while Poka-yoke
is simply a
✓ technique to avoid and usual human errors.
o In order to ensure only good units flow, first, the automation should be replaced with autonomation and
humangeneral errors should be avoided.
o Kaizen is helpful for betterment and improvement but not materially helpful to ensure 100 percent good
unitsinflow.
✓ EPRG (Ethnocentrism, Polycentrism, Regiocentrism, Geocentrism) Model is followed by a global
manager.
✓ Ethnocentrism means a home country is superior in nature than any other country
✓ Polycentrism believes each country has a different demand structure and sets different offices for
differentcountries.
✓ Regiocentrism believes some regions have the same needs to study the needs and then regions having
similardemand is served from the one common office.
✓ Geocentrism see the whole world as a market so they think global and serve global needs
✓ Corporate Restructuring refers to us as an organization modifying our structure and operation. It means we
reallocate our resources which increases our market power and leads to operating synergy.
✓ In Hyper competition - Competitions get bold, aggressive and hostile with dynamic movements which will
shorter Product and design life cycles and also lead to uncertainty in the business environment increases along
with heterogeneity but have no effect on financing cost.
✓ ● Cluster:- Target population is first divided into subpopulations and elements within a cluster are
heterogeneous but cluster themselves are homogenous
o Samples refer to drawing conclusions based on some elements of the population rather than taking the
wholepopulation.
o The sample size defines the correct size of the sample to be taken to draw a meaningful conclusion out
apopulation.
o Strat in this population is divided into homogenous groups.
✓ ● The application of funds is part of the fund flow statement. It shows the outgoing fund from the organization.
Example redemption of shares, purchase of assets, repayment of the long term loan, increase in working
capital, dividend, and tax payment, etc.
o The source of funds is also part of the fund flow statement. It shows the source of incoming funds in
theorganization example issue of shares, sale of a fixed asset (investment), long term loans etc.
o It will not have any effect on current liability.
o It will increase cash but the sale of assets is capital inflow it will be shown in source funds.
✓ Whistleblowing is exposing secretive activities or any information that is deemed unethical, illegal not correct
within an organization whether public or private. But it proves unjustified when it is based upon some Ulterior
motive, Breach of trust and whistleblower is not having any sufficient evidence.
✓ Selection process for includes:-
o Application blank- applicant filling the blank application
o Initial interview- e.g telephonic interview
o Employment tests- written test
o Final interview- HR interview
o Checking references
o Physical examination
✓ An internal factor of motivation for entrepreneurship: Desire to do something new(Ambitious), Educational
background, Occupational background, Family background.
✓ External factor of motivation for entrepreneurship: assistance from govt., assistance from other institutions
(factors facilitating and compelling entrepreneurs to take action).
✓ ● Coupons: is the annual interest payment that the bondholder receives
o When each coupon payment and the redemption value are detached and are issued as separate and
independentinstruments are called Strips.
o Certificates: document showing ownership
o Warrants: gives a right not obligation to buy and sell an equityThus,
✓ Human Resource selection is concerned with applying the appropriate techniques to select a candidate and
find out the best fit candidate for the organization so that an organization can achieve its objective.
✓ . A direct marketer uses different channels to reach customers. These are the following:- Direct mail,
Telemarketing, Catalogue marketing, interactive TV, Website and mobile devices. It does not include direct
selling in its main form as direct selling is restricted to converting a willing customer into a consumer.
✓ 4Ps of marketing are same for all and their correct sequence is
o Product
o Price
o Place
o Promotion
✓ .
✓ A Portfolio theory identifies the asset combination that is efficient to offer a high rate of return.
✓ The capital market theory states trade-off between risk and returns so the major factor to develop capital
market theory is to find out a risk-free asset by trading off between risk and return.
✓ Modern organized retail business refers to a retail house providing a wide variety of products and services
under a single roof, it has a multitude of formats. And these formats can be classified according to the
merchandise offered and size of the area.
✓ Combined leverage = i.e it is measuring the total
risk of the firm also it indicates the effect that changes in sales will have on earning per share.
✓ Attitudes are beliefs, feelings and action tendencies of individuals toward objects, ideas, and people. Option
D is giving the exhaustive definition of attitude.
✓ Marketing feasibility includes estimating the current and future demand estimates, identifying the market
segmentation and identification of target markets and existing competition in the market but market testing
is the part of product development we test our product in the market.
✓ Human Resource Management (HRM) helps to build successful cross border alliances by ensuring that
international joint ventures are staffed by high-quality managers because in strategic alliance there are two
or companies in the agreement that expected to benefit all firms in the agreement so high quality of managers
are required to take care of joint venture and treat other parties of agreement with equality.
✓ International product standardization is least costly in terms of both manufacturing and marketing costs for
the company. So companies should bring uniformity in their marketing mix elements to operate at an
economic scale.
✓ No change in the product itself is required for marketing overseas but many items may require some
adaptation for making them suitable to the foreign markets because of differences in culture, social belief.
✓ Product categories and their respective Quality certification mark
o Gold and silver jewellery- BIS Hallmark
o Agricultural products- AGMARK
o Industrial products- ISI Mark
o Processed food products- FPO Mark
✓ ● Career Planning refers to a process whereby an individual sets career goals and identifies means to achieve
them.
o Human resource planning is the process of analysis and identifying the need and availability of human
resources sothat an organization can meet its objectives.
o Career management is a process of enabling employees to better understand and develop their skills and
interestand use them for the interest of organization and self.
o Career development- Refers to a formal approach used by the firm to ensure that people with proper
qualificationsand experience are available when needed.
✓ Every product or service should be branded otherwise they will be treated as a commodity because brand
name proves anthropomorphism i.e it gives human characteristics to object and creates a new presence in
the market.
✓ If the product or service is branded then it always commands a higher price it needs not to be true as
sometimes brands try to follow a cost leadership strategy to compete with its competitors.
✓ ● The desire for a commodity-backed by ability and willingness to pay is demand
o The decrease in input prices causes a rightward shift in the supply curve
o Demand for cars and the price of petrol are complementary goods that show cross elasticity effect.● Most
demand functions are of the form Qs = a-bp Thus,
✓ Retailing firm is an intermediary part of distribution channel and has no control over Brand building decision
only can control location decision for the distribution, Merchandise mix decision and target market selection
decision for distribution of the product. Also, The main purpose of a retail firm is to increase sales and earn
high profits. So their focus is only on activities which increase sales.
✓ Global pay system include the following steps:-
o Set strategy
o Identify crucial executive behaviour
o Global philosophy framework
o Identify gaps
o Systematize pay system● Adopt pay policies
✓ Financial market growth across globally happened due to Deregulation in the currency market, Growth of
international technology and information technology but sometimes excessive currency fluctuation hits the
financial market badly..
✓ Group development involves the following stages:
o Forming is the orientation stage
o Storming also known as power struggling stage
o Norming refers to cooperation and integration stage
o Performing refers to synergy
o Adjourning is closure
✓ Van purchased by half payment in cash will decrease liquid asset by Rs 5000 and increase bills payable by 7000
i.e increase in liabilities so the net increase in asset side will be 7000 and as we can see this transaction will
not have an immediate effect on owner’s equity in the business.
✓ A decrease in current assets and an increase in current liability decrease the current ratio which makes
business less liquid.
✓ ● Interactionalism states that human behaviour results from a continuous and multidirectional interaction
between the person and the situation.
o HR Approach says that people are central to the organization and they must be developed to their potential
forhigher growth
o Productivity Approach defines the manager’s efficiency depends on optimum utilization of resources.
o Contingency Approach believes that there is no one best option available for an organization's management
shouldchange depending on the situation.
✓ Human Resource procedures describe the roles and responsibilities and process in relation to steps in
recruitment, workforce management, safety and wellbeing, staff management so when all the procedures are
decided in advance it is proved helpful in bringing consistency and fast Decision making. Recruitment is part
of decision making.
✓ INovation is an intermediary and acts as a clearing agent in case of stock exchange i.e it takes guarantee if
another party in the contract defaults in payment so here exchange becomes a counterparty for all trades.
✓ In Regression analysis addition of independent variables(s) causes the prediction error to become smaller as
it R2 (value measuring the %of variation) becomes larger to cause smaller prediction error.
✓ Bureaucratic form of organization has a pyramid form of command structure so organizations are experiencing
acute pressure to change and pursue innovation as a means of securing business growth due to a high degree
of formality.
✓ ● Branch office - setting a branch of an already established business in another country.
o Cooperative joint ventures two companies come into a contract for entering into separate business but they
havethe choice of converting themselves into a limited liability.
o Equity joint venture refers to where two companies form a contract of entering into separate business
ventures butdon't have a choice of limited liability.
o Portfolio investment includes holding of foreign securities and financial assets in other countries, its riskier
asinvestors are relying on the other countries companies and investing their huge amount of money. Risk is
not shared here.
o Wholly owned subsidiary- Establishing our own business in the other country so it's the highest risky mode
ofentry as companies have to do full research about the host country no partner involved.
✓ According to RBI guidelines (2008) MSME is considered to reach the stage of incipient sickness when:
o When there are cost overruns because of the delay in commencement of commercial production by more
than 6months
o The enterprise incurs losses for 2 years or cash loss for one year
o The capacity utilization is less than 50 percent of the projected level in term of salesThus
✓ ● Sampling error or estimation error refers to the difference between the point estimate and the true value
of the population parameter being estimated.
o Probable error is the value that is added and subtracted from the coefficient of correlation to find out the
upper andlower limit within which the value of correlation lies.
o Standard error measures the accuracy with which sample distribution represents its population by using its
standarddeviation.
✓ Continuous compounding refers to when interest earned on an investment is reinvested in the account for
an infinite period. It is calculated like
✓ Microeconomics deals at an individual level in these companies find out the internal issues of the business
firms and sequence for the same is:
o What to produce?
o How to produce?
o How much to produce?
o How to determine the price of a product?
✓ ● Credit policy sets the standard of whether credit should be granted or not to a particular customer.
o Credit standards: refers to the requirement must be met, collection rules these are the eligibility rules for
grantingcredit.
o Credit terms: specify the terms of credit like a customer will get a 2% discount if he pays the total bill
within10days and net 30 means all amount to be paid within 30 days.
o Collection policy specifies the procedure for making a collection.
✓ Different expansion strategies:
o Line Extension refers to when a company is launching an existing product category and existing brand name.●
Brand Extension Refers to when a company is launching a new product category under an existing brand name
● Multi Brands Refers to when a company is launching existing product categories and new brand names.
o Co-branding refers to putting two established brand names of different companies on the same product.
✓ Budgeting is closely related to planning in an organization like thinking in advance about the budgets how is
required, where, when, etc. it includes 4 steps :
o Setting the objectives
o Specifying the goals9
o Laying down the strategies
o Preparation of budget
✓ Constructs of asset pricing with its propagators
o Mean-Variance portfolio criterion- Markowitz, Harry
o Size and Book to market value portfolios- Fama & French
o Capital Asset Pricing model- Sharpa, Lintner and Mossin
o Derivative (option) pricing- Black and ScholesThus,
✓ Moral reasoning theories and their propounders:
o Consequentialism Approach- Thomas Hobbes, Ayow Rand
o Deontological Approach- W.D. Ross, John Rawls
o Natural law theory- Ronald F. White
o Theological Approach- Aristotle
✓ Net Income approach for Capital Structure propounded by David Durand. He explained that the firm can
minimize the weighted average cost of capital and can increase the value of the firm by using debt financing
to its maximum possible extent.
✓ Assumption of this theory:
o There are no taxes
o The cost of debt is less than the cost of equity
o The use of debt does not change the risk perception of investors.
✓ Quick Environmental Scanning Technique is designed to assist the organization in forming strategies by
analyzing external environments. It involves 4 steps: Preparation Phase → Divergent Planning Phase → Option
identification Phase → Scenario Development Phase.
✓ Foreign trade policy is an important instrument that incentivizes the exporters of the country. It is important
for improving the ease of doing business. Yes, it is equally important for exporters of our country to have
knowledge of foreign trade policy so that they can avail of its benefit.
✓ ● Accounting period concept explains the time range during which accounting functions are to be performed.
It can be a calendar year or a financial year.
o The realization concept explains that revenue can only be recorded in the books of account when it is
actuallyrealized.
● Going concern concept presumed that business will continue its operations for a long time.
● The separate entity concept presumed that business is different from the owner of the firm.
Public relations refers to creating good relationships with the popular press and other media so that companies
can communicate messages to their related parties- customers, the general public, and govt. Regulators. It
includes
Covering positive stories, Managing unfavourable rumours, stories, and events, publicity- a non-paid form of
advertising. In short, it manages the reputation of the company.
 2019 june
Transactional Analysis is the study of social transactions of a person in order to determine his ego-state, so as to
understand his behaviour. There are 3 types of Egos.
1) Parent: This is a state in which a person behaves in a way that mimics the behaviour of his parents in a
similarsituation. This could be characterised as loving, caring, domineering etc. depending upon what he
observed and learned from his parents.
2) Adult: In this state, a person looks at the situation very objectively without any preconceived notions
orjudgements. This is the best state as per Transactional Analysis, and everyone strives to achieve this.
3) Child: This state represents how a child behaves or acts in certain situations. For example, a person may
get angryupon being criticized or may respond with a big smile on being appreciated, similar to how a child
behaves.
Transactional Analysis is very useful in understanding human behaviour and their varied nature, and it helps
solve various problems in an organisation and leads to better communication and better leadership.
However, it doesn’t result in a higher social status.
● Corporate Governance refers to a set of systems, principles and processes by which a company is directed and
governed. It ensures fairness and transparency in business operations so that the interests of the stakeholders
are taken care of.
● It lays down certain rules and policies that prohibit companies from conducting unethical behaviour or
practices.Therefore, it is an important instrument of investor protection, as they have put their hard-earned
money into the company, so it safeguards them against any kind of fraudulent activity.
● For this reason, strong corporate governance is indispensable to resilient and vibrant capital markets, which
makesthem reliable and not volatile.
● Gate-Keeper: He is the person that maintains proper communication balance. He ensures that everyone gets an
equal chance to participate in the discussion.
● Supporter: As the name suggests, Supporter is the one who encourages everyone to participate, especially
thehesitant ones. He boosts their morale and motivates them to speak up.
● Consensus Tester: The word Consensus means common consent. This person makes sure that all the
groupmembers agree with the decision, so there will be a common consent.
● Harmonizer: This person is known to maintain harmony in the group. He takes care that the discussion
runssmoothly and that there’s no conflict or tension among the members.
MIS is the Management Information System that is used by managers in order to analyse the overall performance
of their department, which helps in the decision making and in taking corrective action if required. The purpose
of creating MIS reports is to estimate the value and the increase/decrease in profits.
● Revenue Expenditure is the expenditure incurred by a company for running its operations smoothly. In other
words, it is the operating expense or the maintenance cost incurred during the normal course of business.
E.g., Repairs of a car.
● This kind of expense doesn’t result in the formation of an asset. Simply a cost incurred to maintain the asset.
Whereas,
● Capital Expenditure is a kind of expense that results in the formation of an asset, whose benefit is derived
overseveral years. For e.g., Purchase of a car.
● Marketing myopia is a term that refers to the short-sighted or narrow approach of a company that only focuses
on the product it has to offer, without considering its benefits to the customers or without understanding the
customers’ needs and wants.
● Generally, this approach doesn’t work for the long term as it solely focuses on the product and not on
thecustomer’s requirements.
● National treatment rule is a principal in International law that states that there should be no discrimination
between imported and domestically produced goods.
● This means that once the foreign product has entered the domestic country, it has to be treated as equal and
cannotbe rejected or treated any different from locals.
 Thus, Option C is correct.
2. C
Sol. As per Walter Model, P = D/k + {r*(E-D)/k}/k,
Where P = market price per share, D = dividend per share, 16 * 80%
= 12.8. E = earnings per share, 16 given
r = internal rate of return of the firm, 0.16 given
k = cost of capital of the firm, 0.10 given
Thus, P = 12.8 / 0.10 + { 0.16 * (16 - 12.8) / 0.10} / 0.10
Or, P = 128 + {5.12} / 0.10
Finally, P = 128 + 51.2 = 179.2
Thus, Option C is correct.
3. C
Sol. Equity Capitalisation Rate can be obtained by dividing the net operating income by the current market value.
Thus, as per the given information, Equity Capitalisation Rate would be {(3/50)*100} + 8%. That is 14%.
Thus, Option C is correct.
4. D
Sol. BGC Matrix is a tool designed by Boston Consulting Group with a view to finding out the brand position of a
business portfolio. The business portfolio is classified into four categories on the basis of their growth rate
and their relative market share. The purpose is to determine brands good to invest from those which are
not. The 4 categories
are:
A) Star: Star represents a high growth rate as well as a high market share compared to the competitors. These
firmsare both cash generators and cash users. Therefore, they are must-invest.
B) Question Mark: They require close consideration before investing in. These firms have a low market share
but afast-growing market. So, they have the potential to gain market share and become a star; however, there
is uncertainty.
C) Cash cow: They are the most profitable as they have a good market share. It is advised to invest in them
tomaintain their share, so they can reach to become Star.
D) Dog: These firms are characterised by low market share and a slow growth rate. So, they are not worth
investingin as they generate very low or even negative cash returns.
Thus, Option D is correct.
11. A
Sol. ● Product Line: Refers to an array of closely related goods that are produced and sold under a single brand name.
For example, A product line of skincare products may include moisturiser, face wash, body wash, cleanser etc.
● Depth of a product: It refers to the number of sub-products offered within a particular product line. For
example, Aproduct moisturiser listed under the product line of skin care products may have several sub-
products like almond moisturiser, aloe vera moisturiser etc. This defines the depth of the product.
● Width of product mix: The product mix is the total number of product lines a company may offer. Width
signifiesthe number of product lines. Example: A company may offer 3 types of product lines viz skincare,
haircare, body care etc.
● Length of product line: It refers to the number of products being offered under a product line. Example:- A
productline of skincare may offer 4 types of products under it as mentioned in the first point. This defines the
length of the product.
● Licensed branding refers to an agreement that gives permission to a company to produce or use a product of the
original producer/manufacturer of that good. In simple words, the company is renting the use of the product
from the original company of that good.
● In the case given above, X is the company that is renting the use of the product of Calvin Klein, which is the
original manufacturer company.
Balassa Index is a tool that is used in international economics for the purpose of calculating the relative advantage
of a certain country in a certain type of commodity.
Career management is the conscious planning of one’s activities and skillset to understand his/her career interests
that could lead to better fulfilment and career growth. It, therefore, involves careful planning and an active
management choice to utilise one’s skills in the most effective manner so it can lead to career advancement
and development.
. The sign of regression coefficients and correlation is the same, and the correlation coefficient is the geometric mean
of two regression coefficients.
● Opportunity cost refers to the expected returns from the second-best use of the resources. It represents the
benefits that a person misses out on when he chooses one alternative over the other. In simple words, the
Opportunity cost is the opportunity lost.
● For example, A person having 3 hours in hand can either spend it on watching a movie or reading a book. As
time is limited and has alternative uses, one can choose how he may invest his time. He cannot do both the
things with the same amount of time. So, if he opts to watch the movie, the opportunity cost will be the book
he did not read.
Delphi Technique relies upon a panel of experts. In this method of forecasting, the HRP experts work as
intermediaries between experts and the personnel.
William Sharpe, born in 1934, is a Nobel Prize-winning economist who is well known for developing the Capital Asset
Pricing Model (CAPM) which is an extension of the portfolio theory as it takes into account the ‘systematic
risk’ and the expected return.
As per this theory, there are two types of Risks:
1) Systematic Risk: It is the risk that is unavoidable as it is caused by external factors like the business
environmentand affects the overall market.
2) Unsystematic Risk: It is the risk that is caused due to internal factors which are within the control of a company.
As such, this type of risk can be reduced to a great extent.
Modern portfolio theory says that Unsystematic risk can be removed or at least be diversified away by having
a diversified portfolio. Therefore, it is the systematic risk that creates the actual problem and so, it has to be
treated accordingly when calculating the expected return.
● The World Bank is an apex international financial institution that plays an important role in providing loans to the
developing countries. It comprises of 189 member countries and has 130 locations. The Bank comprises of 5
top financial institutions viz. IBRD, IFC, IDA, MIGA and ICSID.
● IDA is the institution that is known as the ‘soft loan window’ of the World Bank as it provides loan to poor
countries at very low rates of interest. It is headquartered in Washington, DC, US.
The FDI Index is prepared by A T Kearney, a global management consulting firm that operates in around 40 countries.
FDI Index is an annual survey or an indicator that checks the impact of certain political, economic and
regulatory changes on the FDI decisions of CEOs, CFOs and other investors. A ranking is given to the countries
on a scale from 0 to 3 on the basis of their attractiveness for FDI, a score of 3 representing the highest level of
confidence.
Willing slaves is the term used for people who are voluntarily willing to work beyond the assigned hours. In such a
type of case, there is no external force or pressure by the employer on the employee to make him work for
longer hours. Instead, it is at his own will that an employee chooses to work longer with an intent to keep
oneself ahead of the competition and produce greater results.
● There are different types of research designs that may be adopted depending on the type of research. For
example,Exploratory research is conducted where the researcher is searching for new ideas or possibilities
with no intention of finding out the answers to any already existing questions. Like studying a social
networking site as an effective marketing media.
● Experimental Research: It is a kind of research that establishes a cause and effect relationship between
twovariables. Of these two, one is the dependent variable, and the other is the independent one. For example,
Price and demand of a product. Where demand is dependent on the price of the product. In the above case,
the purchase of the product is dependent on the display.
Product Life Cycle is the total length of the life of a product. It represents different phases through which a product
passes during its journey. It is broken into 4 stages:
 1) Introduction:- When a new product is introduced in the market with its specifications and qualities.
2) Growth:- Next comes the growth stage. When the product starts to gain popularity and is differentiated from
othersimilar products, its demand begins to grow.
3) Maturity:- This is the peak period of a product's life cycle. Here, the product's demand reaches the maximum,
andthereafter it does not grow further but remains constant.
4) Decline:- Once the demand for the product reaches the maximum, it comes to a saturation point and then it
beginsto fall. This is the decline stage.
Therefore, due to the changing PLC, a company must always keep itself updated about new innovations, its
competitors, differentiation strategies etc. so it can bring the necessary changes accordingly and face different
challenges that may come in the way.
● A monopoly firm is a firm that operates freely as it has no competitors. It has the advantage of fixing its own price
since it does not face any competition. For example, Indian Railways.
● Price and Output are inversely related, which means higher price = lower output and lower price = higher
output.In such a situation, a monopolistic firm needs to decide the level of output and price where it makes
maximum profits.
● In order to generate profits, a monopolistic firm will keep producing until a stage where the additional
revenuebecomes equal to the additional cost, i.e. where MR = MC. At this stage, the firm will have maximum
profits.
● AR is the average revenue a firm makes, which is obtained by dividing the total revenue by total output. And
AC isthe average cost, a firm incurs which is obtained by dividing the total cost by total output. At a stage
where MR = MC, there is maximum profit. Which means at this stage AR must be more than AC and there is
abnormal profit for the firm.
● Exponential distribution is a contnious distribution.
● It is a memoryless family of distribution.
● It is always greater then median that is why it is always skewed right.
● The x values range from zero to infinity in exponential distribution.
The DuPont approach is a technique used to determine the value of Return on Equity (ROE) of a company with
the help of Net Profit Margin, Asset Turnover, and the Equity Multiplier. DuPont Analysis = Net Profit Margin
× AT × EM
where:
Net Profit Margin = Revenue / Net Income
AT = Asset turnover
Asset Turnover = Average Total Assets / Sales
EM=Equity multiplier
Equity Multiplier = Average Shareholders’ Equity / Average Total
Assets Thus,
● Cash Flow Analysis is the evaluation of cash inflows and cash outflows during a specified period. Cash inflows mean
the cash that is coming into the business, whereas cash outflow is the cash that is going out of the business.
● Cash Flow Analysis thus helps in cash management by giving a summarised overview of the cash transactions
overtime.
● It also helps in financial management with the firm by helping in decision making. There is no such
externalfinancial management which any cashflow is helpful for.
● In order to have a competitive edge over its competitors, a company needs to differentiate the product/service
being offered by it from that of its competitors. There are many ways through which a company can do that.
● For, eg. A company can set a higher/lower price for the same product that its competitor is offering, keeping
inview the other factors that would affect its demand.
● In this case, the airline is offering lounge for waiting, which is a special kind of benefit that it is offering to
itscustomers. Therefore, it is differentiation through special constituents.
Performance & credit rating scheme has been implemented by the MSME with a view to providing genuine third
party opinion on the creditworthiness of the micro and small enterprises (MSEs), so as to create awareness
about the pros and cons of their business operations.
Call Option is right to buy at the strike price, and at maturity, the payoff of a long call becomes zero as strike price
itself means the price at which the holder can execute the option.
By its definition, a service is essentially a set of benefits offered to a customer that is non-physical in nature and
onetime consumable.
Some important aspects of services are :
1) Intangibility: A service cannot be seen or touched unlike a product. Therefore, they are intangible.
Example:Accounting, banking etc.
2) Inseparability: A service cannot be separated from its consumption. Which means creation and consumption
ofservice happen simultaneously and cannot be separated. For example, a teacher teaching a subject to the
students.
3) Variability: It means that the quality of services can vary depending on who is providing them.
4) Perishability: It is closely linked to Inseparability. Services are perishable as they are consumed as and when
theyare produced, and therefore, cannot be stored for later use.
● The Chi-square contingency test of independence is used to find out if there exists a relationship between two
nominal variables.
● The frequency of each category of one nominal variable is compared with that of the other variable.
● For example, a researcher wants to examine the relationship between 1. Age ( 1-5, 5-10.. etc.) and 2. Health
status(Very healthy, healthy, unhealthy etc.) Chi-square test can be used for this purpose.
● Concentration banking essentially means focussing on a single bank rather than many at one point of time.
● A concentration bank is the primary bank of an organisation that holds all of its accounts. This means all the
fundsfrom all the regional banks located at different places get collected into a single bank account.
Therefore, it is very hassle-free and helps a large firm operating over a wide area speed up its collection of
funds.
● Snowball sampling is a sampling technique where the potential respondents are rare or difficult to find, so the
existing respondents provide referrals to recruit more people, who again provide referrals for further research,
thereby forming a chain of referrals.
● It’s called snowball because once a snowball starts to roll, it catches more snow along its way, becoming larger
insize.
● In the case given above, a referral chain emerging as each respondent provides the name of their friends to
carryout a further survey can be seen.
● The International Fisher Effect is a theory that helps determine the exchange rates between two currencies on the
basis of the respective nominal interest rates prevailing in each of the two countries.
● As per this theory, a country having higher interest rates will experience inflation which
The Bounded Rationality Approach presents a situation in which a decision-maker has to work under 3 inevitable
constraints :
1) Only limited and often unreliable information is available.
2) The limited capacity of the human mind to process a piece of the given information
3) Only a limited amount of time is available for making a decision
Therefore, in such a situation, a manager has to pick up a course of action that is satisfactory under those
circumstances.
● Marketing starts with the production of the product and ends with its sale. It takes into account the needs of the
customers first and then concentrates on developing a product that fulfils those needs. It involves research
and development, promotion and selling techniques.
● Innovation is nothing but bringing in new ideas, concepts and methods of production and selling.
● The product concept of marketing is a product based marketing that is the manufacture manages business
notthrough cost and low price but by quality product with multiple features.
● Expatriates: As per its definition, an Expatriate is a person who does not live in their own country. As such, they
are the non-citizens of the countries in which the employees are working.
● Home-country nationals: They are the people who live in a country in which the multinational company has
itsheadquarters.
● Third-country nationals: They are the employees who are not the citizens of the host or home country. As
such,they are citizens of a country other than the host country.
● Host-country nationals: They are the citizens of a country in which the company’s branch is located, but the
company is headquartered in a different country.
CAPM Formula, Ra = Rrf + Ba ( Rm - Rrf)
Where: Ra = Expected return on stock, Rrf = Risk-free rate, Ba = Beta, Rm = Expected return of the market
Thus, 15 = 8 + Ba (12-8)
Or, 7 = Ba (4)
So, Ba = 1.75
The fifth schedule of the Industrial Disputes Act, 1947 mentions unfair trade practices and adopts the system of
collective bargaining as a method of settlement of industrial disputes.
“CHAPTER II: AUTHORITIES UNDER THIS ACT” of the Industrial Disputes Act, 1947 has provided the following
authorities:
1) Works Committee.
2) Conciliation officers.
3) Board of Conciliation.
4) Courts of Inquiry.
5) Labour Courts (Tribunals, National Tribunals)
● The P/E (Price-to-Earnings) Ratio is a popular stock analysis tool that determines the market value of a stock as
compared to the firm’s earning.
● Formula to calculate P/E Ratio:
P/E ratio = Price per share/Earning per share
Given Market price per share = Rs 20 , EPS = Rs 5 and exchange ratio
= 1.5 : 1 P/E ratio = 20/5 x 1.5/1 = 6 : 1
● According to the LIFO (Last In First Out) method of inventory valuation, it is assumed that the lastest good produced
or purchased will be sold first, and the first good purchased will be sold at last.
● In the event of rising prices, the latest good purchased will have the maximum value and the initial goods will
havethe lowest value. Since the latest goods will be sold first, the customer will keep buying as the price will
continue to decline (since it is a reverse method).
● This would result in low inventory and high cost of goods sold.
COGS (Cost of goods sold) = Opening inventory + Purchases - Closing Inventory ( As there is low inventory at
the end, the cost will be high)
. ● Credit Rating is essentially an evaluation of a borrower’s creditworthiness in general terms or in terms of a
particular financial obligation.
● It can be assigned to any entity that seeks to borrow money and is published by various credit rating agencies
likeStandard & Poor’s, Moody’ Investors, ICRA etc.
● Therefore, it does not constitute a credit policy of a business firm.
● Gherao is a Hindi word that means 'encirclement'. It is a term that defines a protest in which workers prevent
employers from leaving their workplace, usually by forming a circle around the place or the building until
certain demands are met.
● Therefore, it is different from a refusal to work or cessation of work.
● Observation: The observation method of research is where the data is collected simply by observing the subject.
The researcher can get an exact idea of the person’s behaviour or thoughts by simple observation. Therefore,
it helps in generating data that is relevant to work.
● Questionnaires: A Questionnaire is a written or printed form of a document that consists of a set of questions
thathas to be answered by the respondents in order to collect information. The questions can be both open-
 ended and closed-ended. The advantage of this method is that it is very economical in terms of time, effort
and cost since there is no need to visit the respondent personally.
● Online Technology: Internet is a huge space. There are millions of people using online space every day.
Therefore,it offers a great platform to conduct research. The benefit of this method is that it is very objective
as there is a large population that has access to it, so there is a greater possibility of fair answers.
● Interviews: An Interview involves a face-to-face conversation where the interviewer collects the information
byasking questions to the respondent. A series of questions is posed before the respondent to gather the data.
The advantage of this method is that the interviewer can modify the questions as per the requirement.
● Culture can be seen as the cumulation of norms, behaviour, preferences, some organized ways of dealing in
society.
● Every organisation to have its own culture which is communicated to the employees through stories,
language,rituals, organizational structure and physical layout and rules and policies.
● Willingness to pay (WTP) is that maximum price that a buyer is ready to pay for a product or service. The actual
price that he pays will either be equal to WTP or less than that. Any price exceeding WTP will essentially
result in No sale.
● Willingness to sell (WTS) is the minimum price that a seller is ready to sell his product at. The actual price
atwhich he sells will either be equal to WTS or more than that.
● Therefore, A firm has a competitive advantage over a competitor when its difference between buyers’
willingnessto pay (WTP) and suppliers’ willingness to sell (WTS) is greater than the competitor’s difference
between the WTP and WTS.
● The term “Logical Incrementalism” was introduced by Quinn, in order to explain how the business strategies come
into existence.
● As per Logical Incrementalism Approach, Strategies are not merely long term plans that are formed once
andfollowed over several years, but rather they emerge with time.
● It is logical in the sense that top managers take decisions as they learn by implementing different strategies.
● The benefit of this approach is that it helps investors take investment decisions carefully and therefore,
reducesseveral business risks.
● The Spearman correlation coefficient is a measure of the monotonic association between two variables.
● The Pearson correlation coefficient is designed to capture the extent of the linear association between
variables.
● In regression analysis, the dependent variable is treated as a random variable, while the independent variable
isfixed.
● The Pearson correlation coefficient can range from +1.0 to -1.0.
● Brand equity is basically the value that a brand holds. As per the Aaker Model, brand equity is defined as a
combination of brand awareness, brand loyalty and brand associations.
● An important aspect of brand equity is brand identity which helps people recognize your brand, what it stands
for,what defines it and what value or message does it convey. Therefore, this supports Statement (I).
● Statement (II) is incorrect as the core identity of a brand does not change as the brand travels to new
markets,because that identity is what makes the brand unique. Other aspects may change, like the product
line that comes under a brand. But the brand identity doesn’t change as such.
Sol. PERT and CPM are the two types of project management techniques.
While PERT (Project Management and Review Technique) is suitable in situations where the time taken by
different activities is not unknown or is uncertain, while CPM (Critical Path Method) is suitable where the
projects are of recurring nature.
● PERT manages the uncertain activities of a project (Probabilistic), while CPM manages the predefined activities
ofa project (Deterministic).
● PERT is event-oriented while CPM is activity-oriented.
● PERT mainly concentrates on the time while CPM focuses on the cost.
From the above explanation, we can say that the point a and c are the most appropriate.
There are mainly two approaches to demand forecasting. One is to collect the data by conducting a SURVEY and two,
using the past data through statistical techniques.
Survey Method: This is one of the most common and simple methods to forecast demand. Generally, an
organisation conducts a survey to know the present demand for their products in order to estimate the
possible future demand for their products. A few methods that come under the survey method are:
1) Delphi method: This is a group decision-making technique which involves a group of experts who are asked
toshare their opinions on the future demand for the product.
2) End-use method: In this method, a list of the end-users or the final consumers of the product is prepared
who arethen approached to know about their individual buying patterns in order to forecast the demand for
the product.
3) Complete enumeration Method: Also known as the consensus method, it is a method wherein an entire
populationis studied to gather the data. It means each and every item in the universe is selected for the
purpose of collecting detailed data. The universe could be represented by a particular place, or a group or a
specific community of people.
Statistical Method: This is a method in which the demand is forecasted through studying the past trends. This
involves the GRAPHICAL method wherein certain graphs are prepared on the basis of previous year’s figures,
so as to see the trend to forecast future demand for the product.
External forces are the forces that relate to the outside environment, and has nothing to do with the internal
activities of an organisation. Whereas, Internal forces are the forces that relate to the inside environment of
an organisation that has a direct impact on its business.
● Technological advancement: It is an example of External force because some of your competitors have
adopted abetter and more advanced technology which may have a negative impact on the sales of your
product.
● Workforce Diversity: Workforce refers to the people or the employees in your organisation. Since people
arecoming from different backgrounds and cultures, it has a great impact on the overall business of a company,
which is again an external force as these values come from the outside environment.
● Change in leadership: leadership is an important function of an organisation. It involves leading, guiding,
directingand motivating the employees working under you. Any organisation would do well if it has good
leaders or if it follows an effective leadership style. Therefore, any change in leadership is an internal force
which has a clear and direct impact on the company’s functioning.
● Competition in the market: Now that we know about the external environment, it is very clear that any kind
ofcompetition in the market is an external force as it is coming from the outside.
A binomial distribution is a probability distribution which determines the probability of SUCCESS or FAILURE outcome
when an experiment is conducted multiple times. It is a type of distribution that has two possible outcomes
(Like Yes, No or True, False etc.)
For example: When you toss a coin, there could be two possible outcomes. Either it will show up a ‘head’ or a
‘tail’.
However, it is based on 3 criteria:
1) The number of trials (observations) is fixed - Meaning you can only find out the probability when it is known
toyou how many times does the experiment happen.
2) Each trial is independent - Meaning that the result of one trial does not have any effect on the next trial.
Each trialis independent.
3) Every trial has only two possible outcomes - Like when you toss a coin, there are only two possible
outcomes as itonly has two sides, unlike the case of rolling a dice which has 6 outcomes.
● Depreciation do influence the flow of fund indirectly by reducing the demand for dividend payment and tax
liability of the firm. Also, depreciation cannot be a source of fund as it does not generate any funds but
saves cash outflow.
● It is thus added back to the operating profit to find out funds from operations; thus, it does not have any real
effecton the position of the funds in the firm.
● Customer value is the weightage people give to a product when making a buying decision, in terms of the perceived
benefits they would get and the perceived costs that they would have to incur in receiving those benefits. It
basically defines the difference between the perceived benefits and perceived costs.
● For example, A person may get multiple benefits from the same product. Like, let's say a person buys a laptop
that1. Helps him in his official work 2. Helps him in his personal entertainment and 3. Helps his family members
and friends too. So now he would weigh these benefits against the cost he would have to incur in getting it,
Like 1. Money 2. Time and effort. In such a case, he will only buy the laptop if the benefits outweigh the costs,
i.e. when there is a positive difference between the two. That positive difference is the value or the customer
perceived value.
● In international business, Dumping is referred to as an act where a company sells its product in another market at
a lesser price than what it would sell at in its domestic market.
● Predatory Dumping is a form of anti-competitive behaviour where a foreign company chooses to sell its
productsbelow the market value with an intention to gain access to the market and drive out domestic
competition.
While granting a loan, financial institutes make some covenants which are explicitly related to assets such as
restriction on full or partial disposal of assets, maintenance of working capital position, restriction on the
creation of further charge. But the covenants are not made over non-asset, personal decisions and business
of the firm, like disposal of promoters’ shareholding.
● Cooperative banks are registered under the Co-operative Credit Societies Act, 1912 and regulated by the Reserve
Bank of India. Such banks are the independent association of people who joined voluntarily with an objective
to meet their monetary, financial and economic needs.
● Regional Rural Banks are the Government banks that operate at a regional level in different states across
thecountry. They have been formed with a view to support the rural areas of India by providing them with
banking and financial services.
As Cooperative Bank is an autonomous entity, while Regional Rural Banks are Govt owned banks, they do not
come under the structure of the co-operative bank.
The earliest definition of small scale industry coined in the year 1950 was that it had a maximum size of 0.5
million rupees fixed investments and a workforce strength of less than 50 workers in units using power or less
than 100 workers in units not using power for manufacturing.
Forward Price = 70 + (0.5% of 70) +
0.60 = 70 + 0.35 + 0.60 = $
70.95
● Normal goods are the goods that show a positive relationship between demand and income. Unlike Inferior goods,
for these goods, the demand decreases with an increase in the consumer’s income.
● For example: Let’s consider two goods: 1. Normal good - A decent quality pen worth Rs 10. And 2. Inferior
good -
A poor quality pen worth Rs 2. In this case, if the income of the consumer rises, he will certainly purchase more
of 10 Rs pen and less of 2 Rs pen. However, if his income continues to rise, he may stop buying it and shift to
an even better quality pen which is worth Rs 20.
● Human Capital is an intangible asset which is not mentioned on a balance sheet but has a great impact on
the overall performance of a firm.
● It refers to a stock of skills, knowledge, habits, and abilities possessed by an employee through his
learning,training and development, personality traits etc.
● These qualities of human are not listed anywhere in a balance sheet, but they matter to a large extent.
Twoorganisations may have the same technology and marketing methods, but what differentiates them is the
quality of their personnel.
● This is the reason why companies pay close attention to the candidates while recruiting them and also makes
extraefforts in their training and development.
● NITI Aayog has launched a Women Entrepreneurship Platform (WEP) to develop an ecosystem for the rising
women entrepreneurs across India.
 ● It has been built on 3 Pillars: Iccha Shakti, Gyan Shakti and Karma Shakti
● Through this initiative, women will be provided free credit ratings, mentorship, fund support and
corporatepartnerships.
● Statement I is incorrect because all ideas are not opportunities. An idea is merely a thought or a concept in mind
that can be converted into an opportunity if it has the right qualities. For example, An idea of increasing the
production to maximise the profitability may not be a good one as profitability largely depends on the quality
of the product and not much on the quantity.
● Statement II is correct because any idea that has the right qualities of being attractive, reliability and durability
canbe seen as an opportunity. For example, An idea of producing a high-quality product that is both attractive
and durable has a high chance of getting success.
● Turnaround strategy is a kind of strategy where an organisation realises that the initial decision taken by them was
not right and it may lower its profitability in the near future, so they back out from the decision before it leads
to any further damage.
● Sometimes, it is also due to the changes in the external environment that a firm has to redesign its processes
andmake necessary changes to prevent it from affecting the business’s profitability.
Therefore, re-engineering and re-designing of business processes is an essential and integral part of the
Turnaround strategy.
● Anchoring Bias: It is a cognitive bias in which people tend to rely too much on the primary piece of information
offered, failing to see the subsequent information objectively. For example, You see a recipe book worth Rs
500; then you see another recipe book costing Rs 350. So, you're bound to view the second book as cheap.
There may be other books that cost much less, but you fail to notice that due to this cognitive bias.
● Escalation: Also known as the sunk cost fallacy, it is a situation where an individual tends to stick to a
decisioneven if it proves to be wrong. This is mainly due to the initial investment that has been made. For
Example, A husband-wife tend to stay at a cinema hall even when they clearly don't enjoy the movie, only
because they spent money on the tickets.
● Confirmation Bias: It is the mother of all kinds of misconceptions and a very common one. It is a situation
wherepeople interpret new information in a way that supports their existing beliefs and views. Therefore, the
person filters out all that information that is contradictory to his existing knowledge and looks only for the
information that is compatible with it. This represents a case of selective perception.
● Hindsight Bias: It is another common bias where people tend to overestimate their ability to predict some
eventwhen, in fact, they are really in hindsight and not so easy to predict. For example: Once the outcome of
a cricket match is known to people, they often say it was highly predictable when, in reality, that wasn't the
case.
● Perfect Competition: A market structure where many small sellers competing against each other, selling
homogeneous products at a single rate where the factors of production are freely movable from one firm to
another firm enabling them to produce homogeneous products.
● Monopoly: One seller/entity controls the whole market, restricted entry and exits, as in the case of Indian
railways.
● Monopolistic Competition: It is a type of imperfect competition such that many producers sell
heterogeneousproducts (products that are differentiated) and hence are not perfect substitutes.
● Oligopoly: A market structure lies between the pure monopoly and monopolistic competition, where a few
sellersdominate the market selling homogeneous or differentiated products.
The four areas of feasibility analysis are:
1) Product/service feasibility;
2) Industry/market feasibility;
3) Organizational feasibility; and
4) Financial feasibility
● Exporting is entering a foreign market by selling goods produced in the company’s home country.
● Licensing is a method of entering a foreign market in which the company enters into an agreement and offer
theright to use its name or another right of value for a fee.
 ● Joint Ownership is a joint venture in which a company joins the investors in an international market to create
localbusiness and agrees to share joint ownership and control.
● Direct investment is the buying of a controlling interest in a company to have enough influence to direct the
courseof the company. It is done to acquire raw materials, operate at lower manufacturing cost and to
penetrate the local market.
So, entering a foreign market by developing assembly and manufacturing facilities is known as Direct
Investment.
● Brand experience is a type of marketing which considers the brand as a whole rather than a collection of parts. It
delivers the product/ services as a whole package which influences the feelings of the customer about the
particular product/ service of the company. This helps in creating a sense of belongingness with the company
increasing the goodwill in the eyes of the customer.
● In this question, Singapore airlines try to provide the service as a whole right from entering the airport to
providingfood of customer's choice. They tick all the boxes rather than just focusing on providing service
during the flight.
Along with Convenience sampling, Consecutive sampling, Snowball sampling is an example of non-probability
sampling as the probability of selection of a particular sample can not be calculated.
● Customer satisfaction (often abbreviated as CSAT, more appropriately CSat) is a measure of how the products and
services offered by a company meet the customer expectation.
● Customer satisfaction is a post-consumption phenomenon and often results from a cognitive appraisal.
● Customer loyalty is the result of constant positive emotional experience, satisfaction and perceived value of
anexperience which leads to customer loyalty, whereas customer satisfaction is a temporary positive response
towards a product.
● Data scrubbing, also called data cleansing, deals with detecting and removing errors and inconsistencies of data in
order to improve quality.
● In a Data Warehouse which acts as a central repository for information, consolidation of many data
representationsand treatment of duplicate information become necessary. Thus, errors and inconsistencies
are removed from the database before it is added in the warehouse by data scrubbing.
● The 'War for Talent' (WfT) was a concept coined by Steven Hankin of McKinsey & Company in 1997 in response to
the main challenge faced by big business in the drive to recruit the best and the brightest.
● The war for talent refers to an increasingly competitive landscape for recruiting and retaining talented
employees.
● This is intensified by demographic shifts (primarily in the United States and Europe) and is characterized
byincreasing demand along with decreasing supply (demographically).
India's Trade Policy, 2015-20 stipulates to raise India's share in world exports to
3.5%. India aims to increase its export of merchandise and services from the US $ 465
billion in 2013-14 to approximately US $ 900 billion by 2019-20 Thus,
● MUDRA Yojana is a scheme launched by the Hon'ble Prime Minister of India on April 8, 2015, for providing loans
to the non-corporate, non-farm small/micro-enterprises up to Rs 10 lakh.
● These loans are known as MUDRA loans under Pradhan Mantri MUDRA Yojana [PMMY].
● Under the support of PMMY, three products, namely 'Shishu', 'Kishore' and 'Tarun' were created to signify
thestage of growth and funding needs of the beneficiary micro-entrepreneur.
● Ergonomics can be defined as the study of human interactions with elements and manmade objects.
● The aim of this type of study is to provide an environment that is well suited to the physical needs of the
personand is mostly used at workplaces, where people spend the majority of their time.
● For e.g., building customized desks and chairs for each individual as per their body type, like a chair that
supportsthe lower back of a person to prevent him from slouching. This kind of practice can help individuals
stay healthy and will reduce sickness and long term diseases that are a result of bad posture.
● Line Authority essentially represents the relationship between a superior and a subordinate in an organisation. It
is the power given to the superior to manage or instruct his subordinate to get the work done for the
achievement of the organisational goal.
● The line manager can be a reporting manager, supervisor, team leader, etc., who manages his team and has
directsupervision over their activities.
● On the other hand, staff authority is the supporting function of an organisation that enables a staff manager
toadvise the line managers on improving the effectiveness of their work.
● Staff Manager is usually an independent employee who does not report to the line manager but only
complementshis/her work by sharing expert advice on the subject matter.
● Eclectic Paradigm or OLI framework or the ownership, location, internationalization (OLI) model is a tool or
technique used the companies to determine if it would be beneficial to opt for FDI option over other domestic
or national options.
● Scholar John H. Dunning first propounded this framework in 1979.
● Contextual marketing is an internet-based marketing technique whereby users are catered by ads as per their
recent buying behaviour or their browsing history.
● The objective is to show ads of the products/services that the customers are already interested in, so they
have agreater chance to make a purchase.
● Each time the user searches for something on the internet clicks on any kind of ad or even reads an article
online,the information is stored in the system and is then used for such marketing purpose.
● In the above case, WhatsApp is an application that runs through internet, any exchange of information is
recordedin the app system and is then used by other applications like Uber, which thus pops up to help them
with their travel arrangement for their preferred destination.
● Entrepreneurship Development Institute of India (EDII) is a non-profit, independent Institute, set up in the year
1983 at Ahmadabad, Gujarat and sponsored by four major financial institutions viz IDBI Bank, IFCI Ltd, ICICI
Bank and SBI.
● The main objective of the institute is to strengthen and promote Entrepreneurship in India. For this reason,
EDIIhas established a Centre for Research in Entrepreneurship Education and Development, also known as
CREED, with a view to addressing a wide range of issues that are faced by the small and medium level
enterprises through a broad network of researchers and trainers.
● Directorate General of Foreign Trade (DGFT) in India plays a crucial role in the management and development of
trade relations with other nations.
● DGFT works under the MOCI (Ministry of Commerce and Industry), and it administers laws regarding
foreigninvestment and foreign trade in India.
● An entrepreneur is a person who is free and not indulge as an employee in any organisation; the entrepreneur
thinks and innovates for himself/herself.
● An intrapreneur is a person who is already employed in a company say as a manager, and he/she is
promotinginnovative ideas and methods in the organisation.
● Small Industries Development Bank of India (SIDBI) headquarters at Lucknow, is a development financial institution
in India.
● The bank has the primary objective to develop and finance the MSMEs in India.
● The bank is also engaged in coordination of other institutes which are also engaged in the same activity.
● Propitious niche: Most favourable advantage to a company, like the first company of a certain product from
which the customers ate satisfied in every sense.
● Strategic window: A limited time window in which of the following statements is/are correct with reference
to aparticular strategy is beneficial.
● Mission: The ultimate destination or objective the whole organisation works for.
● Business strategy:
● A strategy to improve the position of the firm in the given environment.
● A job analysis is performed to collect data about the duties and responsibilities, needed skills or work environment
of a job.
 ● All in all the job analysis is making a job, or a set of assignments and task bond in a bundle which can be termed
asone job and assigned to one person having certain skills and qualifications.
● The Constitution (42 Amendment Act), 1976 is the most controversial amendments of the Indian constitution. This
is also known as mini-constitution or constitution of Indira.
● The amendment along with various other amendments inserted Article 43A after Article 43 in The Constitution
OfIndia 1949 which reads “Participation of workers in management of industries.-The State shall take steps,
by suitable legislation or in any other way, to secure the participation of workers in the management of
undertakings, establishments or other organisations engaged in any industry”.
. ● Variable cost is the cost which varies from the level of production. It increases with increasing level of production
and vice versa.
● Total variable cost is the total cost that varies from the level of outputs.
● At a budgeted level of production, the variable cost would be estimated on the basis of the budgeted level
ofoutput, and when the actual level of output is lower than the budgeted level of output, then the total actual
variable cost would also be lower than the budgeted level of output.
● There are 4 basic categories of social security benefits which are under social security
legislation, i.e., retirement, disability, dependents and survivors benefits.
These all are under Old age, survivors and Disability Insurance Program (OASDI). ●
Compensation and Gratuity acts are related to Retirement and surviving. State insurance
is rated to the insurance program.
MM Hypothesis has the following assumptions
(a) Existence of Perfect Capital Market:
● No transaction cost;
● Neglected Floatation cost ;
● The market price of the share is not affected by the investors;
● No Information Cost;
● No restrictions on the purchase and sale of securities.
(b) Homogenous Expectation:- The return expected by the investors is the same for all firms.
(c) Homogeneous Risk - This means risk is the same for all the business firms.
(d) The Dividend Pay-out Ratio is 100%:
(e) Taxes do not exist.
● ERP is Enterprise Resource Planning which means software which is used to plan the resources of an enterprise so
that they may be used to it's fullest with maximum efficiency and effectiveness.
● It is an integrated software which is used for the above purpose, which includes assets, HR, Project
managementetc. This software is made for the planning of the whole corporate and these fall under that.
● Speciality stores are the stores which tend to be specialised or say expert in a particular type/category of the
product like men-wear, women-wear etc.
● They tend to provide high-class service/ have experts for helping their customers which tends to increase
themarkup, but limited speciality makes it a lower volume group.
● Business Goals are the accomplishments which a business wants to achieve over a specific period of time. To
achieve these accomplishments, all the efforts/activities are directed for the end result.
● Strategies are simply the plans made to achieve anything or the actions of planning what and how to do to
achievesomething. Strategies are made to achieve a long term or short term targets.
● Mission or mission statement defines what a company is, what is the cause of its existence, and what it's
currentlydoing so these are the basic functions or tasks of the organisations.
● Rules can be simply defined as the actions you must or must not perform during a particular situation. E.g.,
youmust wear helmets while driving two-wheeler vehicle. In the same way, they are the actions or non-
actions, allowing no discretion.
● Utilitarianism: Balanced/equal net benefits or cost to
everyone ● Same jobs having the same utility would be
paid the same wages.
. ● Linux is a well-known and widely used open-source operating system which is the base for all other software and
applications in the computer system. It is the most reliable and secure operating system.
● Whereas, Java is a set of computer software that is used for developing various programs and run programs
in itsjava programming language. It is independent programming software.
● Communication software provides a gateway to systems to transfer files and messages in different
formatsamongst different computers or users.
● System software provides linkage between hardware and the end-users. It is a program that helps in managing
thecomputer itself.
● GNP is the total monetary value of all finished goods and services produced plus net factor income from abroad
within the territory of the country in a particular financial year.
● GNI and GNP are same, but GNI includes positive net income on FDI and net receipts of primary income
fromabroad which makes GNI>GNP.
Thus, Option A is correct.

2018 Dec

● A price reduction leads to an increase in the quantity demanded of the commodity.

● The quantity of a good or service demanded at a given price level results from price elasticity. A good or
service that is highly elastic means the quantity demanded varies widely at different prices, whereas
goods/services that are inelastic means the quantity demanded remains relatively static at different price
points.
● Increase in the price of a commodity will reduce purchasing power and thus the demand (Price effect). Also,
a fall in price leads to a rise in purchasing power and thus the demand.
● A long-run average cost curve is also known as planning curve and envelope curve because of a firm plans to
produce an input in the long run by choosing a plant on the long-run average cost curve corresponding to the
output which helps to determine the size of the plant to produce the desired output at the minimal possible
cost.
● Long-run average cost curve under linearly homogeneous production function says that with the
proportionate change in the factors of production, the output also increases with the same proportion.
Monopoly is a market situation in which there is a single seller. The monopolistic situation in the market is
not desirable because monopolist becomes able to produce below the economic capacity level when it
exhibits satisfaction with the normal profit.
● Being the sole supplier in the industry, monopolist companies face a downward-sloping demand curve. As a
result, it has to lower the prices of goods/services to increase the quantity sold, and due to this reason, a
monopolist company produces below its economic capacity level.
● Price discriminating strategy: It is a strategy wherein the company charges each customer, different prices for
the same goods or services depending on the ability and willingness of the customer to pay
● Following is the combination that constitutes the form of price discriminating strategy:
● Postage stamp pricing: It is also called uniform delivery pricing which means charging the same delivered price
irrespective of buyer's location
● Basing point pricing: It is also known as Delivered Pricing wherein the prices of goods are set based on a base
cost-plus transportation. Transportation costs are determined from a 'base point' which may not be the
manufacturing location
 ● Free onboard pricing: Under this, the seller sets a price that includes the cost of delivering goods to the nearest
port.
Difficulty level
Correct attempts
Hard
32%
Topic
Paper II - Financing
● Discounted Cash Flow Method: It is an approach used to calculate the present value of a series of future cash
flows. It calculates the cash inflow and outflow through the life of an asset which is then discounted through
a discounting factor.
● The discounted cash flow techniques for capital investment proposals are:
1) Net present value method: This method compares the present or current value of money to the value of
that money in future.
2) Internal Rate of Return Method: It is the discounting rate in which the total of initial cash outlay and
discounted cash inflows are equal to zero.
3) Excess benefit-cost ratio method: This method helps in comparing the present value of all benefits with
that of the cost and investments of a project
Correct Answer : C
● Product line pricing is a strategy of reviewing and setting prices for multiple products that a
company has to offer on coordination with one another.
● Points to consider in product line pricing are
1) Cost estimates: Before setting pricing, it is important to be financially informed about the costs involved
with running the business. Fixed costs, direct costs need to be taken into consideration while deciding pricing.
2) Demand: It is important to know what customers want from a company's products and services, or if the
current customers are buying high end or low-end products. This information will, in turn, help to determine
if the company's decided price is right or needs to be reviewed.
3) Competitors: It is also one of the important points to see what your competitors are charging for different
products and services, how are they positioned in the market. This information helps in giving a benchmark
for deciding pricing.
● Inflation is an increase in the price level of goods and services.
● Supply push inflation is a type of inflation that is caused by an increase in the price of inputs like labour, raw
material etc.
● Deflation is a decrease in the price level of goods and services. It occurs when the inflation rate falls below
0%.
● Stagflation occurs when the production of goods and services in an economy slows down or starts to decline,
and there is a high rate of both inflation and stagnation.
● Motivation is the process that initiates, guides and encourages people to give their best performance and help
in reaching organizational goals.
● Unitary Motivation is not a broader classification of Motivation. It is hardly a unitary phenomenon.
● People vary not only in the level of motivation but also in the orientation of that motivation.
● Cross contact communication is also called Intra-scalar communication. Intra scalar communication is
exchange of information between two or more persons having equal relationship bound to one another.
● Cross contact or intra scalar communication increases understanding, speeds action and provides
supplementary information.
● Sensation thinking personality: People with sensation thinking personality are practical, logical, decisive.
These people are more skilled in some technical jobs. Example: production, management, accounting etc.
● Intuition thinking personality: People of this personality type are creative, energetic and like jobs that are
challenging in terms of design, analysis. Example: Law, R&D.
● Sensation feeling personality: These people are friendly, social, and they approach facts. These people are
pragmatic and methodical.
● Intuition feeling personality: People with this personality type are enthusiastic,people-oriented and helpful.
● Attitudes are judgments, standpoints about a certain subject matter or person, and they can have a powerful
influence over behaviour.
● While attitudes are enduring, they can also change and develop over a period of time.
Attitudes are specific, whereas values form a broader and more encompassing concept.
● Leadership plays a very important role. Leaders have a vision that provides focus. Leadership is about
developing a vision that provides leaders with the focus needed to accomplish organizational goals.
● In the 21st century, the need for such leaders will replace managers in organisations.
● Gang plank breaks the scalar chain. Communication in scalar chain may involve delay when two subordinates
or employees at the same level want to exchange information.
● This is why Fayol suggested the concept of Gang Plank so as to avoid unnecessary delays and allow direct
communication between two subordinate employees at the same level.
● According to the concept of gang plank, two subordinates can directly communicate if any emergency arises,
without following the formal lines of communication.
● Kaizen is a Japanese word which means continuous improvement. TQM is a managementtool for improving
total performance. Kaizen is one of the concepts in TQM.
● TQM is a method used to enhance quality and productivity in business organizations.
● TQM was invented by Walter A. Shewart. It was initially implemented at Western Electric Company, in the
form developed by Joseph Juran. Also, it was demonstrated on a grand scale by the Japanese industry through
the intervention of W.Edwards Deming. He developed the Deming triangle to improve quality control.
● TQM involves variables such as employee involvement, customer focus, process monitoring and control,
quality. Production management is not one of the variables.
● Interpersonal Role:
a) Figurehead: Includes duties that are legal or social in nature
b) Leader: Includes building a team, coaching the members, motivating and encouraging them
c) Liaison: Includes developing and maintaining a network outside the office for information and assistance
● Informational Role:
a) Disseminator: Includes transmitting information within the organization
b) Monitor: Includes seeking information regarding the issues that affect the organization
c) Spokesperson: Includes representing the organization and providing information about the organization
to others ● Decisional Role:
a) Disturbance handler: Includes taking corrective actions when the organization faces any unexpected
difficulties
b) Resource Allocator: Includes optimum allocation of resources
c) Negotiator: Includes representing the organization in negotiations
Succession Planning is a process that involves identification as well as the development of new leaders who
can replace old leaders when they retire or leave the company. The process of Succession Planning involves:
1) Identify key roles for succession or replacement planning.
2) Define competencies required to perform roles.
3) With future orientation, assess people against criteria
4) Identify pool of talent that can potentially perform highly in key roles.
5) Develop employees to be ready for future key roles.
● The concept of Wage Boards was first enunciated by the Committee on Fair Wages and not by the
Minimum Wage Committee.
● A wage board is a tripartite body representing the interest of labour, management and the public.
● Representatives of employers and workers on wage board are appointed by the government after
consulting the concerned organizations.
It is important to use a thorough disciplinary procedure before deciding the most appropriate course of action
to adopt when performance becomes an issue. Following are the steps of disciplinary procedure to be
followed:
1) Preliminary investigation
2) Issue a charge sheet
3) Suspension pending enquiry
4) Notice of enquiry
5) Conduct of enquiry
6) Recording of findings
7) Awarding punishment
8) Communicating punishment
According to Industrial Disputes Act,1947 Sec 25C, Whenever a workman (other than casual workman) whose
name is in the muster rolls (an official list) and who has completed not less than one year of continuous service
under an employer is laid-off, whether continuously or intermittently, he shall be paid by the employer.
● A Union Security Agreement is a contractual agreement that is signed between the employer and the
labour union.
● It aims at ensuring that the workers’ pay their share of the dues and also determines the extent to which
the agreement protects the union in holding its membership.
As per the provisions of the Factories Act,1948
a) Cool drinking water during hot season is to be provided in case of More than 250 workers
b) Employment of Safety Officer in case of 1000 or more workers
c) First aid box in case of 150 workers
d) Ambulance room in case of More than 500 workersThe correct combination of the financial decision is:
1) Investment decisions: Investment decisions involve how to best allocate capital to maximize shareholder
value.
2) Financing decisions: Financing decision is a crucial decision that involves the borrowing and allocation of
funds required for investment decisions.
3) Liquidity Management decisions: These are concerned with the management of the current assets. It is
also concerned with the day to day financial operations that involve current assets and current liabilities.
Liquidity management involves access to readily available cash so as to fund short term investments, cover
debts etc.
4) Dividend decisions: These decisions are made by the finance managers that are concerned with the
payouts to the shareholders. The payout is the portion of earnings given as the dividend at the end of every
reporting period.
● An optimum capital structure is one that maximizes a company’s market value while minimizing its cost of
capital. It is a mix of debt, common stock, preferred stock.
● The Traditional Theory of Capital Structure: When the weighted average cost of capital (WACC is the
average rate of return required to create value for the firm. All sources of capital, including bonds, common
stock, preferred stock etc. are included while calculating WACC) is minimized, and the market value of assets
is maximized, an optimal structure of capital exists.
● Net Income Theory: This theory was presented by Durand. Net Income theory suggests that the value of
the firm can be increased by decreasing the overall cost of capita l(WACC)through higher debt proportion.
● Net operating income theory states that the market value of a firm will be the same irrespective of the
proportion or debt.
● Pecking order theory is not a part of the combination that supports optimum capital structure. This theory
tried to explain why companies use or prefer to use one type of financing over another.
Securities are issued by the companies to the investors. The company makes a direct offer to the general
public to subscribe to the securities of a stated price. Ways of issuing stocks in new securities in new securities
market are:
1) Initial public offer, a process by which a company sells shares of its stock in the open market.
2) Private placement - when a company issues financial securities to a particular group of investors ( 49 or less
in number), it is known as private placement.
3) Offer for sale, a method of selling shares through the exchange platform for listed companies
4) Stock option, right to buy a specific number of common shares at a fixed price over a specified period of time.
5) Book building, a process by which companies determine the demand and the price of a proposed issue of
securities through public bidding.
Venture capital financing is a type of funding that investors provide to start up/newly established companies
believed to have high potential. The process of venture capital financing is as follows:
a) Deal origination: It is the primary step in venture capital financing. It is impossible to make an investment
without a deal.
b) Screening: It is the process of scrutinizing all projects in which an investor could invest.
Various factors taken into consideration are size of investment, market scope etc
c) Due diligence: The proposal is evaluated after the screening, and a detailed study is done. It is a process that
not only involves evaluating the project capacity but also the capacity of the entrepreneurs to meet their
claims
d) Deal Structuring: It involves shaping the deal in a way so as to make it mutually beneficial.
e) Exit Plan: It is the last step in venture capital financing which is made to make minimal losses and maximum
profits.
● As per M-M (Modigliani and Miller approach), the value of the levered firm is equal to the value of the
unlevered firm.
● The arbitrage process takes place when the market price of shares of levered firm is higher than the market
price of the shares of unlevered firm, the arbitrage process in such situation takes place to restore equilibrium.
● Low-cost debt financing means the cheaper cost of borrowings and easy funds; thus company prefers low-
cost debt financing.
● Interest on debt is a charge; it is obliged to be paid even in a loss situation.
● Working capital financing is done by various modes:
● Trade credit: It is a short-term credit facility extended by suppliers in the normal course of business.
● Bank finance: It is one of the most important sources for the financing of current assets.
● Factoring: It is a Financial service that helps firms in managing their receivables better. These can be issued
only if the company possessed a very high credit rating.
● Marketing concept holds that the company’s task is to identify the needs. wants,desires, interest of target
markets and deliver the desired satisfaction.
● Marketing cannot only be performed by individuals but also by organizations.
● Advertising and promotional campaign are necessary. In the case of loyal consumers, the marketing cost
becomes lower because loyal customers have that trust and faith in the brand that they don't tend to switch
to other substitutes.
● A high level of brand loyalty does not insulate the firm from competition because loyal customers do not
switch to competitor's brands even when they are provided with a lot of benefits
● Demographic segmentation includes Age, Religion, Gender, Family size etc.
● Psychographic segmentation includes buyer’s habits, hobbies, spending habits and values
● Unsought Products: These are products that consumers do not generally buy or do not consider buying under
normal circumstances. Diamond rings, life insurance etc. are the examples of such products.
● Convenience Products: These are purchased most frequently by consumers. Products are bought immediately
without great comparison between other options. Sugar, pencils, pen, papers etc all the examples.
● Shopping Products: These products are purchased less frequently by consumers. Consumers spend a fair
amount of time comparing attributes of shopping products such as price, style, quality. Therefore, shopping
products are more carefully compared and consumers spend more time as opposed to convenience products,
comparing alternatives. Examples: Airline tickets, clothing, phones etc.
● Speciality Products: These are the products having unique characteristics. More than spending the time, these
products are concerned with the special efforts that buyers make in buying speciality products compared to
other types of products. These products are only available at select/special places and are highly-priced.
Examples: sports cars, designer clothing, famous paintings etc.
Social media includes websites and applications that allow people to interact among themselves freely
 Nutritional value of different foods is an objective of Cognitive campaigns. It is a way to form connections with
customers and create brand loyalty. Cognitive campaign objectives are focused on learning, knowledge and
beliefs.
The correct sequence of the channel alternatives in order of increasing cost per transaction is:
1) Internet
2) Telemarketing
3) Retail stores
4) Distributors
● X-bar chart is a type of chart that is used to monitor the variations between samples. It is used for features
that can be measured on a continuous scale such as weight, temperature etc.
● A P-chart, also called a p-control chart is used in statistical quality control to graph proportions of defective
items. It is based on binomial distribution, i.e. there are only two possibilities.
● C-chart is a type of control chart which is used to monitor “count”-type data. It monitors the total number
of nonconformities per unit. (Nonconformities are defects found in the sampled subgroup).
● R-chart is a type of statistical process control chart that shows how the range of the subgroups
(measurements of the samples at a given time constitute a subgroup) changes over time. It monitors
variations within samples.
● Design is one of the most important features when it comes to building a great product
● Reverse Engineering: It is a process by which the design of a product is analyzed or created again. This process
is usually repetitive and requires several modifications to the original design.
● Standardization: It is a technique in product design that aims to reduce the number of different parts within
the product. Its purpose is to reduce variations in the product types so that the firm sells and advertises a
standardized product in the global context.
● Concurrent Engineering is a method of designing and developing products wherein different stages run
simultaneously. It is, therefore, also called simultaneous engineering.
● Enterprise Resource Planning: It is an enterprise-wide information system that coordinates all the resources,
information, activities required to complete business processes. Therefore, ERP is not related to product
design.
● Routing: Routing is the first step in production planning and control. It is the process of deciding the
route/path of work and the sequence of operations.
● Scheduling: Scheduling involves fixing the amount of work to do, fixing the starting, completing, date and time
of each operation.
● Dispatching: It is the implementation stage which involves starting the process of production.
● Follow up: This step is concerned with the evaluation of the results.
● In a critical path Method, each defined activity is represented by one arrow in the network. Therefore, no
single activity can be represented more than once in the network.
● There are two kinds of activities; critical and non-critical. Each critical activity will not have any cushion time
to either postpone or prepone its starting time whereas each non-critical activity will have some cushion time
to either postpone or prepone it's starting time from the original starting time.
● Cycle stock: It is the amount of inventory that is planned to be available for normal demand during a given
period.
● Transit stock: It refers to the goods that have already been dispatched or shipped from the supplier’s
warehouse but not yet delivered.
● Buffer stock: It refers to the extra stock held as a reserve in case there are future demands.
● Safety stock: It refers to the additional stock held in the inventory that can be used in case of stockout.
● Mean forecast error is the difference between the actual or real demand and the predicteddemand.
● Mean absolute deviation refers to variation in a data set. It is the average distance between each data value
and the mean.
● Mean square error measures the average squared difference between the predicted values and the
actual/real value.
● Mean absolute percent error; it measures the accuracy of a forecast system as a percentage.
● A decision tree is a structure that is used as an effective method of decision making because it helps to clearly
lay out the problem and analyze the possible consequences of a decision.
● There are three different types of nodes (chance, decision, end nodes).
● In a decision tree, nodes at the left represent actions that occur before nodes that fall farther to the right.
● Classical approach to probability: It is the statistical concept that measures the likelihood of something
happening. This means that every statistical experiment will contain elements that are equally likely to
happen. Formula being P(a) = m/m+n.
● Statistical approach to probability: It is used when all probable outcomes are not known in advance and all of
the probable outcomes are not equally likely.
● Subjective approach to probability: It relates to assigning probabilities based on the assignor's (subjective)
judgments.
● Modern approach to probability: It includes both the classical and statistical definition as particular cases and
overcomes the deficiencies of each of the approaches.
● Business function processing system: Business processes involve a set of activities involving one or more
business functions to help carrying out the organization's mission.
● Transaction processing system: It is a type of information system that collects, stores, modifies and retrieves
the data transactions of an enterprise.
● Data processing system: It is a type of information system that captures, collects the raw data and converts it
into a more meaningful form for further processing.
● Integrated information processing system: It includes multiple information sets linked together in an
organized way.
● The most common threat to a database is unauthorized access.
● Unauthorized access is when someone gains access to a program, server, service using someone else's account
or other methods.
● Hypothesis testing is an act of determining the probability that a given hypothesis is true.
● It involves two types of errors: Type 1 and Type 2
1) Type 1 error: It occurs when true null hypothesis gets rejected.
2) Type 2 error: It occurs when false null hypothesis gets accepted.
● Where the region of rejection is on both sides of the sampling distribution, it is called a two-tailed test and
where it is in one side of the sampling distribution, it is called one-tailed.
● Level of significance is the probability of rejecting the null hypothesis when it is true. The critical value of z
statistic for two-tailed test at 5% level of significance is 1.96.
● Sampling distribution is the probability distribution of a given random sample. It helps in making inferences
about the overall population.
● Sampling distribution does take into account type of population distribution as well as size of samples.
Population size and sample size both are included.
As per the formula, y=a+bx, where y is the dependent variable, x is the independent variable, while a and
b are parameters for the linear function. Putting values in the equation, y = dependent variable = 4 + 2*5
= 14.
● Poisson distribution was developed by Simeon Denis Poisson. It is the discrete probability distribution of the
number of events that occur in a given period of time, given the average number of times that event occurs
over that time period.
● It says that if x is the average number of successes occurring in a given time interval in the Poisson distribution,
then the mean and the variance of the Poisson distribution are both equal to x.
● A binomial distribution occurs when there are only two mutually exclusive outcomes. It decides whether the
distribution is symmetric or not.
● World Trade Organization (WTO) deals with the rules of trade between nations. Founded on January 1, 1995,
headquartered in Geneva, Switzerland.
● Supplementing balance of trade deficit and helping a Nation to overcome balance of payment crisis does not
fall under the ambit of WTO operations, all other are the functions that WTO performs.
 ● Floating forex rate: It is a type of exchange rates where the value of a currency is changes or floats based on
a number of factors. It involves fluctuation of currencies.
● Translation effect of change in forex rate: Translation effect is a risk that a company's assets, equities or
income will have a change in value as a result of change in the exchange rate. It Influences the valuation of
financial statements and reported items.
● Transaction effect of fluctuation in forex rate: Influences time lag in receipt of cash against foreign currency-
denominated invoices.
● Geocentric solution in financial planning and control: Geocentric solution tries to handle control on a global
basis. It tries to get the best out of extreme decentralization and centralization in finance decision and
execution.
● World Investment Report is published annually, by UNCTAD. It focuses on trends in FDI, worldwide. It supports
policymakers by monitoring global and regional FDI trends.
● Both the above Statements with regard to WIR are correct and Reason is the correct explanation.
● The United Nation Conference on Trade and Development (UNCTAD), headquartered in Geneva, Switzerland
was founded on 30 December 1964. It deals with trade, investment and development issues.
● The UNCTAD developed an index to compare the transnationality of countries in which TNCs operate.
● The UNCTAD followed parameters like PDI flow as a percentage of gross fixed capital formation. FDI inward
stock, value-added by foreign affiliates and jobs created by them.
● Predatory pricing strategy is a strategy in which the price of a product or service is set at a very low price so
as to achieve new customers. It is also called undercutting.
● Restrictive trade practice is a practice wherein the trader manipulates the price or the conditions of delivery
of the product. Predatory pricing is also a restrictive trade practice.
● Organizational culture is a dynamic system of shared values, beliefs, norms, behaviour that give an
organization its distinctive character.
● Workers, social environment, values, beliefs are important factors which affect industrial relations, loyalty,
productivity etc. Cultural influences also affect the way of addressing superior authority
Growing proportion of the world output is related internationality, causing faster growth of trade among
nations. This situation is bringing world economic integration, which is reinforced by cross-border capital flows
and regional blocs. Both statements are correct and R is the right explanation.
SICA defined a sick industrial unit as a unit or a company that had existed for not less than five years (NOT 3
years) and which is found at the end of any financial year to have incurred accumulated losses equal to or
exceeding its entire net worth.
● Industrial sickness refers to an industry that has performed badly and has incurred losses for several years. It
is not a sudden phenomenon but a gradual process that ultimately erodes or damages the health of an
Industry beyond cure.
● Identification and detection of sickness incipient stage is the first and foremost measure to reduce industrial
sickness.
● ERG Theory was propounded by Clayton Alderfer. It is the extension of Maslow's Needs Hierarchy
● ERG theory of motivation consists of three groups of core needs:
1) Existence: These include needs for basic material necessities
2) Relatedness: These include Maslow's social and esteem needs (maintaining significant interpersonal
relationships)
3) Growth: These include need for self-development and personal growth and advancement.
Joseph Schumpeter coined the term creative destruction and described how the old is being constantly
replaced by the new ones making the possible higher standard of living. He also highlighted the fact that
markets do not passively tend towards equilibrium until profit margins are wiped out.
● Fabian Entrepreneurs: Fabian Entrepreneurs are those entrepreneurs who are not quite adaptable to the
changing environment and often sceptical in their approach in adopting the changes to be made in the
organization.
● Drone Entrepreneurs: These are those entrepreneurs that refuse to change at any cost even if they are
suffering the losses. These entrepreneurs are quite conservative.
● Imitating Entrepreneurs: These Entrepreneurs directly copy the new inventions made by innovative
entrepreneurs.
● Innovative Entrepreneurs: These are the Industry leaders having the ability to create innovative products
according to the changing environment and are not afraid to take risks.
● Richard Cantillon is associated with the concept of Entrepreneurship that says, the entrepreneur is a specialist
in taking on risk.
● According to Adam Smith's insight, entrepreneurship can be defined as the study of human actions that lead
to changes in the division of labour.
● Entrepreneur is a French word coined by the economist Jean-Baptise Say.
● According to Joseph Schumpeter, an entrepreneur is willing to convert a new idea into a successful innovation
Archie Carroll’s model speaks of an organization’s four most basic forms of responsibility in order of priority
namely:
● Economic Responsibility: Responsibility relating to profit and long term survival by benefiting society
● Legal Responsibility: Responsibility to obey laws and other regulations
● Ethical Responsibility: To act morally and ethically
● Philanthropic Responsibility: To give back to society
Intrapreneurship refers to employee initiatives in the organization, without being asked, while Intrapreneur
takes direct responsibility for turning an idea into a profitable finished product through assertive risk-taking
and innovation. Both the meanings describing an Intrapreneur and Intrapreneurship are correct.
● Corporate governance is a system that includes rules, processes and principles by which a company is
governed.
● Norms of corporate governance include:
A) Audit committee plays an important role in corporate governance. It oversees a company's financial
reporting, internal and external audit functions.
B) Woman independent director: Companies Act,2013 mandated a certain class of companies to have atleast
one woman director on board. SEBI, in compliance with the companies act, 2013 made it compulsory to have
at least one woman director on board. A recommendation by Kotak Committee on corporate governance
suggested that entities must appoint at least one woman independent director to their board.
C) Clause 49 of the listing agreement deals with complete guidelines for corporate governance. Under this
clause, SEBI had put forward the responsibilities of the Audit Committee to have a majority of independent
directors.
● Disclosure norms of earning per share are included in IAS (International Accounting
Standards) wherein an entity is permitted to disclose amounts per share other than profit or loss from
continued/discontinued operations.
● Cadbury Committee was set up in May 1991. The committee published their code of best practices in the year
1992 and this code had 19 Recommendation.
● Clause 49 of the listing agreement by SEBI deals with the complete guidelines for corporate governance.
● The minimum number of specified board meetings a year is listed under the Companies Act, 2013, according
to which every company shall hold a minimum 4 board meetings in a year.
● Whistle Blower is a person who exposes the wrongdoing occurring within an organization. Whistle blowing is
an ethical act of practice.
● Inter-governmental Panel on Climate Change (IPCC) is an intergovernmental body of the United Nations. It
was established in 1988. It has concluded that human activities are having a dangerous impact on the climate
● The United Nations Groups also conclude that some exports differ and any that a reliable estimate of the
human imprint’s magnitude remains a distance off.
● Therefore, both the statements are correct but R is not the right explanation to A.
People differ in their choice of values the enforcement of one group’s value on an individual is an ethical issue.
Still, there is a good deal of commonality is the values that businesses hold.
Ethical codes are statements of the norms and beliefs of an organization which are proposed, discussed and
defined by the management of the firm which is then published and distributed.
● Stakeholders management helps to organise, monitor improve relationships. It is used as a tool for managers
and involves identifying and analyzing stakeholders' needs and expectations and implementing various tasks
to engage with them
● The phrase 'invisible hand' was introduced by Adam Smith in his book 'The Wealth of Nations' to explain
processes that affect socio-economic outcomes.
● Each of the stakeholder’s group constituencies is integral to the operation of a corporation and its role must
be taken into account by managers.
● Nature of corporation has been explained by the input-output model. Employees are critical to the enterprise
as a source of labour, but they are merely one input in the market. Customers receive the output from a
corporation in the form of goods/services.
The term "Collective Bargaining" was first used by Beatrice Webb. It is a process of negotiation between
management and workers for determining mutually agreed terms and conditions.
Sons of the soul policy is associated with Recruitment. It says that the locals should be given a chance to work
for a company that is set up in their state.
● Career refers to a person’s course or progress in a particular area of work(iii)
● Career planning involves determining career goals and identifying means to achieve(ii)
● Career path Sequence of work experiences that gives the opportunity to participate in many aspects of
professional area. It involves the growth of the employee in an organization(i)
● Career Anchors: It is a combination of perceived areas of competence, motives and values relating to
professional work choices(iv)
● Fringe benefits mean anything that includes employee’s family that has high social and peer recognition. They
include health, security and retirement benefits offered.
● Fringe benefits are not always non-taxable in nature. There are some Fringe benefits that are regarded as a
part of taxable income.
● Conciliation is a method of dispute resolution wherein the conciliator meets the parties separately and
attempts to solve their differences.
● Arbitration is a method of conflict resolution wherein a dispute is resolved outside the courts by an agreed
third party.
● Adjudication is a legal process wherein a dispute is resolved by the intervention of a third party appointed by
the government.
● Manifest Conflict is the conflict wherein two parties engage in behaviours which evoke responses from
each other. Conflictual Behavior may include written or oral exchanges. Hence, manifest conflict is not always
documented.
● Pluralist approach: Pluralist approach to industrial relations sees conflict of interest and disagreement
between managers and workers as normal and inescapable(ii)
● Psychological approach: Under this approach, the conflict between labour and management occurs before
every group negatively perceives the behaviour of other groups i.e. both labour and management see each
other as less reliable(i)
● Marxist approach: The Marxist approach sees the Power relationship between the two classes, namely,
employer and employee. (iii)
● Sales promotion (one of the elements of the promotional mix) is a process of persuading potential customers
to buy the product.
● Sales promotion is used as a short term tactic to boost sales, this gives a boost to sales, but it does not object
to decrease the long term stability for any short-run benefit.
● Luxury brands command processing premiums and often have a strong lifestyle component. Also, these
brands require some special considerations in how they are sold.
● Strong brands enjoy customer loyalty, the potential to charge premium prices and considerations.
● Customer Excellence: It focuses on retaining loyal customers and providing excellent customer service(i)
● Operational Excellence: It focuses on efficient operations in order to get their customers the goods that they
want as well as the focus also remains on maintaining strong relationships with suppliers (iii)
● Product Excellence: It focuses on achieving high-quality products. Effective branding and positioning being
their specific strategy (iv)
● Locational Excellence: It focuses on having a good physical location, internet presence(i)
BCG, i.e. Boston Consulting Group matrix provides a framework to analyze products on the basis of growth
and Market share. The four-quadrant matrix contains stars, question marks, cash cows and dogs.
● Dogs: Products that have a low market share as well as low growth rate. These bring back nothing in return.
Therefore, dogs should be phased out unless they are needed to complement the sales of another product or
for competitive reasons(iii)
● Question marks: These have high growth but a low market share. They consume a lot of cashbut bring little in
return. Question marks have the potential to turn into stars. Therefore, they require significant resources to
maintain and potentially increase their market share(iv)
● Cash cows: Cash cows have high market share and low growth prospects. Cash cows have excess resources,
provide the cash required to turn question marks into market leaders(i)
● Stars: Business units generating the best market share and the most cash are considered as Stars. These
require a heavy resource investment to fuel their rapid growth(ii)
● Introduction stage: This is the first stage in the product life cycle. Product is introduced in the market. The
cost of things like research and development, consumer testing, is usually very high at this stage
● Growth stage: It is characterized by strong growth in sales and profits. Under this stage, a firm tries to improve
product quality and adds new features
● Maturity stage: The product by this stage is established and the firm aims to maintain the market share it has
built by now
● Decline stage: It is the last stage for a product where it starts to decline.
● Discount store: A discount store is a store wherein the products are sold at prices lower than the typical
market price.
● Supermarket: Supermarket is designed to serve the total needs of people for food, households, maintenance
products. It is relatively large in size.
● Convenience store: It is relatively small and is located near residential area.
● Catalogue store: Under this, customers order goods from a catalogue and fill out an order form.
● Internal locus of control is when consumers believe they have some control over the outcomes of their actions
whereas external locus of control is when consumers believe that fate or other external factors control all
outcomes.
● Therefore, people who purchase mutual funds are more likely to believe that they cannot predict the market
and probably have an external Locus of control and not internal.
● People who purchase stocks believe that they can predict the market and have an internal locus of control
and not external.
● credit policy is a set of clear written guidelines that a financial organization or business uses to decide who it
will give loan to or give credit
● the major controllable decision variables for deciding the credit policy are credit period, credit standards, cash
discount and collection effort.
Beta measures the responsiveness of a stock's price to changes in the overall stock market. The volatility of
the stock and only systematic risk can be judged by calculating beta.
American style Option contracts can be exercised at any time upto the option's expiration. A European option
is allowed to be exercised only on the maturity date.
Nominal interest rate refers to the interest rate before adjustment for inflation or states interest rate without
adjustment for compounding interest rate. As per the international Fisher Effect, the nominal interest rate
differential must be equal to the expected inflation rate differential in the two countries.
✓A public limited company has 9,00,000 shares outstanding at current market price of Rs 130 per share. The
company needs Rs 2.25 crores to finance its proposed new project. The board of the company has decided to
issue rights shares to raise the required money at Rs 75 per share (as subscription price) to ensure that the
rights issue is fully subscribed. How many rights are required to purchase a new share?
Answer#
 Amount of capital to be raised by right issue = 225 lacs
Price per right issue of share = 75
No of right shares available for subscription by 9 lacs shares = 225 lacs / 75 Rs = 3 lacs shares.
Thus, 3 lacs shares are to be issued for 9 lacs rights.
So, 3 rights are required to purchase a new share.
✓A manufacturing company has an expected usage of 50,000 units of a certain product during next year. The
cost of processing an order is Rs 20 and the carrying cost per unit is Rs 0.50 for one year. What will be the
Economic Ordering Quantity?
Answer#
EOQ = √2AO/C
Annual consumption (A) = 50,000
Ordering cost per order(O) = Rs.20
Carrying cost(C) = Rs.0.50
Therefore, EOQ =√2 ×50000×20/ 0.50
= 2000 units
Thus, Option B is correct.
● Changes in net working capital can be defined as the difference in the WC (working capital) from one
accounting period to the next.
● Change in net working capital=change in current assets - change in current liabilities.
● If a company purchases a fixed asset using cash then the company's current assets will decrease with no
change in current liabilities. Therefore, working capital will decrease.
A conglomerate merger is a merger between two companies that operate in different industries and are
involved in different, unrelated activities. Brooke Bond and Lipton with Hindustan Lever is a conglomerate
merger.
● A forward contract is a contract between two parties to buy or sell an asset at a specified future time. Forward
contracts settle on the maturity date.
● Speculators are primary participants in the futures market. They make money in the forward market wherein
the person agrees/commits to sell a fixed amount of foreign currency at a specified future time and at an
agreed exchange rate that is set today.
● A speculator will loose if he sells foreign currency under a forward contract when the spot price is higher than
the forward price.
● Technology transfer is a process of transferring information and technologies from the organization that holds
it to another foreign organization in order to allow the receiver to benefit from such transfer.
● Various modes of technology transfer include licensing, management contract, franchising, strategic alliance,
import of technique and machinery etc.
● A free market is a system wherein the prices of goods and services are self-regulated by the consumers and
by the open market.
● Technology transferred through the government for common welfare is considered as free-market transfer
and is not subject to patent laws.
● A common market is a customs union wherein movement of factors of production is relatively free amongst
member countries.
● Common market = custom union + factor mobility.
● Custom union=free trade area + common external tariff.
● Harmonisation of economic policies is diversifying the policies, which is opposite of economic grouping.
● Ministerial Conference: The Ministerial Conference is the top decision-making body of the WTO. Decisions on
all matters of the MTA (Multilateral Trade Agreements) can be taken by conference.
● General council: The General Council is composed of the representatives of all the members ● Council for
Trade in Goods: There are three councils under General Council. Council for Trade in Goods, for services and
for Trade-related Aspects of Intellectual Rights.
● Specialised Committees: Along with the councils, it also involves committees. Decisions in WTO are generally
taken by the consensus of the entire membership.
 ● Crawling peg is an exchange rates system that allow appreciation and depreciation to happen gradually. It
allows making small but frequent exchange rate adjustments promoting payments balance.
● Under adjustable peg system, a currency is fixed to a major currency but can be readjusted.
● International Logistics involves the management of the flow of goods and services in a company's supply chain
across at least one international border.
● The components of international logistics are Inventory management, Facility location, transportation,
materials handling, order processing and other activities.
● British disease phenomenon: This term was given to the UK and its economic stagnation in1970s. It relates to
the lack of social vitality of the UK during industrial disputes.
● Dutch disease phenomenon: It is a situation where prosperity of one sector leads to the neglect of other
sectors.
● Regional Economic Integration involves an agreement between countries in order to reduce and finally
remove tariff and non-tariff barriers to the free flow of goods, services between each other.
● Trade Agreements (equations)
1) Preferential trade agreement=Reduced tariff +special quota
2) Free trade agreement=Formal trading+free trading between the countries
3) Custom union=free trade area+common external tariff
4) Free trade area=Customs Union - Common external tariff
5) Common market=custom union+factor mobility
6) Economic union=common market+common economic policies
7) Political union=economic union+common judicial body and shares sovereignty

2018 july
2018 July part1
Determinants of Price Elasticity of Demand:
1) Range of substitutes of the commodity: Higher the availability of close substitutes of the commodity, higher
will be its price elasticity of demand. For example, Nestle Maggi has many substitutes. Therefore, its demand is
always high as people have an option to shift to its substitutes.
2) Extent of different uses: Higher the number of uses of a commodity, higher is the price elasticity of demand.
Example, milk has multiple uses like cheese, butter, ghee, cream etc. Therefore, it has a high demand.
3) Portion of income spent: Higher the portion of income spent on a commodity, higher is its price elasticity
of demand. When there is more amount available to spend, the demand of the consumer rises.
4) Income group of buyers: This may or may not have a positive relationship with the price elasticity of
demand. It depends on the type of commodity. For example, High-end customers have a high demand for luxury
goods and low demand for normal goods.
a) Marginal Productivity/Average Productivity- Elasticity of Production
b) Substitutability of inputs- Production Function
c) Constant Negative Slope- Isocost line
d) Convex to origin- Isoquant curve
● In economics, the equilibrium point is the point where the quantity demanded is equal to the quantity
supplied. It is a point where the demand and supply curves meet. Thus, Statement I is correct.
● At the point of equilibrium, there is no shortage or surplus of a product in the market. As such, excess of
demand and an excess of supply both remain zero. Thus, Statement II is correct.
Both of the given statements are true. And Statement II is the right explanation of Statement I.
● Collusion Model: As per collusive oligopoly, there are a few firms that offer a perfect substitute for each
other’s products, so they get together and agree to set fixed prices that would maximise total industry profits.
● Price Leadership Model: As per this model, there exists a price leader among all the firms in an oligopoly
who sets the prices and who is usually a larger organisation than the rest. So it acts as a price leader, as rest others
are small firms which agree to sell their products at the set prices.
● A company when introducing a new market into the market generally sets a low price for it, since demand
is high when the prices are low. More demand means more access to the market.
● In the initial stage, the focus of a company is more on gaining access to the market and less on generating
profits. Therefore, Statement I is correct.
● When there is an unutilised capacity of a plant, the firms make use of it by producing a new product. This
usually happens in the initial stages of production when there is not a very high demand for the existing product,
so the plant capacity is not fully utilised and the unutilised capacity can be used by them to produce any new
product. Therefore, Statement II is correct.
However, Both of these statements have no link with each other. They are correct independently.
The competitive parity approach is used to determine the advertising budget wherein a firm decides to spend as
much on their advertising as their competitor is spending. As such, it is a form of defensive advertising. This
approach assumes that all competitors have the same marketing objectives.
Profitability Index for an investment proposal of a firm = Ratio of present value of future cash inflows to present
cash outflows.
● Organisation Man: He is a true team player in an organisation. When it comes to group performances, this
man cares least about his individual contributions and more about the goals of his team.
● Self-actualising Man: Self-actualisation means the desire to reach one's full potential. This man uses his
capabilities in the best way possible to develop a sense of creating things.
● Complex Man: This man understands the complex nature of human beings, which cannot be understood
merely by understanding human needs. But also other aspects which affect their behaviours and mood.
● Rational-Economic Man: This man is a rational thinker. He is directed towards maximising his personal
interests alongside working towards the attainment of organisational goals.
● Fritz Heider was an Austrian Psychologist who proposed the Balance Theory of Attitude Formation, that
describes a change in a person’s attitude in order to achieve a balanced situation.
● For example, Two of your best friends starts fighting because of their contrasting views, so in such a
situation you would seek to achieve balance by understanding both of their views and shifting their attitudes from
two extremes to a mid-point where balance is achieved and a neutral state is obtained.
Instrumentality: It says that a person’s motivation to adopt a specific behaviour is based on the outcome he expects
as a result of that behaviour. For example, A child chooses to cry or crib in a certain situation where he thinks that
kind of behaviour will make his parents fulfil his demand. ● Bass Theory of Transformational Leadership describes
how a leader can influence his followers who trust and admire their transformational leader, to keep them
motivated.
● A leader can inspire his followers through 1. By making them aware of the importance of certain task 2. By
making them focus on the group goals instead of individual interests and 3. By activating their high order needs.
Following are the 4 components of this theory:
1) Idealized Influence
2) Inspirational motivation
3) Intellectual stimulation
4) Individualized consideration
From the above explanation, it is clear that team consideration is not a component of this theory.
● When under stress, a person loses his ability to think clearly. He is unable to listen to things and understand the
message correctly. Therefore, Statement I is correct.
● Under a stressful situation, our neocortex (the bigger part of the brain) stops working and the smaller brain
(reptile brain) is activated which disables us to think. As a result, the psychological frame of mind changes and
the message gets distorted. Therefore, Statement II is correct and is also the right explanation of Statement I.
● Perceived peripherality of change - Participation in diagnosis
If the managers believe that the proposed changes are not critical or useful for the organisation, they would
certainly resist the change. In such a case, implementation of change can be achieved by involving them in the
diagnosis of the issues, so they can realise the need to bring change and get over the resistance.
● Fear of loss of power - Role redefinition and re-orientation
Sometimes managers resist change because they fear they may end up losing their current position or power if
new changes are implemented. In such a case, roles can be re-defined and re-designated so that occupants may
believe that they may have different kinds of power when the change is adopted.
● Fear of Obsolescence - Development of skills
Resistance to change is often high when there is a fear among the executives that the new change will require a
new set of skills which they currently lack in or which they may be totally unaware of. Such type of resistance can
be overcome by providing them with opportunities that help develop their skills.
● Fear of imposition - Participation and Involvement
It is natural to resist change when there is a feeling that the change is merely being imposed on them where they
have no say but to just accept the imposition. This type of resistance can be tackled by involving the managers in
seminars, programmes and encouraging their participation at every stage so that they feel valued.
● Autocratic - Obedience
An autocrat is a person who dictates and makes people follow his instructions without asking for their opinion or
without involving them in decision-making. The employees under such a leader will simply obey his orders.
● Custodial - Security and benefits
This model of organisational behaviour is based on economic resources and money.
The employees are oriented towards security and benefits. They depend on the organisation for their financial
security.
● Supportive - Job performance
This model of organisational behaviour emphasis on providing ‘support’ to the employees. The result from it is Job
performance and active participation by the employees.
● Collegial - Responsible behaviour
This model lays emphasis on ‘teamwork’ and ‘partnership’. The employees orientation in such a case is responsible
for behaviour and self-discipline.
Wild cat strike is a type of strike that is held by a unionized workers without the consent of their leader. It is often
sudden and unpredictable, although not illegal.
Metamorphosis stage is the final stage of employee socialisation. It is when a new employee has become totally
familiar with his job, the organisation and the culture. He is able to adjust to the new environment and feels
comfortable in his work.
A Compressed work week is when an employee is allowed to work for more than the usual no. of hours for less
than the traditional no. of days in a week as a means to offer him the flexibility. For example - a traditional job
schedule of 40 hours in a week broken into 8 hours for 5 days can be exchanged for 10 hours for 4 days in a week.
Employee relations include programs to prevent and resolve problems arising from work situations, such as pay
and benefits, work-life balance and working conditions of an employee. With better pay & benefits and good
working conditions, employees are seen to have a healthy relationship with the employers and are positive about
their work.
● Gain sharing plans is a type of management tactic where organisations agree to share some part of their gains
with the employees if they perform up to a standard expectation.
● It is fundamentally an agreement between an employer and some specific employees who are willing to
contribute towards the improved performance, to distribute gains as per their respective contribution.
● A sweetheart contract is an agreement between a union official and an employer in which the employer receives
favourable treatment from the union official without the consent of other union members.
● It contains terms that benefit the management and are unfavourable to union workers.
● Employee engagement is the degree or the extent to which employees of an organisation feel passionate about
their jobs and are committed to the organisation.
● A highly engaged employee often exceed the expectations set within his job role and delivers a lot better
performance than what is expected out of him.
Financial decisions relate to the funds management and taking decisions regarding investing, financing and
dividend distribution. It therefore includes:
1) Investing decisions - Where to invest money into, purchase of certain fixed assets etc.
2) Financing decisions - Where to get funds from, the debt-equity model, various sources of funds - internal &
external sources etc.
3) Profit distribution - How much profit should be distributed as dividends vs how much should be retained.
It does not include pricing decisions.
● Profitability Index is the ratio between the Present Value of future cash inflows and the initial investment.
If PI > 1, it means the profitability is positive
If PI < 1, it means the profitability is negative
If PI = 1, it means there is zero profitability
● Net Present Value is the difference between the Present Value of future cash inflows and the initial
investment.
If there is a + difference, it means the profitability is positive
If there is a - difference, it means the profitability is negative
And if there is 0 (nil) difference, it means zero profitability
Therefore, when the PI = 1, the NPV = 0
● Capital investment refers to careful planning of the long term investments by a firm. Before investing time
and money into any long term project, it is very important for a firm to do a risk-analysis since there is always a
degree of uncertainty regarding the future cash inflows. Therefore, Statement I is correct.
● Capital investment decisions takes into account the estimates of future cash inflows. The present value of
the expected future cash inflows is compared to the current investment amount in order to facilitate decision-
making. Therefore, Statement II is correct and is also the right explanation for statement I.
● Acquisition refers to a situation where one entity acquires the business of another entity. For example,
Acquisition of Whatsapp (an online messaging app) by Facebook (A social networking site).
● A merger is when two companies combine together in order to eliminate competition. For example, the
recent merger of Vodafone and Idea network.
● Amalgamation is when two companies combine to give rise to a completely new entity. For example,
Maruti Motors of India and Suzuki of Japan amalgamated to form a new company called Maruti Suzuki India
Limited.
● A takeover is the same as Acquisition where one entity is said to take over the entire business of another
entity.
● Likewise, Absorption is also the same as Acquisition as it is described as a situation where one entity
absorbs (take up) another entity to eliminate competition.
● The MM-Hypothesis approach states that the presence of more debt (as it is cheaper) in the capital
structure of a firm doesn’t result into increased returns as the same is set off by a corresponding increase in the
cost of equity.
● One of the assumptions of this hypothesis is that firms belong to equal risk class - meaning that the business
risk is the same among all firms having equal operational conditions.
The formula  (Where P0 is market price of shares, E is earning per share, D is dividend per share, R is rate of
Return and K is cost of equity) for determining the dividend of the firm has been given by: James E Walter
● Equity capitals were prefered by investors who want to enjoy short commitment with their securities.
Selective distortion refers to the tendency of people to interpret information in a way that it supports their existing
beliefs or knowledge. In the context of consumer behaviour, it is the tendency of consumers to interpret
information in a way that fits one’s preconceptions in consumer buying behaviour.
The price sensitivity of a product refers to the degree to which consumers are affected by the price of a product
and it causes a change in the product’s demand. The following factors reduce the price sensitivity of a product:
1) The product is more distinctive - unique and distinguishable item
2) Buyers cannot store the product - Example: Services
3) The product has more quality, prestige - So its price doesn’t affect the demand to a great extent.
However, option B is not a factor that reduces price sensitivity.
● Points-of-difference refers to the factors of a product or a brand that makes it unique and establishes
differentiation. Differentiation means what makes a particular brand distinct and different from the others.
● In that sense, points-of-difference refers to the attributes that consumers strongly associate with a brand and
believe they could not find to the same extent with a competitive brand.
Penetrated market refers to the set of consumers who are already using the company’s products. In such a market,
the consumers are already aware of the benefits of the products and therefore, are active users of the product.
● Internal marketing - Internal marketing takes into account the needs of the employees working within an
organisation. It is based on the philosophy that if the employees are happy, they would provide better customer
service. As such, it is used to achieve improved coordination among internal departments.
● Performance marketing - Also known as societal marketing, performance marketing is carried out with the
purpose of giving something back to society for its contribution to the development of your business. It,
therefore, involves brand and customer equity.
● Integrated marketing - Integrated marketing takes into account the needs of all the stakeholders of the company.
All activities under integrated marketing including advertising, PR, direct marketing, online communications,
social media marketing etc. are used together to look after the needs of the customers and business partners.
● Relationship marketing - This type of marketing is mainly aimed towards building strong, long-lasting
relationships with the stakeholders, which includes customers, employees, suppliers, vendors, financing agencies
etc.
● Style - Style is the way one expresses himself. The style reflects the personality of a person.
● Fashion - Fashion is the latest or the prevailing style in a given area at a particular point of time.
● Fad - Fad can be defined as a trend that receives a high degree of appreciation or enthusiasm in a very quick
span, but is usually short-lived and declines very fast.
● Most established companies do focus on incremental innovation (small improvements and upgrades in the
existing products) for new product development. Hence, Statement I is incorrect.
● Most established companies gain access to new markets by a little modification of their existing products for
new customers. Hence, Statement II is correct

HML Analysis classifies inventory on the basis of the per-unit cost of a product, where:
1) High Cost (H) denotes an item of high unit value.
2) Medium Cost (M) denotes an item of medium unit value.
3) Low Cost (L) denotes an item of low unit value.
V.E.D. classification classifies inventory as per the relative importance of certain items to other items, for example
- classification of spare parts. The items are classified into 3 categories:
1) Vital - Most important items in the inventory
2) Essential - Relatively of less importance but necessary items in the inventory.
3) Desirable - Beneficial but optional items in the inventory.
SDE classification classifies inventory on the basis of availability and usage of the items.
It classified the items as:
1) Scare (S) - items that are normally imported and are scarcely available.
2) Difficult (D) - Items that require more than 15 days to be available.
3) Easy available (E) - Items that are readily available.
● The critical path in project management is defined as the longest sequence of activities that are conducted
in the completion of a project. In other words, it is the longest duration path between the first and the last nodes
of a project. Therefore, Statement I is correct.
● The duration of a project is, in fact, the same as the duration of its critical path. Therefore, Statement II is
incorrect.
● The Earliest start and finish times of activity are based on the condition that every activity *has to be*
started and finished as early as possible. Therefore, Statement III is also incorrect.
● Internal failure costs are generated due to product failures that happen before a product leaves the factory.
Therefore, Statement I is incorrect.
● External failure costs are generated due to product failures that happen after the product has been sold to
customers. Therefore, Statement II is also incorrect.
● Methods analysis is the analysis of different tasks done in the completion of job. In simple words, it tells
how a job is done. Whereas job design defines the structure of the job and the names the tasks within the job.
Therefore, Statement I is incorrect.
● Principles of motion economy aim at minimizing the fatigue of workers that is caused due to unnecessary
movements or repetitive motion of the different parts of the body. Therefore, Statement II is correct.
● Work sampling is a technique wherein the proportion of time spent by the workers on different activities
is calculated so that steps can be taken to minimise the same. Therefore, Statement III is incorrect.
‘Just In Time’ originally developed in the 1970s by a Japanese company is a technique that aims at reducing the
production times and the response times from suppliers and to customers. It was initially known as the Toyota
Manufacturing system.
● Technological process - It refers to the sequence of steps (Processes) that have to be taken in order to meet
a need or solve a problem. It, therefore, represents process design and linkage.
● Facilities - It refers to the facility layout that is essentially an arrangement or designing of the different
aspects of manufacturing in a way that produces the desired results. It is carried out so as to make the
manufacturing process more efficient and effective.
● Personnel Estimates - It refers to the number of people required to perform the tasks in production
efficiently, which includes the skills requirement and the supervision requirement.
● Vertical Integration Studies - It means when a company makes use of more than one stage of the supply
chain. There are four stages of the supply chain: procurement, production, delivery and return. A company is said
to be vertically integrated when it controls more than one of these stages. It, therefore, involves Vendor
Capabilities and Acquisition Decision.
● White goods are the large or heavy electrical appliances like TVs, Washing machines, AC, refrigerators,
ovens etc. which were traditionally available usually in white colour.
● Companies producing such goods usually have separate plants for their production to avoid confusion and
to achieve economies of scale. Therefore, Statement I is correct.
● Pepsi and Coke have bottling plants scattered all over the country with a view to reducing the overall
transportation costs and the lead time for supplying goods in the markets. Therefore, Statement II is incorrect.
● The formula for calculating the probability of A and B (Independent events) = p(A)*p(B) or p(B)*p(A)
Where p(A) denotes the probability of event A and p(B) denotes the probability of event B. Therefore, Statement I
is correct.
● The formula for calculating the probability of A (Independent event) and B (Dependent event) p(A and B)
= p(A)p(B|A)
Where p(A) denotes the probability of event A and p(BIA) denotes the conditional probability of event B when
event A has already occurred. Therefore, Statement II is also correct.
A type I error is the type of error that happens when a null hypothesis is rejected despite it being accurate. This
means that the hypothesis is true but our test leads to its rejection.
● Stratified sampling is a method of sampling wherein the total population is divided into small sub-groups
known as Strata, on the basis of certain common characteristics or traits.
● After dividing the population, the researcher randomly picks the items from each sub-group to determine
the relationship between different sets of population. Therefore, Stratified sampling relates to the probability-
based sampling technique.
The Coefficient of Correlation between the two variables is the geometric mean of the two Regression Coefficient
(a) The Coefficient of Correlation is independent of the change of origin and scale.
(c) The probable error of the Coefficient Correlation is 0.6745 times its standard error.
(d) Coefficient of Correlation multiplied by the ratio between the standard deviations of the two variables denotes
the slope of the regression line.
Poisson distribution is a model of a series of discrete events where we know the average time between two events
but we do not know the exact timings of the events. As such, in this type of probability distribution, the mean value
of the distribution is the sole parameter of the distribution.
a) Testing the goodness of fit of a distribution- Chi-square test
b) Testing the significance of the differences among the average performance of more than two sample groups- F-
test
c) Testing the significance of the difference between the average performance of two sample groups (Large-sized)-
Z-test
TThe blockchain in information technology refers to the recording of electronic or digital transactions in a way that
keeps them transparent, secure, and auditable.
It, therefore, helps in the protection of the details of electronic transactions.
Overall cost leadership is a strategy whereby companies sort to have a competitive advantage over their
competitors by achieving the lowest cost of production. Therefore, it involves strict cost controls and detailed cost
control reports.
• Turnaround, Divestment and Liquidation are the three types of retrenchment strategies.
• Retrenchment is cutting down cost and expenses by reducing any operation, while turnaround is backing out or
retreat from a wrong decision made earlier.
• Combination Strategy is using other grand strategies like stability, expansion or retrenchment altogether in the
business.
● Corporate Parenting Analysis is done to understand how large and diversified corporations can truly
prosper by investing in specific businesses and defining their organizational structures and management processes
for each individual segment.
● For example, Reliance Industries is now a huge MNC that first started as a mobile network company and
gradually expanded itself through diversifying its operations in different business units, each unit having its own
structure and philosophy.
● Stability strategy is a strategy adopted by companies wherein they retain their present strategy at the
corporate level and only concentrates on their present products and markets and not on the expansion.
● In the above case, A packaged tea business company providing special services to its institutional buyers in
order to encourage bulk buying is an example of stability strategy because they are not introducing any new
strategy or product for its expansion, but simply concentrating on the existing market and making it more efficient.
● Mission - Mission is the purpose for the existence of a plan; something that gives your plan a direction. It
is, therefore, the reason behind the existence of anything.
● Vision - Vision is what we aspire to be, or what one dreams of. It’s a picture in our minds depicting our
intent and where we want to stand. Therefore, vision can be described as Aspiration expressed as strategic intent.
● Objectives - An objective is a specific result that a person expects to achieve within a specified time.
Therefore, Objectives refer to accomplishing results at a certain time
● Programs - A program gives us a set of activities that need to be conducted in order to achieve the plan.
Strategic Myopia refers to the short-sightedness of the businesses where they can only see clearly those things that
are to take place in the short term but have a very unclear picture of how things are going to shape in future. As a
result, they tend to reject unfamiliar and negative information that might have an impact on their future activities
or position.
Timely and adequate assistance and rehabilitation efforts to MSEs should begin on a proactive basis when early
signs of sickness are detected. This stage is termed as ‘hand holding stage’. This involves intervention by banks
immediately after early detection of sickness so that it can be fixed at an early stage before it goes out of hand.
Business experience in the same or related line is not an external factor to an entrepreneur. Since it is his own
experience which is not a result of any outside phenomenon, it is, in fact, an internal factor to an entrepreneur.
● When an industrial unit falls sick, those who depend on it have to face an uncertain future. This statement
is true because a lot of people make their living and their entire income by working for these business units alone.
So, when these units begin to fall, it affects them to a large extent as they have to find new means for their
livelihood.
● The sick units continue to operate below the break-even point and are, thus, forced to depend on external
sources for funds of their long-term survival. This has happened to many companies Like IL&FS, CCD etc. who were
in great losses and instead of shutting their business, they became dependent on external sources of funds to
continue their business. Therefore, this statement is correct. However, it has no relation to the above statement.
A pure entrepreneur is a person whose motivation lies in psychological and monetary rewards. He embarks on the
journey of entrepreneurship for his personal satisfaction in work, ego, and status.
As such, they are the founders of the business and conceptualize a business plan by putting efforts to make it a
success.
● As per Joseph Schumpeter, “Entrepreneurship is essentially a creative activity or it is an innovative
function”.
● Francis A. Walker defines an entrepreneur as “one who is endowed with more than average capacities in
the task organising and coordinating the factors of production i.e., land, labour, capital and enterprise.”
● According to Peter F. Drucker, an entrepreneur is “one who always searches for change, responds to it and
exploits it as an opportunity. Innovation is the specific tool of entrepreneurs, the means by which they exploit
change as an opportunity for a different business or a different service.”
In which one of the following years, the Government of India did bring an Industrial Policy
Resolution(1956,1948,1977)
An Intrapreneur is an internal employee of a company who uses his entrepreneurial skills and capabilities to bridge
the gap between inventors and managers and help the organisation financially.
Accountability and transparency is not visible in less developed countries - This statement is false because
accountability and transparency are essential for the smooth functioning of a modern economy. In fact, they have
much more efficiency and visibility in less developed countries.
A disciplined and controlled corporate governance can considerably reduce financial turmoil.
A good corporate citizenship is a sort of national pride.
A good corporate governance can considerably reduce corporate frauds.
Ethics are the principles and our moral values that help us distinguish between what is right and what is not. As
such, they govern the actions of an individual.
i. Justice to a particular community which has been suffering in the past from injusticeCommunitarian Justice ii.
Treat equal people equally and unequal people unequally- Distributive Justice iii. Justice is ensured at the
beginning and all people are treated equally- Commutative Justice iv. Actions performed complying to the law-
Procedural Justice
● There was an absence of such ideologies of capitalist system at the time of Plato, while the capital system
and the injustice caused in society by this system was criticised by karl marx.
● Karl Marx's also gave theory of alienation, which states that capitalism leads to alienation of workers.
1992 Rio Declaration was a short document produced at the UN "Conference on Environment and Development"
(UNCED) which consisted of 27 principles to help nations in future sustainable development. The “Polluters must
pay” principle is one of them.
● In April 1998, CII (Confederation of Indian Industry) released a report entitled “Desirable Corporate Governance:
A Code”, outlining a series of non mandatory recommendations for listed companies regarding practices of
corporate governance.
● SEBI, vide its circular SEBI/MRD/SE/31/2003/26/08 dated August 26, 2003 made it mandatory for every public
company listed on Indian stock exchanges to follow the revised code.
Friedman, Ackerman and Carol have their own models on Corporate Social Responsibility (CSR). Walker, however,
has not given any model on CSR.
● As per Section 25C of The Industrial Disputes Act, 1947, a badli workman is defined as “a workman who is
employed in an industrial establishment in the place of another workman whose name is borne on the muster
rolls of the establishment, but shall cease to be regarded as such for the purposes of this section, if he has
completed one year of continuous service in the establishment.”
● As per this definition, Statement I is correct but Statement II is incorrect.
● Codetermination, also called as worker participation, means giving rights to the staff or the workers to vote for
the representatives on the board of directors of the company.
● It is based on the idea of equal participation of shareholders and employees in the decision making of a firm and
as such it promotes democratic decision-making process at the firm level.
● Individuals that are officially hired by a leasing company but are trained for a client company, are called leased
employees. In such an arrangement, the leasing company is called the Professional Employer Organisation (PEO).
Therefore, Statement II is correct.
● In employee leasing contract, the leasing company provides employees for specialised areas of work, such as
human resource management, payroll accounting and risk administration. Therefore, Statement II is incorrect.
According to the Employees’ State Insurance Act’1948, dependants are certain relatives of a deceased insured
person.
These include:
1) His widow,
2) A son below 25 years of age,
3) An unmarried daughter4) his widowed mother.
According to this, Option C is not considered as Dependent.
In today’s ever-changing business environment, it is very essential for a company to have a sustainable competitive
advantage. Sustainable competitive advantages are the assets, attributes, and features that help a company in
building superiority and achieving a favourable long term position over its competitors.
● One of the trends to build a sustainable competitive advantage are innovations and innovations
management since a firm that continuously brings innovations will always adapt itself to the changing environment
and maintain its position in the market. Therefore, Statement (A) is correct.
● The human resource dept. has a very crucial role in building sustainable competitive advantage as
innovations can be brought in only with the presence of efficient human resource management that would help
connect innovations with the traditional change management. Therefore, statement (R) is correct and is the right
explanation of (A).
The ‘Hot-Stove Rule’ helps in imposing a disciplinary action without causing resentment. This rule shows a cause-
and-effect relationship between touching a Hot-Stove and the subsequent action.
Following are the principles on which it is based:
1) Prior warning: You knew the consequence of it before it happened.
2) Immediate Response: As soon as you touched the stove, the burn was immediate and so was your response to
it.
3) Consistent action: Every time you touch the stove, your hand gets burned. Therefore, it is consistent action.
4) Impersonal Approach: No matter who touches the stove, his hand will get burned.
From the above explanation, it is clear that Option D is not the principle of this rule.
In the year 1931, the Whitley Commission recommended a body to be established that would provide consultation
on labour matter, ensuring adequate representation of the various parties involved viz employers, labour and the
government. That body is called the Tripartite bodies (Tripartite - meaning three parties).
Brand imagery is the visuals that represent the identity of a brand, what it stands for and how people perceive it.
Therefore, brand imagery can be defined as the extrinsic properties of the product or service, including the ways
in which the brand attempts to meet customers’ psychological or social needs.
● Real needs are the benefits that a customer expects from buying a product. For example, You buy a mobile
phone which may initially cost you a big amount, but has long term durability and requires the least maintenance.
● In the options given above, Option B represents the real needs of the customer as the customer gets the
benefit of reduced operating costs when he purchases a certain type of car.
● Channel members are the intermediaries who are involved in the distribution of the products from the
manufacturer to the final customer.
● Channel members perform various functions that include gathering information about potential & current
customers, competitors and other forces in the marketing environment; and also acquiring the funds to finance
inventories at different levels in the marketing channel. Therefore, Statement (I) is incorrect, while Statement (II)
is correct.
The word concentration means something of a large size/amount/number being fit into a small space/time period.
In the content of advertising, Concentration denotes spending the entire amount pertaining to advertising budget
in a single period while launching of a new product. It is advised so because it is assumed that the initial expenditure
that will bring in long term returns to the firm.
● The term profitability means the extent to which a company yields profit or generates revenues through
its operations and resources.
● In order to know the exact financial position or status, it is very important for companies to measure the
profitability of their products, territories, customer groups, segments, trade channels and order sizes.
● This helps companies in taking decisions relating to expansion, reduction, elimination of a certain
product/activity etc
A supermarket is defined as large size self-service store offering a wide variety of food and household products,
organized into sections, high in volume but available at low-cost.
● Customer partnering means maintaining close relations with the customers to add more value to the operations
of a company.
● Uncovering is a business practice that involves the use of analytical methods to get insights into customers, what
they like, how they behave etc.
● Broadening means to widen the activities of an enterprise by taking into account the interests of all the
stakeholders that include customers, employees, shareholders, suppliers, etc.
● Benchmarking refers to a practice where businesses select a few companies as the “best practice companies” in
order to improve their performance.
● A debt-equity ratio explains the relationship between debt and equity. The ratio calculates the amount of total
debt against the total shareholder's equity, where a ratio of 2:1 indicates that for every 1 unit of equity, the
company has raised 2 units of debt. Therefore, Statement (I) is correct.
● The cost of floating debt is always lesser and much cheaper than the cost of floating an equity issue because debt
is tax-free so it reduces the income tax payable. Therefore, Statement II is false.
The Debt-Service Coverage Ratio (DSCR) is a ratio that measures the ability of a company to fulfil or repay all of its
debt obligations with its operating income or the available cash flow. In essence, it is an indicator of the number of
times surplus covers interest and instalments of Term Loans.
● Tangible Net Worth of a company = total tangible assets of the company less total liabilities.
● Thus, Tangible Net Worth = paid-up capital less loss incurred in the current year and any accumulated losses.
● So, 2 lacs - 50,000 - 2 lacs = Rs -50,000
● Liquidity Risk: It is a kind of risk where a company is unable to meet its short term obligations due to non-
availability of ready cash.
● Financial Risk: It refers to the inability of a firm to pay off its debt obligations.
● Exchange Risk: It refers to the possibility of adverse effect on firm’s assets, liabilities and income due to
movement of interest rates.
● Default Risk: It refers to a situation or possibility of not receiving the dues from the debtors either partially or
wholly.
● Control function is useful in determining different types of costs involved in a project and how one can minimise
these costs so as to achieve maximum profitability.
● For this purpose, it takes into account the standard costs and actual costs, and analyse the variances between
these costs.
As the payout ratio is 100%, the company declares all Rs 50,000 to its 5,000 shares @ 10 per share.
Now the cost of equity = Dividend / market value + growth rate
OR, (10/175) * 100 = 5.71%
● CRISIL - CRISIL is the first credit rating agency of India established in the year 1987, that provides ratings, research,
and risk and policy advisory services.
● Moody’s Investors Service - Established in the year 1909, it is a bond credit rating agency that provides
international financial research on bonds issued by commercial and government entities.
● Standard and Poor - Founded in the year 1860, it is an American financial services company that provides financial
research on stocks, bonds and commodities.
● Fitch Ratings - It is an international credit rating agency established in the year 1914 and is based out of New
York city.
● Established in the year 1995, the World Trade Organization (WTO) is an international financial organisation that
governs the trade among various nations.
● The main purpose of the organization is to help producers of goods and services, exporters, and importers in
managing their businesses.
● It was formed after the 1947 General Agreement on Tariffs and Trade (GATT) for more efficient, speedy and
transparent trade system unlike the GATT system which was highly susceptible.
● At present, the WTO has 164 member countries.
As per the above explanation, statement (a) is incorrect while statement (b) and © are correct.
The Association of Southeast Asian Nations (ASEAN) is a regional intergovernmental organization that comprises
of ten countries in Southeast Asia with an objective of promoting economic growth of the countries. Among its
several official languages, Tamil is one of them.
As the Government of India is growing exports and providing more jobs for the young, talented, well-educated and
even semi-skilled and unskilled workforce in India, the Indian economy growing from Rs 32 trillion in 2004 to about
Rs 153 trillion by 2016.
Logistics Performance Index is a tool that allows countries to identify the challenges and opportunities they face in
their performance on logistics and suggests how they can improve it.
● Liner shipping refers to the transportation of the goods from one place to another via oceans, seas through ships
that travel on regular routes and fixed schedules.
● It is used for cargo with higher unit value and manufactured or semi-manufactured goods.
● Its shipping lines offer slower shipping services.
● Its document of transport contract is called the ‘Bill of lading’.
From the above explanation, it is clear that point D is not true about liner shipping.
● Foreign-exchange risk is a possibility that an asset denominated in a foreign currency may lose its value due to
‘unanticipated’ changes in the exchange rates between the foreign currency and the domestic currency.
Statement (I) is incorrect.
● It denotes the sensitivity of the real value of assets, liabilities and operating income to unanticipated changes in
exchange rates expressed in its functional currency. Statement (II) is correct.
Exporting companies having annual turnover upto Rs 30 crore in the preceding year are eligible for financial
assistance under the Market Development Assistance (MDA).
 Problems based 2020 june
➢ As a regulatory norm in India, a listed company in ordinary course is required to report quarterly results within
how many days of the end of the quarters?
A. 45 B.
15
C. 30 D.
90
• A listed company in the ordinary course is required to report
quarterly standalone financial results to the stock exchange
within 45 days of the end of the quarters.
Thus, Option A is correct.

➢ Which of the following is excluded from the responsibility of the International accounting Standards board
(IASB)?
o Harmonization and convergence of accounting B. Promulgation and adaption of Generally Accepted

Standards. Accounting Principles (GAAP).

D. Promulgation and gaining acceptance of International
C. Promulgation of International accounting Standards.
Financial Reporting Standards (IFRS).
Sol. • The responsibility of promulgation of Generally Accepted Accounting Principles (GAAP) and reporting practices
is of Financial Accounting Standard Board and not the International accounting Standards board (IASB).

Thus, Option B is correct.

➢ A firm's current asset and current liabilities are Rs.1600 and Rs.1000, respectively. How much can it borrow on
a short-term basis without reducing the current ratio below 1.25?
o Rs 2000 B. Rs 1280 C. Rs 1400 D. Rs 1080

Sol. • Let’s assume Rs. X to be borrowed amount of funds

Current assets =

1.25 =
1600 + x = 1250 + 1.25x
350 = 0.25x
= Rs. 1400

o Thus, Option C is correct.

o
➢ From the information given below, find out the efficiency ratio of the firm's operations:
Budgeted production: 880 Units, actual production: 750 Units
Standard hours per unit: 10 hours, actual working hours: 6000 hours
o 125% B. 80%
C. 75% D. 120%
 1. A
Sol. • Efficiency ratio or Productivity ratio is use to measure the level of efficiency attained by producing stated
output.

Efficiency ratio =

=
= 125%
Thus, Option A is correct.

➢ Given the interest rate on a 1-year loan is 14.5 per cent and inflation is expected to be 6.5 percent in India.
What should be the interest rate on a 1-year maturity loan in Thailand when the expected inflation rate is 8.5
per cent?
o 18.35 percent B. 14.65 per cent
C. 16.65 per cent D. 16.35 per cent

Sol. •
1.145/x = 1.065/ 1.085
X= 1.1665 or 16.65%
Thus, Option C is correct.

➢ The linear relation between the excess return on individual securities and the overall market at every point in
time is known as
A. Capital Market Line (CML) B. Security Market Line (SML)
C. Security characteristic Line (SCL) D. Market Specification bias (MSB)
• Security characteristic Line is a straight line formed with the
help of regression analysis which signifies the systematic risk and
rate of return over particular security.
• SCL interpret the security performance to compare to market
performance.
Thus, Option C is correct.

2019 dec problems based

1. Comprehension:
Read the passage and attempt the questions that follow:
Dinesh, a young executive, joined Softech Co. three months back. Coining with a brilliant academic record,
he played a key role to revamp the company finance and management procedures for which he was
recognized by the management.
But now his performance has come down with mistakes found in most of his actions. Several things
transpired against him. His only son turned spastic and he was overlooked for promotion against a new
 comer. This witnessed him becoming less popular among staff. Adding to that, a mild flirtation with a
female employee was blown out of proportion.
Dinesh has become emotionally and professionally depressed with morale down and seemed loosing self-
confidence badly.
As HR Manager which life positions in Transactional Analysis would you expect Dinesh to have?

A. I’m Ok, You are Ok B. I’m Ok, You are not Ok

C. I’m not Ok, You are Ok D. I’m not Ok, You are not Ok

sol● I'm Ok, You are Ok is a life position wherein people have the ability to solve their problems easily and they
value other people in their lives. It is based on the adult ego.
● I'm Ok, You are not Ok is a life position wherein an individual is of the opinion that only he is right and
others arewrong. Individuals in this life position possess the rebellion child ego.
● I'm not Ok, You are Ok is a life position wherein an individual feels inferior to others. Individuals in this
positionalways complain about things and remain dissatisfied with their lives.
● I'm not Ok, You are not Ok is a life position wherein people think very negatively and even feel that life is
notworth living.
● Since Dinesh feels depressed and emotionally stressed. Therefore, it is important for him to be positive,
solve hisproblems and gain his self-confidence.
Thus, Option A is correct.

2. Comprehension : Based on the information given below, answer the questions which follow.
Kruger Corporation has recently implemented a standard cost obtained the following information for
variance analysis:
(a) Standard cost information:
Direct materials = Rs. 5 per kg.
Quantity allowed per unit = 100 kg per unit
Direct labour rate = Rs. 20 per hour
Hours allowed per unit = 2 hours per unit
Fixed overhead budget = Rs. 12,000 per month
Normal level of production = 1200 units
Fixed overhead application rate = Rs. 10 per unit
Variable overhead applicable rate = Rs. 2 per unit
Total overhead applicable rate =
Rs. 12 per unit (b) Actual cost
information:
Cost of material purchased and consumed = Rs. 4,68,000
Quantity of material purchased and consumed = Rs. 1,04,000 kg
Cost of direct labour = Rs. 46,480
Hours of direct labour = 2240 Hrs.

What is the direct materials price variance? given an actual price of Rs. 4.50 per kg?
A. Rs. 20,600 unfavourable B. Rs. 52,600 favourable
C. Rs. 48,600 favourable D. Rs. 52‚000 unfavourable

• Sol. Direct Material Price Variance = (Actual price - Standard price) *

Actual Quantity = (Rs 4.5 per Kg - Rs 5 per Kg) * (1,04,000 Kg) = Rs.
52‚000 unfavourable
Thus, Option D is correct.
 Obtain the overhead spending variance.
A. Rs. 29,202 unfavourable B. Rs. 1,202
unfavourable
C. Rs. 1,200 favourable D. Rs. 15,202
favourable

• Sol. Overhead Spending Variance = Fixed Overhead Spending Variance + Variable Overhead Spending
Variance Fixed Overhead Spending Variance = Actual Fixed Overhead - Standard Fixed Overhead
= 12,850-12,000 = Rs 850 unfavourable
Variable Overhead Spending Variance = Actual Variable Overhead - Standard Variable Overhead
= 2,352- 2000= Rs 352 unfavourable
= 850+353 = 1202 unfavourable
Thus, Option B is correct.

What is the material quantity variance?

A. Rs. 26,000 favourable B. Rs. 20,000
Unfavourable
C. Rs. 28,000 favourable D. Rs. 29,000
unfavourable

• Sol. Material Quantity Variance = (Actual Quantity - Standard Quantity) *

Standard Rate = (1,04,000 - 1,000*100) * 5 = 4,000*5 = Rs 20,000
unfavourable
Thus, Option B is correct.

What is the labour efficiency variance?

A. Rs. 4,800 unfavourable B. Rs. 4,200 favourable
C. Rs. 4,800 favourable D. Rs. 1,200
unfavourable

• Sol. Labour Efficiency Variance = (Actual Labour Hours - Standard Labour Hours) *
Standard Rate = (2240 - 1000*2) * 20 = 240*20 = Rs 4800 unfavourable
Thus, Option A is correct

What is the overhead volume variance?

A. Rs. 4,600 favourable B. Rs. 2,200
unfavourable
C. Rs. 4,000 unfavourable D. Rs. 2,000
unfavourable

• Sol. Overhead Volume Variance = (Actual Unit - Expected Unit) * Standard Fixed
Overhead Rate = (1000 - 1200) * 10 = Rs 2,000 unfavourable
Thus, Option D is correct.
 The Total Asset Turnover Ratio and Total Assets to Networth Ratio of Kuber Ltd. are 1.75 and 2, respectively.
If the Net Profit Margin of this company is 8%. What is the Return on Equity (ROE)?
A. 0.20 B. 0.25
C. 0.22 D. 0.28
• Sol. Total asset turnover ratio=
A total asset to net worth=
Profit margin=
ROE=

Thus, Option D is correct.