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Acknowledgement ___________________________________
We humbly praise God, the Almighty
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We are grateful to Prof. Arun Kumar for his endless help and support.
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Our thanks to all the members of Shuchita Prakashan (P) Ltd. for their sincere services in bringing out this book
in a smooth way within a short span of time.
We applaud our son Bhaskar

for the silent sacrifices he made for us while we were busy with this book.
Dr. Arpita Ghose Gourab Ghose
In this edition
Questions Solutions May - 2010
to
to November - 2019 Duly incorporated in chapters May - 2010May - 2019

Duly incorporated in chapters November - 2019 on companion.sauda.com
v
CA Inter Group - II
(New Syllabus)
Paper 7 - Enterprise Information Systems & Strategic Management
Authors :
Dr. Arpita Ghose Gourab Ghose
Editors : Prof. Arun Kumar CA Mohit Bahal CS (Dr.) Himanshu Srivastava
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Sources of Questions in this Scanner_________________

CA Inter Gr. II
Paper 7 - Enterprise Information Systems & Strategic Management Section - A (Enterprise Information Systems)
Ch. Chapter Name No.
1 Automated Business Processes
2 Financial and Accounting Systems
3 Informat i o n Components
4 E-commerce, Emerging Technologies
5 Core Banking Systems S y s t e m s and Its

M-Commerce and
Sources of Questions from Old Course

CA IPCC Paper- 7A, Chapter- 1 & 5 CA Final Paper- 7A, Chapter- 2 & 7
CA IPCC Paper- 7A, Chapter- 4 CA Final Paper- 6, Chapter- 2
CA IPCC Paper- 7A, Chapter-1 to 5

CA Final Paper- 6, Chapter- 3 & 6 CA IPCC Paper- 7A, Chapter-2 to 5
CA Final Paper- 6, Chapter- 8
CA IPCC Paper- 7A, Chapter- 3 CA Final Paper- 6, Chapter- 7
Section - B (Strategic Management )

1 Introduction to Strategic Management CA IPCC Paper- 7B, Chapter-1, 2, 3, 4 & 7
2 Dynamics of Competitive Strategy
3 Strategic Management Process
4 Corporate Level Strategies
5 Business Level strategies
6 Functional Level Strategies CA IPCC Paper- 7B, Chapter-1, 2, 3, 5, 6 & 7 CA IPCC Paper- 7B, Chapter- 2, 3, 4 & 5 CA IPCC Paper- 7B, Chapter- 2, 3
& 4 CA IPCC Paper- 7B, Chapter- 1, 2 & 4 CA IPCC Paper- 7B, Chapter- 5
7 Organization and Strategic Leadership CA IPCC Paper- 7B, Chapter- 2 & 6
8 Strategy Implementation and Control CA IPCC Paper- 7B, Chapter- 4, 6 & 7 Notes:
1. When Questions/Chapters are taken from different levels of same course (e.g. from Final level in papers of Inter, or from Inter level in papers of Final)
or from different courses (e.g. from CS or CMA in CA) then following are not prepared in the Scanner for such Questions/Chapters:
(a) Examination Trend Analysis
(b) Line Chart Showing Relative Importance of Chapters
(c) Table Showing Importance of Chapter on the Basis of Marks
(d) Bar Chart in Chapters
(e) Repeatedly Asked Questions
2. When new syllabus is introduced in a Course, then full question papers of only new course examinations are added at the end of Scanner.
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Prefaceto Scanner___________________________
A dream does not become reality through magic, it takes sweat, determination and hard work.
It gives us immense pleasure and satisfaction to present the Thirty second edition of Scanner for CA Inter Group - II
(New Syllabus) Paper 7 Enterprise Information Systems & Strategic Management in a new format.
This book contains questions and solution of more than 20 attempts along with important RTP and Practice
Questions.
The unique feature of this book is 3 way Scanned past year Question and Answers
- Chapter Wise Scanned
- Topic Wise Scanned
- Each Topic Scanned in ascending order of examination/year.
Each question indicates its category i.e. Objective, Short Notes, Distinguish Between, Descriptive and Practical with
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With Best Wishes
Arpita & Gourab
e-mail: ghose.gourab@gmail.com
UNIQUE FEATURES OF THIS EDITION
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Distinguish Between, Descriptive Questions and Practical Questions.
☐ (Or) for Optional Questions.
☐ "{C}" for Compulsory Questions.
☐ Analytical Classification of every Chapter in Four Categories: (1) Short Notes,
(2) Distinguish Between,
(3) Descriptive Questions and
(4) Practical Questions.
☐ 100% Correct Answers of Practical Questions.
☐ Frequency table showing distribution of marks & compulsory questions to identify important chapters.
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x Dedicated To _______________________________________________
Late Brajendra Lal Ghose & Late Ardhendu Ghosh
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Contents__________________________________________
Paper - 7 _______________ Enterprise Information Systems & Strategic Management

Section A - Enterprise Information Systems
Chapter Name
Page No.
☐ Study Material Based Contents 7.3

☐ Syllabus 7.4
☐ Examination Trend Analysis 7.6
☐ Line Chart Showing Relative Importance of Chapters 7.10
☐ Table Showing Importance of Chapter on the Basis of Marks 7.11
☐ Legends for the Graphs 7.12
1. Automated Business Processes 7.13
2. Financial and Accounting Systems 7.89
3. Information Systems and Its Components 7.139
4. E-Commerce, M-Commerce and Emerging Technologies 7.240
5. Core Banking Systems 7.293
☹ Question Paper of May, 2019 7.319
☹ Question Paper of November, 2019 7.321
Section B - Strategic Management

☐ Study Material Based Contents 7.325
☐ Syllabus 7.326
☐ Examination Trend Analysis 7.328
☐ Line Chart Showing Relative Importance of Chapters 7.332
☐ Table Showing Importance of Chapter on the Basis of Marks 7.333
1. Introduction to Strategic Management 7.335
2. Dynamics of Competitive Strategy 7.363
3. Strategic Management Process 7.443
4. Corporate Level Strategies 7.474
5. Business Level Strategies 7.515
6. Functional Level Strategies 7.536
7. Organisation and Strategic Leadership 7.578
8. Strategy Implementation and Control 7.608
☹ Question Paper of May, 2019 7.644
☹ Question Paper of November, 2019 7.646
☹ Test Series 7.648
xv
PART - A
Bl
Enterprise Information Systems

STUDY MATERIALBASED CONTENTS
Paper 7 Enterprise Information Systems & Strategic Management
Section — A
Enterprise Information Systems
Syllabus . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.4
Examination Trend Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.6
Line Chart Showing Relative Importance of Chapters . . . . . . . . . . . 7.10
Table Showing Importance of Chapter on the Basis of Marks 7.11
Legends for the Graphs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.12
Study Material Based Contents
C.N. Study Chapters P.N.

1. Automated Business Processes . . . . . . . . . . . . . . . . . . 7.13
2. Financial and Accounting Systems . . . . . . . . . . . . . . . . 7.89
3. Information Systems and Its Components . . . . . . . . . . 7.139
4. E-Commerce, M-Commerce and Emerging Technologies 7.240
5. Core Banking Systems . . . . . . . . . . . . . . . . . . . . . . . . . 7.293
Question Paper of May 2019 . . . . . . . . . . . . . . . . . . . . . 7.319
Question Paper of November 2019 . . . . . . . . . . . . . . . . 7.321
Syllabus
Paper 7 Enterprise Information Systems (100 marks) & Strategic Management

(One Paper - Three Hours)
Section — A
Enterprise Information Systems (50 marks)
Objective:
“To develop an understanding of technology enabled Information Systems and their impact on enterprise-wide
processes, risks and controls”.
Contents
1. Automated Business Processes
(i) Introduction to Enterprise Business Processes, Benefits, Risks and
Controls.
(ii) Diagrammatic representation of business processes using
Flowcharts.
(iii) Risks and controls for specific business processes: Procure to pay
(P2P), Order to Cash, Inventory Cycle, Hire to Retire, Supply Chain
Management, Fixed Assets etc.
(iv) Applicable regulatory and compliance requirements including
computer related offences, privacy, cyber-crime, Sensitive Personal
Data Information of Information Technology Act, 2000.
2. Financial and Accounting Systems:
(i) Integrated (ERP) and non-integrated systems with related risks and controls.
(ii) Business process modules and their integration with Financial and Accounting systems.
(iii) Reporting Systems and MIS, Data Analytics and Business Intelligence.
(iv) Business Reporting and fundamentals of XBRL (extensible Business Reporting Language).
(v) Applicable regulatory and compliance requirements.
3. Information Systems and Its Components:

(i) Components of Automated Information Systems: Application Systems, Data-base, Network and Operating
System with related risks and controls.
(ii) Mapping of Organization structure with segregation of duties in Information Systems.

4. E-Commerce, M-Commerce and Emerging Technologies :
(i) Components and Architecture of E-Commerce and M-Commerce with related risks and controls.
(ii) Business process flow with its related risks and controls. (iii) Applicable regulatory and compliance
requirements. (iv) Emerging technologies with its related risks and controls.
5. Core Banking Systems:
(i) Components and Architecture of CBS and related risks and controls.
(ii) Core modules of banking and Business process flow and its related risks and controls.
(iii) Reporting Systems and MIS, Data Analytics and Business Intelligence.
(iv) Applicable regulatory and compliance requirements.
Examination Trend Analysis

Paper 7A Enterprise Information Systems
Question Paper Based Contents of Last Five Examinations Years Q. No. CompulChapter Marks
sory No. Name
Category Page No.
2017 1. (a) {C} 1 Automated Business Processes 2

Nov. (b) {C} 4 E-Commerce, M-Commerce and Emerging Technologies 2
2. (a) 3 Information Systems and Its Components 4
(b) 3 " " " " 2
5. (b) 4 E-Commerce, M-Commerce and Emerging Technologies 4
6. 1 Automated Business Processes 8
7. (b) 4 E-Commerce, M-Commerce and Emerging Technologies 2
(c) 4 " " " " 2
2018 1. (a) {C} 2 Financial and Accounting Systems 2

May (b) {C} 3 Information Systems and Its Components 2
(c) {C} 4 E-Commerce, M-Commerce and Emerging Technologies 4
(d) {C} 1 Automated Business Processes 2
(e) {C} 1 " "
2. (a) 3 Information
Components
""2
Systems and Its 6
(b) 1 Automated Business Processes 4
3. (a) 2 Financial and Accounting Systems 6
(b) 3 Information Systems and Its Components 4
4. (a) 5 Core Banking Systems 6
(b) 4 E-Commerce, M-Commerce and Emerging Technologies 4
5. (a) 1 Automated Business Processes 6
(b) 5 Core Banking Systems 4
6. (a) 4 E-Commerce, M-Commerce and Emerging Technologies 8
(b) 2 Financial and Accounting Systems 2
(Or) (b) 3 Information Systems and Its Components 2
Descriptive 32
" 279
Descriptive 162 " 151
" 265 Practical 72
Sh. Notes 259 " 251
Descriptive 128
" 214
" 283
Descriptive 78
" 32
" 163
" 79
" 112
" 217 " 294
" 254
Practical 73
Descriptive 307
" 252 " 100

" 164 Nov. (b) {C} 2 Financial and Accounting Systems 2 (c) {C} 3 Information Systems and Its
Components 2
(d) {C} 4 E-Commerce, M-Commerce and Emerging Technologies 2
(e) {C} 5 Core Banking Systems 2
2. (a) 1 Automated Business Processes 6
(b) 2 Financial and Accounting Systems 4
3. (a) 2 " " " " 6
(b) 3 Information Systems and Its Components 4
4. (a) 4 E-Commerce, M-Commerce and Emerging Technologies 6
(b) 5 Core Banking Systems 4
5. (a) 5 " " " 6
(b) 4 E-Commerce, M-Commerce and Emerging Technologies 4
6. (a) 3 Information Systems and Its Components 8
(b) 1 Automated Business Processes 2
(Or) (b) 1 " " " 2
" 129
" 214
Descriptive 243
" 306
Descriptive 30
" 114
" 101
" 192
" 257
" 304
" 310
" 261
" 193
" 25
" 76
May (b) {C} 4 E-Commerce, M-Commerce and Emerging Technologies 2 2. (a) 3 Information Systems and Its Components 6 (b) 2 Financial and
Accounting Systems 4 3. (a) 5 Core Banking Systems 6 (b) 1 Automated Business Processes 4 4. (a) 5 Core Banking Systems 6
Systems and Its (b) 3 Information
Components 5. (a) 4 E-Commerce,

Emerging Technologies 8 (b) 2 Financial and Accounting Systems 2 (Or) (b) 2 " " " 2 " 284
Practical 215
Descriptive 116
" 295
" 26
" 296
4 M-Commerce and
" 227
Descriptive 280
" 90
" 102
2019 1. (a) {C} 5 Core Banking Systems 3 Descriptive 312
Nov. (b) {C} 1 Automated Business Processes 2 " 32
2. (a) 1 " " " 6 " 42
(b) 3 Information Systems and Its
Components 4 " 233
3. (a) 3 " " " " 6 " 195
(b) 4 E-Commerce, M-Commerce and
Emerging Technologies 4 " 283
4. (a) 2 Financial and Accounting Systems 6 " 104
(b) 4 E-Commerce, M-Commerce and
5. (a) 5 Core Banking Systems 6 " 312
(b)(i) 5 " " " 2 " 312
(ii) 4 E-Commerce, M-Commerce and
(Or) (b) 2 Financial and Accounting Systems 2 " 104
Line Chart
Table Showing Importance of Chapter on the Basis of Marks

Ch. Years 15 15 16 16 17 17 18 18 1919 No. Chapter Name May Nov May Nov May Nov May Nov May Nov Total Ave. 1. Automated Business 8 14
12 14 10 14 12 7 8 99 9.9 Processes
2. F i n a n c i a l a n d 4 6 10 12 8 10 50 5.0 Accounting Systems
3. Information Systems and 10 18 20 20 12 6 14 14 10 10 134 13.4 Its...
4. E - C o m m e r c e , M 16 8 16 14 6 10 14 12 10 10 116 11.6 Commerce and...
5. Core Banking Systems 2 2 4 10 12 12 11 53 5.3
Legends for the Graphs CHAPTER
1
Automated Business Processes
This Chapter Covers: Study’s Chapter: 1
Chapter Comprises: Enterprise Business Processes ☹Automated Business Processes ☹Enterprise Risk Management
☹Risks ☹Controls ☹Risks and Controls for specific Business Processes ☹Regulatory and Compliance Requirements.
THE GRAPH . . . . . . . . . . . . . . . . . Trend Analysis
Marks of Objective, Short Notes, Distinguish Between, Descriptive & Practical Questions
Legend
Objective Short Notes Distinguish Descriptive Practical
For detailed analysis Login at www.scannerclasses.com for registration and password see first page of this
book.
TIMEMANAGER
Time First Indepth learning
i.e.....
1. Budgeted
2. Actual
3. Variance (1-2)
............ Day 1 16
Instant
Revision (in hours)
Next After day 7 days

i.e.... i.e. on ........... ...........
Day 2 Day 8
4.00 3.12
. . . . . . . . . . . Plan and Manage your Time Periodic Revision
(in hours)
After After After Fix as 30 days 60 days 90 days per your

i.e. on i.e. on i.e. on need. ........... .............. ............
Day 30 Day 60 Day 90
2.20 1.35 1.35

QUICK LOOK Repeatedly Asked Questions
. . . . . . . Weightage Analysis Common Answered Questions
Must Try Question
7.1 1.2, 2.4,3.7, 7.7, 7.8, 7.17,7.28
1 Introduction
Q.1.1 2007 - Nov [6] (c) Descriptive Briefly explain the principles to guide the design of measures and indicators to
be included in EIS. (5 marks) [C.A. Final - I] Answer:
Meaning of EIS • EIS is a tool that is designed to meet the special needs of top-level managers.
• EIS provides direct on-line access to relevant information in a useful and navigable format. Relevant information is
timely, accurate, and actionable about aspects of a business that are of particular interest to the senior manager.
• The useful and navigable format of the system means that it is specifically designed to be used by individuals with
limited time, limited keyboarding skills, and little direct experience with computers.
• An EIS is easy to navigate so that managers can identify broad strategic issues, and then explore the information to
find the root causes of those issues.
• EIS is mainly an advancement of MIS but it can include the Decision Support System (DSS).
Principles that guide design of measures
1. An Executive Information System (EIS) is a tool that provides direct on-line access to relevant information in a
useful and navigable format.
2. EIS is a computer based information system that serves the information need of top executives.
3. EIS enables users to extract summary data and model complex problems without the need to learn query
languages, statistical formulas or high computing skills.
4. EIS is very user friendly, supported by graphics and exception reporting and drill down capabilities.
5. EIS provides rapid access to timely information and direct access to management reports.
6. EIS is capable of accessing both internal data and external data.
7. EIS is easily connected to Internet (with online information services and e-mail)
8. EIS provides extensive online analysis tool like trend analysis, market conditions etc.
9. EIS can easily be given a DSS support for decision making.
10. EIS is easy to navigate so that managers can identify broad strategic issues, and then explore the information to
find the root causes of those issues.
Space to write important points for revision
Q.1.2 RTP Descriptive
Discuss Executive information systems (EIS) and its components. Answer:
Executive Information Systems (EIS):

An Executive Information System (EIS) is the nature of Information System used by executives to access and
administer the data they entail to make informed business decisions. In the hierarchical structure of information
systems, the EIS is at the pinnacle and is designed to renovate all significant data (from project to process to budget)
into aggregated information that makes sense and brings value to the by and large business strategy. EIS is able to
link data from various sources both internal and external to provide the amount and kind of information executives
find useful. These systems are designed for top management; easy to use present information in condensed view;
access organisation’s databases and data external to the
Components of an EIS Components Hardware

Software
User Interface
Tele
communication Description
Includes Input data- entry devices, CPU, Data Storage files and Output Devices.
Includes Text base software, Database and Graphic types such as time series charts, scatter diagrams, maps, motion
graphics, sequence charts and comparison- oriented graphs (i.e., bar charts) Model base.
Includes hardware (physical) and software (logical) components by which people (users) interact with a machine.
Several types of interfaces can be available to the EIS structure, such as scheduled reports, questions/answers, menu
driven, command language, natural language and input/output.
Involves transmitting data from one place to another in a reliable networked system.
2 Enterprise Business Processes
Q.2.1 2014 - Nov [2] (a) Descriptive
What are the various key factors to be considered in implementing Business Process Management (BPM) in an
enterprise? (4 marks) Answer:
Various key factors to be considered in implementing Business Process Management (BPM) in an enterprise are as
follows:
Factors Scope
Goals
Methods to be used
Skills Required
Tools to be used Key Considerations
A single process, a department, the entire company.

Process understanding, Process Improvement, Process Automation/ Optimization and Process reengineering.
Six Sigma, BPM Life Cycle Method, TQM, Informal methods.

C o n s u l t a n t s , T r a i n E mp l o y e e s , F o r ma l Certification, Basic Education, Existing Skill sets.
White-Boards, Sticky Notes, Software for Mapping, D o c u me n t i n g , S o f t w are for Simulat i o n ,

Comprehensive BPMS.
Investments to Make Training, Tools, Time.

Sponsorship/Buy-in Executive Level, Department Level, Process Needed Owner Level, Employee Level.
Q.2.2 2014 - Nov [2] (b) Descriptive
What are the major reasons for failure of Business Process Management System (BPMS)? (4 marks) Answer:
Reason for Failure of BPMS:
1. The consumer is often confronted with poor customer service due to
broken processes, inefficient processes and manual processes- that is the customer is often confronted (challenged)
with the silos of the
2. The same consumer is becoming more and more demanding with respect to delivery time and also demanding
higher quality of the products or services.
3. The product or service is becoming more and more personalized supported by increased customer services.
4. Inadequate investment in ongoing training for involved personnel and deficient executive involvement.
5. Breakdown in gap analysis due to deficient project management.
6. Inefficient corporate policy protecting the integrity of data in BPMS. Space to write important points for revision
Q.2.3 2017 - May [1] {C} (a) Descriptive
Write any two principles of Business Process Management. (2 marks) Answer:

Principles of Business Process Management:
1. Principle of Context
Awareness
2. Principle of Continuity
BPM should fit to the organisational context. It should be tailor made and should not follow cook book approach.
BPM should be a continuous and permanent practice. It should not be a one-off project.
Define Business Process

Answer:
Business Process:
A Business Process Consists of a set of activities that are performed in coordination in an organizational and
technical environment. These activities jointly realize a business goal. Each business process is enacted by a single
organization, but it may interact with business processes performed by other organizations. To manage a process, the
first task is to define it that involves defining the steps/ tasks in the process and mapping the tasks to the roles
involved in the process. Once the process is mapped and implemented, performance measures are established. The
last piece of the process management definition describes the organizational setup that enables the standardization of
and adherence to the process throughout the organization.

During a job interview, an interviewer asked Mr. A to list out all the risks and their controls associated with Order-
To-Cash (O2C) business process. Prepare an appropriate draft reply.
Answer:
Risks and Controls related to the Order to Cash (O2C) business process are as follows:
S. Risks
No.
1. The Customer master file might not be maintained properly and the information might not be accurate.
2. Invalid changes are made to the customer master file.
3. All Valid changes to the customer master file are not processed.
The maintained properly and the information is accurate.
Controls
Customer master file is
Only Valid changes are made to the customer master file.
All Valid changes to the customer master file are processed.
4. Changes to the customer master file might not be accurate.
Changes to the customer master file are not processed in a timely manner.
5. Customer master file data might not be up-to- date and relevant.
Changes to the customer master file are made accurate.
Changes to the customer master file are processed in a timely manner.
Customer master file data is up to date and relevant.

Q.3.1 2014 - Nov [1] {C} (e) Descriptive
What are the objectives of business process automation? (2 marks) Answer:

The success of any business process automation shall only be achieved when BPA ensures
Confidentiality
Integrity
Availability Time lines
To ensure that data is only available to persons who have right to see the same;
To ensure that only authorized amendments can be made in the data;
To ensure that data is available when asked for; and
To ensure that data is made available at the right time. To ensure that all the above parameters are met, BPA needs
to have appropriate internal controls put in place.

Q.3.2 2015 - Nov [1] {C} (a) Descriptive Mention the challenges in implementing ‘Business Process Automation’.
(2 marks) Answer:
Challenges in implementing Business Process Automation 1. Planning
2. Organizing
3. Leading
4. Controlling
5. Increase in Number of interface with Customers

6. High Cost
It requires determining the goals, of the information system function and the means of achieving these goals.
It involves gathering, allocating and coordinating the resources needed to accomplish the goals. It involves
motivating, guiding and communicating with personnel.
Comparing actual performance with planned performance as a basis for taking any corrective actions that are
needed.
Since the number of interface with customers is growing for e.g. phone, e-mail, SMS, Whatsapp etc. it becomes
difficult to handle.
It plays heavily on the budget of the company. Space to write important points for revision
Q.3.3 2015 - Nov [6] (b) Descriptive What is meant by ‘controls’ in BPA? What are their major objectives? (4
marks)
Answer:
Business Process Automation Controls
Meaning of • Business Process Automation
Meaning of Control •
BPA is the basic component of an enterprisewide automation and management scheme for both business and IT
workflow.
It refers to removing the human element from existing business processes by automating the repetitive or
standardized process components. It ranges from automating a simple data-entrymanipulation task to building
complex, automated financial management processes using existing applications.
Control is defined as policies, procedures, practices and organization structure that are designed to provide
reasonable assurance that business objectives are achieved and undesired events are prevented or detected are
corrected.
Major Objectives of Controls in BPA:
1. Authorization It ensures that all transactions are approved by responsible personnel in accordance with their
specific or general authority before the transaction is recorded.
2. Completeness In ensures that no valid transactions have been omitted from the accounting records.
3. Validity It ensures that all valid transactions fairly represent the economic events that actually occurred, are
lawful in nature and have been executed in a c c o r d a n c e w i t h ma n a g e me n t ’ s g e n e r a l authorization.
4. Accuracy
5. Physical
Safeguards and Security
It ensures that all valid transactions are accurate, consistent with the originating transaction data, and information is
recorded in a timely manner.
Ensures that access to physical assets and information systems are controlled and properly restricted to authorized
personnel.
6. Error Handling It ensures that errors detected at any stage of processing receive prompt corrective action and are
reported to the appropriate level of management.
7. Segregation of It ensures that duties are assigned to individuals in a Duties manner that ensures that no one
individual can control both the recording function and procedures relative to processing a transaction.

Q.3.4 2017 - May [6] (b) Descriptive What are the generic reasons for going for Business Process Automation? (4
marks)
Answer:
Business Process Automation
Meaning BPA is the basic component of an enterprise-wide automation and management scheme for both business
and IT workflow.
It refers to removing the human element from existing business processes by automating the repetitive or
standardized process components. It ranges from automating a simple data-entry-manipulation task to building
complex, automated financial management processes using existing applications.
Need of BPA
1. Fast Service to customers
2. To Remain
Competitive and enhancing goodwill
3. Cost Saving
4. Error free
5. Focus on key areas
This was not the initial reason for adaption of BPA but gradually business managers realized that automation could
help them to serve their customers faster and better.
To provide the level of products and services as offered by competition and thus enhancing goodwill.
Automation leads to saving in time and labour costs. To provide error free services to the customer.
Freeing people from routine and volume, and allow management to do what they are best at make decisions, analyze
data implications and trends and focus on providing better customer service.

Q.3.5 2018 - Nov [6] (b) Descriptive State the required characteristics of goals to be achieved by implementing
Business Process Automation (BPA). (2 marks)
Answer:
The characteristics of goals to be achieved by implementing Business Process Automation (BPA), being:
• S - Specific
• M - Measurable
• A - Attainable
• R – Relevant
• T – Timely

Q.3.6 2019 - May [3] (b) Descriptive
A business organization is planning to increase the accuracy of information transferred and certifies the repeatability
of the value -added task performed by the automation of business.
Being a management consultant, identify any four major benefits that the organization can achieve through the
automation of a business process.
(4 marks) OR RTP Descriptive
Briefly discuss the benefits of Business Process Automation. Answer:

Major benefits that the organisation can achieve through the automation of a business process.
1. Quality & Consistency ☐

2. Time Saving ☐
☐
3. Improved Operational ☐ efficiency
☐ Ensures that every action is performed identically - resulting in high quality, reliable results and stakeholders will
consistently experience the same level of service.
Automation reduces the number of tasks employees would otherwise need to do manually.
IT frees up time to work on items that add genuine value to the business, allowing innovation and increasing
employees’ level of motivation.
Automation reduces the time it takes to achieve a task, the effort required to undertake it and the cost of completing
it successfully.
Automation not only ensures systems run smoothly and efficiently, but that errors are eliminated and best practices
are constantly leveraged.
4. Governance and ☐ Reliability

5. Reduced Turnaround ☐ Times
The consistency of automated processes means stakeholders can rely on business processes to operate and offer
reliable processes to customers, maintaining a competitive advantage.
Eliminate unnecessary tasks and realign process steps to optimise the flow of information throughout production,
service, billing
adjustment of
and collection. This
processes distills operational performance and reduces the turnaround times for both staff and external customers.

Discuss the steps in implementing Business Process Automation. Answer:

The steps in implementing Business Process Automation are:
Step 1: Define why we plan to implement a BPA?

The primary purpose for which an enterprise implements automation may vary from enterprise to enterprise . A list
of generic reasons for going for BPA may include any or combination of the following:
• Errors in manual processes leading to higher costs.
• Payment processes not streamlined, due to duplicate or late payments,
missing early pay discounts and losing revenue.

• Paying for goods and services not received.
• Poor debtor management leading to high invoice aging and poor cash
flow.
• Not being able to find documents quickly during an audit or lawsuit or not
being able to find all documents.
• Lengthy or incomplete new employee or new account on boarding.
• Unable to recruit and train new employees, but where employees are
urgently required.
• Lack of management understanding of business processes.
• Poor customer service.
Step 2: Understand the rules/ regulation under which enterprise needs to comply with?
One of the most important steps in automating any business process is to understand the rules of engagement, which
include following the rules, adhering to regulations and following document retention requirements. This
governance is established by a combination of internal corporate policies, external industry regulations and local,
state and central laws. Regardless of the source, it is important to be aware of their existence and how they affect the
documents that drive the processes. It is important to understand that laws may require documents to be retained for
specified number of years and in a specified format. Entity needs to ensure that any BPA adheres to the
requirements of law.
Step 3: Document the Process, we wish to automate
At this step, all the documents that are currently being used need to be documented. The following aspects need to
be kept in mind while documenting the present process:
• What documents need to be captured?
• Where do they come from?
• What format are they in Paper, Fax, email, PDF etc.?
• Who is involved in processing of the documents?
• What is the impact of regulations on processing of these documents?
• Can there be a better way to do the same job?
• How are exceptions in the process handled?
The benefit of the above process for user and entity being that it provides clarity on the process, helps to determine
the sources of inefficiency, bottlenecks and problems and allows tore- design the process to focus on the desired
result with workflow automation.
Step 4: Define the objectives/ goals to be achieved by implementing BPA

Once the above steps have been completed, entity needs to determine the key objectives of the process improvement
activities - SMART (Specific: Clearly defined, Measurable: Easily quantifiable in monetary terms, Attainable:
Achievable through best efforts, Relevant: Entity must be in need of these and Timely: Achieved within a given time
frame.)
Step 5: Engage the business process consultant
This is again a critical step to achieve BPA. To decide as to which company/ consultant to partner with depends
upon the following:
• Objectivity of consultant in understanding/ evaluating entity situation.
• Does the consultant have experience with entity business process?
• Is the consultant experienced in resolving critical business issues?
• Whether the consultant is capable of recommending and implementing
a combination of hardware, software and services as appropriate to meeting enterprise BPA requirements?
• Does the consultant have the required expertise to clearly articulate the business value of every aspect of the
proposed solution?
Step 6: Calculate the Return on Investment (ROI) for project
The right stakeholders need to be engaged and involved to ensure that the
benefits of BPA are clearly communicated and implementation becomes
successful. Hence, the required business process owners have to be
convinced so as to justify the benefits of BPA and get approval from senior
management. Some of the methods for justification of a BPA proposal may
include cost savings in terms of eliminating fines to be paid by entity due to
delays, cost of audits and lawsuits and reduced cost of space regained from
paper, file cabinets; reduction in required manpower leading to no new
recruits; ensuring complete documentation for all new accounts; taking
advantage of early payment discounts and eliminating duplicate payments;
ensuring complete documentation for all new discounts; ensuring complete
documentation for all new accounts; building business by providing superior
levels of customer service and charging for instant access to records etc.
Step 7: Developing the BPA

Once the requirements have been document, ROI has been computed and top management approval to go ahead has
been received the consultant develops the requisite BPA. The developed BPA needs to meet the objectives for which
the same is being developed.
Step 8: Testing the BPA
Once developed, it is important to test the new process to determine how well it works and identify where additional
“exception processing” steps need to be included. The process of testing is an iterative process, the objective being
to remove all problems during this phase.
Testing allows room for improvements prior to the official launch of the new process, increases user adoption and
deceases resistance to change. Documenting the final version of the process will help to capture all of this hard
work, thinking and experience which can be used to train new people.

4 Enterprise Risk Management
“Enterprise Risk Management (ERM) does not create a risk-free environment; rather it enables management to
operate more effectively in environments filled with risks”. In view of this statement, explain the various benefits,
which Board of Directors and Management of an entity seek to achieve by implementing the ERM process within
the entity. (6 marks)
Answer:
Enterprise Risk Management (ERM) dose not create a risk free environment, rather it enables management to
operate more effectively in environments filled with risks. The Board of Directors and Management achieve the
following benefits by implementing the ERM process within the entity:
1. Align risk appetite and strategy:

Risk appetite is the degree of risk, on a broad-based level that an enterprise (any type of entity ) is willing to accept
in pursuit of its goals. Management considers the entity’s risk appetite first in evaluating strategic alternatives, then
it setting objectives aligned with the selected strategy and in developing mechanisms to manage the related risks.
2. Link growth, risk and return:

Entities accept risk as part of value creation and preservation and they expect return commensurate with the risk.
ERM provides an enhanced ability to identify and assess risks, and establish acceptable levels of risk relative to
growth and return objectives.
3. Enhance risk response decision:

ERM provides the rigor to identify and select among alternative riskresponses risk avoidance, reduction, sharing and
acceptance. ERM provides methodologies and techniques for making these decisions.
4. Minimize operational surprises and losses:

Entities have enhanced capability to identify potential events, assess risk and establish responses, thereby reducing
the occurrence of surprises and related costs or losses.
5. Identify and manage cross-enterprise risks:

Every entity faces a myriad of risks affecting different parts of the enterprise. Management needs to not only
manage individual risks, but also understand interrelated impacts.
6. Provide integrated responses to multiple risks:

Business processes carry many inherent risks, and ERM enables integrated solutions for managing the risks.
7. Seize opportunities:
Management considers potential events, rather than just risks, and by considering a full range of events,
management gains an understanding of how certain events represent opportunities.
8. Rationalize capital:
More robust information on an entity’s total risk allows management to more effectively assess overall capital needs
and improve capital allocation.
5 Risks
Q.5.1 2017 - Nov [1] {C} (a) Descriptive Risks involved in implementing Business Process Automation. (2 marks)
Answer:
Risks involved in implementing Business Process Automation 1. Risk to Jobs
2. False Sense of Security
Jobs that were earlier performed manually by several employees would post-automation would be mechanized,
thereby posing a threat to jobs.
Automating poor processes will not gain better business practices.

Q.5.2 2019 - Nov [1] {C} (b) Descriptive How the inherent risks involved in BPA can be classified? Discuss any
four. (2 marks)
6 Controls
Q.6.1 2018 - May [1] {C} (e) Descriptive
Explain the following in brief:

Risk Assessment (2 marks) Answer:
Risk Assessment
Risk may be defined as the possibility that an event will occur and adversely affect the achievement of objectives.
Risk assessment involves a dynamic and interactive process for identifying and assessing risk to the achievement of
objectives. Risks to the achievement of these objectives from across the entity are considered relative to established
risk tolerances. Thus, risk assessment forms the basis for determining how risks will be managed. A precondition to
risk assessment is the establishment of objectives, linked at different levels of the entity. Management specifice
objectives within categories of operations, reporting and compliance with sufficient clarity to be able to identity and
assess risks to those objectives. Risk assessment also requires management to consider the impact of possible
changes in the external environment and within its own business model that may render internal control ineffective.

7
Diagrammatic Representation of Business Processes
Q.7.1 2010 - Nov [7] (c)
What is Program debugging ? Explain it briefly.
OR 2013 - May [7] (ii)

Write short note on Program Debugging Answer :
Program Debugging :
It is a process of finding errors in program and rectifying them by using diagnostic routine before putting the
program into use. There is a real necessity to debug a program, i.e. to cleanse it from errors. For this purpose, the
programmers device a set of test data transactions to test the various alternative branches in the program. The results
got from the computer are compared with one derived manually prior to computer processing. When the results do
not match for any reason, the programmer then verifies the flowchart and coding sheet to hunt for the bugs. This
process is called program debugging.
Descriptive (2 marks)
Q.7.2 2010 - Nov [5] Descriptive
What do you mean by term flow chart? Draw a program flow chart to find the sum of first 50 odd numbers. (2 + 6 =
8 marks) Answer :
Flow Chart:
• Flowchart is a diagram that shows sequence of steps required to solve
a particular problem.
• It is a logical flow of steps which shows sequence of operations of a
program by using symbols and inter-connectivity lines. It is like a
blueprint that shows the general plan and essential details of the
proposed structure.
• It allows the programmer to compare different approaches and
alternatives on paper and often shows inter-relationships that are not
immediately apparent.
The required flowchart to find the sum of first 50 odd numbers is drawn below :
Where CAWL means Clear All Working Locations Space to write important points for revision
Q.7.3 2012 - Nov [7] (iii) Objective
Describe briefly System Flow Chart (2 marks) Answer:

System Flowchart:
• System flowchart depicts the electronic flow of data and processing
steps in Information systems.

• It is used by System Analysts to describe the data flow and operations
for a data processing cycle.
• It defines the broad processing in the organizations.
• It shows the origin of data, filing structure, processing to be performed,
output that is to be generated and necessity of any offline operation.
What is a Data Flow Diagram. Explain the four major components of a Data Flow Diagram. (4 marks) Answer:
Types of Data Flow Diagrams (DFDs)
There are two types of Data Flow Diagrams:
1. Logical Data Flow Diagram.
2. Physical Data Flow Diagram.
1. Logical Data Flow Diagram

2. Physical Data Flow Diagram
A logical DFD focuses on the business and how the business operates. It describes the business events that take
place and the data required and produced by each event. The logical model reflects the business. A physical DFD
shows how the system will be implemented. The physical model depicts the system.
Major Component of DFD

Data Flow Diagrams
1. Concept of Data Flow Diagram (DFD):
☐ A Data flow diagram graphically describes the flow of data within an organisation. It is used to document
existing system and to plan and design new ones. There is no ideal way to develop a DFD; different problems call
for different methods. A DFD is composed of four basic elements : data sources and destinations, data flows,
transformation processes, and data stores. Each is represented on a DFD by one of the symbols shown in figure
given below.
Data Flow Diagram Symbols

Symbol
Represent Data Sources and destinations
Explanation
The people and organizations that send data to and receive data from the system are represented by square boxes.
Data destinations are also referred to as data sinks. Represent Data flows
Represent
Transformation process
Represent Data stores
The flow of data into or out of a process is represented by curved or straight lines with arrows :
The processes that transform data from inputs to outputs are represented by circles. They are often referred to as
bubbles.
The storage of data is represented by two horizontal lines.
These four symbols are combined to show how data are processed For Example :
In data flow
☐ Input to process (3) is data flow, (4) which comes from data source (1). The outputs of process (3) are data flows
(4) and (5) Data flow (5) is sent to data destination (10). Process (6) uses data flow (4) and (7) as input and produces
data flow (9) and (7) as output. Data flow (7) comes from and returns to data store (8). Data flow is sent to data
destination (11).
☐ Above figure assigns specific titles to each of the processes depicted in symbols.
☐ These figures will be used to examine the four basic elements of a DFD in more detail.
2. Components of Data Flow Diagram :
(i) Data Flows ☐

☐
☐
(ii) Data Source ☐ and

Destinations ☐
☐
(iii) Processes ☐
☐ It represents the flow processes, data stores, destinations.

Data flow arrows are labeled to indicate the type of data being passed.
Data that pass between data stores and a data source/destination must go through some form of data processing, i.e.
through a transformation process.
An entity can be both a Source and a Destination.
A source or destination symbol on the DFD represents an organisation or individual that sends or receives data used
or produced by the system.
A Data Flow can consist of one or more pieces of datum. As data flow may be composed of more than one data
element, it must be determined whether to show one or more lines. The determining factor is whether the data
elements always flow together.
Process represent the transformation of data into information.
The output is sent to Data Stores or Data Destinations.
of data between data source and (iv) Data Stores ☐ A Data Store is a temporary or permanent
repository of data.
☐ DFDs do not show the physical storage
medium (disks, paper, etc.) used to store the
data.
☐ Like other DFD elements, Data Store names
should be descriptive.
☐ As in above figure, item (8) data store are
represented by horizontal lines, with the data
store's name recorded inside.
3. Sub-division of Data Flow Diagrams
(i) N e e d f o r Data flow Diagrams are sub-divided into Sub-Division successively lower levels in order to provide
increasing amount of detail. This is because only few systems can be fully diagramed on one sheet of paper.
Moreover, different Users have different needs, and hence, various DFD levels covering each user area can only
satisfy their requirements.
(ii) Context Diagram
(iii) An example Context

Diagram is shown
below
The highest-level DFD is referred to as a Context Diagram. A context diagram provides the reader with a summary
level view of a system. It depicts a data processing system and the external entities that are the sources and
destinations of the system's inputs and outputs.
Example shows the payroll processing procedures. On an inference, it is understood that the Payroll Processing
System receives time cards from the Personnel Department and employee data from the Human Resources
Department.
When these data are processed, the system produces:
(a) Tax reports for payments into Government
Account,
(b) Employee pay cheques,
(c) A cheque for the entire salary amount to be
deposited in the Bank Account, and (d) Payroll Reports for submission to Management
for review.
4. Sub-division of DFD: Sub-dividing the Context Diagram leads to modules of lesser levels.
In the aforesaid example, if preparation of employee pay cheques is taken as a lower level, the activities concerned
with it will be represented by a separate sub-divided DFD. The sub-divided DFD for preparation of pay cheques will
involve activities like computation of monthly pay, tax deductions, other deductions, recovery of advances, drawing
up cheques in the employees name, preparation of payroll voucher and updation of the payroll Master File.
The Process of sub - divided Data is represented below :

[Figure shows the sub-divided Context Diagram of DFD] Space to write important points for revision
Q.7.5 2018 - Nov [1] {C} (a) Descriptive
Explain ‘Data Flow Diagram’. (2 marks) Answer:
Data Flow Diagrams:

A Data flow diagram graphically describes the flow of data within an organisation. It is used to document existing
system and to plan and design new ones. There is no ideal way to develop a DFD; different problems call for
different methods. A DFD is composed of four basic elements : data sources and destinations, data flows,
transformation processes, and data stores.
DFD basically provides an overview of:
☐ What data a system processes;
☐ What transformations are performed;
☐ What data are stored;
☐ What results are produced and where they flow.
It is mainly used by technical staff for graphically communicating between systems analysts and programmers.
Business Processes are documented / designed using flow-charts to understand the process in visualized form. Being
a business advisor what advantages of flow-charts will you suggest to represent the business processes in
diagrammatic form. (6 marks)
Q.7.7 RTP Distinguish Between
Distinguish Between Data flow of DFD and Data store of DFD. Answer:
Data Flow of DFD: Data Flow is the movement of data between the entity,
the process and the data store. Data flow portrays the interface between the components of the DFD. The flow of
data in a DFD is named to reflect the nature of the data used (these names should also be unique within a specific
DFD). Data flow is represented by an arrow, where the arrow is annotated with the data name.
Data Store of DFD: A Data store is where a process stores data between processes for later retrieval by that same
process or another one. Files and tables are considered data stores. Data store names (plural) are simple but
meaningful, such as “customers”, “orders” and “products”. Data stores are usually drawn as a rectangle with the
right hand side missing and labeled by the name of the data storage area it represents, though different notations do
exist.

Q.7.8 RTP Descriptive Discuss advantages and limitations of using Data Flow Diagram.
Answer:
Advantages of using Data Flow Diagram (DFD)
1. It aids in describing the boundaries of the system.
2. It is beneficial for communicating existing system knowledge to the
users.
3. A straightforward graphical technique which is easy to recognize.
4. DFDs can provide a detailed representation of system components.
5. It is used as the part of system documentation file.
6. DFDs are easier to understand by technical and nontechnical audiences
7. It supports the logic behind the data flow within the system. Limitations of using Data Flow Diagram
1. It makes the programmers little confusing concerning the system
2. The biggest drawback of the DFD is that it simply takes a long time to create, so long that the analyst may not
receive support from management to complete it.
3. Physical considerations are left out.
Q.7.9 2007 - Nov [4] Practical An electric supply company charges the following rates from its consumers :
No. of unit consumed Charges/unit

(`)
For the first 200 units 2.50
For the next 300 units 3.50
Over 500 units 5.00
Computer database of the company has the following information :
) Consumer Name
) Address
) Unit consumed
) Bill date
) Payment date
If the consumer pay his bill within 15 days from the bill date, 10% discount is given. If he makes the payment after
15 days from the bill date, 5% surcharge is levied. Draw a Flow chart to calculate the net amount of the bill for each
consumer and print it. (10 marks)
Answer: Q.7.10 2008 - May [4] Practical
A bicycle shop in a city hires bicycles by the day at different rates for different models as given below :
Model No. Hire rate per day

(`)
Model No. 1 14.00
Model No. 2 12.00
Model No. 3 10.00
In order to attract customers, the shopkeeper gives a discount on the number of days a bicycle is hired for. The
policy of discount is as given below :
No. of days Discount rate
(%)
1-5 0.00
6-10 8
11 and over 15
For every bicycle hired, a deposit of ` 30.00 must be paid. Develop a flow chart to print out the details for each
customer such as name of the customer, bicycle model number, number of days a bicycle is hired for, hire charges,
discount and total charges including deposits. (10 marks)
Answer:
Q.7.11 2008 - Nov [4] Practical
A Book publisher offers discount to customers on the basis of customer type and number of copies ordered as shown
below:
Customer type Book Seller
Library Number of Copies Ordered % of Discount
More than 10 25
Less than or equal to 10 15
More than 5 20
Less than or equal to 5 10
Customer number, name , type, book number, number of copies ordered and unit price are given as input. Draw a
flow chart to calculate the net amount of the bill for each customer and print it.
The above is to be carried out for 50 customers. (10 marks)
Answer:
Q.7.12 2009 - May [4] Practical
Frame the problem for which the given Flowchart has been drawn. See the Abbreviations defined below :
Cust. : Customer, Prod : Product, Amt : Amount, Disc : Discount, TV : Television, FR : Fridge, MS : Music
System, ST : Student (10 marks)
Answer:
The problem relates to ‘Discount Policy’ of a company engaged in selling electronic items.
Item
TV
Fridge
Music System
Category of Customer Discount All 15% Student 12%* Others 15%* Student 10%* Others 18%**
* irrespective of order value

* * subject to order value being more than ` 1 lakh.
Q.7.13 2009 - Nov [4] (a) Practical Write the output sequence (at least first five numbers) for the given flowchart,
if N = 0 is selected as the value for N as input.
(5 marks) Answer :
If N = 0 then the output sequence will be :
0 1 4 25 676
Q.7.14 2009 - Nov [4] (b) Practical
If the statement “N. = N * N” in the computation box of the flowchart is modified as “N = N * (N – 1)”. Write the
output sequence (at least first five numbers) for the flowchart with N = 0 as the input value for N.
(5 marks) Answer:
If “N = N* N” is modified as “N = N* (☐1)” with N = 0 as output, then the output sequence will be:
00000
The Income-tax for the employees of an organization is calculated on the basis of their Gross Income and the
Investments made by them, under Section 80C. The taxable income is calculated according to the following rules :
Taxable Income = Gross Income☐Investments provided investments are less than 1.5 lac. Otherwise
Taxable Income = Gross Income ☐ 1,50,000
Following rules are applied to calculate the Income-tax, on the Taxable Income :
Taxable Income (i) 0 – 2,50,000 (ii) 2,50,001 – 5,00,000

(iii) 5,00,001 – 10,00,000
(iv) 10,00,001 – and above
Income-tax
Nil
5%, on the excess of 2,50,000
12,500 + 20% on the excess of 5,00,000
1,12,500 + 30% on the excess of 10,00,000
Also an educational cess of 4% of Income-tax is levied on all the employees, irrespective of the income.
Employee number, Name, Gross Income, Investment amount is given as input. Draw a flow chart to calculate the
Income-tax payable by each employee. (10 marks)
Answer:
Terms used :
ENO = Employee Number
ENAME = Employee Name
GROSS = Gross Income
INV = Investment made
TINC = Taxable Income
IT = Income Tax
ECESS = Education Cess
ITPAY = Total Income Tax payable CAWL = Clear All Working Locations

Q.7.16 2011 - May [5] (a) Practical
For computing custom duty, the imported items are classified into 4 categories. The rate of duty to be levied on each
category of items is given below :
Category Class of goods % custom duty on the (K) value of goods (V) 1 Food and beverages 10 2 Textile and
leather goods 15 3 Heavy machinery 20 4 Luxury items 40
Draw a flowchart to compute the custom duty. (4 marks) Answer :

Q.7.17 2011 - Nov [6], RTP Practical
A housing society having 400 members pay electricity bills at the following rates :
No. of units consumed Charges/unit
( `)
For the first 200 units 2.65
For the next 300 units 3.90
Over 500 units 4.75
Surcharge @ 5% of the bill is to be added to the charges.
Draw a flow chart which will read the house number and the number of units consumed. Print the total charges with
the house number and the units consumed. (8 marks)
Answer:
Abbreviations used :
House No. - House Number Units - No. of units consumed Amt - Amount
Chrg - Charges
Q.7.18 2012 - May [6] Practical For the flow chart given below:
(a) Print the output displayed for using the given two sets of data:
XY
1st Set : 15 20
2nd Set : 35 30 (4 marks)
(b) What interpretation do you make from the instructions given in the flow chart? (3 marks) (c) Comment about the
storage of the variables used in the instructions of the flow chart. (1 mark)
Answer:
(a) For first set, X=15, Y=20
Instruction Output
Read X, Y 15, 20
Print X, Y 15, 20 ............1st Print X = X + Y X = 15 + 20 = 35
Y = X - Y Y = 35 - 20 = 15
X = X - Y X = 35 - 15 = 20
Print X, Y 20, 15 ............2nd Print 1st Print 15 20
2nd Print 20 15
For second set, X = 35, Y = 30
Instruction Output
Read X, Y 35, 30
Print X, Y 35, 30 ..............1st Print X = X + Y X = 35 + 30 = 65
Y = X - Y Y = 65 - 30 = 35
X = X - Y X = 65 - 35 = 30
Print X, Y 30, 35 ..............2nd Print 1st Print 35 30
2nd Print 30 35
Answer:
(b) The given set of instructions in the flow chart is the steps for swapping/interchanging the values of two variable
without involving the third variable. As clearly interpreted from the output, the values of X and Y in the both the
value sets have got interchanged.
Note: The interpretation involves two important factors:
(i) Interchange of values of two variables X and Y.
(ii) Without involving the third or temporary storage/variable.
Answer:
(c) The comments about the storage of the variables used in the instructions of the flow chart are as follows
X = X + Y // The value of X has been assigned the value of (X+Y)...(i) Y = X - Y // The value of Y has been
assigned the value of (X-Y)..(ii) X = X - Y // The value of X has again been assigned the value of (X-Y), where the
value of X and Y are calculated from the statement (i) and (ii) Space to write important points for revision
Q.7.19 2012 - Nov [6] Practical Draw a flow chart to print the square of odd numbers between 10 to 50 and also
print the sum of their square. (8 marks)
Answer:
The required flowchart is as follows:
I: Stores the value of odd number between 10 to 50 at each step. SQ : Stores the calculated value of square of each
odd number at each step. SUM : Stores the sum of the squares of all the odd numbers till that step.

Q.7.20 2013 - May [6] (b) Practical Top town Municipality, is levying annual House Tax, as per following rules:
Size of House in Sq.
Metre
Less than 100
Upto Next 400
Upto Next 500
More than 1000
House tax rate per Square Metre
Nil
` 10
` 20
` 25
There is a surcharge of 5% of the value of House Tax. Taking into account the above factors, draw a flow chart to
compute appropriate total House Tax including surcharge for any one house. (6 marks)
Answer:
Please see answer on next page
Q.7.21 2013 - Nov [6] Practical A book publisher of Information Technology offers discount to its customers on
the basis of customer type as detailed below:
Customer Type Discount

Book Seller 30%
Library 20%
Student 10%
Further if number of copies purchased is more than 20, then additional discount of 5% is allowed irrespective of
customer type. Number of books, unit price of each book and customer type are given as input. Draw a flow chart to
calculate the net amount after all discount and print customer type, number of copies and net amount. (8 marks)
Answer:
ABC Limited is a software development company, which appointed 50 software engineers in August’ 2014 at a
monthly salary of ` 30,000. All these engineers shall be entitled for an increment in their monthly salary after six
months. The increment on present monthly salary shall be based on their performance to be evaluated on a 100
marks scale as per details given below:
– Performance Marks < 70, then increment shall be 10% of present salary.
– 70 ☐ Performance marks < 80, then increment shall be 20% of present
salary.
– Performance Marks☐80, then increment shall be 30% of present salary. Draw a Flow-Chart to enable to print the
details like name of the engineer, performance marks, monthly increment amount and revised monthly salary for
each of these 50 engineers. (8 marks)
Answer:
Let us define the variables first:
PM: Performance Marks
RESAL: Revised Monthly Salary,
INCAMT: Increment Amount,
NAME: Name of Engineer,
N: Pointer to track number of Engineers,
INCREMENT = 0
Q.7.23 2015 - Nov [2] Practical An E-Commerce site has the following cash back offers.
(i) If the purchase mode is via website, an initial discount of 10% is given on the bill amount.
(ii) If the purchase mode is via phone app, an initial discount of 20% is given on the bill amount.
(iii) If done via any other purchase mode, the customer is not eligible for any discount.
Every purchase eligible to discount is given 10 reward points. (a) If the reward points are between 100 and 200
points, the customer is eligible for a further 30% discount on the bill amount after initial discount.
(b) If the reward points exceed 200 points, the customer is eligible for a further 40% discount on the bill amount
after initial discount. Taking purchase mode, bill amount and number of purchases as input, draw a flowchart to
calculate and display the total reward points and total bill amount payable by the customer after all the discount
calculation. (8 marks) Answer:
Let us define the variables first:
PM: Purchase Mode BA: Bill Amount TBA : Total Bill Amount NOP: Number of Purchases TRP: Total Reward
Points
IN_DISC: Initial Discount ET_DISC: Extra Discount on purchases eligible to Initial Discount N: Counter (to track
the number of purchases)
Q.7.24 2016 - Nov [5] Practical
Draw a Flowchart for the following process:

Leebay is a new e-commerce website that is setting up business in India. Leebay and their partner bank Paxis have
come up with a joint promotion plan for which the following offers are proposed.
Customers can either log in through a mobile app or directly from the website:
(1) If the payment mode chosen is ‘Paxis Credit’, then a 20% discount is
given to the user.

(2) If the payment mode chosen is ‘Paxis Debit’, then a 10% discount is
given to the user.
(3) If other payment modes are used, then no discount is given. Also, to promote the downloads of its new
smartphone app, the company has decided to give the following offer:
1. If the purchase mode is ‘Mobile App’, then no surcharge is levied on
the user.
2. If any other purchase mode is used, then additional 5% surcharge is
levied on the user. This surcharge is applied on the bill after all
necessary discounts have been applied.
With bill amount, payment mode and purchase mode as inputs, draw
a flowchart for the billing procedure for Leebay. (1 × 8 = 8 marks) Answer:
A company is selling three types of products, namely, A, B and C to two different types of customers viz. dealers
and retailers. To promote the sales, the company is offering the following discounts:
(i) 10% discount is allowed on Product A, irrespective of the category of customers and the value of order.
(ii) On product B, 8% discount is allowed to retailers and 12% discount to dealers, irrespective of the value of order.
(iii) On product C, 15% discount is allowed to retailers irrespective of the value of order and 20% discount to
dealers if the value of order is minimum of ` 10,000.
Draw a flowchart to calculate the discount for the above policy.(8 marks) Answer:
Q.7.26 2017 - Nov [6] (a) (b) (c) Practical
(a) Draw a flow chart to incorporate for the following steps: L1 N = 1
L2 PRINT N
L3 N = N × (N + 1)
L4 STOP when N exceeds 100
L5 GOTO L2
Note that in step L3, ‘×’ denotes multiplication sign. (4 marks)
(b) List the output for the above program. (2 marks)
(c) List the output if the above program is modified in the step L1 as N= 0. (2 marks)
Answer:
(a)
(b) Output = 1, 2, 6, 42
(c) Output = O (it will continue as the loop doesn’t end)
Q.7.27 2018 - May [5] (a) Practical An e-commerce website is offering following discounts:
☐ If the purchase mode is via website, a discount of 5% is given on the bill
amount.
☐ If the purchase mode is via phone app, a discount of 10% is given on
bill amount.
☐ If purchase is done via any other mode, customer is not eligible for any
discount.
Draw a Flowchart to calculate and display the bill amount payable by the customer. (6 marks) Answer:
Let us define variables first:
PM: Purchase Mode BA: Bill Amount
IN - DISC : Initial Discount N : Counter ( to track the no. of purchases)
Q.7.28 RTP Practical A bicycle shop in a city provides rental facility to its customers at different rates for different
models as given below:
Model No. Hire Rate per day Model No. 1 ` 10

Model No. 2 ` 9
Model No. 3 ` 8
Model No. 4 ` 7
To attract customers, the shopkeeper gives a discount of 15 percent to all those customers, who hire a bicycle for
more than one-week period. Further to attract women customer, he gives additional discount of 10 percent
irrespective of hire period. For every bicycle hired, a security deposit of ` 25 must be paid. Draw a flow chart to
print out the details of each customer such as name of customer, bicycle model number, number of days a bicycle is
hired for, hire charges, discount and total charges including deposits.
Answer:
Abbreviations used are as follows:
HCHG: Hire Charges DAYS: No. of days a bicycle is hired for NAME: Name of Customer TCHG: Total Charges
MODEL: Bicycle Model No. TDISC: Total Discount
SEX: Gender of the Customer
The flowchart is available on the next page.
8
Risks and Controls for Specific Business Processes
Q.8.1 2018 - Nov [6] (Or) (b) Descriptive Give two examples of the Risks and Control objectives for Human
Resource Process at configuration level. (2 marks)
Answer:
Example of Risks and control objectives for Human Resource Process at configuration level
☐ Risks objectives for Human Resource Process at configuration
level:
Employees who have left the company continue to have system access. Employees have system access in excess of
their job requirements.
☐ Control objectives for Human Resource Process at configuration level:

System access to be immediately removed when employees leave the company.
Employees should be given system access based on a “need to know” basis and to perform their job function.

9
Regulatory and Compliance Requirements: Companies Act 2013
Corporate governance is the framework of rules and practices, by which a board of directors ensures accountability,
fairness and transparency in a company’s relationship with all its stakeholders. List out the rules and procedures that
constitute corporate governance framework. (3 marks)
Answer:
☐ Corporate Governance is the framework of rules and practices by which a board of directors ensures
accountability, fairness, and transparency in a Company’s relationship with its all stakeholders (financiers,
customers, management, employees, government, and the community). Corporate governance framework constitute
the following rules and procedures :
1. Contract
2. Reconciling
3. Supervision and Control
Explicit and implicit contracts between the company and the stakeholders for distribution of responsibilities, rights
and rewards
Procedures for reconciling the sometimes conflicting interests of stakeholders in accordance with their duties,
privileges and roles, and
Procedures for proper supervision, control and information flows to serve as a system of checks and balances.

10
Regulatory and Compliance Requirements: Information Technology Act (IT Act)
Q.10.1 2007 - Nov [7] (a) Short Notes Write short note on the following :
Objectives of Information Technology Act, 2000. (5 marks) [CA Final - II]
Answer :
Objectives of Information Technology Act. (Amended Vide ITAA, 2008): To grant legal ☐ recognition to ☐
☐
To facilitate ☐
☐ To facilitate and give ☐ legal recognition to
To enable ☐ To empower ☐
To provide for ☐ To deal with ☐
Transaction carried out through e-commerce. Electronic Signature as a method of authentication of electronic
documents/ transactions.
Book keeping in electronic form banks by amending Bankers’ Book Evidence Act, 1891.
Electronic filing of documents with government departments.

Electronic storage of data.
Electronic funds transfer between banks and financial institutions by amending RBI Act, 1934.
Electronic governance
State/Central Government to intercept/monitor any information transmitted through any computer resource for
investigation of any offence.
Protection of data security and privacy. Electronic offences by amending Indian Panel Code, 1860 and Indian
Evidence Act, 1872. Space to write important points for revision
Q.10.2 2018 - May [1] {C} (d) Descriptive

Cyber Crime (2 marks) Answer:
Cyber Crimes: Cyber Crimes also known as Computer Crime is a crime that involves use of a computer and a
network. ls the reputation of the victim or cause physical or mental harm, or loss, to the victim directly or indirectly
using modern telecommunication networks such as Internet (chat rooms, email, notice boards and groups) and
mobile phones.

Explain the positive aspects contained in the IT Act 2000 and its provisions, from the perspective of e-commerce in
India. (4 marks) Answer:
From the perspective of e-commerce in India, the IT Act, 2000 and its provisions contain many positive
aspects which are as follows: ☐ The implications for the e-businesses would be that email would now be
a valid and legal form of communication in India that can be duly produced and approved in a Court of Law.
☐ Companies shall now be able to carry out electronic commerce using the legal infrastructure provided by the Act.
☐ Digital signatures have been given legal validity and sanction in the Act.
☐ The Act throws open the doors for the entry of corporate companies in the business of being Certifying
Authorities for issuing Digital Signatures Certificates.
☐ The Act now allows Government to issue notification on the web thus, heralding e-governance.
☐ The Act enables the companies to file any form, application or any other document with any office, authority,
body or agency owned or controlled by the appropriate Government in electronic form by means of such electronic
form as may be prescribed by the appropriate Government.
☐ The IT Act also addresses the important issues of security, which are so critical to the success of electronic
transactions.
☐ The Act has given a legal definition to the concept of secure digital signatures that would be required to have
been passed through a system of a security procedure, as stipulated by the Government at a later date.
MULTIPLE CHOICE QUESTION

1 Introduction
1. ________ may be defined as any kind of information system which improves the functions of an enterprise
business processes by integration.
(a) Management Information System
(b) Enterprise Information System
(c) Enterpreneur Information System
(d) Corporate Information System
2. Enterprise Information System provide a technology platform that enable organizations to integrate and co-
ordinate their business processes on a _________.
(a) Robotic System
(b) Robotic foundation
(c) Robust foundation
(d) Robust management system
3. An Enterprise Information System can be used to

(a) increase business productivity
(b) reduce service cycle
(c) reduction in product development cycle and marketing life cycles (d) All of them.
2 Enterprise Business Processes
4. Business Processes has been categorised (a) Operational and Supporting Processes (b) Management processes
(c) Only (a) not (b)
(d) Both (a) and (b)
5. Operational processes deal with the core business and value chain, which deliver value to the customer by helping
to produce a product or service. It is also known as ________.
(a) Primary Processes
(b) Secondary Processes
(c) Tertiary Processes
(d) Supporting Processes
6. Secondary processes is a back core processes and functions within an organisation, is also known as _________.
(a) Management Processes
(b) Operational Processes
(c) Supporting Processes
(d) Helping Processes
7. Processes measure, monitor and control activities related to business procedures and system, is known as
_________.
(a) Operational Processes
(b) Supporting Processes
(c) Management Processes
(d) Controlling Processes
8. Management Processes do not provide value directly to the customer but has a direct impact on _______.
(a) operation of the enterprise
(b) efficiency of the management
(c) efficiency of the enterprise
(d) effectiveness of the enterprise
9. _______ is the technology-enabled automation of activities that accomplish a specific function and can be
implemented for many different functions of company activities including sales, management, operations, HR etc.
(a) Business Processes
(b) Business Processes Technology
(c) Business Process Automation
(d) Automated Business Technology
10. Business Process Automation is a process of ______ and then automating business processes.
(a) analyzing
(b) documenting
(c) optimizing
(d) All of the above
11. Success of any Business Process Automation (BPA) shall only be achieved when BPA ensures the ________.
(a) Confidentiality
(b) Integrity and Availability
(c) Timeliness
12. The ________ is the flow of information, customized by value-added tasks, that begins with the primary contact
with a potential customer and continues through deliverance of a finished product.
(a) Business Process
(b) Business Information Process
(d) Automated Business Control
4 Enterprise Risk Management
13. _________ may be defined as a process, effected by an entity’s BOD, management and other personnel, applied
in strategy setting and across the enterprise, designed to identify potential events that may affect the entity, and
manage risk to be within its risk appetite, to provide reasonable assurance regarding the achievement of entity
objectives. (a) Information Risk Management
(b) Align Risk Appetite and Strategy
(c) Entity’s Risk Management
(d) Enterprise Risk Management
14. Enterprise Risk Management provides a framework for management to __________.

(a) effectively deal with uncertainty
(b) associated risk and opportunity
(c) enhance its capacity to build value
15. Enterprise Risk Management consist of _______ interrelated components. Such components are derived from
the way management runs a business, and are integrated with the management process. (a) Four
(b) Five
(c) Seven
(d) Eight
16. Which of the following is not a component of Enterprise Risk Management?

(a) Internal Management
(b) Event Identification
(c) Organisational Chart
(d) Objective Setting.
5 Risks
17. Risk is any event that may result in a significant deviation from a _______ resulting in an unwanted negative
consequence. (a) Planned Objective
(b) Unplanned Objective
(c) Planned Consiquences
6 Controls
18. ______ is defined as policies, procedures, practices and organisation structure that are designed to provide
reasonable assurance that business objectives are achieved and undesired events are prevented or detected and
corrected.
(a) Risk Assessments
(b) Monitoring
(c) Operation
(d) Control
19. ___________ defines the system of internal control as the plan of enterprise and all the methods and procedures
adopted by the management of an entity to assist in achieving management’s objective of ensuring, as far as
practicable, the orderly and efficient conduct of its business.
(a) SA - 310
(b) SA - 315
(c) SA - 320
(d) SA - 700
20. An Internal Control System:

(a) Facilitate the effectiveness and efficiency of operations. (b) Assists compliance with applicable laws and
regulations. (c) Helps safeguarding the assets of the entity.
(d) All of the above.
21. Which one of the following is not an objective of Internal Control? (a) Compliance with applicable laws and
regulations
(b) Meeting Sales Target
(c) Effectiveness and efficiency of operations
(d) Reliability of reporting.
22. The extent and nature of the risks to internal control vary depending on the nature and characteristics of the
_______.
(a) entity’s information system
(b) entity’s control system
(c) entity’s management system
(d) entity’s risk control system
23. According to _____ explains fine components of any internal control as they relate to a financial statement audit.
(a) SA - 300
(b) SA - 305
(c) SA - 310
(d) SA - 315
7
Diagrammatic Representation of Business Processes
24. Flowcharts are used in designing and documenting simple processes or _________.
(a) Progress
(b) Production
(c) Procedures
(d) Programs
25. Most common type of boxes used in a flow chart.

(a) A decision, usually denoted as a diamond
(b) A processing step, usually called activity, and denoted as a
rectangular box
(c) A control step, usually denoted as circular box.
26. A flowchart is described as ________ when the page is divided into different swim lanes describing the control
of different organizational units.
(a) Activity function
(b) Mutual-functional
(c) Cross-functional
27. Data Flow Diagrams (DFD) show the flow of data or information from (a) beginning to the end
(b) one place to another
(c) establishment to customer
(d) None of the above.
8
Risks and Controls for Specific Business Processes
28. __________ is the methodical process of defining options that are provided. When any software is installed,
value for various parameters should be setup as per policies and business process work flow and business process
rules of the enterprise
(a) Master
(b) Transactions
(c) Control Objectives
(d) Configuration
29. __________ refer to the actual transactions entered through menus and functions in the application software,
through which all transactions for specific modules are initiated, authorised or approved.
(a) Master
(b) Transactions
(c) Control Objectives
(d) Configuration
30. A process of obtaining and managing the raw materials needed for manufacturing a product or providing a
service, is known as _________. (a) Purchase to Pay P2P
(b) Order to Cash or O2C
(c) Master O2C
(d) Transactions O2C
31. A set of business processes that involve receiving and fulfilling customer requests for goods or services, is
called.
(a) Purchase to pay or P2P
(b) Order to cash or O2C
(c) Master O2C
(d) Transaction O2C.
32. A process of accurately tracking the on-hand inventory levels for an enterprise, is known as ______.
(a) Inventory Control
(b) Stock Process and Control
(c) Inventory Cycle
(d) Masters-Inventory
33. _________ process refers to the process of recording the transactions in the system to finally generating the
reports from financial transactions in the system.
(a) Inventory Cycle
(b) General Ledger
(c) Fixed Asset Cycle
(d) Master-General Ledger
9 Regulatory and Compliance Requirements
34. Which one of the following is not defined as Sensitive Personal Information?
(a) Home address
(b) Financial information
(c) Biometric information
(d) Password
35. Which one of the following deals with Section 143 of the Companies Act, 2013?
(a) Powers and duties of auditors and auditing standards (b) Acquisition and Mergers
(c) Powers and duties of Board of Directors
(d) Penalties due to non-compliance.
36. ________ is the framework of rules and practices by which a board of directors ensures accountability, fairness,
and transparency in a company’s relationship with its all stakeholders.
(a) Management’s Framework
(b) Privacy Policy
(c) Risk Monitoring
(d) Corporate Governance
ANSWER
1. (b) 2. (c) 3. (d) 4. (d) 5. (a) 6. (c) 7. (c) 8. (c) 9. (c) 10. (d) 11. (d) 12. (a) 13. (d) 14. (d) 15. (d) 16. (c) 17. (a) 18.
(d) 19. (b) 20. (d) 21. (b) 22. (a) 23. (d) 24. (d) 25. (d) 26. (c) 27. (b) 28. (d) 29. (b) 30. (a) 31. (d) 32. (c) 33. (b) 34.
(a) 35. (a) 36. (d)
CHAPTER Financial and 2 Accounting Systems
Chapter Comprises: ☹ Integrated (ERP) and non-Integrated Systems ☹Risks and Controls ☹Audit of ERP Systems
☹Reporting System and
Management Information System (MIS) ☹Data Analytics and Business
Intelligence ☹Business Reporting and Fundamentals of XBRL
☹Applicable Regulatory & Compliance Requirements.

Legend
book. 7.89
TIMEMANAGER
First Indepth
learning
i.e.....Time
............ Day 1
1. Budgeted 16
2. Actual
3. Variance
(1-2)
Instant
Revision (in hours)

i.e.... i.e. on ........... ...........
Day 2 Day 8
4.00 3.12
(in hours)

2.20 1.35 1.35
. . . . . . . Weightage Analysis Common Answered Must Try Question Questions
4.1 2.7, 4.2, 4.3, 4.11, 5.4
1 Concepts in Computerized Accounting Systems
A business organization is shifting from traditional accounting system to computerized accounting system. The
organization needs to store the data that is relatively permanent and not expected to change frequently in accounting
system.
As a financial expert, suggest any two types of such data in accounting system. (2 marks)
Answer:
☐ In this case, a business organization is shifting from traditional accounting system to computerised accounting
system. The organization needs to store the data that is relatively permanent and not expected to change frequently
in accounting system, so such type of data is called master data.
☐ The following are the types of such data (i.e. master data) in accounting system:
1. Accounting Master Data
2. Inventory Master Data
3. Payroll Master Data.
4. Statutory Master Data.
Accounting Master Data

Inventory Master Data
This includes names of ledgers, groups, cost centers, accounting voucher types, etc. E.g. Capital Ledger is created
once and not expected to change frequently. Similarly, all other ledgers like sales, purchase, expenses and income
ledgers are created once and not expected Opening previous year to next year is also a part of master data and not
expected to change.
This includes stock items, stock groups, godowns, inventory voucher types, etc. Stock item is something which
bought and sold for business purpose, trading goods. E.g. If a person is into the business of dealing in white goods,
stock items shall be Television, Fridge, Air Conditioner, etc. For a person running a medicine shop, all types of
medicines shall be stock items for him/her. to change again and again. balance carried forward from
Payroll Master Data

Statutory Master Data
Payroll is a system for calculation of salary and recoding of transactions relating to employees. Master data in case
of payroll can be names of employees, group of employees, salary structure, pay heads, etc. These data are not
expected to change frequently. E.g. Employee created in the system will remain as it is for a longer period of time,
his/her salary structure may change but not frequently, pay heads associated with his/ her salary structure will be
relatively permanent.
This is a master data relating to statute/law which may be different for different type of taxes. E.g. Goods and
Service Tax (GST), Nature of Payments for Tax Deducted at Source (TDS), etc. This data also shall be relatively
permanent. We don’t have any control on this data as statutory changes are made by Government and not by us. In
case of change in tax rates, forms, categories; we need to update/change our master data.

2
Integrated (ERP) and Non- Integrated Systems: Integrated ERP Systems
Q.2.1 2007 - Nov [6] (a) Descriptive What is Enterprise Resource Planning? Briefly describe its benefits. (10
marks) [CA Final - II]
Answer:
ERP
ERP - Definition ☐ An ERP system is a fully integrated business management system.
☐ Simply stated, the Information Systems that support various functional areas like Accounting, Finance,
Production, Marketing are HR integrated into what is known as an ERP system.
☐ Today, ERP system:

☐ Support the entire sequence of activities, on value chain, through which firm may add value to its goods and
services;
• Promise one database, one application, one user interface for entire Enterprise;
☐ Provide an organization a structured environment in which all decisions are fully supported by accurate and
reliable real-time information.
☐ It organizes and integrates operation processes and information flows to make optimum use of resources such as
men, material, money and machine.
☐ In short, ERP is a global, tightly integrated closed loop business solution package and is multifaceted.
Objectives of ERP ☐ ERP’s major objective is to integrate all departments and functional information flows across
a company onto a single computer system that can serve all of the enterprise’s needs.
☐ For example, improved order entry allows immediate access to inventory, product data, customer credit history,
and prior order information. such availability of information raises productivity and increases customer satisfaction.
☐ ERP systems are in use in thousands of large and medium companies worldwide, and some ERP systems are
producing dramatic results.
☐ ERP integrates all routine transactions within a company, including internal suppliers and customers. Later it was
expanded, in what is known as extended ERP software, to incorporate external suppliers and customers.
Benefits of ERP The benefits accruing to any business enterprise by implementing an ERP are unlimited.
Following are some of the benefits achieved by implementing the ERP Package:
1. Improved information access and management
throughout the enterprise.

2. Interacted financial information for effective
analysis and control.
3. Greater accuracy of information with detailed
content, better presentation and satisfactory for
decision making.
4. Reduction in paper work, by providing on-line
formats for quickly entering and retrieving
information.
5. Reliable information access by use of common
DBMS, consistent and accurate data, and
improved reports.
6. Better monitoring and quicker resolution of
queries.
7. Help to achieve competitive advantage by
improving its business processes.
8. Quick response to change in business operations
and market conditions.
9. Improved International operations by supporting a
variety of tax structures, invoicing schemes,
multiple currencies, multiple period accounting
and languages.
10. Improved Cost Control.
11. Standardised
processes. 12. Reduction in
smooth process flow.
13. Unified and integrated customer database and
order information, leading to better co-ordination
between manufacturing, inventory and despatch
activitiesamongdifferentlocations
simultaneously.
14. Faster response and follow up on customers, and
more efficient collection mechanism.
15. Accounts Payable personnel have increased
control over invoicing and payment processing,
thereby boosting their productivity and eliminating
reliance on computer personnel for these
operations.
16. Improved timeliness of information by permitting
posting daily instead of monthly.
17. Improved supply-demand linkage with remote
locations and branches in different countries. 18. Standardised HR information, leading to a unified,
simple method for tracking employees’ time and
communicating with them effectively.
19. Provides solution for problems like Single
Monetary Unit (SMU) or Euro Currency. 20. Integrated solution for managing a business using
Systems Approach.
and efficient manufacturing
Inventory Levels, by ensuring
Enabling
Technological support
☐ An ERP system requires sophisticated (advanced) information technology infrastructure.

☐ Today, PCs, client server technology and RDBMS, all can help in deployment of ERP systems.
• Most of the ERP systems exploit the power of Three Tier Client Server Architecture.
☐ It is assumed that the companies implementing ERP solutions have multiple locations of operation and control,
hence to facilitate online data transfer, technologies like Workflow, Work group, Ware, electronic Data Interchange
(EDI), Internet, Intranet etc. can be used.
Planning.
Answer:
A. Characteristics of an ERP Q.2.2 2008 - May [4] (a) Descriptive
Briefly explain the characteristics and features of an Enterprise Resource (5 marks) [CA Final - II]
Sr. Characteristics No.
1. Integrated
Explanation
2. Flexibility
3. Intelligent
Business Tools
It should integrate the various processes in the organization.
It should be flexible enough to accommodate the changing needs of an enterprise.
ERP should provide intelligent business tools like DSS, EIS, and data mining to enable better decisions.
4. Modular and ERP system should be a modular and open
Open system. It implies that any module can be interfaced or detached, whenever required, without affecting the
other modules. It also supports thirdparty add-ons by providing access to open database connectivity through the use
of client/server technology.
5. Comprehensive It should support variety of organizational functions. 6. Customization

7. C u tting E d g e and Future Proof Technologies
8. Real-Time
Access
9. User Specific
10. Multi-Currency Multi-Language 11. Best Business Practices
12. Beyond The Company
It should have the ability to customize without programming.
ERP should incorporate latest technologies like electronic fund transfer, electronic data interchange, e-commerce
etc.
ERP system should allow access to the data in real-time.
Its Components/Modules can be used individually and they are also expandable in stages to meet requirements.
ERP package should have global adaptation in form of multiple currencies and languages facilities.
It must have a collection of the best business processes applicable worldwide. It imposes its own logic on company’s
strategy, culture and organization.
It should not be confined to the organizational boundaries, rather support the online connectivity to the other
business entities of the organization.
B. Features of an ERP Sr. Features No.

1. Management Tool
2. Business Tool
3. Technology
4. Problem Elimination
5. Information Management
6. Corporate Image
Explanation
ERP is the solution for better project management.
ERP provides intelligent business tools like Decision Support System, Executive Information System, data mining
and easy working systems to enable better decision.
ERP allows automatic introduction of the latest technologies like Electronic Fund Transfer (EFT), Electronic Data
Interchange (EDI), Internet, Intranet, video conferencing, E-Commerce, etc.
ERP eliminates most business problems like material shortages, productivity enhancements, customer service, cash
management, inventory problems, quality problems, prompt delivery, etc.
ERP bridges the information gap across organisation, ERP is a high-end solution to business applications which
enable the integration of Enterprise Resources and Information.
ERP performs core customer service, corporate image, ERP system can enhance a manufacturer’s ability to
accurately schedule production, fully utilize capacity, reduce inventory and meet promised despatch dates for
customers. activities and increases
thereby augmenting the

7. Business Support
8. Cross
Functional
9. Cross Company Integration
10. Multi-faceted
ERP supports strategic and business planning activities, operational planning and execution activities, creation of
Materials and Resources. All these functions are effectively integrated for flow and update of information
immediately upon entry of any information. It has end to end Supply Chain Management to optimize the overall
Demand and Supply Data.
ERP facilitates Company-wide Integrated Information System covering all functional areas like manufacturing,
selling and distribution, payables, receivables, inventory, accounts, human resources, purchases etc.
ERP provide complete integration of system not only across departments but also across Companies under the same
management.
ERP provides multi-platform, multi-facility, multimode manufacturing, multi-currency, multi-lingual facilities.

Q.2.3 2015 - Nov [7] (e) Short Notes Write short note on Components of ERP model. (4 marks) [CA Final - II]
Answer:
Components of ERP Model:
ERP model is consists of four components which are implemented through a methodology. All four components are
as follows:
1. Software The software component is the component that is component most visible part and consists of several
modules such as Finance, HR, Supply Chain Management, Supplier Relationship Management Customer
Relationship and Business Relationship.
2. Process flow
3. Customer mind set
4. Change
management
It is the model that illustrates the way how information flows among the different modules within an ERP system.
By creating this model it easier to understand how ERP work.
By implementation of ERP system, the old ways for working which user understand and comfortable with have to
the changed and may lead to user’s resistance. E.g. some users may say that they have spent many years doing an
excellence job without help of ERP system. In order to lead ERP implementation to succeed, company needs to
eliminate negative value or belief that users may carry toward utilizing new system.
In ERP implementation, change needs to the managed several levels user attitude; resistance to change; and business
process changes.

Q.2.4 2018 - May [6] (b) Descriptive Explain the significance of Front End and Back End in a software. (2 marks)
Answer:
Front End and Back End are used by software people again and again. The understanding of this words are:
☐ Front End: It is part of the overall software which actually interacts with
the user who is using the software.

Back End: It is a part of the overall software which does not directly interact with the user, but interact with Front
End only.
☐ If a user wants to have some information from the system i.e. Balance
Sheet.
☐ User will interact with Front End part of the software and request Front
End to generate the report.
☐ Front End will receive the instruction from user and pass it on the Back
End.
☐ Back End will pass the data, generate the report and send it to the Front
End. Front End will now display the information to user.
☐ This is how the process gets completed each and every time.
‘Web Applications’ are one of the two ways of using a software including Financial and Accounting Software and
now-a-days, the use of web applications is increasing rapidly. You, being an IT consultant, have to list out some of
the advantages and disadvantages of using web applications.
(6 marks)
Answer:
Web Applications are one of the two ways of using a software including financial and Accounting software and
now-a-days, the use of web applications is increasingly rapidly.
Advantages of Web Applications:
1. Installation and
Maintenance
As software is installed on only one computer, i.e. a web server, it need not be installed on each computer. Hence,
installation on user computer is not required and maintenance and updating of software becomes extremely easy.
2. Accessibility As software is not installed on the hard disc of user’s computer and it is used through browser and
internet, it can be used from any computer in the world. Access to the software becomes very easy.
3. Mobile Using mobile application becomes very easy as data is Application available 24×7.
Disadvantages of using Web Applications: 1. Data Storage
2. Data Security
3. Performance
4. Flexibility
Data is not stored in the user’s server computer. It is stored on a web server. Hence, user will not have any control
over the data.
Data security is a big challenge in case of web application as the data is not in control of the user or owner of data. It
is maintained on a web server.
As data is picked from web server using internet, speed of operation may be slower in web applications.
Web applications do not even compare to the flexibility of desktop applications. If you want to write a web
application that basically interacts with the user’s hardware, you are doing it wrong ! Just stick with a desktop
application (e.g. c #. Net in visual studio ) for your program.

Q.2.6 2019 - May [5] (Or) (b) Descriptive Major features of an ERP system is central database. Which are the
options possible to different users while assigning access to it ?
(2 marks) Answer:
☐ Major feature of an ERP system is Central database. As the Complete data is stored centrally at one place,
ensuring safety of data and minimising risk of loss of data is a big challenge.
☐ The following options are possible to different users, while assigning access to it
1. Create Allows to create data.

2. Alter Allows to alter data.
3. View Allows only to view data.
4. Print Allows to print data. Space to write important points for revision
Explain the term “Master Data” and its types.

Answer:
Master Data: Master Data is relatively permanent data that is not expected to change again and again. It may
change, but not again and again. In accounting systems, there may be following type of master data.
• Accounting Master Data: This includes names of ledgers, groups, cost centers, accounting voucher types, etc.
E.g. Capital Ledger is created once and not expected to change frequently. Similarly, all other ledgers like, sales,
purchase, expenses and income ledgers are created once and not expected to change again and again. Opening
balance carried forward from previous year to next year is also a part of master data and not expected to change.
• Inventory Master Data: This includes stock items, stock groups, godowns, inventory voucher types, etc. Stock
item is something which bought and sold for business purpose, a trading goods. E.g. If a person is into the business
of dealing in white goods, stock items shall be Television, Fridge, Air Conditioner, etc. For a person running a
medicine shop, all types of medicines shall be stock items for him/her.
• Payroll Master Data: Payroll is a system for calculation of salary and recoding of transactions relating to
employees. Master data in case of payroll can be names of employees, group of employees, salary structure, pay
heads, etc. These data are not expected to change frequently. E.g. Employee created in the system will remain as it is
for a longer period of time, his/her salary structure may change but not frequently, pay heads associated with his/ her
salary structure will be relatively permanent.
• Statutory Master Data: This is a master data relating to statute/law. It may be different for different type of taxes.
E.g. Goods and Service Tax (GST), Nature of Payments for Tax Deducted at Source (TDS), etc. This data also shall
be relatively permanent. In case of change in tax rates, forms, categories, we need to update/change our master data.

3 Risks and Controls in an ERP Environment
Central database is the main feature of an ERP system. As the complete data is stored at one place, ensuring safety
of data and minimizing risk of loss of data is a big challenge. As an IT expert discuss the risks associated with
various aspects of ERP. (6 marks)
Q.3.2 2019 - Nov [5] (Or) (b) Descriptive Explain briefly the concept of Role-Based-Access-Control (RBAC) in
ERP System. (4 marks)
Business Process Modules and their 4 integration with Financial and Accounting System:
Q.4.1 2007 - Nov [2] (c) Descriptive What is Supply Chain Management? Discuss the potential problems which can
be addressed through supply chain management. (5 marks) OR 2011 - May [4] (b) Descriptive “Supply Chain
Management should focus on certain problems.” Discuss these problems in detail. (4 marks) Answer:
Supply Chain Management:
Meaning In words of Council of Supply Chain Management Professionals (CSCMP) Supply Chain Management
(SCM) encompasses the planning and management of all activities involved in sourcing and procurement,
conversion and all logistics management activities.
It includes co-ordination and collaboration with channel partners, which can be suppliers, inter mediaries, customers
etc.
Thus, SCM is a process of planning, implementing and controlling the operations of supply chain with a purpose to
satisfy the needs of customers. It integrates supply and demand management within and across companies and spans
all movements and storage of raw material, work in progress inventory and finished goods from point of entry to
point of consumption.
Supply Chain Management addresses the following problems 1. Information

2. Inventory
3. Distribution Network
Configuration
4. Distribution strategy
It integrates system and processes through the supply chain to share valuable information which includes demand,
forecast, inventory etc.
It deals with the problem relating to inventory management such as quantity and location of raw material, work in
progress and finished goods.
It includes problem relating to number and location of suppliers, production facilities, distribution centres, customers
etc.
It addresses the various problems relating to distribution strategy such as whether the distribution system should be
centralised or decentralised, pull or push strategy, third party logistics, cross docking or direct shipment.

Q.4.2 2011 - May [6] (b), RTP Descriptive How does Customer Relationship Management (CRM) improve
customer relationship? (4 marks) Answer:
Customer Relationship Management
Meaning Customer Relationship Management (CRM) includes the methodologies, technologies and capabilities
that help an enterprise to manage customer relationships. CRM is a corporate level strategy which focuses on
creating and maintaining relationships with its customers. There are several commercial CRM software packages in
the market which support CRM strategy. CRM is not just a technology but rather a holistic approach to an
organization’s philosophy in dealing with its customers. This includes policies and processes, front of house
customer service, employee training, marketing system and information management.
To be effective, the CRM process needs to be integrated end-to-end across marketing, sales and customer service.
A g o o d C R M program needs to
7.
A good CRM
program can
improve
customer service by facilitating
communication in several ways
1.
2.
3.
4.
5.
6.
1.
2.
3.
4. Identify customer success factors.

Create a customer based culture.
Adopt customer based measures.
Develop an end-to-end process to serve customer. Recommend what question to ask to help a customer in solving a
problem.
Recommend what to tell a customer with a complaint about purchase.
Track all aspects of selling to customers as-well-as customer support.
It provides product and product use information and technical assistance on web sites that are accessible round the
clock.
It first identifies how each individual customer defines quality and then design a service strategy for each customer
based on these individual requirements and expectations.
It helps to identify potential problems quickly before they occur.
It provides a fast mechanism for managing and scheduling follow-up sales calls to assess postpurchase cognitive
dissonance, repurchase probabilities, repurchase times and repurchase frequencies.
5. It provides a mechanism to track all points of
contact between a customer and the company and do if in an integrated way in order to reduce confusion.
6. It provides a fast and user friendly mechanism for registering and handling complaints and also for correcting
service deficiencies.
7. It also uses internet cookies to back customer interests and personalize product offering accordingly.
8. CRM can be integrated into other cross-functional systems and thereby provide accounting and production
information to the interested customers when they want it.
How CRM can improve Customer Relationship
CRM programs are also able to improve customers relationship. Mobile Commerce or — commerce is the ability to
conduct commerce using a mobile device e.g. cell phones, a PDA (Personal Digital Assistant), a smart phone while
on move. Currently M-commerce is mainly used for the sale of mobile phone, ring-tones and games. Other services
include the sending of information such as cricket scores, jokes, news, astrology etc. via SMS. Some of the —
commerce applications are information-on-demand systems like news service or stock tickers, stock brokerage and
banking application by SMS or WAP.
As content delivery over wireless devices are faster, more secure, and scalable there is wide speculation that M-
commerce will surpass wireline ecommerce as the method of choice for digital commerce transactions. The main
payment methods used to enable M-commerce are. ☐ Premium rate calling numbers.
☐ Charging to the mobile telephone user’s bill or
☐ Deducting from their calling credit, either directly or via reverse changed
SMS.
Q.4.3 2012 - Nov [5] (a), RTP Descriptive Explain in brief technical functionality of Customer Relationship
Management. (4 marks)
Answer:
CRM solution is characterised by the following technical functionality: 1. Scalability
2. Multiple
communication channels
3. Database
4. Workflow
5. Assignment
6. Customer
privacy
considerations
Ability to be used on a large scale and to be reliably expanded to whatever scale is necessary. Ability to interface
with uses via many different devices (phone, internet etc.)
Centralized storage of all information relevant to customer interaction.
Ability to trigger a process in the back office system. e.g. E-mail response etc.
Ability to assign, service requests to a person or a group.
The data encryption and the destruction of records are needed to ensure that they are not stolen or abused.

Q.4.4 2012 - Nov [5] (b) Descriptive Describe tactical level of activities in Supply Chain Management. (4 marks)
Answer:
Levels of Supply Chain Management
Supply chain is the backbone of any company. It begins with procuring the materials or services needed to create the
end product and continues until
the finished goods are in the customer’s hands. This process typically involves a range of decisions and transactions
between several distinct entities.
Businesses must choose vendors, freight carriers, and possibly warehouse solutions. Inventory storage and the
handling of goods-in-process are part of supply chain management as well. Marketing and distributing the product to
the consumer wraps up the process. Essentially, supply chain management includes every decision made about the
products or services a company delivers to their customers.
Levels of Supply Chain Management

1. Strategic Planning
2. Tactical Management
3. Operational Management
Tactical Businesses make short-term decisions involving the Management supply chain at the tactical level. At the
strategy level, general planning begins, but processes are actually defined at the tactical level. Tactical decisions
play a big role in controlling costs and minimizing risks. At this level, the focus is on customer demands and
achieving the best end value.
Issues addressed at this level:
• Procurement contracts for necessary materials and services
• Production schedules and guidelines to meet quality, safety, and quantity standards
• Transportation and warehousing solutions, including outsourcing and third-party options
• Inventory logistics, including storage and endproduct distribution
• Adopting best practices in comparison to competitors
Q.4.5 2013 - Nov [7] (iii) Short Notes

Write short note on the Collaborative CRM. (2 marks)
Answer:
Collaborative CRM: It is a customer relationship management approach in which customer interaction data of an
organisation is integrated and synchronously share to enhance customer satisfaction and loyalty for maximised
profitability and revenue. Collaborative CRM integrates customers, processes, strategies, and insight allowing
organisations to more effectively and efficiently serve and retain customer.

Q.4.6 2016 - Nov [1] {C} (c) Descriptive Answer the following in brief:
Name any four key sub-modules of HRMS module of ERP. (2 marks)
Answer:
Key Sub-modules of HRMS are as follows:
1. Workforce Management
2. Payroll Management
3. Time and Attendance Management
4. Personnel Management

Q.4.7 2016 - Nov [3] (a) Descriptive Describe how the Business Community is benefitted by adopting Information
Technology based CRM process. (4 marks) Answer:
A good CRM
program can
improve customer service by
facilitating
communication in several ways
1. It provides product and product use information and technical assistance on web sites that are accessible round the
clock.
2. It first identifies how each individual customer defines quality and then design a service strategy for each
customer based on these individual requirements and expectations.
3. It helps to identify potential problems quickly before they occur.

4. It provides a fast mechanism for managing and scheduling follow-up sales calls to assess postpurchase cognitive
dissonance, repurchase probabilities, repurchase times and repurchase frequencies.
5. It provides a mechanism to track all points of contact between a customer and the company and do if in an
integrated way in order to reduce confusion.
It provides a fast and user friendly mechanism
6. for registering and handling complaints and also for correcting service deficiencies. It also uses internet cookies to
back customer
7. interests and personalize product offering accordingly.
CRM can be integrated into other cross
8. functional systems and thereby provide accounting and production information to the interested customers when
they want it.

Q.4.8 2018 - May [3] (a) Descriptive
A manufacturing company is implementing an ideal ERP software, where a single database is being utilized and it
contains all the data for various software modules. Identify the modules of an ideal ERP software along with their
functions. (6 marks)
Answer:
An Ideal ERP System is that System which caters all types of needs of an organization and provides right data and
right point of time to right users for their purpose. Hence, definition of ideal ERP System may change per
organization. But generally, an ideal ERP System is that system where a single database is utilized and contains all
data for various software modules. These software modules can include the following: ☐ Manufacturing:
Some of the functions include engineering, capacity, workflow management, quality control, bills of material,
manufacturing process etc.
☐ Financials:
Accounts payables, accounts receivables, fixed assets, general ledger and cash management etc.
☐ Human Resources :
Benefits, training, payroll, time and attendance, etc.

☐ Supply Chain Management :
Inventory, supply chain planning, supplier scheduling, claim processing,
order entry, purchasing, etc.
☐ Projects :
Costing, billing, activity management, time and expense, etc. ☐ Customer Relationship Management (CRM):
CRM is a term applied to processes implemented by a company to
handle its contract with its customers. CRM Software is used to support
these processes, storing information on current and prospective
customers. Information in the system can be assessed and entered by
employees in different departments, such as sales marketing, customer
service, training, professional development, performance management,
human resource development, and compensation. Details on any
customer contacts can also be stored in the system. The rationale
behind this approach is to improve services provided directly to
customers and to use the information in the system for targeted
marketing.
☐ Data Warehouse:
Usually this is a module that can be assessed by an Organizations
customers, Suppliers and employees. Data warehouse is a repository of
an organization’s electronically stored data. Data warehouses are
designed to facilitate reporting and analysis. This classic definition of the data warehouse focuses on data storage.
However, the means to retrieve and analyze data, to extract, transform and load data, and to manage the data
dictionary are also considered essential components of data warehouse system. An expanded definition for data
warehousing includes business intelligence tools. tools to extracts, transform, and load data into the repository, and
tools to manage and retrieve metadata. In contract to data warehouses are operational systems which perform day-to-
day transaction processing. The process of transforming data into information and making it available to the user in
a timely enough manner to make difference is known as data warehousing. Space to write important points for
revision
A business organization is planning to switch on to an integrated software for accounting as well as tax compliance
instead of separate software for accounting and tax compliance. Being a consultant to the management of this
organization, you are required to advise them on various Pros and Cons of having single software for both the
accounting and tax compliance. (4 marks)
Answer:
Pros. and Cons. of having single software for Accounting and Tax Compliance:
Sr. Particulars No.
1 Ease of software operation Accounting and Tax Compliance Software
Less as this is integrated system of accounting and t a x c o m p l i a n c e , everything connected with other and
making changes at one place may affect other aspects also.
Only Tax Compliance Software
More as this is used only for one single purpose, i.e. tax compliance, it is less complicated and bound to be easy.
2 Features and
facilities
Less as this system is not an exclusive system for tax compliance, it may have limited features for tax compliance.
3 Time and efforts required
Lessas this is an integrated system, time required to transfer data to compliance software is zero.
4 Accuracy
5 Cost
Moreas this is an integrated system and hence accounting data shall always be same. No need to transfer data to
compliance software and reconcile the data.
More if tax compliance feature is not available in a c c o u n t i n g s y s t e m , getting it customized may require
some amount of cost which may be higher than buying separate software
Moreas this is an exclusive and specifically designed system for tax compliance, naturally more features and
facilities shall exist in this system.
More- as this is a separate s o f t w a r e , d a t a f r o m accounting software need to put in this for preparation of
returns. This may take extra time and efforts.
Less as there are two s e p a r a t e s y s t e m , r e c o n c i l i a t i o n w i t h accounting data is needed, possibility of

mismatch of data is always there.
Less as this is specific purpose software, there shall be less complications and cost also shall be less.
Customer Relationship Management (CRM) is a system which aims at improving relationship with customers.
Briefly explain any four key benefits of CRM module of ERP. (4 marks)
Answer:
☐ Customer Relationship Management (CRM) is a system which aims at improving the relationship with existing
customers, finding new prospective customers and winning back former customers.
☐ The following are the key benefits of CRM module of ERP : 1. Improved customer relations
One of the prime benefits of using a CRM is obtaining better customer satisfaction. By using this strategy, all
dealing involving servicing , marketing and selling out products to the customers can be carried out in an organized
and systematic way. Better services can be provided to customers through improved understanding of their issues
and this in turn helps in increasing customer loyalty and decreasing customer agitation. In this way, continuous
feedback from the customers regarding the products and services can be received. It is also possible that the
recommend the acquaintances, when efficient and satisfactory Services are provided. customers may
product to their
2. Increase Customer revenues
3. Maximize up
Selling and crossselling
By using a CRM strategy for any business, the revenue of the company can be increased. Using the data collected,
marketing campaigns can be popularized in a more effective way. With the help of CRM software, it can be ensured
that the product promotions reach a different and brand new set of customers, and not the ones who had already
purchased the product, and thus effectively increase the customer revenue.
A CRM system allows up-selling which is the practice of giving customers premium products that fall in the same
category of their purchase. The strategy also facilitates cross selling which is the practice of offering complementary
products to customer, based on their previous purchases. This is done by interacting with the customers and getting
an idea about their wants, needs and patterns of purchase. The details thus obtained will be stored in a Central
database, which is accessible to all company executives. So, when an opportunity is spotted, the executives can
promote their products to the customers thus maximizing up-selling and cross selling.
4. Better internal communication

5. Optimize marketing
Following a CRM strategy helps in building up better communication within the company. The sharing of customer
data between different departments will enable them to work as a team. This is better than functioning as an isolated
entity, as it will help in increasing the company’s profitability and enabling better services to customers.
CRM enables to understand the customer needs and behaviour, there by allowing any enterprise to identify the
correct time to market its product to the customers. CRM will also give an idea about the most profitable customer
groups, and by using this information similar prospective groups, at the right time will be targeted. In this way,
marketing resources can be optimised efficiently and time is not wasted on less profitable customer groups.
Discuss the core components of Supply Chain Management. Answer:

The Core Components of SCM are as follows:
1. Procurement/ Purchasing: This begins with the purchasing of parts,
components or services. Procurement must ensure that the right items are delivered in the exact quantities at the
correct location on the specified time schedule at minimal cost. It must address the question of assurance that these
suppliers will deliver as promised.
2. Operations: The second major element of supply chain management
system is operations. Having received raw materials, parts, components, assemblies or services from suppliers the
firm must transform them and produce the products or the services that meet the needs of its consumers. It must
conduct this transformation in an efficient and effective manner for the benefit of the supply chain management
system.
3. Distribution: The third element of the supply chain management system is distribution. Distribution involves
several activities transportation (logistics), warehousing and customer relationship management (CRM). The first
and most obvious is logistics the transportation of goods across the entire supply chain.
4. Integration: The last element of supply chain management is the need for integration. It is critical that all
participants in the service chain recognize the entirety of the service chain. The impact of the failure to adopt a
system- wide perspective that is examining the totality of the chain can significantly increase costs and destroy
value.
Q.4.12 RTP Descriptive On joining a Manufacturing company XYZ, you are briefed about the functioning of
different modules like Financial Accounting Module, Sales
and Distribution Module, Human Resource Module, Material Management Module, Production Planning Module
etc. Prepare a brief description on the Material Management Module (MM) based on your understanding.
Answer:
Material Management (MM) Module manages materials required, processed and produced in enterprises. Different
types of procurement processes are managed with this system. Some of the popular sub-components in MM module
are vendor master data, consumption based planning, purchasing, inventory management, invoice verification and so
on. Material management also deals with movement of materials via other modules like logistics, Supply Chain
Management, sales and delivery, warehouse management, production and planning. The overall purchase process
includes the following sub-processes:
• Purchase Requisition from Production Department: Production department sends a request to purchase
department for purchase of raw material required for production.
• Evaluation of Requisition: Purchase department shall evaluate the requisition with the current stock position and
purchase order pending position and shall decide about accepting or rejection the requisition.
• Asking for Quotation: If requisition is accepted, quotations shall be asked to approve vendors for purchase of
material.
• Evaluation of Quotations: Quotations received shall be evaluated and compared.
• Purchase Order: This is a transaction for letting an approved vendor know what we want to purchase, how much
we want to purchase, at what rate we want to purchase, by what date we want the delivery, where we want the
delivery. Hence a typical purchase order shall have following information.
☐ Description of stock items to be purchased.

☐ Quantity of these stock items.
☐ Rate for purchases.
☐ Due Date by which material is to be received.
☐ Godown where material is to be received.
• Material Receipt: This is a transaction of receipt of material against purchase order. This is commonly known as
Material Receipt Note (MRN) or Goods Receipt Note (GRN). This transaction shall have a linking with Purchase
Order. Information in Purchase Order is automatically copied to Material Receipt Voucher for saving time and
efforts of user. Stock is increased after recording of this transaction.
• Issue of Material: Material received by stores shall be issued to production department as per requirement.
• Purchase Invoice: This is a financial transaction. Trial balance is affected due this transaction. Material Receipt
transaction does not affect trial balance. This transaction shall have a linking with Material Receipt Transaction and
all the details of material received shall be copied automatically in purchase invoice. As stock is increased in
Material Receipt transaction, it will not be increased again after recording of purchase invoice.
• Payment to Vendor: Payment shall be made to vendor based on purchase invoice recorded earlier. Payment
transaction shall have a linking with purchase invoice.

5 Reporting System and MIS : MIS
Q.5.1 2008 - May [2] (b) Descriptive Describe the main prerequisites of a MIS which makes it an effective tool.
Explain the major constraints in operating it. (10 marks) [CA Final - II] Answer:
The main pre-requisites of an effective MIS are as follows:
1. Qualified
S y s t e m a n d M a n a g e m e n t Staff
☐☐
In a MIS, we have two types of experts: one computer and system expert and other managements staffs who
direct the system experts about their needs and requirements from a MIS. Both of them should have expertise in
their respective fields.
But they must possess certain knowledge of other fields also. E.g. system expert must know management consents.
Same is the case with management experts.
They must have some basic knowledge of computers so that they can help in system designing and independently
use the system.
2. Active
Participation of O p e r a t i n g Management
After implementation of MIS operative staff may show some behavioural problem, which can be handled by
educating the operative management about the benefit of MIS.
3. Top ☐ Management
Support
☐
☐
4. Database ☐
☐
☐
5. Control ☐ and Maintenance of MIS
• To be effective, MIS requires full support of top management if it is absent then subordinates become lethargic and
disinterested.
To gain the support from top management, it should be provided with cost benefit analysis of having MIS.
This action of subordinates will lead to change in the attitude of top management towards MIS and they’ll give their
full support.
It is a super file which has all records or data to a particular organisation at one place. It can be subdivided into
various subsets namely; employee file, inventory file, General Ledger accounting file, supplier file, customers file
etc. Database should be user oriented.
It should be controlled by separate authority that is the DBA (database administrator).
Control refers to the process of ensuring that MIS is operating as it was designed to operate. Sometimes users
develop their own procedures or shortcuts to use the system that may reduce its effectiveness.
To check such practices, the management at each level should devise check mechanism for information system
control.
Maintenance means alterations and modifications according to the need and requirements of the user. So there must
be some scope of improvement in the system. 6. Evaluation of To meet the future needs MIS should be
MIS evaluated at regular time intervals. Evaluation process must have following steps:
• Evaluate whether system is flexible enough to
cope with any expected or unseen information requirements in future.
• Take the feedback from users as well as d e s i g n e r s a b o u t c a p a b i l i t i e s a n d shortcomings in the

system.
☐ Guide the proper authority to maintain the effectiveness of MIS.

Q.5.2 2012 - May [5] (c), RTP Descriptive
Discuss the constraints in operating a MIS. (4 marks) [CA Final - II] Answer:
The following are the limitation of MIS:
1. One slacking sub-system would throw the entire integrated MIS out of gear.
2. The success of MIS hinges on the quality of software for which there is scarcity of the brainwave, i.e., systems
analysts, system designers and programmers.
3. Budgeting of MIS is extremely difficult.
4. MIS is not a substitute for effective management. It means that it cannot replace managerial judgement in making
decisions in different functional areas. It is merely an important tool in the hands of executives for decision-making
and problem solving.
5. MIS is inherently fragile, highly sensitive and requires continuous monitoring.
6. It cannot provide tailor-made information packages suitable for the purpose of every type of decision made by
executives.
7. Its effectiveness decreases due to frequent changes in top management organisational structure and operational
team.
8. Its effectiveness is reduced in those organisations where the culture of hoarding information and not sharing with
others hold.
9. It is less useful for making non-programmed decisions-Such type of decisions are not of routine type and thus
they require information, which may not be available from existing MIS to executives.
10. It takes into account mainly quantitative factor; thus it ignores the nonquantitative factors like morale, attitude of
members of the organisation, which have an important bearing on the decision-making process of executives.
11. Quality of the outputs of MIS is basically governed by the quality of inputs and processes.
12. MIS may not have requisite flexibility to quickly update itself with changing needs of time, especially in a fast
changing and complex environment.
Q.5.3 2013 - Nov [6] (b) Descriptive Describe any six characteristics of an effective management information
system. (6 marks) [CA Final - II] Answer:
Major characteristics for an effective Management Information System (MIS) are given as follows:
Management Oriented
It means that efforts for the development of the information system should start from an appraisal of management
needs and overall business objectives. Such a system is not necessarily for top management only; it may also meet
the information requirements of middle level or operating levels of management as well.
Management Directed
Integrated
Common Data Flows
Heavy Planning Element
Because of management orientation of MIS, it is necessary that management should actively direct the system’s
development efforts. For system’s effectiveness, it is necessary for management to devote their sufficient time not
only at the stage of designing the system but for its review as well to ensure that the implemented system meets the
specifications of the designed system.
Development of information should be an integrated one, which means that all the functional and operational
information sub-system should be tied together into one entity. An integrated Information system has the capability
of generating more meaningful information to management by taking a comprehensive view or a complete look at
inter locking sub-systems that operate within a company.
It means that the use of common input, processing and output procedures and media whenever required. Data is
captured by system analysts only once and as close to its original source as possible. Afterwards, they try to utilize a
minimum of data processing procedures and sub-systems to process the data and strive to minimize the number of
output documents and reports produced by the system. This eliminates duplication in data collections, simplifies
operations and produces an efficient information system.
An MIS usually takes 3 to 5 years and sometimes even longer period to get established firmly within a company.
Therefore, a MIS designer must be present in MIS development who should keep in view future objectives and
requirements of firm's information in mind.
Sub System Concept

Common Database
Computerized
Even though the information system is viewed as a single entity, it must be broken down into digestible sub-systems
which can be implemented one at a time by developing a phasing plan. The breaking down of MIS into meaningful
sub-systems sets the stage for this phasing plan.
Database is the mortar that holds the functional systems together. It is defined as a "super-file" which consolidates
and integrates data records formerly stored in many separate data files. The organization of a database allows it to be
accessed by several information sub-systems and thus, eliminates the necessity of duplication in data storage,
updating, deletion and protection.
Though MIS can be implemented without using a computer, the use of computers increases the effectiveness of the
system. In fact, its use equips the system to handle a wide variety of applications by providing their information
requirements quickly. Other necessary attributes of the computer to MIS are accuracy and consistency in processing
data and reduction in clerical staff. These attributes make computer a prime requirement in management information
system.

6 Data Analytics and Business Intelligence
Q.6.1 2016 - May [5] (b) Descriptive Explain the ‘Dashboards’ and ‘Scorecards’ as tools of Business Intelligence.
(4 marks)
Answer:
Dashboards and scorecards are analytical tools that allow organisations to focus on the measurements that are
important to their business
Dashboard
Scorecard
A business intelligence dashboard is a data visualization tool that displays the current status of metrics and key
performance indicators (KPIs) for an enterprise. Dashboards consolidate and arrange numbers, metrics and
sometimes performance scorecards on a single screen. They may be tailored for a specific role and display metrics
targeted for a single point of view or department. The essential features of a BI dashboard product include a
customizable interface and the ability to pull real-time data from multiple sources.
Dashboards provide advance operational efficiencies and user experience by enabling availability of frequently used
functions on a single console.
A scorecard is a data visualization tool that helps organizations, individuals, or groups of individuals to reach goals
by displaying progress toward objectives against the objective themselves. Scorecards can be arranged into many
visual configurations, but most will at least place goals alongside a running tally of current totals, in order to provide
an at a glance measure of progress.
This tool is typically a top-down approach that allows management to implement its strategy by aligning
performance with goals. Similar to a grade school report card, the scorecard measures periodic results (weekly,
monthly, quarterly, annually) against a predetermined goal, allowing users to gauge how their performance stacks up
against expectations.
Dashboard Vs. Scorecard
The business intelligence dashboard is often confused with the performance scorecard. The main difference between
the two, traditionally, is that a business intelligence dashboard, like the dashboard of a car, indicates the status at a
specific point in time. A scorecard, on the other hand, displays progress over time towards specific goals. Dashboard
and scorecard designs are increasingly converging. For example, some commercial dashboard products also include
the ability to track progress towards a goal. A product combining elements of both dashboards and scorecards is
sometimes referred to as a scorecard.


Business Intelligence (BI) (2 marks) Answer:
Business Intelligence:
Business Intelligence (BI) may be defined as the delivery of accurate, useful information to the appropriate decision
makers within the necessary time frame to support effective decision making for business processes. BI is comprised
of information that contains patterns, relationships and trends about customers, suppliers, business partners and
employees. BI is essentially timely, accurate, high-value and actionable business insights and the work processes
and technologies used to obtain them. Business intelligence systems process, store and provide useful information to
the user who need it, when they need it. BI can handle large amounts of information to help identify and develop
new opportunities. Making use of new opportunities and implementing an effective strategy can provide a
competitive market advantage and long- term stability.

Q.6.3 2018 - Nov [1] {C} (b) Descriptive
Define ‘Data Analytics’. (2 marks) Answer:

Data Analytics:
Data Analytics is the process of examining data sets to draw conclusions about the information they contain,
increasingly with the aid of specialized systems and software. As a term, Data Analytics predominantly refers to an
assortment of applications, from basic Business Intelligence (BI) reporting and online Analytical processing (OLAP)
to various forms of advanced analytics.

Discuss Business Intelligence tools.

Answer:
Business Intelligence Tools
Business Intelligence tools are a type of software that is designed to retrieve, analyze and report data. Some of the
key Business Intelligence tools are given as follows:
• Simple Reporting and Querying: This involves using the data
warehouse to get response to the query: "Tell me what happened." The objective of a BI implementation is to turn
operational data into meaningful knowledge. This requires that Bl must be connected with the enterprise data and all
the necessary data is available in one place, in one common format. Data warehousing (DW) provides the perfect
architecture to combine all the data dispersed throughout the enterprise in different applications in a variety of
formats, on a range of hardware, which could be anywhere to be cleaned up, summarized, converted and integrated
into one common format and available centrally for further processing. There are reporting tools used to arrange
information into a readable format and distribute it to the people who need it.
• Business Analysis: This involves using the data to get response to the
query: "Tell me what happened and why." Business analysis refers to presenting visualizing data in a
multidimensional manner. Business analysis allows the user to plot data in row and column coordinates to further
understand the intersecting points. ETL (Extract, Transform, Load) tools bring in data from outside sources,
transform it to meet business specified operational needs and then load the results into the company database.
Metadata tools gather and analyze metadata, helping to increase data quality.
• Dashboards: This involves using the Information gathered from the data warehouse and making it available to
users as snapshots of many different things with the objective of getting response to the query: "Tell me a lot of
things, but without too much effort". Dashboards are flexible tools that can be bent into as many different shapes as
per user requirements. It includes a collection of graphs, reports, and KPIs that can help monitor such business
activities as progress on a specific initiative.
• Scorecards: This involves providing a visual representation of the enterprise strategy by taking critical metrics and
mapping them to strategic goals throughout the enterprise. Scorecards offer a rich, visual gauge to display the
performance of specific initiatives, business units, or the enterprise as a whole and the individual goals in the context
of larger enterprise strategy. Scorecards distill information into a small number of metrics and targets and provide
users with an at-a-glance perspective of information. A scorecard has a graphical Iist of specific, attainable strategic
milestones, combined with metrics that serve as benchmarks. Specific measures on how well the company has
actually performed specified activities are linked in the scorecard with graphical display highlighting the status of
each goal.
• Data Mining or Statistical Analysis: This involves using statistical, artificial intelligence and related techniques
to mine through large volumes of data and providing knowledge without users even having to ask specific questions.
The objective is to provide interesting and useful information to users by design even without their querying. Data
Mining involves data analysis for discovering useful patterns that are "hidden' in large volume of diverse data.
7
Business Reporting and Fundamentals of XBRL
Q.7.1 2014 - Nov [7] (d) Descriptive
Write short note on the Extensible Business Reporting Language (XBRL) (2 marks) Answer:
XBRL, is a freely available XML-based specification that uses accepted financial reporting standards and practices
to exchange financial statements across all software and technologies, including the internet. It is an XMLbased
framework that provides the financial community a standards-based method to prepare, publish in a variety of
formats, reliably extract and automatically exchange financial statements of publicly held companies. XBRL is not
about establishing new accounting standards but enhancing the usability of the ones that we have through the digital
language of business, XML.
XBRL could also be described as a computer programming add-on that tags each segment of computerized business
information with an identification code or marker. In most cases, accounting software will insert XBRL tags
automatically. If an accounting system lacks XBRL, a user can still add XBRL tags to financial information using an
add-on program or customized software tagging tools.
XBRL works by taking company business reporting data, mapping the structure of the information to XBRL for
financial statements, and creating any additional tags needed to render a full set of financial statements. The result of
the process is an additional identifier attached to each piece of business data that can provide clues at to its origin, its
relationship to other data, the rules used to prepare the information and more.

1 Introduction
1. Financial and Accounting Systems include other aspects of business management like:
(a) Inventory
(b) Human Resource
(c) Customers Relationship Management
2 Integrated (ERP) and Non- Integrated Systems
2. A set of principles or procedures per which something is done; an organised scheme or method called _______.
(a) Set
(b) Syntex
(c) System
(d) Process
3. Co-ordinated and standardised flow of activities performed by people or machines, which can traverse functional
or departmental boundaries to achieve a business objective and creates value for internal or external customers,
called ________.
(a) Set
(b) Syntex
(c) System
(d) Process
4. Master data is relatively permanent data that is not expected to change again and again, _______.
(a) It may change
(b) It may not change
(c) It may change, but not again and again.
5. Master Data include:

(a) Accounting Master Data
(b) Inventory Master Data
(c) Payroll Master Data
6. _________ is an enterprise wide information system designed to coordinate all the resources, information, and
activities needed to complete business processes such as order fulfillment or billing.
(a) Enterprise Resource Planning
(b) Integrated Resource Planning
(c) Integrated Information System
(d) Overall Resource Planning
7. Enterprice Resource Planning (ERP) system is based on (a) common database

(b) a modular software design
(c) based on real time
(d) both (a) and (b)
8. Well - known ERPs available in the market except

(a) SAP & Oracle
(b) MFG Pro
(c) MS Axapta
(d) MRC Ortra
9. An Ideal ERP System is that system which

(a) Caters all types of needs of an organisation
(b) Provides right data
(c) Right Point of time of time to right users for their purpose. (d) All of the above.
3 Risks and Controls
10. Major Feature of an ERP System is : (a) Central framework

(b) Central Database
(c) Integral Control
11. In Computer System, Role - Based - Access - Control (RBAC) is an approach to restricting system access to
_____.
(a) end users
(b) controlling personnel
(c) management
(d) authorised users
4 Audit of ERP Systems
12. Fundamental objectives of an audit of controls ________ in an ERP Environment.

(a) can Change
(b) may be change
(c) do not change
(d) change automatically
13. ERP System should produce accurate complete and authorised information that is _________.
(a) usefullness.
(b) timely manner.
(c) supportable and timely.
(d) none of the above.
Business Process Modules and their 5 integration with Financial and Accounting System:
14. _______ consists of a set of activities that are performed in Coordination in an organisational and technical
environment. (a) Information System
(b) Database Process
(c) Business Process
(d) Integrated System
15. Process Management is based on a view of an organisation as a system of ________, which involves concerted
efforts to map, improve and adhere to organizational process
(a) interlinked process
(b) consolidation process
(c) business process
(d) central process
16. Controlling Module facilitates _____ all the processes in an organisation. (a) co-ordinating
(b) monitoring
(c) optimising
17. Process in Production Planning Module include (s) :
(a) Issue of raw material from store
(b) Conversion into W.I.P then into Finished Goods
(c) Stock transfer to godown.
(d) All of them
18. Customer Relationship Management (CRM) is a system which aims at improving the relationship with existing
customers, ______. (a) fining new prospective customers.
(b) winning back former customers.
(c) Either (a) or (b)
19. Which of the following about Back End is false?

(a) Communicates with user directly
(b) Communicates with front end directly
(c) Processes the data
(d) Generates the report.
6
Reporting System and Management Information System (MIS)
20. MIS system collect data from various are as within a business _______. (a) individually
(b) intermitantally
(c) automatically
(d) on - demand
21. Most of the MIS system generates _________ reports.

(a) auto
(b) on demand
(c) on site
(d) required
7 Data Analytics and Business Intelligence
22. _______ process of examining data sets to draw conclusions about the information they contain, increasingly
with the aid of specialised systems and software is known as :
(a) Data Science
(b) Data Analysis
(c) Data Analytics
(d) Business Analytics
23. ______ Pre- dominantly refers to an assortment of applications, from basic Business Intelligence (BI), reporting
and Online Analytical Processing (O LAP) to various forms of advanced analytics. (a) Data Analytics
(b) Data Analysis
(c) Data Science
(d) Data Analysis Technologies
24. OLAP stands for _______.

(a) Online Analytical Processing
(b) Offline Analytical Processing
(c) Online Analytical Product.
(d) Offline Analytical Product.
25. Which of the following is not an attribute of information ? (a) Availability

(b) Mode and Format
(c) Completeness
(d) Inadequacy
8 Business Reporting And Fundamentals of XBRL
26. XBRL is used by _________.

(a) Government only
(b) Accountants only
(c) Investors only
(d) All of above
27. _____________is the public reporting of operating and financial data by a business enterprise, or the regular
provision of information to decision maker within an organisation to support them in their work . (a) Business
Reporting
(b) Business Analyticals
(c) Enterprise Process
(d) Business or Enterprise Reporting.
28. XBRL Stands for _________.

(a) xtensible Business Reporting Language
(b) extensible Business Reporting Language
(c) xtensible Business Report Log book
(d) extensible Business Reporting Ledger
9
Applicable Regulatory and Compliance Requirements
29. Which sentence is true about installed software application ? (a) It is installed on the hard disc of the computer
of the user. (b) It is installed on the web server.
(c) It is installed on a website.
(d) It is installed on cloud.
30. Regulatory compliance is an organisation’s adherence to __________ relevant to its business

(a) Laws and Regulations
(b) Guidelines
(c) Specifications
(d) All of above
31. If Cash ledger is grouped under indirect income ________. (a) It shall still be considered in balance sheet as it is
a cash ledger. (b) It shall be displayed in profit and loss account.
(c) Software shall show error message.
(d) None of above
ANSWER
1. (d) 2. (c) 3. (d) 4. (c) 5. (d) 6. (a) 7. (d) 8. (d) 9. (d) 10. (b) 11. (d) 12. (c) 13. (c) 14. (c) 15. (a) 16. (d) 17. (d) 18.
(d) 19. (a) 20. (c) 21. (b) 22. (c) 23. (a) 24. (a) 25. (c) 26. (d) 27. (d) 28. (b) 29. (a) 30. (d) 31. (b)
CHAPTER
3
Information Systems and Its Components
Chapter Comprises: Information Systems ☹Components of Information Systems ☹Information Systems’ Controls
☹Classification of Information Systems’ Controls ☹Information Systems’ Auditing ☹Audit Trail
☹Organization Structure and Responsibilities ☹Segregation of Duties.

Legend
book. 7.139
TIME MANAGER
i.e.....
1. Budgeted
2. Actual
3. Variance (1-2)
............ Day 1 16
Instant
Revision (in hours)

i.e.... i.e. on ........... ...........
Day 2 Day 8
4.00 3.12
(in hours)

2.20 1.35 1.35

QUICKLOOK . . . . . . . . Weightage Analysis Repeatedly Asked Questions
1.1, 2.3, 3.1, 3.8, 8.1, 8.2, 9.2, 9.5
Common Answered Questions
2.2, 2.3, 2.14, 3.7, 3.9, 5.1, 5.3, 5.4, 5.5, 8.1, 9.2, 9.7, 11.2, 14.1
Must Try Question

2.5, 2.9,2.14, 3.7, 5.6, 8.10,9.4,9.11,9.15
1 Components of Information System
Q.1.1 2007 - Nov [5] (ii), 2010 - May [1] (b) (iv), Short Notes 2013 - Nov - [1] (c) (ix)
Write short notes on the Intranet. (2 marks each)
Answer:
Intranet: Intranet is a type of information system that facilitates communication within the organization, among
widely dispersed departments, division and regional location. Technology used for intranet is same as that of
internet which uses Web Browsers, Web Server and Data Warehouses in a single view.
The same browser makes available all information applications and data. The main objective of such facility is to
organize each individual's desktop with nominal cost, time and effort to be more productive, cost efficient, timely
and competitive.

2
Components of Information System: Computer System - Hardware and Software
Q.2.1 2008 - Nov [1] (a) (iv) Objective/Short
Describe briefly the Cache memory (1 mark) Answer:
Cache Memory: It is the high speed storage device used to increase the processing speed by making available the
current programs and data to the CPU at a faster rate. Processor incorporates their own internal cache memory which
acts as a temporary memory and boosts processing power significantly.
• Cache memory acts as temporary memory and boosts processing power
significantly.
• The cache that comes with the processor is called level one (L1) cache.
• This cache runs at processor's clock speed, and therefore is very fast.
• The L1 cache is divided into two sections-one for data and other for
instructions.
Q.2.2 2008 - Nov [1] (b) (i) Objective Explain the Smart Card System (1 marks) OR 2011 - Nov [1] {C} (b) (i)
Descriptive
Explain the ‘Smart Cards’ (2 marks) Answer:

Smart Card System: A Smart Card is a plastic card about the size of a
credit card with an embedded micro chip that can be loaded with data used for telephone calling, electronic cash
payment and other applications. A smart card is more secure than a magnetic stripe card and can be programmed to
self destruct if wrong password is entered too many times. They contain a microprocessor chip and memory and
include keypad.

Q.2.3 2008 - Nov [2] (c), RTP
Explain the basic functions of an Operating system. OR 2010 - Nov [2] (a), 2013 - May [2] (a) Describe any four
basic functions of an operating system.
Descriptive
(4 marks each) Answer:

Various functions performed by Operating Systems are listed below.
1. Schedule Jobs It determines the sequence in which the jobs are to be executed using priorities established by the
organisation.
2. Manage Hardware and Software

resources
It first loads the application programs into the primary storage and then causes various hardware units to perform the
task as specified by the application.
3. Maintain System Security
A password is created for every user to ensure that unauthorized persons are denied to access the data in the system.
4. Enable Multiple User Resource sharing
It enables many users to share the programs at the same time with a feature called multiprogramming.
5. Handling Interrupts
It is a technique used by the operating system to temporarily suspend processing of the program and enable the other
program to be executed.
6. Maintain Usage Records

It can keep track of the amount of time used by each user for each system unit-the CPU, secondary storage, and
input and output devices. This information is used to charge departments using the organization computing
resources.
Few of operating systems known are Micro-soft D i s k o p e r a t i n g s y s t e m ( M S - D O S ) , MS-WINDOWS,
UNIX. OS/2, Window NT etc.

Q.2.4 2010 - May [1] (b) (v) Descriptive Explain the Multitasking (1 marks)
Answer:
Multitasking: Multi-tasking refers to the ability of the Operating System’s to execute two or more of a single user’s
tasks concurrently. Multiple tasks are executed by the CPU switching between them. This is accomplished through
foreground/background processing. In this method, the CPU time is shared by different processes.
Q.2.5 2010 - Nov [1] {C} (b), RTP Distinguish Between Explain the difference between ‘Dynamic RAM’ and
‘Static RAM’. (2 marks) Answer:
S. Basis
No.
1. Meaning
2. Data Storage
3. Power
Consumption 4. Speed and Cost
Dynamic RAM Static RAM
It is the most common type of main memory. It is dynamic because each memory cell loses its charge, so it must be
refreshed hundreds of times each second to prevent data from being lost.
Data remains stored as long as the refreshing process is continued each second.
Power consumption of dynamic RAM is less.
Speed of dynamic RAM is slower than that of static RAM but cost wise i t i s c h e a p e r a s compared to static
RAM. It is a lot faster, expensive and larger memory and commonly used in cache memory. Since it is static, it need
n o t b e c o n t i n u a l l y refreshed.
Data remains stored as long as the power is on.

Power consumption of static RAM is more.
Speed of static RAM is more than dynamic RAM b u t c o s t w i s e i s expensive and larger as compared to
dynamic RAM.
Q.2.6 2011 - May [1] {C} (a) Objective/Short
Why a virtual memory in computer is required? (2 marks) Answer:

Need of Virtual Memory in Computer:
Virtual Memory is a technique that allows the execution of a process, even though the logical address space
requirement of the process is greater than the physically available main memory.
It extends primary memory by treating disk storage as a logical extension of the main memory, thus increasing the
storage capacity.
If a computer lacks RAM needed to run a program or operations, Windows uses virtual memory. Virtual memory
combines RAM with temporary space on the hard disc. When RAM runs low virtual memory moves data from
RAM to a space called paging file. This frees up the RAM to complete its work.
Q.2.7 2011 - May [1] {C} (d) Objective/Short Explain the function of "Arithmetic Logic Unit". (2 marks)
Answer:
Arithmetic Logic Unit
An arithmetic logic unit (ALU) is a digital circuit used to perform arithmetic and logic operations. It represents the
fundamental building block of the central processing unit (CPU) of a computer. Data is transferred from the storage
unit to ALU where it is worked upon and redirected to storage unit.
Functions of ALU 1. Arithmetic Operations
Additions, subtractions, multiplications and division etc. are example of arithmetic operations. ALU is also
responsible for the following conditions: Equalto conditions, Less than condition and greater than condition.
2. Logical Logical operations include comparison between
Operations numbers, letter and or special characters. Operations like AND, OR, NOR, NOT etc. using logical
circuitry are examples of logical operations.
3. Data Operations such as flushing a register is an Manipulations example of data manipulation. Shifting binary
numbers are also example of data manipulation. Space to write important points for revision
What are the functions of a “Control Unit”? (2 marks) Answer:
Functions of Control Unit:

1. The Control Unit (CU) controls and guides the interpretation, flow and manipulation of all data and information.
The CU sends control signals until the required operations are done properly by ALU and memory.
2. CU helps in program execution that is, carrying out all the instructions stored in the program. The CU gets
program instructions from memory and executes them one after the other. After getting the instructions from
memory in CU, the instruction is decoded and interpreted that is, which operation is to be performed. Then the asked
operation is carried out. After the work of this instruction is completed, control unit sends signal to memory to send
the next instruction in sequence to CU.
3. The control unit even controls the flow of data from input devices to memory and from memory to output devices.
4. Acts as a Central Nervous System by maintaining the order and directing the flow of sequence of operation and
data within the computer,
5. It selects the program statement from the storage unit, interprets the statement and sends the appropriate electronic
impulses to Arithmetic/ Logic and storage units which carries out the required operation,
6. Its basic function is to instruct the input device, when to start and stop transferring data to output devices.
Q.2.9 2012 - May [1] {C} (b), RTP Distinguish Between Differentiate volatile and non-volatile memory. (2 marks)
Answer: Volatile Memory 1. Requires a power source to retain information.
2. Wh en power source i s disconnected, information is lost or deleted.
3. Often used for temporary retention of data, such as with RAM, or for retention of sensitive data.
4. Volatile memory is often used because it is faster, as well as because it is better suited to retaining sensitive
information because shutting off a power source can quickly delete that information.
5. It is typically used for primary storage.

Example: RAM, is a form of volatile memory. RAM is used to temporarily hold the data required to run programs
and applications on an electronic device.
Non Volatile Memory Does not require a power source to retain information.
W h e n p o w e r s o u r c e i s disconnected, information is not lost or deleted.
Often used for long-term retention of data, such as files and folders.
Non-volatile memory is used because it is better suited to longterm retention of information.

It is typically used for secondary, tertiary and offline storage.
Example: ROM, computer harddisk drive, which is used to hold data such as files and documents.
Q.2.10 2012 - Nov [2] (a) Descriptive What is Software? Describe various types of software in brief. (4 marks)
Answer:
Meaning of Software
A computer system consists of hardware and software. Hardware means tangible computer equipment whereas
software is the means of controlling the hardware. Software is a set of computer programs, procedures and
associated documents like flow charts etc. related to the effective operation of a computer system. They are a
sequence of instructions written in a language understood by the system.
Types of Computer Software 1. System Software

2. Application Software
☐ System software is a computer program which manages and support a computer system and its information
activities.
☐ They manage the resources of a computer and provide a set of standard services to its users.
☐ They are generally developed and written by the vendor and sold to the end user along with system.
It includes the following :
1. Programming language.
2. Operating systems.
3. Subroutines.
4. Utility program.
5. Diagnostic routines.
6. Language translator.
☐ Application softwares are main programs for various applications which are written by the programmer of a
computer.
☐ The program usually solves a particular application or problem that is unique to the organization.
3. General Purpose Software
☐ Usually different organizations require different programs for similar application & hence it is difficult to write
standardized programs.
☐ E.g. Payroll, General Accounting, Sales Statistics and Inventory Control etc.
☐ General Purpose Software provides the framework for a great no. of business, scientific and personal applications
and are sold as a package.
☐ Spreadsheet, databases, CAD, and word processing software etc. fall into this category.
☐ The software is accompanied by user oriented documentation such as reference manuals, keyboard templates etc.
and it is up to the user to create the application from the software. Space to write important points for revision
Q.2.11 2013 - May [1] {C} (ii) Objective/Short
Describe briefly the following terms with reference to Information Technology:

Virtual Memory (1 mark)
Answer:
Virtual Memory:
Virtual Memory is a technique that allows the execution of a process, even though the logical address space
requirement is greater than the physical available memory. It is a primary storage that does not actually exist. It uses
the hardware and the software feature which provide for automatic segmentation of a program and for moving the
segment from secondary storage to primary storage when needed.
Q.2.12 2015 - Nov [1] {C} (b) Distinguish Between
Distinguish between ‘Cache Memory’ and ‘Virtual Memory’. (2 marks) Answer:

Difference between ‘Cache Memory’ and ‘Virtual Memory’
• Cache Memory:
Cache memory is a smaller, faster memory which stores copies of the data from the most frequently used main
memory locations so that Processor/Registers can access it more rapidly than main memory. It is the property of
locality of reference, which allows improving substantially the effective memory access time in a computer system.
• Virtual Memory:
Virtual memory is in fact not a separate device but an imaginary memory area supported by some operating systems
(for e.g. windows) in conjunction with the hardware. If a computer lacks the Random Access Memory (RAM)
needed to run a program or operation, windows uses virtual memory to compensate. Virtual memory combines
computer’s RAM with temporary space on the hard disk. When RAM runs low, virtual memory moves data from
RAM to a space called a paging file. Moving data to and from the paging file frees up RAM to complete its work.
Thus, virtual memory is an allocation if hard disk space to help RAM.

Q.2.13 2015 - Nov [3] (a) Descriptive Mention briefly the different types of application software. (4 marks)
Answer:
Types of Application Software
1. Application Suite It has multiple applications bundled together Related functions, features and user interfaces
interact with each other e.g. MS Office 2010 which has MS Word, MS Excel, MS Access etc.
2. Content Access Software
3. Educational Software
4. Enterprise Software
5. Enterprise
Infrastructure Software
6. Information
Worker Software
7. Media
Development Software
It is used to access contents and addresses a desire for published digital content and entertainment e.g. Media
players, adobe digital etc.
It holds contents adopted for use by students e.g. Examination test CDs.
It addresses an enterprises needs and data flow in a huge distributed environment. E.g. ERP applications like SAP.
It provides capabilities required to support enterprise software systems e.g. E-mail servers, security software.
It addresses individual needs required to manage and create information for individual projects within departments
e.g. Spreadsheets, CAAT etc. It addresses individual needs to generate and print electronic media for others to
consume. E.g. Desktop publishing, video editing etc.
Q.2.14 2015 - May [7] (b) Short Notes Write short note on the Android (2 marks) OR 2017 - Nov [2] (b), RTP
Descriptive
What is Android? Discuss its significance. (2 marks) Answer:
Android:
☐ Android is a Linux-based operating system designed primarily for touch screen mobile devices such as smart
phones and tablet computers.
☐ It was built to enable developers to create compelling mobile applications that take full advantage of all a handset
has to offer.
☐ It powers devices from some of the best handset and tablet manufacturers in the world, like Samsung, HTC,
Motorola, Sony, Asus and more.
☐ It provides access to a wide range of useful libraries and tools that can be used to build rich applications.
Q.2.15 2016 - Nov [7] (c) Short Notes
Write short notes on Memory Management (2 marks) Answer:

Memory Management:
Memory Management features of operating system allow controlling how memory is accessed and maximize
available memory & storage operating system also provides virtual memory by carving an area of hard disk to
supplement the functional memory capacity of RAM. In this way it augments memory by creating a virtual RAM.

Q.2.16 2017 - May [7] (b) Short Notes Write short notes Read Only Memory (2 marks) Answer:
1. Used for ROM is used for storing micro programs and control instructions that allows special operations to be
performed by the machine.
2. Volatility ROM is non-volatile or permanent memory.

3. Users Only machines use ROM.
4. Things Stored ROM does not allow data to be stored instead they are written by its manufacturer once for all.
5. Reading and Re-writing 6. Power
Interruptions
Instructions written on ROM can be read but cannot be re-written.
Power interruptions do not destroy the contents of ROM.
3
Components of Information Systems: Data Resources
Q.3.1 2007 - Nov [2] (a), 2012 - Nov [3] (a), RTP Descriptive
Describe salient features of Hierarchical Database structure. (5,4 marks) Answer:

Hierarchical Database
Meaning of
Hierarchical
Database
Structure
In this type of structure, records are logically arranged into a hierarchy of relationships. Records are logically
arranged in a tree pattern. Hierarchy structure implements one to one and one-to-many relationships. All records in
hierarchy are called nodes. Each node is related to other in a parent-child relationship as each parent record may
have one or more child record but no child record may have more than one parent record. The top parent record in
the hierarchy is called the root.
Features of Hierarchical Data Base
1. Hierarchically flexible than structured database are less any other database structure
because the hierarchy of records must be determined and implemented before a search can be conducted, or in other
words, the relationships between records are relatively fixed by the structure.
2. Managerial use of query language to solve the
problem may require multiple searches and proof which is very time consuming. Thus, analysis and planning
activities, which frequently involve adhoc management queries of the database, may not be supported as effectively
by a hierarchical database management system as they are by other Database structures.
3. Ad-hoc queries made by managers that require different relationships other than that are already implemented in
the database may be difficult or time consuming to accomplish.
4. Records are logically structured in inverted tree pattern.

5. It implements one-to-one and one-to-many relationships.
6. Each record or node in hierarchy is related to other records in a parent-child relationship.
7. Child to many parents type logical structure finds difficulty in processing.
8. Processing with group records of natural relations can be done faster.
Q.3.2 2008 - May [5] (i) Short Notes
Write short note on the Data warehouse (5 marks) Answer:

Data Warehouse
Meaning
A Data Warehouse is a computer database that
collects, integrates, and stores an organizations data with the aim of producing accurate and timely management
information and supporting data
Characteristics
Advantages
analysis. It provide tools to satisfy the information needs of employees or all organizational levels and not just for
complex data queries. It made possible to extract archived operational data and overcome inconsistencies between
different legacy data formats:
1. It is subject oriented, means data are organized according to subject instead of application. The organised data
(according to subject) contains, only the information necessary for decision support processing.
2. Encoding of data is often inconsistent when the data resides in many separate applications in the operational
environment but when data are moved from the operational environment into the data warehouse they assume a
consistent coding convention.
3. Data warehouse contains a place for storing historical data to be used for comparison, trends and forecasting.
4. Data are not updated or changed in anyway once they enter the data warehouse but are only loaded and accessed.
1. Enhanced and user access to a wide variety of data.

2. Increased data consistency.
3. Increased Productivity and decreases computing costs.
4. It is able to combine data from different sources, in one place.
5. It provides an infrastructure that could support change to data and replication of the changed data back in to the
operational systems. Space to write important points for revision
Q.3.3 2008 - Nov [1] (b) (ii) Objective/Short
Explain the Data Warehouse (1 mark) Answer:

Data Warehouse: A Data Warehouse is a computer database that collects,
integrates, and stores an organizations data with the aim of producing accurate and timely management information
and supporting data analysis. It provides tools to satisfy the information needs of employees or all organizational
levels and not just for complex data queries. It makes possible to extract archived operational data and overcome
inconsistencies between different legacy data formats.

Q.3.4 2009 - May [1] (b) (i) Objective/Short
Explain the Real time data warehouse (1 mark) Answer:

Real Time Data Warehouse: A data warehouse is a repository of an organisations electronically stored data. It is
designed to facilitate reporting and supporting data analysis. Real time Data warehouse is the stage where data
warehouse are updated on a transaction or event basis, every time an operational system performs a transaction.

Q.3.5 2010 - May [5] (a) Short Notes
Write short note on the Stages of Data Mining (5 marks) Answer:

Data Mining
Meaning
Data mining is the extraction of implicit, previously
unknown and potentially useful information from data. It searches for relationship and global patterns that exist in
large databases but are hidden among the vast amount of data. These relationships represent valuable knowledge
about database & objects in the database that can be put to use in the areas such as decision support, prediction,
forecasting and estimation. In other words data mining is concerned with the analysis of data and the use of software
techniques used for finding patterns and regularities in sets of data. It is the computer responsible for finding the
patterns by identifying the underlying rules and features in the data.
Stages in Data Mining

1. Selection
2. Pre
processing
3. Transformation
4. Data Mining
Selecting or segmenting the data according to some criteria so that subsets of the data can be determined.
This is the data cleansing stage where certain information is removed which is deemed unnecessary and may slow
down queries. Also the data is reconfigured to ensure a consistent format as there is a possibility of inconsistent
formats because the data is drawn from several sources.
The data is not merely transferred across but transformed in that overlays may be added. For example, demographic
overlays are commonly used in market research. The data is made usable and navigable.
This stage is concerned with the extraction of patterns from the data. A pattern can be defined as a given set of facts
(data) F, a language L and some measures of certainty C. A pattern in a statement S in L that describe relationships
among a subset Fs of F with a certainty C such that S is simpler in some sense than the enumeration of all the facts in
Fs.
5. Integration and
Evaluation
The patterns identified by the systems are interpreted into knowledge which can then be used to support human
decision making. For example, prediction and classification tasks, summarizing the contents of a data base or
explaining observed phenomena.

Q.3.6 2010 - Nov [1] {C} (a) Objective/Short
What is importance of Address bus on a mother board? (2 marks) Answer:

Importance of Address Bus : The address bus is a set of wires on the mother board similar to data bus that
connects the CPU and RAM and carries the addresses of the memory locations where data can be retrieved or
stored. It determines maximum number of memory and address. Number of parallel wires in the address bus
determines the maximum number of memory locations the CPU can address.

Q.3.7 2011 - Nov [2] (a) Descriptive What is Database? What are the benefits of Database Management Solution?
(4 marks) OR 2014 - May [2] (a), RTP Descriptive Describe any four benefits of database management solution
for an organization.
Answer:
Meaning of Database
(4 marks)
A database is the collection of related and ordered information organised in such a way that information can be
accessed quickly and easily. Hence, an organised logical group of related files would constitute a database.
Definition According to G. M. Scott “A database is a computer
file system that uses a particular file organisation to facilitate rapid updating of individual records, simultaneous
updating of related records, easy access to all records by all application programs and rapid access to all stored data
which must be bought together for a particular routine report or inquiry or a special purpose report or inquiry”.
Benefits of DBMS Solution
1.
2.
3.
4.
5.
6.
7.
8.
9. It enhances data integrity and security.

It reduces data redundancy and inconsistency. It provides application data independence. It provides logical and
physical data independence.
It provides faster data accessibility and improved data sharing.
It reduces complexity of the Information System environment. It increases productivity of development.
It provides systematic storage of data in the form of table.
It provides low cost of developing and maintaining system.
10. It provides backup and recovery.

11. Different privileges can be given to different users.
12. Multiple simultaneous usage by good no. of users. organization’s
application
Q.3.8 2014 - May [7] (b), 2016 - Nov [7] (e) Write short note on the Data Mining
Short Notes (2 marks each)
Answer:
Data mining is the extraction of implicit, previously unknown and potentially useful information from data. It
searches for relationship and global patterns that exist in large databases but are hidden among the vast amount of
data. These relationships represent valuable knowledge about database & objects in the database that can be put to
use in the areas such as decision support, prediction, forecasting and estimation. In other words data mining is
concerned with the analysis of data and the use of software techniques used for finding patterns and regularities in
sets of data. It is the computer responsible for finding the patterns by identifying the underlying rules and features in
the data.
Q.3.9 2015 - Nov [3] (b) Descriptive What are the major advantages and disadvantages of DBMS? (4 marks) OR
2017 - May [3] (b), RTP Descriptive
Explain any four advantages of using a Data Base Management System (DBMS).
Answer:
Advantages of DBMS
1. Permits Data Sharing

2. Minimizes Data Redundancy
(4 marks)
One of the principle advantages of a DBMS is that the same information can be made available to different users.
In a DBMS duplication of information or redundancy is, if not eliminated, carefully controlled or reduced i.e. there
is no need to repeat the same data over and over again. Minimizing redundancy can therefore significantly reduce
the case of storing information on hard drives and other storage devices.
3. Maintains Integrity
4. Consistency of Program and File
5. User Friendly
6. Achieving Data Independence
7. Faster
Application Development
Data integrity is maintained by having accurate, consistent and upto date data. Updates and changes to the data only
have to be made in one more place in DBMS ensuring integrity. The chances of making mistake increase if the same
data needs to be changed at several different places than making the change in one place.
Using a DBMS, file formats and programs are standardized. This makes the data files easier to maintain because the
same rules and guidelines apply across all types of data. The level of consistency across files and programs also
makes it easier to manage data when multiple programs or involved.
DBMS makes the data access and manipulation easier for the user. DBMS also reduce the reliance of users on
computer experts to meet their date needs.
In a DBMS data does not reside in applications but data based program & data are independent of each other.
In the case of deployment of DBMS, application development become fast. The data is already therein databases.
Application developer has to think of only the logic required to retrieve the data in the way a user needs.
Disadvantages of DBMS:
1. Cost Implementing a DBMS system can be expensive and time consuming, especially in large enterprises.
Training requirements alone can be quite costly.
2. Security Even with safeguards in place, it may be possible
for some unauthorised users to access the database. If one gets access to database then it could be an all or nothing
proposition.

Q.3.10 2016 - Nov [7] (b) Short Notes
Write short notes on the Object Oriented Data Base Model (2 marks) Answer:
Object Oriented Data Base Model:
It is based on the concept that the world can be modeled in term of objects and their interactions. Objects are entities
covering some meaning for us and possess certain attributes to characterize them and interacting with each other. In
these database, the data is modeled and created as objects.

What an enterprise has to do to manage its information in an appropriate manner? Also, mention any four operations
that can be carried out with the help of Data Base Management System. (DBMS). (4 marks)
Answer:
Database Management Systems (DBMS):
☐ Every enterprise needs to manage its information in an appropriate and
desired manner. The enterprise has to do the following for this: ☐ Knowing its information needs.
☐ Acquiring that information.
☐ Organizing that information in a meaningful way.
☐ Assuring information quality. and
☐ Providing software tools so that users in the enterprise can access
information they require.
☐ DBMS are software that aid in organizing, controlling and using the data needed by the application programme.
☐ Commercially available database management system are oracle, my SQL, SQL services.
☐ Data is given facts from which additional facts can be inferred thus database is a collection of facts.
☐ Database – This is a collection of files.
☐ File – This is a collection of records
☐ Records – This is a collection of fields
☐ Field – This is a collection of characters.
☐ Characters – These are a collection of bits.
☐ Hierarchical Database Model
☐ Network Database Model
☐ Relational Database Model, and
☐ Object Oriented Database Model.
Data Warehouse extracts data from one or more of the organization’s databases and loads it into another database for
storage and analysis purpose. As a Data Warehouse Manager, determine the design criteria, which should be met
while designing Data Warehouse. (6 marks)
Answer:
☐ Data Warehouse extracts data from one or more of the organization’s databases and loads it into another database
for storage and analysis purpose. As a data warehouse manager, following are the design criteria which should be
met while designing Data Warehouse.
☐ It uses non- operational data. This means that the data warehouse is using a copy of data from the active
databases that the company uses in its day-to -day operations, so the data warehouse must pull data from the existing
databases on a regular, scheduled basis.
☐ The data is time-variant. This means that whenever data is loaded into the data warehouse, it receives a time
stamp, which allows for comparisons between different time periods.
☐ The data is standardized. Because the data in a data warehouse usually comes from several different sources, it is
possible that the data doesn’t use the same definitions or units. For example, our Events table in our Student clubs
database lists the event dates using the mm/dd/yyyy format (eg.01/10/2013). A table in another database might use
the format yy/mm/ dd (eg.13 /01/10) for dates, For the data warehouse would have to be converted to use this
standard format, This process is called Extraction - Transformation load (ETL).
Q.3.13 2018 - May [6] {OR} (b) Descriptive
Explain various types of Data Coding Errors. (2 marks) Answer:

Transcription Errors:
Meaning It is a special type of data entry error that is commonly made by human operators or by Optical Character
Recognition (OCR) programs.
Types 1. Addition errors:

Addition errors occur when an extra digit or character is added to the code. For example, inventory item number
83276 is recorded as 832766.
2. Truncation errors:
Truncation errors occur when a digit or character is removed from the end of a code. In this type of error, the
inventory item above would be recorded as 8327.
3. Substitution errors:
Substitution errors are the replacement of one digit in a code with another. For example, code number 83276 is
recorded as 83266.
Transposition Errors:
Meaning It is a simple error of data entry that occur when two digits that are either individual or part of larger
sequence of numbers are reversed (Transpose) when posting a transaction.
Types 1. Single transposition errors:
It occur when two adjacent digits are reversed. For instance, 12345 are recorded as 21345. 2. Multiple
transposition errors :
It occur when non- adjacent digits are transposed. For example, 12345 are recorded as 32154. Space to write
important points for revision
4
Component of Information System: Networking and Communication Systems
Q.4.1 2009 - May [2] (Or) (b) Descriptive
Describe the ways a computer network can help business. (7 marks) Answer:
Networking satisfies a broad range of purposes and meets various requirements. Networking has become
essential for the following reasons:
1. File sharing Networking enables an user to share files between all the connected computers. When all data files
in an organization are concentrated at one place it becomes easier for staff to share documents & other data.
2. Print sharing
3. E-mail
4. Shared
Databases
5. Communication and
Collaboration
6. Fax sharing
7. Fault
Tolerance
When printers are made available over the network, multiple users can print to the same printer. It reduces the
number of printers in the organization. Network printers are often faster and more capable than those connected
directly to individual workstations.
Internet or group email enables staff in the office to communicate with each other quickly and effectively and also
provide capabilities for contact management, scheduling and task assignment. Shared databases are an important
subset of file sharing. For an extensive database (e.g. a membership, client, grants or financial accounting database)
a network is the only effective way to make the database available to multiple users at the same time.
A network allows employees to share files, view other people’s work and exchange ideas more efficiently, email and
instant messaging tools may be used to communicate quickly and to store messages for future reference.
Through the use of a shared modem(s) connected directly to the network server, fax sharing permit users to fax
documents directly from their computer without having to print out them on paper. Establishing fault tolerance is the
process of making sure that there are several lines of defence against accidental data loss (i.e. hard drive failure or
deleting a file by mistake). Usually the first line of defence is having redundant hardware especially hard drives.
Additional measures include having the server attached to an uninterruptible power supply, so that power failure and
block outs do not harm the equipment.
8. Remote Access
9. Internet
Access and Security
10. Organization
A highly desirable network function, remote; access allow users to dial into organization’s network via telephone
and access network resources they can access when they’re in the office.
When computers are connected via a network they can share a common network connection to the internet. It
facilitates email, documents transfer and access to the resources available on the www.A.I. Technology group
strongly recommends the use of a firewall to any organization with any type of broadband internet connection.
Variety of network scheduling software makes it possible to arrange meetings without constantly checking
everyone’s schedules. This software includes features such as shared address books and to-do lists.

Describe any four limitations of the Computer system. (4 marks) Answer:

The Limitations of Computer System are as follows:
1 GIGO
2 Limitation of Software
3 Tampering of Data
Garbage In Garbage Out i.e. computer does not have its own IQ and an incorrect input data would result in an
incorrect output. The computer does what it is programmed to do and can do nothing else.
To perform specialized functions, special purpose softwares are required. The investment in software is much more
than in hardware.
Data handling through computers requires special protection routines.

4 Limitations of Hardware
Smaller computers can perform relatively limited work at a slower speed. So more investment is required for higher
speed computers.

Q.4.3 2016 - Nov [1] {C} (b) Descriptive List any four features of computerized networking in an organization. (2
marks) Answer:
Features of Computerised Networking
File Sharing
Print Sharing
Remote Access
Network computing and their clients provide a browser based user interface. Network computers are micro
computers without floppy or hard disk drives that are designed as low cost network computing devices. Application
and database servers provide the operating system, application software, applets databases needed by the end users
in the network.
Networking enables an user to share files between all the connected computers. When all data files in an
organization are concentrated at one place it becomes easier for staff to share documents and other data.
When printers are made available over the network, multiple users can print to the same printer. It reduces the
number of printers in the organization. Network printers are often faster and more capable than those connected
directly to individual workstations.
A highly desirable network function, remote access allow users to dial into organization’s network via telephone and
access network resources they can access when they’re in the office.
Internet Access and Security
When computers are connected via a network they can share a common network connection to the internet. It
facilitates email, documents transfer and access to the resources available on the www.A.I. Technology group
strongly recommends the use of a firewall to any organization with any type of broadband internet connection.

5
Component of Information System: Network Related Concepts
Q.5.1 2007 - Nov [1] (a) (i) (v) Describe briefly the Repeaters OR 2013 - May [1] {C} (viii) Objective/Short (1
mark) Objective/Short
Describe briefly the following terms with reference to Information Technology:

Repeaters (1 mark)
Answer :
Repeaters: In digital communication systems, a repeater is a device that receives a digital signal on an
electromagnetic or optical transmission medium and regenerates the signal along the next leg of the medium. In
electromagnetic media, repeaters overcome the attenuation caused by freespace electromagnetic-field divergence or
cable loss. A repeater decreases distortion by amplifying or regenerating a signal so that it can be transmitted
onwards in its original strength form. A series of repeaters make possible the extension of a signal over a distance.
Q.5.2 2008 - May [1] (a) (v) Objective/Short
Describe briefly the DNS Server (1 mark) Answer:

DNS Server: DNS is an internet-wide distributed database system that
documents and distributes network specific information. The internet protocol recognises any computer by its IP
number and Domain names are given for user’s convenience. Therefore it becomes necessary to translate the domain
names to corresponding IP address or vice versa. This is done by DNS.

Q.5.3 2008 - Nov [5] (a) Short Notes Write short note Star Network topology (5 marks) OR 2013 - Nov [4] (a)
Descriptive Explain Star Network Topology. Discuss its advantages and disadvantages. (4 marks) OR 2016 - May
[4] (a) Descriptive What are the characteristics of Star Network? Write any two advantages and two disadvantages
of Star Network. (4 marks)
Answer:
Star Network:
Meaning
In this network the communication channel emanates
from a central computer system. It means that the processing nodes are directly connected with a central system. To
transmit information from one node to another, it should be necessarily routed through the central computer.
Characteristics ☐ It ties end user computers to a central computer. ☐ The central unit in the star network acts as
the traffic controller among all the other computers tied to it. The central computer is usually a mainframe (host),
which acts as the file server.
☐ A star network is well suited to companies with one large data processing facility shared by a number of smaller
departments. Many star networks take the form of hierarchical networks with a centralized approach.
Advantages ☐ Several users can use the central unit at the same time.
☐ It is easy to add new nodes and remove existing nodes.

☐ A node failure does not bring down the entire network.
☐ It is easier to diagnose network problem through a central hub.
Disadvantages ☐ The whole network is affected if the main unit “goes down,” and all communications stop.
☐ Considered less reliable than a ring network, since the other computers in the star are heavily dependent on the
central host computer. If it fails, there is no backup processing and communications capability and the local
computers will be cut off from the corporate headquarters and from each other.
☐ Cost of cabling the central system and the points of the star network together are very high.
Q.5.4 2009 - Nov [5] (a) Descriptive Describe the Ring Network. Discuss its advantages and disadvantages. (5
marks) OR 2012 - Nov [4] (a) Descriptive Define Ring Topology. Discuss its advantages and dis-advantages. (4
marks)
Answer:
Ring Network: Meaning
Suitable for Advantage

Disadvantages
In this network cable passes from one node to another node until all nodes are connected in the form of loop or ring.
LAN
(i) Offers high performance for small number of workstations or for larger networks where each station has a similar
workload.
(ii) Ring network can span longer distance than other type of networks.
(iii) Reliable since communication between two computers is not dependent on a single computer like the host
computer
(iv) Ring Networks are easily extendable. (i) Relatively expensive & difficult to install. (ii) Failure of one computer
on the network can
affect the entire network.

(iii) Difficult to troubleshoot a ring network. (iv) Adding or removing computer can disrupt the
entire network.
Q.5.5 2010 - May [1] (a) (iii), RTP Objective/Short Describe briefly the WiFi (1 mark) OR 2012 - May [1] {C}
(e)
Answer the following question in brief:
What is WiFi? (2 marks)
Answer:
WiFi: WiFi means ‘Wireless Fidelity’ which describes the underlying technology of wireless local area network
based on IEEE 802.11 specifications. WiFi is used for mobile computing devices, Internet and VOIP phone access,
gaming applications, consumer electronics, public transports and mobile commerce etc.

Q.5.6 2011 - Nov [3] (a), RTP Descriptive Discuss in brief various data transmission modes. (4 marks)
Answer:
There are three different types of data communication modes. SIMPLEX: SENDER ONE WAY
ONLYRECEIVER HALF
DUPLEX: SENDER OR RECEIVER RECEIVER OR OR SENDER
FULL :
DUPLEX : SENDER AND RECEIVER RECEIVER AND AND SENDER
1. Simplex
2. Half Duplex
3. Full Duplex
This communication mode permits data to flow in only one direction. The terminal device connected to a simplex is
either a send only or receive only device. Simplex mode is seldom used because a return path is generally needed to
send acknowledgments, control or error signals.
Under this mode, the data gets transmitted back and forth between two stations but data can go only in one direction
of the two at any given point of time. It is a connection in which the data flows in one direction or the other but not
both at the same time. E.g. Wireless systems.
A full duplex mode connection can simultaneously transmit and receive data between two stations. It is the most
commonly used communication mode. It is faster because it avoids the delay that occur in a half duplex mode each
time the direction of transmission is changed. A full duplex is used in interactive communication.
Since data can flow in both directions simultaneously, each end of the line can thus transmit and receive at the same
time.

Q.5.7 2012 - May [7] (c) Objective/Short Describe briefly
Conventions or rules of a Protocol (2 marks)
Answer:
Communication Protocols are the set of rules for inter-computer communication that have been agreed upon and
implemented by many vendors, user and standard bodies. Ideally, a protocol standard allows heterogeneous
computer to talk to each other.
Protocols are software that performs a variety of actions necessary for data transmission between computers. At the
most basic level, protocols define the physical aspects of communication, such as how the system components will
be interfaced and at what voltage levels will be transmitted.

Q.5.8 2012 - Nov [1] {C} (i) Objective/Short
Describe briefly, the following terms with reference to Information Technology.

Switch (1 mark)
Answer:
Switch: Switch is a hardware device used to direct messages across a network. It creates temporary point to point
links between two nodes on a network and sends all data along that link throughout the network.

Q.5.9 2012 - Nov [7] (ii) Objective/Short Describe briefly terms:
(ii) Wireless LAN (2 marks)
Answer:
Wireless LAN: Wireless Local Area Network (WLAN) is a flexible data communications system that does not
require any physical media or cables for data transmission. Using Radio Frequency (RF) technology, Wireless LANs
transmit and receive data over the air. Users can access shared information without any plug in or without any
physical connection. Wireless LAN configurations range from simple peer-to-peer topologies to complex networks
offering distributed data connectivity, flexibility and mobility.

Describe Mesh Network Topology. Discuss its advantages. (4 marks) Answer:

Mesh Network
Meaning
Features
Advantages
A mesh network is a network topology in which each node relays data for the network. All mesh nodes cooperate in
the distribution of data in the network.
☐ Mesh networks can relay messages using either a flooding technique or a routing technique.
☐ Nodes under this network are randomly connected using communication lines.
☐ Mesh network can be fully connected or partially connected. In fully connected topology, each node is connected
by a dedicated point to point link to every node. In a partially connected topology, the computers are widely
scattered.
1. Reliability is very high since there exists an alternative path if the direct link between two nodes is down.
2. It is easier to diagnose the network problems.

3. Yields greater amount of redundancy in the event that one of the nodes fails where network traffic can be
redirected to another node.
Disadvantages 1. The cost of installation & maintenance is high. 2. If there are few cables in the network, the loss
of even one cable or device may damage the network seriously.
Mesh Topology Space to write important points for revision

Q.5.11 2013 - Nov [1] {C} (v) Objective/Short Describe briefly the following terms with reference to Information
Technology.
(v) Hub (1 mark) Answer:
Hub: Hub is a common connection point for devices in a network. Hubs are commonly used to connect segments of
a LAN. It contains multiple port. When a packet arrives at one port, it is copied to the other ports so that all
segments of the LAN can see all packets. It works on half duplex mode.

Q.5.12 2013 - Nov [5] (c), RTP Distinguish Between Distinguish between the following:
(c) Half Duplex and Full Duplex Connection (3 marks)
Answer:
Difference between Half Duplex and Full Duplex Half Duplex Full Duplex
It is a connection in which the data flows in one direction or the other but not both at the same time. E.g. Wireless
systems.
Data can be transmitted in both the direction simultaneously.
E.g. Telephone system, Internet chatting.
This type of connection makes it possible to have bidirectional communications using the full capacity of the line.
Since data can flow in both directions simultaneously, each end of the line can thus transmit and receive at the same
time.

Q.5.13 2014 - May [7] (c) Short Notes
Write short note on the following:

VOIP (2 marks) Answer:
VOIP: Voice Over Internet protocol is a network layer protocol that contains addressing information and some
control information that enables packets to be routed. Other terms commonly associated with VoIP are IP telephony,
Internet telephony, Voice over Broadband (VoBB), broadband telephony and broadband phone. This allows delivery
of voice communications over IP networks, for example, phone calls.

Q.5.14 2014 - Nov [4] (a) Descriptive What is Bus Topology? List its two advantages and two disadvantages. (3
marks)
Answer :
Bus Topology
Meaning
A bus network is a network topology in which nodes
are directly connected to a common linear (or branched) half-duplex link called a bus. In a bus network, a single
length of wire, cable or optical fiber connects a number of computers. All communications travel along this cable,
which is called a ‘Bus’.
Advantages
Disadvantages
• There is no host computer or ride server which makes bus network reliable as well as easy to use and understand.
• If one of the microcomputers fail, it will not affect the entire network.
• Computers interrupting each other can use a lot of bandwidth.
• Each connection between two cables weakness the electrical signal.

Which network topology can be used in case of Military Installations with a very small number of nodes and why it
should be used? List advantages and disadvantages of such network topology? (4 marks)
Answer:
Mesh Topology Meaning
Advantages
Disadvantages
A mesh network is a network topology in which each node relays data for the network. All mesh nodes cooperates in
the distribution of data in the network. Mesh networks can relay messages using either a flooding technique or a
routine technique.
In case of Military Installations Mesh Topology is used because it is created for highly reliable and security sensitive
applications.
Yields the greatest amount of redundancy in the event that if one of the nodes fails, the network traffic can be
redirected to another node. Network problems are easier to diagnose.
Installation and maintenance cost is very high as more cable is required in Mesh Topology.

Q.5.16 2015 - Nov [1] {C} (c) Distinguish Between Answer the following questions in brief.
In what way a Switch is different from a Router in the computer networks? (2 marks) Answer:
S. Switch
No.
1. Switch is a communications p r o c e s s o r t h a t m a k e s c o n n e c t i o n s b e t w e e n telecommunications
circuits in a network, so that a telecommunications message can reach its intended destination. Router is processor
networks based on different rules o r p r o t o c o l s , s o t h a t a telecommunications message can be routed to its
destination.
Router
a communications that interconnects
2. S w i t c h e s c o n n e c t s communications circuits network.

t e l e Router interconnects networks in a bases on rules or protocols.

Q.5.17 2016 - May [1] {C} (c) Descriptive
Answer the following questions in brief:

What do you understand by ‘Transmission mode’? Name three types of transmission modes. (2 marks)
Answer:
Transmission Mode:
The transmission mode is used to define the direction of signal flow between two linked devices. There are three
types of transmission modes characterized according to the direction of the exchanges:
1. Simplex
2. Half - Duplex
3. Full Duplex
Network.
Answer:
Difference between Switch and Bridge: Q.5.18 2016 - Nov [1] {C} (d) Distinguish Between
Answer the following in brief:

Present two differences between Switch and Bridge in Telecommunication (2 marks)
S. B a s i s o f No. Difference 1. Meaning
Switch Bridge
Switch is a communicating processor that makes c o n n e c t i o n b e t w e e n Bridge is a communication processor

that connects number of Local Area
2. Mode of Inter connection
3. No. of ports f o r I n t e r connection
4. Cost
telecommunication circuits in a network so that a telecommunication message can reach its intended destination.
By Hardware
N e t w o r k ( L A N ) . I t m a g n i f i e s t h e d a t a transmission signal.
Via Software
D o z e n s o f p o r t s (Hundreds)
Very few ports (2 – 16)
Lower than Bridge Higher than switch Space to write important points for revision
Q.5.19 2016 - Nov [6] (b) Descriptive Describe the Wireless technologies that have evolved and widely used in
modern day computerized environment. (4 marks) Answer:
Wireless Media 1. Terrestrial Microwave
2. Radio waves
Terrestrial microwave media uses the atmosphere as the medium through which to transmit signals and is used
extensively for high-volume as well as longdistance communication of both data and voice in the form of
electromagnetic waves.
Radio waves are an invisible form of electromagnetic radiation that varies in wavelength from around a millimeter
to 1,00,000 km. making if one of the widest ranges in the electromagnetic spectrum.
3. Micro waves
4. Infrared waves
5. Communication Satellites
Microwaves are radio waves with wavelengths ranging from as long as one meter to as short as one millimeter or
equivalently, with frequencies between 300 MHZ (0.3 Ghz) and 300 Ghz.
Infrared light is used in industrial scientific and medical applications. Night-vision devices using infrared
illumination allow people or animal to be observed without the observer being detected.
Communication Satellites use the atmosphere as the medium through which to transmit signals. They are used
extensively for high-volume as well as longdistance communication of both data and voice.

Q.5.20 2016 - Nov [7] (a) Short Notes
Write short note on “Packet Switching”. (2 marks) Answer:

Packet Switching:
Packet Switching refers to protocols in which messages are broken up into small transmission units called packets,
before they are sent. Each packet is transmitted individually across the net. The packet may even follow different
routes to the destination. Since there is no fixed path, different packets can follow different path and thus they may
reach to destination out of order.

Q.5.21 RTP Distinguish Between Distinguish between Star Network and Mesh Network.
Answer: Star Network
The star network, a popular network configuration, involves a central unit that has a number of terminals tied into it.
The characteristics of a Star Network are:
• It ties end user computers to a
central computer
• The central unit
network acts as
controller among all the other
computers tied to it. The central
computer is usually a mainframe
(host), which acts as the file
server.
• A star network is well suited to
companies with one large data
processing facility shared by a
number of smaller departments. in the star the traffic
Mesh Network
In the structure, there is random c o n n e c t i o n o f n o d e s u s i n g communication links. A mesh network may

be fully connected or connected with only partial links. In fully interconnected topology, each node is connected by
a dedicated point to point link to every node. The reliability is very high as there are always alternate paths available
if direct link between two nodes is down or dysfunctional. Fully connected networks are not very common because
of the high cost. Only military installations, which need high degree of redundancy, may have such networks, that
too with a small number of nodes.

6 Information Systems’ Controls
Q.6.1 2016 - May [3] (a) Descriptive Write any 8 Information Systems Control procedures covering the access
safeguards over computer programs. (4 marks)
Answer :
Information System Control Procedure:
A well designed information system should have controls built in for all its sensitive or critical sections. Information
system control procedure may include following:
1. Strategy and direction.
2. General Organization and Management.
3. Access to IT resources, including data and programs.
4. System development methodologies and change control. 5. Operation procedures system programming and
technical support
functions.
6. Quality Assurance Procedures
7. Physical Access Controls
8. Business Continuity Planning (BCP) and Disaster Recovery Planning (DRP)
9. Network and communication, Database Administration
10. Protective and detective mechanisms against internal and external attacks.
Q.6.2 2016 - May [6] (a) Descriptive Describe the Information Systems Management Controls usually performed
by Top Management. (4 marks)
Answer :
An Information System Control is defined as a system of collection, storage and processing of financial and
accounting data that is used by decision makers. An accounting information system is generally a computer based
method for tracking accounting activity in conjunction with information technology resources.
The top level management are in charge of the management of different information system control.
7
Classification of Information Systems Control: Based on Objectives of Control
Q.7.1 RTP Descriptive Determine the controls that are classified based on the time when they act, relative to a
security incident.
Answer:
Preventive Controls
Detective Controls
These controls prevent errors, omissions, or security incidents from occurring. Examples include simple data-entry
edits that block alphabetic characters from being entered in numeric fields, access controls that protect sensitive
data/ system resources from unauthorized people, and complex and dynamic technical controls such as anti-virus
software, firewalls, and intrusion prevention systems. Some examples of preventive controls can be Employing
qualified personnel; Segregation of duties; Access control; Vaccination against diseases; Documentation;
Prescribing appropriate books for a course; Training and retraining of staff; Authorization of transaction; Validation,
edit checks in the application; Firewalls; Anti-virus software (sometimes this acts like a corrective control also), etc.,
and Passwords. The above list contains both of manual and computerized, preventive controls.
These controls are designed to detect errors, omissions or malicious acts that occur and report the occurrence. In
other words, Detective Controls detect errors or incidents that elude preventive controls. Detective controls can also
include monitoring and analysis to uncover activities or events that exceed authorized limits
Corrective Controls
or violate known patterns in data that may indicate improper manipulation. Some examples of Detective Controls
are Cash counts; Bank reconciliation; Review of payroll reports; Compare transactions on reports to source
documents; Monitor actual expenditures against budget; Use of automatic expenditure profiling where management
gets regular reports of spend to date against profiled spend; Hash totals; Check points in production jobs; Echo
control in telecommunications; Duplicate checking of calculations; Past-due accounts report; The internal audit
functions; Intrusion Detection System; Cash counts and bank reconciliation, and Monitoring expenditures against
budgeted amount. Corrective Controls are designed to reduce the impact or correct an error once it has been
detected. Corrective controls may include the use of default dates on invoices where an operator has tried to enter
the incorrect date. For example- Complete changes to IT access lists if individual’s role changes is a corrective
control. If an accounts clerk is transferred to the sales department as a salesman his/her access rights to the general
ledger and other finance functions should be removed and he/she should be given access only to functions required
to perform his sales job. Some other examples of Corrective Controls are Submit corrective journal entries after
discovering an error; A Business Continuity Plan (BCP); Contingency planning; Backup procedure; Rerun
procedures; Change input value to an application system; and Investigate budget variance and report violations.
Classification of Information Systems Control: 8 Based on Nature of Information Systems

Q.8.1 2008 - May [1] (b) (i), 2010 - May [1] (b) (iii) Explain the Firewalls
OR 2014 - May [7] (a), 2015 - Nov [7] (a)
Write short note on Firewall

Answer :
Fire Wall: Fire wall is a device that forms a barrier between a secure and an
open environment when the latter environment is unusually considered. Fire walls are systems which control the
flow of traffic between the Internet and the firms internal LAN's and systems. They are packaged as turnkey
hardware/software packages and are set up to enforce the specified security policies that are desired. A firewall is a
personal and effective means of protecting the firm's internal resources from unwanted intrusion.
Resources
Objective/Short (1 mark) Short Notes (2 marks each)

Q.8.2 2008 - May [1] (b) (v), 2009 - Nov [1] (b) (ii), 2013 - Nov [1] (c) (ii)
Explain the Transaction log.

Answer:
Transaction Log:
A Transaction log is a file that records database modifications. Database modifications consist of inserts, updates,
deletes, commits, rollbacks, and database schema changes. A transaction log is not required but is recommended.
The database engine uses a transaction log to apply any changes made between the most recent checkpoint and the
system failure. The checkpoint ensures that all committed transactions are written to disk.
Objective/Short
(1 mark each) During recovery the database engine must find the log file at specified location. When the transaction
log file is not specifically identified then the database engine presumes that the log file is in the same directory as the
database file.

Q.8.3 2009 - May [1] (b) (v) Objective/Short
Explain the Operating system (1 mark) Answer :
Operating System: Operating system is a master control program of a computer that manages its internal functions,
provides means to control the computer’s operations and file system.
They are written by programmers and are different than those in a typical application program.
The codes of the operating system of a computer are stored externally in a series of program files on the computer’s
hard disk or external memory.

Discuss the various tools that are available for the protection of information and system against compromise,
intrusion or misuse. (4 marks) Answer :
Several tools are available to protect information and system against compromise, instruction or misuse :
1. Fire wall (i) Fire walls are systems which control the flow of traffic between the Internet and the firms internal
LAN's and systems.
(ii) They are packaged as turnkey hardware/ software packages and are set up to enforce the specified security
policies that are desired.
2. Encryption
(iii) A firewall is a personal and effective means of protecting the firm's internal resources from unwanted intrusion.
(i) Encryption allows information to transmit to the internet while being protected from interpretation by
eavesdroppers.
(ii) The two approaches to encryption are : (a) Hardware encryption devices
(b) Software encryption devices
If the Internet is being used to exchange information among branch offices for instance, use of hardware encryption
can ensure that all traffic between these offices is secure.
It is employed in conjunction with specific application. For example certain electronic mail packages provide the
facility of encryption and decryption for message security.
3. Message Authentication
4. Site
Blocking
(i) Message Authentication ensures that message is really from whom it purports to be and that it has not been
tampered with.
(ii) Clearly defined internet security policies and procedures should always be part of any corporate Internet security
strategy.
(i) Site Blocking is a software based approach which prohibits access to certain websites that are deemed
inappropriate by management. In addition to blocking sites, companies can also log activities and determine the
amount of time spent on the Internet and identify the sites visited.

Q.8.5 2014 - Nov [5] (a) Descriptive Briefly explain the two main approaches to establish access controls in
Software Systems. (4 marks)
Answer :
To ensure that all information that is generated from system is accurate, complete and reliable for decision making
there is a requirement for proper controls.
1. Application Controls
2. Internal Controls
Application controls are the controls on the sequence of processing events. These controls cover all phases of data
right from data origination to its final disposal. Application controls cover transactions as they are recorded in each
stage of processing into muster parameter and transaction files and include controls relating to transmission and
distribution of output through display, electronic media or printed reports. SA-315 defines the system of internal
control as the plan of enterprise and all the methods and procedures adopted by the management of an entity to assist
achieving management’s objective of ensuring as far as practicable the orderly and efficient conduct of it’s business
including adherence to management policies, the safeguarding of assets, prevention and detection of fraud.

Q.8.6 2015 - Nov [4] (a) Descriptive Mention the two categories of encryption/decryption methods. What are two
basic approaches to encryption? (4 marks) Answer :
Two Categories of Encryption/Decryption Methods:
1. The Secret Key Method
In secret key encryption/decryption method, the same key is used by both sender and the receiver. The sender uses
this key and an encryption algorithm to encrypt data; the receiver uses the same key and the corresponding
decryption algorithm to decrypt the data. In this, the algorithm used for decryption is the inverse of the algorithm
used for encryption.
2. Public Key In public key encryption, there are two keys: a private Method key and a public key. The private key
is kept by the receiver and the public key is announced to the public. Two Basic Approaches to Encryption:
1. Hardware Encryption
2. Software Encryption
Hardware encryption devices are available at a reasonable cost, and can support high-speed traffic. If the internet is
being used to exchange information among branch offices or development collaborators, for instance, use of such
devices can ensure that all traffic between these offices is secure.
Software encryption is conjunction with specific electronic mail packages, for e.g. provide encryption and
decryption for message’s security.
typically employed in
applications. Certain
Data that is waiting to be transmitted are liable to unauthorized access called ‘Asynchronous Attack’. Explain
various types of Asynchronous attacks on data. (4 marks)
Answer:
Types of Asynchronous attacks on data:
1. Data Leakage This involves leaking information out of the computer by means of dumping files to paper or
stealing computer reports and tape
2. Subversive Attacks
3. Wire-tapping
These can provide intruders with important information about messages being transmitted and the intruder may
attempt to violate the integrity of some components in the sub-system.
This involves spying on information being transmitted over communication network.
4. Piggybacking This is the acts of following an authorized person through a secured door or electronically
attaching to an authorized telecommunication link that intercepts and alters transmissions. This involves intercepting
communication between the operating system and the user and modifying them or messages.

substituting new
An operating system allows users and their applications to share and access common computer resources and
execute a variety of activities. Hence, protecting operating system access is extremely crucial. Identify various steps
through which protection of operating system access can be achieved. (8 marks)
Answer:
An operating system allows users and their applications to share and access common computer resources and
execute a variety of activities. Hence, protecting operating system access is extremely crucial and can be achieved
using following steps:
1. Automated terminal
identification
This will help to ensure that a specified session could only be initiated from a certain location or computer terminal.
4. Access
Control List
5. Discretionary Access
Control
2. Terminal logA log-in procedure is the first line of defense against in procedures unauthorized access as it does
not provide unnecessary help or information, which could be misused by an intruder. When the user initiates the log-
on process by entering user-id and password, the system compares the ID and password to a database of valid users
and accordingly authorizes the log-in.
3. Access Token If the log-on attempt is successful, the operating system creates an access token that contains key
information about the user including user-id, password, user group and privileges granted to the user. The
information in the access token is used to approve all actions attempted by the user during the session.
This list contains information that defines the access privileges for all valid users of the resource. When a user
attempts to access a resource, the system compasses his or her user-id and privileges contained in the access token
with those contained in the access control list. If there is a match, the user is granted access.
The system administrator usually determines; who is granted access to specific resources and maintains the access
control list. However, in distributed systems, resources may be controlled by the end-user. Resource owners in this
setting may be granted discretionary access control, which allows them to grant access privileges to other users. For
Example, the controller who is owner of the general ledger grants read only privilege to the budgeting department
while accounts payable manager is granted both read and write permission to the ledger.
6. User
identification a n d
authentication
7. Password management system
8. Use of system utilities
9. Duress alarm to safeguard users
10. Terminal time out
11. Limitation of connection time

The users must be identified and authenticated in a foolproof manner. Depending on risk assessment, more stringent
methods like Biometric Authentication or Cryptographic means like Digital Certificates should be employed.
An operating system could enforce selection of good passwords. Internal storage of password should use one-way
hashing algorithms and the password file should not be accessible to users.
System utilities are the programs that help to manage critical functions of the operating system e.g. addition or
deletion of users obviously, this utility should not be accessible to a general user. Use and access to these utilities
should be strictly controlled and logged.
If users forced to execute some instruction under threat, the system should provide a alert the authorities.
Log out the user if the terminal is inactive for a defined period. This will prevent misuse in absence of the legitimate
user.
Define the available time slot. Do not allow any transaction beyond this time For Example, no access after 8.00
p.m. and before 8.00 a.m. - or on a Saturday or Sunday.

An internet connection exposes an organization to the harmful elements of the outside world. As a network
administrator, which Network Access controls will you implement in the organization to protect from such harmful
elements? (6 marks)
Recognize the activities that deal with the System Development Controls in an IT Setup.
Answer:
The activities that deal with system development controls in IT setup are as follows:
System
Authorization Activities
User
Specification Activities
Technical Design Activities

Internal Auditor’s Participation
All systems must be properly and formally that each new system request be submitted in written form by users to
systems professionals who have both the expertise and authority to evaluate and approve (or reject) the request.
Users must be actively involved in the systems development process. Regardless of the technology involved, the
user can create a detailed written descriptive document of the logical needs that must It should describe the user’s
view of the problem, not that of the systems professionals.
The technical design activities translate the user specifications into a set of detailed technical specifications of a
system that meets the user’s needs. The scope of these activities includes systems analysis, general systems design,
feasibility analysis, and detailed systems design.
The internal auditor plays an important role in the control of systems and should become involved at the inception of
the system development process to make c o n c e p t u a l s u g g e s t i o n s r e g a r d i n g s y s t e m requirements
and controls and should be continued throughout all phases of the development process and into the maintenance
phase.
Program Testing
User Test and Acceptance Procedures

All program modules must be thoroughly tested before they are implemented. The results of the tests are then
compared against predetermined results to identify programming and logic errors. For example, if a program has
undergone no maintenance changes since its implementation, the test results from the audit should be identical to the
original test results. Having a basis for comparison, the auditor can thus quickly verify the integrity of the program
code. On the other hand, if changes have occurred, the original test data can provide evidence regarding these
changes. The auditor can thus focus attention upon those areas. Just before implementation, the comprising user
personnel, systems professionals, and internal audit personnel system meets its stated requirements, the system is
formally accepted by the user departments(s).

9
Classification of Information Systems Control: Based on Audit Functions
Describe the factors which have contributed to the growth of Local Area Network. (6 marks) Answer :
Few Reasons for Growth of Local Area Network are mentioned as under:
1. Security Locking of servers by software and hardware means, security for programs and data files can be
achieved.
2. Expanded PC usage through

inexpensive workstation
3. Distributed Processing
4. Electronic Mail and Message Broadcasting
5. Organisa
tional benefits
6. Data
Management benefits
7. Software cost and

up-gradation
Diskless node also offer security by not allowing users to download important data on floppies or upload unwanted
software or viruses.
In a LAN already set up, cost to automate additional employees through diskless PCs is less.
Many companies operate as if they had distributed system in place. If numerous PCs are installed around the office,
these machines represent the basic platform for a LAN with inter user communication and information exchange.
Electronic mail allows users to communicate more easily among themselves. This can be done by providing each
user with a mailbox on the server.
Benefits of LAN’s are numerous. These include reduced costs in computer hardware, software and peripherals, and
a drastic reduction in the time and cost of training or re-training manpower to use the systems. Communication is
easier and faster. Information flow between departments also becomes smoother.
Data located on the central server hence much easier to manage and back it up. No file is transferred to user through
floppies.
Since a single server is used hence the software is to be purchased only once instead of buying multiple copies,
hence, resulting in reduced cost of software for every machine in organisation. Also up gradation is much easier.
Q.9.2 2008 - May [1] (b) (iv)

Explain the following “Multiplexer”.
OR 2011 - Nov [7] (b), 2013 - Nov [1] (c) (vii)
Describe briefly “Multiplexer”.

Answer :
Multiplexer: A multiplexer is a device that selects one of several analog or digital input signals and forwards the
selected input into a single line. Multiplexer enables various devices to share one communication line. It scans each
device to collect and transmit data on a single line to CPU. It receives input signals from several low speed lines,
converts them into one line and transmits it to high speed transmission channel.
Objective/Short (1 mark)
Objective/Short (2, 1 marks)
Q.9.3 2008 - May [1] {C} (c) Descriptive Briefly discuss any five database control features.
Answer :
Data Base Control Features : Features
1. Data ☐ Generally (5 marks) [CA Final - II]
Explanation
database systems use encryption Encryption procedures to protect highly sensitive data like password files, certain
financial data, product formulae etc.
☐ Data encryption uses an algorithm to scramble selected data, thus making it unreadable to an intruder "browsing"
the database.
☐ Encryption is used for protecting data that are transmitted across networks.
2. Database ☐ Authorisation Table ☐
☐
3. User-Defined ☐ Procedures
4. User View ☐
☐
☐
5. Biometric ☐ Devices
☐
☐ The database authorization table contains rules that limit the actions that a user can take. This technique is similar
to the access control list used in the operating system.
Each user is granted certain privileges that are coded in the authority table, which is used to verify the user's action
requests.
A user defined procedure allows the user to create a personal security program or routine to provide more positive
user to identification than a single password can.
The user view or subschema is a subset of the total database that defines the user's data domain and provides access
to the database.
Access privileges to the data, as defined in their views, should be commensurate with the user' legitimate needs.
Various users may share a single user view but have different authority levels. Effective access control requires
additional security measure. User authentication procedures use biometric devices, which measure various personal
characteristics, such as fingerprints, voice prints, retina prints, or signature characteristics. These user characteristics
are digitized and stored permanently in a database security file or on an identification card that the user carries.
When an individual attempts to access the database, a special scanning device captures his or her biometric
characteristics, which is compared with the profiles data stored internally or on the ID card. If the data do not match,
access is denied.
Q.9.4 2008 - May [3] (b), RTP Descriptive

What are the Network Threats and Vulnerabilities ? (4 marks) Answer : Meaning
Threats
A threat is anything that can disrupt the operation functioning integrity or availability of network or system. In
computer security a threat is a possible danger that might exploit a vulnerability to breach security and therefore
cause possible harm. Any circumstance or event with the potential to adversely impact an IS through unauthorized
access, destruction, disclosure, modification of data, and/or denial of service is considered as threat.
A threat can be either
• “Intentional”: Hacking: an individual cracker or a
criminal organization or
• “Accidental”: The possibility of a computer
malfunctioning, or the possibility of a natural
disaster such as an earthquake, a fire, or a
tornado or otherwise a circumstance, capability,
action, or event.
The threats to the security of systems can be broadly divided into nine categories:
1. Fire,
2. Water,
3. Energy variations like voltage fluctuations, circuit
breakage, etc.,
4. Structural damages,
5. Pollution,
6. Intrusion like physical intrusion and eavesdropping,
7. Viruses and Worms,
8. Misuse of software, data and services,
9. Threats from Hackers.
Q.9.5 2008 - Nov [1] (a) (iii), 2012 - Nov [1] {C} (ii) Objective/Short
Describe briefly the following terms “ MODEM”. (1 mark each) Answer :

MODEM: It stands for Modulator/Demodulator. It is a device that converts
the digital computer signal to analog telephone signal and vice-versa. Modems are required to telecommunicate
computer data with ordinary telephone lines because computer data is in digital form but telephone lines are analog.
Modems are built with different range of transmission speed.

Q.9.6 2009 - May [3] (Or) (c) Descriptive
Why documentation is required? List any 4 types of documentation required to be prepared prior to delivery of
customized software to a customer.
Answer :
Need for
documentation
Types
(2 ☐ 4 = 6 marks)
• It provides a method to understand the various issues related with software development.
• It provides means to access details related to system study, system development, system testing, system operational
details.
• It also provides details associated with further modification of software
(i) Strategic and application plans.
(ii) Application Systems and Program documentation. (iii) System Software and Utility program documentation.
(iv) Database documentation, Operation manual, User Manual, Standard Manual, Backup Manual and other.
Q.9.7 2010 - May [3] (a), RTP Descriptive Discuss the various attributes of Local Area Network (LAN). (5 marks)
OR 2017 - May [4] (a) Descriptive What are the characteristics of Local Area Networks? (4 marks)
Answer :
Local Area Network:
Meaning Local Area Network or LAN is a network of
interconnected data communication devices. LAN covers a limited geographical area, it can be within a department
or division that belongs to the organization. LAN enables sharing of resources like hard disks, printers and also data
created. LAN uses high-speed media and are mostly privately owned and operated.
Main attributes of Local Area Networks (LAN) are
1.
2.
3.
4.
5.
6.
7. Inexpensive transmission media is used to connect computers in limited geographical area mainly through coaxial
cable.
Provides easy physical connection of devices to the media.
Inexpensive devices like modems, repeaters and transceiver are used to interface with the transmission media.
Network data transmission is easier for the devices with different transmission rates in the network. Provides high
degree of interconnection between the network devices.
Provides high data transmission rates between source and the destination.
It provides central controlling processor on the network.
8. All devices have the potential to communicate with
other devices on the network.

9. Each attached device may only hear and does not
necessarily process messages or instructions.

What are the requirements of LAN? (4 marks) Answer :

Local Area Network or LAN is a network of interconnected data communication devices. LAN covers a limited
geographical area, it can be within a department or division that belongs to the organization. LAN enables sharing of
resources like hard disks, printers and also data created. LAN uses high-speed media and are mostly privately owned
and operated.
A LAN should have the following requisite features:
1. Compatibility A layer of compatibility at the software level must be provided by local area network system so
that software can be easily written and widely distributed. A LAN operating system must be flexible to support large
variety of hardware e.g. Novell Netware.
2. Internetworking Bridging of different LANs together is one of the most important requirement of any LAN.
Resources should be accessible from all workstations on the bridge network in a transparent way with no special
commands requirement for crossing the bridge. Network operating system must be hardware independent providing
the same user interface irrespective of the hardware.
3. Growth Path and Modularity

4. System
Reliability and Maintenance
One more essential feature of LAN is its modularity. It means a set of PCs should get easily converted into a LAN
which can grow in size simply by adding additional workstations. For additional storage requirement, another hard
disk should be easily added to another server.
All computers are prone to system lockups, power failures and catastrophes. In case of centralized processing if
central processor goes down, all users connected to it are left without a machine to work on. Such a situation can
even arise in distributed or local area network. Hence, a LAN operating system should be powerful enough to
withstand accidents.

Q.9.9 2013 - May [3] (a) Descriptive Explain briefly any four components of Local Area Network (LAN). (4
marks)
Answer :
Components of LAN are as follows:
1. File Servers
2. The Network Operating System
File servers are computers used for the purpose of managing file systems, servicing the network printers, handling
network communications and other functions. It can be a dedicated or nondedicated one.
It is a system software of LAN that integrates the network’s hardware components. It establishes and maintains the
connection between the workstations and the file server. It contains two parts :
(i) File servers and

(ii) Workstation software.
3. Workstations
4. Network
Interface Cards
5. Network Cabling
It is a desktop computer with LAN card, in a Local Area Network that runs application programs and serves as an
access point to the network. Only intelligent workstations are used in networks. Dumb terminals are not used. PCs
load programs from server and do their own processing and after processing the files are again stored in the server.
PCs with LAN card make up Workstation.
It is an adapter which lets the user to connect a network cable with the computer. It includes encoding and decoding
circuitry and a receptacle for a network cable connection. It is the connection between PC (nodes) and the LAN.
The network cabling used to connect the nodes together may be any of the following types : (i) T w i s t e d Pair
(ii) Coaxial Cables
(iii) Fiber Optic Cables
Same as used for telephone wiring in houses and business establishment, inexpensive and easy to install. Used for
dedicated data networks.
Well established and long-used cabling system for terminals and computers. Commonly used to connect computers
and terminals in a local area such as an office, Floor, building and campus.
These cables are now replacing old copper cables. Fiber Optic use light as the communication medium. These are
lightweight, can handle many times the telephone conversation or volume of data handled by copper wire cabling.
Data is more secure in Fiber Optic Networks.

Q.9.10 2014 - May [1] {C} (c) Distinguish Between
Answer the following question briefly:
What is the difference between backup and recovery? (2 marks) Answer :
Difference between Backup and Recovery
• Backup and recovery systems are used for the protection and retention
of data.
• Backup is used to keep copies of data for data protection purpose, while
recovery is used for salvaging data that is already lost.
• In other words, backup can be considered a precautionary method
(making and keeping copies of data in case they get lost), while recovery
is a cure for already lost data.
• Even though, precaution is always better than cure, there are many
occasions when recovery is needed simply because some users do not
take enough time/effort for backing up their data on a regular basis.
• One advantage of backing up is that there is a guarantee that the data
is secure, while it is difficult to vouch that the recovery will always work.
• Using backed up data in case of a data loss can be considered easier
and quicker than recovering a lost file (which could be quite tedious
depending on the situation).
• However recovery could be the only solution in extreme cases like when
both the original and backed up data is lost.
Q.9.11 2014 - May [3] (a), RTP Descriptive What is a ‘threat’? Explain any three types of Network Security
threat? (4 marks) Answer : Meaning A threat is anything that can disrupt the operation
functioning integrity or availability of network or system. In computer security a threat is a possible danger that
might exploit a vulnerability to breach security and therefore cause possible harm. Any circumstance or event with
the potential to adversely impact an IS through unauthorized access, destruction, disclosure, modification of data,
and/or denial of service is considered as threat.
A threat can be either:
• “Intentional”: Hacking: an individual cracker or a
criminal organization or
• “Accidental”: The possibility of a computer
malfunctioning, or the possibility of a natural
disaster such as an earthquake, a fire, or a
tornado or otherwise a circumstance, capability,
action, or event.
Types
1. Unstructured Threats
2. Structured Threats
These originate mostly from inexperienced individuals using easily available hacking tools from the internet. These
tools induce four - scanning tools. address - sweeping tools, and many others. These originate from individuals who
are highly motivated and technically competent and usually understand network system design and the
vulnerabilities of those system. An individual, who presents structured threat typically target a specific destination
on group.
3. External
Threats authorised access to systems or network.
These originate from individuals or organizations working outside an organization who does not have organization’s
computer
Q.9.12 2014 - Nov [4] (b), RTP Descriptive What do you mean by threat and vulnerability? Explain any three facts
responsible for occurrence of vulnerabilities in the software. (5 marks)
Answer :
Threats A threat is anything that can disrupt the operation functioning integrity or availability of network or system.
Threats originate from individuals who have authorised access to the network. These users either have an account on
a server or physical access to the network.
Vulnerability Vulnerability is an internet weakness in the design, configuration or implementation of a network or

system that renders it susceptible to a threat.
The following facts are responsible for occurrence of vulnerabilities in the software: Software Bugs
Timing Windows
Software Bugs are so common that users have developed techniques to work around the consequences and bugs that
make saving work necessary every half an hour or crash the computer every so often are considered to be a normal
part of computing.
This problem may occur when a temporary file is exploited by an intruder to gain access to the file, overwrite
important data and use the file as a gateway for advancing further into the system.
Insecure default Configurations

End users
Insecure default configurations occur when vendors use known default password to make it as easy as possible for
consumers to set up new systems.
Generally users of computer systems are not professionals and are not always security conscious. Space to write
What are the major process controls, which should be enforced through front end application system, to have
consistency in the control process? (4 marks)
Answer :
The Process Controls that should be enforced through the front end application system, to have consistency in
the control process are as follows:
Run-to-Run Totals
Reasonableness Verification
Edit Checks
Field Initialization
Exception Reports
These help in verifying data that is subject to process through different stages. A specific record can be used to
maintain the control total.
Two or more fields can be compared and cross verified to ensure their correctness.
Edit checks similar to the data validation controls can also be used at the processing stage to verify accuracy and
completeness of data.
Data overflow can occur, if records are constantly added to a table or if fields are added to a record without
initializing it.
Exception reports are generated to identify errors in data processed.

Existence/Recovery Controls
The check-point/restart logs facility is a short-term backup and recovery control that enables a system to be
recovered if failure is temporary and localized.

Answer the following questions in brief:

Explain Cryptographic Controls. (2 marks) Answer :
Cryptographic Controls:
Cryptographic controls are designed to protect the privacy of data and to prevent unauthorised modifications of data.
Cryptography achieves this goal by scrambling data into codes (cryptograms) so that it is meaningless to anyone
who does not possess the authentication to access the respective system resource or file. Examples are encryption,
digital signature etc.

Q.9.15 2016 - May [2] (a), RTP Descriptive
Describe any four reasons why documentation is important to Information Systems. (4 marks) Answer :
Information System is defined as the processed data for decision making. The information system shall be used to
derive data for the organization. Documentation includes the flowcharts, narratives and other written
communications that describe the inputs, processing and outputs of an Accounting Information System. It describes
the logical flow of data within a computer system and the procedures that employees must follow to accomplish
application tasks.
Some of the Reasons why documentation is important to Information Systems are as follows:
1. Documentation helps to
understand how the system works
2. Documentation helps to develop new system
3. Documentation helps in
documenting business
processes
4. Documentation helps in Auditing Information System
In computerized systems, the processing is e l e c t r o n i c a n d i n v i s i b l e . T h e r e f o r e , documentation is

required to help employees understand how a system works, assist accountants in designing controls for it,
demonstrates to managers that it will meet their information needs, and assists auditors in understanding the systems
that they test and evaluate.
Documentation helps system designers develop new systems in much the same way that blueprints help architects
design building. Well written documentation and related graphical systems-design methodologies play key roles in
reducing system failures and decreasing the time spent correcting.
Understanding business processes can lead to better systems and Documentation helps understand how their
businesses operates. It also helps them to analyze as to what is missing from critical organizational activities, and
how to improve core business activities effectively and efficiently.
Documentation helps depict audit trails. It helps auditors determine the strengths and weaknesses of a system’s
controls and thus the scope and complexity of audit of Information System.
better decision. managers better

Q.9.16 2016 - Nov [2] (a) Descriptive Describe any four output Controls that have to be enforced both in a
batchprocessing environment as well as in an online environment.
(4 marks) Answer :
Types of output controls can be described as follows:
1. Logging of Output Programme

Execution
2. Controls over Printing

3. Retention Controls
4. Existence/ Recovery Controls
When programms used for output of data, are executed, they should be logged and monitored. In the absence of
control over such output programme executions, confidentially of data could be compromised.
It should be ensured that unauthorised disclosure of information printed is prevented. Users must be trained to select
the correct print and access restriction may be placed on the workstations that can be used for printing.
Retention controls consider the duration for which outputs should be retained before being destroyed. Consideration
should be given to the type of medium on which the output is stored.
These controls are needed to recover output in the event that if it is lost or destroyed on in case that if the output is
written to a spool of files or report files which stands untraceable.

Q.9.17 2017 - May [1] {C} (c) Descriptive What are the advantages of Fiber-optic transmission? (2 marks)
Answer :
Advantages of Fibre Optic Transmission:
1. Can carry digital as well as analog signals.
2. High speed and greater carrying capacity than coaxial cable
transmission and twisted pair lines.

3. Lower error rate.
4. Not susceptible to electronic noise.
5. Not affected by electromagnetic radiation.
6. Flexible and can be used undersea also.
Q.9.18 2018 - May [1] {C} (b) Descriptive Explain the following in brief:
Line Error Control (2 marks)
Answer:
Line Error Control:
Whenever data is transmitted over a communication line, recall that it can be received in error because of attenuation
distortion, or noise that occurs on the line. These errors must be detected and corrected.
(i) Error Detection:

The error can be detected by either using a loop (echo) check or building some form of redundancy into the message
transmitted.
(ii) Error Correction:

When line errors have been detected, they must then be corrected using either forward error correcting codes or
backward error collecting codes.

Q.9.19 2018 - Nov [1] {C} (c) Descriptive Explain the term ‘Cryptography’. (2 marks)
Answer:
Cryptography:
It deals with programs for transforming data into cipher text that are meaningless to anyone, who does not possess
the authentication to access the respective system resource or file. A cryptographic technique encrypts data (clear
text) into cryptograms, (cipher text) and its strength depends on the time and cost to decipher the cipher text by a
cryptanalyst. Three techniques of cryptography are transposition (permute the order of characters within a set of
data), substitution (replace text with a key-text) and product cipher (combination of transposition and substitution).

A company XYZ is implementing the software by using the program development life cycle methodology and
applying control phases in parallel to the development phases to monitor the progress against plan. Being an IT
developer, design the various phases and their controls for program development life cycle. (6 marks)
Answer:
☐ Phases and their controls for Program Development Life Cycle : Phase
Planning
Control Controls
Techniques like Work Breakdown Structures (WBS), Grantt Charts and PERT (Program Evaluation and Review
Technique) charts can be used to monitor progress against plan.
The control phase has two major purposes :

– Task progress in various software life - cycle phases should be monitored against plan and corrective action should
be taken in case of any deviations.
– Control over software development, acquisition and implementation tasks should be exercised to ensure software
released for production use is authentic, accurate and complete.
Design A systematic approach to program design, such as any of the structured design approaches or object -
oriented design is adopted.
Coding Programmers must choose a module implementation and integration strategy like Top-down. Bottom-up
and Threads approach , a coding strategy that follows the percepts of structured programming, and a documentation
strategy to ensure program code is easily readable and understandable.
Testing Three types of testing can be undertaken:
– Unit Testing : which focuses on individual program modules

– Integration Testing : Which focuses in groups of program modules : and
– Whole - of - Program Testing : which focuses on whole program
These tests are to ensure that a developed or acquired
program achieves its specified requirements.
O p e r a t i o n Management establishes formal mechanisms to monitor and the status of operational programs so
maintenance needs Maintenance can be identified on a timely basis. Three types of
maintenance can be used are as follows:
– Repair Maintenance : in which program errors are corrected:

– Adaptive Maintenance : in which the program is modified to meet changing user requirements; &
– Perfective Maintenance : in which the program is tuned to decrease the resource consumption. Space to write
10 Information Systems Auditing

Q.10.1 2017 - May [1] {C} (b) Descriptive
Answer the following in brief:

What kind of awareness is required by an auditor for auditing in an IT environment? (2 marks)
Answer :
☐ Auditing in a computerized environment would involves the process of evaluating and reporting the adequacy of
system controls, efficiency, economy, effectiveness, and security practices. The auditor should make sure that assets
and information resources are safeguarded, data integrity is protected, and the system complies with applicable
policies, procedures, standards, rules, laws and regulations.
☐ The Auditor has to look at both the manual and automated parts of the system, because of their interfacing nature.
☐ The increased risks and changes in the traditional control functions has caused to a shift the Auditors scope of
work in IS Environment. The key concerns of auditor are:
(i) Develop and apply new criteria in evaluating control weaknesses in Computerized Information Systems (CIS),
(ii) Tailor-testing techniques to the CIS under study, and (iii) Use computers to perform some portions of audit
examination. Space to write important points for revision
Q.10.2 2018 - May [3] (b) Descriptive Explain briefly the objectives of Information System’s Auditing. (4 marks)
Answer:
Objectives of Information System’s Auditing 1. Asset
Safeguarding Objectives
2. Data Integrity Objectives
3. System
Effectiveness Objectives
4. System
Efficiency Objectives
The information system assets (hardware, software, data information etc.) must be protected by a system of internal
controls from unauthorized access.
It is a fundamental attribute of IS Auditing. The importance to maintain integrity of data of an organization requires
all the time. It is also important from the business perspective to the decision maker, competition and the market
environment.
Effectiveness of a system is evaluated by auditing the characteristic and objective of the system to meet business and
user requirements.
To optimize the use various information system resources (machine time, peripherals, system software and labour)
along with the impact on its computing environment.

11
Information Systems’ Auditing: Concurrent or Continuous Audit
Q.11.1 2010 - May [4] (a) Descriptive Describe some of the advantages of continuous audit techniques. (5 marks)
[CA Final - II]
Answer :
Advantages of Continuous Audit Techniques are as under: 1. Timely,
Comprehensive a n d D e t a i l e d Auditing
2. Surpris e Test Capability
3. Information to System Staff on m e e t i n g o f objectives
4. Training for New users
5. Obtain
Resources required
6. Continuous
Audit
Techniques are more likely to be used
Evidence would be available more timely and in a comprehensive manner. The entire processing can be evaluated
and analysed rather than examining the inputs and the outputs only.
As evidences are collected from the system itself by using continuous audit techniques, auditors can gather evidence
without the system staff and application system users being aware that evidence is being collected at that particular
moment. This brings in the surprise test advantages.
Continuous audit techniques provide information to systems staff regarding the test vehicle to be used in evaluating
whether an application system meets the objectives of asset safeguarding, data integrity, effectiveness and
efficiency.
Using the ITFs new users can submit data to the application system, and obtain feedback on any mistakes they make
via the system’s error reports.
Auditors should be able to obtain resources required from the organisation to support development, implementation,
operation and maintenance of continuous audit techniques. Continuous audit techniques are more likely to be used if
auditors are involved in the development work associated with a new application system.
7. Knowledge and Experience of Working with Computer

Systems
8. Audit Trail is less Visible
Auditors need the knowledge and experience of working with computer systems to be able to use continuous audit
techniques effectively and efficiently.
Continuous auditing techniques are more likely to be used where an audit trail is less visible and the costs of errors
and irregularities are high.

Q.11.2 2011 - May [6] (b) Descriptive As an IS Auditor, explain the types of information collected for auditing by
using System Control Audit Review File (SCARF) technique.
(4 marks) [CA Final - II] OR 2016 - May [5] (a) Descriptive
As an IS auditor of a company, you want to use SCARF technique for collecting some information, which you want
to utilize for discharging some of your functions. Briefly describe the type of information that can be collected
through the use of SCARF technique. (6 marks) [CA Final - II]
Answer :
An IS Auditor might use SCARF to collect the following types of information:
1. System
Exception
2. Snapshots and Extended Records
3. Performance Measurement
SCARF can be used to monitor different types of application system exceptions.
Snapshots and extended records can be written into the SCARF file and printed when required.
Auditors can use embedded routines to collect data that is useful for measuring or improving the performance of an
application system.
4. Application System
Errors
5. Statistical Sample
6. Policy and Procedural Variances
SCARF audit routines provide an independent check on the quality of system processing, whether there are any
design and programing errors as well as errors that could creep into the system when it is modified and maintained.
Some embedded audit routines might be statistical sampling routines, SCARF provides a convenient way of
collecting all the sample information together on one file and use analytical review tools thereon. Organizations
have to adhere to the policies, procedures and standards of the organization and the industry to which they belong.
SCARF audit routines can be used to check when variations from these policies, procedures and standards have
occurred.
7. Profiling Data Auditor can use embedded audit routines to collect data to build profiles of system users.
Deviations from these profiles indicate that there may be some errors or irregularities.

Q.11.3 2011 - Nov [5] (b) Descriptive Describe the advantages and disadvantages of Continuous Auditing
Techniques in brief. (4 marks) [CA Final - II]
Answer :
Advantages of Continuous Auditing Techniques:
Please refer 2010 - May [4] (a) on page no. 218
Disadvantages The following are some of the disadvantages and
limitations of the continuous Audit System: 1. Auditors should be able to obtain resources required from the
organization to support development, implementation, operation, and maintenance of continuous audit techniques.
2. Continuous audit techniques are more likely to be used if auditors are involved in the development work
associated with a new application system.
3. Auditors need the knowledge and experience of working with computer systems to be able to use continuous audit
techniques effectively and efficiently.
Continuous auditing techniques are more likely to be used where the audit trail is less visible and the costs of errors
and irregularities are high.
4. Continuous audit techniques are unlikely to be effective unless they are implemented in an application system that
is relatively stable. Space to write important points for revision
Q.11.4 2013 - May [4] (a) Descriptive What do you mean by ‘System Control Audit Review File’ (SCARF)? What
types of information can be collected by Auditor using SCARF.
(6 marks) [CA Final - II] Answer :

☐ System Control Audit Review file uses embedded audit modules to
continuously monitor transaction activity and collect data on transactions with special audit significance.
☐ The data are recorded in a SCARF or audit log.
☐ Transactions that might be recorded in a SCARF include those exceeding a specified rupee limit, involving
inactive accounts, deviating from company policy, or containing write downs of asset values.
☐ Periodically, the auditor receives a print out of the SCARF file, examines the information to identity any
questionable transactions and performs any necessary follow-up investigation.
SCARF : System Approach

Q.11.5 2014 - May [7] (a) Short Notes

Continuous and Intermittent Simulation (CIS) (4 marks) [CA Final - II] Answer :
CIS:
This is a variation of the SCARF continuous audit technique. This technique can be used to trap exceptions
whenever the application system uses a database management system. During application system processing CIS
executes in the following way:
☐ The database management system reads an application system
transaction. It is passed to CIS. CIS then determines whether it wants to examine the transaction further. If yes, the
next steps are performed or otherwise it waits to receive further data from the DBMS. ☐ CIS replicates or simulates
the application system processing. ☐ Every update to the database that arises from processing the selected
transactions will be checked by CIS to determine whether discrepancies exist between the results it produces and
those the application system produces.
☐ Exceptions identified by CIS are written to a exception log file. ☐ The advantage of CIS is that it does not
require modifications to the application system and yet provides an online auditing capability. Space to write
Differentiate between Concurrent Audit and General Audit. Answer:

Concurrent Audit: In this, Auditors are members of the systems development team. They assist the team in
improving the quality of systems development for the specific system they are building and implementing. General
Audit: In this, Auditors evaluate systems development controls overall. They seek to determine whether they can
reduce the extent of substantive testing needed to form an audit opinion about management’s assertions relating to
the financial statements in systems effectiveness and efficiency.

12 Audit Trail
Q.12.1 2010 - May [2] (c) Descriptive
The management of ABC Ltd. wants to design a detective control mechanism for achieving security policy objective
in a computerised environment. As an auditor explain, how audit trails can be used to support security objectives.
(10 marks) [CA Final - II]
Answer :
Audit trails can be used to support security objectives in three ways: 1. Detecting unauthorized access to the
system,
2. Facilitating the reconstruction of events, and
3. Promoting personal accountability.
Each of these is described below:
Detecting Detecting unauthorized access can occur in real time Unauthorized or after the fact.
Access ☐ The primary objective of real-time detection is to
protect the system from outsiders who are attempting to breach system controls.
☐ A real-time audit trail can also be used to report on changes in system performance that may indicate infestation
by a virus or worm.
☐ Depending upon how much activity is being logged and reviewed, real-time detection can impose a significant
overhead on the operating system, which can degrade operational performance.
☐ After-the-fact detection logs can be stored electronically and reviewed periodically or as needed.
Reconstructing When properly designed, they can be used to Events determine if unauthorized access was
accomplished, or attempted and failed.
☐ Audit analysis can be used to reconstruct the steps that led to events such as system failures, security violations
by individuals, or application processing errors.
☐ Knowledge of the conditions that existed at the time of a system failure can be used to assign responsibility and
to avoid similar situations in the future.
Personal Audit trail analysis also plays an important role in
Accountability accounting control.
☐ For example, by maintaining a record of all changes to account balances, the audit trail can be used to reconstruct
accounting data files that were corruption by a system failure.
☐ Audit Trails monitor user activity even at the lowest level. This serves as a preventive control. ☐ Individuals are
afraid of social stigma and hence hesitate to hence hesitate to violate security policy if they know that their actions
are recorded in an audit log. This minimises security violations.

13 Audit Trail: Auditing Logical Access Control
Describe the components of Intrusion Detection Systems. (4 marks) Answer :

The Components of Intrusion Detection System are as follows:
1 Sensors These are deployed in a network or on a device to collect data. They take input from various resources,
including network packets, log files, and system call traces. Input is collected, organized and then forwarded to one
more analyzers.
2 Analyzers Analyzers in IDS collect data forwarded by sensors and then determine if an intrusion has actually
occurred. Output from analyzers should include evidence supporting the intrusion report. The analyzers may also
provide recommendations and guidance on mitigation steps.
3 User
interface
4 Honeypot
The user interface of the IDS provides the end users a view and way to interact with the system. Through the
interface, the user can control and configure the system. Many user interfaces can generate reports as well.
In fully deployed IDS, some administrators may choose to install a “Honey pots”, essentially a system components
setup as bait or decoy for intruders. Honey pots can be used as early warning systems on a attack, decoys from
critical systems, and data collection sources for attack analysis.

Q.13.2 2019 - May [4] (b) Descriptive Discuss the key activities, which require special attention for auditing the
user access provisioning. (4 marks) Answer:
☐ Auditing the user access provisioning process requires attention to several key activities, including:
1. Access request processes
2. Access approvals
The IS auditor should identify all user access request processes and determine if these processes are used
consistently throughout the organization.
The IS auditor needs to determine how requests are approved and by what authority they are approved. The auditor
should determine if system or data owners approve access requests, or if any accesses are ever denied.
3. New employee provisioning

4. Segregation of Duties (SoD)
5. Access reviews
The IS auditor should examine the new employee provisioning process to see how a new employee’s user accounts
are initially set up. The auditor should determine if new employee’s managers are aware of the access requests that
their employees are given and if they are excessive.
The IS auditor should determine if the organization makes any effort to identify segregation of duties. This may
include whether there are any SoD matrices in existence and if they are actively used to make user access request
decisions.
The IS auditor should determine if there are any periodic access reviews and what aspects of user accounts are
reviewed: this may include termination reviews, internal transfer reviews, SoD reviews, and dormant account
reviews.

14 Organisation Structure and Responsibilities
Q.14.1 2007 - Nov [2] (b) Descriptive Explain value added services being offered by a Data Centre. (5 marks) OR
2013 - Nov [4] (b) Descriptive
Describe various value added services offered by a Data Centre.
Answer :
Some of the value added services that data centres provide are:
1. Data base Monitoring

2. Web
Monitoring
3. Back up and Restore
4. Storage on Demand
5. Intrusion Detection System
This is done via a database agent, which enables the high availability of the database through comprehensive
automated management.
It accesses and monitors website performance, availability, response and integrity, from a visitor's perspective. It
reports on HTTP, FTP service status, monitor URL availability, verify web content accuracy and changes.
It provides a centralised multi-system management capabilities and a comprehensive integral management solution
to data storage using backup agent for the operating systems, database and applications.
It provides back-end infrastructure as well as expertise best practices and process to give a robust and cost effective
storage strategy. It also provides security, reliability and availability of data to meet company's demand.
It detects malicious activity on the host based ID systems and network-based ID systems.
Q.14.2 2009 - May [2] (c), RTP Descriptive What are the challenges faced by the management of a data centre?
Answer :
Data Centre A Data Center is a centralized repository for the
storage, management and dissemination of data & information. Data center is a facility used for housing a large
amount of electronic equipment, typically computers and communication equipments. The purpose of a data center
is to provide space and bandwidth connectivity for server in a reliable, secure and scalable environment. It also
provides facilities like housing websites, providing data serving and other services for companies. Such type of data
center may contain a network operations center (NOC) which is restricted access area containing automated system
that constantly monitor server activity, web traffic, network performance and report even slight irregularities to
engineers, so that they can stop potential problems before they occur.
Challenges
1. Maintaining Infrastructure
2. Skilled
Human
Resources
3. Selection of Technology
A data center needs to set up an infrastructure comprising of a member of electronic equipment, typically computers
and band width connectivity for server in a reliable secure and scalable environment.
A data center needs skilled staff expert at network management having software and hardware operating skill.
A data center also faces the challenge of proper selection of technology crucial to the operational of the data center.
4. Maintaining System
Performance
A data centre has to maintain maximum uptime and system performance, while establishing sufficient redundancy
and maintaining security

Describe briefly salient features of Data Centres. (4 marks) Answer :

Features of Data Centers
1. Data Centers are characterized by the size of their operations and require a minimum area of around 5,000 to
30,000 square meters. A financially viable data center could comprise of a hundred to several thousand servers.
2. It should ensure maximum data security and availability. Data centers have to be protected against intruders by
controlling access to the facility and by video surveillance. They should be able to withstand natural disasters and
calamities, like fire the power failures. Recovery sites must be well maintained.
3. The goal of a Data Center is to maximize the availability of data, and to minimize potential downtime. To do this,
redundancy has to be built into all the mission critical infrastructure of the data center, such as connectivity,
electrical supply, security and surveillance, air conditioning and fire suppression.
4. A Data Center should provide the highest power availability with uninterrupted power systems (UPS).
5. Physical Security and Systems Security are critical to operations. Thus, it should provide both types of security
measures to ensure the security of equipments and data placed at the data center.
15
Organisation Structure and Responsibilities: Job Titles and Job Description
What are the various views taken into account, while designing the architecture of a Database. Which view is user
dependent and which one is user independent? Which view is storage device oriented?
(3 ☐2☐1 = 6 marks) Answer :

While designing the architecture of a database, the following views are taken into account. 1. External ☐
View ☐
☐
2. Conceptual ☐ View ☐
☐
3. Internal View ☐ ☐
☐ It is also known as user view

As name suggests, it includes only those application programs which are user concerned. It is described by users/
programmers by means of external schema.
It is also known as global view.
It represents the entire data base and includes all data base entities.
It is defined by conceptual scheme and describes all records, relationships, constraints or boundaries. It is also
known as physical view.
It describes the data structure and the access methods.
It is defined by internal schema and indicates how data will be stored.
Out of the above three External View is user dependent and the rest two are user independent.
Also internal view is user independent.
16 Segregation of Duties
Q.16.1 2019 - Nov [2] (b) Descriptive Explain any four examples of segregation of duties (SOD) controls. (4
marks)
1 Information System
1. A group of mutually related, cooperating elements with a defined boundary; working on reaching a common goal
by taking inputs and producing outputs in organised transformation process, is called: (a) Data
(b) Information
(c) Feedback
(d) System
2. Information System (IS) refers to the interaction between _________ (a) data and information
(b) data and processes
(c) processes and technology
(d) processes and controls
3. Any specific Information System aims to support ___________. (a) operations

(b) management
(c) decision making
4. The main aim and purpose of each Information System is to convert the __________ which is useful and
meaningful.
(a) data into information
(b) information into information
(c) data into system
(d) information in process
2 Components of Information Systems
5. An Information System comprise of _________.

(a) people
(b) software and hardware
(c) data and network
(d) all of the above
6. _________ is in fact not a separate device but an imaginary memory area supported by some operating system in
conjunction with the hardware.
(a) Cache memory
(b) Primary memory
(c) Secondary memory
(d) Virtual memory
7. A set of instructions that tell the hardware, what to do, is known as: (a) Operating System
(b) Software
(c) Logic Access
(d) RAM
8. _________ is a set of computer programs that manages computer hardware resources and acts as an interface with
computer application programs.
(a) Operating System
(b) Application Software
(c) Operating Software
(d) Virtual Memory
9. The process of analysing data to find previously unknown trends, patterns, and associations to make decisions, is
known as: (a) Big Data
(b) Data Warehouse
(c) Data Analysis
(d) Data Mining
10. ________ is a technology that takes an Internet Signal and convert into ratio waves.
(a) Packet Switching
(b) Wi-Fi
(c) Vo Ip
(d) DNS
11. A growing class of data being transferred over the Internet is Voice Data. A protocall enables sounds to be
converted to a digital format for transmission over the Internet and then recreated at the other end is known as.
(a) Domain Name System (DNS)
(b) Wi-Fi
(c) Packet Switching
(d) Voice over IP (VoIP)
3 Information System Control
12. Basic Purpose of Information System Controls in an organisation is to ensure that the basic objectives are
achieved and undesired risk events is/are ___________.
(a) prevented
(b) detected
(c) corrected
13. An information systems auditing includes

(a) Reviewing the implemented system
(b) Providing consultation
(c) Evaluating the reliability of operational effectiveness of controls. (d) All of the above
14. Control objectives in Information System serve for the purpose of
(a) Outline the policies of the organisation as laid down by the management
(b) A benchmark for evaluating whether control objectives are met.
4 Classification of Information System Control
15. Objective of controls in Information System

(a) Preventive
(b) Detective and Corrective
(c) Compensatory
16. Classification on the basis of nature of Information System Resources are

(a) Environmental and Physical Access Control
(b) Environmental and Logical Access Control
(c) Environmental, Physical Access and Logical Access Controls (d) Physical Access and Logical Access Controls
17. Quality Assurance (QA) personnel perform a monitoring role for management to ensure that:
(a) Quality goals are established and understood clearly by
stakeholders
(b) Compliance occurs with the standards that are in place to attain
quality information system
(c) Both (a) and (b)
(d) Either (a) or (b)
18. Wide Area Network Topologies have the characteristics:
(a) They span large geographic areas
(b) They often encompass components that are owned by other parties
(c) They provide relatively low-speed communication among nodes
19. Which of the following is not a component of Information Systems?
(a) People
(b) Data
(c) Network
(d) Transaction Processing System
20. Which of the following is not a functional unit of Control Processing Unit?
(a) Control Unit
(b) Input Devices
(c) Registers
(d) Arithmetic and Logic Unit
5 Information Systems Auditing
21. Which of the following is not a Corrective Control?

(a) Backup Procedure
(b) Hash Totals
(c) Rerun Procedure
(d) Contingency Planning
22. Which of the following term is not used in Relational Database Models? (a) Objects
(b) Relations
(c) Attributes
(d) Tables
23. SCARF stands for ___________.

(a) System Control Audit Review File
(b) System Control Audit Report File
(c) System Control Audit Review Format
(d) Simulation Control Audit Review File
24. _________ technical involves embedding audit software modules within a host application system to provide
continuous monitoring of the system’s transactions.
(a) Audit hooks
(b) SCARF
(c) Integrated Test Facility (ITF)
(d) Continuous and Intermittent Simulation (CIS)
6 Audit Trail
25. Audit trails can be used to support security objectives in the way of: (a) Detecting Unauthorised Access
(b) Reconstructing Events
(c) Personal Accountability
26. Accounting Audit Trail applies in

(a) Resource usage from log-onto log-out time
(b) Log of Resource Consumption
(c) Log-in and Log-out of Human Resource
7 Organisation Structure and Responsibilities
27. CISO stands for:

(a) Chief Information Security Office (b) Chief Information Security Officer (c) Central Information Security Office
(d) Central Informative Services Office
28. Data Management Comprises the function of: (a) Data base Architech
(b) Data base Administrator
(c) Data base Analyst
7 Segregation of Duties
29. Segregation of Duties (SOD) also known as:

(a) Distribution of Duties
(b) Separation of Duties
(c) Classification Duties
(d) None of the above
30. __________ is the conversion of data into a secret code for storage in data base.
(a) Cipher Text
(b) Encryption
(c) Decryption
(d) Logging
31. In computer net work __________ refers to the ability of a network to recover from any kind of error like
connection failure, loss of data etc. (a) Routing
(b) Contention
(c) Resilience
(d) Band width
ANSWER
1. (d) 2. (c) 3. (d) 4. (a) 5. (d) 6. (d) 7. (b) 8. (a) 9. (d) 10. (b) 11. (d) 12. (d) 13. (d) 14. (d) 15. (d) 16. (c) 17. (c) 18.
(d) 19. (d) 20. (b) 21. (b) 22. (a) 23. (a) 24. (b) 25. (d) 26. (d) 27. (b) 28. (d) 29. (b) 30. (b) 31. (c)
CHAPTER E-Commerce,
4
M-Commerce and Emerging Technologies
Chapter Comprises: Components for E-Commerce ☹Architecture of Networked Systems ☹Work Flow Diagram for
E-Commerce ☹Risks and Controls ☹Guidelines and Laws governing E-Commerce ☹Digital Payments ☹Computing
Technologies.

Objective Short Notes
Legend
Distinguish Descriptive Practical
book. 7.240
TIMEMANAGER
Time First In
depth learnin g
i.e.....
............ Day 1
Instant Revision (in hours) . . . . . . . . . Plan and Manage your Time
Periodic Revision (in hours)

i.e.... i.e. on
.......... ........... . Day 8
Day 2
1.
Budgeted
2. Actual
3. Variance (1-2)
16 4.00 3.12
After After After Fix as 30 60 days 90 per your

days i.e. on days need.
i.e. on ............. i.e. on
........... . ...........
Day 30 Day 60 .
Day 90
2.20 1.35 1.35
Q UICK LOOK Repeatedly Asked Questions

3.2, 9.1, 9.2

3.2, 5.1,11.3 3.1,3.4, 5.1, 7.2,9.6,11.5,12.2
1 Introduction to E-Commerce
e-business benefits individuals, businesses, government and society at large. As a business seller, analyse the
benefits that you would draw from e-business.
Answer:
Benefits of e-business to a Seller Increased
Customer Base
Recurring payments made easy
Instant
Transaction
Provides a dynamic
market
Reduction in Costs
☐
Efficiency
improvement
due to
☐
☐ By electronically accessing on-line databases of bid opportunities, online abilities to submit bids, and on-line
review of rewards.
In overhead costs through uniformity, automation, and large-scale processes.
Advertising costs. integration of management
Reduction in time to complete business transactions, particularly from delivery to payment.

Reduction in errors, time, for information processing by eliminating requirements for re-entering data. Reduction in
inventories and reduction of risk of obsolete inventories as the demand for goods and services is electronically
linked through just-in- time inventory and integrated manufacturing techniques.
Creation of New Markets
Since the number of people getting online is increasing, which are creating not only new customers but also
retaining the old ones.
Each business has number of operations being homogeneous. Brings in uniformity of scaled operations.
The transactions of e commerce are based on real time processes. This has made possible to crack number of deals.
Since there are several players, providing a dynamic market which enhances quality and business.
☐
☐☐
This is done through the ability to easily and cheaply reach potential customers.
Easier Entry into New

Markets
Better Quality of Goods

Elimination of Time Delays
This is especially into geographically remote markets, for enterprises regardless of size and location.
As standardized specifications and competition have increased and improved variety of goods through expanded
markets and the ability to produce customized goods.
Faster time to market as business processes are linked, thus enabling seamless processing and eliminating time
delays.

2
Q.2.1 2018 - Nov [1] {C} (d)
Describe the term ‘Digital Library’. Answer:

Digital Library:
A digital library is a special library with a focused collection of digital objects that can include text, visual material,
audio material, video material, stored as electronic media formats (as opposed to print, microform, or other media),
along with means for organizing, storing, and retrieving the files and media contained in the library collection.
Digital libraries can vary immensely in size and scope, and can be maintained by individuals, organizations, or
affiliated with established physical library buildings or institutions, or with academic institutions. The digital content
may be stored locally, or assessed remotely via computer networks. An electronic library is a type of information
retrieval system.
Components for E-Commerce

3 Architecture of Networked Systems
Q.3.1 2009 - May [3] (a), RTP Descriptive Describe in brief the various components of Client Server Architecture.
(4 marks) Answer:
Components of Client/Server architecture are as follows: 1. Client: There are basically three types of clients.
i. Non Graphical User Interface
ii. GUI
iii. Object
Oriented User Interface
It requires a minimum amount of human interaction. It includes ATM, Cell phones, fax machines and robots.
Clients are human interaction models usually involving object/action models like the pull down menus in Windows
3-X.
It takes, GUIClients even further with expanded visual formats, multiple work places, and object interaction rather
than application interaction Example –Windows 95.
2. Server: Server awaits requests from the client and regulates access to shared resources. i. File Servers
ii. Database Server
iii. Transaction Servers
iv. Web Server
Make possible to share files across a network by maintaining a shared library of document, data and images.
For execution of processing power SQL requests from clients.

It executes a series of SQL commands, an online transaction Processing program (OLTP). It allows client and server
to communicate with a universal language called HTTP.
3. Middleware: The network system implemented within the client/server technology is known as middleware. It
allows clients and servers to interact. Generally it allows for communication, directory services, queuing, distributed
file sharing and printing. Middleware is composed of four layers.
i. Service
ii. Network operating System
It carries coded instructions and data from s o f t w a r e a p p l i c a t i o n t o t h e b a c k end-processing layer for

encapsulating network routing instructions.
This layer adds additional instructions to ensure that the transport layer transfers data packets to its designated
receiver efficiently and correctly.
4. Fat–Client Fat server Fat Client

Fat Server
In this system more of the processing takes place on the client, like with a file server or database server. It is also
referred as “2-Tier” systems.
It places more emphasis on the server and tries to minimize the processing done by client. Example transaction,
groupware and web servers. It is also referred to as “3-Tier” system.
5. Network: Network hardware is cabling the communication cords and the device that link the server and the
clients. The communication and data flow over the network is managed &maintained by network software. It
involves wiring in the wall and function boxes that are usually in closet.
Q.3.2 2010 - Nov [4] Descriptive Write the important characteristics of the Client-Server technology.
OR 2015 - Nov [4] (b), 2016 - Nov [4] (b) Mention briefly the prominent characteristics of a architecture.
Answer:
Client Server: Organisation of individual computers on a network decides that how they will interact with other
computers on the network. One of the ways of organising network of computers is the client server technology or
strategy. In this kind of technology one host computer handles the other connected computer (nodes) on the network.
This host computer serves the storage needs and sometimes the processing needs of all the network nodes. This host
computer is also called the server and the connected nodes as clients. The most common type of client server
arrangement is a LAN composed of microcomputers connected to a network server which serves to all the clients
(users) of the LAN.
A client program running on one of the microcomputers can request specific data from server. The server program
retrieves data from its database and returns it to the client. This way a LAN permits all the computers connected to it
to share hardware, software and data. Disk storage and printers are the most commonly shared devices.
Characteristics of Client/Server technology:
1. Client/Server architecture consists of a client process and a server
process that can be distinguished from each other.

2. The client portion and the server portion can operate on separate
computer platforms.
3. Either the client platform or the server platform can be upgraded without
having to upgrade the other platform.
4. The server is able to service multiple clients concurrently. 5. In some client/server systems clients can access
multiple servers. 6. The client server system includes some sort of networking capability. (8 marks)
Descriptive
‘Client-Server’ (4 marks each) 7. A vital portion of the application logic resides at the client end. 8. The action is
usually initiated at the client end, not the server end. 9. GUI (Graphical user Interface) generally resides at the client
end. 10. SQL (Structural Query Language) capability is characteristic of majority
of the client/server systems.

11. The database server should provide protection and security. Space to write important points for revision
Q.3.3 2014 - May [4] (a) Descriptive Describe briefly any four features of Application Servers. (4 marks) Answer:
Features of Application Servers
1. Component Management
2. Fault
Tolerance
3. Load
Balancing 4. Management Console
Provides the managers with tools for handling all the components and runtime services like session management
and synchronous / asynchronous client notifications as well as executing server business logic.
Ability of the application server with no single point of failure defining policies for recovery and trail - over
recovery in case of failure of one object.
Capability to send the request to different servers depending on the load and availability of server. Single point
graphical management console for remotely monitoring client and server clusters. Space to write important points
for revision
Q.3.4 2015 - May [3] (b), RTP Descriptive What is Server? Briefly explain any four types of servers based on the
nature of service they provide. (4 marks)
Answer:
Server
Meaning A Server is a computer (hardware) or device on a network dedicated to run one or more Services (as a
host), to serve the needs of the users of other Computers on a network.
Types of Server
1. File Server This is a computer and storage device dedicated to storing files. Any user on the network can store
files on the server. 2. Print Server This is a computer that manages one or more printers.
3. Network This is a computer that manages network traffic. Server
4. Database This is a computer System that processes database Server queries.
5. Application This is a program that handles all application operations Server between users and an enterprise’s
back end business applications or databases.
6. Web Server Web Server is a computer that delivers web pages. Every web server has an IP address and possibly
a domain name.
7. Mail Server Mail Server moves and stores mail over corporate networks.
4
Architecture of Networked Systems: Three Tier Client Server
Q.4.1 2014 - May [4] (b) Descriptive List the two advantages and two disadvantages of 3-tier architecture. (4
marks)
Answer:
Advantages of 3-Tier Architecture
1. Separation of user
interface control and data presentation from application logic
2. Dynamic load
balancing
Through this separation, more clients are able to have access to wide variety of server application.
If bottlenecks in terms of performance occur, the server process can be moved to other servers at runtime.
Disadvantages of 3-Tier Architecture
1. There is an increased need for network traffic management, server load balancing and fault tolerance.
2. Current Tools in 3-tier architecture are relatively immature and are more complex.
Q.4.2 2015 - May [1] {C} (d) Descriptive
Answer the following question in brief:

Briefly explain three tiers in three tier architecture. (2 marks) Answer:
Three-tier architecture is a client-server software architecture pattern in which the user interface (presentation),
functional process logic (“business rules”), computer data storage and data access are developed and maintained as
independent modules, most often on separate platforms. A three-tier architecture is a client-server architecture in
which the functional process logic, data access, computer data storage and user interface are developed and
maintained as independent modules on separate platforms. Three-tier architecture is a software design pattern and a
well-established software architecture.
The Three Tiers in a three-tier architecture are:

1. Presentation Tier
2. Application Tier
3. Data Tier
Occupies the top level and displays information related to services available on a website. This tier communicates
with other tiers by sending results to the browser and other tiers in the network. It is thus used for input and output
of data or information.
Also called the middle tier, logic tier, business logic or logic tier, this tier is pulled from the presentation tier. It
controls application functionality by performing detailed processing. Application logics are used for processing data
according to the business rules.
It maintains data and provides data management service. Houses database servers where information is stored and
retrieved. Data in this tier is kept independent of application servers or business logic.

Q.4.3 2019 - Nov [5] (b) (ii) Descriptive Write a brief description of three tier architecture of Application Software.
(2 marks)
5
Architecture of Networked Systems: E - Commerce Architecture Vide Mobile Apps
Q.5.1 2011 - May [7] (c), RTP Descriptive Write short note on "Mobile Commerce". (2 marks) OR 2013 - May [5]
(a) Descriptive What is M-Commerce? Discuss the business areas affected by MCommerce technology. (4 marks)
OR 2017- Nov [7] (c) Short Notes
Write short notes on the following:

m-commerce (2 marks) Answer:
Mobile Commerce
Meaning Mobile commerce or m-commerce is about the explosion of application and service that are becoming
accessible from internet enable mobile devices. It involves new technologies. Service and business models. It is
quite different from traditional e-commerce. Mobile phones or PDAs impose very different constraints than desktop
computer. But they also open the door to a new applications and services.
M-commerce (mobile commerce) is the buying and selling of goods and services through wireless handheld devices
such as cellular telephone and personal digital assistants (PDAs) known as next generation ecommerce, m-
commerce enables users to a cess the internet without needing to find a place to plug in. The emerging technology
behind m-commerce, which is based on the Wireless Application Protocol (WAP), has made strides in countries,
where mobile devices equipped with web-ready micro-browsers are much more common.
Scope As content delivery over wireless devices are faster, more secure and scalable there is wide speculation that
M-commerce will surpass wireline e-commerce as the method of choice for digital commerce transactions.
The main payment methods used to enable M-commerce are:

1. Premium rate calling numbers;
2. Charging to the mobile telephone user’s bill; or
3. Deducting from their calling credit, either directly or via reverse changed SMS.
The Industries affected by m-commerce include:
☐ Financial Services, which includes mobile banking (when customers use their handheld devices to access their
account and pay their bills) as well as brokerage services, in which stock quotes can be displayed and trading
conducted from the same handheld device. ☐ Tele Communication in which service changes, bill payment and
account reviews can all be conducted from the same handheld device. ☐ Service/Retail, as consumers are given the
ability to place and pay for orders on the fly.
☐ Information Services, which include the delivery of financial news, sports figures and traffic updates to a single
mobile device. Space to write important points for revision
6 Work Flow Diagram for E-Commerce

Q.6.1 2018 - May [6] (a) Descriptive Draw Workflow Diagram for e-commerce and describe various steps and
corresponding activities involved in this diagram. (8 marks)
Answer:
(E-commerce Workflow Diagram)
Various steps and corresponding activities involved in above diagram S.No. Step
1. Customers login
2. Product / Service Selection
3. Customer places order
Activities
Few e-commerce merchants may allow same transactions to be done through phone, but the basic information flow
is e-mode.
Customer selects products / services from available options.
Order is placed for selected product/ service by customer. This step leads to next important activity PAYMENT
GATEWAY.
4. Payment Gateway Here Customer makes a selection of the payment method. In case payment methods is other
than cash on delivery (COD), the merchant
gateway
gets the update from payment
about payment realisation from customer. In case of COD, e-commerce vendor may do an additional check to
validate customer.
5. Dispatch and This process may be executed at two different
Shipping Process ends. First if product / service inventory is managed by e-commerce vendor, then dispatch shall
be initiated at merchant warehouse. Second, many e-commerce merchants allow third party vendors to sale through
merchant websites. For example: FLIPKART states that it has more than 1 lakh registered third party vendors on its
website.
6. Delivery Tracking Another key element denoting success of ecommerce business is timely delivery. Merchants
keep a track of this. All Merchants have provided their delivery staff with hand help devices, where the product /
service delivery to customers are immediately updated.
7. COD Tracking In case products are sold on COD payment mode, merchants need to have additional check on
matching delivery with payments.
Numerous services are of the nature which does not have a separate delivery need, for example booking a train
ticket through IRCTC. Co. in. In this case, there is no separate delivery of service, tickets booking updates are
generated as soon as payments are received by IRCTC. Co. in payment gateways.

7 Risks and Controls
Q.7.1 2018 - May [4] (b) Descriptive Explain various Control Objectives of e-commerce or m-commerce. (4
marks)
Answer:
Various Control Objectives of e-Commerce or m-Commerce are as follows:
1. Prevent
organizational costs of data Loss
2. Prevent loss from incorrect decision making
3. Prevent loss of Computer

Hardware,
Software and Personnel
4. Prevent from high costs of computer Error
5. Safeguard
assets from unauthorized
access
6. Ensure data integrity
Data is a critical resource of an organization for its present and future process and its ability to adapt and survive in a
changing environment.
Management and operational controls taken by managers involve detection, investigations and correction of out-of-
control processes. These highlevel decisions require accurate data to make quality decision rules.
These are critical resources of an organization which has a credible impact on its infrastructure and business
competitiveness.
In a computerized enterprise environment where many critical business processes are performed, a data error during
entry or process would cause great damage.
The information system assets (hardware, software, data files etc.) must be protected by a system of internal controls
from unauthorized access.
The importance to maintain integrity of data of an organization depends on the value of information, the extent of
access to the information and the value of data to the business from the perspective of the decision maker,
competition and the market environment.
7. System
Effectiveness Objectives
8. System
Efficiency Objectives
Effectiveness of a system is evaluated by auditing the characteristics and objective of the system to meet substantial
user requirements.
To optimize the use of various information system resources (machine time, peripherals, system software and
labour) along with the impact on its computing environment.

Q.7.2 2019 - Nov [4] (b) Descriptive Explain the concept of E-Commerce briefly. How can you protect your
ECommerce business from intrusion? (4 marks)
Q.7.3 RTP Descriptive As an IT consultant, advise some tips to an aspiring e-commerce vendor so that his business
can be protected from intrusion.
Answer:
Tips to protect any e-Commerce business from intrusion are as follows: Viruses
Hackers
Passwords
Check your website daily for viruses, the presence of which can result in the loss of valuable data.
Use software packages to carry out regular assessments of how vulnerable your website is to hackers.
Ensure employees change these regularly and that passwords set by former employees of your organization are
defunct.
Regular
Software
Updates
Sensitive Data
Your site should always be up to date with the newest versions of security software. If you fail to do this, you leave
your website vulnerable to attack.
Consider encrypting financial information and other confidential data (using encryption software). Hackers or third
parties will not be able to access encrypted data without a key. This is particularly relevant for any e-Commerce sites
that use a shopping cart system.
Know the details of your payment service provider contract. Space to write important points for revision
86 Digital Payments
Subsequent to demonetization, one of your elderly neighbour, who was using traditional digital methods of making
payments like cards, net banking etc., asked for your help to know about the various new methods of Digital
Payments. Identify and explain various new methods of Digital Payments for him. (6 marks)
Answer:
Various new methods of Digital Payments are explained as follows:
1. UPI Apps Unified Payment Interface (UPI) and retail payment banks are changing the very face of banking in
terms of moving most of banking to digital platforms using mobiles and apps. UPI is a system that powers multiple
bank accounts (of participating banks), several banking services features like fund transfer, and merchant payments
in a single mobile application. UPI
2. Immediate Payment
Service
(IMPS)
3. Mobile apps : BHIM

4. Mobile Wallets
or unified payment interface is a payment mode which is used to make fund transfers through the mobile app. User
can transfer funds between two accounts using UPI apps. User must register for mobile banking to use UPI apps.
Currently, this service is only available for android phone users. User need to download a UPI app and create a VPA
or UPI ID. There are too many good UPI apps available such as BHIM, SBI UPI app, HDFC UPI app, Imobile,
phonepe app etc.
It is an instant interbank electronic fund transfer service through mobile phones. It is also being extended through
other channels such as ATM, Internet Banking etc.
BHIM (Bharat Interface for Money) is a mobile App developed by National Payments Corporation of India (NPCI)
based on UPI (Unified Payment Interface). It facilitates e-payments directly through banks and supports all Indian
banks which use that platform. It is built on the Immediate Payment Service infrastructure and allows the user to
instantly transfer money between the bank accounts of any two parties. BHIM works on all mobile devices and
enables users to send or receive money to other UPI payment addresses by scanning QR code or using account
number with Indian Financial system code (IFSC) code or MMID (Mobile Money Identifier) code for users who do
not have a UPI-based bank account.
It is defined as virtual wallets that stores payment card information on a mobile device. Mobile Wallets provide a
convenient way for a user to make-in-store payments and can be used that merchants listed with the mobile wallet
service providers. There are mobile wallets like
5. Aadhar Enabled Payment Service (AEPS)
6. Unstructure Supplementary Service Data (USSD)
Paytm, Freecharge, Buddy, Mobikwik etc. Some of these are owned by banks and some are owned by private
companies.
Government of India, is planning to launch this in near future. AEPS is an Aadhar based digital payment mode.
Customer needs only his or her Aadhar number to pay to any merchant. AEPS allows bank to bank transactions. It
means the money you pay will be deducted from your account and credited to the payee’s account directly.
Customers will need to link their Aadhar numbers to their bank accounts. APES once launched can be used at POS
terminals also.
A revolutionary idea, where to make payments through mobiles there is neither need for internet nor any smart
phone. USSD banking or *99# Banking is a mobile banking based digital payment mode. User does not need to
have a smartphone or internet connection to use USSD banking S/he can easily use it with any normal feature
phone. USSD banking is as easy as checking of mobile balance. S/he can use this service for many financial and
non-financial operations such as checking balance, sending money, changing Mobile Banking personal
Identification number (MPIN) and getting Mobile Money Identifier (MMID).
96 Computing Technologies: Virtualization

Q.9.1 2014 - Nov [7] (a), 2017 - Nov [7] (b) Write short note on the following:
Hardware Virtualization
Short Notes
(2 marks each)
Answer:
Hardware Virtualization:
Hardware Virtualization refers to the creation of a virtual machine that acts like a real computer with an operating
system. Software executed on these virtual machines is separated from the underlying hardware resources. Hardware
virtualization can give root access to a virtual machine.

Q.9.2 2015 - May [7] (e), 2017 - May [7] (e) Write short note on the following:
Network Virtualization
Answer:
Network Virtualization:
☐ Virtualization is known as the process of creating logical computing
resources with the help of available physical resources.

☐ The network virtualization is accomplished by using virtualization
software.
☐ Network virtualization allows a large physical network to be provisioned
into multiple smaller logical networks.
☐ Network virtualization allows better utilization of hardware resources
between multiple users and group of users.
Short Notes
(2 marks each)
Q.9.3 2016 - May [7] (e) Short Notes Write short note on the following:
Storage Virtualization (2 marks)
Answer:
Storage Virtualization:
Storage virtualization is the apparent pooling of data from multiple storage devices, even different types of storage
devices, into what appears to be a single device that is managed from a central console. It helps the storage
administrator perform the tasks of backup, archiving and recovery more easily and in less time by disguising the
actual complexity of a Storage Area Network (SAN). Administrators can implement virtualization with software,
applications or by using hardware and software hybrid appliances. The servers connected to the storage system
aren’t aware of where the data really is. Storage virtualization is sometimes described as “abstracting the logical
storage from physical storage.”
of virtualization. Answer:
Virtualization Q.9.4 2016 - Nov [4] (b) Descriptive
Explain the Concept of Virtualization. Enumerate any 2 major applications (4 marks)
Virtualization refers to technologies designed to provide a layer of abstraction between computer hardware system
and the software running on them.
Application of Virtualization: 1. Testing and Training

2. Portable workspace
Virtualisation can give root access to a virtual machine. This can be very useful such as in kernel development and
operating system courses.
Recent technologies have used virtualization to create portable workspaces on devices like ipods and USB memory
sticks.

Q.9.5 2018 - Nov [5] (b) Descriptive Discuss various application areas of ‘Virtualization’. (4 marks)
Answer:
Application Areas of Virtualization: 1. Server
Consolidation
2. Disaster Recovery
3. Testing and Training
4. Portable
Applications
5. Portable
Workspaces
Virtual machines are used to consolidate many physical servers into fewer servers, which in turn host virtual
machines. Each physical server is reflected as a virtual machine “guest” residing on a virtual machine host system.
This is also known as “Physical-to virtual” or ‘P2V’ transformation.
Virtual machines can be used as “hot standby” environments for physical production servers. This changes the
classical “backup-and-restore” philosophy, by providing backup images that can “boot” into live virtual machines,
capable of taking over workload for a production server experiencing an outage.
Virtualisation can give root access to a virtual machine. This can be very useful such as in kernel development and
operating system courses.
Portable Applications are needed when running an application from a removable drive, without installing it on the
system’s main disk drive. Virtualization can be used to encapsulate the application with a redirection layer that
stores temporary files, windows registry entries and other state information in the application’s installations
directory and not within the system’s permanent file system.
Recent technologies have used virtualization to create portable workspaces on devices like iPods and USB memory
stick.

Differentiate between Storage Virtualisation and Hardware Virtualisation. Answer:

Storage Virtualization:
Storage virtualisation is the apparent pooling of data from multiple storage devices, even different types of storage
devices, into what appears to be a single device that is managed from a central console. Storage virtualization helps
the storage administrator perform the tasks of backup, archiving and recovery more easily and in less time by
disguising the actual complexity of a Storage Area Network (SAN). Administrators can implement virtualisation
with software applications or by using hardware and software hybrid appliances. The servers connected to the
storage system aren’t aware of where the data really is Storage virtualization is sometimes described as “abstracting
the logical storage from the physical storage”.
Hardware Virtualization:
Hardware Virtualization or Platform Virtualization refers to the creation of a virtual machine that acts like a real
computer with an operating system. Software executed on these virtual machines is separated from the underlying
hardware resources. For example, a computer that is running Microsoft Windows may host a virtual machine that
looks like a computer with the Linux operating system; based software that can be run on the virtual machine. The
basic idea of Hardware virtualization is to consolidate many small physical servers into one large physical server so
that the processor can be used more effectively.

1010 Computing Technologies: Grid Computing
Q.10.1 2014 - Nov [6] (b) Descriptive Briefly explain Grid Computing. What are possible reasons of using grid
computing? (4 marks)
Answer:
Grid Computing Grid Computing is a computer network in which each computer’s resources are shared with every
other computer in the system. In the ideal grid computing system, every resource is shared, turning a computer
network into a powerful supercomputer. With the right user interface, accessing a grid computing system is no
different than accessing a local machine’s resources.
Some of the reasons of using Grid Computing are as follows:
1. Civil Engineers collaborate to design, execute and analyze shake table experiments.
2. An Insurance company mines data from partner hospitals for fraud detection.
3. An Application service provider offloads excess load to a compute cycle provider.
4. An Enterprise configures internal & external resources to support eBusiness workload.
5.
Large-scale science and engineering are done through the interaction
of people, heterogeneous computing resources, information systems and instruments, all of which are geographically
and organizationally dispersed.

Q.10.2 2016 - May [6] (b) Descriptive Discuss the constraints that need to be taken into consideration while
developing a secured Grid Architecture. (4 marks)
Answer:
Constraints that need to be taken into account while developing a secured Grid Architecture:
1. Single Sign-on A user should authenticate once and they should
be able to acquire resources, use them, and release them and to communicate internally without any further
authentication.
2. Protec t i o n of Credentials
3. Inter operability with Local security situations
4. Exportability
5. S u p p o r t f o r Secure group communication
6. S u p p o r t f o r Multiple implementations
User passwords, private keys etc. should be protected.
Access to local resources should have local security policy at a local level. Despite of modifying every local
resource there is an inter domain security server for providing security to local resources.
The Code should be exportable i.e. they cannot use amount of encryption at a time.
There should be a minimum communication at a time.
In a communication there are number of processes which coordinate their activities. This coordination must be
secure and for this there is no such security policy.
There should be a security policy which should provide security to multiple sources based on public and private key
cryptography.

List out the application areas of Grid Computing. (4 marks) Answer:

Application Areas of Grid Computing:
• Civil engineers collaborate to design, execute and analyze shake table experiments.
• An Insurance company mines data from partner hospitals for fraud detection.
• An Application service provider offloads excess load to a compute cycle provider.
• An Enterprise configures internal and external resources to support ebusiness work load.
• Large - scale science and engineering are done through the interaction of people, heterogeneous computing
resources, information systems and instruments all of which are geographically and organizationally dispersed.
What are the benefits of Grid Computing?

Answer:
Benefits of Grid Computing are as follows:
Making use of Underutilized Resources
Resource Balancing
In most organizations, there are large amounts of underutilized computing resource. Grid computing provides a
framework for exploiting these underutilized resources. Grid computing (more specifically, a data grid) can be used
to aggregate this unused storage into a much larger virtual data store, possibly configured to achieve improved
performance and reliability over that of any single machine.
For applications that are grid-enabled, the grid can offer a resource balancing effect by scheduling grid jobs on
machines with low utilization. This feature of grid computing handles occasional peak loads of activity in parts of a
larger organization. An unexpected peak can be routed to relatively idle machines in the grid; and if the grid is
already fully utilized, the lowest priority work being performed on the grid can be suspended or even cancelled and
performed gain later to make room for the higher priority work.
Parallel CPU Capacity
Virtual Resources and Virtual

Organizations for Collaboration
Access to Additional Resources
The potential for usage of massive parallel CPU capacity is one of the most common visions and attractive features
of a grid. A CPU-intensive grid application can be thought of as many smaller subjobs, each executing on a different
machine in the grid. To the extent that these sub-jobs do not need to communicate with each other, the more scalable
the application becomes. A perfectly scalable application will, for example, finish in one tenth of the time if it uses
ten times the number of processors.
The users of the grid can be organized dynamically into several virtual organizations, each with different policy
requirements. These virtual organizations can share their resources such as data, specialized devices, software,
services, licenses, and so on, collectively as a larger grid. These resources are virtualized to give them a more
uniform interoperability among heterogeneous grid participants. The participants and users of the grid can be
members of several real and virtual organizations. The grid can help in enforcing security rules among them and
implement policies, which can resolve priorities for both resources and users.
In addition to CPU and storage resources, a grid can provide access to other resources as well. For example; if a user
needs to increase their total bandwidth to the Internet to implement a data mining search engine, the work can be
split among grid machines that have independent connections to the Internet. In this way, total searching capability
is multiplied, since each machine has a separate connection to the Internet.
Reliability
Management
High-end conventional expensive hardware to machines also use duplicate processors in such a way that when they
fail, one can be replaced without turning the other off. Power supplies and cooling systems are duplicated. The
systems are operated on special power sources that can start generators if utility power is interrupted. All of this
builds a reliable system, but at a great cost, due to the duplication of expensive components.
The goal to virtualize the resources on the grid and more uniformly handle heterogeneous systems create new
opportunities to better manage a larger, more distributed IT infrastructure. The grid offers management of priorities
among different projects. Aggregating utilization data over a larger set of projects can enhance an organization’s
ability to project future upgrade needs. When maintenance is required, grid work can be rerouted to other machines
without crippling the projects involved.
computing systems use
increase reliability. The

11 Computing Technologies: Cloud Computing
Q.11.1 2014 - Nov [3] (a) Descriptive What is cloud computing? Describe any three types of clouds in cloud
computing environment. (4 marks)
Answer:
Cloud Cloud computing is the use of various services such Computing as software development platforms, servers,
storage
and software over the internet often referred to as the “cloud”.

The cloud computing environment can consist of multiple types of clouds based on their deployment and
usage:
Public Clouds
Private/internal Clouds
Hybrid Clouds
The public cloud is made available to the general public or a large industry group. They are administrated by third
parties or vendors over the internet and services are offered on pay-per-use basis. It is widely used in the
development, deployment and management of enterprise.
This cloud computing environment resides within the boundaries of an organisation and is used exclusively for the
organisation’s benefits. They are built primarily by IT departments within enterprises who seek to optimize
utilization of infrastructure resources within the enterprise by provisioning the infrastructure with applications using
the concepts of grid and virtualization. The private cloud enables and enterprise to manage the infrastructure and
have more control.
It is a composition of two or more clouds (Private, Community or Public) and is maintained by both internal and
external providers. Though they maintain their unique identity, they are bound together by standardized data and
application portability. With a hybrid cloud organizations might run non-core applications in a public cloud.

Q.11.2 2014 - Nov [7] (e) Short Notes

Software as a Service (SAAS) (2 marks) Answer:
Software as a Service(SAAS): It includes a complete software offering on the cloud. Users can access a software
application hosted by the cloud vendor on pay- per-use basis. SAAS is a model of software deployment where an
application is hosted as a service provided to customers across the internet by removing the need to install and run
an application on a user’s own computer.

Q.11.3 2015 - May [6] (a)
Discuss any four key characteristics of Cloud Computing. OR 2017 - May [6] (a)
Explain any four characteristics of cloud computing. Answer:

Characteristic of Cloud Computing
Descriptive
(4 marks) Descriptive (4 marks)

1. On-demand self-service
2. Broad network access
3. Resource pooling
A consumer can unilaterally provision computing capabilities, such as server time and network storage, as needed
automatically without requiring human interaction with each service provider.
Capabilities are available over the network and accessed through standard mechanisms that promote use by
heterogeneous thin or thick client platforms e.g., mobile phones, tablets, laptops and workstations.
The provider’s computing resources are pooled to serve multiple consumers using a multi-tenant model, with
different physical and virtual resources
4. Rapid
elasticity
5. Measured service
dynamically assigned and reassigned according to consumer demand. There is a sense of location independence in
that the customer generally has no control or knowledge over the exact location of the provided resources but may
be able to specify location at a higher level of abstraction e.g., country, state or datacenter.
Capabilities can be elastically provisioned and released, in some cases automatically, to scale rapidly outward and
inward commensurate with demand. To the consumer, the capabilities available for provisioning often appear to be
unlimited and can be appropriated in any quantity at any time.
Cloud systems automatically control and optimize resource use by leveraging a metering capability at some level of
abstraction appropriate to the type of service (e.g., storage, processing, bandwidth and active user accounts).
Resource usage can be monitored, controlled and reported, providing transparency for the provider and consumer.

Q.11.4 2015 - Nov [6] (a), RTP Descriptive Discuss any four advantages of Cloud Computing. (4 marks)
Answer :
Cloud Computing
Meaning It is a network technique which helps organizations to
share resources using internet. Cloud Computing is the use of various services such as software development
platforms, servers, storage and software over the internet often referred to as the Cloud. A cloud is collection of
servers, applications, database,
Advantage of Cloud
Computing
documents, agreements, spreadsheets, storage capacity etc. which allows organizations to share these resources from
anywhere.
Cloud services allow individuals and business to use software and hardware that are managed by third parties.
Examples of cloud services include online file storage, social networking sites, web-mail and online business
applications. Cloud computing provides a shared pool of resources, including data storage space, networks,
computer processing power, and specialized corporate and user applications.
A cloud is normally setup by a big information technology company such as Google, Microsoft, Oracle, IBM,
Amazon etc. for providing cloud based services to their users.
1. With cloud computing an organization can use any
scale of information technology capacity immediately without investing in new hardware infrastructure or buying
new software licenses. Cloud computing is highly beneficial to business organizations who do not want to setup
expensive data centres but they want to use services of dedicated data centres from anywhere.
2. The consumer or user no longer has to be at a PC i.e. user can use any device for using applications.
3. The consumer does not purchase a specific version of software which is required to be configured for Smart
phones, PDAs etc. The consumer can download the required version from cloud.
4. The consumer can access multiple servers from anywhere on the globe without knowing where they are located.
Q.11.5 2016 - May [3] (b), RTP Descriptive Define the term ‘Cloud Computing Architecture’. Explain the two
parts of Cloud Computing Architecture. (4 marks)
Answer:
Cloud Computing Architecture
Meaning Cloud Computing Architectural refers to the components and subcomponents that typically consists of a
front end platform (fat client, thin client, mobile device), back end platforms (servers, storage), a cloud based
delivery and a network (Internet, Intranet, Intercloud). Combined these components make up cloud computing
architecture. It typically involves multiple cloud components communicating with each other over a tight or loose
coupling of cloud resources, services, middleware and software components.
Types of Cloud Computing Architecture:

1. Front End
2. Back End
The front end of the cloud computing system comprises of the client’s devices (or it may be a computer network)
and some applications that are needed for accessing the cloud computing system. All the cloud computing system do
not give the same interface to users.
For e.g. Web services like electronic mail programs use some existing web browsers such as Firefox, Microsoft’s
Internet explorer or Apple’s safari. Other types of systems have some unique applications which provide network
access to its clients.
Back End refers to some physical peripherals. In cloud computing, the back end is cloud itself which may
encompass various computer machines, data storage systems and servers. Groups of these clouds make a whole
cloud computing system. Theoretically, a cloud computing system can include practically any type of web
application program such as video games to applications for data processing, software development and
entertainment residing on its individual dedicated server for services. There are some set of rules, generally called as
protocols which are followed by this server and it users a special type of software known termed as middleware that
allow computers that are connected on networks to communicate with each other. If any cloud computing service
provider has many customers, then there’s likely to be very high demand for huge storage space. Many companies
that are service providers need hundreds of storage devices.

Q.11.6 2016 - Nov [1] {C} (a), RTP Descriptive
State two Features of Infrastructure as a Service (IaaS) model of Cloud Computing. (2 marks) Answer:
Features of IaaS Model of Cloud Computing:
☐ It provides clients with access to serve hardware, storage, bandwidth
and other fundamental computing resources.

☐ It provides access to shared resources on need basis without revealing
details like location and hardware to clients.
Q.11.7 2017 - May [7] (b) Short Notes Write short note on the following:
Cloud vs. Grid Computing (4 marks) [C.A.Final - II]
Answer:
Basis of Difference
1. Meaning
2. Structure Grid Computing
Grid Computing is provisioning of IT resources through a Control Server, to multiple locations, using webservices.
This uses Software to divide and carve out pieces of program, as a large system image, to many computer nodes.
the
4. Point of Failure
3. Device Use Generally, access to Grid Computing is through one type of device only, e.g. only Desktop PCs, or
only Laptops, etc.
Sometimes, if one part of the Software in a Node fails, the application in other Nodes r e l y i n g o n s u c h
Node/Software, also fail. However, this can be avoided using certain Passover technologies.
Cloud Computing refers to provisioning of IT-resources as a service through the Internet.
Resources are maintained in the Cloud/Internet for easy access, without installation of Software in the User Device.
Access to Cloud applications can be from a variety of devices - Desktop, Laptop, Smart phones, etc.
Data is stored in the Cloud/Internet, which can be retrieved as per Users requirement. Failure of one Node, will not
affect other Nodes.
5. Data
Storage
Suitable volumes economical if the data size is small.

only for large
of data. Not
Cloud Computing
Suitable for any size of data storage starting from 1 Byte to several Terabytes.
hardware to operate maintain them.
7. Focus A C o m p u t a t i o n a l f o c u s e s m a i n l y
6. Cost Higher Cost of Investment and Operating Expenses, due to need for large system images, and associated
and
G r i d o n computationally intensive operations.
Cloud Computing offers two t y p e s o f s e r v i c e levels/instances - Standard and High-CPU.
Q.11.8 2017 - May [7] (d) C o m p a r a t i v e l y l o w e r investment and operating expenses, in areas of H a r d
w a r e , S o f t w a r e , Training, Data Storage, etc.
Short Notes Write short note on the following Community Cloud

(4 marks) [C.A.Final - II] Answer:
Community Cloud:
Meaning It is a Cloud Infrastructure for the exclusive use by a specific community of Consumers from
Organizations that have shared concerns (e.g. Mission, Security R e q u i r e m e n t s , P o l i c y , a n d C o m p l i a
n c e Considerations).
Owned and 1. one or more of the organizations in the Managed by community,

2. a third party, or
3. some combination of them, and it may exist on or off premises.
Features 1. Collaborative and Distributive: No single Company has full control over the whole cloud. This is
usually distributive and hence better cooperation provides better results.
2. Partially Secure: Only a few organizations share the Cloud, so there is a possibility that the data can be leaked
from one organization to another, however it is safe from the external world.
3. Cost Effective: Community Cloud becomes cost effective since it is shared by many organisations. Space to write
Differentiate between Private Clouds and Community Clouds. Answer:

Private Clouds: This cloud computing environment resides within the
boundaries of an organization and is used exclusively for the organization’s benefits. These are also called internal
clouds. They are built primarily by IT departments within enterprises who seek to optimize utilization of
infrastructure resources within the enterprise by provisioning the infrastructure with applications using the concepts
of grid and virtualization. The benefit of a Private Cloud is that it enables an enterprise to manage the infrastructure
and have more control, but this comes at the cost of IT department creating a secure and scalable cloud.
Community Clouds: This is the sharing of computing infrastructure in between organizations of the same
community. For example, all Government organizations within India may share computing infrastructure on the
cloud to manage data. The risk is that data may be stored with the data of competitors.

12 Computing Technologies: Mobile Computing
Q.12.1 2014 - Nov [3] (b) Descriptive What is mobile computing? What are the three major concerns related to
mobile computing? (4 marks)
Answer:
Mobile Computing
Meaning Mobile computing is the use of portable computing
devices (such as laptop and hand-held computers) in conjunction with mobile communication technologies to enable
users to access the internet and data on their home or work computers from anywhere in the world. Mobile
computing is enabled by use of mobile devices (portable and hand held computing devices) such as PPA, laptops,
mobile phones, MP3 players, digital cameras, tablet PC and pamtops on a wireless network.
Mobile computing involves mobile communication. Mobile hardware and Mobile software which are
discussed as follows:
Mobile
Communication
Mobile
Hardware
Mobile communication refers to the infrastructure put in place to ensure that seamless and reliable communication
goes on. These would include devices such as Protocols, Services, Bandwidth and Portals necessary to facilitate and
support the stated services. The data format is also defined at this stage. Mobile hardware includes mobile devices or
device components that receive or access the service of mobility. They would range from portable laptops, smart
phones, tablet PC’s to Personal Digital Assistants. These devices will have receptors that are capable of sensing and
receiving signals. These devices are configured to operate in full-duplex whereby they are capable of sending and
receiving signals at the same time.
Mobile Mobile software is the actual program that runs on the Software mobile hardware. It deals with the
characteristics and requirements of mobile application. This is the engine of that mobile device. In other terms it is
the operating system of that appliance. It is the essential component that makes the mobile device operates.

Q.12.2 2016 - May [5] (b), RTP Descriptive
Describe the various benefits of Mobile Computing. (6 marks) Answer:
Mobile Computing Benefits:

! It provides mobile work force with remote access to work order details, such as work order location contact
information, required completion date asset history relevant warranties.
! It enables mobile sales personnel to update work order status in real time, facilitating excellent communication.
! It provides access to corporate service and information at any time.
! It provides remote access to corporate knowledge base at the job location.
! It enables to improve management effectiveness by enhancing information quality, information flow and ability to
control a mobile workforce.
Q.12.3 2017 - Nov [1] {C} (b) Descriptive Answer the following in brief:
Major concerns relating to Mobile Computing. (2 marks)
Answer:
Mobile Computing:
Mobile computing is the use of portable computing devices (such as laptop) in conjunction with mobile
communication technologies to enable user to access the internet and data on their home or work computers from
any where in the world. Mobile computing is enabled by use of mobile devices (portable and hand held computing
devices) such as PDA, Laptops, Mobile Phones, MP3 Players, Digital Cameras, Tablet PC and Palmtops on a
wireless network.
Major Concerns Relating to Mobile Computing are given as follows: ☐ Mobile computing has its fair share of
security concerns as any other
technology.
☐ Dangers of mispresentation - another problem playing mobile computing
are credential verification.
☐ Power consumption - when a power out let or portable generator is not
available, mobile computers must rely entirely on battery power. ☐ Potential health hazards.
Mobile computing is an important and rapidly evolving technology that allows users to transmit data from remote
location to other locations in mobility condition.
Being a communication expert, identify the limitations in current scenario that impede or hesitate users to use this
technology frequently.
(8 marks) Answer:
☐ Mobile computing is an important and rapidly evolving technology that allows users to transmit data from remote
locations to other locations in mobility condition.
The following are the limitations in current scenario that impede or hesitate users to use this technology
frequently.
1. Insufficient Bandwidth
Mobile Internet access is generally slower than direct cable connections using technologies such as General Packet
Radio Service (GPRS) and Enhanced Data for GSM (Global System for Mobile Communications) Evolution
(EDGE), and more recently 3G networks. These networks are usually available within range of commercial cell
phone towers. Higher speed wireless LANs are inexpensive but have very limited range.
2. Security Standards
When working mobile, one is dependent on public networks, requiring careful use of Virtual Private Network
(VPN). Security is a major concern while concerning the mobile computing standards on the fleet. One can easily
attack the VPN through a huge number of networks interconnected through the line.
3. Power
consumption
When a power outlet or portable generator is not available, mobile computers must rely entirely on battery power.
Combined with the compact size of many mobile devices, this often means unusually expensive batteries must be
used to obtain the necessary battery life. Mobile Computing should also look into Greener IT in such a way that it
saves the power or increases the battery life.
4. Transmission interferences
Weather, terrain and the range from the nearest signal point can all interfere with signal reception. Reception in
tunnels, some buildings and rural areas in often poor.
5. Potential health hazards

People who use mobile devices while driving is often distracted from driving and are thus assumed more likely to be
involved in traffic accidents. Cell phones may interfere with sensitive medical devices. There are allegations that cell
phone signals may cause health problems.
6. Human
interface with device
Screens and keyboards tend to be small, which may make them hard to use. Alternate input methods such as speech
or handwriting recognition require training.

13 Computing Technologies: Green Computing
Q.13.1 2015 - May [7] (d) Short Notes

Best practices of Green IT. (4 marks) Answer:
Best Practices of Green IT:
Green IT refers to the study and practice of establishing/using computers and IT resources in a more efficient,
environmentally friendly and responsible way. Computer consumes lots of raw materials and natural resources,
power to run them, raw materials to manufacture them and problem of disposing them at the end of their life cycle.
It is the study and practice of designing, manufacturing, using and disposing of computers, servers, associated
subsystems etc. in efficient and effective manner to mitigate negative effect on environment. The goals are to reduce
hazardous materials, maximize energy efficiency during product’s lifetime and promote recyclability of defunct
product and factory waste.

14 Computing Technologies: BYOD
Q.14.1 2016 - Nov [7] (e) Short Notes Write short note on the following:
(e) Advantages of BYOD (4 marks) [C.A. Final -II]
Answer:
Advantage of BYOD:
1. It provides flexible work spaces.
2. It leads to increased employees satisfaction.
3. It reduces the desktop cost.
4. It reduces maintenance cost and updation activity cost.

BYOD program can be classified.
Every business decision is accompanied with a set of threats and so is BYOD program. Explain briefly the areas in
which the risks associated with (4 marks)
15 Internet of Things
Q.15.1 2018 - May [1] {C} (c) Explain the following in brief: Internet of Things (IoT)
Descriptive
(4 marks)
Answer:
Internet of Things (IoT):
The Internet of Things (IoT) is a system of interrelated computing devices, mechanical and digital machines,
objects, animals or people that are provided with unique identifiers and the ability to transfer data over a network
without requiring human-to-human or human-to-computer interaction for example:
(i) Washing machines with WiFi networking capabilities can connect themselves to home Wi-Fi. Once these
machines are so connected, they can be controlled through machine manufacturer mobile APP from anywhere in the
World.
(ii) India’s living ledged of cricket appearing in an Advertisement for water purifier informs that, the water purifier
is WiFi enabled. When the purifying agents deplete in the machine, it connects to home WiFi and informs the
Service agents of the company.
This examples are from products being sold in India.

Q.15.2 2019 - May [1] {C} (b) Descriptive Write any two application areas of Internet of Things (IOT). (2 marks)
Answer:
Application areas of Internet of Things (IOT) :
1. All home appliances to be connected and that shall create a virtual home.
☐ Home owners can keep track of all activities in house through
their hand held devices.

☐ Home Security CCTV is also monitored through hand held
devices.
2. Office machines shall be connected through internet. ☐ Human resource managers shall be able to see inter how
many
people have had a cup of coffee from vending machine and how
many are present.
☐ How many printouts are being generated through office printer ?
16 Computing Technologies: Web 3.0

Q.16.1 2016 - Nov [7] (c) Short Notes
(c) Major Components of WEB 3.0 (4 marks) Answer:
Major Components of WEB 3.0
1. Semantic Web This provides the web user a common framework
that could be used to share and reuse the data across various applications, enterprises and community boundaries.
This allows the data and information to be readily intercepted by machines, so that the machines are able to take
contextual decisions on their own by finding, combining and acting upon relevant information on the web.
2. Web Services It is a software system that supports computer- to
computer interaction over the internet.

For example: the popular photo sharing website Flickr provides a web service that could be utilised and the
developers to programmatically interface with Flickr in order to search for images.

1 Introduction to E-Commerce
1. E-Commerce is the:
(a) Process of doing business electronically
(b) Electronic transaction between Buyer and Seller
(c) Electronic and exchange of goods between manufacturer and buyer (d) None of the above
2. Customer interaction under E-Commerce is.

(a) Face-to-Face
(b) Screen-to-Face
(c) Mobile-to-Face
(d) None
3. Under E-Commerce Resource focus on

(a) Supply side
(b) Demand side
(c) Both Demand and Supply side
(d) None
4. Benefit/Profit impact under E-Commerce:

(a) Increases the profit margin of manufacturers
(b) Above (a) allow manufacturers to give discounts to customers (c) Customers get better price
2 Components for E-Commerce
5. Effective Supply Chain Management need to ensure:

(a) They have enough and right goods suppliers
(b) Suppliers are financially and operational safe
(c) Suppliers are able to provide real-time stock inventory and delivery
time is very short

6. UPI stands for _________.
(a) Universal Payment Interface
(b) Unified Proximity Interface
(c) Unified Payment Interface
(d) Unified Payment Interaction
7. BHIM (Bharat Interface for Money) is an example of _________. (a) Mobile Hardware
(b) Mobile App
(c) Mobile Operating System
(d) Mobile Wallet
3 Architecture of Networked Systems
8. E-Commerce runs through.

(a) Computers
(b) Computers and Mobiles
(c) Network-connected system
(d) Satelite system
9. E-Commerce runs through networks-connected system. Networked system can have ________ architecture.
(a) Two tier
(b) Three tier
(c) Multi tier
10. Advantages of Two-tier systems is/are
(a) By having simple structure, it is easy to setup and maintain entire system smooth
(b) The system performance is higher because business logic and database are physically close
(c) Processing is shared between the client and server, more users could interact with system.
11. Three-tier software architecture does not consist:
(a) Presentation Tier
(b) System Tier
(c) Application Tier
(d) Database Tier
12. In which buying and selling of goods and services through wire less hand held devices such as cellular telephone
and personal digital assistants.
(a) E-Commerce
(b) M-Commerce
(c) B2 to B Business
(d) B2 to C Business
4 Risk and Controls
13. Risk associated with e-commerce transaction except:

(a) Privacy and Security
(b) Quality Issue
(c) Discount to the customer
(d) Delay in goods and Hidden Costs.
14. In an e-commerce environment controls are necessary for Seller/Buyers/Merchants except on

(a) Product Catalogues
(b) Discounts and Promotional Schemes
(c) Tax accounting for all product/services sold
(d) Accounting for cash received through Cash on Delivery mode of
Sales.
5 Guidelines and Law’s Governing E-Commerce
15. Commercial Laws Governing E-Commerce except (a) The Competition Act, 2002
(b) The Goods and Service Tax Act, 2017 (c) Hindu Marriage Act, 1955
(d) Foreign Exchange Management Act, 1999
16. E-Commerce are covered under few other Law as these transactions are done electronically
(a) Information Technology Act, 2000 (As amended 2008) (b) Reserve Bank of India, Act 1932
(c) Only (a)
6 Digital Payment
17. BHIM Stands for _______.

(a) Bharat Interface for Money
(b) Bharat Interpayment for Money
(c) Bharat Interaction for Money
(d) Bharat Interperson transaction for Money
18. National Payments Corporation of India (MPCI) developes Mobile App based on UPI.
(a) Paytm
(b) BHIM
(c) Phonepay
(d) Mobi kwick
19. IMPS stands for:

(a) Interperson Payment System
(b) Immediate Payment System
(c) Immediate payment Service
20. An instant interbank electronic fund transfer service through mobile phones, and is also being extended through
other channels such as ATM, Internet Banking etc. is known as
(a) UPI
(b) BHIM
(c) IMPS
(d) Internet banking
21. BHIM works on all mobile devices and enable users to send or receive money to other UPI payment addresses
by:
(a) Scanning Q Code
(b) Using account number with IFSC
(c) Using MMID (Mobile Money Identifier Code)
(d) Any one of the above mode
22. USSD Stands for _________.

(a) Unified Structure Service Data
(b) Unstructure Systematic Service Data
(c) Unstructure Supplementary Service Data
(d) Unified Supplementary Service Data
7 Computing Technologies
23. __________ means to create a virtual version of a device or resource, such as a server, storage device, network
or even an operating system where the framework divides the resource into one or more execution environments.
(a) Visualisation
(b) Virtualisation
(c) Vertilisation
(d) Verification
24. Concept of virtuatisation lies in partitioning which divides a single physical server into ________ logical
servers.
(a) Two
(b) Four
(c) Eight
(d) Multiple
25. Virtualisation refers to the creation of a virtual machine that acts like a real computer with an operating system is
called _______. (a) Software Virtualisation
(b) Hardware Virtualisation
(c) Platform Virtualisation
(d) Either (b) or (c)
26. __________ is a computer network in which each computer’s resources are shared with every other computer in
the system.
(a) Grid Computing
(b) Cloud Computing
(c) Hybrid Computing
(d) Mobile Computing
27. Combination of both at least one private (internal) and at least one public (external) cloud computing
environments - usually, consisting of infrastructure, platforms and applications, is known as.
(a) Central Cloud
(b) Hybrid Cloud
(c) Community Cloud
(d) Combination of Cloud
28. The technology that allows transmission of data via a computer without having to be connected to a fixed
physical link, is called _________. (a) Grid computing
(b) Cloud computing
(c) Hybrid computing
(d) Mobile computing
29. GSM Stands for __________.

(a) Global Service for Mobile Communication
(b) Global System for Mobile Communication
(c) Global System for Mobile Code
(d) Global Semanties for Mobile Communication
30. Green Computing is also known as _________.

(a) Green Accounting
(b) Green Evaluation
(c) Green Financing
(d) Green IT
31. Study and practice of environmentally sustainable computing or IT, is known as ___________.
(a) Grid Computing
(b) Mobile Computing
(c) Green Computing
(d) Cloud Computing
32. Machine Learning is a type of ________ that provides computers with the ability to learn without being
explicitly programmed and focuses on the development of computer programs that can change when exposed to new
data.
(a) Mental Ability
(b) Computer Ability
(c) Artificial Intelligence
(d) Software Intelligence
ANSWER
1. (a) 2. (b) 3. (b) 4. (d) 5. (d) 6. (c) 7. (b) 8. (c) 9. (d) 10. (d) 11. (b) 12. (b) 13. (c) 14. (c) 15. (c) 16. (d) 17. (a) 18.
(b) 19. (c) 20. (c) 21. (d) 22. (c) 23. (b) 24. (d) 25. (d) 26. (a) 27. (b) 28. (d) 29. (b) 30. (d) 31. (c) 32. (c)
CHAPTER
5Core Banking Systems

Chapter Comprises: ☹Overview of Banking Services and Related IT Risk and Controls ☹Component and
Architecture of CBS ☹Core Business Processes Flow and relevant Risks and Controls ☹Reporting Systems and MIS,
Data Analytics & Business Intelligence ☹Applicable Regulatory and Compliance Requirements.

Legend
book. 7.293
TIMEMANAGER
i.e.....
1. Budgeted
2. Actual
3. Variance (1-2)
............ Day 1 16
Instant
Revision (in hours)
i.e.... i.e. on ........... ...........
Day 2 Day 8
4.00 3.12
. . . . . . . . . Plan and Manage your Time Periodic Revision
(in hours)

2.20 1.35 1.35

4.1 1.4, 2.1, 4.1
1
Overview of Banking Services and Related IT Risk and Controls
Automation of business processes has introduced new types of risks in banking service. You being the Branch
Manager of a CBS branch, list out some of the internal controls you think to be implemented in your branch.
(6 marks)
Answer:
Automation of business processes has introduced new types of risks in banking service. As a Branch Manager of a
CBS Branch, following are some of the internal controls to be implemented in the branch:
☐ Work of one staff member is invariably supervised/checked by another
staff member, irrespective of the nature of work (Maker-checker process) ☐ A System of job rotation among staff
exists.
☐ Financial and administrative powers of each official position is fixed and
communicated to all persons concerned.

☐ Branch Managers must send periodic confirmation to their controlling
authority on compliance of the laid down systems and procedures. ☐ All books are to be balanced periodically.
Balancing is to be confirmed
by an authorised official.
☐ Details of lost Security forms are immediately advised to controlling so
that they can exercise caution.
☐ Fraud prone items like currency, Valuables, draft forms, term deposit
receipts, traveler’s cheques and other such security forms are in the
custody of at least two officials to the Branch.
Information Technology (IT) risks can be reduced by implementing the right type and level of control in automated
environment that is done by integrated controls into information technology. Being an IT consultant, suggest various
steps of IT related control to a branch manager of a bank.
(6 marks)
Answer:
Information Technology (IT) risks can be reduced by implementing the right type and level of control in automated
environment that is done by integrated controls into information technology.
So being an IT consultant, following are the various steps of IT related Control suggested to a Branch
Manager of a bank.
1. The system maintains a record of all log-ins and log - outs. 2. If the transaction is sought to be posted to a dormant
(or inoperative)
account, the processing is halted and can be proceeded with only with a supervisory password.
3. The system checks whether the amount to be withdrawn is within the drawing power.
4. Access to the system is available only between stipulated hours and specified days only.
5. The system flashes a message if the balance in a lien account would fall below the lien amount after the
processing of the transaction.
6. Exception situations such as limit excess, reactivating dormant accounts, etc. can be handled only with a valid
supervisory level password.
7. A user time out is prescribed. This means that after a user long-in and there is no activity for a pre-determined
time, the user is automatically logged - out of the system.
8. Individual users can access only specified directories and files. Users should be given access only on a “need-to-
know basis” based on their role in the bank. This is applicable for internal users of the bank and customers.
9. Once, the end of the day process is over, the ledgers cannot be opened without a supervisory level password.
General controls are pervasive controls and apply to all systems components, processes and data for a given
enterprise or systems environment. As an IT consultant, discuss some of the controls covered under general controls
which you would like to ensure for a given enterprise. (6 marks)
Answer:
General controls are pervasive controls and apply to all systems components, processes and data for a given
enterprise or systems environment.
General controls includes but are not limited to:
1. Information Security Policy
2. Administration, Access, and Authentication
3. Separation of key IT functions
4. Management of Systems
Acquisitions and Implementation
5. Change
Management
The security policy is approved by the senior management and encompasses all areas of operations of bank and
drives access to information across the enterprise and other stakeholders.
It should be administered with appropriate policies and procedures clearly defining the levels. of access to
information and authentication of users.
Secure deployment of IT requires the bank to have separate IT organisation structure with key demarcation of duties
for different personnel within IT department and to ensure that there are no SOD conflicts.
Software solution for CBS are most developed acquired and implemented. Hence, process of acquisition and
should be implementation of systems properly controlled.
IT solutions deployed and components must be changed in tune with changing needs as per t e c h n o l o g y
processes,
environment,
regulatory and requirements. These changes impact the live its various
changes in b u s i n e s s compliance
6. Backup, Recovery and Business Continuity
7. Proper Development and Implementation of Applications

Software
8. Confidentiality, Integrity and

Availability of Software and data files
environment of banking services. Hence, change management process should be implemented to ensure smooth
transition to new environments covering all key changes including hardware, Software and business processes. All
changes must be properly approved by the management, before implementation.
Heavy dependence on IT and criticality makes it imperative that resilience of banking operations should be ensured
by having appropriate business continuity including backup recovery and off-site data centre.
Application software drives the business processes of the banks. These solutions in case developed and implemented
must be properly controlled by using standard software development process.
Security is implemented to ensure Confidentiality, Integrity and Availability (CIA) of information. Confidentiality
refers to protection of critical information. Integrity refers to ensuring authenticity of information at all stages of
processing. Availability refers to ensuring availability of information to users when required. IT operations refer to
how IT is deployed, implemented and maintained within the bank. All IT operations need to be controlled by
appropriate policies and procedures.
9. Incident response and management
There may be various incidents created due to failure of IT. These incidents need to be appropriately responsed and
managed as per pre-defined policies and procedures.

Q.1.4 RTP Descriptive Analyse new set of IT risks and challenges associated with the businesses and standards that
the banks should consider? Answer:
The business processes and standards adapted by Banks should consider these new set of IT risks and challenges:
1. Frequent Changes or Obsolescence of Technology
2. Multiplicity and Complexity of Systems
Technology keeps on evolving and changing constantly and becomes obsolete very quickly. Hence, there is always a
risk that the investment in technology solutions unless properly planned may result in loss to bank due to risk of
obsolescence.
The core of banking services remain same but by using technology the way these banking products and services are
provided changes drastically. The Technology architecture used for services could include multiple digital platforms
and is quite complex. Hence, this requires the bank personnel to have personnel with requisite technology skills or
the management of the bank’s technology could be outsourced to a company having the relevant skill set.
3. Different Types of Controls for

Different Types of Technologies/ Systems
4. Proper Alignment with Business Objectives and Legal/ Regulatory Requirements

5. Dependence on Vendors Due to Outsourcing of IT Services
6. Vendor Related Concentration Risk

7. Segregation of Duties (SoD)
Deployment of Technology gives rise to new types of risks which are explained later in this chapter. These risks
need to be mitigated by relevant controls as applicable to the technology/information systems deployed in the bank.
Banks must ensure that the CBS and allied systems implemented, cater to all the business objectives and needs of
the bank, in addition to the legal/regulatory requirements envisaged.
In a CBS environment, the bank requires staff with specialized domain skills to manage IT deployed by the bank.
Hence, these services could be outsourced to vendors and there is heavy dependency on vendors and gives rise to
vendor risks which should be managed by proper contracts, controls and monitoring.
There may not one but multiple vendors providing different services. For example, network, hardware, system
software and banking software services may be provided by different vendors or these services may be provided by
a single vendor. Both these situations result in higher risks due to heavy dependence on vendors.
Banks have a highly-defined organization structure with clearly defined roles, authority and responsibility. The
segregation of duties as per organization structure should be clearly mapped in the CBS used by the bank. This is
8. External Threats Leading to Cyber Frauds/ Crime
9. Higher Impact Due to Intentional or Unintentional Acts of Internal

Employees
10. New Social Engineering Techniques Employed to acquire

Confidential Credentials
a high-risk area since any SoD conflicts can be a potential vulnerability for fraudulent activities. For example, if a
single employee can initiate, authorize and disburse a loan the possibility of misuse cannot be ignored.
The CBS environment provides access to customers anytime, anywhere using internet. Hence, information system
which was earlier accessible only within and to the employees of the bank is now exposed as it is open to be
accessed by anyone from anywhere. Making the information available is business imperative but this is also fraught
with risks of increased threats from hackers and others who could access the software to commit frauds/crime.
Employees in a technology environment are the weakest link in an enterprise. This is much more relevant in bank as
banks deal directly with money. Hence, the employee acts done intentionally or unintentionally may compromise
security of the IT environment.
Fraudsters use new social engineering techniques such as socializing with employees and extracting information
which is used unauthorizedly to commit frauds. For example: extracting information about passwords from bank’s
staff acting as genuine customer and using it to commit frauds.
Explain the Internal controls in banks?

Answer:
Risks are mitigated by implementing internal controls as appropriate to the business environment. These types of
controls must be integrated in the IT solution implemented at the bank’s branches. Some examples of internal
controls in bank branch are given here:
• Work of one staff member is invariably supervised/ checked by another
staff member, irrespective of the nature of work (Maker-Checker process).

• A system of job rotation among staff exists.
• Financial and administrative powers of each official/ position is fixed and communicated to all persons concerned.
• Branch managers must send periodic confirmation to their controlling authority on compliance of the laid down
systems and procedures.
• All books are to be balanced periodically. Balancing is to be confirmed by an authorized official.
• Details of lost security forms are immediately advised to controlling so that they can exercise caution.
• Fraud prone items like currency, valuables, draft forms, term deposit receipts, traveler’s cheques and other such
security forms are in the custody of at least two officials of the branch.
2
Component and Architecture of CBS: Overview
Q.2.1 2015 - Nov [7] (e), RTP Short Notes Write short note on Core Banking System (2 marks)
Answer:
CORE stands for “Centralized Online Real time Environment”. Core banking system may be defined as the set of
basic software components that manage the services provided by a bank to its customers through its branches. In
other words, the platform where communication technology and information technology are managed to suit core
needs of banking is known as core banking solutions. This technologies has cut down time, working at a same time
as on dissimilar issue and escalating usefulness. Here, computer software is developed to perform core operation of
banking like recording of transactions, passbook maintenance and interest calculation on loans and deposits,
customer records, balance of payments and withdrawal.

Q.2.2 2016 - May [7] (d) Short Notes

Nucleus Finn One (2 marks) Answer:
Nucleus FinnOne:
☐ The Nucleus FinnOne banking suite, made and marketed by India based
company Nucleus software, comes with a wide variety of integrated applications that cover different aspects of
global web banking. These applications include a loan orientation system that automates and manages the
processing of many type of loans, a credit card application system with strong credit and fraud detection tools and a
multilingual web-based collection service that organizes legal payouts.
☐ FinnOne is a web based global banking product designed to support banks and financial solution companies in
dealing with assets, liabilities core financial accounting and customer service. The solution is wholly focused on
banking and financial services spanning across solutions in the areas of Retail and Corporate Banking, Cash
Management, Relationship Banking, CRM, Credit Risk, EAI, Internet Banking etc.
3 CBS Architecture
Explain various key aspects in-built into the architecture of a Core Banking System. (4 marks)
Answer:
Some key aspects in built into architecture of a core Banking System are as follows:
1. Information flow
Facilitates information flow within the bank and improves the speed and accuracy of decision-making. It deploys
systems that streamline integration and unite corporate information to create a comprehensive analytical
infrastructure.
2. Customer centric
Through a holistic core banking architecture, enables banks to target customers with the right offers at the right time
with the right channel to increase profitability.
3. Regulatory compliance
4. Resource optimization
Compliance in case of banks is complex and expensive. CBS has built-in and regularly updated regulatory platform
which will ensure compliance.
Optimizes utilization of information and resources of banks and lowers costs through improved asset reusability,
faster turnaround times, faster processing and increased accuracy.
4
Component and Architecture of CBS: Core Features of CBS
Q.4.1 2009 - May [5] (a) Descriptive What do you understand by the term EFT? Describe in brief, the different
EFT systems in operations. (5 marks)
OR 2011 - Nov [7] (d) Objective/Short Describe briefly:
Electronic Fund Transfer (2 marks) Answer:
Electronic Fund Transfer (EFT)
Meaning Electronic fund transfer (EFT) represents the way the business can receive direct deposit of all payments
from the financial institution to the company bank account. Once the user signs up, money comes to him directly. It
is fast, safe and means that the money will be confirmed in user’s bank account quicker that he had to wait for the
mail, deposit the cheque and wait for the funds to become available.
Following are some examples of EFT systems in operation:
1. Automated
Teller Machines (ATMs)
2. Point of sale (POS)

Transactions
These machines are used with a debit or EFT card and a code, which is often called a personal identification number
or PIN.
Some debit or EFT cards (referred to as check card) can be used when shopping, to allow the transfer of funds from
the consumers A/c to the merchant’s.
3. Pre-authorized Transfer
4. Telephone Transfers
Under this method funds are automatically deposited or withdrawn from an individual’s account, when the account
holder authorizes the bank or a third party to do so.
Funds can be transferred from one account to another from saving to checking e.g. can order payments of specific
bills by phone.

Q.4.2 2018 - Nov [1] (e) Descriptive
Define ‘Proxy Server’. (2 marks) Answer:

Proxy Server:
A proxy server is a computer that offers a computer network service to allow clients to make indirect network
connections to other network services. A client connects to the proxy server, and then requests a connection, file, or
other resource available on a different server. The proxy provides the resource either by connecting to the specified
server or by serving it from a cache. In some cases, the proxy may alter the client’s request or the server’s response
for various purposes.

Core Business Processes Flow and Relevant 5 Risks and Controls: Business Process Flow of Credit Cards
Q.5.1 2016 - Nov [4] (a) Descriptive Briefly describe the four stages of processing Credit Card transactions. (4
marks)
2. Batching
3. Clearing
4. Funding Answer:
Stages of Processing Credit Card Transactions
1. Authorisation A card holder requests a purchase from the merchant the request is submitted to acquirer. The
acquirer sends a request to the issuer to authorise a transaction. An authorisation code is sent to the acquirer. The
acquirer authorises the transaction the card holder receives product.
The merchant stores all the day authorised sales in a batch the merchant sends the batch to the acquirer at the end of
the day to receive payment.
The batch is sent through the card network to request payment from the issuer. The card network distributes each
transaction to the appropriate issuer. The issuer subtracts its interchange fees, which are shared with the card
network, and transfers the amount. The card network routes the amount to the acquirer.
The acquirer subtracts its discount rate and pays the merchant the remainder. The card holder is billed. Space to
write important points for revision
Now-a-days, Credit Cards are extensively being used for payment purpose. As a consultant to credit card section of
a bank, advise the risks involved in the credit card process. (4 marks)
Answer:
Following are the risks involved in the Credit Card process : 1. Credit Line setup is unauthorized and not in line
with the banks policy. 2. Masters defined for the customer are not in accordance with the PreDisbursement
Certificate
3. Credit line setup can be breached.

4. Inaccurate interest/charge being calculated in the Credit Card System.
5. Inaccurate reconciliations performed.
Core Business Processes Flow and Relevant 6 Risks and Controls: e-Commerce Transaction Processing
Discuss any four dimensions of e-commerce Security. (4 marks) Answer :

Different dimensions of e-Commerce security are:
1. Integrity The ability to ensure that information being displayed on a web site or transmitted or received over the
internet has not been altered in any way by an unauthorized party.
2. Non-repudiation The ability to ensure that e-commerce participants do not deny (i.e. repudiate) their online
actions.
3. Authenticity The ability to identify the identity of a person or entity with whom we are dealing in the internet.
4. Confidentiality The ability to ensure that messages and data are available only to those who are authorized to
view them.
5. Privacy The ability to control the use of information about oneself.
6. Availability The ability to ensure that an e-commerce site continues to function as intended.
Q.6.2 2014 - May [1] {C} (e) Distinguish Between
Answer the following question briefly:

What is the difference between Integrity and Authenticity with reference to E-Commerce? (2 marks)
Answer:
Integrity: The ability to ensure that information being displayed on website or transmitted or received over the
internet has not been altered in any way by an unauthorized party.
Authenticity: The ability to identify the identity of a person or entity with whom we are dealing in the internet.

Q.6.3 2014 - May [5] (b) Descriptive Explain step by step online transaction processing in an e-commerce
environment.
Answer :
1. Order Placed
(4 marks)
Customer places order through secure connection on website or merchant managed keys in transaction.
2. Authorization Request
3. Authorization Response
Payment gateway receives the transaction through the secure internet connection ,encrypts it, and submits an
authorization to the credit card issuing bank.
Credit card issuing bank either approves or declines the request and sends a response back through the payment
gateway to the website.
4. Order Fulfilled Once approved the merchant processes and ships the customers order.
5. Settlement Request
The payment gateway sends a settlement request to the merchant account provider each day that transactions are
processed.
6. Settlement Deposited
The merchant account provider deposits the amount for each settlement into the merchant’s bank account. Usually it
takes 24-48 hours.

7 IT Related Risks and Mitigating Controls
In line with the suggestions of RBI, M/s. ABC Bank is planning to obtain ISO 27001 : 2013 certification for its
Information Security Management System. As an IS Auditor, you are required to prepare a sample list of Risks w.r.t.
Information Security for the Bank. (6 marks)
Answer:
A Sample list of Risks w.r.t. Information Security for the Bank: 1. Significant information resources may be
modified inappropriately,
disclosed without authorization, and/or unavailable when needed. (e.g., they may be deleted without authorization).
2. Lack of management direction and commitment to protect information assets.

3. Potential Loss of Confidentiality, availability and integrity of data and system.
4. User accountability is not established.
5. It is easier for unauthorized users to guess the password of an authorized user and assess the system and/or data.
This may result in loss of confidentiality, availability and integrity of data and system.
6. Unauthorized viewing, modification or copying of data and/or unauthorized use, modification or denial of service
in the system.
7. Security breaches may go undetected.
8. Inadequate preventive measure for key server and IT system in case of environmental threat like heat, humidity,
fire, flood etc.
9. Unauthorized system or data access, loss and modification due to virus, worms and Trojans.
8
Q.8.1 2014 - Nov [1] {C} (d) Distinguish Between Answer the following question in brief:
What is the difference between electronic cheque and paper cheque? (2 marks)
Answer :
Difference between Electronic Cheque and Paper Cheque Electronic Cheque Paper Cheque
1. Electronic cheque is in electronic form
Paper cheque is in paper form.
2. Electronic cheque includes credit card, debit card etc.

Paper cheque includes crossed cheque, bearer cheque etc.
3. Electronic cheque functions as a message to the sender’s bank to transfer funds.

Paper cheque message is given initially to the receiver who in turn endorses the cheque and presents it to the bank to
obtain funds.

Q.8.2 2019 - Nov [1] {C} (a)
Describe any three key functions of RBI.
Descriptive
(3 marks)
Banks face the challenge of addressing the threat of money laundering on multiple fronts as banks can be used as
primary means for transfer of money across geographies. In light of the above statement, discuss the Money
Laundering process and its different stages. (6 marks)
Q.8.4 2019 - Nov [5] (b) (i) Descriptive What do you understand by Regulatory Compliance? (2 marks)
1
Overview of Banking Services and Related IT Risk and Controls
1. ________ is a technology which allows machines to read and process cheques enabling thousands of cheque
transactions in a short-time. (a) IFSC
(b) MICR
(c) ECS
(d) SIP
2. MICR stands for _____________.

(a) Magnetic Ink Character Record
(b) Magnetic Ink Character Register
(c) Magnetic Ink Character Recognition
(d) Magnetic Inter Clearing Route
3. ECS stands for __________.

(a) Electronic Clearing Service
(b) Electric Clearing Service
(c) Electric Clearing System
(d) Easy Clearing System
4. The dependence on technology in banking for most of the key banking services and processes has led to various
challenges except: (a) Frequent changes or obsolescence of technology
(b) Multiplicity and complexity of systems
(c) Facilitate ECS
(d) Dependence on vendors due to out sourcing of IT services
2 Component and Architecture of CBS
5. __________ refers to a common IT solution wherein a central shared database supports the entire banking
application.
(a) MICR
(b) ECS
(c) CBC
(d) CIF
6. Popular CBS Software except:

(a) Buys Bee
(b) Finele
(c) Finn One
(d) Bank Mate
7. State the feature(s) of Core Banking Solution:

(a) On-line real-time processing
(b) All databases updated simultaneously
(c) Anytime, anywhere access to customers and vendors (d) All of the above
8. Which of the following is not a core banking services?

(a) Advance
(b) Letters of Credit
(c) Reporting
(d) Deposits
9. Which of the following is an application control?

(a) Configuring system software
(b) Transaction Logging
(c) Setting parameters in masters
(d) Back up of data
3
Core Business Processes Flow and Relevant Risks and Controls
10. Which of the following is a General Control?

(a) Setting Database Security
(b) Edit Checks
(c) Completeness Check
(d) For
11. Which of the following in one of the primary objective of implementing controls?
(a) Frauds are detecting pro-actively
(b) All computer errors are prevented
(c) Undesired events are prevented or detected and corrected (d) Revenue targets are achieved
12. Which of the following best defines a risk?

(a) Undesired events are prevented
(b) Threat exploits vulnerability
(c) Physical threats are documented
(d) Inherent vulnerabilities are identified
13. Which is not a Mortgage Loan?

(a) Home Loan
(b) Personal Loan
(c) Top Up Loan
(d) Loans for Under Construction Property
14. IBAS Stands for?

(a) Internet Banking Application Server
(b) Internet Banking Application System
(c) Inter Banking Adjustment System
(d) International Banking Adjustment System
15. Risk associated with Core Banking System (CBS) except. (a) Several Software interfaces across diverse network
(b) Authorisation and Authentication process
(c) On-Line real time processing
(d) User Identity Management
4
Reporting Systems and MIS, Data Analytics and Business Intelligence
16. __________ is a comprehensive set of reform measures, developed by the Basel Committee on Banking
Supervision, to strengthen the regulation, supervision and risk management of the Banking Sector. (a) Basel I
(b) Basel II
(c) Basel III
(d) Basel IV
17. Artificial neural network logic is also known as.

(a) Artificial Network
(b) Artificial Intelligence
(c) Algorithms Intelligence
(d) Application Intelligence
5
18. All Banking firms including Cooperative Banks in India are regulated by the legislation:
(a) Banking Regulation Act, 1949
(b) Prevention of Money Laundering Act, 2002
(c) Reserve Bank of India Act, 1934
19. Which of the following is not computer related offence as per in IT Act, 2000?
(a) Identify theft
(b) Stealing computer resource
(c) Violation of privacy
(d) Stealing of mobile.
20. Which of the following best defines Money Laundering?

(a) Gifting immoveable property to relatives
(b) Converting proceeds of crime and projecting it as untainted property (c) Tax Planning as per provision of IT Act
(d) Transferring fixed deposit to employees
21. Which is the primary objective of SPDI?

(a) Protecting Computer Software
(b) Securing Critical Information
(c) Securing Personal Information
(d) Identifying Sensitive Information
22. Which of the following is a cyber crime?

(a) Physical theft at branch
(b) Breaking into ATM
(c) Altering name in cheque
(d) Software piracy
23. The Information Technology Act was passed in 2000 and amended in 2008. But the Information Technology Act
Rules were passed in (a) 2009
(b) 2010
(c) 2011
(d) 2012
ANSWER
1. (b) 2. (c) 3. (a) 4. (c) 5. (c) 6. (a) 7. (d) 8. (c) 9. (b) 10. (a) 11. (c) 12. (b) 13. (b) 14. (a) 15. (c) 16. (c) 17. (b) 18.
(a) 19. (d) 20. (b) 21. (c) 22. (d) 23. (c)
May - 2019
CA Inter Gr. II Paper - 7
(New Syllabus)
Enterprise Information Systems and Management
GENERAL INSTRUCTION TO CANDIDATES

1. The question paper comprises two parts, Part I and Part II. 2. Part I comprises Multiple Choice Questions
(MCQs).
PART - II
1. Question paper comprises 5 questions. Answer Question No. 1 which is compulsory and any 3 out of the
remaining 4 questions. Section - A
1. (a) Corporate governance is the framework of rules and practices, by which a board of directors ensures
accountability, fairness and transparency in a company’s relationship with all its stakeholders. List out the rules and
procedures that constitute corporate governance framework. (3 marks)
(b) Write any two application areas of Internet of Things (IOT). (2 marks)
2. (a) A company XYZ is implementing the software by using the program development life cycle methodology and
applying control phases in parallel to the development phases to monitor the progress against plan. Being an IT
developer, design the various phases and their controls for program development life cycle. (6 marks)
(b) Customer Relationship Management (CRM) is a system which aims at improving relationship with customers.
Briefly explain any four key benefits of CRM module of ERP.
(4 marks) 3. (a) Information Technology (IT) risks can be reduced by implementing the right type and level of
control in automated environment that is done by integrated controls into information technology.
7.319
Being an IT consultant, suggest various steps of IT related control to a branch manager of a bank. (6 marks) (b) A
business organization is planning to increase the accuracy of information transferred and certifies the repeatability of
the value added task performed by the automation of business.
Being a management consultant, identify any four major benefits that the organization can achieve through the
automation of a business process. (4 marks)
4. (a) General controls are pervasive controls and apply to all systems components, processes and data for a given
enterprise or systems environment.
As an IT consultant, discuss some of the controls covered under general controls which you would like to ensure for
a given enterprise. (6 marks)
(b) Discuss the key activities, which require special attention for auditing the user access provisioning. (4 marks) 5.
(a) Mobile computing is an important and rapidly evolving technology that allows users to transmit data from
remote location to other locations in mobility condition.
Being a communication expert, identify the limitations in current scenario that impede or hesitate users to use this
technology frequently. (8 marks)
(b) A business organization is shifting from traditional accounting system to computerized accounting system. The
organization needs to store the data that is relatively permanent and not expected to change frequently in accounting
system.
As a financial expert, suggest any two types of such data in accounting system. (2 marks)
OR
Major features of an ERP system is central database. Which are the options possible to different users while
assigning access to it ? (2 marks)
Question Paper O 7.321
November - 2019
(New Syllabus)
Enterprise Information Systems and Management
(MCQs).
Question paper comprises 5 questions. Answer Question No. 1 which is compulsory and any 3 out of the remaining
4 questions.
PART - II
Section - A
1. (a) Describe any three key functions of RBI. (3 marks) (b) How the inherent risks involved in BPA can be
classified? Discuss any four. (2 marks) 2. (a) Business Processes are documented / designed using flow-charts to
understand the process in visualized form. Being a business advisor what advantages of flow-charts will you suggest
to represent the business processes in diagrammatic form. (6 marks) (b) Explain any four examples of segregation of
duties (SOD) controls. (4 marks) 3. (a) An internet connection exposes an organization to the harmful elements of
the outside world. As a network administrator, which Network Access controls will you implement in the
organization to protect from such harmful elements? (6 marks) (b) Every business decision is accompanied with a
set of threats and so is BYOD program. Explain briefly the areas in which the risks associated with BYOD program
can be classified. (4 marks) 4. (a) Central database is the main feature of an ERP system. As the complete data is
stored at one place, ensuring safety of data and minimizing risk of loss of data is a big challenge. As an IT expert
discuss the risks associated with various aspects of ERP.
(6 marks)
(b) Explain the concept of E-Commerce briefly. How can you protect your E-Commerce business from intrusion? (4
marks) 5. (a) Banks face the challenge of addressing the threat of money laundering on multiple fronts as banks can
be used as primary means for transfer of money across geographies. In light of the above statement, discuss the
Money Laundering process and its different stages. (6 marks) (b) (i) What do you understand by Regulatory
Compliance?
(2 marks) (ii) Write a brief description of three tier architecture of Application Software. (2 marks) OR
Explain briefly the concept of Role-Based-Access-Control (RBAC) in ERP System. (4 marks)
Part - B
Bl
Strategic Management
STUDY MATERIALBASED CONTENTS
Paper 7 Enterprise Information Systems & Strategic Management
Section — B
Syllabus . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.326
Examination Trend Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.328
Line Chart Showing Relative Importance of Chapters . . . . . . . . 7.332
Table Showing Importance of Chapter on the Basis of Marks. . 7.333
Study Material Based Contents

C.N. Scanner Study Chapters P.N.
1. (Chapter 1) Introduction to Strategic Management . . . . . . 7.335

2. (Chapter 2) Dynamics of Competitive Strategy. . . . . . . . . . 7.363
3. (Chapter 3) Strategic Management Process. . . . . . . . . . . . 7.443
4. (Chapter 4) Corporate Level Strategies . . . . . . . . . . . . . . . 7.474
5. (Chapter 5) Business Level Strategies . . . . . . . . . . . . . . . . 7.515
6. (Chapter 6) Functional Level Strategies . . . . . . . . . . . . . . . 7.536
7. (Chapter 7) Organisation and Strategic Leadership . . . . . . 7.578
8. (Chapter 8) Strategy Implementation and Control . . . . . . . 7.608
Question Paper of May, 2019 . . . . . . . . . . . . . 7.644
Question Paper of November, 2019 . . . . . . . . 7.646
Test Series . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.648
Syllabus
Paper 7 Enterprise Information Systems (100 marks) & Strategic Management

(One Paper - Three Hours)
Section — B
Strategic Management (50 marks)
Objectives:
To develop an understanding of strategic management concepts and techniques and acquire the ability to apply the
same in business situations.
Contents
1. Introduction to Strategic Management

☐ Business Policy
☐ Meaning and Nature of Strategic Management
☐ Business Strategy
☐ Strategic Levels in Organizations
☐ Strategic Management in Government and Not-for-profit
Organization
2. Dynamics of Competitive Strategy
☐ Competitive Landscape
☐ Strategic Analysis
☐ Industry and Competitive Analysis
☐ Core Competence
☐ Competitive Advantage
☐ Internal and External Analysis
☐ SWOT Analysis
☐ Globalization
3. Strategic Management Process

☐ Strategic Planning
☐ Strategic Intent - Vision, Mission and Objectives
☐ Strategy Formulation
4. Corporate Level Strategies

☐ Concepts and Nature of Corporate Strategy ☐ Strategic Alternatives at Corporate Level
☐ Stability
☐ Growth/Expansion
☐ Business Combinations - Merger and Acquisition ☐ Strategic Alliances
☐ Retrenchment/Turnaround
☐ Combination
5. Business Level Strategies

☐ Competitive Strategies at Business Level ☐ Michael Porter’s Generic Strategies
☐ Best-Cost Provider Strategy
6. Functional Level Strategies

☐ Marketing Strategy
☐ Financial Strategy
☐ Operations Strategy
☐ Human Resource Strategy
☐ Research and Development
7. Organisation and Strategic Leadership

☐ Organisation Structure
☐ Strategic Business Unit
☐ Strategic Leadership
☐ Strategy Supportive Culture
☐ Entrepreneurship and Intrapreneurship
8. Strategy Implementation and Control

☐ Strategy Implementation
☐ Strategic Change
☐ Strategic Control
☐ Strategy Audit
☐ Business Process Re-engineering
☐ Benchmarking
Examination Trend Analysis

Paper 7B Strategic Management
Question Paper Based Contents of Last Five Examinations Years Q. No. Compulsory Chapter Marks No Name Category Page No.
2017 8. (b) {C} 3 Strategic Management Process 3

Nov. (c) {C} 4 Corporate Level Strategies 3
(d) {C} 6 Functional Level Strategies 3
(e) {C} 2 Dynamics of Competitive Strategy 3
9. (a)(i) 4 Corporate Level Strategies 2
(ii) 4 " " " 2
11. (a) 4 " " " 4
(b) 3 Strategic Management Process 3
12. (a) 2 Dynamics of Competitive Strategy 4
(b) 3 Strategic Management Process 3
13. (a) 8 Strategy Implementation and Control 4
(b) 6 Functional Level Strategies 3
14. (a) 1 I n t r o d u c t i o n t o S t r a t e g i c Management 4
(Or)(b) 2 Dynamics of Competitive Strategy 3
Descriptive 454 " 506 " 550 " 393 Objective 489 " 490 Descriptive 476 " 468 " 376 ” 462 Dt. Between 626 " 557
Short Notes 347 " 382
2018 7. (a) {C} 2 Dynamics of Competitive Strategy 2

May (b) {C} 3 Strategic Management Process 2
(c) {C} 4 Corporate Level Strategies 2
(d) {C} 2 Dynamics of Competitive Strategy 2
(e) {C} 4 Corporate Level Strategies 2
8. (a) 1 I n t r o d u c t i o n t o S t r a t e g i c Management 2
(b) 2 Dynamics of Competitive Strategy 2
(c) 7 O r g a n i s a t i o n a n d S t r a t e g i c Leadership 2
(d) 7 " " " " 2
(e) 5 Business Level Strategies 2
9. (a) 4 Corporate Level Strategies 5
a n d S t r a t e g i c (b) 7 O r g a n i s a t i o n
Leadership 10. (a) 1 I n t r o d u c t i o n

Management (b) 8 Strategy Implementation and Control 5 11. (a) 5 Business Level Strategies 5 (b) 6 Functional Level Strategies 5 12. (a) 8 Strategy
Implementation and Control 7 (b) 8 " " " " 3 (Or)(b) 2 Dynamics of Competitive Strategy 3 5 t o S t r a t e g i c
5 Descriptive 387 ” 454 ” 475 Descriptive 383 ” 490
Objective 348 " 384
Objective 597
” 583
” 521
Practical 507
” 595
Descriptive 349
” 612
” 517
” 548
” 619
” 625
Short Notes 415
2018 7. (a) {C} 1 I n t r o d u c t i o n t o S t r a t e g i c Nov. {C} Management 2 (b) {C} 3 Strategic Management Process 2 (c) {C} 4 Corporate Level
Strategies 2 (d) {C} 5 Business Level Strategies 2 (e) 6 Functional Level Strategies 2 8. (a) 3 Strategic Management Process 2 (b) 7 O r g a n i s a t i o n a n
d S t r a t e g i c Leadership 2 (c) 8 Strategy Implementation and Control 2 (d) 4 Corporate Level Strategies 2 (e) 4 " " " 2 9. (a) 7 O r g a n i s a t i o n a n d
S t r a t e g i c Leadership 5 (b) 5 Business Level Strategies 5 10. (a) 7 O r g a n i s a t i o n a n d S t r a t e g i c Leadership 5 (b) 6 Functional Level
Strategies 5 11. (a) 6 Functional Level Strategies 5 (b) 1 I n t r o d u c t i o n t o S t r a t e g i c Management 5 12. (a) 8 Strategy Implementation and
Control 7 (b) 8 " " " " 3 (Or)(b) 2 Dynamics of Competitive Strategy 3 Descriptive 352
” 467
” 491
” 521
” 549
Objective 457
” 579
” 634
” 491
” 491
Practical 580 ” 529
Descriptive 603
” 544
Descriptive 562
” 340
Short Notes 618
Descriptive 633
” 371
2019 6. {C} 4 Corporate Level Strategies 5 May 7. (a) 1 I n t r o d u c t i o n t o S t r a t e g i c Management 5 (b) 2 Dynamics of Competitive Strategy 5 8.
(a) 3 Strategic Management Process 5 (b) 6 Functional Level Strategies 5 9. (a) 7 O r g a n i s a t i o n a n d S t r a t e g i c Leadership 5 (b) 5 Business
Level Strategies 5 10. (a) 8 Strategy Implementation and Control 7 (b) 7 O r g a n i s a t i o n a n d S t r a t e g i c Leadership 3 (Or) (b) 8 Strategy
Implementation and Control 3
2019 6. {C} 4 Corporate Level Strategies 5

Nov. 7. (a) 1 I n t r o d u c t i o n t o S t r a t e g i c Management 5
(b) 2 Dynamics of Competitive Strategy 5
8. (a) 3 Strategic Management Process 5
(b) 4 Corporate Level Strategies 5
9. (a) 5 Business Level Strategies 5
(b) 6 Functional Level Strategies 5
10. (a) 7 O r g a n i s a t i o n a n d S t r a t e g i c Leadership 5
(b) 8 Strategy Implementation and Control 5
(Or) (b) 5 Business Level Strategies 5
Practical 494
Descriptive 350
” 364
” 466
” 566
” 593
” 528
” 634
” 588 Dt. Between 610 Practical 509
Descriptive 357
” 377
” 463
” 492
” 521
” 553
Dt. Between 594

Descriptive 634
Short Notes 529
Line Chart
Table Showing Importance of Chapter on the Basis of Marks

Ch. Years 15 15 16 16 17 17 18 18 1919 No. Chapter Name May Nov May Nov May Nov MayNov May Nov Total Ave 1. I n t r o d u c t i o n t o 6 4 3
2 4 7 7 5 5 43 4.3
Strategic Manage
ment
2. D y n a m i c s o f 14 5 16 14 11 10 9 3 5 5 92 9.2 Competitive Strategy
3. Strategic Manage3 7 7 8 7 9 2 4 5 5 57 5.7 ment Process
4. C o r p o r a t e L e v e l 10 7 4 6 3 11 9 6 5 10 71 7.1
Strategies
5. B u s i n e s s L e v e l 3 4 7 7 5 10 36 3.6
Strategies
6. F u n c t i o n a l L e v e l 8 6 7 9 10 6 5 12 5 5 73 7.3 Strategies
7. Organisation and 3 7 10 7 6 9 12 8 5 67 6.7 Strategic Leadership
8. S t r a t e g y I m p l e 4 5 10 4 15 12 10 5 65 6.5 m e n t a t i o n a n d
Control
FOR NOTES CHAPTER
1
Introduction to Strategic Management
This Chapter Covers : Study’s Chapter: 1
Chapter Comprises: ☹Business Policy ☹Concept of Management ☹Concept of Strategy ☹Importance of Strategic
Management ☹Limitations of Strategic Management ☹Strategic Levels in
Organisations ☹Strategic Management in Government and Not-for-profit Organisations.

Legend
book.
TIMEMANAGER
i.e.....
1. Budgeted
2. Actual
3. Variance (1-2)
............ Day 1 16
Instant
Revision (in hours)

i.e.... i.e. on ........... ...........
Day 2 Day 8
4.00 3.12
(in hours)

2.20 1.35 1.35

1.5, 2.3, 2.5
. . . . . . . Weightage Analysis Common Answered Must Try Question Questions 1.7, 2.5, 3.2 1.5, 1.8, 2.1,3.1, 4.4
1 Concept of Strategy
Q.1.1 2008 - Nov [6] (a) Objective
State with reasons which of the following statement is correct/incorrect: Strategy is a substitute for Sound, Alert and
Responsible management. (2 marks) Answer:
Incorrect : Strategy is no substitute for sound, alert and responsible management. Strategy can never be perfect,
flawless and optimal. It is in the very nature of strategy that it is flexible and pragmatic; it is art of the possible; it
does not preclude second-best choices, trade-offs, sudden emergencies, pervasive pressures, failures and frustrations.
However, in a sound strategy, allowances are made for possible miscalculations and unanticipated events.
Q.1.2 2008 - Nov [6] (d) Objective State with reasons which of the following statement is correct/incorrect: A
company’s strategy has always to be pro-active in nature. (2 marks)
Answer:
Incorrect: Strategy is partly proactive and partly reactive.
A company’s strategy is typically a blend of proactive actions on the part of managers to improve the company’s
market position and financial performance and as needed reactions to unanticipated developments and fresh market
conditions. Hence a portion of a company’s strategy is always developed on the fly, coming as a reasoned response
to unforeseen developments-fresh strategic manoeuver on the part of rival firms, shifting customer requirements and
expectations, new technologies and market opportunities, a changing political or economic climate in the
surrounding environment.
Q.1.3 2011 - Nov [9] (a) (i) Objective State with reason which of the following statement is correct or incorrect:
The process of strategy avoids matching potential of the organization with the environment opportunities. (2 marks)
Answer:
Incorrect: In the process of strategic management an organisation continuously scans its relevant environment to
identify various opportunities and threats. Organisations keen to grow and expand often look for promising
opportunities that match their potential. Such opportunities become a good stepping stone for achieving the goals of
the organisation.
Q.1.4 2012 - May [9] (a) (i) Objective
State with reasons which of the following statement is correct or incorrect: Developing annual objectives & short-
term strategies that are compatible with the selected set of long-term objectives are one of the major tasks of
strategic management. (2 marks)
Answer:
Correct: A Company’s set of strategic objectives should include both short term and long terms performance target.
Short term objectives help to focus attention on delivering immediate performance improvements. While long term
objectives represent the results expected from pursing certain strategies.

Q.1.5 2012 - Nov [8] {C} (b), 2016 - May [14] (Or) (b), Descriptive RTP
“Strategy is partly proactive and partly reactive.” Do you agree? Give reasons for your answer. (3 marks each)
Answer:
A Company’s Strategy is basically a combination of
1. Pro-active actions of the managers and
2. Re-active actions.
Proactive Actions
In proactive strategy, organizations will analyze possible environmental scenarios and create strategic framework
after proper planning and set procedures and work on these strategies in a predetermined manner. Proactive actions
are the efficient planning to :
(i) improve the company’s market position. (ii) improve the company’s financial performance.
Reactive Actions Reactive strategy is triggered by the changes in the environment and provides ways and means to
cope with the negative factors or take advantage of emerging opportunities.
Reactive actions are the responses to the environmental changes in order to :
(i) face unforeseen developments and changes. (ii) adjust and adapt to unanticipated risks. Environment also plays
an important role in strategy formulation.
Conclusion:
Thus, we can conclude that strategy is partly proactive and partly reactive. Under proactive strategy organisations
will analyse possible environmental scenarios and create strategic framework after proper planning and set
procedures and work on these strategies in a predetermined manner. However there can be significant deviations
between what was visualised and what actually happens. These deviations are then handled through reactive
strategy. Reactive strategy is triggered by the changes in the environment and provides ways and means to cope with
the competitive factors or threat factors and take advantage of emerging opportunities.
Q.1.6 2013 - Nov [9] (a) (i) Objective
State with reasons which of the following statement is correct or incorrect: A company's strategy has always to be
proactive in nature. (2 marks) Answer:
Incorrect Strategic analysis seeks to determine alternative course of action that could best enable the firm to achieve
its mission and objectives in light of impact and influence of competitive environment.

Q.1.7 2015 - May [12] (b) Descriptive Quite often strategies of most business organizations are a combination of
planned strategies and reactive strategies. Explain with reasons.
(3 marks) OR 2018 - Nov [11] (b) Descriptive
“Strategy is partly proactive and partly reactive”. Elaborate. (5 marks) Answer:

Strategy is partly proactive and partly reactive.
☐ In proactive strategy, organizations will analyze possible environmental
scenarios and create strategic framework after proper planning and set procedures and work on these strategies in a
predetermined manner. ☐ However, in reality no company can forecast both internal and external environment
exactly.
☐ Everything cannot be planned in advance.
☐ Strategies need to be attuned or modified in light of possible environmental changes.

☐ There can be significant or major strategic changes when the environment demands.
☐ Reactive strategy is triggered by the changes in the environment and provides ways and means to cope with the
negative factors or take advantage of emerging opportunities.

1. face unforeseen developments and changes.
2. adjust and adapt to unanticipated risks.
1. face unforeseen developments and changes.
2. adjust and adapt to unanticipated risks.

Yummy Foods and Tasty Foods are successfully competing in the business of ready to eat snacks in Patna. Yummy
has been pioneer in introducing innovative products. These products will give them good sale. However, Tasty
Foods will introduce similar products in reaction to the products introduced by the Yummy Foods taking away the
advantage gained by the former.
Discuss the strategic approach of the two companies. Which is superior?
Answer:
Yummy foods is proactive in its approach.
On the other hand Tasty Food is reactive.
Proactive strategy is planned strategy whereas reactive strategy is adaptive reaction to changing circumstances. A
company’s strategy is typically a blend of proactive actions on the part of managers to improve the company’s
market position and financial performance and reactions to unanticipated developments and fresh market conditions.
If organisational resources permit, it is better to be proactive rather than reactive. Being proactive in aspects such as
introducing new products will give you advantage in the mind of customers.
At the same time, crafting a strategy involves stitching together a proactive/intended strategy and then adapting first
one piece and then another as circumstances surrounding the company’s situation change or better options emerge-a
reactive/adaptive strategy. This aspect can be accomplished by Yummy Foods.

2 Strategic Management
Q.2.1 2007 - Nov [8], RTP Descriptive
What is Strategic Management? What benefits accrue by following a strategic approach to managing? (10 marks)
Answer :
Strategic Management:
Meaning Strategic Management is multi-dimensional function. As a
broad overall process it is defined as the set of decisions and actions resulting in formulation and implementation of
strategies designed to achieve the objectives of an organisation.
Strategic Management is interpreted in a wider sense as “the process which deals with fundamental organisational
renewal and growth with the development of the strategies, structures and systems necessary to achieve such
renewal and growth, and with the organisational systems needed to effectively manage the strategy formulation and
implementation processes.”
Objectives 1. To Create a competitive advantage over the other competitor.
2. To Meet the opportunities and threats with challenge. Process 1. Developing mission.
2. Defining objective and goal.
3. Structuring business portfolio.
4. Incorporating functional plans.
Benefits 1. Financial benefits

On the basis of empirical studies and logical analysis it may be claimed that the impact of strategic management is
primarily that of improved financial performance in terms of profit and growth of firms with a developed strategic
management system having major impact on both planning and implementation of strategies.
2. Enhanced capability of problem prevention This is likely to result from encouraging and rewarding
subordinate attention to planning considerations, and managers being assisted in their monitoring and forecasting
role by employees who are alerted to the needs of strategic planning.
3. Improved quality strategic decisions through group interaction

The process of group interaction for decision-making facilitates generation of alternative strategies and better
screening of options due to specialised perspectives of group members. The best alternatives are thus likely to be
chosen and acted upon.
4. Greater employee motivation

Participation of employees or their representatives in strategy formulation leads to a better understanding of the
priorities and operation of the reward system. Also there is better appreciation on their part of the productivity-
reward linkage inherent in the strategic plan. Hence goal-directed behaviour is likely to follow the incentives.
5. Reduction of gaps and overlaps in activities With strategy formulation undertaken through the participative
process, there is better understanding of the responsibilities of individuals and groups. Role differentiation which is
thereby clarified should reduce the gaps and overlaps in the activities of groups and individuals.

Q.2.2 2008 - May [6] (e) Objective State with reason which of the following statement is correct/incorrect:
“Efficiency and effectiveness mean the same in strategic management.”
(2 marks) Answer :
Incorrect:
The two terms ‘Effectiveness’ and ‘Efficiency’ mean different but they are related to each other.
☐ ‘Effectiveness’ aims to achieve the goals within time.
☐ ‘Efficiency’ focuses on optimum use of resources to achieve the goals. Management is concerned not only with
achieving goals effectively but also attaining them as efficiently as possible. For instance, it is easier to be effective
if one ignores efficiency. For example, some government organizations get their jobs done but at a very high cost.
Usually, high efficiency is associated with high effectiveness, which is the aim of all managers. However, undue
emphasis on high efficiency without being effective is also not desirable. Poor management is due to both
inefficiency and ineffectiveness. So, management should be both effective and efficient.

Q.2.3 2009 - May [6] (a), 2017 - May [9] (a) (ii), RTP Objective State with reason which of the following
statement is correct or incorrect: Strategic management is a bundle of tricks and magic. (2 marks each)
Answer:
Incorrect: No, strategic management is not a bundle of tricks and magic. It is much more serious affair. It involves
systematic and analytical thinking and action. Although, the success or failure of a strategy is dependent on several
extraneous factors, it cannot be stated that a strategy is a trick or magic. Formation of strategy requires careful
planning and requires strong conceptual, analytical and visionary skills.

Q.2.4 2009 - May [6] (e) Objective
State with reason which of the following statements are correct or incorrect :
The rate and magnitude of changes that can affect organisations are decreasing dramatically. (2 marks)
Answer:
Incorrect: The rate and magnitude of changes that can affect organisations are increasing day by day because of
change in business environment due to globalisation and liberalization that are fast-paced and have far-reaching
implications for business, as most of the organisation are dependant on the environmental factors.

Q.2.5 2011 - May [14] (a), 2013 - May [6] (e) Short Notes Write short note on the following :
Importance of Strategic Management. (4 marks) OR 2012 - May [8] {C} (b) Descriptive Briefly explain the
importance of Strategic Management. (3 marks)
Answer :
Importance of Strategic Management
1. Financial benefits
2. Enhanced capability of problem

prevention
3. Improved
quality strategic decisions
through group interaction
4. Greater employee motivation
On the basis of empirical studies and logical analysis it may be claimed that the impact of strategic management is
primarily that of improved financial performance in terms of profit and growth of firms with a developed strategic
management system having major impact on both planning and implementation of strategies.
This is likely to result from encouraging and rewarding subordinate attention to planning considerations, and
managers being assisted in their monitoring and forecasting role by employees who are alerted to the needs of
strategic planning.
The process of group interaction for decisionmaking facilitates generation of alternative strategies and better
screening of options due to specialised perspectives of group members. The best alternatives are thus likely to be
chosen and acted upon.
P a r t icipation of empl o y e e s o r t h e i r representatives in strategy formulation leads to a better understanding of

the priorities and operation of the reward system. Also there is better appreciation on their part of the productivity-
reward linkage inherent in the strategic plan. Hence goal-directed behaviour is likely to follow the incentives.
5. Reduction of gaps and

overlaps in activities
With strategy formulation undertaken through the participative process, there is better understanding of the
responsibilities of individuals and groups. Role differentiation which is thereby clarified should reduce the gaps and
overlaps in the activities of groups and individuals.

Q.2.6 2011 - Nov [9] (b) (i) Objective
Fill in the blanks in the following statement with the most appropriate word: Strategic Management is not a box of
tricks or a bundle of techniques. It is analytical thinking and _________ of resources to action. (1 mark)
Answer:
(i) Commitment
Q.2.7 2017 - Nov [14] (a) Short Notes Write a Short note on the following :
Family Managed Enterprises - Challenges & issues. (4 marks)
Answer :
Cooperation on account of family ownership:
Theoretically, cooperation generates automatically in businesses owned by a same family. The ownership, groups
are engaged in the management of their enterprised in a direct manner. Commonly, the ownership group is nothing
but a family and its Kith and Kin. In India, a very large number of business enterprises, big, medium and small are
family managed enterprises. These include large business houses such as Tata, Birla, Godrej Reliance, Modi,
Escorts and etc. Major decisions and sometimes even minor decisions are made by members of the family who
manage the enterprise. The interest of the family largely influence the managerial decisions and activities of the
enterprise. There is a total identity between the needs and goals of the family and of the enterprise.
Sometimes, quarrels and conflicts among the managing members of the family on family matters tend to distort their
behaviour in managing the enterprise also and thereby damage its functioning. Succession remains a tricky and
conflicting issue in businesses. Be it the Ambanis of Reliance Industries, the Bajajs or Bajaj Auto, the Nandas of
Escorts, or the Modis of Modi Rubber- each family has, in the recent past, faced succession and ownership issues
and found them tough resolve. However, one can count several counter examples of family- run businesses that have
resolved these issue amicably. The Muruguppa group in the south, the Burmans of Dabur India and the Thapars
have settled succession issues without coming into the public eye.
Q.2.8 2018 - May [8] (a) Objective
Which of the following statement is ‘correct’ and which is ‘incorrect’? Give reason, in brief, for your answer:
Non-profit organizations do not require Strategic Management. (2 marks)
Answer:
Incorrect
☐ Strategic Management applies equally to profit as well as non-profit
organizations. Though non-profit organizations are not working for the profit, they have to purpose, vision and
mission. They also work within the environmental forces and need to manage strategically to stay afloat to
accomplish their objectives. For the purpose of continuity and meeting their goals, they also need to have and
manage funds and other resources just like any other for profit organization.

Q.2.9 2018 - May [10] (a) Descriptive Define Strategic Management. Also discuss the limitations of Strategic
Management. (5 marks)
Answer:
Meaning of Strategic Management:
Strategic Management is multi-dimensional function. As a broad overall process it is defined as the set of decisions
and actions resulting in formulation and implementation of strategies designed to achieve the objectives of an
organisation.
Strategic Management is interpreted in a wider sense as “the process which deals with fundamental organisational
renewal and growth with the development of the strategies, structures and systems necessary to achieve such
renewal and growth, and with the organisational systems needed to effectively manage the strategy formulation and
implementation processes.” Objectives of Strategic Management:
1. To Create a competitive advantage over the other competitor. 2. To Meet the opportunities and threats with
challenge.
! Limitations of Strategic Management :
☐ Environment is highly complex and turbulent. It is difficult to understand the complex environment and exactly
pinpoint how it will shape-up in future. The organizational estimate about its future shape may awfully go wrong
and jeopardise all strategic plans. The environment affects, as the organization has to deal with suppliers, customers,
governments and other external factors.
☐ Strategic management is a time - consuming process. Organizations spend a lot of time in preparing,
communicating the strategies that may impede daily operations and negatively impact the routine business.
☐ Strategic management is a costly process. Strategic management adds a lot of expenses to an organization. Expert
strategic planners need to be engaged, efforts are made for analysis of external and internal environments devise
strategies and properly implement. These can be really costly for organizations with limited resources particularly
when small and medium organization create strategies to compete.
☐ In a competitive scenario, where all organizations are trying to move
strategically, it is difficult to clearly estimate the competitive responses to a firm’s strategies.

‘Strategic Management is not a panacea for all the corporate ills, it has its own pitfalls which can’t counter all
hindrances and always achieve success’.
Do you agree with this statement? Discuss. (5 marks)
Answer:
☐ ‘Strategic Management is not a panacea for all the corporate ills, it has its own pitfalls which can’t counter all
hindrances and always achieve success’ This Statement is correct and can be agreed because there are limitations
attached to strategic management and can be explained as follows:
1. Environment is highly complex and turbulent
It is difficult to understand the complex environment and exactly pinpoint how it will shape-up in future. The
organisational estimate about its future shape may awfully go wrong and jeopardise all strategic plans. The
environment affects as the organization has to deal with Suppliers, customers, governments and other external
factors.
2. Strategic
management is a time– consuming process
Organizations spend a lot of time preparing, communicating the strategies that may impede daily operations and
negatively impact the routine business.
3. Strategic
management is a costly process
Strategic management adds a lot of expenses to an organization. Expert strategic planners need to be engaged,
efforts are made for analysis of external and internal environments devise strategies and properly implement. These
can be really costly for organisations with limited resources particularly when small and medium organisation create
strategies to complete.
4. Competition is unpredictable
In a competitive scenario, where all organisations are trying to move strategically, it is difficult to clearly estimate
the competitive responses to a firm’s strategies.

3 Strategic Levels in an organisation
Q.3.1 2010 - Nov [9] (a) (ii), RTP Objective
State with reasons which of the following statements are correct or incorrect.
Control systems run parallel with strategic levels. (2 marks)
Answer :
Correct :There are three strategic levels – corporate, business and functional. Control systems are required at all the
three levels. At the top level, strategic controls are built to check whether the strategy is being implemented as
planned and the results produced by the strategy are those intended. Down the hierarchy management controls and
operational controls are built in the systems. Operational controls are required for day-to-day management of
business.

Q.3.2 2010 - Nov [13] (b) Distinguish Between Distinguish between the following :
The Three Levels of Strategy Formulation. (3 marks) OR 2018 - Nov [7] {C} (a) Descriptive
List the different strategic levels in an organization. (2 marks) Answer:

Strategic Level in an Organisation :
In case of multidivisional and multilocational organisation that competes in several different businesses, it has
separate self-contained divisions to manage each of these. There are three levels of strategy in management of
business - corporate, business, and functional.
Corporate level • of management

•
•
•
Business Level •
• It consists of the chief executive officer and other top level executives.
These individuals occupy the apex of decision making within the organization.
The role of corporate-level managers is to oversee the development of strategies for the whole organization.
This role includes defining the mission and goals of the organization, determining what businesses it should be in,
allocating resources among the different businesses and so on rests at the Corporate Level.
Development of strategies for an individual business areas is the responsibility of the general managers in these
different businesses or business level managers.
A business unit is a self-contained division with its own functions - e.g. finance, production, and marketing.
• The strategic role of business-level manager, head
of the division, is to translate the general statements of direction and intent that come from the corporate level into
concrete strategies for individual businesses.
Functional Level • Managers are responsible for the specific functions or operations such purchasing, product
service, and so on. as human
development,
• Therefore a functional manager's resources, customer
sphere of responsibility is generally confined to one organizational activity, whereas general managers oversee the
operation of a whole company or division.

Q.3.3 2015 - May [8] {C} (b) Descriptive In your view, what is the role of Corporate level managers in Strategic
management? (3 marks) Answer:
Corporate level • The corporate level of management consists of the Chief Executive Officer (CEO), other Senior
Executives, the Board of Directors and Corporate Staff.
• These individuals are the main decision making body within the organization.
The Role of • Corporate Level • Manager • includes:
• Defining the corporate vision, mission and goals. Determining what business it should be in. Allocating resources
among the different businesses.
Formulating and implementing strategies that span individual businesses.

Providing leadership for the organization.

4
Strategic Management in Government Organisation and Not for Profit Organisation
Q.4.1 2008 - Nov [6] (b) Objective State with reasons which of the following statement is correct/incorrect:
Strategic management is not needed in non-profit Organisations.
(2 marks) Answer :
Incorrect: Strategic management refers to the managerial process of forming a strategic vision, setting objectives,
crafting a strategy implementing and executing the strategy, and then overtimes initiating whatever corrective
adjustments in the vision, objectives, strategy and execution are deemed appropriate therefore, the steps are required
in all types of organisation whether profit oriented or not as profit is not the sole motive of strategic management.

Q.4.2 2010 - Nov [9] (a) (i) Objective State with reasons which of the following statement is correct or incorrect.
Not-for-profit organizations are not required to have a strategy. (2 marks)
Answer :
Incorrect : Strategic management refers to the managerial process of forming a strategic vision, setting objectives,
crafting a strategy implementing and executing the strategy, and then overtimes initiating whatever corrective
adjustments in the vision, objectives, strategy and execution are deemed appropriate therefore, the steps are required
in all types of organisation whether profit oriented or not as profit is not the sole motive of strategic management.
Similar to commercial organizations, ‘not-for-profit’ organizations must also have a strategy. It is required to give it
direction, focus and efficient utilization of resources. In many ‘not-for-profit’ organizations surpluses are important
for their survival and growth.

Q.4.3 2011 - Nov [8] {C} (e) Descriptive
Describe briefly the use of Strategic Management techniques in Educational Institutions. (3 marks) Answer :
Education is considered to be a noble profession. An educational institution often functions as a not-for-profit
organization managed by trusts and societies. They include schools, colleges and universities. Being inherently non-
commercial in nature, educational organisations do not have cut-throat competition as in case of their commercial
counterparts. However, as the number of institutions belonging to both public and private sector are increasing, the
competition is gradually rising. Through the use of strategic management techniques such institutions are expected
to concentrate attention towards:
• Appointing and retaining quality faculty for teaching.
• Getting better name and recognition.
• Designing the curriculum in such a way to provide better citizenry and
employability.
• Attracting talented students.
• Preparing students for the future challenges by capacity building.
Q.4.4 2013 - May [11] (b) Descriptive Explain the role of Strategic Management in non-profit organisations. (3
marks)
Answer:
Meaning of Strategic
Management
Role of Strategic Management in Non Profit

Organisation
Conclusion
Strategic management refers to the managerial process of forming a strategic vision, setting objectives, crafting a
strategy implementing and executing the strategy, and then overtimes initiating whatever corrective adjustments in
the vision, objectives, strategy and execution are deemed appropriate therefore, the steps are required in all types of
organisation whether profit oriented or not as profit is not the sole motive of strategic management. 1. Developing
mission of the organisation 2. Strategic Management then helps in defining
objectives and goals.

3. Strategic Management structures the business
portfolio and incorporates the functional goals. 4. Helps meet opportunities and threats with
challenge.
Thus strategic management is the process which helps Not for Profit Organisation to deal with fundamental
organisational renewal and growth with the development of the strategies, structures and systems necessary to
achieve such renewal and growth, and with the organisational systems needed to effectively manage the strategy
formulation and implementation processes.
Q.4.5 2019 - Nov [7] (a) Descriptive “Strategic Management concepts are useful for educational institutions.”
Explain with reasons. (5 marks)
5 Miscellaneous: Business Environment
Q.5.1 2008 - May [6] (a) Objective
State with reason which of the following statement is correct/incorrect: “Profit may not be a universal objective but
business efficiency is definitely an objective common to all business.” (2 marks)
Answer :
Correct: The primary objective of business is to earn adequate profit but not maximum profit. Profit serves as a
yardstick to measure the success of the business. To facilitate and sustain profit earning, certain other objectives are
also pursued by business and efficiency is one of them.

Q.5.2 2015 - Nov [12] (a) Descriptive Can a business succeed in the long run by focusing only on profit as its
primary objective? What are other objectives of a business? (4 marks)
Answer:
The primary objective of business is to earn adequate profit but not maximum profit. Profit serves as a yardstick to
measure the success of the business. To facilitate and sustain profit earning, certain other objectives are also pursued
by business and efficiency is one of them.
Thus, the business organization cannot succeed in long run by focusing only on profit as a primary objective. It has
to consider all other objectives which are as follows:
1. Survival Survival is the will and anxiety to perpetuate in future as long as possible. It is a basic, implicit objective
of most organization. The ability to survive is the function of the nature of ownership, nature of business,
competencies of management, general and industry conditions, financial strength of organization and so on.
2. Stability It is least expensive and risky objective in terms of managerial time and talent and other resources. A
stable and steady enterprises minimises managerial tension and demands less dynamism.
3. Growth It is very promising and popular objective which with dynamism, vigour, promise and success.
Enterprise growth may take into one or more forms like increase in assets, manufacturing facilities, increase in sales
volume in existing products or through new products, improvement in profit and market share, increase in
manpower employment, acquisition of other firm and so on.
4. Efficiency Business organization seek efficiency in rationally choosing appropriate means to achieve their goals,
doing the thing in best possible manner, utilizing the resources in most suitable combination to get highest
productivity.
5. Profitability Profit is sole motive of all business. All other objective are facilitative objective but business should
also concentrate on other objective to prosper in long run.

1 Business Policy
1. “Evaluation of business policy arose from the developments in the use of planning techniques by managers”
defines by.
(a) Christensen
(b) William F. Glueck
(c) Harvard S. Smith
(d) Igor H. Ansoff
2. Business policy tends to emphasise on the rational analytical aspect of _____________.

(a) Management
(b) Human Resource Management
(c) Strategic Management
2 Concept of Management
3. Management is a/an ____________to make things happen, to gain command over phenomena, to induce and
direct events and people in a particular manner.
(a) Planning process
(b) Organisation process
(c) Influence process
(d) Strategic process
4. Influence process is backed by ________.

(a) Power
(b) Competence
(c) Knowledge and resources
3 Concept of Strategy
5. Strategy is define as “A unified, comprehensive and integrated plan designed to assure that the basic objectives of
the enterprise are achieved ,” by ___________.
(a) William F. Glueck
(b) Ignor H. Ansoff
(c) Christensen
(d) Harvard S. Smith
6. In large organisations strategies are formulated at the ________. (a) Corporate Level
(b) Divisional Level
(c) Functional Level
7. Company’s strategy is __________action

(a) Proactive
(b) Reactive
(c) Subjective
(d) Partly proactive and partly reactive
4 Strategic Management
8. Objectives of strategic management are:
(a) To guide the company successfully through all changes in the environment.
(b) To create competitive advantage, so that the company can out perform the competitors in order to have
dominance over the market
(c) Changes in the environment and strategy to relate the goals of the organisation to the means of achieving them.
9. Strategic management involves developing the company’s vision_____________.
(a) Environmental scanning
(b) Strategy formulation
(c) Strategy implementation
5 Strategic Levels In Organisations
10. Strategic Levels involves in a business organisation.

(a) Corporate Level
(b) Business Level
(c) Functional Level
11. Functional managers provides most of the information that makes it possible for business and corporate level
general manager to formulate__________.
(a) Overall strategies
(b) Comprehensive Functional strategies
(c) Realistic Strategies
(d) Realistic and attainable strategies
6
Strategic Management in Government And Not For Profit Organisations
12. “Strategic management is not needed in non-profit organisations” statement is _____________.

(a) Correct
(b) In correct
(c) Partially correct
(d) None
13. “I believe we do a far better job of strategic management than any company I kwon” said by __________.
(a) Richard Cyert
(b) Christensen
(c) William F. Glueck
(d) Igor H. Ansoff
ANSWER
1. (b) 2. (c) 3. (c) 4. (d) 5. (a) 6. (d) 7. (d) 8. (d) 9. (d) 10. (d) 11. (d) 12. (b) 13. (a)
CHAPTER
2
Dynamics of Competitive Strategy
Chapter Comprises:☹ Competitive Landscape ☹ Strategic Analysis ☹Methods of Industry and Competitive
Analysis ☹Key Factors for Competitive
Success ☹Core Competence ☹Competitive Advantage ☹Internal and
External Analysis (Portfolio Analysis) ☹(BCG) Growth-Share Matrix ☹Ansoff’s
Product Market Growth Matrix ☹ADL Matrix ☹General Electric Matrix ☹
SWOT Analysis ☹TOWS Matrix ☹Globalization.

Legend
book. 7.363
TIMEMANAGER . . . . . . . . . . . Plan and Manage your Time
First Indepth
learning Instant
Revision
(in hours) Periodic Revision (in hours)
Time i.e.....
............ Day 1

i.e.... i.e. on ........... ...........
Day 2 Day 8 After After After Fix as
30 days 60 days 90 days per your i.e. on i.e. on i.e. on need.
........... .............. ............
1. Budgeted 16 4.00 3.12 2.20 1.35 1.35

2. Actual
3. Variance (1-2)
QUICK LOOK . . . . . . . Weightage Analysis Repeatedly Asked Questions
Common Answered Must Try Question Questions
3.3, 6.6, 7.3 3.3, 3.6, 4.2, 6.4, 6.5, 3.9, 3.14, 4.4, 4.5, 6.6, 8.1, 10.1, 11.5, 13.4 4.8, 9.1, 10.1, 13.4
1 Competitive Landscape
Q.1.1 2019 - May [7] (b) Descriptive What do you understand by ‘Competitive Landscape’? What are steps to
understand the competitive landscape? (5 marks)
Answer:
☐ Competitive landscape is a business analysis which identifies and understands the competitors.
☐ It the comprehends their vision, mission, core values, niche market, strengths and weaknesses.
☐ Understanding of competitive landscape requires an application of “competitive intelligence”.
☐ Steps to understand competitive landscape :
1. Identify the Competitor

2. Understand the competitors
3. Determination the strengths of

competitors
☐ The first step to understand the competitive landscape is to identify the competitors in the firm’s industry and
have actual data about their respective market share.
☐ This answer the question:

☐ who are the competitors?
☐ Once the competitors have been identified, the strategist can use market research reports, internet, newspapers,
social media, industry reporters, and various sources to understand the product and services offered by them in
different market?.
This answers the question:

☐ What are their product and services?
☐ What are the strength of competitors? What do they do well ? Do they offer great products? Do they utilize
marketing in a way that comparatively reaches out to more consumers ? Why do customers give them their
business?
☐ This answer the questions:

☐ What are their financial positions? ☐
☐
–
–
4. Determine the ☐ weaknesses of the Competitors
☐ ☐ 5. Put all the ☐ information together

☐
–
–
– What gives them cost and price advantages?
What are they likely to do next ?

How strong is their distribution network? What are their human resource strengths?
Weaknesses (and strengths) can be identified by going through customers reports and reviews appearing in various
media. After all, consumers are often willing to give their opinions, especially when the products, or services are
either great or very poor.
This answers the question
Where are they lacking ?
At this stage, the strategist should put together all information about competitors and draw inference about what they
are not offering and what the firm can do to fill in the gaps. The strategist can also know the areas which need to be
strengthen by the firm.
This answers the questions:
What will the business do with this information ?
What improvements does the firm need to make ?
How can the firm exploit the weaknesses of competitors ?
2 Strategic Analysis
What are the different issues in strategic analysis.

Answer:
The following are the different issues which must be considered in strategic analysis: 1. Time line
2. Balancing
There are different forces that drive and constrain strategy and that must be balanced in any strategic decision. An
important aspect of strategic analysis is to consider the possible implications of routine decisions. Strategy of a
business, at a point of time, is result of a series of small decisions taken over an extended period. A manager who
tries to increase the growth momentum of an organization is materially changing strategy.
The process of strategy formulation is often described as one of the matching the internal potential of the
organization with the environmental opportunities. As perfect match between the two may not be feasible, strategic
analysis involves a workable balance between diverse and conflicting considerations. A manager working on a
strategic decision has to balance opportunities, influences and constraints. There are pressures that are driving
towards a choice such as entering a new market. Simultaneously there are constraints that limit the choice such as
existence of a big competitor. 3. Risk The complexity and intermingling of variables in
the environment reduces the strategic balance in the organization. Competitive markets, liberalization, globalization,
booms, recessions, technological advancements, inter-country relationships all affect businesses and pose risk at
varying degree. An important aspect of strategic analysis is to identify potential imbalances or risks and assess their
consequences. A broad classification of the strategic risk that requires consideration in strategic analysis is given
below:
External risk is on account of inconsistencies between strategies and the forces in the environment. Internal risk
occurs on account of forces that are either within the organization or are directly interacting with the organization on
a routine basis.
3 Methods of Industry and Competitive Analysis

Q.3.1 2008 - May [6] (b) Objective
State with reason which of the following statement is correct/incorrect: “Industry is a grouping of dissimilar firms.”
(2 marks) Answer :
Incorrect: Industry is a group of firms whose products have same and similar attributes such that they compete for
the same buyers.
Q.3.2 2008 - May [7] (c) Descriptive Briefly answer the following :
Strategic groups. (2 marks)
Answer:
A Strategic Group consists of rival firms with similar competitive approaches and positions in the market.
Companies in the same strategic group can resemble one another in any of several ways: they may have comparable
product– line breadth, sell in the same price/quality range, emphasize the same distribution channels, use essentially
the same product attributes to appeal to similar types of buyers, depend on identical technological approaches, or
offer buyers similar services and technical assistance.

Q.3.3 2011 - May [10] (ii), 2012 - May [10] (vii) Explain the meaning of the following concepts : Strategic Group
Mapping
OR 2017 - May [14] (a)
Strategic Group Mapping
Descriptive
(1 mark each) Short Note
(4 marks)
Answer :
A Strategic Group is a cluster of firms in an industry with similar competitive approaches and market positions. An
industry contains only one strategic group when all sellers pursue essentially identical strategies and have
comparable market positions.
Strategic group mapping is a useful analytical tool for comparing the market positions of each firm separately and
for grouping them into like positions when an industry has so many competitors that it is not practical to examine
each one in depth. It involves plotting firms on a two-variable map using pairs of differentiating characteristics such
as price/quality range; geographic coverage and so on.
Thus strategic group mapping is a technique for displaying the different market or competitive positions that rival
firms occupy in the industry.

Q.3.4 2012 - May [9] (a) (ii) Objective
State with reason which of the following statement is correct or incorrect: E-commerce technology opens up a host
of opportunities for reconfiguring industry and company value chains. (2 marks)
Answer:
Correct: As more industries go global, strategic management is becoming an increasingly crucial way to keep track
of international development for long-term competitive advantage. The use of Internet for doing business is re-
shaping the global marketplace and that it will continue to do so for many years. It is believed that Internet would
transform or have a major impact on their corporate strategy. The Internet is changing the way customer, suppliers,
and companies interact and it is changing the way companies work internally.
State with reason which of the following statement is correct or incorrect: A strategic group consists of rival firms
with similar competitive approaches and positions in the market. (2 marks)
Answer:
Correct: A Strategic Group consists of those rival firms that have similar competitive approaches and positions in
the market. Organizations in the same strategic group can resemble one another in several ways like offering buyers
similar services and technical assistance.

Q.3.6 2014 - Nov [8] {C} (c) Descriptive In your view what are the Key Success Factors for operating in a
competitive market place? (3 marks) OR 2018 - Nov [12] (Or) (b) Descriptive Examine the significance of KSFs
(Key Success Factors) for competitive success. (3 marks)
Answer:
Key success factors are those few things that must go well to ensure success for an organization and, therefore, they
represent those managerial or enterprise areas that must be given special and continual attention to bring about high
performance. KSFs include issues vital to an organization’s current operating activities and to its future success. The
purpose of key success factors is to inspire and incentive marketing and sales to a more robust business status.
Products and services of businesses should not remain static or without evolution. Vigilance over key success factors
helps business organisations to gauge business potential within the target market and also in the realm of business
competition.
Each business identifies key success factors differently, depending on their products and services.
Some of the KSFs may include: 1. Managing and developing people

2. Strategic focus
3. Operations, or what people do all day
4. Physical resources 5. Customer relations
Effectively managing people requires balancing constraining forces (providing direction, structures, organization,
some rules) with liberating forces (encourage personal growth, development and creativity).
In today’s rapidly changing world, it’s not just enough to have a purpose for existing. Leaders have to focus the
organization’s resources on the greatest opportunities. It’s necessary for leaders to keep focused on the desired end
results such as increased sales and profits, or more satisfied customers, while constantly steering the organization
across the stormy waters of the marketplace.
Effective operations ensure that customers get exactly what they want at the right time, the right price and the right
quality. Thus effective operations management focuses on what is called cycle time (producing a product or service
from start to finish), cost control, and quality control (which requires some form of measurement).
Finances, facilities and equipment are the big three physical resources.
Customers are where the money comes from, so in many ways this is the most important success factor. As the
famous business guru Peter Drucker said years ago. The purpose of a business is to get and keep customers. Getting
customers involves marketing - indeed this success factor includes all kinds of marketing and sales. The key to
successful customer relations is to give them what they need, not just what you want to sell.

Q.3.7 2014 - Nov [9] (a) (ii) Objective
State with reason which of the following statement is correct or incorrect: An industry can have more than one
strategic group. (2 marks) Answer:
Correct: An industry can have more than one strategic group. An industry contains only one strategic group when
all sellers pursue essentially identical strategies and have comparable market positions. On the other hand, there are
as many strategic groups as there are competitors when each rival pursues a distinctively different competitive
approach and occupies a substantially different competitive position in a market place.

What steps would you take to construct a ‘Strategic Group Map’ for an industry? (3 marks) Answer:
Strategic group mapping is a useful analytical tool for comparing the market positions of each firm separately and
for grouping them into like positions when an industry has so many competitors that it is not practical to examine
each one in depth. It involves plotting firms on a two-variable map using pairs of differentiating characteristics such
as price/quality range; geographic coverage and so on.
Steps take to construct a ‘Strategic Group Map’ for an industry: 1. Identify the competitive characteristics that
differentiate firms in the
industry.
2. Plot the firms on a two-variable map, using pairs of differentiating characteristics.

3. Classify firms that follows the same strategy, into one strategic group.
4. Determine the position of each strategic group, by making it proportional to the size of the Group’s respective
share of total industry sales revenues.
Q.3.9 2015 - Nov [8] {C} (b), RTP Descriptive
Key Success Factors (KSFs) are the rules that shape whether a company will be financially and competitively
successful? Do you agree with this statement? How to identify an industry’s key success factors? (3 marks)
Answer:
! Key Success Factors (KSFs):
• An industry’s Key Success Factors are those things or strategic elements affect that the industry members ability to
prosper in future in market place-based on particular industry element, product attributes, resources, competencies,
competitive capabilities and business outcomes which defines the difference between profit and loss and ultimately
between industry success and failure.
• A company with perceptive understanding of industry KSFs can gain sustainable competitive advantage by
training its strategy on industry KSFs and devoting its energy better than rivals on one or more of these factors.
• The main purpose of identifying KSFs is to make judgement about what things are more important to competitive
success and what things are less important.
• Essentially five things or factors are needed by any organization wanting to succeed:
• People: those who make up the organization

• Purpose: a reason for organizing and working together
• Processes: activities which the people undertake to fulfill their purpose
• Physical Resources: a place to work, the right equipment, money to pay the bills and the people who work there
• Customers: people outside the organization who are willing to pay money in return for the products and services
the organization provides; for government organizations taxpayers are the customers; many non profits depend on
contributions from donors who believe in the value of what the organization is doing.
• The answers of following 3 questions will help us to identify KSFs.

1. One what basis do customers choose between the competing
brand of sellers? What product attributes are crucial? 2. What resources and competitive capabilities does a seller
need
to have to be competitive successful?
3. What does it take for seller to achieve a sustainable competitive
advantage?
State with reason which of the following statement is correct or incorrect: E-commerce technology close up the
opportunities for reconfiguring industry and company value chains. (2 marks)
Answer:
Incorrect: E-commerce technology doesn’t close up but open up the opportunities for reconfiguring industry and
company value chains.

Q.3.11 2016 - May [14] (b) Short Note Write short note on the following:
Concept of driving forces. (3 marks)
Answer:
Concept of Driving Forces
Some common Driving Forces
The company shall determine the driving forces and their impacts on competitions. This analysis is done in two
steps:
(i) Identifying the most common driving forces causing the competition.
(ii) Finding or analyzing their individual contribution to competition.
☐
☐
☐
☐
☐
☐
☐
Decreasing cost or price
Increasing globalization
Market innovations
Product Innovations
Change in long term industry growth rate Exit or entry of major firms
The internet and new e-commerce opportunities and threats it breeds in the industry.

Assume that you are a manager making a business plan. Provide a checklist of the important factors to be considered
for conducting an analysis to make such plan. (4 marks)
Answer:
1. Opportunity and Issue Analysis
What are the current opportunities that are available in the market the main threats that business is facing and may
face in the future, the strengths that the business can rely on and any weaknesses that may affect the business
performance.
2. Competitive Situation
Analyze main competitors of organization who are they what are they upto how do they compare. advantage?
weakness. What are their competitive
Analyze their strength and

3. Product Situation The details about current product. The details
about current product may be divided into part such as the core product and any secondary or supporting services or
products that also make up what you sell. It is important to observe this in terms of its different parts in order to be
able to relate this back to core needs of customers.

“Industry and competitive analysis begins with an overview of the industry’s dominant economic features.” Explain
and also narrate the factors to be considered in profiling in industry’s economic features.
(5 marks)
What do you understand by Trigger of change? How is trigger related to driving force?
Answer:
Triggers of Change:
Triggers are fundamental character to make movements. The intensity of competition is determined by the triggers.
Triggers hits the driving force and driving force creates impact on competition. This analysis has two steps:
• Identify most common driving forces causing the competition.
• Find how much it is creating impact on competition.
There is popular concept of life cycle of the product. The life cycle change is applicable to the whole industries. But
we know that there are other factors also which provide stimulant for changes.
The trigger hits the driving force. Industry and competition changes because of force and motion in business. The
most dominant force or reason for change is called driving force. This driving forces have biggest influences on kind
of competition that will take place in industry. Most powerful driving force is good enough to make quality
upgradation. Some of the categories of drivers are to take the industry on the top in the quality, awareness, stability
etc. Many events can affect an industry powerfully enough to qualify as driving force. Some of them can be industry
specific and some of them can be general. Some of the categories of drivers are the following:
• The Internet and the new e-commerce opportunities and threats it
breeds in the industry.

• Increasing globalization.
• Changes in the long-term industry growth rate.
• Product innovation.
• Marketing innovation.
• Entry or exit of major forms.

4 Core Competence
Q.4.1 2007 - Nov [6] (c) Objective
State with reasons which of the following statement is correct/incorrect: A core-competence is a unique opportunity
of an organisation not shared by other. (2 marks)
Answer :
Correct : Core competencies represent distinctive skills which helps a firm gain competitive advantage over the
others. It is thus not shared by others and if the competitors imitate or develop similar core competencies, the firm
has to continuously gain more and more competencies to stand aside.

Q.4.2 2008 - Nov [7] (c) Briefly answer the following: Components of a Value chain. OR 2013 - Nov [14] (b) Write
short note on the following: Components of Value Chain
Answer :
Components of Value Chain: 1. Primary Activities:
(i) Inbound Logistics

(ii) Operations
(iii) Outbound Logistics
(iv) Marketing and Sales
(v) Service
Arranging the inbound materials, parts, and/or finished inventory from suppliers to manufacturing or assembly
plants, warehouses, or retail stores
Concerned with managing the process that converts inputs (in the forms of raw materials, labour, and energy) into
outputs (in the form of goods and/or services).
Is the process related to the storage and movement of the final product and the related information flows from the
end of the production line to the end user.
Selling a product or service and processes for creating, communicating, delivering, and exchanging offerings that
have value for customers, clients, partners, and society at large.
Includes all the activities required to keep the product/service working effectively for the buyer after it is sold and
delivered.
Descriptive
(2 marks) Short Note
(3 marks)
movement of
2. Support Activities (i) Infrastructure
(ii) Technological Development
(iii) Human
Resources Management
(iv) Procurement
Consists of activities such as accounting, legal, finance, control, public relations, quality a s s u r a n c e and
management.
Pertains to the software, procedures and technical knowledge brought to bear in the firm’s transformation of inputs
into outputs. Consists of all activities involved in recruiting, hiring, training, developing, compensating and (if
necessary) dismissing or laying off personnel.
The acquisition of goods, services or works from an outside external source.

gene r a l ( s t r a t e g i c ) equipment, hardware,
Q.4.3 2011 - Nov [10] (iii) Descriptive
Explain the meaning of the following concepts:

Value Chain Analysis (1 mark) Answer :
Value Chain
A firm’s Value Chain forms a part of a larger stream of activities, which Porter calls a value system. A value system,
or an industry value chain, includes the suppliers that provide the inputs necessary to the firm along with their value
chains. After the firm creates products, these products pass through the value chains of distributors (which also have
their own value chains), all the way to the customers. All parts of these chains are included in the value system. To
achieve and sustain a competitive advantage, and to support that advantage with information technologies, a firm
must understand every component of this value system.
Q.4.4 2014 - Nov [11] (a), RTP Descriptive “Management of internal linkages in the value chain could create
competitive advantage in a number of ways”. Briefly explain. (4 marks)
Answer:
Successful implementation of supply management systems require a change from managing individual function to
integrating activities into key supply chain processes. It involves collaborative work between buyers and suppliers
joint product development, common systems and shared information. A key requirement for successfully
implementing supply chain will be network of information sharing and management of linkages.
Linkages are relationships between the way one value activity is performed and the cost or performance of another
(e.g., purchasing highquality, precut steel sheets can simplify manufacturing and reduce scrap). Linkages can lead to
competitive advantage in two ways optimization and coordination.
Linkages among value activities arise from a number of generic causes, among them the following: the same
function can be performed in different ways; the cost or performance of direct activities is improved by greater
efforts in indirect activities; activities performed inside a firm reduce the need to demonstrate, explain, or service a
product in the field; quality assurance functions can be performed in different ways.
The buyer’s Value Chain. Buyers also have value chains, and a firm’s product represents a purchased input to the
buyer’s chain. Understanding the value chains of industrial, commercial, and institutional buyers is easy because of
their similarities to that of a firm.
The Value Chain can be used to compare the firm’s current position with the strategy selected in order to assess the
strategic gap. The use of activitybased cost measurement with value chain analysis will enable individual
components of the business to be evaluated without losing sight of their holistic impact on the competitiveness of
the business.
Finally, the basic concept of the Value Chain has been used by strategists to explain the success of various firms in
pursuit of a differentiation or low cost strategy.

Q.4.5 2017 - Nov [14] (Or) (b) Short Note Write short note on the following:
Value Chain Analysis. (3 marks)
Answer:
Value Chain
Concept
A firm’s value chain forms a part of a larger stream
of activities, which Porter calls a value system. A value system, or an industry value chain, includes the suppliers
that provide the inputs necessary to the firm along with their value chains. After the firm creates products, these
products pass through the value chains of distributors (which also have their own value chains), all the way to the
customers. All parts of these chains are included in the value system. To achieve and sustain a competitive
advantage, and to support that advantage with information technologies, a firm must understand every component of
this value system.
Components of Value Chain

1. Primary Activities
(i) Inbound Arranging the inbound movement of materials, Logistics parts, and/or finished inventory from
suppliers to manufacturing or assembly plants, warehouses, or retail stores.
(ii) Operations Concerned with managing the process that converts inputs (in the forms of raw materials, labour,
and energy) into outputs (in the form of goods and/or services).
(iii) Outbound Logistics

(iv) Marketing and Sales
(v) Service
Is the process related to the storage and movement of the final product and the related information flows from the
end of the production line to the end user.
Selling a product or service and processes for creating, communicating, delivering, and exchanging offerings that
have value for customers, clients, partners, and society at large.
Includes all the activities required to keep the product/service working effectively for the buyer after it is sold and
delivered.
2. Support Activities (i) Infrastructure

(ii) Technological Development
(iii) Human
Resources Management
(iv) Procurement
Consists of activities such as accounting, legal, finance, control, public relations, quality assurance and general
(strategic) management.
Pertains to the equipment, hardware, software, procedures and technical knowledge brought to bear in the firm’s
transformation of inputs into outputs.
Consists of all activities involved in recruiting, hiring, training, developing, compensating and (if necessary)
dismissing or laying off personnel.
The acquisition of goods, services or works from an outside external source.

Q.4.6 2018 - May [7] {C} (d) Descriptive Explain the meaning of core competencies. (2 marks)
Answer:
Core Competence:
A core competence is a unique strength of an organization which may not be shared by others. Core competencies
are those capabilities that are critical to a business achieving competitive advantage. In order to qualify as a core
competence, the competency should differentiate the business from any other similar businesses.

Human Resource Manager’s role is significant in building up core competency of the firm. (2 marks)
Answer:
Correct
The human resource manager has a significant role to play in developing core competency of the firm. A core
competence is a unique strength of an organization which may not be shared by others. Core- competencies can be
generated and maintained only through the effective management of human resources and their skills.
Q.4.8 RTP Descriptive How does the core competency and value chain linked together helps the company to be
unique?
Answer:
Core Competence:
A core competence is a unique strength of an organization which may not be shared by others. Core competencies
competence, the competency should differentiate the business from any other similar businesses.
Core competences in Separate activities may provide competitive advantage for an organization, but nevertheless
over time may be imitated by competitors. Core competences are likely to be more robust and difficult to imitate if
they relate to the management of linkages within the organization’s value chain and linkages into the supply and
distribution chains. It is the management of these linkages which provides ‘leverage’ and levels of performance
which are difficult to match.
The Management of Internal Linkages in the value chain could create competitive advantage in a number of
ways:
• There may be important linkages between the primary activities. For
example, a decision to hold high levels of finished stock might ease production scheduling problems and provide for
a faster response time to the customer. However, it will probably add to the overall cost of operations. An
assessment needs to be made of whether the value added to the customer by this faster response through holding
stocks is greater than the added cost.
• It is easy to miss this issue of managing linkages between primary activities in an analysis if, for example, the
organization’s competences in marketing activities and operations are assessed separately.
• The Management of the linkages between a primary activity and a support activity may be the basis of a core
competence. It may be key investments in systems or infrastructure which provides the basis on which the company
outperforms competition. Computer-based systems have been exploited in many different types of service
organization and have fundamentally transformed the customer experience.
• Linkages between different support activities may also be the basis of core competences.
In addition to the management of internal linkage, competitive advantage may also be gained by the ability to
complement/co-ordinate the organization’s own activities with those of suppliers, channels or customers. Again, this
could occur in a number of different ways:
• Vertical integration attempts to improve performance through ownership
of more parts of the value system, making more linkages internal to the organization. However, the practical
difficulties and costs of co-ordinating a wider range of internal activities can outweigh the theoretical benefits.
• Within manufacturing industry, the competence in closely specifying requirements and controlling the
performance of suppliers (sometimes linked to quality checking and/or penalties for poor performance) can be
critical to both quality enhancement and cost reduction.
• A more recent philosophy has been total quality management, which seeks to improve performance through closer
working relationships between the specialists within the value system. For example, many manufacturers will now
involve their suppliers and distributors at the design stage of a product or project.
• The merchandising activities which manufacture undertakers with their distributors are now much improved and
are an important.

‘Value for Money’ is a leading retail chain, on account of its ability to operate its business at low costs. The retail
chain aims to further strengthen its top position in the retail industry. Marshal, the CEO of the retail chain is of the
view that to achieve the goals they should focus on lowering the costs of procurement of products.
Highlight and explain the core competence of the ‘Value for Money’ retail chain.
Answer:
A Core Competence is a unique strength of an organization which may not be shared by others. Core Competencies
competence, the competency should differentiate the business from any other similar businesses. A core competency
for a firm is whatever it does is highly beneficial to the organisation.
‘Value for Money’ is the leader on account of its ability to keep costs low.
The cost advantage that ‘Value for Money’ has created for itself has allowed the retailer to price goods lower than
competitors. The core competency in this case is derived from the company’s ability to generate large sales volume,
allowing the company to remain profitable with low profit margin.

5 Competitive Advantage
Q.5.1 2018 - May [7] (a) Descriptive Explain the concept of competitive advantage. (2 marks)
Answer:
Competitive Advantage:
Competitive advantage is the position of a firm to maintain and sustain a favourable market position when compared
to the competitors. Competitive advantage is ability to offer buyer’s something different and thereby providing more
value for the money. It is the result of a successful strategy. This position gets translated into higher market share,
higher profits when compared to those that are obtained by competitors operating in the same industry. Competitive
advantage may also be in the form of low cost relationship in the industry or being unique in the industry along
dimensions that are widely valued by the customers in particular and the society at large.

6
Internal and External Analysis/ (Portfolio Analysis)
Q.6.1 2008 - May [7] (b) Descriptive Briefly answer the following :
Growth phase of product life cycle (2 marks)
Answer:
Growth Phase of Product Life Cycle:
After the product is introduced in the market, the product enters the second stage i.e. growth stage. Under this stage
the product gains popularity and recognition. As a result the demand and sales go up tremendously. Consequently
profit of the firm starts going up. However, high profit also attracts competitors to enter the field. Thus expenditure
on advertisement and sales promotion programme should be increased.

Q.6.2 2009 - May [6] (d) Objective State with reason which of the following statement is correct or incorrect: PLC
is an S shaped curve. (2 marks)
Answer:
Correct:
PLC is a S-shaped curve showing graphical representation of sales over time that passes through four stages that is,
introduction, growth, maturity and decline phase. Identification of PLC stages of any product or service is very
helpful in marketing management.

Q.6.3 2010 - Nov [9] (b) (ii) Objective
Fill in the blanks in the following statements with the most appropriate word:
Product Life Cycle portrays the distinct _______ in the sales history of a product. (1 mark)
Answer :
Stages.
Q.6.4 2012 - Nov [12] (b) Descriptive Explain the concept of Experience Curve and highlight its relevance in
strategic management. (3 marks) OR 2014 - May [4] (a), RTP Short Notes Write short note on the following:
Experience Curve (4 marks) Answer:
Experience Curve
Meaning
Based on
Implication
Experience curve is a concept which explains the phenomena of efficiency increase gained by workers through
repetitive productive work. It is a portfolio approach.
Experience curve is based on the commonly observed phenomenon that unit costs decline as a firm accumulates
experience in terms of a cumulative volume of production.
The implication is that larger firms in an industry would tend to have lower unit costs as compared to those of
smaller organizations, thereby gaining a competitive cost advantage.
Results from Experience curve results from a variety of factors such as learning effects, economies of scale, product
redesign and technological improvements in production.
Relevance in Strategic
Management
1.
2. With implementation of experience curve larger firms in an industry tend to have lower cost per unit as compared
to smaller companies thus gaining a competitive cost advantage.
Thus it builds market share and discourage competition by building a barrier for new firms.
Q.6.5 2013 - Nov [14] (a) Short Note Write short note on the following:
Product Life Cycle (4 marks) OR 2015 - May [14] (a), RTP Short Notes Write short note on the following:
Product Life Cycle (PLC) and its significance in portfolio diagnosis. (4 marks)
Answer:
Production Life Cycle
Definition Product Life Cycle (PLC) is the cycle through which every product goes through from introduction to
withdrawal or eventual demise. A product progresses through a sequence of stages from introduction to growth,
maturity, and decline. This sequence is known as the product life cycle and is associated with changes in the
marketing situation, thus impacting the marketing strategy and the marketing mix.
Introduction ---☐Growth ---- ☐ Maturity ------ ☐ Decline -----☐ PLC Curve PLC is an S– shaped curve which
exhibits the relationship of sales with respect of time for a product that passes through the four successive stages of
(1) introduction (Slow sales growth), (2) growth (rapid market acceptance) (3) maturity (slow down in growth rate)
and (4) decline (sharp downward drift). If businesses are substituted for product, the concept of PLC could work just
as well.
Description: These stages are: 1. Introduction

2. Growth
3. Maturity
This is the stage when the product is introduced into the market. In this stage, there’s heavy marketing activity,
product promotion and the product is put into limited outlets in a few channels for distribution. Sales take off slowly
in this stage. The need is to create awareness, not profits.
The second stage is growth. In this stage, sales take off, the market knows of the product; other companies are
attracted, profits begin to come in and market shares stabilize.
The third stage is maturity, where sales grow at slowing rates and finally stabilize. In this stage, products get
differentiated, price wars and sales promotion become common and a few weaker players exit.
4. Decline
5. Significance of PLC
Advantage
The fourth stage is decline. Here, sales drop, as consumers may have changed, the product is no longer relevant or
useful. Price wars continue, several products are withdrawn and cost control becomes the way out for most products
in this stage.
PLC analysis, if done properly, can alert a company as to the health of the product in relation to the market it serves.
PLC also forces a continuous scan of the market and allows the company to take corrective action faster. But the
process is rarely easy.
The main advantage of PLC is that it can be used to diagnose a portfolio of products (or businesses) in order to
establish the stage at which each of them exists. Particular attention is to be paid on the businesses that are in the
declining stage. Depending on the diagnosis, appropriate strategic choice could be made. For instance, expansion
may be a feasible alternative for businesses in the introductory and growth stages. Mature businesses may be used as
sources of cash for investment in other businesses which need resources. A combination of strategies like selective
harvesting, retrenchment, etc. may be adopted for declining businesses. In this way, a balanced portfolio of
businesses may be built up by exercising a strategic choice based on the PLC concept.

Q.6.6 2012 - Nov [9] (a) (i), 2015 - Nov [9] (a) (ii) Objective
State with reason which of the following statement is correct or incorrect: Portfolio analysis helps the strategists in
identifying and evaluating various businesses of a company. (2 marks each)
Answer:
Correct:
Corporate portfolio analysis (or simply, portfolio analysis) is a set of techniques that evolved during the mid –
1960s.
☐ Corporate portfolio analysis could be defined as a set of techniques
that help strategists in taking strategic decisions with regard to individual products or businesses in a firm's portfolio.
Q.6.7 2017 - Nov [8] {C} (e) Descriptive Discuss with example the relevance of experience curve in strategic
management. (3 marks)
Answer:
Experience Curve:
Meaning
Based On
Relevance
Experience curve is a concept which explains the phenomena of efficiency increase gained by workers through
repetitive productive work. It is a portfolio approach.
Experience curve is based on the commonly observed phenomenon that unit costs decline as a firm accumulates
experience in terms of a cumulative volume of production.
The concept of experience curve is relevant for a number of areas in strategic management for instance, experience
curve is considered a barrier for new firms contemplating entry in an industry. It is also used to build market share
and discourage competition.
Example In the contemporary Indian two wheeler market, the experience curve phenomenon seems to be working
in favour of Bajaj Auto, which for the past decade has been selling, on an average, five lakh scooters a year and
retain more than 60 percent of market. Its only serious competitor is LML Vespa Ltd., which has a far lesser share of
the market. The primary strategic advantage that Bajaj Auto has is in terms of costs, other competitors like Gujarat
Narmada and Kinetic Honda find it extremely difficult to compete due to the cost differentials the currently exist.
The likely strategic choice for underdog competitors could be a market nice approach or segmentation based on
demography.

7
Internal and External Analysis (Portfolio Analysis) : BCG - Growth Share Matrix
Q.7.1 2007 - Nov [7] (c) Descriptive Briefly answer the following :
Explain the term star in the context of BCG matrix. (2 marks) Answer:
BCG Matrix
Star Stars are high growth- high market share businesses which are growing rapidly.
Cow Cash Cows are businesses which generate large amount of cash but their rate of growth is slow.
Dog These are low growth and low share business and products. They may generate enough cash to maintain
themselves in the market but do not have much future.

Q.7.2 2009 - May [8] Descriptive
Describe the construction of BCG matrix and discuss its utility in strategic management. (5 ☐ 5 = 10 marks)
Answer:
Boston Consulting Group (BCG) matrix provides a graphic representation for an organization to examine different
businesses in its portfolio on the basis of their relative market shares and industry growth rates. The result of the
combination of industry growth rate and relative market share, each along a high and low dimension, is a four-cell
matrix. Each cell of the matrix has been given an appropriate name by the Boston Consulting Group.
Relative Market Share
— The vertical axis denotes the rate of growth of sales in percentage for particular industry.
— The horizontal axis denotes the relative market share and serve as a measure of company Strength in the Market.
The Four Cells of the BCG Matrix are:
1. Star Stars are high growth- high market share businesses which are growing rapidly.
2. Cow Cash Cows are businesses which generate large amount of cash but their rate of growth is slow.
3. Question Business with high industry growth but low market share Marks for a company are questions marks
which are also called ‘Problem Children’. They require large amounts of cash to maintain or gain market share.
These are usually new products or services so they need heavy investment. It is for business organisation to turn
them into the stars and then to cash cows when the growth rate reduces.
4. Dogs These are low growth and low share business and products. They may generate enough cash to maintain
themselves in the market but do not have much future.

Q.7.3 2011 - Nov [11] (a), 2017 - May [11] (a) Descriptive In the light of BCG Growth Matrix state the situation
under which the following strategic options are suitable:
(i) Build
(ii) Hold
(iii) Harvest
(iv) Divest (4 × 1 = 4 marks each)
Answer:
In the light of BCG Growth Matrix, once an organisation has classified its products or SBUs, it must determine what
role each will play in the future.
The Four Strategies that can be pursued are:
(i) Build Create a new brand and a new target audience by means of a Question Mark. Here the objective is to
increase market share, even by forgoing short-term earnings in favour of building a strong future with large market
share.
(ii) Hold Maintain this success and benefit from market growth by means of a star. Here the objective is to preserve
market share.
(iii) Harvest Make as much money as possible with the product by means of the Cash Cow. This can be achieved by
improving or renewing the product or by manufacturing by-products. Here the objective is to increase short-term
cash flow regardless of long-term effect.
(iv) Divest Abandon the investment in the product by means of a Dog; the market is saturated or there is no or little
interest in the product. Here the objective is to sell or liquidate the business because resources can be better used
elsewhere.

Q.7.4 2012 - May [9] (b) (ii) Objective
Fill in the blanks in the following statements with the most appropriate word: Market penetration refers to a
_________ where the business focuses on selling existing products into existing market. (1 mark)
Answer:
Growth Strategy.
Q.7.5 2015 - May [8] {C} (c) Descriptive
What does the concept of ‘question marks’ in the context of BCG GrowthShare matrix signify? What strategic
options are open to a business firm which has some ‘question marks’ in the portfolio of its businesses?
(3 marks) Answer:
• The Concept of ‘question marks’ in the context of BCG growth-share matrix is high growth & low market share.
• They require huge amount of cash to maintain or gain market share.
• Question marks are generally new goods and services which have a good commercial prospect.
• There is no specific strategy which can be adopted. If the firm thinks it has dominant market share, then it can
adopt expansion strategy, else retrenchment strategy can be adopted.
• Most businesses start as question marks as the company tries to enter a high growth market in which there is
already a market share.
• If ignored, the question marks may become dogs, while if huge investment is made, they have the potential of
becoming stars. Space to write important points for revision
Q.7.6 2015 - May [11] (a) Descriptive To which industries the following environmental changes will offer
opportunities and pose threats (name any two industries in each case). Give reasons for your answer.
(i) Significant reduction in domestic air-fares spanning over a long period.
(ii) Cut in interest rates by banks. (2 × 2 = 4 marks) Answer:
(i) If there is changes in significant reduction in domestic air-fares spanning over a long period:
☐ Airline Industries: As an opportunity because it creates profit in
future and service can be improved.

☐ Service Industries: It creates opportunity for them in the future as a service communication can be improved by
providing better and speedier services.
(ii) Cut in interest rates by banks:

☐ Banking Section: Cut in interest rate can be favourable to banking industries as it attracts and pleases the
customers for more loans and advances. So, they can earn good amount on fund.
☐ Manufacturing Industries: Main requirement of manufacturing industries is a fund at its lower cost. So, when
there is change in Bank Interest Rate, Manufacturing Industries can avail such fund and grow in an economy.

Q.7.7 2016 - May [9] (a) (i) Objective State with reason which of the following statement is correct or incorrect:
BCG Growth Share Matrix is popularly used for resource allocation. (2 marks)
Answer:
Correct:
BCG Growth Share Matrix is popularly used for resource allocation.

Q.7.8 2010 - May [8] (ii) Practical
An industry comprises of only two firms — Soorya Ltd. and Chandra Ltd. From the following information relating
to Soorya Ltd., prepare BCG Matrix:
Product Revenues Percent
(in ` ) Revenues Profits Percent Percentage Percentage (in ` ) Profits Market Industry
Share Growth Rate A 6 crore 48 120 lakh 48 80 + 15 B 4 crore 32 50 lakh 20 40 + 10 C 2 crore 16 75 lakh 30 60 –
20 D 50 lakh 4 5 lakh 2 5 – 10
Total 12,5 crore 100 250 lakh 100

(4 marks)
Answer:
On implementation of BCG approach, a company classifies its different businesses on a two dimensional growth-
share matrix. In the matrix, the vertical axis shows market growth rate and provides a measure of market
attractiveness. The horizontal axis shows relative market share and serves as a measure of company strength in the
market. Using the given data on market share and industry growth rate of Soorya Ltd., its four products are placed in
the BCG matrix as follows:
High Product A [80% Market Share + 15% Growth Rate] Stars Product C [ 6 0 % M a r k e t Sha re ☐ 20%
Growth Rate] Cash Cows Relative
Analysis :
Low
Product B
[40% Market Share + 10% Growth Rate] Question Marks
Product D
[05% Market Share ☐10% Growth Rate] Dogs
Market Shares
(i) Product A is in best position as it has a high relative market share and a high industry growth rate.
(ii) On the other hand, product B has a low relative market share, yet competes in a high growth industry.
(iii) Product C has a high relative market share, but competes in an industry with negative growth rate. The company
should take advantage of its present position that may be difficult to sustain in long run.
(iv) Product D is in the worst position as it has a low relative market share, and competes in an industry with
negative growth rate. Space to write important points for revision
Q.7.9 2013 - Nov [11] Practical From the following information relating to X Ltd. company, prepare BCG Matrix
and also analyse it.
Product Revenues Percent Profit Percent Percentage Percentage (in `) Revenues (in `) Profit Market Industry Share
Growth Rate
A 60 Crore 48 1200 Lakh 48 80 +15

B 40 Crore 32 500 Lakh 20 40 +10
C 20 Crore 16 750 Lakh 30 60 ☐20
D 05 Crore 04 50 Lakh 02 05 ☐10
Total 125 Crore 100 2500 Lakh 100
(4 + 3 = 7 marks) Answer:
Using the BCG approach, a company classifies its different businesses on a two dimensional Growth-Share Matrix.
In the Matrix, the vertical axis represents market growth rate and provides a measure of market attractiveness. The
horizontal axis represents relative market share and serves as a measure of company strength in the market. With the
given data on market share and industry growth rate of X Ltd., its four products are placed in the BCG matrix as
follows:
Relative Market Share
High
Product A
[80% Market Share + 15% Growth Rate] Stars
Product C
[ 6 0 % M a r k e t Share ☐ 2 0%
Growth Rate]
Cash Cows
Low Product B
[40% Market Share + 10% Growth
Rate]
Question Marks Product D
[05% Market Share ☐ 10% Growth
Rate]
Dogs
Product A: It falls in the Star category and is in the best position with high relative market share and a high industry
growth rate. This product has the best opportunities for expansion. It will require heavy investment to maintain its
present position.
Product B: It is a question mark product that has a relatively low market share, yet competes in a high growth
industry. This product will also need lot of cash to hold its share. If unattended, it is capable of becoming a cash
trap. Product C: It is a cash cow for the business, has a relatively high market share competing in an industry with
negative growth rate. The company should take advantage of its present position that may be difficult to maintain in
the long run. Currently it needs less investment to maintain its market share.
Product D: It is presently placed in the Dog category, is in the worst position as it has relatively a low market share
and competes in an industry with negative growth rate. This product does not have much future. It should be
minimized by means of divestment or liquidation.
Internal and External Analysis (Portfolio 8 Analysis) : Ansoff’s Product Market Growth Matrix
Aurobindo, the pharmaceutical company wants to grow its business. Draw Ansoff’s Product Market Growth Matrix
to advise them of the available options. (4 marks)
OR 2013 - May [8] {C} (d) Descriptive
“The Ansoff’s product market growth matrix is a useful tool that help businesses their product and market growth
strategy.” Elucidate this statement. (3 marks)
OR 2017 - May [11] (b), RTP Descriptive
How Ansoff’s Product Market Growth Matrix is a useful tool for business organisations? (3 marks) Answer:
The Ansoff Matrix is a strategic planning tool that provides a framework to help executives, senior managers, and
marketers devise strategies for future growth. It is named after Russian American Igor Ansoff, who came up with
the concept. Ansoff, in his 1957 paper, provided a definition for productmarket strategy as “a joint statement of a
product line and the corresponding set of missions which the products are designed to fulfill”.
Ansoff’s Product Market Growth Matrix is useful tool that helps businessmen decide their product and market
growth strategy. This two dimensional matrix gives us four strategic options.
Market
Penetration
Market
Development
In market penetration strategy, the organization tries to grow using its existing offerings (products and services) in
existing markets. In other words, it tries to increase its market share in current market scenario. This involves
increasing market share within existing market segments. This can be achieved by selling more products or services
to established customers or by finding new customers within existing markets. Here, the company seeks increased
sales for its present products in its present markets through more aggressive promotion and distribution.
This can be accomplished by:
(i) Price decrease;

(ii) Increase in promotion and distribution support; (iii) Acquisition of a rival in the same market; (iv) Modest
product refinements.
In market development strategy, a firm tries to expand into new markets (geographies, countries etc.) using its
existing offerings.
This can be accomplished by
1. Different customer segments
2. Industrial buyers for a good that was previously
sold only to the households;

3. New areas or regions about of the country
4. Foreign markets
This Strategy is more likely to be successful where:
1. The firm has a unique product technology it can leverage in the new market;
2. It benefits from economies of scale if it increases output;
3. The new market is not too different from the one it has experience of;
4. The buyers in the market are intrinsically profitable.
Product In Product Development strategy, a company tries to Development create new products and services
targeted at its existing markets and customer to achieve growth. This involves extending the product range available
to the firm’s existing markets.
These Products may be obtained by:
1. Investment in research and development of additional products;

2. Acquisition of rights to produce someone else’s product;
3. Buying in the product and “branding” it;
4. Joint development with ownership of another company who need access to the firm’s distribution channels or
brands.
Diversification Through Diversification an organisation tries to grow its market share by introducing new offerings
in new markets. It is the most risky strategy because both product and market development is required. A strategy
for company growth through starting up or acquiring businesses outside the company’s current products and
markets.
Advise: Based on the matrix, Aurobindo may segregate its different products. Being in pharmaceuticals,
development of new products is result of extensive research and involves huge costs. There are also social
dimensions that may influence the decision of the company. It can adopt penetration, product development, market
development or diversification simultaneously for its different products.

Q.8.2 2012 - May [10] (vi) Descriptive
Explain the meaning of following concepts:

Market Penetration (1 mark) Answer:
Market Penetration: Market penetration as a deliberate strategy involves gaining market share through improving
quality or productivity, and increasing marketing activity. This is true for the long-term desirability of obtaining a
dominant market share. However, the nature of the market and the position of competitors determine the ease with
which a business can pursue a strategy of market penetration.

Q.8.3 2016 - May [13] (b) Distinguish Between
Distinguish between the following:

‘Market development’ and ‘Product development’. (3 marks) Answer:
Market Development and Product Development
Market Development
1. Meaning This strategy involves m a r k e t i n g e x i s t i n g products to customer in related market areas, by
adding different channels of distribution or by
Product Development
This involves substantial m o d i f i c a t i o n o f e x i s t i n g products or creation of new but related products that
can be marketed to current customers through established level. changing the content of a d v e r t i s i n g o r
promotional media
2. Market Here, the existing market Change changes because firms enters into new market.
3. Product H e r e p r o d u c t s a r e offered i.e. existing product offered in new markets.

Here, market doesn’t change, firm agrees to offer in same market
Here, new products are offered in existing markets.

9
Internal and External Analysis (Portfolio Analysis) : ADL Matrix
Q.9.1 2012 - Nov [10] (iii) Descriptive Explain the meaning of the following concepts:
ADL Matrix (1 mark)
Answer:
The matrix suggested by Arthur D. Little Company for portfolio analysis is a four-by-five matrix and is aimed at
linking stages in the product life cycle with the competitive strength of businesses. The matrix is illustrated below:
Classified according to their business strength, SBUs may be plotted on the vertical axis which is divided into five
segments—Weak, Tenable, Favourable, Strong and Dominant. The stages in life cycle of the products are plotted on
the horizontal axis in four segments—Embryonic, Growth, Maturity and Decline.

Describe the various competitive positions and its assessment criteria as per ADL Matrix. (3 marks) Answer:
Competitive Positions and their Assessment Criteria for ADL Matrix:
1. Dominant
2. Strong
3. Favourable
4. Tenable
5. Weak
This is a comparatively rare position and in many cases is attributable either to a monopoly or a strong and protected
technological leadership.
By virtue of this position, the firm has a considerable degree of freedom over its choice of strategies and is often
able to act without its market position being unduly threatened by its competitors.
This position, which generally comes about when the industry is fragmented and no one competitor stand out
clearly, results in the market leaders a reasonable degree of freedom.
Although the firms within this category are able to perform satisfactorily and can justify staying in the industry.
The performance of firms in this category is generally unsatisfactory although the opportunities for improvement do
exist.
Q.9.3 2014 - Nov [12] (a) Practical In the context of Ansoff’s Product-Market Growth Matrix, identify with
reasons, the type of growth strategies followed in the following cases:
(i) A leading producer of tooth paste, advises its customers to brush teeth twice a day to keep breath fresh.
(ii) A business giant in hotel industry decides to enter into dairy business. (iii) One of India’s premier utility vehicles
manufacturing company ventures to foray into foreign markets.
(iv) A renowned auto manufacturing company launches ungeared scooters in the market.
Answer:
(i) Market
Penetration
(ii) Diversification
(iii) Market
Development
(iv) Product
Development
(4 marks)
Refers to a growth strategy where the business focuses on selling existing products into existing markets.
Diversification refers to a growth strategy where a business markets new products in new markets.
Market Development refers to a growth strategy where the business seeks to sell its existing products into new
markets.
Product Development refers to a growth strategy where business aims to introduce new products into existing
markets.
Internal and External Analysis (Portfolio 10 Analysis) : General Electric Matrix [Stop Light Strategy Model]
Q.10.1 2016 - May [12] (b) Descriptive Discuss General Electric model of analyzing current business portfolio. (3
marks) OR RTP Descriptive
Explain GE model. How is it useful in making strategic choices. Answer:

General Electric Model:
☐ This model is used by General Electric Company (developed by GE with
the assistance of the consulting firm McKinsey & company). This model, is also known as Business Planning
Matrix, GE Nine cell Matrix and GE Electric Model. The strategic planning approach in this model has been
inspired from traffic control lights. The lights that are used at crossing to manage traffic are; green for go, amber or
yellow for caution, and red for stop. This model uses two factors while taking strategic decision: Business strength
and market attractiveness. The vertical axes indicates market attractiveness and horizontal axis shows the business
strength in the industry.
The Market attractiveness is measured by a number of factors like: ☐ Size of the market.
☐ Market growth rate.
☐ Industry profitability.
☐ Competitive intensity.
☐ Availability of technology.
☐ Pricing trends.
☐ Overall risk off returns in the industry.
☐ Opportunity for differentiation of products and services. ☐ Demand variability.
☐ Segmentation.
☐ Distribution structure (e.g. retail, direct, wholesale) etc.
☐ Business Strength is measured by drivers like: ☐ Market share.

☐ Market share growth rate.
☐ Profit margin.
☐ Distribution efficiency.
☐ Brand image.
☐ Ability to compete on price and quality.
☐ Customer loyalty.
☐ Production capacity.
☐ Technological capability.
☐ Relative cost position.
☐ Management caliber etc.
Business Strength
Strong Average Weak High Green Green Yellow Medium Green Yellow Red Low Yellow Red Red Figure : The
GE Portfolio Matrix
Zone Strategic Signals Green Invest/Expand Yellow Select/Earn
Red Harvest/Divest
If a product falls in the green section, the business is at advantageous position. To reap the benefits, the strategic
decision can be to expand, to invest and grow.
If a product is in the amber or yellow zone, it needs caution and managerial discretion is called for making the
strategic choices. If a product is in the red zone, it will eventually lead to losses that would make things difficult
for organisations. In such cases, the appropriate strategy should be retrenchment, divestment or liquidation.

11 SWOT Analysis
State with reason which of the following statement is correct or incorrect: The purpose of SWOT analysis is to rank
organisations. (2 marks) Answer:
Incorrect:
Organisations use SWOT analysis to understand the external and internal environment. SWOT refers to strength,
weakness, opportunities and threats. Through this analysis, the strengths and weaknesses existing within an
organisation can be matched with the opportunities and threats operating in the environment so that an effective
strategy can be formulated.

To which industries the following development offers opportunities and threats? ‘The number of nuclear families,
where husband and wife both are working, is fast increasing’. (3 marks)
Answer:
Different developments in the environment can offer different opportunities and threats to businesses. An
opportunity is a favourable condition in the organisation’s environment which enables it to strengthen its position
with respect to its competitors. A threat is an unfavourable condition in the which causes a risk for, or damage to,
the organisation’s position.
The Situation in the question relates to threats and opportunities of social environment. In the present social
environment, there is growth of nuclear families. This is away from the joint family system, when both husband &
wife are working it increases their spending capacity. Opportunity: Such developments bring direct opportunities to
different businesses such as Ready to eat food, fast to cook items, dish washers, washing machines, creches for
children and so on. Indirect opportunities exists for other lifestyle products.
Threat: At the same time, such development also acts as threat to traditional raw food suppliers, kitty party
organizers and so on.
Q.11.3 2014 - May [12] (b) Descriptive Explain the significance of SWOT analysis. (3 marks) Answer:
SWOT Analysis
Meaning
SWOT analysis (alternatively SWOT matrix) is an acronym
for strengths, weaknesses, opportunities, and threats and is a structured planning method that evaluates those four
elements of a project or business venture. A SWOT analysis can be carried out for a company, product, place,
industry, or person. It involves specifying the objective of the business venture or project and identifying the internal
and external factors that are favorable and unfavorable to achieve that objective. SWOT analysis aims to identify the
key internal and external factors seen as important to achieving an objective.
Categories
2.
Significance of SWOT
Analysis
SWOT analysis groups key pieces of information into two main categories:
1.
☐
☐
☐ Internal factors: the strengths and weaknesses internal to the organization.

External factors: the opportunities and threats presented by the environment external to the organization.
It provides logical framework for systematic and sound analysis of issues having bearing on the business situation,
generation of alternative strategies and the choice of strategy.
It presents information about both external and internal environment in a structured firm where it is possible to
compare external opportunities and threats with internal strengths and weakness.
It guides the strategist in strategy identification. It is natural that a strategist faces a problem when his organization
cannot be matched in the firm patterns. It is possible that the organization may have several opportunities and some
serious threats. It is equally true that the organisation may have powerful strengths coupled with major weaknesses
in the light of critical success factors.
Q.11.4 2014 - Nov [12] (b) Descriptive To which industries the following developments offer opportunities and
threats?
“Increasing trend in India to organize IPL (Cricket) type of tournaments in other sports also”. (3 marks)
Answer:
Opportunities
Threats
An opportunity is a favourable condition in the organisation’s environment which enables it to strength then its
position. The opportunities through IPL (cricket) tournaments are as follows:
☐ Growth of the Nation.
☐ Growth of Indian Cricket Industry.
• Growth of Stadiums.
• Growth of Sports Industry.
• Growth of Media Industry.
• Growth of tourism and hotel industry.
A threat is an unfavourable condition in the organisations environment which causes a risk for or damage to
organisation. ☐ Increase in corruption. ☐ Increase in betting. ☐ Time wasting of people.

Q.11.5 2016 - Nov [14] (a)
Write short note on the following: SWOT analysis.
OR 2018 - May [12] (Or) (b) Write a short note on SWOT analysis.
Short Notes
(4 marks) Short Notes
(3 marks) Answer:
SWOT Analysis:
1. Concept
SWOT analysis (alternatively SWOT matrix) is an
acronym for strengths, weaknesses, opportunities, and threats and is a structured planning method that evaluates
those four elements of a project or business venture. A SWOT analysis can be carried out for a
2. Aim
3. Categories
4. Strength
5. Weakness
company, product, place, industry, or person. It involves specifying the objective of the business venture or project
and identifying the internal and external factors that are favorable and unfavorable to achieve that objective.
SWOT analysis aims to identify the key internal and external factors seen as important to achieving an objective.
SWOT analysis groups key pieces of information into two main categories:
1. Internal factors: the strengths and weaknesses
internal to the organization.

2. External factors: the opportunities and threats
presented by the environment external to the
organization.
Strength is an inherent capability of the organization which it can use to gain strategic advantage over its
competitors.
A weakness is an inherent limitation or constraint of the organisation which creates strategic disadvantage for it.
6. Opportunity An opportunity is a favourable condition in the organisation’s environment which enables it to

strengthen its position.
7. Threat A threat is an unfavourable condition in the organisation environment which causes a risk for, or damage
to the organisation position.

Read the following case and answer the questions given at the end :
Read the following case and answer the questions given at the end :
30% annually) snacks segment, an altogether new to it. It had only one
national competitor☐Trepsico’s Trito. After a year its wafer snack
brand☐Ringo, fetched 20% market share across the country. Ringo’s
introduction was coincided with the cricket world cup. The wafer snacks
market is estimated to be around ` 250 crores.
The company could take the advantage of its existing distribution
network and also source potatoes from farmers easily. Before the PTC
could enter the market a cross-functional team made a customer survey
through a marketing research group in 14 cities of the country to know
about the snacks of eating habits of people. The result showed that the
customers within the age-group of 15-24 years were the most promising
for the product as they were quite enthusiastic about experimenting new
snack taste. The company reported to its chefs and the chefs came out
with 16 flavours with varying tastes suiting to the targeted age-group. The company decided to target the youngsters
as primary target on
the assumption that once they are lured in, it was easier to reach the
whole family.
Advertising in this category was extremely crowded. Every week two-three
local products in new names were launched, sometimes with similar
names. To break through this clutter the company decided to bank upon
humour appeal.
The Industry sources reveal that PTC spent about ` 50 crores on
advertisement and used all possible media☐print and electronic, both
including the creation of its own website, Ringoringoyoungo.com with
offers of online games, contests etc. Mobile phone tone downloading was
also planned which proved very effective among teenagers. The site was
advertised on all dotcom networks. Em TV, Shine TV, Bee TV and other
important channels were also used for its advertisement alongwith FM
radio channels in about 60 cities with large hoardings at strategic places. Analysts believes that Ringo’s success
story owes a lot to PTC’s
widespread distribution channels and aggressive advertisements. Humour
appeal was a big success. The ‘Ringo’ was made visible by painting the
Railway bogies passing across the States. It has also been successful to
induce Lovely Brother’s Future Group to replace Trito in their Big-Bazaar
and chain of food Bazaars. PTC is paying 4% higher margin than Trepsico
to Future group and other retailers.
Ringo to giving Trepsico a run for its money. Trito’s share has already
been reduced considerably. Retail tie-ups, regional flavours, regional
humour appeals have helped PTC. But PTC still wants a bigger share in
the market and in foreign markets also, if possible.
Questions :
(a) What is SWOT Analysis ? (4 marks)
(b) What are the strength of PTC ? (4 marks)
(c) What are the weaknesses of PTC for entering into the branded snacks market ? (4 marks)
(d) What kind of marketing strategy was formulated and implemented for Ringo ?
What else need to be done by Ringo so as to enlarge its market ? (8 marks)
Answer:
(a) The comparison of strengths, weaknesses, opportunities, and threats is normally referred to as a SWOT analysis.
• Strength: Strength is an inherent capability of the organization which it can use to gain strategic advantage over its
competitors.
• Weakness: A weakness is an inherent limitation or constraint of the organization which creates strategic
disadvantage to it.
• Opportunity: An opportunity is a favorable condition in the organization’s environment which enables it to
strengthen its position.
• Threat: A threat is an unfavorable condition in the organization’s environment which causes a risk for, or damage
to, the organization’s position.
The central purpose of SWOT analysis is to identify the strategies
that will create a firm – specific business model that will best align, fit, or
match a company’s resources and capabilities to the demands of the
environment in which it operates. Strategic managers compare and
contrast the various alternative possible strategies against each other
with respect to their ability to achieve major goals and superior
profitability.
(b) The strength of PTC:
(i) Wide spread distribution network
(ii) Aggressive advertisements
(iii) Easy availability of raw material
(iv) Ringo’s introduction coincided with Cricket Wold Cup. (c) The main weakness was the presence of strong
national competitor. The
company has only targeted youngster. Heavy advertisement cost is not
required. It is unusually increasing the expenditure of the company. (d) The company’s marketing strategy targeted
the youngster on the
assumption that once they are lured in, it would be easier to reach the
whole family. For this their decision to bank upon humour appeal clicked.
The following measures can be taken by Ringo so as to enlarge its
market.
(i) Making the product available in public places and other crowded areas and organising street shows etc.
(ii) Attention should also be paid towards the preference and tastes of foreign buyers for exploring the foreign
market.
Read the following case and answer the questions given at the end : Subhiksha (prosperity in Sanskrit) began with a
single grocery store at Chennai in 1997. Subhiksha stores increased from 50 in 2000 to 140 by 2002-03 (spread
across 30 towns in Tamilnadu) to 670 by 2006-07 to 1650 by September, 2008. Its early success was due to its
business model based upon no-frills/deep discount and high level of neighbourhood focus. Its decision in 2004 to go
national from a regional player at a rapid pace proved wrong. With the growing ambition to go national, focus
shifted from value to customers to creating valuation for self. The company had recruited all the employees to foray
into consumer durables also. Its revenue increased from` 278 crore from 140 stores in 2005 to` 2305 crore in 2008
with a capital base of`32 crore. Subhiksha’s profit after tax for 2007-08 was`41 crore. It had invested heavily,
largely using debt, and paybacks took longer than expected. Repayment of debt had no relationship to cash flow. In
the end the company had liabilities of ` 900 crore.
Around January, 2009, the company had started to shut down stores pan-India and in February, the top management
quit the firm, not just because it defaulted on rentals of its outlets and salaries since October, 2008. Today all the
stores are closed. Major suppliers had stopped supplies after it defaulted on payments. It asked its employees to take
home groceries; and go on leave without pay. Many employees did not get their salaries. Initially the company was
confident to restructure and remain in business.
Indian retail industry comprises of 12 million mom-and-pop stores and kirana stores (many of whom have also
started innovating) and unknown number of hawkers in the unorganized sector working on small-sized stores and
with low or no rentals and salaries and the organized retailers (market share not more than 5%).
The emergence of a large young population and a growing middle class with strong disposable incomes and credit
card culture are the drivers of the organized retail, a mix of two types — ones going in for huge expansion
announcements and others following “slow and steady wins the race strategy”. The industry operates not on a very
hefty margin. The yearly top-line growth is likely to remain around 10-15% as against forecasted 35% this year.
Compared with players like Pantaloon, Reliance, More, RPG and even Nilgiri’s (which has private equity funding),
Subhiksha has no large group’s backing (except Shri Azim Premji having 10% stake). The strategy was to raise
more debt and keep equity low. During 2006, Subhiksha had a good chance to make an initial IPO or raise private
equity money, but it was in quest of creating higher valuations. Suddenly retail was no longer so hot and the capital
tap had gone dry. Due to inability to raise more debt, working capital was diverted to expand. Many of the organized
retailers have survived the downturn through transformation in their strategies and tactics. However, one thing is
certain that footfalls have declined for the organized retail.
Debt-ridden retailer Subhiksha Trading Services Ltd. has begun its second innings in February, 2010, with the
launch of its first cash-andcarry store (the board outside the outlet reads Subhiksha Maligai Arisi Mandi) in
Thiruvanmiyur in Chennai — at its first ever retail outlet). “Subhiksha’s model will be different this time around and
will not directly engage with customers,” said an industry source.
Questions :
(a) “To understand the nature of competition certain questions need to be
answered.” What those questions are? (3 marks) (b) Who were the competitors of Subhiksha? Do you think they
were
better equipped than it? (5 marks) (c) What, where and how the business strategy of Subhiksha might have
gone wrong? (4 marks) (d) If you were the strategy consultant to the Organised Retailers
Association of India, what will you advise to control the cost and
convert the threat of dropping footfalls and declining sales into an
opportunity? (6 marks) (e) How is a Cash-and-carry store different from a Retail store? Name any
other such Cash-and-carry store in India. (2 marks) Answer:
(a) The nature of competition can be visualised in terms of SWOT (strength, weakness, opportunities and threats).
The questions frequently asked are as follows :
(i) What are the strengths? What are the strengths of the competitors?
(ii) What are the weaknesses? What are the weaknesses of the competitors?
(iii) What are the opportunities that are available? What is the position of opportunities when compared to
competitors? (iv) What are the threats that are available? What is the position of threats when compared to
competitors?
Alternatively: Alternative questions that can be answered to understand the nature of competition are :
(i) Who are the competitors?
(ii) What are their market shares?
(iii) What are their products and services?
(iv) What gives them cost and price advantage?
(v) What are their financial positions?
(vi) What are they likely to do next?
(vii) Who are the potential future competitors?
(b) Subhiksha was facing competition on two fronts :
(i) Organised sector : Big departmental stores.
(ii) Unorganised sector : Weekly markets, street vendors etc. Different vendors in organised and unorganised sector
enjoyed a
number of distinct advantages in comparison with Subhiksha. There are
many players in the organized retailing such as ‘Big Bazaar’, ‘Spencer’,
‘More’, etc. These had support of established big business houses. They
also took better strategic decisions. All of them competed with
Subhiksha and were not short of finances.
The unorganised sector’s benefit is their own low costs and reach to
the customers. Mom-and-Pop stores are small-sized retailers that are
spread around nook and corner of the country. They enjoy personal
relationships touch with the customers, and have cost advantage due to
no or low rentals and salaries. They also normally work with their own
funds and do not have any interests costs. Weekly Bazaars, frequently
named after the days of weeks such as Mangal/Budh Bazaar, also enjoy
similar position. Hawkers lined up along streets, spread out on temporary
platforms and illuminated by gas-lamps also offer bargains. The street
vendors offer the unparalleled convenience as they serve at the door of
the users.
(c) Subhiksha’s business model was working fine till it was a regional player.
It did try to look at the things with long-term perspective but that landed
them in trouble. Problems arose when it tried to expand rapidly. It was
their aggressive growth strategy that had gone awry because they
opened too many stores in too short a period without realising the
potential of the company. Outlets were opened for sake of expansion,
inspite of focus on sustainable growth.
Subhiksha’s financial strategy also proved to be problematic. Retail
sector needs cash infusion. Subhiksha expanded by diverting working
capital and rising high costs debts. To leverage on a small equity base
of` 32 crore only was bound to put them in difficulty. Recession made
it faster. The strategy of Subhiksha of raising funds with more debt and
less equity was wrong. It also did not go for the IPO to manage their
finances in a better manner.
(d) In order to control the costs Organised Retailers Association of India can
make several recommendations to its members. A strategist may
suggest the following points:
1. Reduce inventory: With proper inventory management, the cost of obsolescence and reduce financing cost of
inventory.
2. Efficient utilisation of facilities: Expenditure on account of power can be reduced by optimum usage of air-
conditioning, lifts, lighting, etc.
3. Procure directly from the source: To reduce the costs and take advantages of bulk purchases, the products may
be purchased directly from the manufacturers and producers.
4. Lease out excess space to manufacturers and other marketers: Extra space may be leased out at a price to
others. This will generate extra revenue and efficient utilisation of space. Many organised retailers offer separate
space to the sellers of cosmetics or small eateries. This also improves footfalls.
5 Offer discounts: Hefty discounts can be offered on the products that are brought at low costs to improve the
interest and footfalls. It improves the sales even with falling footfalls.
6. Combination offers: Offers can be made to combine low moving products with fast moving products and sell
them at discount. 7. A balanced capital structure: The debt-equity ratio should be
properly maintained with future perspective so that the scarce
financial resources can be utilized in an optimum manner. 8. Organise special events to improve sales: Special
events can be
launched. These can have direct effect in increasing footfalls and
the sales. For example, an exhibition can be organised inviting
mobile manufacturers to showcase their new products. Events such
as painting competition for school kids, magic shows can also be
organised to attract visitors to the stores.
9. Have proper security: Proper security system should be
maintained to reduce the losses on account of pilferages. (e) A cash-and-carry store is different from a retail store.
Cash and carry store is one where customer pays in cash and carries away the purchases. The term is basically being
used for the stores (wholesalers) that are making bulk sales to the retailers, caterers and institutional buyers.
Therefore the business model is business to business. No credit period is given and invoice is settled on the spot in
cash. The goods are carried away by the purchasers themselves. The store works as a bulk supplier rather than a
retailer selling small quantities directed towards consumers.
Q.11.8 2010 - Nov [8] {C} Practical
Read the following case and answer the questions given at the end: Godrej, still managed by a family board, is a
113-year-old brand and
has a great brand value. But younger generation's reaction has been - "it's
my parents' or my grandparents' brand. Hence the Group launched a rebranding exercise in 2008, the most visible
part being a new logo, uniform
across all group companies. It has well diversified businesses - cyclical
(property : owning 3000 acres in Mumbai's Vikhroli alone, Ahmedabad,
Pune and Kalyan), stable (fast moving consumer goods), rural (Agrovat
stores) and urban (organised retail stores-Nature's Basket, domestic appliances and furniture). The group sells fatty
acids to tyre manufacturers; animal feed to 1,00,000 farmers; and premium wine in Mumbai and Delhi. Its
customers range from five-year olds (nutrine), ageing man (hair dye), to housewives (soaps & locks), IT companies
(renting sprawling spaces), to Government of India (like rockets for Chandrayan), and to 50,000 barbers (Godrej
dye). But it abstains in
new-age, sunrise industries like health care and information technology. Godrej Consumer Products Limited
(GCPL) has adopted a '3 by 3'
strategy, sticking to emerging markets in three regions - Asia, Africa and
Latin America as their culture, tastes and even skin colours are quite
similar to India and in three categories-personal care, hair-care and
insecticides. Since 2005, GCPL has made seven acquisitions, including
its biggest acquisition of Indonesia's Megasari Group for` 1200 crore, in
2010. "Acquisitions overseas add status and pedigree to brand-owners in
the domestic market" says an expert. Prashant Goenka (Emami) questions
"When Indian companies such as Dabur, Godrej and Marico can make it
big in international markets, why can't Emami ?" Anil Chug (Wipro) says,
"by having a presence in multiple markets our risk assessment is
neutralized". Marico's Harish opines- "the global play has helped Marico
expand its footprint and given it another avenue for growth." Recently Godrej's top honchos toured the hinterlands,
an indicator of
the renewed focus on consumer. To reach out to new customers,
especially in rural India, it has gone in for destructive innovation. The
group has been manufacturing refrigerators for more than 50 years, but its
penetration has been only 18%. It found out that people do not need a
180 litre fridge due to space and cost constraints. It came out with
'Chotukool' - a square 45 litre mini fridge priced at just ` 3,250. Another
example of destructive innovation is the launch of 'U & Us’ - a 'by
appointment' design studio where customers co-design their furniture as
customers see furniture as an extension of their personality. Thus Godrej
group is transiting from manufacturing-oriented to consumer oriented.
Questions:
(i) What are the strengths of Group Godrej? (3 marks) (ii) What are the weaknesses of Group Godrej? (3 marks) (iii)
What is the Group Godrej's perception with regard to innovation and consumers now? (3 marks) (iv) Why do firms
go global? (6 marks)
Answer:
(i) Strengths of the Godrej group are:

a. The group is into well diversified businesses. The businesses are both cyclical and stable in nature. The group also
has presence in both rural and urban markets with different product offerings.
b. Godrej is more than 113 year old brand.

c. Godrej enjoys trust and goodwill and has great brand value. d. Godrej has 3000 acres of own land in Vikhroli, a
developing suburb
in Mumbai.
e. Godrej is growing internationally and is concentrating on emerging
markets of three regions – Asia, Africa, & Latin America. (ii) Weaknesses of the group are:
a. Godrej is managed by members of a family. Unlike professional
management the family considerations may play important role in
the decisions of the company.
b. Godrej has made some aggressive acquisitions in recent times.
How these are assimilated will be crucial for its business. c. Lacks a significance presence in new-age, sun-rise
industries like
health care, information technology and automobile industry. (iii) Godrej group is shifting from being
manufacturing oriented to consumer oriented. The company is focusing on customers and innovation. A business
must understand what its customers want and keep innovating new products to satisfy the identified wants. If a
company fails to do this, it will get extinct. For innovation Godrej has adopted destructive innovation. The capacity
to innovate is a fundamental source of competitive advantage.
(iv) There are many reasons due to which the companies go global: a. To increase the returns through higher
margins or lower costs
through large scale of operations.
b. Firms having surplus resources or capabilities developed at home
may deploy them abroad for expansion.
c. Due to imposition of trade barriers by an importing state, the
exporters from aboard decide to build manufacturing plants in the
importing country.
d. Firms facing stiff domestic competition often decide to go
international in search of new market.
e. International presence dilutes local risk
f. Development of Institutions to support and facilitate international
business.
g. Availing advantages of the liberalization initiatives of various
governments across the world.
h. Attractive opportunities may exist in form of businesses in
managerial or financial difficulty.
Q.11.9 2011 - May [8] {C} Practical
Read the following case and answer the questions given at the end : Sharp Corporation is a worldwide developer of
innovative products and core technologies that play a key role in shaping the future of electronics. As a leader in
liquid crystal displays (LCDs) and digital technologies, Sharp offers one of the broadest and most advanced lines of
consumer electronics, information products and electronic components, while also creating new network businesses.
Sharp Corporation has traveled a long way from an assembler of televisions to a leading TV manufacturer. In its
early days as business enterprise, the company was making low quality and low price TVs and was, thus
overshadowed by the giants like Sony, Samsung and Matsushita. It was a technology follower in the beginning and
was using secondary technology, The brand image, too, was not very high. Sharp, under the leadership of Machida,
went for a brand image make over by using innovation. The new leader has concentrated on R & D, in addition to
enhancing its market coverage.
Its innovation in liquid crystal display (LCD) technology and developing products featuring LCD's made at the
reputed electronics company in Japan. Sharp is now the world's largest manufacturer of LCD TVs. The company has
very well succeeded and sustaining its success is a major critical factor: its focus on innovation. Unfortunately, the
global economic downturn has hit Sharp worse than the most American Companies. The industry as a whole, and
Sharp in particular, realised the fact that only innovation in terms of quality, cost and competitive strength is the
main survival factor. At the same time the industry is not unaware of the fact that every new technology will
obsolete faster. Average life of every new technology is becoming shorter and shorter.
The ever changing competitive scenario with the global competitors waging to dethrone Sharp and the entry of low
cost manufacturers from Asia, have created some of the biggest challenges for Sharp. Newer display technologies
with superior quality at a lesser price are emerging in the international market. Sharp has taken the first mover
advantage, but is facing competition from the late entrants.
Questions:
(i) What are the strengths of Sharp Corporation? (3 marks) (ii) What are the weaknesses of Sharp Corporation? (3
marks) (iii) What should be the next move of Sharp Corporation? (3 marks) (iv) Analyse the key success factors for
LCD TV Industry. (6 marks)
Answer:
(i) A positive aspect or strong capacity of a business which helps it overcome difficulties and gain strategic
advantage over the others is known as strength of any business.
Eg.: Excellent work force, strong R & D.
The strengths of Sharp Corporation are as follows:
(a) It is the leader in LCD and digital technologies.
(b) Broadest and advanced product line
(c) Wide market coverage
(d) Focus on innovation through R & D.
(ii) The term weakness refers to a negative aspect or limitation of a
business which keeps it way behind its competitors.

Eg: Use of old technology or techniques of production. The weaknesses of Sharp Corporation are as follows: (a)
Brand image was not high in the beginning and was thus
overshadowed by giants like Sony, Samsung, Matsushita. (b) It was technology follower in the beginning and was
using
secondary technology.
(c) Global economic turn down hit it worse than other American
Company.
(d) Not able to cope up with ever changing technology. (iii) The next move of Sharp Corporation should be to renew
its value chain management in order to create competitive edge both in terms of high quality product as well as in
terms of low cost.
It can also explore areas where competition is low and also think about alliances, merger and takeovers.
(iv) Key success factors of LCD TV industry.
(a) High quality accomplished with low cost and competitive strength. (b) Constant upgradation in its technology.
(c) First moves advantage.
12 TOWS Matrix
Q.12.1 2009 - Nov [7] (a) Descriptive Discuss the relevance of Tows Matrix in strategic planning process. (2
marks)
Answer:
TOWS Matrix
SO Strategy
WO Strategy
ST Strategy
WT Strategy
Relevance of TOWS Matrix
TOWS Matrix - Threat, Opportunity, Weakness, Strength is an important tool that helps managers develop four type
of strategies:
1. SO strategy
2. WO strategy
3. ST strategy
4. WT strategy
SO Strategies use a firm's internal strengths to take advantage of external opportunities. All managers would like
their organization to be in a position in which internal strengths can be used to take advantage of external trends and
events. Organizations generally will pursue WO, ST, or WT strategies in order to get into a situation in which they
can apply SO Strategies.
WO Strategies focus at improving internal weaknesses by taking advantage of external opportunities. ST

Strategies make use of firm's strengths to minimize the impact of external threats.
WT Strategies are defensive tactics directed at reducing internal weakness and avoiding external threats.
Tows Matrix helps in:

1. Listing the firm's key external opportunities.
2. Listing the firm's key external threats.
3. Listing the firm's key internal strengths.
4. Listing the firm's key internal weaknesses.
5. Matching internal strengths with external opportunities, and record the resultant SO Strategies in the appropriate
cell.
6. Matching internal opportunities, and Strategies.
weaknesses with external record the resultant WO
7. Matching internal strengths with external threats, and record the resultant ST Strategies.
8. Matching internal weaknesses with external threats, and record the resultant WT Strategies.

Q.12.2 2013 - May [11] (a) Descriptive How is TOWS Matrix an improvement over the SWOT Analysis? Describe
the construction of TOWS Matrix. (2 + 2 = 4 marks) OR RTP Descriptive Explain how Tows matrix can generate
strategic options within external and internal environment.
Answer:
TOWS Matrix an Improvement over the SWOT Analysis.

However
The basic objective of SWOT analysis is to provide a framework to reflect on the firms ability to overcome barriers
or threats and avail the opportunities emerging in the environment.
While conducting the SWOT analysis managers are often not able to come to terms with the strategic choices that
the outcomes demand. Heinz Weihrich developed a matrix called TOWS matrix by matching strengths and
weaknesses of an organization with the external opportunities and threats.
The benefit of TOWS matrix lies in systematically identifying relationships between these factors and selecting
strategies on their basis. Thus SWOT analysis is a planning tool while TOWS matrix is an action tool having a wider
scope than SWOT.
Construction of TOWS Matrix
Construction of TOWS Matrix Involves Eight Steps
1. Listing the firm's key external opportunities.

2. Listing the firm's key external threats.
3. Listing the firm's key internal strengths.
4. Listing the firm's key internal weaknesses.
5. Matching internal opportunities, and Strategies in the appropriate cell.
6. Matching internal weaknesses with external opportunities, and record the resultant WO Strategies.
7. Matching internal strengths with external threats, and record the resultant ST Strategies.
8. Matching internal weaknesses with external threats, and record the resultant WT Strategies. strengths with
external record the resultant SO
The matrix is outlined below: Internal elements

External elements
Environmental
opportunities (and risks) Environmental threats
Organizational Strength
Organizational Weaknesses Strategic Options
SO : Maxi - Maxi WO : Mini - Maxi
ST : Maxi - Mini WT : Mini - Mini Space to write important points for revision
13 Globalisation
Q.13.1 2008 - Nov [8] Descriptive What is meant by a Global Company? Explain briefly different strategic
approaches for Globalisation by a Company. (4☐6 = 10 marks)
Answer:
Meaning of Global Company:
A Company is said to be a Global Company when:
(i) The company has several manufacturing locations around the world and offers products in several diversified
industries, and
(ii) It is able to compete in domestic markets with foreign competitors. A company which has gone global is called a
Multinational (MNC) or a Transnational (TNC).
Different Strategic Approaches for Globalisation by Company:
1. Configuring anywhere in the world
2. Interlinked
and independent economies
3. Lowering of trade and tariff barriers
An MNC can locate its different operations in different countries on the basis of raw material availability, consumer
markets and low cost labour.
In terms of economies - welfare, globalization refers to the unique economically interdependent international
environment. Each country’s prosperity is interlinked with the rest of the world. No nation can any longer hope to
lead an existence of solitude and isolation in which only domestic industries can function.
The apparent and real collapse of international trade barriers proposes a new global co-operative arrangement and a
redefinition of roles of state and industry. The trend is towards increased privatisation of manufacturing and services
sectors, less government interference in business decisions and more dependence on the value-added sector to gain
market place competitiveness world over, governments are pulling out from commercial business. The trade tariffs
and custom barriers are getting lowered, resulting in cheaper and abundant supply of goods.
4. Infrastructural resources an inputs at international

prices
5. Market side Efficiency
6. Formation regional blocks

of
Infrastructural inputs must be ensured at competitive prices, if the companies were to compete globally. The
advantages of cheap labour (and other inputs) evaporate in the face of continuous inflation and high infrastructural
costs.
Integration of global markets implies that costs, quality processing time, and terms of business because dominant
competition drivers customers can make a genuine choice products and services on the basis of maximum value for
money. The inexorable pressure of technology and need for its integration means that customers no longer have to
be satisfied with shoddy products, and services provided by the monopolies.
Countries, like corporations, have to form strategic alliances to ward off economic and technological threats and
leverage their respective comparative and competitive advantages. The signing of NAFTA (North American Free
Trade Area) among N America, Canada and Mexico creates new markets and manufacturing opportunities for these
countries and threatens to disrupt the plans and strategies of world powers such as Japan.

Q.13.2 2010 - May [6] (a) Objective State with reason which of the following statement is correct or incorrect:
Globalisation means different things to different people. (2 marks)
Answer:
Correct : Globalization means the process of integration of the world into one huge market. Globalization helps for
removal of all trade barriers among countries. Globalization is an opportunity for organizations to expand their
markets and reach out to different customers. Globalization can also have other meanings. For some Globalization is
a new paradigm- a set of fresh beliefs, working methods, and economic, political and socio-cultural realities in
which the previous assumptions are no longer valid. For developing countries, Globalization means integration with
the world economy.

Q.13.3 2012 - May [14] (b) Short Notes Write short note on the following:
Role of Global Industries (3 marks)
Answer:
Role of Global Industries:
Global industries are those which operate at the transnational, cross-culture, and across the border level. They
integrate the world into one huge market. They are committed to the international market to offer quality product in
several diversified industries. The influence of global industries studied in terms of operating in the international
environment is as below.
(i) Process of globalisation.

(ii) Global economic forces.
(iii) Global trade and commerce.
(iv) Global financial system, sources of financing, and accounting
standards.
(v) Geopolitical situation, strategic interests of nations.
(vi) Global demographic patterns.

(vii) Global human resource.
(viii) Global information systems, communication networks.
(ix) Global technological and quality systems and standards. (x) Global markets and competitiveness.
(xi) Global legal system, adjudication and arbitration mechanisms.
(xii) Globalisation of management.
Q. 13.4 2012 - Nov [14] (Or) (b) Short Notes Write short note on the following:
Characteristics of a Global Company. (3 marks)
OR 2013 - Nov [9] (b) Descriptive A global company has three characteristics. Explain. (3 marks)
OR 2016 - Nov [8] {C} (a) Descriptive
State three characteristics that are specific to a global company. (3 marks)
Answer:
Meaning of Global Company:
A Company is said to be a global company when:
(i) The company has several manufacturing locations around the world and offers products in several diversified
industries, and
(ii) It is able to compete in domestic markets with foreign competitors. A company which has gone global is called a
Multinational (M NC) or a Transnational (TNC).
Characteristics of Global Company:
A Global Company has three characteristics:
(i) It is a conglomerate of multiple units but all linked by common ownership.
(ii) Multiple units draw on a common pool of resources, such as money, credit, information, patents, trade names
and control systems.
(iii) The units respond to some common strategy. Nestle International is an example of an enterprise that has become
multinational. A global company is, therefore, one that, by operating in more than one country gains R&D,
production, marketing and financial advantages in its cost and reputation that are not available to purely domestic
competitors. The global company views the world as one market, minimises the importance of national boundaries,
sources, raises capital and markets wherever it can do the job best.
Q.13.5 2016 - May [9] (b) Descriptive Elaborate the reasons necessary for the globalization of companies. (3
marks)
Answer:
Reason for Globalization of Companies:
☐ Rapid shrinking of time and distance across the globe.
☐ Domestic market are no longer adequate and rich.
☐ Development of attractive new product to attract customers
internationally.
☐ To reduce high transportation cost.
☐ Cheaper labour available in other country to produce the product.

1 Introduction
1. Competitive advantage comes from a firm’s _________to perform activities more effectively than rivals.
(a) Vision
(b) Capacity
(c) Ability
(d) Strategies
2. A competitive strategy consists of moves to:

(a) Attract customers
(b) Withstand competitive pressures
(c) Strengthen market position.
2 Competitive Landscape
3. Under standing of competitive

Landscape requires an application of ___________.
(a) Competitive intelligence
(b) Competitive attitudes
(c) Competitive vigillance
(d) Competitive comparison
4. ___________ is the way of identifying and understanding the competitors and at the same time, it permits the
comprehension of their vision, mission, core values niche market, strengths and weakness. (a) Competitive
Dynamics
(b) Competitive Strategy
(c) Competitive Intelligence
(d) Competitive Landscape
3 Strategics Analysis
5. Analytical sequence is form strategic appraisal of the external and internal situation:
(a) To evaluation of alternatives
(b) To Choice of strategy
(c) To evaluation of dynamics
6. Issue must consider for Strategic Analysis

(a) Balance of external and Internal factors
(b) Strategy evolves over a period of time
(c) Strategic decision at a point of time
4 Methods of Industry and Competitive Analysis
7. Which is/are the most important question which helps to identify an industry’s key success factor?
(a) What does it take for sellers to achieve a sustainable competitive
advantage?
(b) One what basis do customers choose between the competing
brands of sellers?
(c) What resources and competitive capabilities does a seller need to
have to be competitively successful?
8. A strategic group consists of those rival firms which have __________. (a) Similar competitive approaches
(b) Position in the market
(c) (a) or (b)
(d) (a) and (b)
5 Core Competence
9. Major core competencies are identified in the area of _________. (a) Competitor differentiation
(b) Customer values
(c) Application to other marker
10. __________are the knowledge, skills, and facilities necessary to design and produce core products.
(a) Competitors’s competence
(b) Core competencies
(c) Core intelligence
(d) Core market
11. Which concept is a kin to a learning curve which explains the efficiency increase gained by workers through
repetitive productive work? (a) Experience curve
(b) Strategic curve
(c) Port folio analysis
(d) Product life cycle
12. Product life cycle a _________.

(a) U Shaped curve (b) S Shaped curve (c) Cyclic shaped curve (d) Down shaped curve
6
Boston Consulting Group (BCG) Growth Share Matrix
13. BCG matrix is the simplest way to portray a ____________. (a) Market Growth Rate
(b) Relative Market Analysis
(c) Corporation’s portfolio of investment
(d) Business Expansion opportunities
14. BCG growth share matrix also known for its__________. (a) Cash Cows metaphors.
(b) Cow and Dog metaphors
(c) Stars metaphors
15. Under BCG matrix low-growth, high market share business or products is represented by.
(a) Dogs
(b) Stars
(c) Cash Cows
(d) Any of the above
16. Product Market Growth Matrix is Proposed by __________. (a) Boston Consulting Group
(b) Igor Ansoff
(c) Arthur D. Little
(d) McKinsey and company
17. The ADL matrix is a portfolio analysis technique is based on________. (a) Business life cycle
(b) Market life cycle
(c) Product life cycle
(d) Industry’s life cycle
7 SWOT Analysis
18. SWOT analysis referred to __________.

(a) Strength, Weakness, option and threat analysis
(b) Strength, Weakness, opportunity and threat analysis (c) Strength, Worstness, opportunity and threat analysis, (d)
Any of the above
19. In a market place organisation’s performance is influenced by: (a) The Organisation’s correct market position
(b) The nature of environmental opportunities and threat (c) The organisation’s resource capability to capitalize the
opportunities
and to protect against the threats.

8 TOWS Matrix
20. TOWS Matrix is developed by (a) Heinz Weihrich

(b) Igor Ansoff
(c) Arthur D. Little
(d) S.W. Smith
21. SWOT analysis is a planning tool TOWS analysis is a/an__________. (a) Procedure tool
(b) Functional tool
(c) Action tool
(d) System tool
9 Globalisation
22. Globalised company is also called___________.

(a) Multinational (MNC)
(b) Transnational (TNC)
(c) Universonal (VNC)
(d) Either (a) or (b)
23. Which is the important characteristics of a Global company ?
(a) Multiple units draw on a common pool of resources, such as money, credit information, patents trades marks and
control system.
(b) The units respond to some common strategy, besides, its managers and shareholders are also based in different
nations.
(c) It is a conglomerate of multiple units but all linked by common ownership
ANSWER
1. (c) 2. (d) 3. (a) 4. (d) 5. (d) 6. (d) 7. (d) 8. (d) 9. (d) 10. (b) 11. (a) 12. (b) 13. (c) 14. (b) 15. (c) 16. (b) 17. (c) 18.
(b) 19. (d) 20. (a) 21. (c) 22. (d) 23. (d)
CHAPTER
3
Strategic Management Process
Chapter Comprises: ☹Strategic Planning ☹Strategic Decision Making ☹Strategic Intent ☹Vision, Mission and
Objectives ☹Strategic
Management Model ☹Stages in Strategic Management.

Legend
book.
7.443
TIME MANAGER . . . . . . . . . . . Plan and Manage your Time Periodic Revision (in hours)
Time
1. Budgeted
2. Actual
3. Variance (1-2)
First InInstant depth Revision

learning (in hours)
i.e..... Next After day 7 days i.e.... i.e. on ............ ........... ........... Day 1 Day 2 Day 8
16 4.00 3.12 After After After Fix as 30 days 60 days 90 days per your i.e. on i.e. on i.e. on need.
........... .............. ............

2.20 1.35 1.35
QUICK LOOK . . . . . . . Repeatedly Asked Common Answered Questions Questions 2.1, 5.5 3.2,4.2, 4.4, 4.5, 5.1,
5.6, 5.8
Q.1.1 2011 - May [10] (i)
Explain the meaning of the following concepts : Corporate Strategy
Answer:
Corporate Strategy:
Corporate strategy is the growth design of the firm. It provides an integrated framework for the top management
to 1. Search for, evaluate and exploit beneficial opportunities, 2. Perceive and meet potential threats and crisis,
Weightage Analysis Must Try Question

3.2, 4.6, 5.4, 5.6, 6.1, 8.4
1 Introduction
Descriptive
(1 mark)
3. Make full use of resources and strengths,
4. Offset corporate weaknesses and to make major decisions in general. Thus corporate strategy is the game plan
that paves the way of the firm towards success. They provide a systematic basis for the firm to stand in face of
challenges and change as also quickly to adjust to them. Space to write important points for revision
Q.1.2 2014 - May [8] {C} (d) Descriptive What does corporate strategy ensure? Explain. (3 marks)
Answer:
Corporate strategy is the growth design of the firm.
It provides an integrated framework for the top management to 1. To search for, evaluate and exploit beneficial
opportunities, 2. To perceive and meet potential threats and crisis,
3. To make full use of resources and strengths,
4. To offset corporate weaknesses and to make major decisions in general. Thus corporate strategy is the game plan
that paves the way of the firm towards success. They provide a systematic basis for the firm to stand in face of
challenges and change as also quickly to adjust to them. Corporate strategy in the first place enables the growth of
firm and ensures the correct alignment of the firm with its environment. It serves as the design for filling the
strategic planning gap. It also helps to build the relevant competitive advantages.
2 Strategic Planning
Q.2.1 2010 - Nov [13] (a),
2013 - May [13] (b), RTP
Distinguish between the following :
Top-Down and Bottom-Up Strategic Planning.
Distinguish Between
(4 marks each)
Answer:
Top-Down and Bottom-Up Strategic Planning
There are two approaches for strategic planning - top down or bottom up.
Top-Down Strategic Planning
Top down strategic planning describes a centralized approach to strategy formulation in which the corporate centre
or head office determines mission, strategic intent, objectives and strategies for the organization as a whole and for
all parts. Unit managers are seen as implementers of pre-specified corporate strategies
Bottom-Up Strategic Planning
Bottom up strategic planning is a upward characteristic of autonomous or semi-autonomous divisions or subsidiary

companies in which the c o r p o r a t e c e n t r e d o e s n o t conceptualize its strategic role as being directly
responsible for determining the mission, objectives, or strategies of its activities. Bottom-up planning may prefer to
act as a catalyst and facilitator, keeping things reasonably simple and confining itself to perspective and broader
strategic intent.
operational
strategic
Q.2.2 2016 - May [12] (a) Descriptive Explain briefly following areas on which the strategic planners concentrate
to achieve the long term prosperity:
(i) Profitability
(ii) Competitive position
(iii) Employee development
(iv) Public responsibility (1× 4 = 4 marks)
Answer:
(i) Profitability
(ii) Competitive Position
(iii) Employee Development
(iv) Public
Responsibility
The main motive of business organization is profitability. The private enterprises shall mainly work objective of
profit. Some other enterprises thinks that profit is sole motive all other are falitative objective.
The competitive position for a organization would mean that the factors which shall affect the organizations
competition in market and how the from positions itself from it.
Employee development refers to the development of employee of an organization by way of training, increasing in
salary etc.
The public responsibility refers to the organization responsibility in market and public it is also be known as
Corporate Social Responsibility (CSR).

3 Strategic Decision Making
Q.3.1 2011 - Nov [8] {C} (c) Descriptive
You are appointed as a Strategic Manager by XYZ Co. Ltd. Being a Strategic Manager what should be your tasks to
perform? (3 marks) Answer:
As a Strategic Manager of XYZ Co. the tasks to be performed can be divided in following five stages keeping in
mind the framework of strategic management.
Stage 1 Where are we Now?

(Beginning)
Stage 2 Where are we Want to Be? (Ends)
Stage 3 How Might we Get Three? (Means)
Stage 4 Which way is Best?

(Evaluation)
Stage 5 How Can we Ensure

Arrival?
(Control)
This is the starting point of strategic planning and consists of doing a situational analysis of the firm in the
environmental context. Here the firm must find out its relative market position, corporate image, its strength and
weakness and also environmental threats and opportunities. This is also known as SWOT (Strength, Weakness,
Opportunity, Threat) analysis. You may refer third chapter for a detailed discussion on SWOT analysis. This is a
process of goal setting for the organization after it has finalised its vision and mission. A strategic vision is a
roadmap of the company’s future – providing specifics about technology and customer focus, the geographic and
product markets to be pursued. The capabilities it plans to develop, and the kind of company that management is
trying to create. An organization’s Mission states what customers it serves, what need it satisfies, and what type of
product it offers.
Here the organization deals with the various strategic alternatives it has.
Out of all the alternatives generated in the earlier stage the organization selects the best suitable alternative in line
with its SWOT analysis.
This is a implementation and control stage of a suitable strategy. Here again the organization continuously does
situational analysis and repeats the stages again.

Q.3.2 2011 - Nov [12] (a), RTP Descriptive What is Strategic Decision Making ? Briefly explain the major
dimensions of strategic decisions. (1 + 3 = 4 marks) OR 2015 - Nov [14] (a) Write short note on the following:
Strategic Decision-making
OR 2016 - Nov [14] (b) Write short note on the following:
Short Notes
(4 marks) Short Notes
“Strategic decisions are different in nature than all other decisions.” In the light of this statement, explain any three
major dimensions of strategic decisions. Answer:
Strategic Making
(3 marks)
Decision Decision making is a managerial process and function of choosing a particular course of action out of
several alternative courses for the purpose of accomplishment of the organizational goals. Strategic decisions are
different in nature than all other decisions which are taken at various levels of the organization during their day-to-
day working.
Dimensions of Strategic Decisions 1. Strategic issues require top
management
decisions
2. Strategic issues are likely to have a significant impact on the long term prosperity of the firm
Strategic issues involve thinking in totality of the organizations and also there is lot of risk involved.
Generally the results of strategic implementation are seen on a long term basis and not immediately.
3. Strategic issues i n v o l v e t h e allocation of large amounts of company resources
4. Strategic issues usually have major multi functional or multibusiness consequences
5. Strategic issues are future oriented
6. Strategic issues necessitate consideration of factors in the firm’s external environment
It may require huge financial investment to venture into a new area of business or the organization may require huge
number of manpower with new set of skills in them.
As they involve organization in totality they affect different sections of the organization with varying degree.
Strategic thinking involves predicting the future environmental conditions and how to orient for the changed
conditions.
Strategic focus in organization involves orienting its internal environment to the changes of external environment.

Q.3.3 2014 - May [9] (b) Descriptive What are the major stages in the strategic management process? (3 marks)
Answer:
1. Where are we now Beginning
This is the starting point of strategic planning and consists of doing a situational analysis of the firm in the
environmental context. Here the firm must find out its relative market position, corporate image, its strength and
weakness and also environmental threats and opportunities.
2. Where we want to be?

3. How might we get there?
4. Which way is best? Evaluation
5. How can we ensure survival?
This is a process of goal setting for the organisation after it has finalised its vision and mission.
Means - Here organisation deals with the various strategic alternatives it has.
Out of all the alternatives generated in the earlier stage the organisation selects the best suitable alternative in line
with its SWOT Analysis.
Control - This is a implementation and control stage of a suitable strategy. Here an organisation continuously does
situational analysis and repeats the stage again.

Q.3.4 2014 - Nov [11] (b) Descriptive How strategic decisions differ in nature from other routine decisions taken in
day-today working of an organization? Explain. (3 marks)
Answer:
Strategic decision making or strategic planning describes the process of creating a company’s mission and objectives
and choosing the course of action of company.
Decision making is a managerial process and function of choosing a particular course of action but out of several
alternative courses for the purpose of accomplishment of the organizational goals. Decisions are routine, tactical or
strategic in nature.
Strategic decisions are different from other decisions that are taken at various levels of the organization during day
to-day working of the organizations. They have long term implications, steer organisations to its future path and
have organization wide implications and so on. These decisions are taken considering different internal and external
factors. They are also taken with partial or no definite knowledge of different factors affecting the decision situation.

Q.3.5 2017 - May [8] {C} (d), RTP Descriptive
Briefly discuss the framework of strategic management. (3 marks) Answer:
The term strategic management refers to the managerial process of forming a strategic vision, setting objectives,
crafting a strategy, implementing and executing the strategy, and then initiating whatever corrective adjustments in
the vision, objectives strategy, and execution are deemed appropriate. The basic framework of strategic process can
be described in a sequence of five stages as follows:
Stage one – Beginning: Where are we now?
Stage two – End: Where we want to be?
Stage three – Means: How might we get there?
Stage four – Evaluation: Which way is best?
Stage five – Control: How can we ensure arrival?

4 Vision, Mission and Objectives :Vision
State with reasons which of the following statement is correct/incorrect: All strategies emerge from Corporate
vision. (2 marks) Answer:
Correct : All strategies emerge from corporate vision as a strategy is meant to fill in the need of organisations for a
sense of dynamic, direction, focus and cohesiveness. Strategies are made to evaluate and exploit beneficial
opportunity, to perceive and meet potential threats and crisis, to make full use of resources and strengths, to off-set
corporate weaknesses and to make major decisions in general.

Q.4.2 2010 - May [7] (c) Descriptive Briefly answer the following :
‘Shared Vision’ and ‘Vision Shared’. (2 marks) OR RTP Distinguish Between
Distinguish between on the following:

‘Shared Vision’ and ‘Vision Shared’.
Answer:
All Individuals in an organisation relate themselves with the vision of their organisation in different ways. When the
individuals are able to bring organisational vision close to their hearts and minds they have “shared vision”. Shared
vision is a force that creates a sense of commonality that permeates the organization and gives coherence to diverse
activities. where as, ‘vision shared’ shows imposition of vision from the top management. It may demand
compliance rather than commitment. For the success of an organisation having shared vision is better than vision
shared.

Q.4.3 2010 - Nov [9] (b) (iii) Objective Fill in the blank in the following statement with the most appropriate word:
Vision is always _______ oriented. (1 mark) Answer:
Future.
Q.4.4 2011 - Nov [10] (v)
Explain the meaning of the following concepts: Strategic Vision
OR 2018 - May [7] {C} (b)
Describe the term ‘Strategic Vision’.
Answer:
A Strategic Vision is a Road map of a Company’s Future – providing specifics about technology and customer
focus, the geographic and product markets to be pursued, the capabilities it plans to develop, and the kind of
company that management is trying to create.
In the process of strategy making, management is expected to look forward to the organisation's future, posing a
question, 'What kind of an enterprise is it going to be'? This direction☐setting idea underlies the concept of strategic
vision. It is said to be a road map of the company's future.
Descriptive
(1 mark) Descriptive (2 marks)
State the three elements of a strategic vision. (3 marks)
OR 2013 - May [9] (b) Descriptive Explain the elements of strategic vision. (3 marks)
OR 2017 - Nov [8] {C} (b) Descriptive
What are the three elements of a strategic vision? (3 marks) Answer:
Strategic Vision
Meaning A Strategic vision is a road map of a company’s future – providing specifics about technology and
customer focus, the geographic and product markets
Concept
Definition
Example
Advantage
to be pursued, the capabilities it plans to develop, and the kind of company that management is trying to create.
Strategic Vision is rightly defined as a mental perception of the kind of environment that an organisation aspires to
create with a broad timeframe. It may be regarded as a dream in the sense of an ideal.
The Vision Statement of Warner – Lambert, the reputed Pharma Company of USA:
“To be the best–that is the compelling vision of Warner–Lambert. To achieve it, we nurture imagination and prize
creativity. We move fast to build competitive advantage. We use our global reach to harvest ideas from all sources.
We are willing to take well☐thought☐out risks and reward visionary action, even if results fall short of
expectations. We recognize that excellence begins with focusing our resources on our most important opportunities
and challenges”.
1. A Vision fosters long term thinking .

2. It helps in creating a common identity and a shared sense of purpose which is at once inspiring and exhilarating
for managers.
3. It represents a discontinuity, a step function and a jump ahead so that the company knows what it is to be.
4. Well articulated visions are not only original and unique but also prompt risk☐taking besides experimentation.
Elements Conveying ‘who we are’
1. Coming up with a vision statement that defines what business the company is presently in.
2. Deciding the long term course of action where we are going. Using the vision statement as a basis for deciding
on a long term course making choices.
3. Communicating the vision statement - The strategic vision should be communicated in clear exciting terms that
arouse organisation wide commitment.
“A strategic vision is a road map of a company’s future”. Comment. Draft a strategic vision statement of any well
known national level Educational Institution you are familiar with. (3 marks)
Answer:
A Strategic Vision is a Road Map of a Company’s Future – providing specifics about technology and customer
focus, the geographic and product markets to be pursued, the capabilities it plans to develop, and the kind of
company that management is trying to create.
Vision Statement of IIT Mumbai:

The vision of IIT Mumbai is to be the fountainhead of new ideas and of innovators in technology and science. Its
mission is to create an ambience in which research and scholarship and leaders and innovators of tomorrow emerge.

Which of the following statement is correct and which is incorrect ? Give reasons in brief for your answer.
Vision is one of the key elements of Strategic Intent. (2 marks)
Answer:
Correct:
Vision implies the blueprint of the company’s future position. It describes where the organisation wants to land.
Every Sub - System of the organization is required to follow its vision.

5 Vision, Mission and Objectives : Mission
Q.5.1 2009 - Nov [7] (b) Descriptive State the points that may be considered while writing a mission statement of a
Company. (2 marks) OR 2010 - May [8] (i) Descriptive What tips can you offer to write a ‘right’ Mission
Statement? (4 marks)
Answer:
A Company's mission is a long-term view of what the organisation is striving to become in future indicating the
basic thrust of the firm including its products, business and markets.
Mission as defined by Glueck and Jauch is the answer to the question 'what business are we in? that is often faced by
corporate level strategists. To choose a mission is to answer the basic question: “What business are we in?”
Mission statements mainly describe the organizations present capabilities, customer focus, activities, and business
makeup. Following Points are useful while writing right mission statement of a company:
1. One of the roles of a mission statement is to give the organization its
own special identity, business emphasis and path for development. 2. A company’s business is defined by what
needs it is trying to satisfy,
customer groups it is targeting, technologies and competencies it uses
and the activities it performs.
3. Good mission statements are highly personalized☐unique to the
organization for which they are developed.
4. The mission should not be to make profit.
5. Technology, competencies and activities are important in defining a
company’s business because they indicate the boundaries on its
operation.
Q.5.2 2010 - Nov [9] (b) (i) Objective Fill in the blanks in the following statement with the most appropriate word:
"In the factory, we make cosmetics. In the drugstore, we sell ______.
(1 mark) Answer:
Hopes
Q.5.3 2011 - May [9] (b) (ii) Objective Fill in the blanks in the following statement with the most appropriate
word: The corporate mission is an expression of the _________ of the firm. (1 mark) Answer:
Growth Ambition
Q.5.4 2014 - May [8] {C} (a), RTP Descriptive
Mission statement of a company focuses on the question:

‘Who we are’ and ‘What we do’. Explain briefly. (3 marks) Answer:
A Company’s mission statement is typically focused on its present business scope – “who we are and what we do”;
☐ This is the starting point of strategic planning and consists of doing a
situational analysis of the firm in the environmental context. Here the firm must find out its relative market position,
corporate image, its strength and weakness and also environmental threats and opportunities.
☐ This is a process of goal setting for the organisation after it has finalised its vision and mission. A strategic vision
is a roadmap of the company’s future - providing specifics about technology & customer focus, the geographic and
product markets to be pursued, the capabilities it plans to develop and the kind of company that management is
trying to create.

Q.5.5 2014 - Nov [9] (a) (i), 2016 - Nov [9] (a) (i) Objective
State with reasons which of the following statement is correct or incorrect: Strategic vision and mission statements
are needed only by large business houses. (2 marks each)
Answer:
Incorrect:
Strategic vision and mission statement provides a framework for future and it is core documents prepared for base of
formulation of strategy. Therefore, it is required for all business houses.

Q.5.6 2015 - May [13] (b) Distinguish Between Distinguish between the “Vision and Mission”. (3 marks) OR
2017 - May [13] (a)
Distinguish between the following: Vision and Mission

Answer:
Difference between Vision and Mission: Distinguish Between
(4 marks)
Basis of Difference Vision Mission
Meaning Vision Statement outlines
what the organization wants to be. It concentrates on the future. It is a source of inspiration. It provides clear
decision making criteria.
Time Period It concentrates on future.
A Mission Statement tells you the fundamental purpose of t h e o r g a n i z a t i o n . I t concentrates on the present.
It defines the customer & the critical processes. It informs you of the desired level of performance.
It concentrates on present. Focus The Vision Statement can galvanize the people to achieve defined objectives, even
if they are stretch objectives, v i s i o n i n measurable, provide the
s p e c i f i c , achievable, relevant and time bound objectives.
Mission Statement provides a path to realize the vision in line with its values. These statements have a direct bearing
on the bottom line and success of organization.
Q.5.7 2015 - Nov [8] {C} (c) Descriptive “A company should focus on external perspective to define its mission.”
Support this statement with reasons. (3 marks) Answer:

• A Company’s mission is a long term view of what the organisation is
striving to become in future indicating the basic thrust of the firm including its product, business and market.
Mission as defined by Glueck and Jauch is the answer to the question, ‘what business are we in’? The answer should
have marketing or external perceptive and should not be restated to the production or generic activities of business.
The mission is a statement which defines the role that the organization plays in the society.
• The organisation relate their existence to satisfy need of society. So we can describe mission as a statement which
defines role that an organization plays in the society. The society as whole comes in external perceptive of business
so that the company should focus on external perceptive to define its mission.

Q.5.8 2016 - Nov [8] {C} (b) Descriptive
You are asked to draft a mission statement of a company. What is a mission statement? Give any two characteristics
of a good mission statement. (3 marks)
OR 2017 - Nov [12] (b) Descriptive
Explain ‘Mission’ briefly. Discuss major elements of an effective corporate mission statement. (3 marks) Answer:
Mission Statement
A Company's mission is a long-term view of what the organisation is striving to become in future indicating the
basic thrust of the firm including its products, business and markets.
Mission as defined by Glueck and Jauch is the answer to the question 'what business are we in? To choose a
mission is to answer the basic question: "What business are we in?" Thus a company may define its mission by
stating that it is in the transportation business, which by implication states that the company, depending on its own
capabilities and external opportunities, looks forward to engaging in transportation of goods by road and any other
means, and include carriage of goods as well as passengers.
Characteristics of good mission statement:
Following points are useful while writing right mission statement of a company:
1. One of the roles of a mission statement is to give the organization its
own special identity, business emphasis and path for development. 2. A company’s business is defined by what
needs it is trying to satisfy,
customer groups it is targeting, technologies and competencies it uses
and the activities it performs.
3. Good mission statements are highly personalized☐unique to the
organization for which they are developed.
4. The mission should not be to make profit.
5. Technology, competencies and activities are important in defining a
company’s business because they indicate the boundaries on its
operation.
Q.5.9 2019 - Nov [8] (a) Descriptive Why an organisation should have a mission? What considerations are to be
kept in mind while writing a good mission statement of a company? (5 marks)
Q.5.10 2007 - Nov [10] Practical Read the following case and answer the questions at the end:
Dr. Sukumar inherited his father's Dey's Lab in Delhi in 1995. Till 2002, he owned 4 labs in the National Capital
Region (NCR). His ambition was to turn it into a National chain. The number increased to 7 in 2003 across the
country, including the acquisition of Platinum lab in Mumbai. The number is likely to go to 50 within 2☐3 years
from 21 at present. Infusion of` 28 crores for a 26% stake by Pharma Capital has its growth strategy.
The lab with a revenue of `75 crores is among top three Pathological labs in India with Atlantic (` 77 crores) and
Pacific (` 55 crores). Yet its market share is only 2% of ` 3,500 crores market. The top 3 firms command only 6% as
against 40☐45% by their counterparts in the USA.
There are about 20,000 to 1,00,000 stand alone labs engaged in routine pathological business in India, with no
system of mandatory licensing and registration. That is why Dr. Sukumar has not gone for acquisition or joint
ventures. He does not find many existing laboratories meeting quality standards. His six labs have been accredited
nationally whereon many large hospitals have not thought of accreditation. The College of American Pathologists
accreditation of Dey's lab would help it to reach clients outside India.
In Dey's Lab, the bio ☐chemistry and blood testing equipments are sanitised every day. The bar coding and
automated registration of patients do not allow any identity mix☐ups. Even routine tests are conducted with highly
sophisticated systems. Technical expertise enables them to carry out 1650 variety of tests. Same day reports are
available for samples reaching by 3 p.m. and by 7 a.m. next day for samples from 500 collection centres located
across the country. Their technicians work round the clock, unlike competitors. Home services for collection and
reporting is also available.
There is a huge unutilised capacity. Now it is trying to top other segments. 20% of its total business comes through
its main laboratory which acts as a reference lab for many leading hospitals. New mega labs are being built to
encash preclinical and multi☐centre clinical trials within India and provide postgraduate training to the pathologists.
Questions:
(i) What do you understand by the term Vision? What is the difference between 'Vision' and 'Mission'? What vision
Dr. Sukumar had at the time of inheritance of Dey's Lab? Has it been achieved?
(2+2+2+2 = 8 marks) (ii) For growth what business strategy has been adopted by Dr. Sukumar? (2 marks) (iii) What
is the marketing strategy of Dr. Sukumar to overtake its competitors? (6 marks) (iv) In your opinion what could be
the biggest weakness in Dr. Sukumar's business strategy. (4 marks)
Answer:
(i) A Company’s mission is a long term view of what the organisation is striving to become in future indicating the
basic thrust of the firm including its product, business and markets.
At the time of inheritance of Dey's Lab, Dr. Sukumar had a vision of turning his labs into a National Chain.
☐ The number of labs increased from 4 to 21 across the country,
including the acquisition of Platinum lab in Mumbai. ☐ His lab with a revenue of ` 75 crores is among top three
Pathological labs in India.
Dr. Sukumar has achieved his vision. But it would be better if he
acquires all other labs to establish the National Chain. (ii) ☐ His six labs have been accredited nationally,
☐ New mega labs are being built to en-cash preclinical and
multi☐centre clinical trials within India and provide postgraduate
training to the pathologists.
☐ Inviting capital infusion by a Pharma Capital for a 26% stake. (iii) ☐ The bio☐chemistry and blood testing
equipments are sanitized
every day,
☐ The bar coding and automated registration of patients. ☐ Even routine tests are conducted with highly
sophisticated
systems.
☐ Technical expertise enables them to carry out 1650 variety of tests.
Same day reports are available for samples reaching by 3 p.m. and
by 7 a.m. next day for samples from 500 collection centres located
across the country.
☐ Facility of delivery or collection at home.
(iv) ☐ Huge unutilized capacity and which may be due to lack of
manpower evident from the fact that the technicians are engaged
24 hours.
☐ Not going in for acquisition or Joint Ventures would have been one
of the weaknesses.
6 Goals and Objectives

‘Objectives’ and ‘Goals’ provide meaning and sense of direction to organizational endeavour. Explain. (3 marks)
Answer :
Objectives are the organizations performance targets. The results and outcomes it wants to generate. They function
as yardstick for tracking an organizations performance and progress. Business objectives translates their vision and
mission. As such term objectives is synonymous with goals, however, we all make attempt to distinguish between
them. Objectives are open ended attributes and goals are close ended attributes. All organization have objective. The
pursuit of objective is an unending process such as organizations sustain themselves. Objective and goals provide
meaning and sense of direction to organizational endeavour.

What are the characteristics which must be possess by objectives, to be meaningful to serve the intended role? (5
marks) Answer:
Objectives are the organizations performance targets. The results and outcomes it wants to generate. They function
as yardstick for tracking an organizations performance and progress. Business objectives translates their vision and
mission.
Characteristics of Objectives to make it meaningful to serve the intended role
☐ Objectives should define the organization’s relationship with its
environment.
☐ They should be facilitative towards achievements of mission and
purpose.
☐ They should provide the basis for strategic decision-making. ☐ They should provide standards for performance
apprisal. ☐ They should be concrete and specific.
☐ They should be related to a time frame
☐ They should be measurable and controllable.
☐ They should be challenging.
☐ Different objectives should correlate with each other.
☐ Objectives should be set within the constraints of organisational
resources and external environment.
7 Strategic Management Model

Q.7.1 2018 - Nov [7] {C} (b) Descriptive Present a diagrammatic representation of a Strategic Management model.
(2 marks) Answer:
Diagrammatic Representation of a Strategic Management Model :
8 Stages in Strategic Management
State with reason which of the following statement is correct/incorrect: Environmental constituents exist in isolation
and do not interact with each other. (2 marks)
Answer :
Incorrect :
Business environment consists of number of factors events, influences etc. which arise from different sources and
interact with each other continuously to create new sets of complex influences.
State with reason which of the following statement is correct or incorrect: A business, even if it continually remains
passive to the relevant changes in the environment, would still grow and flourish. (2 marks)
Answer:
Incorrect:
All living things live within an environment. Similarly business also dwells within an environment. The success of
business is known to have been determined by the constant changes taking place in the social, economic, political
and other conditions of the environment. A business just cannot remain passive to these changes. It is from the
analysis of these changes that management can make decisions on whether to react, to ignore, or to try to influence,
anticipate future opportunities or threats.

The strategic management process encompasses three phases. Explain. (3 marks) Answer :
Strategy
Formulation
Strategy
Implemation
Laying down the firm’s vision, mission and objective Swot Analysis
(1) Environmental scanning
(2) Organizational appraisal
Identification and Evaluation of Strategic Alternative Decision making, i.e, choice of strategy
Implementation of strategy
☐ Design of organisational structure
☐ Definition of orgaanisational systems & procedures ☐ Resource Allocation Decisions
☐ Management of behavioural Issues
Strategy Control
Evaluation of Strategy
☐ Process of evaluation ☐ Criterium for evaluation ☐ Techniques of evaluation.
However, before these three phases, Strategic Management involves the following two stages, namely :
(i) Developing a strategic vision and formulation of statement of mission, goals and objectives.
(ii) Environmental and organisational analysis.
To convert strategic plans into actions and results, a manager must be able to direct organizational change, motivate
people, build and strengthen company competencies and competitive capabilities, create a strategy-supportive work
climate, and meet or beat performance targets. Explain the principal aspects of strategy-execution process.
Answer:
In most situations, strategy-execution process includes the following principal aspects:
• Developing budgets that steer ample resources into those activities
critical to strategic success.
• Staffing the organization with the needed skills and expertise,
consciously building and strengthening strategy-supportive
competencies and competitive capabilities, and organizing the work
effort.
• Ensuring that policies and operating procedures facilitate rather than
impede effective execution.
• Using the best-known practices to perform core business activities and
pushing for continuous improvement.
• Installing information and operating systems that enable company
personnel to better carry out their strategic roles day in and day out.
• Motivating people to pursue the target objectives energetically.
• Creating a company culture and work climate conducive to successful
strategy implementation and execution.
• Exerting the internal leadership needed to drive implementation forward
and keep improving strategy execution. When the organization
encounters stumbling blocks or weaknesses, management has to see
that they are addressed and rectified quickly.
Good Strategy execution involves creating strong “fits” between strategy and organizational capabilities, between
strategy and the reward structure, between strategy and internal operating systems, and between strategy and the
organization’s work climate and culture.

1 Strategic Planning
1. ___________involves a fact of interactive and overlapping decisions leading to the development of an effective
strategy for the firm. (a) Strategic Planning
(b) Strategic Decision Making
(d) Strategic Uncertainty
2. _________is represented by a future trend or event that has inherent unpredictability

(a) Strategic Planning
(b) Strategic Decision Making
(d) Strategic Uncertainty
2 Strategic Decision Making
3. “Strategic decisions encompass the definition of the business, products to be handled, markets to be served,
functions to be performed and major policies needed for the organisation to execute these decisions to achieve the
strategic objective” defines by _________.
(a) Willium G. Glueck
(b) Jauch and Glueck
(c) Igor H. Ansoff
(d) Christeneen
4. Which is not a dimension of strategic decisions ?

(a) Strategic decisions involve commitment of organisational resources. (b) Strategic decision are future oriented
(c) Strategic decisions require low level management involvement (d) Strategic decision are likely to have a
significant impact on the long
term prosperity of the firm

3 Strategic Intent
5. Clarity in strategic intent is important for the __________of the enterprise

(a) Production planning
(b) Expansion planning
(c) Diversification and Expansion
(d) Future success and growth
6. Strategic intent could be in the form of __________for the organisation at the corporate level.
(a) Vision and mission statements
(b) Business model
(c) Goals and objectives
(d) Business definition
4 Vision, Mission and Objectives
7. Strategic vision point out a particular ____________.

(a) Direction
(b) Charts a strategic path to be followed in future
(c) Moulding organisational identity
8. Mission statement of an organisation deciding ____________. (a) Where we are ?

(b) Where we are going ?
(c) What is our achievement ?
(d) How to organise?
9. “What business are we in and what we do” is resolved by the organisation through its__________.
(a) Vision
(b) Mission
(c) Strategy
(d) Governance practices
4 Strategic Management Model
10. Strategic management process includes____________. (a) Analysis

(b) Implementation
(c) Evaluation
11. Strategy formulation, implementation and evaluation activities should be performed on a _______________.
(a) Continual basis
(b) Yearly basis
(c) Semi - annually basis
(d) Any of the them
ANSWER
1. (a) 2. (d) 3. (b) 4. (c) 5. (d) 6. (a) 7. (d) 8. (b) 9. (b) 10. (d) 11. (a)
CHAPTER
4
Corporate Level Strategies
Chapter Comprises: ☹Typologies of Strategies ☹Stability Strategy ☹Growth/Expansion Strategy ☹Expansion

through Diversification,
Mergers and Acquisitions, Strategic Alliance ☹Retrenchment/Turnaround
Strategy ☹Combination Strategy.
Legend
book.
7.474
TIME MANAGER
i.e.....
1. Budgeted
2. Actual
3. Variance (1-2)
............ Day 1 16
Instant
Revision (in hours)

i.e.... i.e. on ........... ...........
Day 2 Day 8
4.00 3.12
(in hours)

2.20 1.35 1.35

3.5
1.1 3.6, 3.22, 3.23, 4.12, 4.13
1 Typologies of Strategies
Q.1.1 2012 - May [10] (iv) Descriptive Explain the meaning of following concepts: Directional Strategies
OR 2018 - May [7] (c)
Explain the meaning of Directional Strategy. (1 mark) Descriptive (2 marks)
Answer:
According to Glueck and Jouch, there are four Generic Strategic Alternatives: They are:
(a) Stability Strategy (b) Expansion Strategy (c) Detriment Strategy (d) Combination Strategy These are the business
strategies to provide basic direction for strategic actions towards achieving long terms business objectives and hence
known as directional strategies.

Discuss the broad areas in which Functional Strategies of a business organization is carried out. (4 marks) Answer:
Once higher level corporate and business strategies are developed, management need to formulate and implement
strategies for each functional area. For effective implementation, strategists have to provide direction to functional
management depends critically on the manner in which strategies are implemented.
Functional area strategy such as marketing, financial, production and human resource are based on the functional
capabilities of an organisation. For each functional area, first the major sub areas are identified and then for each of
these sub functional areas, contents of functional strategies, important factors, and their importance in the process of
strategy implementation is identified.
In terms of the levels of strategy formulation, functional strategies operate below the SBL or Business level
strategies, within functional strategies there might be several sub-functional areas. Functional strategies are made
within the higher level-strategies and guidelines there in that are set at higher levels of an organisation. Functional
managers need guidance from the business strategy in order to make decisions. Operationals plans tell the functional
managers, what has to be done while policies state how the plans are to be implemented.
2 Typologies of Strategies : Stability Strategy

Q.2.1 2010 - May [7] (b) , RTP Descriptive
Briefly answer the following :

Grand Strategy Alternative during Recession (2 marks) Answer:
Stability Strategy is recommendable option for the organisations facing recession. During recession businesses face
reduced demand for their products even at low prices. Funds capital become scarce, expenditure on expansion is
stopped, profits decline and businesses try to minimise the costs. They work hard to maintain the existing market
share, so that company survives the recessionary period.

State with reason which of the following statement is correct or incorrect. Stability strategy is not a ‘do-nothing’
strategy. (2 marks) Answer:
Correct:
Stability Strategy is not a ‘do-nothing’ strategy. Stability is important goal of business enterprise - to safeguard its
existing interests and strengths, to pursue well established and tested objectives, to continue in the chosen business
path, to maintain operational efficiency on sustained basis.

3 Typologies of Strategies : Growth / Expansion Strategy
Q.3.1 2007 - Nov [6] (d) Objective State with reason which of the following statement is correct/incorrect:
Acquisition is a strategy. (2 marks)
Answer:
Correct:
Acquisitions provide a rapid means of gaining an established product/market position. Acquisitions may be a
particularly attractive means of corporate development under certain strategic and financial conditions. In mature
industries containing a number of established firms, entry through acquisition can avoid the competitive reaction
that can accompany attempts to enter the industry by internal development: rather than intensifying the rivalry by
adding a further player, the potential competition is purchased. In other industries in which competitive advantage
rests in assets built up over considerable periods of time acquisitions can immediately achieve a market position that
could be virtually impossible to develop internally. For example, Sony, the Japanese electronics.

Q.3.2 2007 - Nov [7] (b) Descriptive Briefly answer the following:
What is meant by Concentric diversification? (2 marks)
Answer:
Concentric or Related Diversification :
When an organization takes up an activity related to its existing business definition or one or more of a firm’s
businesses in terms of customer groups, customer functions or alternative technologies, it is called concentric
diversification.
Concentric diversification occurs when a firm adds related products or markets. The goal of such diversification is to
achieve strategic fit. Strategic fit allows an organization to achieve synergy. In essence, synergy is the ability of two
or more parts of an organization to achieve greater total effectiveness together than would be experienced if the
efforts of the independent parts were summed. Synergy may be achieved by combining firms with complementary
marketing, financial, operating, or management efforts.
Q.3.3 2009 - May [7] (c) Distinguish Between Differentiate clearly between forward and backward integration. (2
marks)
Answer:
Forward and backward integration form a part of vertically integrated diversification. In this firms opt to engage in
those businesses that are vertically related to the existing business of the firm. For increasing the business, firms
engaged in those businesses that are linked forward or backward in the chain and make specific product/ process
with the intention of making them into the new business for the firm.
Difference between Forward and Backward Integration
Basis of
Difference Meaning Forward Integration
stated differently, integration focuses manner in which a company o v e r s e e s i t s p r o d u c t distribution.

Forward integration is moving forward in the value chain and entering in the business that use existing products.
Forward integration will also take place where organisations enter into business o f d i s t r i b u t ion channels.
When companies are looking forward looking distribution or improve the placement of their products,
forward on the they are usually to expand their
Backward Integration
Focus
Backward integration is a step towards, creation of effective supply by entering into the existing business to expand
profits and gain greater control over production.
Backward movement usually involves internal steps to reduce overall dependency on things like suppliers and
service providers. It thus concentrates on how a company regulates its goods and supplies.
Q.3.4 2010 - Nov [10] Descriptive
Explain the meaning of the following strategies and also give suitable examples (one each):
(i) Forward Integration
(ii) Backward Integration
(iii) Horizontal Integration
(iv) Conglomerate Diversification
(v) Divestment
(vi) Liquidation
(vii) Concentric Diversification (7 marks) Answer:

Strategy
(i) Forward Integration
(ii) Backward Integration
(iii) Horizontal Integration
(iv) Conglomerate Diversification Meaning
Gaining ownership or increased control over the next level in the value chain (Manufacturing or intermediaries).
Gaining ownership or increased control over the previous level in the value chain (Manufacturing or suppliers).
Seeking ownership or increased control of a firm’s competitors.
Adding new, unrelated products or services

Example
R e l i a n c e ( o w n i n g diversified pumps.
I n d u s t r i e s r e f i n e r i e s ) into petrol
An automobile manufactures diversifying into tyre production.
ICICI Bank taking over Bank of Rajasthan.
Yash Birla Group (Auto & Engineering) decides to enter wellness, solar power and schools.
(v) Divestment Divestment involves the strategy sale or
liquidation of a portion of business, or a major division, profit centre or SBU.
(vi) Liquidation Liquidation strategy is a n e x t r e m e a n d unattractive strategy as it involves closing down a firm
and selling its assets. It is considered as the last resort when all other options fail.
(vii) Concentric In concentric diversifDiversification i c a t i o n , t h e n e w business are added that are linked to
the existing businesses (Remove m a n a g e m e n t b u s i n e s s e s ) t h r o u g h process, technology or marketing.

Q.3.5 2011 - Nov [13] (b), 2013 - Nov [13] (a), 2016 - May [13] (a)

Concentric Diversification and Conglomerate Diversification.(3, 4 marks) Godrej Group’s withdrawal from the JV
with Sara Lee from Africa.
Those companies whose products are no more in demand sell all their assets.
Kotak Mahindra Bank gets into insurance and a s s e t m a n a g e m e n t businesses.
Distinguish Between Answer:

Sr. Basis of No. Difference
1. Occurrence Concentric
Diversification
Concentric diversification occurs when a firm adds r e l a t e d markets. p r o d u c t s o r
2. Linkages In concentric diversification,
the new business is linked to the existing businesses through process, technology or marketing.
3. Reason The most common reasons
for pursuing a concentric diversification are that opportunities in a firm’s existing line of business are available.
Conglomerate
Diversification
On the other hand conglomerate diversification occurs when a firm diversifies into areas that are unrelated to its
current line of business.
In conglomerate diversification, no such linkages e x i s t ; t h e n e w b u s i n e s s / p r o d u c t i s disjointed from

the existing businesses/ products.
Common reasons for pursuing a conglomerate growth strategy is that opportunities in a firm's current line of
business are limited or opportunities o u t s i d e a r e h i g h l y lucrative.
Q.3.6 2012 - Nov [13] (b), RTP

Vertically Integrated Diversification and Diversification.
Distinguish Between
Horizontally Integrated (3 marks)
Answer:
Vertically Integrated Diversification Horizontally Integrated Diversification In vertically integrated
diversification, firms opt to engage in businesses that are related to the existing business of the firm. The firm
remains vertically within the same process.
Under horizontal Integrated Diversification, diversification takes place through the acquisition of one or more
similar business operating at the same stage of production- marketing chain that is going into complementary
product by product or taking over competitor’s products.

What is meant by backward integration? Name any two backward integration strategies that hospitals may pursue. (1
+ 2 = 3 marks) Answer:
‘Backward Integration’
Backward Integration is a form of vertical integration that involves the purchase of, or merger with, suppliers up the
supply chain. Companies pursue backward integration when it is expected to result in improved efficiency and cost
savings. This type of integration might cut transportation costs, improve profit margins and make the firm more
competitive. Backward Integration Strategies Pursued by Hospitals
1. Health plans: It’s hard to imagine improving the medical marketplace
until hospitals and health plans work together to build an efficient and effective delivery system. The potential
benefits of provider-payer collaboration surely will come sooner if both parties contribute their unique and
complementary expertise according to the economic law of comparative advantage. With very few exceptions,
hospitals don’t have the resources or skills to start their own insurance companies, nor are insurance companies
generally competent to provide health services. They need each other to succeed in the new marketplace, but other
partners must also be at the table to prevent harmful collusion. 2. Medical groups: Physician relations are surely a
close No.2 on the list
of threats to providers’ viability. Hospitals can’t exist without a medical staff, but many physicians can be successful
without a hospital. However, hospitals have much better access to capital and can create the technological
infrastructure needed to support 21st century health care. In return, physician leaders need to help steer hospitals
away form their focus on inpatient care. Physician-hospital integration should be structured to build a better health
system.

Q.3.8 2014 - Nov [14] (b) Short Notes Write short note on the following:
Expansion through acquisitions and mergers. (3 marks)
Answer:
Expansion Strategies are used to expand firms’ operations by adding markets, products, services, or stages of
production to the existing business. The purpose of diversification is to allow the company to enter lines of business
that are different from current operations. When the new venture is strategically related to the existing lines of
business, it is called co-centric diversification. Conglomerate diversification occurs when there is no common thread
of strategic fit or relationship between the new and old lines of business; the new and old businesses are unrelated.
External diversification occurs when a firm looks outside of its current operations and buys access to new products
or markets. Mergers are one common form of external diversification. Mergers occur when two or more firms
combine operations to form one corporation, perhaps with a new name. These firms are usually of similar size. One
goal of a merger is to achieve management synergy by creating a stronger management team. This can be achieved
in a merger by combining the management teams from the merged firms.
Acquisitions, a second form of external growth, occur when the purchased corporation loses its identity. The
acquiring company absorbs it. The acquired company and its assets may be absorbed into an existing business unit
or remain intact as an independent subsidiary within the parent company. Acquisitions usually occur when a larger
firm purchases a smaller company. Acquisitions are called friendly if the firm being purchased is receptive to the
acquisition. (Mergers are usually “friendly.”) Unfriendly mergers or hostile takeovers occur when the management
of the firm targeted for acquisition resists being purchased.

Q.3.9 2015 - May [14] (Or) (b) Short Notes Write short note on the following:
Conglomerate Merger. (3 marks)
Answer:
Conglomerate Merger:
Mergers occur when two or more firms combine operations to form one corporation, perhaps with a new name.
These firms are usually of similar size. One goal of a merger is to achieve management synergy by creating a
stronger management team. This can be achieved in a merger by combining the management teams from the merged
firms.
• Conglomerate Mergers are the combination of Firms that are unrelated
to each other. There are no linkages with respect to customer groups, customer functions and technologies being
used.
• There are no important common factors between the organizations in production, marketing, research and
development and technology.
• In practice, however, there is some degree of overlap in one or more of these factors.
Q.3.10 2015 - Nov [8] {C} (d) Descriptive
A Bakery starts producing pastries and other similar products. What type of diversification strategy is being
followed by it and why? (3 marks) Answer:
• A diversification strategy should be pursued only after a careful study of
buyers needs and preferences to determine the feasibility of incorporating one or more differentiating features into a
unique product that features the desired attributes. A successful differentiation strategy allows a firm to charge a
higher price for its product and to gain customer loyalty because consumer may become strongly attracted to
differentiation features.
• Here a backery starts producing pastries and similar products then first it should study the buyers needs and
preferences that what the buyers like to eat and what kind of products the buyers like.
• The backery should also take into the consideration that they should make their product unique than the other
seller. This is because the consumer attracts the unique feature of backery’s products and allow the firm to charge
the prices of the products. It should follow concentrics diversification strategy because of above reasons.

Q.3.11 2015 - Nov [11] (a) Descriptive Identify with reasons the type of growth strategies followed in the following
cases:
(i) A leading producer of confectionery products advertising the new uses of its product ‘Chokoo Mix’ aggressively.
(ii) A company in publishing industry deciding to revise college text books.

(iii) A renowned company in textile industry starting to manufacture PFY and PSF, critical raw materials for
textiles.
(iv) A business giant in auto manufacturing enters into edible oils, hotels, financial services and dairy businesses. (4
marks)
Answer:
(i) The Producer is following Market Penetration Growth Strategy.
☐ Market Penetration is growth strategy where business focuses on selling existing products in the existing market.
It is achieved by making more sale to present customer without changing products in any major way. It is done by
more advertisement.
☐ Here, the producer of confectionary products advertising the new uses of its existing product in existing market.
So, the product and market are same as previous so producer is following market penetration growth strategy.
(ii) The company here follows product Development Growth Strategy:
☐ Product development refers to a growth strategy where business aims to introduce new product in market.
☐ Here the company in publishing industry decides to revise product text books in market. So it is following
product development growth strategy.
(iii) The company has adopted Backward Integration Growth Strategy
under vertically integrated diversification. Since it has started with
manufacture of critical raw material it will ensure uninterrupted supply
of critical raw material and also ensure that company retains the
margins in dealing with raw materials which otherwise would have
gone to its suppliers.
(iv) Here the company is following the Diversification Growth Strategy.
☐ Diversification growth strategy refers to the strategy where a business markets produces new products in new
markets.
☐ Here a business giant in auto manufacturing enters into edible oils hotels, financing and dairy services so it
produces new products and serves totally new customers.
Q.3.12 2016 - Nov [8] {C} (d) Descriptive What is expansion strategy? State and discuss briefly (in few lines each)
the two types of expansion strategies followed by firms. (3 marks)
Answer:
Meaning of Strategy
Expansion Strategy
The term strategy is derived from the Greek word ‘strategos’ which means generalship — the actual direction of
military force.
Every organisation plans to expand. An organisation that is not expanding is said to be falling behind. Expansion
strategy is followed when an organisation broadens the scope of one or more of its businesses in order to improve its
overall performance. Reasons for Adoption :
(i) Growth is often a cherished cultural value. (ii) In face of changing environment growth is necessary for survival.
(iii) Increasing size may lead to more control over the market.
(iv) Advantage from the experience curve may accrue.
Variants of Expansion Strategy :
(i) Intensive growth strategy.
(ii) Diversification Strategy.
A. Horizontal diversification :
(a) Concentric diversification.
(b) Conglometric diversification
B. Vertical diversification :
(a) Forward integration
(b) Backward integration
Intensive Growth Strategy : Consists of increasing the sales revenue profit and market share of existing product
line.
Diversification Strategy :
It is a strategy in which the growth objective or expansion objective is achieved by adding new products or services
to the existing product line.
Horizontal Diversification :
It consists of adding parallel new products or services to the existing product or service line.

Q.3.13 2017 - May [13] (b) Distinguish Between Distinguish between the following:
Co-generic Merger and Conglomerate Merger (3 marks)
Answer:
Co-generic Merger and Conglomerate Merger
In Co-generic Merger two or more merging organizations are associated in some way or the other related to the
production processes, business markets or basic required technologies. Such merger include the extension of the
product line or acquiring components that are required in the daily operations. It offers great opportunities to
businesses to diversify around a common set of resources and strategic requirements. For example, organization in
the white goods categories such as refrigerators can diversify by merging with another organization having business
in kitchen appliances.
Conglomerate Mergers are the combination of organizations that are unrelated to each other. There are no linkage
with respect to customer groups, customer functions and technologies being used. There are no important common
factors between the organizations in production, marketing, research and development and technology. In practice,
however, there is some degree of overlap in one or more of these factors.

Q.3.14 2017 - Nov [9] (a) (i) Objective State with reasons which of the following statement is correct or incorrect:
Expansion strategy is a highly versatile strategy. (2 marks)
Answer:
Correct:
Strategy is a highly versatile strategy: it offers several permutations and combination for growth. A firm opting for
the expansion strategy can generate many alternatives within the strategy by altering its propositions regarding
products, markets and functions and pick the one that suits it most.

State with reasons which of the following statement is correct or incorrect: Forward and backward integration forms
part of horizontally integrated diversification. (2 marks)
Answer:
Incorrect:
Forward and backward integration forms are part of horizontally integrated diversification is incorrect. Its vertically
integrated diversification. In vertically integration diversification firms opt to engage in businesses that are vertically
related to the existing business of the firm.
The firm remains vertically within the same process. While diversifying firms opt to engage in businesses that are
linked forward or backward in the chain and enter specific product/process steps with the intention of making them
into new businesses for the firm.

Describe the term ‘Co - generic merger’. (2 marks) Answer:

Co- Generic Merger:
☐ In Co-generic merger two or more merging organizations are associated in some way or the other related to the
production processes, business markets, or basic required technologies. Such merger include the extension of the
product line or acquiring components that are required in the daily operations. It offers great opportunities to
businesses to diversify around a common set of resources and strategic requirements. For example, an organization
in the white goods category such as refrigerators can diversify by merging with another organization having
business in kitchen appliances.

Q.3.17 2018 - Nov [7] {C} (c) Descriptive List the advantages of Strategic Alliances. (2 marks)
Answer:
Advantages of Strategic Alliance are :
1. Organizational: Learn skills and obtain capabilities from strategic
partners.
2. Economic: Sharing of costs and risks by members of alliance.
3. Strategic: Rivals can join together to cooperate rather than compete.
4. Political: Alliance with partners with political influence improve overall power position of the organisation.
Q.3.18 2018 - Nov [8] (d), (e) Objective
Which of the following statements are correct and which are incorrect ? Give reasons in brief for your answer.
(d) Acquiring of ambulance services by a hospital is an example of
forward integration strategy. (2 marks) (e) There is no such thing as backward integration. (2 marks) Answer:
(d) Incorrect:
Acquiring of ambulance services by a hospital is an example of backward integration strategy.
(e) Incorrect:
Backward integration is a step towards, creation of effective supply by entering business of input providers. For
example, a large supermarket chain considers to purchase a number of farms that would provide it a significant
amount of fresh produce.

Q.3.19 2019 - Nov [8] (b) Descriptive Explain the Strategic Alliance. Describe the advantages of Strategic Alliance.
(5 marks)
Read the following case study and answer the questions given at the end: Meters Limited is a company engaged in
the designing, manufacturing, and marketing of instruments like speed meters, oil pressure gauges, and so on, that
are fitted into two and four wheelers. Their current investment in assets is around` 5 crores and their last year
turnover was` 15 crores, just adequate enough to breakeven. The company has been witnessing over the last couple
of years, a fall in their market share prices since many customers are switching over to a new range of electronic
instruments from the range of mechanical instruments that have been the mainstay of Meters Limited.
The company has received a firm offer of cooperation from a competitor who is similarly placed in respect of
product range. The offer implies the following:
(i) transfer of the manufacturing line from the competitor to Meters Limited;
(ii) manufacture of mechanical instruments by Meters Limited for the competitor to the latter's specifications and
brand name; and
(iii) marketing by the competitor.
The benefits that will accrue to Meters Limited will be better utilization of its installed capacity and appropriate
financial compensation for the manufacturing effort.
The production manager of Meters Limited has welcomed the proposal
and points out that it will enable the company to make profits. The sales
manager is doubtful about the same since the demand for mechanical
instruments is shrinking. The Chief Executive is studying the offer.
(a) What is disinvestment strategy? Do you see it being practiced in the given case? Explain. (5 marks)
(b) What is stability strategy ? Should Meters Limited adopt it?(5 marks)
(c) What is expansion strategy ? What are the implications for Meters Limited in case it is adopted ? (5 marks)
(d) What is your suggestion to the Chief Executive ? (5 marks)
Answer:
(a) Disinvestment Strategy involves the sale or liquidation of a portion of business or a major division to a profit
centre organisation or SBU.
Divestment is usually a part of rehabilitation or restructuring plan and is adopted by those organisations which are in
loss or are unsuccessful in the market.
Yes, it is being practiced in the given case study. Here the major reason leading to disinvestment is change in
technology. Meters Ltd, is engaged in manufacturing mechanical instruments which are not in demand in the present
market. So the market price of instruments is declining and the company is in a situation to withdraw itself from the
market. Hence, Meter Ltd's. competitor is offering divestment strategy and the company is ready to adopt a proposal
of the competitor to withdraw its brand name and manufacture products in the name of the competitor.
(b) Stability Strategy means sustaining moderate growth in line with the existing trends i.e. staying in the market
with the same business, same product market posture and functions and maintaining same level of effort as at
present.
In the given case, the market share of Meter’s Ltd, is declining day by day due to the increased demand of electronic
instruments and in this situation if the company will adapt stability strategy it will sooner have a corporate death. So
it is important for the company that it does not remain stable but take necessary steps to cope up with the changing
environment.
(c) Expansion Strategy is a true growth strategy and involves a redefinition
of the business. Expansion strategy is followed when an organisation broadens the scope of its business in order to
improve its performance. In the given case, the market for the products of Meters Ltd. is declining, So if it adopts
expansion strategy it may go into mergers and acquisitions to increase its market share. The company adopts the
different measures of expansion in order to maintain itself in the changing business environment.
(d) After the analysis of situation of Meters Ltd., it is advisable to adopt the expansion strategy in order to maintain
their stake in the market. It is adopted because:
— It may become good when environment demands increase in pace
of activity.
— Increasing size may lead to more control over the market as
compared to competitors.
Chief executive shall accept the proposals to expand its market share and become a monopoly power in its own
range of mechanical products. Space to write important points for revision
Q.3.21 2019 - May [6] {C} Practical
Gautam and Siddhartha two brothers are the owners of a cloth manufacturing unit located in Faridabad. They are
doing well and have substantial surplus funds available within the business. They have different approaches
regarding corporate strategies to be followed to be more competitive and profitable in future.
Gautam is interested in acquiring another industrial unit located in Faridabad manufacturing stationery items such as
permanent markers, notebooks, pencils and pencil sharpeners, envelopes and other office supplies. On the other
hand, Siddhartha desires to start another unit to produce readymade garments.
Discuss the nature of corporate strategies being suggested by two brothers and risks involved in it. (5 marks)
Answer:
☐ In this case, Gautam and Siddhartha two brother running a cloth manufacturing unit in Faridabad, They have
surplus and have different approaches between them regarding corporate strategies.
☐ Gautam is interest in acquiring another industrial unit located in Faridabad manufacturing Stationery items such
as permanent markers, notebooks, pencils, and pencil Sharpeners, envelopes and other office supplies. So strategy
adopted by Gautam is conglomerate diversification.
☐ Conglomerate mergers are the combination of organizations that are unrelated to each other. There are no
linkages with respect to customer groups, customer functions and technologies being used. There are no important
common factors between the organizations in production, marketing, research and development and technology. In
practice, however, there is some degree of overlap in one or more of these factors.
☐ On the other hand Siddhartha desires to start another unit to produce readymade garments. So strategy adopted by
Siddhartha is vertically Integrated diversification.
☐ In vertically integrated diversification, firms opt to engage in businesses that are related to the existing business
of the firm. The firm remains vertically within the same process sequence moves forward or backward in the chain
and enters specific product / process steps with the intention of making them into new businesses for the firm. The
characteristic feature of vertically integrated diversification is that there, the firm does not jump outside the
vertically linked product - process chain.
Risk Involved
In conglomerate diversification, there are no linkages with customer
group, customer marketing functions and technology used, which is a risk.
In the case of vertical integrated diversification, there is a risk of lack of
continued focus on the original business.
Discuss how mergers and acquisitions are used for business growth. What are the various types of mergers?
Answer:
Many organizations in order to achieve quick growth, expand or diversify use mergers and acquisitions strategies.
Merger and acquisition in simple words are defined as a process of combining two or more organizations together.
There is a thin line of difference between the two terms but the impact of combination is completely different in both
the cases. Merger is considered to be a process when two or more organizations join together to expand their
business operations. In such a case the deal gets finalized on friendly terms. Owners of pre-merged entities have
right over the profits of new entity. In a merger two organizations combine to increase their strength and financial
gains.
When one organization takes over the other organization and controls all its business operations, it is known as
acquisition. In the process of acquisition, one financially strong organization overpowers the weaker one.
Acquisitions often happen during economic recession or during declining profit margins. In this process, one that is
financially stronger and bigger establishes it power. The combined operations then run under the name of the
powerful entity. A deal in case of an acquisition is often done in an unfriendly manner, it is more or less a forced
association.
Types of Mergers:
1. Horizontal Horizontal mergers are combinations of firms engaged in Merger the same industry. It is a merger
with a direct competitor. The principal objective behind this type of mergers is to achieve economies of scale in the
production process by shedding duplication of installations and functions, widening the line of products, decrease in
working capital and fixed assets investment, getting rid of competition and so on.
2. Vertical Merger
3. Co-generic Merger
4. Conglomerate Merger
It is a merger of two organizations that are operating in the same industry but at different stages of production or
distribution system. This often leads to increased synergies with the merging firms. If an organization takes over its
supplier/producers of raw material, then it leads to backward integration. On the other hand, forward integration
happens when an organization decides to take over its buyer organizations or distribution channels. Vertical merger
results in operating and financial economies. Vertical mergers help to create an advantageous position by restricting
the supply of inputs or by providing them at a higher cost to other players.
In co-generic merger two or more merging organizations are associated in some way or the other related to the
production processes, business markets, or basic required technologies. Such merger include the extension of the
product line or acquiring components that are required in the daily operations. If offers great opportunities to
businesses to diversify around a common set of resources and strategic requirements. For example, an organization
manufacturing refrigerators can diversify by merging with another organization having business in kitchen
appliances.
Conglomerate mergers are the combination of organizations that are unrelated to each other. There are no linkages
with respect to customer groups, customer functions and technologies being used. There are no important common
factors between the organizations in production, marketing, research and development and technology. In practice,
however, there is some degree of overlap in one or more of these factors.
Q.3.23 RTP Descriptive Vastralok Ltd., was started as a textile company to manufacture cloth. Currently, they are
in the manufacturing of silk cloth. The top management desires to expand the business in the cloth manufacturing.
To expand they decided to purchase more machines to manufacture cotton cloth.
Identify and explain the strategy opted by the top management of Vastralok Ltd.
Answer:
Vastralok Ltd. is currently manufacturing silk cloth and its top management has decided to expand its business by
manufacturing cotton cloth. Both the products are similar in nature within the same industry. The strategic
diversification that the top management of Vastralok Ltd. has opted is concentric in nature. They were in business of
manufacturing silk and now they will manufacture cotton as well. They will be able to use existing infrastructure
and distribution channel. Concentric diversification amounts to related diversification.
In concentric diversification, the new business is linked to the existing businesses through process, technology or
marketing. The new product is a spin-off from the existing facilities and products/processes. This means that in
concentric diversification too, there are benefits of synergy with the current operations.
Q.3.24 RTP Descriptive What is Divestment strategy? When is it adopted?

Answer:
Divestment Strategy:
Concept Divestment strategy involves the sale or liquidation of a portion of business, or a major division, profit
centre or SBU. For a multiple product company, divestment could be a part of rehabilitating or restructuring plan
called turnaround.
When • A divestment strategy may be adopted due to various Adopted reasons:
• When a turnaround has been attempted but has proved to be unsuccessful.

• A business that had been acquired proves to be a mismatch company. and cannot be integrated within the
• Persistent negative cash flows from a particular business create financial problems for the whole company.
• Severity of competition and the inability of a firm to cope with it.
• Technological upgradation is required if the business is to survive but where it is not possible for the firm to invest
in it.
• A better alternative may be available for investment.

4
Typologies of Strategies : Retrenchment / Turnaround Strategy
Q.4.1 2008 - May [7] (a)
What is meant by retrenchment strategy? Answer:
Retrenchment Strategy
Descriptive
(2 marks)
Meaning Retrenchment Strategy may require a firm to redefine its business and may involve divestment of a major
product line or an SBU, abandon some markets or reduce its functions. Retrenchment in pace may necessitate a firm
to use layoffs, reduce R&D or marketing or other outlays, increase the collection of receivables etc. The
Reasons for following

efforts aimed at redefining the business and reducing the pace of activities can improve performance of a firm.
Retrenchment in combination with expansion is not uncommon. “Retrenchment alone is probably the least
frequently used generic strategy.”
1. The firm is doing poorly.

2. If there is pressure from various groups of stakeholders to improve performance.
3. If better opportunities of doing business are available elsewhere a firm can better utilize its strengths.
Under what conditions would you recommend the use of Turnaround strategy in an organisation ? What could be a
suitable work plan for this? (5 + 5 = 10 marks)
Answer:
Turnaround Strategies
Meaning Retrenchment may be done either internally or externally. For internal retrenchment to take place,
emphasis is laid on improving internal efficiency, known as turnaround strategy.
The overall goal of turnaround strategy is to return an underperforming or distressed company to normalcy in terms
of acceptable levels of profitability, solvency, liquidity and cash flow. In order to achieve its objectives, turnaround
strategy must reverse causes of distress, resolve the financial crisis, achieve a rapid improvement in financial
performance, regain stakeholder support, and overcome internal constraints and unfavourable industry
characteristics.
Condition or Indicators
Focus
Elements
Contributing towards
turnaround
There are certain conditions or indicators which point out that a turnaround is needed if the organization has to
survive. These danger signs are:
1. Persistent negative cash flow
2. Negative profits
3. Declining market share
4. Deterioration, in physical facilities
5. Overmanning, high turnover of employees, and low
morale
6. Uncompetitive products or services
7. Mismanagement
For turnaround strategies to be successful, it is imperative to focus on the short and long– term financing need as
well as on strategic issues. A workable action plan for turnaround should include:
Analysis of product, market, production processes, competition and market segment positioning.
Clear thinking about the market place and production logic. Implementation of plans by target– setting feedback,
and remedial action.
A set of ten elements that contribute to turnaround are:
1. Changes in the top management
2. Initial credibility – building actions
3. Neutralising external Pressures
4. Internal control
5. Identifying quick pay off activities
6. Quick cost reductions
7. Revenue generation
8. Asset liquidation for generating cash
9. Mobilization of the organizations
10. Better internal coordination.


Need for Turnaround Strategy (2 marks) Answer:
Need for Turnaround Strategy:
Need for Turnaround Strategy is when an enterprise’s performance deteriorates to a point that it needs a radical
change of direction in strategy, and possibly in structure and culture as well. Turnaround strategy is a highly targeted
effort to return an organization to profitability and increase positive cash flows to a sufficient level. It is used when
both threats and weaknesses adversely affect the health of an organization so much that its basic survival is difficult.

Q.4.4 2011 - Nov [9] (b) (iii) Objective
Divestment is a part of rehabilitation and is adopted when a ________ has been attempted but has proved to be
unsuccessful. (1 mark)
Answer:
Turnaround
What is Divestment strategy? When is it adopted? (3 marks) Answer:

Divestment Strategy is also known as Retrenchment strategy.
Retrenchment strategy may require a firm to redefine its business and may involve divestment of a major product
line or an SBU, abandon some markets or reduce its functions. Retrenchment in pace may necessitate a firm to use
layoffs, reduce R&D or marketing or other outlays, increase the collection of receivables etc. The efforts aimed at
redefining the business and reducing the pace of activities can improve performance of a firm. Retrenchment in
combination with expansion is not uncommon. “Retrenchment alone is probably the least frequently used generic
strategy.”
Features 1.
2.
Reasons for Following

1. 2.
3. Retrenchment Strategy involves a partial or total withdrawal either from products, markets or functions in one or
more of a firm’s businesses.
Retrenchment Strategy is generally followed during the period of decline of a business when it is thought possible to
bring profitability back to the firm. If the prospects of restoring profitability are not good, abandoning market share,
reducing expenses and assets can use controlled divestment.
The firm is doing poorly.
If there is pressure from various group of stakeholders to improve performance.
If better opportunities of doing business are available elsewhere, a firm can better utilize its strengths. The
retrenchment strategy is particularly followed for dealing with crises. For minor crises pace retrenchment will be
suitable, for moderate crises, divestiture of some division or units may be inevitable whereas for serious crises, a
liquidation strategy will be imperative.

Q.4.6 2012 - May [13] (b) Distinguish Between Distinguish between the following:
Expansion Strategy and Retrenchment Strategy (3 marks)
Answer:
Sr. Basis of Expansion Strategy No. Difference
1. When Done Expansion

followed
strategy is w h e n a n
organisation broadens the scope of one or more of its businesses in order to i m p r o v e i t s o v e r a l l

performance.
2. Done (i) Increasing the level of Through objectives in terms of market share, sales revenue etc.
(ii) Increasing functional performance in major respects.
(iii) Adding new product line to the present one.

(iv) Acquisition, merger or amalgamation of firms.
3. Reason (i) Growth is often a cherished cultural values.
(ii) In face of changing environment growth is necessary for survival.
(iii) Increasing size may lead to more control over the market.
(iv) Advantage from the experience curve may accrue.
Retrenchment strategy may require a firm to redefine its business.
May involve divestment of a major product line or an S B U , a b a n d o n s o m e markets or reduce its functions.
Retrenchment in pace may necessitate a firm to use layoffs, reduce R&D or marketing or other out l a y s , i n c r e a
s e t h e collection of receivables etc.
(i) The firm is doing poorly. (ii) If there is pressure from v a r i o u s g r o u p s o f stakeholders to improve
performance.
(iii) If better opportunities of doing business are available elsewhere a firm can better utilize its strengths.
Q.4.7 2015 - May [10], RTP Descriptive
The Management of a sick company manufacturing various electrical home appliances seeks your advice for an
appropriate retrenchment strategy. What will be your advice and why? (7 marks)
Answer:
☐ Retrenchment Strategy may require a firm to redefine its business and may involve divestment of a major product
line or an SBU, abandon some markets or reduce its functions.
☐ The efforts aimed at redefining the business and reducing the pace of activities can improve performance of a
firm.
☐ Sometime business have products or units which are not performing as per their expectation.
☐ In this situation, business may divest such business units from their portfolio, as ‘stop loss’ strategy.
☐ The retrenchment over here is not related to retrenchment of staff but the retrenchment of business unit.
☐ The nature, extent and timing of retrenchment are matters to be carefully decided by management, depending
upon each contingency.
☐ The sick company manufacturing various electrical home appliances seeks so management follows as per
following:
☐ First of all, the enterprise withdrawing from some marginal markets, withdrawal of some brands and sizes of
products, withdrawal of even some slow moving products, winding up some branch offices, abolition of some
executive positions and so on.
☐ Next, the enterprise may resort to sale of some manufacturing facilities and individual product divisions which
are a drag on the enterprise’s resources.
☐ It may also seek retirement either from Production on the marketing stage.
☐ It is also possible to think of offering itself for takeover by another more viable enterprise.
☐ At a last option an enterprise may seek liquidation which means corporate death.
Q.4.8 2016 - Nov [14] (Or) (b) Short Notes

Reasons to adopt Turnaround Strategies. (3 marks) Answer:
Reasons for adopting turnaround strategy is as follows: 1. Turnaround is needed when an enterprise’s
performance deteriorates to
a point that it needs a radical change of direction in strategy and possibly in structure and culture as well.
2. To return an underperforming or distressed company to normalcy in terms of acceptable levels of profitability,

solvency, liquidity and cash flow.
3. To achieve its objectives, turnaround strategy must reverse, causes of distress, resolve the financial crisis, achieve
a rapid improvement. Space to write important points for revision
State the reasons in which a company thinks for going to divestment strategy. (3 marks) Answer:
Divestment Strategy involves the sale or liquidation of a portion of business, or a major division, profit centre or
SBU. Divestment is usually a part of rehabilitation or restructuring plan.
A Divestment Strategy may be adopted due to various reasons:
(i) When a turnaround has been attempted but has proved to be unsuccessful.
(ii) A business that had been acquired proves to be a mismatch and cannot be integrated within the company.
(iii) Persistent negative cash flows from a particular business create financial problems for the whole company.
(iv) Severity of competition and the inability of a firm to cope with it.
(v) Technological upgradation is required if the business is to survive but where it is not possible for the firm to
invest in it.
(vi) A better alternative may be available for investment.
XYZ Ltd. is a multi-product company, suffering from continuous losses since last few years and has accumulated
heavy losses which have eroded its net worth.
What strategic option is available to the management of this sick company? Advise with reasons. (5 marks)
Answer:
☐ This sick company (XYZ Ltd.) has huge accumulated losses that have eroded its net worth. The multi - product
company may analyse its various products to take decisions on the viability of each.
☐ Retrenchment becomes necessary for coping with hostile and adverse situations in th environment and when any
other strategy is likely to be suicidal. The nature, extent and timing of retrenchment are matters to be carefully
decided by management, depending upon each contingency.
☐ Retrenchment strategy is adopted because:
☐ The management no longer wishes to remain in business either partly or wholly due to continuous losses and
unviability. ☐ The environment faced is threatening.
☐ Stability can be ensured by reallocation of resources from unprofitable to profitable businesses.
☐ Retrenchment strategy is followed when an organization substantially reduces the scope of its activity. This is
done through an attempt to find out the problem areas and diagnose the causes of the problems. Next steps are taken
to solve the problems. These steps result in different kinds of retrenchment strategies.
* Turnaround Strategy :
☐ If the organization chooses to transform itself into a leaner structure and focuses on ways and means to reverse
the process of decline, it adopts a turnaround strategy. It may try to reduce costs, eliminate unprofitable outputs,
generate revenue, improve coordination, better control and so on. It may also involve changes in top management
and reorienting leadership.
* Divestment Strategy :
☐ Divestment Strategy involves the sale or liquidation of a portion of business, or a major division, Profit Center or
SBU. Divestment is usually a part of rehabilitation or restructuring plan and is adopted when a turnaround has been
attempted but has proved to be unsuccessful.
* Liquidation Strategy :
☐ In the retrenchment strategy, the most extreme and unattractive is liquidation strategy. It involves closing down a
firm and selling its assets.
☐ It is considered as the last resort because it leads to serious consequence such as loss of employment for workers
and other employees, termination of opportunities where a firm could pursue any future activities, and the stigma of
failure. Many small - scale units, proprietorship firms and partnership ventures liquidate frequently but medium and
large-sized companies rarely liquidate in India. The company management, government, banks and financial
institutions, trade unions, suppliers and creditors, and other agencies are extremely reluctant to take a decision, or
ask, for liquidation.
☐ Liquidation strategy may be unpleasant as a strategic alternative but when a “dead business is worth more than
alive”, it is a good proposition.
☐ The management of a sick company manufacturing multi products be explained about the each of the above three
options of retrenchment strategy with their pros and cons. But the appropriate advice with respect to a particular
option of retrenchment strategy will depend on the specific circumstances of each such multi products and
management goals of the company.
Q.4.11 2019 - Nov [6] {C} Practical
An XYZ Company is facing continuous losses. There is decline in sales and product market share. The products of
the company became uncompetitive and there is persistent negative cash flow. The physical facilities are
deteriorating and employees have low morale. At the board meeting the board members decided that they should
continue the organization and adopt such measures that the company functions properly. The board has decided to
hire young executive Shayamli for improving the functions of the organization. What corporate strategy should
Shayamli adopt for this company and what steps to be taken to implement the corporate strategy adopted by
Shayamli? (5 marks)
Distinguish between Divestment strategy and liquidation strategy. Answer:

Divestment Strategy:
Divestment strategy involves the sale or liquidation of a portion of business, or a major division, profit centre or
SBU. Divestment is usually a part of rehabilitation or restructuring plan and is adopted when a turnaround has been
attempted but has proved to be unsuccessful. The option of a turnaround may even be ignored if it is obvious that
divestment is the only answer.
Liquidation Strategy:
Liquidation as a form of retrenchment strategy is considered as the most extreme and unattractive. If involves
closing down a firm and selling its assets. It is considered as the last resort because it leads to serious consequences
such as loss of employment for workers and other employees, termination of opportunities a firm could pursue, and
the stigma of failure.
Devise an ideal work plan for implementing a turnaround strategy in an organisation.

Answer:
Work Plan for Implementing a Turnaround Strategy :
• Stage One - Assessment of current problems: The first step is to
assess the current problems and get to the root causes and the extent of damage the problem has caused. Once the
problems are identified, the resources should be focused toward those areas essential to efficiently work on
correcting and repairing any immediate issues.
• Stage Two - Analyze the situation and develop a strategic plan: Before you make any major changes;
determine the chances of the business’s survival. Identify appropriate strategies and develop a preliminary action
plan. For this one should look of or the viable core businesses, adequate bridge financing and available
organizational resources. Analyze the strengths and weaknesses in the areas of competitive position. Once major
problems and opportunities are identified, develop a strategic plan with specific goals and detailed functional
actions.
• Stage Three - Implementing an Emergency Action Plan: If the organization is in a critical stage, an appropriate
action plan must be developed to stop the bleeding and enable the organization to survive. The plan typically
includes human resource, financial, marketing and operations actions to restructure debts, improve working capital,
reduce costs, improve budgeting practices, prune product lines and accelerate high potential products. A positive
operating cash flow must be established as quickly as possible and enough funds to implement the turnaround
strategies must be raised.
• Stage Four - Restructuring the business: The financial state of the organization’s core business is particularly
important. Prepare cash forecasts, analyze assets and debts, review profits and analyze other key financial functions
to position the organization for rapid improvement.
During the turnaround, the “product mix” may be changed, requiring the organization to do some repositioning.
Core products neglected over time may require immediate attention to remain competitive. Organisations may also
withdraw from some markets, close some facilities or discontinue some products.
The “people mix” is another important ingredient in the organization’s competitive effectiveness. Reward and
compensation systems that encourage dedication and creativity encourage employees to think profits and return on
investments.
• Stage Five - Returning to normal: In the final stage of turnaround strategy process, the orgination should begin
to show signs of profitability, return on investments and enhancing economic valueadded. Emphasis is placed on a
number of strategic efforts such as carefully adding new products and improving customer service, creating alliances
with other organizations, increasing the market share, etc.
Q.4.14 RTP Descriptive A large textile mill, which is in the verge of collapse, has approached you to suggest
turnaround strategies. What can be the action plan while recommending turnaround strategies for such a firm?
Answer:
A textile mill which is on the verge of collapse should carefully analyse its present position, gravity of problems,
whether there exist ways to overcome these problems, available resources and so on. The action plan for turnaround
strategy can be as follows:
1. Assessment of Current Problems:
The first step is to assess the current problems and get to the root causes and the extent of damage the problem has
caused. Once the problems are identified, the resources should be focused toward those areas essential to efficiently
work on correcting and repairing any immediate issues. The problems can be internal such as low morale of workers
in the textile or environment driven such as huge influx of cheap cloth from foreign markets.
2. Analyze the Situation and Develop a Strategic Plan:

Before you make any major changes; determine the chances of the business’s survival. Identify appropriate
strategies and develop a preliminary action plan. For this one should look for the viable core businesses, adequate
bridge financing and available organizational resources. Analyze the strengths and weaknesses in the areas of
competitive position. Once major problems and opportunities are identified, develop a strategic plan with specific
goals and detailed functional actions.
3. Implementing an Emergency Action Plan:

If the organization is in a critical stage, an appropriate action plan must be developed to stop the bleeding and enable
the organization to survive. The plan typically includes human resource, financial, marketing and operations actions
to restructure debts, improve working capital, reduce costs, improve budgeting practices, prune product lines and
accelerate high potential products. A positive operating cash flow must be established as quickly as possible and
enough funds to implement the turnaround strategies must be raised.
4. Restructuring the Business:

The financial state of the organization’s core business is particularly important. If the core business is irreparably
damaged, then the outlook for the entire organization may be bleak. Prepare cash forecasts, analyze assets and debts,
review profits and analyze other key financial functions to position the organization for rapid improvement. During
the turnaround, the “product mix” may be changed, requiring the organization to do some repositioning. The ‘people
mix’ is another important ingredient in the organization’s competitive effectiveness.
5. Returning to Normal: In the final stage of turnaround strategy process, the organization should begin to show
signs of profitability, return on investments and enhancing economic value-added. Emphasis is placed on a number
of strategic efforts such as carefully adding new products and improving customer service, creating alliances with
other organizations, increasing the market share etc.

5
Typlogies of Strategies : Combination Strategy
Q.5.1 2011 - May [10] (vii) Descriptive
Explain the meaning of the following concepts :

Combination Strategies (1 mark) Answer :
Combination strategies :
When an organization adopts a mix of stability, expansion and retrenchment either simultaneously or sequentially
for the purpose of improving its performance, it is said to follow the combination generic strategy. With
combination strategies, the strategists consciously apply several generic strategies to different parts of the firm or to
different future periods. For example a paint company adopts combination strategies when it augments its offering
of decorative paints to provide a greater variety to its customers (stability) and increases its product range to add
industrial and automotive paints (expansion), and closes down the paint-contracting division (retrenchment).

1 Typologies of Strategies
1. “Strategy is a deliberate search for a plan of action that will develop a business competitive advantage and
compound it” is defined by _______.
(a) Louis Pasteur
(b) Bruce D Henderson
(c) Willium F Glueck
(d) Lawrance R Jauch.
2. In a corporate units competitive strategies includes:

(a) Cost Leadership
(b) Differentiation
(c) Focus Cost Leadership
3. Which is not a basic feature of corporate strategies?

(a) Stability
(b) Expansion
(c) Combination
(d) Procurement
4. A stability strategy is followed by the firm specially when _________.
(a) The strategic decisions focus on incremental improvement of functional performance.

(b) It continues to serve in the same or similar markets and deals in same or similar products and services.
5. Which is the most highly versatile strategy?
(a) Stability Strategy
(b) Expansion Strategy
(c) Divestment Strategy
(d) Turnaround Strategy
6. Which is the best reason for combination strategy?
(a) The organisation is composed of different business, each of which lies in a different industry requiring a different
response.
(b) The organisation is large and faces complex environment.
(c) Both of (a) and (b)
(d) None of above
ANSWER
1. (b) 2. (d) 3. (d) 4. (c) 5. (b) 6. (d)
CHAPTER
5
Business Level Strategies
Chapter Comprises: ☹Porter’s Five Forces Model-Competitive Analysis ☹Threat of New Entrants ☹Bargaining
Power of Buyers ☹Bargaining
Power of Suppliers ☹The Nature of Rivalry in the Industry ☹Threat of
Substitutes ☹Business-Level Strategies ☹Michael Porter’s Generic
Strategies ☹Cost Leadership Strategy ☹Differentiation Strategy
☹Focus Strategies ☹Best-Cost Provider Strategy.

Legend
book.
7.515
TIME MANAGER
i.e.....
1. Budgeted
2. Actual
3. Variance (1-2)
............ Day 1 16
Instant
Revision (in hours)

i.e.... i.e. on ........... ...........
Day 2 Day 8
4.00 3.12
(in hours)

2.20 1.35 1.35

–

1.2, 2.3 2.1, 2.3, 2.10
1 Porter’s Five Forces Model: Competitive Analysis
Q.1.1 2012 - Nov [8] {C} (a) Descriptive Explain the factors that affect the strength of competitive pressures from
substitute products. (3 marks)
Answer:
Substitute products are those products which are used in place of main product. They are a latent source of
competition in an industry. Substitute products offering a price advantage and/or performance improvement to the
consumer can drastically alter the competitive character of an industry.
According to Michael Porter , the state of competition in an industry is a composite of competitive pressures
operating in five areas of overall market. One of the five areas is the threat of substitute products or services. The
threat of actual or potential substitutes needs to be examined carefully, as it may put a ceiling on the prices for a
product, or make inroads into the market and reduce its demand, e.g : PVC tubes making inroads into the market for
steel tubes, or copper loosing its market to aluminium and plastics.

Q.1.2 2009 - Nov [8] Descriptive What are the five competitive forces in an industry as identified by Michael Porter
? Explain. (10 marks) OR 2011 - Nov [8] {C} (b) Descriptive Industry is a composite of competitive pressures in
five areas of the overall market. Briefly explain the competitive pressures. (3 marks) OR 2018 - May [11] (a)
Descriptive Explain briefly the competitive forces in any industry as identified by Michael Porter. (5 marks)
Answer:
A structured approach to examine the competitive environment of an organisation has been suggested by Michael
Porter.
Logic of the
Approach
The logic behind this approach is that for most organisations, the strategic competitive advantages enhance and
ensure long-term profit potentials, and also because competitive forces happen to be more immediate external
influences which organisations are likely to be able to overcome directly by their own actions.
Porters
Framework
1. Degree of Competitive rivalry
2. Threat of Potential Entrants
Porter identified five basic forces which, according to him, determine the intensity and state of competition in an
industry, and the collective impact of which determines the long☐run profit potential in the industry.
The basic forces are:
1. Degree of competitive rivalry among competitors; 2. Threat of entry posed by potential entrants; 3. Threat of
actual or potential substitutes;
4. Bargaining power of suppliers; and
5. Bargaining power of customers.
Rivalry or competition leads to actions taken by different players to get an edge over other players.
The specific factors determining competitive rivalry are :
1. The number and size of competitors.
2. The industry growth rate.
3. Capital intensity involving high fixed costs. 4. Product differentiation, and
5. Exit barriers.
New entrants with their extra capacity and new product range bring new competitive pressures.
This threat depends on the barriers to entry, which may typically include:
(i) Economies of scale.

(ii) Capital requirement for entry.
(iii) Access to distribution channel.
(iv) Cost advantages irrespective of size.
(v) Differentiation of product (brand identity). (vi) Expected retaliation by existing players. (vii) Cost of switching
over to other product markets. (viii) Government policy and legislation.
3. Substitutes
4. Supplier Power
5. Customer Power
Substitute products are a latent source of competition in an industry. Substitute products offering a price advantage
and/or performance improvement to the consumer can drastically alter the competitive character of an industry.
The threat of actual or potential substitutes needs to be examined carefully, as it may put a ceiling on the prices for a
product, or make inroads into the market and reduce its demand, e.g: PVC tubes making inroads into the market for
steel tubes, or copper loosing its market to aluminium and plastics.
The bargaining power of suppliers determines the cost of raw materials and other inputs of the industry. The
strategic freedom of an organisation may be constrained by suppliers under circumstances, which may lead to
reduced margins for the organisation. This happens where :
(i) there is a concentration of suppliers, or monopoly of supply enjoyed by a supplier.
(ii) the switching costs from one supplier to another is high due to a manufacturer's dependence on a specialised or
differentiate item of supply.
(iii) the scope of supplier resorting to forward integration. (iv) the customers are of little importance to the supplier.
The bargaining power of the buyers influences not only the prices that the producer can charge but also influences
costs and investments.
The bargaining power of customers is a function of factors as:
(i) Concentration of buyers.

(ii) Alternate sources of supply.
(iii) Costs of switching over to other customer segments. (iv) Threat of backward integration of buyer organisation,
and
(v) Substitutes available.

Analyse the following cases in the context of Michael Porter’s Five Forces Model:
(i) A supplier has a large base of customers.
(ii) A manufacturer of sports goods has the advantage of economies of large scale production.
(iii) Products offered by competitors are almost similar. (3 marks)
Answer:
(i) A Supplier has a large base of customers:
☐ Quite often suppliers, too, exercise considerable bargaining power over companies. The more specialised the
offering from the supplier, greater is his power.
☐ If the suppliers are limited in number they stand a still better chance to exhibit their bargaining power.
☐ The bargaining power of suppliers determines the cost of raw materials and other inputs of the industry and,
therefore, industry attractiveness and profitability.
(ii) A Manufacturer of sports goods has the advantage of economies of large scale production:
☐ Bargaining power of customers is another force that influences the competitive condition of the industry.
☐ This force will become heavier depending on the buyers forming groups or cartels.
☐ Mostly, this is a phenomenon seen in industrial products. ☐ Quite often, users of industrial products come
together formally or informally and exert pressure on the producer in matters such as price, quality and delivery.
(iii) Products Offered by competitors are almost similar: ☐ Substitute products are a latent source of
competition in an industry.
☐ In many cases they become a major constituent of competition. ☐ Substitute products offering a price advantage
and /or performance improvement to the consumer can drastically alter the competitive character of an industry.
Q.1.4 2018 - May [8] (e) Objective
Economies of scale discourages new entrants. (2 marks) Answer:
Correct
Economies of Scale refers to the decline in the per-unit cost of production (or other activity) as volume grows. A
large firm that enjoys economies of scale can produce high volumes of goods at successively lower costs. This tends
to discourage new entrants.

Q.1.5 2018 - Nov [7] {C} (d) Descriptive
What do you mean by “Economics of Scale”? (2 marks) Answer:

Economies of Scale :
Economies of Scale refer to the decline in the per - unit cost of production (or other activity) as volume grows. A
large firm that enjoys economies of scale can produce high volumes of goods at successively lower costs. For
examples, in the semiconductor industry, larger companies, such as IBM, Intel, Samsung and Texas Instruments,
enjoy substantial economies of scale in the production of advanced microprocessors, communication chips and
integrated circuits that power most customer electronics, personal computers (PCs) and cellular phones. This acts as
a barrier for new entrants.

Q.1.6 2019 - Nov [9] (a) Descriptive Discuss in what conditions rivalry among competitors tends to be cut-throat
and profitability of the industry goes down. (5 marks)
Explain Porter’s five forces model as to how businesses can deal with the competition.
Answer:
To gain a deep understanding of a company’s industry and competitive environment, managers do not need to gather
all the information they can find and waste a lot of time digesting it. Rather, the task is much more focused. A
powerful and widely used tool for systematically diagnosing the significant competitive pressures in a market and
assessing the strength and importance of each is the Porter’s five-forces model of competition. This model holds that
the state of competition in an industry is a composite of competitive pressures operating in five areas of the overall
market:
• Competitive pressures associated with the market maneuvering and
jockeying for buyer patronage that goes on among rival sellers in the industry.
• Competitive pressures associated with the threat of new entrants into the market.
• Competitive pressures coming from the attempts of companies in other industries to win buyers over to their own
substitute products.
• Competitive pressures stemming from supplier bargaining power and supplier-seller collaboration.
• Competitive pressures stemming from buyer bargaining power and seller-buyer Collaboration.
2 Michael Porter’s Generic Strategies

Michael E. Porter has suggested three generic strategies. Briefly explain them. What is the basic objective to follow
a generic strategy? In what situations can the three strategies be used? Identify the type of strategy used in the
following examples :
(a) Dell Computer has decided to rely exclusively on direct marketing.
(4 marks) (b) “Our basic strategy was to charge a price so low that microcomputer makers couldn’t do the software
internally for that cheaply.” (3 marks) (c) ‘NDTV’, a TV Channel has identified a profitable audience niche in the
electronic media. It has further exploited that niche through the addition of new channels like ‘NDTV Profit’ and
‘Image’. (3 marks) Answer:
Michael E. Porter describes that, strategies allow organizations to gain competitive advantage from three different
bases:
(i) Cost leadership,

(ii) Differentiation, and
(iii) Focus.
The basic purpose of following a generic strategy is to gain competitive advantage so as to ensure long-time survival
and growth of the organisation. Generic Emphasises Strategy
Cost Cost Leadership empha-sizes Leadership producing s t a n d a r - dized products at a very low per-unit cost for
consumers who are price-sensitive. It frequently results from productivity increases and aggressive pursuit of cost
reduction throughout the development, production, marketing, and distribution processes. It allows a firm to earn
higher profits than its competitors.
Situations under which these Generic strategies can be used.
When the market is pricesensitive, not much room is left for differentiation. Cost leadership is a better option when
buyers do not c a r e m u c h a b o u t differences between the brands.
Differentiation Differentiation is a strategy aimed at producing products and services considered unique industry
wide and directed at consumers who are relatively price-insensitive. It concerns with distinguishing a product/
service from that of its competitors through unique design features, technological leadership, unique uses of
products and attributes like quality, environmental impact and customer service.
Focus Focus means producing products and services that fulfil the specific needs of small groups of consumers. It
involves selecting or focusing a market or customer segment in which to operate. This strategy is suitable when the
customers want or can get attracted to specific attribute(s) of the products. It is directed towards creating separate
market with a product with different attribute(s). The strategy is useful in a p e r f e c t l y c o mp e t i t i v e market
where all products look similar.
S m a l l e r f i r m s m a y compete on a focus basis. When the customers have distinctive preferences or

requirements and the rival firms are not attempting to specialise in the same target segment.
In the given examples the generic strategies that are being followed are given as follows :
(a) Differentiation: Dell Computers is differentiating on product delivery.
Computer market is highly competitive and the products are very similar. (b) Cost Leadership: By Keeping the
prices low, microcomputer makers
acquire the software rather than developing themselves is a case of cost
leadership.
(c) Focus: NDTV has identified a profitable area (audience niche) and is
focusing on it.
Q.2.2 2011 - May [9] (b) (iii) Objective
Michael Porter's Generic strategies allow organizations to gain competitive advantages by cost leadership,
_________ and focus. (1 mark)
Answer:
Differentiation
Q.2.3 2013 - May [8] {C} (c), RTP Descriptive
According to Michael Porter, strategies allow organizations to gain competitive advantages from different bases.
Explain these bases as mentioned by Porter. (3 marks)
OR 2017 - May [12] (a) Descriptive Michael Porter has suggested three generic strategies. Explain them with
examples. (4 marks) OR RTP Descriptive Discuss strategic alternatives with reference to Michael Porter’s
strategies.
Answer:
According to Porter, strategies allow organizations to gain competitive advantage from three different bases: cost
leadership, differentiation and focus.
1. Cost Cost leadership emphasizes producing standardized
Leadership product at a very low per-unit cost for consumers who are price sensitive. It frequently results from
productivity increases and aggressive pursuit of cost reduction throughout the development, production, marketing
and distribution processes. It allows a firm to earn higher profits than its competitors.
2. Differentiation Differentiation is a strategy aimed at producing
products and services considered unique industry wide and directed at consumers who are relatively price
insensitive. It concerns with distinguishing product/service from that of its competitors through unique design
features, technological leadership, unique uses of products and attributes like quality, environmental impact and
customer service.
3. Focus Focus means producing product and services that fulfill the specific needs of small groups of consumers. In
involves selecting or focusing a market or customer segment in which to operate.
STRATEGIC ADVANTAGE Uniqueness perceived by the customer
Industry DIFFERENTIATION STRATEGIC

Low cost position
OVERALL COST LEADERSHIP TARGETFOCUS Particular
Segment Only
Figure: Michael Porter’s Generic Strategy Space to write
Q.2.4 2012 - May [10] (v) Descriptive Explain the meaning of following concepts:
Cost Leadership Strategies (1 mark)
Answer:
Cost Leadership Strategy:
When the competitive advantage of a firm lies in a lower cost of products or services relative to what the
competitors have to offer, it is termed as cost leadership. A firm which finds and exploits all sources of cost
advantage and aims at becoming a low cost producer in the industry is said to pursue a sustainable cost leadership
strategy. It implies achieving the lowest cost in production and marketing to gain a large market share compared
with competitors over time. If a firm can achieve and sustain overall cost leadership then it will be an
above☐average performer in the industry provided it can command prices at or near the industry average.

Identify the Generic Strategy used in the following examples: (i) Bell Computer has decided to rely exclusively on
direct marketing. (ii) Our basic strategy was to charge a price so low that micro computer
makers couldn't do the software internally for that cheaply. (iii) 'MD TV', a TV channel has identified a profitable
audience niche in
the electronic media. It has further exploited that niche through the
addition of new channels like 'MD TV' Profit and Image. (3 marks) Answer:
(i) Differentiation Strategy
Bell Computers is differentiating on product delivery as computer market is highly competitive and the competitive
and the products are very similar.
(ii) Cost Leadership
Keeping the prices low so that microcomputer makers acquire the software rather than developing themselves is a
case of cost leadership.
(iii) Focused Differentiation
MD TV has identified a profitable area (audience riche) and is focusing on it.
Q.2.6 2014 - May [13] (a) Distinguish Between Distinguish between the following:
Cost Leadership and Differentiation Strategies (4 marks)
Answer:
Cost Leadership:
A primary reason for pursuing forward, backward, horizontal integration strategies is to gain cost leadership
benefits. A number of cost elements affect the relative attractiveness of generic strategies, including economies of
scale achieved. Learning and experience Curve affects the percentage of capacity utilisation achieved and linkage
with suppliers and distributors. A successful cost leadership strategy usually permeates the entire firm, as evidenced
by high efficiency, low overhead, limited perks, intolerance of waste, intensive screening at budget requests, wide
sponsor control, rewards linked to cost containment, and broad employee participation in cost control efforts.
Differentiation Strategies: It offers different degrees of differentiation. Differentiation does not guarantee
competitive advantages, especially if standard products sufficiently meet customer needs or if rapid imitation by
competitors is possible.

Q.2.7 2019 - May [9] (b) Descriptive What do you mean by differentiation strategy? How it is achieved? (5 marks)
Answer:
☐ Differentiation is a strategy aimed at producing products and services considered unique industry wide and
directed at consumers who are relatively price-insensitive. It concerns with distinguishing a product/ service from
that of its competitors through unique design features, technological leadership, unique uses of products and
attributes like quality, environmental impact and customer service.
☐ This strategy is suitable when the customers want or can get attracted to specific attribute(s) of the products. It is
directed towards creating separate market with a product with different attribute(s). The strategy is useful in a
perfectly competitive market where all products look similar.
To achieve differentiation, following are the measures that could be adopted by an organization to
incorporate:
1. Offer utility for the customers and match the products with their tastes
and preferences.
2. Elevate the performance of the product.
3. Offer the promise of high quality product / service for buyer satisfaction.
4. Rapid product innovation.
5. Taking steps for enhancing image and its brand value.
6. Fixing product prices based on the unique features of the product and buying capacity of the customer.
Q.2.8 2019 - Nov [10] (Or) (b) Short Notes Write a short note on the concept of cost leadership strategy and how
to achieve it? (5 marks)
Q.2.9 2018 - Nov [9] (b) Practical
Sohan and Ramesh are two friends who are partners in their business of making biscuits. Sohan believe in making
profits through selling more volume of products. Hence, he believes in charging lesser price to the customers.
Ramesh, however of the opinion that higher price should be charged to create an image of exclusivity and for this,
he proposes that the product to undergo some change.
Analyse the nature of generic strategy used by Sohan and Ramesh.
(5 marks) Answer:
The Generic Competitive Strategies or Best - Cost provider Strategy involves providing customers more
value for the money by emphasizing low cost and better quality difference. It can be done: (1) through offering
products at lower price than what is being offered by
rivals for products with comparable quality and features or. (2) charging similar price as by the rivals for products
with much higher
quality and better features.
Generic Strategy adopted by Sohan and Ramesh :

1. As Sohan is opinion of making profits through selling more volume of products by charging less prices of
biscuits. The strategy adopted here is to take competitive advantage. It provides more value for the money and
having lower costs than competitors
2. As Ramesh is of the opinion that higher price should be charged to create an image of exclusivity and for this, he
proposes that the product to undergo some change. Here, Ramesh build in whatever features buyers are willing to
pay for and charge a premium price for to cover extra costs of differentiating features. The firm shall require to
either under price rival brands with comparable features or match the price of rivals and provide better features to
build a reputation for delivering the best value. This strategy focuses on Market Emphasis.
Q.2.10 RTP Practical
Gennex is a company that designs, manufactures and sells computer hardware and software. Gennex is well known
for its innovative products that has helped the company to have advantage over its competitors. It also spends on
research and development and concerned with innovative softwares. Often the unique features of their product, that
are not available with their competitors helps them to gain competitive advantage. Gennex using the strategy is
consistently gaining its position in the industry over its competitors.
Identify and explain the Porter’s generic strategy which Gennex has opted to gain the competitive advantage.
Answer:
According to Porter, strategies allow organizations to gain competitive advantage from three different bases: cost
leadership, differentiation, and focus. Porter called these base generic strategies.
Gennex has opted differentiation strategy. Its products are designed and produced to give the customer value and
quality. They are unique and serve specific customer needs that are not met by other companies in the industry.
Highly differentiated and unique hardware and software enables Gennex to charge premium prices for its products
hence making higher profits and maintain its competitive position in the market.
Differentiation strategy is aimed at broad mass market and involves the creation of a product or service that is
perceived by the customers as unique. The uniqueness can be associated with product design, brand image, features,
technology, dealer network or customer service.

3 Best Cost Provider Strategy
Q.3.1 2012 - Nov [10] (iv) Descriptive Explain the meaning of the following concepts:
Best-cost provider strategy (1 mark)
Answer :
The Best cost Provider strategy is an advancement of Porter’s generic strategy.
Best Cost Provider:

☐ It targets the value conscious buyer
☐ by either underpricing the competitors brand with comparable features
or matching the price of the competitor by providing better features. ☐ Thereby creating more value for money.
1
Porter’s Five Forces Model: Competitive Analysis
1. Michael Porter’s Generic Strategies comprises except:

(a) Cost Leadership Strategy
(b) Best Cost Provider Strategy
(c) Focus Strategy
(d) Differentiation Strategy.
2. Common barriers to entry represents hurdles that slow down entry by other firms except:
(a) Capital requirements
(b) Switching cost
(c) Added Production Capacity
(d) Brand identity.
3. Suppliers can influence the profitability of an industry in various way except:

(a) Buyers have full knowledge of the sources of products and their
substitutes
(b) They can erect high switching cost
(c) They are more concentrated their buyers
(d) Their products are crucial to the buyer and substitutes are not
available.
2 Business Level Strategies
4. Business Level Strategy is concerned with the issue such as _______. (a) Achieving advantage over competitors
(b) Avoiding competitive disadvantage
(c) Meeting the needs of key customers
5. _________ is very important in obtaining and sustaining a competitive advantage.

(a) Knowing general Customers
(b) Knowing Sellers
(c) Knowing Producers
(d) Knowing one’s customers.
6. ___________ are the foundation of an organization’s business level strategies.

(a) Business Structure
(b) Customers
(c) Competitive environment
(d) Business Scale.
3 Michael Porter’s Generic Strategies
7. Porter’s Generic Strategies allow organisations to gain competitive advantage from different bases, except:
(a) Customers
(b) Cost Leadership
(c) Differentiation
(d) Focus.
8. Producing products and services that full fill the needs of small groups of customers, is termed as:
(a) Cost Leadership
(b) Differentiation
(c) Competitive advantage
(d) Focus.
9. Cost Leaders tend to keep their costs low by minimizing advertising, market research, and research and
development, but this approach can prove to be expensive in the long run. Is this method is good for long term?
(a) Yes
(b) No
(c) Paretically yes
(d) Non.
10. Differentiations strategy should be made on the basis of_________. (a) Product
(b) Pricing
(c) Organisation
(d) Any of the above.
11. A successful __________ strategy depends on an industry segment that is of sufficient size, has good growth
potential, and is not crucial to the success of other major competitors.
(a) Customer
(b) Cost Leadership
(c) Focus
(d) Differentiation
4 Best Cost Provider Strategy
12. Best-Cost Provider Strategy is directed towards giving customers more value for the money by emphasizing
_____________.
(a) Differentiation Strategy
(b) Low cost
(c) upscale differences
(d) Both Low Cost and upscale
13. Cost Leadership strategy is a low cost competitive strategy that aims at _________.
(a) Customer centric market
(b) Specialised market
(c) Specific market area
(d) Broad mass market
14. Differentiation strategy is aimed at broad man market and involves the creation of a product or service that is
perceived by _______ as unique. (a) Customers
(b) Supplier
(c) Producer
(d) Management
15. Which is not a disadvantages of Differentiation strategy? (a) In long term, uniqueness is difficult to sustain.
(b) Substitute products can’t replace differentiated products which have
high brand value and enjoy customer loyalty

(c) Charging too high a price for different differentiated features may
cause the customers to switch off to another alternative. (d) Differentiation fails to work if its basis is something that
is not valued
by the customers.
16. Focus strategies are most effective when:
(a) consumers have distinctive preferences or requirements (b) When rival firms are not attempting to specialize in
the same target
segment.
17. Objective of the Best -Cost Provider strategy is to keep cost and price those of other sellers of comparable
products.
(a) Higher than
(b) Lower than
(c) Equal to
ANSWER
1. (b) 2. (c) 3. (a) 4. (d) 5. (d) 6. (b) 7. (a) 8. (d) 9. (b) 10. (d) 11. (c) 12. (d) 13. (d) 14. (a) 15. (b) 16. (d) 17. (b)
CHAPTER
6
Functional Level Strategies
Chapter Comprises: ☹Marketing Strategy ☹Marketing Mix ☹Strategic Marketing Techniques ☹Financial Strategy
☹Production/Operations Strategy ☹Logistics Management ☹Supply Chain Management
☹Research and Development Strategy ☹Human Resource Strategy.

Legend
book.
7.536
TIME MANAGER
i.e.....
1. Budgeted
2. Actual
3. Variance (1-2)
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Instant
Revision (in hours)

i.e.... i.e. on ........... ...........
Day 2 Day 8
4.00 3.12
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2.20 1.35 1.35
3.1
. . . . . . . Weightage Analysis Common Answered Questions
1.1, 3.1, 4.6, 4.8, 5.1, 7.1, 7.3, 8.2, 10.3
Must Try Question
1.1, 1.2, 3.7, 7.5, 10.2, 10.3
1 Introduction
Q.1.1 2007 - Nov [9], RTP Descriptive What is meant by Functional strategies ? In terms of level where will you
put them? Are functional strategies really important for business?
(4+2+4 = 10 marks) OR 2013 - Nov [8] {C} (d) Descriptive Why functional strategies are needed for any business?
(3 marks)
Answer:
Meaning A functional strategy is the short-term game plan for a key functional area within a company.
☐ It is the approach a functional area takes to achieve
corporate and business unit objectives and strategies by maximizing resource productivity.
☐ It deals with a relatively restricted plan that provides the objectives for a specific function, for the allocation of
resources among different operations within that functional area and for facilitating coordination between them for
an optimal contribution to the achievement of the business and corporate-level objectives.
☐ Functional strategies clarify corporate and business strategies by providing more specific details about how key
functional areas to be managed in the near future.
☐ Functional strategy is concerned with developing and nurturing a distinctive competence to provide a company or
business unit with a competitive advantage.
Level • In terms of level, functional strategies operate below the SBU or business level strategies.
• Within functional strategies there are several sub functional areas.

• Functional strategies are made within the higher level strategies and guidelines there in that are set at higher levels
of an organisation.
Need Functional Strategies are developed to fulfill the
following needs:
1. All the parts of an organization implement the strategic decisions.
2. There is a basis for controlling activities in the different functional areas of a business.
3. The time functional managers spend on decisionmaking may be reduced as discretionary framework operates,
within which decisions need to be taken.
4. Functional managers handle consistently similar situations occurring in different functional areas. Space to write
Q.1.2 RTP Practical
Rohit Bhargava is the Managing Director of Smooth and Simple Pvt Ltd. The company established in 2011, with 35
employees grew very fast to become an organisation with 335 employees in the year 2016. With the increase in size
Rohit started facing difficulty in managing things. Many a times he finds that personnel at the functional level are
not in sync with the strategies of the top. He felt that strategies need to be segregated into viable plans and policies
that are compatible with each other and communicated down the line.
Why does Rohit need to segregate the strategies into functional plans? Discuss.
Answer:
Rohit Bhargava needs to break higher level strategies into functional strategies for implementation. These functional
strategies, in form of Marketing, Finance, Human Resource, Production, Research and Development help in
achieving the organisational objective. The reasons why functional strategies are needed can be enumerated as
follows:
• Functional strategies lay down clearly what is to be done at the
functional level. They provide a sense of direction to the functional staff.

• They are aimed at facilitating the implementation of corporate strategies
and the business strategies formulation at the business level.
• They act as basis for controlling activities in the different functional areas
of business.
• They help in bringing harmony and co-ordination as they are formulated
to achieve major strategies.
• Similar situations occurring in different functional areas are handled in
a consistent manner by the functional managers.
2 Marketing Strategy: Marketing

Q.2.1 2011 - May [9] (a) (ii) Objective State with reason which of the following statement is correct or incorrect.
Marketers alone can deliver superior value to customers. (2 marks)
Answer:
Incorrect :
Marketers alone can’t deliver superior value to customer. It is just not a place where goods are brought and sold but
are one of the determinant of the business. Organisation, Suppliers, Intermediaries, Competitors and also the market
provided the superior value to the customer with the competitors. The customer gets the product at a low price with
better Quality of product.
3 Marketing Strategy: Marketing Mix
Q.3.1 2010 - Nov [14] (b), 2013 - May [14] (a) Short Notes Write short note on the following :
Elements of Marketing Mix. (3 marks) OR 2009 - May [7] (b) Descriptive Answer briefly of the following :
Enlist the components of marketing mix. (2 marks)
Answer:
Elements of Marketing Mix
Marketing mix forms an important part of overall competitive marketing strategy. The marketing mix is the set of
controllable marketing variables that the firm blends to produce the response it wants in the target market. The
marketing mix consists of everything that the firm can do to influence the demand for its product. These are usually
referred to as 4Ps - product, price, place and promotion.
Product
Price
Place
Promotion
The 4p’s and their relation with customer i.e. 4c’s are
Product stands for the “goods-and-service” combination the company offers to the target Market.
Price stands for the amount of money customers have to pay to obtain the product.
Place stands for company activities that make the product available to target consumers. One of the most basic
marketing decision is choosing the most appropriate channel to reach target customer. Promotion stands for
activities that communicate the merits of the product and persuade target consumers to buy it. It includes - Personal
Selling, Advertising, Publicity and Sales promotion.
4p’s 4c’s
Product ☐ Relates with Customer Solution. Price ☐ Relates with Customer Cost.
Place ☐ Relates with Convenience of Customer. Promotion☐ Relates with Communication with
customers .
Modern Version: The traditional concept of 4Ps is also expanded further with more Ps such as,
• People
• Physical Evidence
• Process
Under the dynamics of market all the Ps are extremely important so as to build and sustain a competitive advantage
over the rivals.

Q.3.2 2014 - Nov [14] (Or) (b) Short Notes

Expanded Marketing Mix. (3 marks) Answer :
Expanded Marketing Mix:
Marketing mix is a systematic way of classifying the key decision areas of marketing management. It is the set of
controllable marketing variables that the firm blends to produce the response it wants in the target market. The
original framework of marketing mix comprises of 4ps-product, price, place and promotion. However, the above
elements of marketing mix are not exhaustive.
In the recent years marketing mix has expanded to highlight certain other key decision areas.
They are :
1. People : all human actors who play a part in delivery of the market
offering and thus influence the buyer’s perception, namely the firm’s personnel and the customer.
2. Physical Evidence: the environment in which the market offering is delivered and where the firm and customer
interact.
3. Process: the actual procedures, mechanisms and flow of activities by which the product/service is delivered.
Q.3.3 2015 - May [14] (b) Short Notes

Publicity and Sales Promotion. (3 marks) Answer:
Publicity:
☐ Publicity is also a non-personal form of promotion similar to advertising. ☐ However, no payments are made to
the media as in case of advertising. ☐ Basic tools for publicity are press releases, press conferences, reports,
stories and internet releases.

☐ These releases must be of interest to the public.
Sales Promotion:
☐ Sales Promotion is an omnibus term that includes all activities that are undertaken to promote the business but are
not specifically included under personal selling, advertising or publicity.
☐ Activities like discounts, contests, money refunds, installments, kiosks, exhibitions and fairs constitute sales
promotion.
☐ All these are meant to give a boost to the sales.
What are the objectives that must be kept in mind while designing a pricing strategy of a new product? (4 marks)
Answer:
The following are three objectives that much be kept in mind while designing a pricing strategy for a new
product.
1. Making the product acceptable to the customers.
2. Producing a reasonable margin over cost.
3. Achieving a market that helps in developing market share.

Q.3.5 2016 - Nov [13] (b) Distinguish Between

Advertising and Publicity. (3 marks) Answer:
Difference between Advertising and Publicity
• Advertising is a non-personal, highly flexible and dynamic promotional
method. The media for advertisings are several such as pamphlets, radio, television and internet. Choice of
appropriate media is important for effectiveness of the message. The media may be local, regional or national.
• Publicity is communication of a product, brand or business by placing
information about it in the media without paying for the time or media space directly. Thus, it is way of reaching
customer’s with negligible cost. Space to write important points for revision
Explain the marketing mix in the context of modern marketing. (5 marks) Answer:
Modern Marketing Mix :
Typically, all organizations use a combination of 4 Ps in some form or the other. However, the above elements of
marketing mix are not exhaustive. It is pertinent to discuss a few more elements that may form part of an
organizational marketing mis strategy. They have got more currency in recent years. Growth of Services has its own
share for the inclusion of newer elements in marketing.
A few Ps included later are as follows:
1. People
2. Process
3. Physical Evidence
All human actors who play a part in delivery of the market offering and thus influence the buyer’s perception,
namely the firms personnel and the customer.
The actual procedures, mechanisms and flow of activities by which the product / service is delivered. The
environment in which the market offering is delivered and where the firm and customer interact. Space to write
Q.3.7 RTP Descriptive What are the objectives that must be kept in mind while designing a pricing strategy of a
new product?
Answer:
For a new product pricing strategies for entering a market needs to be designed. In pricing a really new product at
least three objectives must be kept in mind.
i. Making the product acceptable to the customers.

ii. Producing a reasonable margin over cost.
iii. Achieving a market that helps in developing market share.
For a new product an organization may either choose to skim or penetrate the market. In skimming prices are set at a
very high level. The product is directed to those buyers who are relatively price insensitive but sensitive to the
novelty of the new product. For example call rates of mobile telephony were set very high initially. Even the
incoming calls were charged. Since the initial off take of the product is low, high price, in a way, helps in rationing
of supply in favour of those who can afford it.
In penetration pricing firm keeps a temptingly low price for a new product which itself is selling point. A very large
number of the potential customers may be able to afford and willing to try the product.

4
Marketing Strategy: Strategic Marketing Techniques
Q.4.1 2007 - Nov [6] (b) Objective State with reason which of the following statement is correct/incorrect:
Tele☐shopping is an instance of direct marketing. (2 marks)
Answer:
Correct :
Direct marking is the process of marketing through various media which interact directly with the customers and
customers also make a direct response. In tele-shopping customers make a direct response. Thus, it is an instance of
direct marketing.
Q.4.2 2011 - May [10] (iii) Descriptive Explain the meaning of the following concepts :
Relationship Marketing (1 mark) Answer:
Relationship Marketing : It is the process of creating, maintaining, and enhancing strong, value-laden relationship
with customers an other stakeholder. For example, British Airways offers special lounges with showers at 199
airports for frequent flyers. Thus, providing special benefits to select customers to strengthen bonds goes a long way
in building relationships.

Q.4.3 2011 - Nov [10] (ii), (iv), (vi) Descriptive

(ii) Service Marketing (1 mark) (iv) Enlightened Marketing (1 mark)
(1 mark) (vi) Person Marketing Answer:

(ii) Service Marketing
(iv) Enlightened Marketing
Is applying the concepts, tools, and techniques, of marketing to services. Service is any activity or benefit that one
party can offer to another that is essentially intangible and non-perishing. These may be from business to consumer
and from business to business.
helps a company to support the best long-run performance of the marketing system. It is based on five principles –
customer-oriented marketing, innovative marketing, value marketing, sense-of-mission marketing, and societal
marketing.
(vi) Person Marketing consists of activities undertaken to create,
maintain or change attitudes or behavior towards particular people. For example, politicians, sport stars, film stars,
professionals market themselves to get votes or promote their careers and income.

Q.4.4 2012 - May [10] (ii), (iii), RTP Descriptive

(ii) Differential Marketing (1 mark) (iii) De-marketing (1 mark)
Answer:
(ii) Differential Marketing: A market coverage strategy in which a firm decides to target several market segments
and designs separate offer for each.
(iii) De-Marketing: De-marketing is a marketing strategy to reduce demand of the product temporarily or
permanently. The objective however is not to completely destroy the demand, but only to reduce or shift this
happens when there is overfull demand.

Q.4.5 2012 - Nov [10] (v), RTP Descriptive

Synchro-marketing (1 mark) Answer:
Synchro marketing : When the demand for the product is irregular due to season etc. causing idle capacity or over-
worked capacities, synchro marketing can be used to find ways to alter the same pattern of demand through flexible
pricing, promotion and other incentives.
Q.4.6 2014 - May [13] (b), RTP Distinguish Between Distinguish between the following:
Social Marketing and Service Marketing (3 marks) OR 2018 - May [11] (b) Descriptive Define the term
‘Marketing’. Distinguish between social marketing and service marketing. (5 marks)
Answer:
• Marketing is the study and management of exchange relationship. It is the activity set of institutions and processes
for creating, communicating, delivering and exchanging offerings that have value for customers, clients, partners
and society at large. It is all about satisfying needs and wants through an exchange process.
☐ Social Marketing: It refers to the design, implementation and control of programs seeking to increase the
acceptabilities of social ideas, cause or practice among a target group. For instance the publicity campaign for
prohibition of smoking in Delhi explained the place where one can and can’t smoke in Delhi.
☐ Service Marketing: It is applying the concepts, tools and techniques, of marketing to services. Services is any
activities on benefit that one party can offer to another that is essentially intangible and does not result in the
banking, savings, retailing, educational or utilities.
State with reason which of the following statement is correct or incorrect. Demarketing strategies may aim to reduce
demand temporarily or permanently. (2 marks)
Answer:
Correct:
Demarketing is a marketing strategy to reduce demand temporarily or permanently. The aim is not to destroy
demand, but only to reduce or shift it. This happens when the demand is too much to handle.

Q.4.8 2017 - May [14] (b), RTP Short Notes Write short note on the following:
Augmented Marketing (3 marks) OR 2018 - Nov [7] {C} (e) Descriptive Define Augmented Marketing. Give two
examples. (2 marks)
Answer:
Augmented Marketing:
Augmented marketing refers to deliberate and accelerated efforts to get better marketing returns through additional
means. It includes provision of additional customer services and benefits built around the care and actual products
that relate to introduction of hi-tech services like movies on demand, on-line computer repair services, secretarial
services, etc. Such innovative offerings provide a set of benefits that promise to elevate customer service to
unprecedented levels.
☐ For e.g., Movies on demand, online computer repair services, secretarial
services etc.
5 Financial Strategy
Q.5.1 2011 - May [11] (a) Descriptive "Evaluating the worth of a business is central to strategy implementation." In
the light of this statement, explain the methods that can be used for determining the worth of a business. (4 marks)
OR 2013 - May [8] {C} (b) Descriptive What do you mean by financial strategy of an organization? How the worth
of a business is evaluated? (3 marks) OR 2017 - Nov [8] (d) Descriptive Give various methods for evaluating the
worth of a business. (3 marks)
Answer :
Meaning of Financial Strategy
The Financial Strategies of an organization are related to several finance/accounting concepts considered to be
central to strategy implementation. It includes acquiring needed capital or sources of fund, management or usage of
funds, and evaluating the worth of a business etc.
All the various methods for determining a business’s worth can be grouped into three main approaches;
First Approach Net worth Or Stockholder’s Equity
Second
Approach:
Measuring the Value of a firm
The First approach in evaluating the worth of a business is determining its net worth or stockholders’ equity. Net
worth represents the sum of common stock, additional paid-in capital, and retained earnings. After calculating net
worth, add or subtract an appropriate amount for goodwill and overvalued or undervalued assets. This total provides
a reasonable estimate of a firm’s monetary value. If a firm has goodwill, it will be listed the balance sheet, perhaps
as “intangibles”.
The Second approach to measuring the value of a firm grows out of the belief that the worth of any business should
be based largely on the future benefits owners may derive through net profits. A conservative rule of thumb is to
establish a business’s worth as five times the firm’s current annual profit. A five-year average profit level could also
be used. When using the approach, remember that firms normally suppress earnings in their financial statements to
minimize taxes.
Third
Approach: Letting the Market
determine business’s worth
The Third approach, letting the market determine a business’s worth, involves three methods.
First, base the firm’s worth on the selling price of a similar company.
The second approach is called the price-earnings ratio method. To use this method, divide the market price of the
firm’s common stock by the annual earnings per share and multiply this number by the firm’s average net income
for the past five years.
The third approach can be called the outstanding shares method. To use this method, simply multiply the number of
shares outstanding by the market price per share and add a premium.
Q.5.2 2011 - Nov [8] {C} (d) Descriptive Successful implementation of any project needs additional funds. What
are the different sources of raising funds and their impact on the financial strategy which you as a Financial Manager
will consider ? (3 marks)
Answer :
Successful strategy implementation often requires additional capital. Besides net profit from operations and the sale
of assets, two basic sources of capital for an organization are debt and equity. Determining an appropriate mix
of debt and equity in a firm’s capital structure can be vital to successful strategy implementation. Theoretically, an
enterprise should have enough debt in its capital structure to boost its return on investment, but too much debt in the
capital structure of an organization can endanger stockholders’ return and jeopardize company survival.
The Major Factors Regarding in this have to be made by Strategists are:
• Selecting right capital structure;
• Procurement of capital and working capital borrowings;
• Reserves and surplus as sources of funds; and
• Relationship with lenders, banks and financial institutions.
Q.5.3 2015 - May [8] {C} (d) Descriptive ‘Determining an appropriate mix of debt and equity in a firm’s capital
structure can be vital to successful strategy implementation’. Discuss.
(3 marks) Answer :
Successful Strategy implementation often requires additional capital. Besides net profit from operations and the sale
of assets, two basic sources of
capital for an organization are debt and equity. Determining an appropriate mix of debt and equity in a firm’s
capital structure can be vital to successful strategy implementation. Theoretically, an enterprise should have enough
debt in its capital structure to boost its return on investment, but too much debt in the capital structure of an
organization can endanger stockholders’ return and jeopardize company survival.
☐ Being a financial manager to determine an appropriate mix of debt and
equity in a firm’s capital structure can be vital to successful strategy implementation.
☐ Fixed debt obligations generally must be met, regardless of circumstances.

☐ This does not mean that stock issuances are always better than debt for raising capital.
☐ If ordinary stock is issued to finance strategy implementation, ownership and control of the enterprise are diluted.
☐ This can be a serious concern in today’s business environment of hostile takeovers, mergers, and acquisitions.
☐ The Major factors regarding which strategies have to be made by a financial manager are: capital structure,
procurement of capital and working capital borrowings, reserves and surplus as sources of funds, and relationship
with lenders, banks and financial institutions.
☐ Strategies related to the sources of funds are important since they determine how financial resources will be made
available for the implementation of strategies.
Q.5.4 2019 - Nov [9] (b) Descriptive Discuss the various approaches for evaluating the worth of a business. (5
marks)
6
Production/Operations Strategy: Production System
Q.6.1 2010 - May [6] (b) Objective State with reason which of the following statement is correct or incorrect:
Production strategy implements, supports and drives higher strategies.
(2 marks) Answer :
Correct :
In order to get, effective implementation of higher level strategies, strategists need to provide direction to functional
managers, including production, regarding the plans and policies to be adopted. Production strategy provides a path
for transmitting corporate and business level strategy to the production systems and makes it operational. It may
relate to production planning, operational system, control and research & development.

Q.6.2 2012 - May [10] (i) Descriptive

Production System (1 mark) Answer :
Production System:
A system which helps transformation of input into output through processing with the help of factors of production
like land, labour, capital & entrepreneur.
Q.6.3 2014 - May [14] (b) Short Notes

Production System (3 marks) Answer :
Production System:
A production process consists of activities that are required in transforming an input set (human resources, raw
materials, energy, money, information, etc.) to valuable outputs with the help of processors. A production system
converts inputs into outputs with the help of processor. The production system is concerned with the capacity,
location, layout product or service design, work system, degree of automation, extent of vertical integration, and
such factors. Strategies related to production system are significant as they deal with vital issues affecting the
capability of the organization to achieve its objectives.

Q.7.1 2008 - Nov [7] (a)
Logistics Strategy
OR 2011 - Nov [10] (vii)
Explain the meaning of the following concepts: Logistics Strategy
Answer :
Logistics Strategy:
Logistics Strategy is the science of evaluating the most cost effective methodology of distributing goods to market
while achieving service level objectives. It is important for companies to recognize that logistics strategy
7
Production/Operations Strategy: Logistics Management
Descriptive
(2 marks) Descriptive
(1 mark) can be product-specific, customer-specific, location-specific and that supply chains for each industry are
dynamic and evolving. Logistics is not confined to tactical decisions about transportation and warehousing.
Logistics strategy is the set of guiding principles, driving forces and ingrained attitudes that help to coordinate goals,
plans and policies between partners across a given supply chain.
Logistics ensures that right material are available at the right place at the right time of the right quality and at the
right cost.
Logistical activities typically include management of inbound and outbound goods, transportation warehousing,
handling of material fulfilment of orders, inventory management, supply/demand planning.

Q.7.2 2011 - May [10] (v) Descriptive
Out bound Logistics (1 mark) Answer :
Outbound logistics collect, store and distribute the product to customers. For tangible products this would be
warehousing, materials handling, transport, etc. In the case of services, it may be more concerned with arrangements
for bringing customers to the service if it is a fixed location (e.g. sports events).

Q.7.3 2013 - Nov [12] (b), RTP Descriptive What do you mean by Logistic Strategy ? What are the different areas
to examine while developing a logistic strategy? (1 + 3 = 4 marks) OR 2016 - May [8] {C} (a) Descriptive Discuss
the areas one should examine while developing a logistics strategy. (3 marks)
Answer :
Logistics Strategy is the science of evaluating the most cost effective methodology of distributing goods to market
while achieving service level objectives. It is important for companies to recognize that logistics strategy can be
product-specific, customer-specific, location-specific and that supply chains for each industry are dynamic and
evolving. Logistics is not confined to tactical decisions about transportation and warehousing.
Logistics strategy is the set of guiding principles, driving forces and ingrained attitudes that help to coordinate goals,
plans and policies between partners across a given supply chain.
Logistics ensures that right material are available at the right place at the right time of the right quality and at the
right cost.
Logistical Activities typically include management of inbound and outbound goods, transportation warehousing,
handling of material fulfilment of orders, inventory management, supply/demand planning.
Logistics Strategy deals with the flow of products into and out of the manufacturing process.
• Three trends are evident: centralization, outsourcing, and the use of the
Internet.
• To gain logistical synergies across business units, corporations began
centralizing logistics in the headquarter groups.
• This centralized logistics group usually contains specialists with
expertise in different transportation modes such as rail or trucking. They
work to aggregate shipping volumes across the entire corporation to gain
better contracts with shippers.
• Companies like Amoco Chemical, Georgia-Pacific, Marriott, and Union
Carbide view the logistics function as an important way to differentiate
themselves from the competition, to add value, and to reduce costs. The Development of logistics strategy can be
done by developing and answering the following questions:
1. Which sources of raw materials and components are available? 2. How many manufacturing locations are there?
3. What products are being made at each manufacturing location? 4. What modes of transportation should be used
for various products? 5. What is the nature of distribution facilities?
6. What is the nature of materials handling equipment processed? Is it
ideal?
7. What is the method of deploying inventory in the logistics network? 8. Should the business organization own the
transport vehicles?
Q.7.4 2016 - Nov [9] (a) (ii) Objective State with reason which of the following statement is correct or incorrect:
Logistic Management is an extension of Supply Chain Management.
(2 marks) Answer :
Incorrect:
Logistic management is related to planning, implementing and controlling the storage and movement of goods and
services, while supply chain management is much more than that it is a tool of business transformation and involve
delivering the right product at the right time to the right interfaces such as telecom or postal system.

Q.7.5 2017 - Nov [13] (b), RTP
Inbound logistics and outbound logistics. Answer :
Point Inbound Logistics
Meaning Inbound logistics are the activities

receiving,
concerned with
s t o r i n g a n d distributing the inputs to the product service.
Deal with Raw material, components, partly processed inputs, etc.

Distinguish Between
(3 marks)
Outbound Logistics
Outbound logistics relate to collection storage and distribution of the product to customers.
Finished products. Activities It includes activities like materials handling, stock control, transport etc.
It includes activities such as storage/ warehousing of finished goods, order processing, deliveries, Delivery vehicles,
etc.

scheduling operation of
8
Production/Operations Strategy: Supply Chain Management
Q.8.1 2011 - May [10] (iv) Descriptive

Supply Chain Management (1 mark) Answer :
Supply Chain Management (SCM) is the management of a network of interconnected business involved in the
ultimate provision of product and service packages required by end +customers. Supply chain management spans all
movement and storage of raw materials, work-in-process inventory, and finished goods from point of origin to point
of consumption (supply chain).

Q.8.2 2011 - Nov [12] (b) Descriptive What are the requirements for the successful implementation of supply chain
management system? Discuss.
OR 2013 - Nov [10]
Explain the major steps which are required for implementation of supply chain management in the business
organisation. (7 marks) (3 marks) Descriptive the successful
OR 2017 - May [10] Descriptive What is supply chain management? Discuss major steps in implementing supply
chain management systems in a business organisation.
(7 marks) Answer :
Successful implementing supply management systems requires a change from managing individual functions to
integrating activities into key supply chain processes. It involves collaborative work between buyers and suppliers,
implementing supply chain will be network of information sharing and management. The partners need to link
together to share information through electronic data interchange and take decisions it timely manner.
Implementing and successfully running supply chain management system will involve:
1. Product
development
2. Procurement
Customers and suppliers must work together in the product development process. Right from the start the partners
will have knowledge of all involving all partners will help in shortening the life cycles. Products are developed and
launched in shorter time and help organizations to remain competitive.
Procurement requires careful resource planning, quality issues, identifying sources, negotiation, order placement,
inbound transportation and storage. Organizations have to coordinate with suppliers in scheduling without
interruptions. Suppliers are involved in planning the manufacturing process.
4. Physical
Distribution
5. Outsourcing
6. Customer Services
7. Performance Measurement
3. Manufacturing Flexible manufacturing processes must be in place to respond to market change. They should be
adaptive to accommodate customization and changes in the taste and preferences. Manufacturing should be done on
the basis of just-in-time and minimum lot sizes. Changes in the manufacturing process be made to reduce
manufacturing cycle.
Delivery of final products to customers is the last position in a marketing channel. Availability of the product at the
right place at right time is important for each channel. Participant through physical distribution processes serving the
customer become an integral part of marketing. Thus supply chain management links a marketing channel with
customers.
Outsourcing is not limited to the procurement of materials and components, but also include outsourcing of service
that traditionally have been provided within an organization. The company will be able to focus on those activities
where it has competency and everything else will be outsourced.
Organizations, through interfaces with the company’s production and distribution operations, develop customer
relationships so as to satisfy them. They work with customer to determine mutually satisfying goals, establish and
maintain relationship. This is turn help in producing positive feelings in the organization and the customers.
There is a strong relationship between the supplier, customer and organization. Supplier capabilities and customer
relationships can be correlated with a firm performance. Performance is measured in different parameters such as
costs, customer service, productivity and quality.
Q.8.3 2012 - Nov [13] (a) Distinguish Between Distinguish between the following:
Logistic Management and Supply Chain Management. (4 marks)
Answer :
Supply Chain Management is a process of planning, implementing and controlling the supply chain operations. It
involves.
1. Linkages between supplier, manufacturers and customers. 2. Close working with suppliers, intermediaries, other
services provider and
customers.
3. Sourcing and procurement of material, conversion and logistics. Logistics ensures that right material are available
at the right place at the right time of the right quality and at the right cost.
SCM is but an extension of logistic management. (SCM) is the management of a network of interconnected business
involved in the ultimate provision of product and service packages required by end +customers.
While logistical activities typically include management of inbound and outbound goods, transportation
warehousing, handling of material fulfilment of orders, inventory management, supply/demand planning SCM is a
specific tool of business transformation and involves delivering the right product at the right time to the right place
and at right price. It reduces cost and enhances customer service. Supply chain management spans all movement and
storage of raw materials, work-in-process inventory, and finished goods from point of origin to point of
consumption (supply chain).

Q.8.4 2015 - Nov [9] (b)
“Supply Chain Management is conceptually wider
Management.” Explain.
Answer :
☐ Supply Chain Management refers to the linkages between supplier,
manufactures, and customers. It involves all activities like resourcing and procurement of material, conversion and
logistics.
Descriptive than Logistic (3 marks)
☐ Logistics Management deals with flow of products into and out of the manufacturing process.
☐ Supply Chain Management is an extension of logistic management. However there is difference between this
two. Logistic activities typically include management of inbound and outbound goods, transportation, warehousing,
handling of material, fulfilment of orders, inventory management, supply/demand planning.
☐ Since supply chain management includes the logistics it is conceptually wider than logistic management.

What steps are to be considered for implementing the supply chain management in a business organization? Explain.
(5 marks)
Answer:
Successful implementing supply management system requires a change from managing individuals functions to
integrating activities into key supply chain processes. It involves collaborative work between buyers and suppliers,
implementing supply chain will be network of information sharing and management. The partners need to link
together to share information through electronic data interchange and take decisions in timely manner.
Implementing and successfully running supply chain management system will involve :
1. Product Development :
Customers and Suppliers must work together in the product development process. Right from the start the partners
will have knowledge of all. Involving all partners will help in shortening the life cycles. Products are developed and
launched in shorter time and help organizations to remain competitive.
2. Procurement :
Procurement requires identifying sources, transportation and storage. Organizations have to coordinate with
suppliers in scheduling without interruptions. Suppliers are involved in planning the manufacturing process.
3. Manufacturing :
Flexible manufacturing processes must be in place to respond to market changes. They should be adaptive to
accommodate customization and changes in the taste and preferences. Manufacturing should be done on the basis of
just in time (JIT) and minimum lot sizes changes in the manufacturing process be mode to reduce manufacturing
cycle.
4. Physical Distribution :
Delivery of final products to customers is the last position in a marketing channel. Availability of the products at the
right place at right time is important for each channel participant. Through physical distribution processes serving
the customer become an integral part of marketing. Thus, supply chain management links a marketing channel with
customers.
5. Outsourcing :
Outsourcing is not limited to the procurement of materials and components, but also include outsourcing of services
that traditionally have been provided within an organization. The company will be able to focus on those activities
where it has competency and everything else will be outsourced.
6. Customer Services :
Organizations, through interfaces with the company’s production and distribution operations, develop customer
relationships so as to satisfy them. They work with customer to determine mutually satisfying goals, establish and
maintain relationships. This in turn help in producing positive feelings in the organization and the customers.
careful resource planning, quality issues,
negotiation, order placement, in bound
7. Performance Measurement :
There is a strong relationship between the supplier, customer and organization. Supplier capabilities and customer
relationships can be correlated with a firm performance. Performance is measured in different parameters such as,
costs, customer service, productivity and quality.

9 Research and Development Strategy
Q.9.1 2014 - Nov [8] {C} (d) Descriptive How would you argue that Research and Development Personnel are
important for effective strategy implementation? (3 marks)
Answer :
Research and Development personnel can play an integral part in strategy implementation. Strategies are such as
product development, market penetration and concentric diversification require that new products be successfully
developed and that old products be significantly improved. But the level of management support for R&D is often
constrained by resource availability. There must be effective interactions between R&D departments and other
functional departments in implementing different types of generic business strategies.

10 Human Resource Strategy
State with reason which of the following statement is correct or incorrect: The role of human resource manager is
significant in building up core competency of the firm. (2 marks)
Answer :
Correct: The human resource manager has a significant role to play in developing core competency of the firm. A
core competence is a unique strength of an organization which may not be shared by others. Core-competencies can
be generated and maintained only through the effective management of human resources and their skills.

Q.10.2 2011 - Nov [11] (b), RTP Descriptive Explain the strategic role of Human Resources Management in the
following areas:
(i) Facilitation of Change

(ii) Building Core Competency
(iii) Development of Work Ethics and Culture. (3 × 1 = 3 marks)
Answer :
(i) Facilitation of Change
(ii) Building Core Competency
The Human resource are more concerned with substance rather t h a n form, accomplishments rather than activities,
and practice rather than theory. The human resource management will have to devote more time to promote changes
than to maintain the status quo.
The human resource manager has a great role to play in developing core competency by the firm. A core
competence is a unique strength of an organization which may not be shared by others in the form marketing and
technical capacity.
(iii) Development of Works Ethics and Culture
As changing work ethic requires increasing emphasis on individuals, jobs will have to be redesigned to provide
challenge. Flexible starting and quitting times for employees may be necessary. Focus will shift from extrinsic to
intrinsic motivation. A vibrant work culture will have to be developed in the organizations to create an atmosphere
of trust among people and to encourage creative ideas by the people. Far reaching changes with the help of technical
knowledge will be required for this purpose.

Q.10.3 2012 - Nov [8] {C} (d), 2019 - May [8] (b) Descriptive Explain any three prominent areas where Human
Resource Manager can play a strategic role. (3,5 marks) OR 2014 - May [8] {C} (b) Descriptive State the factors of
human resource that influence on employees competence. (3 marks) OR 2015 - Nov [8] {C} (e) Descriptive Explain
any three prominent areas where Human Resource Manager can play a strategic role. (3 marks) OR 2016 - Nov [12]
(a) Descriptive
“Human resources are now viewed as a source of competitive advantage.” Discuss the four activities when
performed properly can increase the competency of workforce. (4 marks)
Answer :
Recruitment and Selection
Training
Appraisal of Performance
Compensation
The workforce will be more competent if a firm can successfully identify, attracts, and select the most competent
applicants.
The workforce will be more competent if employees are well trained to perform their jobs properly.
The performance appraisal is to identify any performance deficiencies experienced by employees due to lack of
competence which can be solved through counseling, coaching or training.
A firm can usually increase the competency at its workforce by offering pay and benefit packages that are more
attractive than those of their competitors.

Q.10.4 2008 - Nov [10], RTP Practical
Read the following case and answer the questions given at the end : Sahni Auto Industries is a manufacturer and
exporter of Auto parts with an annual turnover of Rupees one thousand crores. It employs about 2,000 persons in its
factory in Punjab and its other offices in India and abroad.
The Personnel Administration and Human Resources Department of the company is headed by Mr. Amit Kapoor-
the Chief Personnel Manager. Mr. Amit Kapoor, an Automobile Engineer joined the company 5 years ago as
Product Development Manager. After a successful stint of 4 years as Product Development Manager, he was
transferred to Personnel Administration and Human Resources Department as the Chief Personnel Manager as a part
of Career development plan. Mr. Vikas, MBA in Human Resources from a renowned Business school, joined the
company as Personnel Manager only 3 months back. He reports to Mr. Amit Kapoorthe Chief Personnel Manager.
He handles all routine personnel and industrial relations matters.
One day, during informal discussion with Mr. Amit Kapoor, Mr. Vikas suggested him of linking Human Resources
Management with Company’s strategic goals and objectives to further improve business performance and also to
develop Organisational culture that fosters more innovative ideas. He also advocated creating abundant ‘Social
Capital’ on the ground that people tend to be more productive in an environment which has trust and goodwill
embedded in it rather than which is highly hierarchical and formal. Mr. Amit Kapoor disagreed with Mr. Vikas and
told him that the role of Human Resources Department was only peripheral to the business and all his suggestions
about its strategic role were beyond the purview of Personnel Administration and Human Resources Department.
After this, Mr. Vikas started having number of arguments with Mr. Amit Kapoor in several issues relating to
personnel and industrial relations since he felt that a person with a degree in Human Resources Management was in
a far better position to run Personnel Administration and Human Resources Department. Mr. Amit Kapoor - the
Chief Personnel Manager had often shown his displeasure on Mr. Vikas’s argumentative tendency and had made it
known to the General Manager.
The General Manager called Mr. Amit Kapoor in his office to inform him that he has been elected for an overseas
assignment. He further told him to find a suitable person as his successor; he even suggested Mr. Vikas as a possible
candidate. Mr. Amit Kapoor, however, selected Mr. Balram, who was working as Training Manager in a
Multinational Company for the last 5 years.
Mr. Vikas, soon started having arguments with Mr. Balram also over number of issues relating to industrial relations
since he felt that he had no experience in handling industrial relations matters. Mr. Balram now realised that Mr.
Vikas was trying to make things difficult for him. After a series of meetings with the General Manager, Mr. Balram
eventually succeeded in convincing him to transfer Mr. Vikas to an office outside Punjab. On learning about his
impending transfer, Mr. Vikas wrote a letter to the General Manager joining details of various instances, when Mr.
Balram had shown his incompetence in handling problematic situations. When asked for explanation by the General
Manager, Mr. Balram had refuted almost all the allegations. The General Manager accepted his explanation and
informed Mr. Vikas that most of his allegations against Mr.
Balram were unwarranted and baseless. He further advised him to avoid confrontation with Mr. Balram. Mr. Vikas
then wrote a letter to the Chairman repeating all the allegations against Mr. Balram. On investigation, the Chairman
found most of the allegations true. He then called all the three - the General Manager, the Chief Personnel Manager
and the Personnel Manager in his office and implored them to forget the past and henceforth to work in coordination
with each other in an environment of Trust and Goodwill.
Questions :
(a) Identify and discuss the major issues raised in the case. (6 marks) (b) Comment on the recruitment of the two
Chief Personnel Managers.
(4 marks) (c) Would you justify Mr. Vikas’s argumentative tendency with the Chief Personnel Managers? Give
reasons for your answer. (4 marks) (d) Do you agree with suggestion offered by Mr. Vikas to link Human Resources
Management with the company’s strategic goals? If yes, suggest prominent areas where Human Resources
Department can play role in this regard. (6 marks)
Answer :
(a) The Major Issues Raised in the case are:
(i) Lack of Corporate Functioning: Sahni Auto Industries is a multinational company with and annual turnovers
of` 1000 crores and 2000 persons in a factory which needs a human resources strategy formulation.
(ii) Right person at the right job: Mr. Amit Kapoor is an automobile engineer that means he is a technical person
and hence was appointed as a Product Development Manager but later on he was transferred to Personnel
Administration and Human Resource Department which is not his area.
Similar issue is also seen in the case of recruitment of Mr. Balram as a head of Personnel Administration and Human
Resource Department though he was a Training Manager in MNC for last 5 years.
(iii) Grapevine: It is seen in the case that during an informal communication between Mr. Amit Kapoor and Mr.
Vikas, disagreements cropped in which led to a number of agreements relating to personal and industrial relations.
(iv) Seniority Vs. Merit: In the given case, seniority of Mr. Amit Kapoor has been taken as the only criteria for
appointing him as the Chief Personnel Manager. However, Mr. Vikas who is M.B.A. in human resource from a
renowned business school was appointed as the Personnel Manager.
(v) Lack of Company’s Corporate Strategy: A company’s strategic goals should always be linked and integrated
with all the functions of the organisation. But in the case of Sahni Auto Industries human resource was not linked
and was viewed only as a peripheral function of the organisation.
(vi) Lack of Strategic Organisational Response: When Mr. Vikas wrote a letter to the General Manager regarding
various instance in which Mr. Balram had shown his incompetence in handling problematic situations, the General
Manager did not looked into the matter deeply and informed Mr. Vikas that most of his allegations against Mr.
Balram were unwarranted and baseless. However, on the same since, when investigation was done, the chairman
found most of the allegations true.
(b) Recruitment of the two Chief Personnel Managers (CPM): CPM - I : The first CPM MR. Amit Kapoor was
prima facie automobile engineer who was promoted as a CPM of human resource department due to his successful
stint of 4 years as a product development managers.
However while doing so it was somewhere over looked that the basic unique selling point (USP) of Mr. Kapoor was
engineering and not managing.
This was the reason that he disagreed with the suggestion of Mr. Amit Kapoor regarding linking of human resource
with company’s strategic goals.
Mr. Amit Kapoor was also of the notion that all suggestions about strategic roles are beyond the purview of
personnel administration and HRA.
CPM - II : The second CPM was selected by Mr. Amit Kapoor as his successor who was working as a training
manager in a multinational company for the last 5 years named MR. Balram. Here again the choice for a perfect and
professionally qualified CPM was not upto the mark and hence again there were difference of opinion between Mr.
Vikas who is an MBA in human resource and Mr. Balram who has been working as a training manager.
(c) The working style of a professional is altogether different as compared to a traditional experienced person hence
Mr. Vikas being an MBA is having strategic style of working.
The strategic responsibilities of human resource manager includes developing a staffing plan for effectively
implementing strategics regarding corporate goals and visions.
Mr. Vikas has a strong academic background from a renowned business school. Hence his working style is of
integrating all organisational elements including human resource with the company’s strategic goals. Mr. Vikas is
arguing with all the chief personnel managers because the style of working of managers is different as compared to
Mr. Vikas’s style of working as he is a master in human resource and knows what a welldesigned strategic-
management system is all about. He knows that there should be a linking between human resource management and
company’s strategic goals which both the chief personnel managers are not ready to understand.
This is the core reason for Mr. Vikas’s argumentative tendency which is upto an extent justified but however. I
would advise Mr. Vikas to find a midway as regards such arguments and find a path and method to make both the
managers understand the importance of his views and thoughts.
(d) The job of human resource manager is changing rapidly strategic responsibilities of the human resource
managers include assessing the staffing needs and develop a staffing plan for effectively implementing strategies.
There should be a clear link between human resource and company’s strategic goals.
Linking company and personal benefit is a major new strategic responsibility of human resource managing. The
need to match individual aptitudes with strategy implementation tasks should be considered for the success of the
organisation.
Hence, I agree with the suggestions offered by Mr. Vikas to link human resource management with the company
strategic goals. The prominent areas where human resources department can play role in this regards are:
(i) Providing Purposeful Direction: The human resource management must be able to lead people and the
organization towards the desired direction involving people right from the beginning. The most important tasks of a
professional management is to ensure that the object of an organization has been internalized by each individual
working in the organization. Goals of an organization states the very purpose and justification of its existence.
The management have to ensure that the objects of an organization becomes the object of each person working in
the organization and the objectives are set to fulfill the same. Objectives are specific aims which must be in the line
with the goal of the organization and the all actions of each person must be consistent with the objectives defined.
(ii) Creating Competitive Atmosphere: Present’s globalized market maintaining a competitive gain is the object of
any organization. There are two important ways of business can achieve a competitive advantages over the others.
The first is cost leadership which means the firm aims to become a low cost leader in the industry. The second
competitive strategy is differentiation under which the firm seeks to be unique in the industry in terms of dimensions
that are highly valued by the customers. Putting strategies into effect carries a heavy premium on having a highly
committed and competent workforce.
(iii) Facilitation of Change: The Human resource will be more concerned with substance rather than form,
accomplishments rather than activities, and practice rather than theory. The personnel function will be responsible
for furthering the organization not just maintaining it. Human resource management will have to devote more time
to promote changes than to maintain the status quo.
(iv) Diversion of Workforce: In the modern organization management of diverse workforce is a great challenge.
Workforce diversity can be observed in terms of male and female workers, young and old workers, educated and
uneducated workers, unskilled and professional employee, etc. Moreover, many organizations also have people of
different castes, religious and nationalities, The workforce in future will comprise more of educated and self
conscious workers. They will ask for higher degree of participation and avenues for fulfillment. Money will no
longer be the sole motivating force for majority of the workers, Non-financial incentives will also play an important
role in motivating the workforce.
(v) Empowerment of Human Resource: Empowerment means authorizing every number of a society of
organization to take of his/her own destiny realizing his/her full potential. It involves giving more power to those
who, at present, have little control what they do and little ability to influence the decisions being made around them.
(vi) Building Core Competency: The human resource manager has a great role to play in developing core
competency by the firm. A core competence is a unique strength of an organization which may not be shared by
others. This may be in the form of human resources, marketing, capability, or technological capability. If the
business is organized on the basis of core competency, it is likely to generate competitive advantage. Because of this
reason, many organization have restructured their businesses by divesting those businesses which do not match core
competence. Organization of business around core competence implies leveraging the limited resources of a firm. It
needs creative, courageous and dynamic leadership having faith in organization’s human resources.

1 Marketing Strategy
1. Marketing is an activity performed by _________.

(a) all manufacturing units
(b) all service organisation
(c) all supply organisation
(d) all business organisation.
2. In present day marketing process is the process of _________. (a) Analysing market opportunities
(b) Selecting target customer, developing the marketing mix (c) Managing the marketing effort
3. Value Delivery Network encompasses

(a) Company’s chain of Activity
(b) Customers
(c) Suppliers
4. Marketing mix decision is based on “APs” concept, which means: (a) Product, Price, Place and Product Quality
(b) Product, Price, Place and Promotion
(c) Product Price, Product Quality Product Quantity (d) Product, Price, Place of origin, and Place of sales.
5. In marketing mix decision term “4PS” are used from a marketers angle while term “4Cs” is used from a
__________ angle.
(a) Customers
(b) Producers
(c) Consumption
(d) Customers Preference
6. Marketing has various components except_______.
(a) Planning
(b) Procedure
(c) Implementation
(d) Control
2 Financial Strategy
7. Financial Strategy does not include:

(a) Developing projected financial statements
(b) Management of funds and evaluating the worth of a business (c) Strategies related to operations, planning and
control are concerned
with aggregate future planning

(d) Acquiring needed capital of fund.
8. Some examples of decisions that may required financial and accounting policies, except:
(a) To Lease or buy fixed assets
(b) Whether to be a price leader or a price follower
(c) To determine an appropriate dividend payout ratio
(d) To extend the time of account receivable.
3 Production/Operations Strategy
9. Logistics can help a business except (a) Cost Saving

(b) Reduced Inventory
(c) Synchro - Marketing
(d) Competitive advantage
10. Operations strategy is related to the products on system including_____. (a) Operational Planning
(b) Control Management
(c) Logistics Management
11. The term _____________ refers to the linkages between suppliers, manufacturers and customers.
(a) Product cycle
(b) Production chain
(c) Supply chain
(d) Logistic supply
12. Process of planing, implementing and controlling the supply chain operation is known as _______.
(a) Logistic Supply
(b) Logistic Management
(c) Production Chain Management
(d) Supply chain management
13. Logistic Management is an extension of supply chain management statement is _________.

(a) True
(b) False
(c) Paretically True
(d) None
4 Research and Development Strategy
14. Research and development polices can enhance strategy implementation except:
(a) Emphasize product or process improvement
(b) Improvement of delivery time
(c) Develop robotics or manual type process
(d) Be ledgers or follower in R&D.
15. Conflicts between marketing, finance, R & D and information systems departments can be minimized with
____________.
(a) Clear policies and objectives
(b) Clear policies and procedures
(c) Clear understanding
(d) Clear procedure and implementation.
5 Human Resource Strategy
16. Under Human Resource Management, the strategist tries to achieve a __________ for his organisation.
(a) Cost Saving
(b) Reduce cost of Human Resource
(c) Customer Satisfaction
(d) Competive advantage
17. In which area HRM function was been recognised as a strategic partner? (a) Building core competency
(b) Formulating and implementation of organisational strategies (c) Implementation of different types of strategies
ANSWER
1. (d) 2. (d) 3. (d) 4. (b) 5. (a) 6. (b) 7. (c) 8. (b) 9. (c) 10. (d) 11. (c) 12. (d) 13. (b) 14. (b) 15. (a) 16. (d) 17. (b)
CHAPTER
7
Organisation and Strategic Leadership
Chapter Comprises: ☹Organization Structure ☹Simple Structure ☹The Functional Structure ☹The Divisional
Structure ☹Multi Divisional
Structure ☹The Strategic Business Unit (SBU) Structure ☹The Matrix
Structure ☹Network Structure ☹Hourglass Structure ☹Strategic
Leadership ☹Strategy Supportive Culture ☹Entrepreneurship and
Intrapreneurship.

Legend
book. 7.578
TIME MANAGER
i.e.....
1. Budgeted
2. Actual
3. Variance (1-2)
............ Day 1 16
Instant
Revision (in hours)

i.e.... i.e. on ........... ...........
Day 2 Day 8
4.00 3.12
(in hours)

2.20 1.35 1.35

7.1, 9.4
7.1, 10.3 5.4, 9.3, 10.1, 10.5
1 Organisation Structure
Q.1.1 2018 - Nov [8] (b) Objective
Which of the following statements is correct and which is incorrect ? Give reasons in brief for your answer.
Structure has no impact on the strategy of the organization. (2 marks)
Answer:
Incorrect:
In order to implement strategies that have been formulated, all companies need some form of organizational
structure. As companies formulate new strategies, increase in size, or change their level of diversification, new
organizational structure may be required. So structure has impact on the strategy of the organization.

Q.1.2 2018 - Nov [9] (a) Practical
Manoj started his telecom business in 2010. Over next five years, he gradually hired fifty people for various
activities such as to keep his accounts, administration, sell his products in the market, create more customers,
provide after sales service, coordinate with vendors. Draw the organization structure Manoj should implement in his
organization and name it. (5 marks)
Answer :
Manoj has started his telecom business. Organization structure for telecom business follows is Divisional Structure.
The following is a diagrammatic representation of Divisional Structure that Manoj should implement in his
organization.
2 Organisation Structure: Simple Structure

‘To coordinate more complex organizational functions, companies should abandon the simple structure in favour of
the functional structure’ Discuss. (3 marks) Answer:
The Organization should divide its functions so as to work effectively. The Organizational function are very
complex in nature. Simple organisation structure is most appropriate usually in small business organisations
following simple business strategy. However when these organisation grow and expand its complexities and
functions also grow. Such function, includes marketing function, supply chain functions, human resource function
etc. Management of such function are difficult for organization. The organization for this formulate the structure of
such function so that it can work in effective manner. Thus, organization should abandon simple function in favour
of the functional structure.

3 Organisation Structure: Functional Structure
What do you understand by functional structure? (3 marks) Answer:
Functional Structure:
The functional structure consists of a Chief Executive Officer or a Managing Director and limited corporate staff
with functional line managers in dominant functions such as Production, Accounting, Marketing, R&D, Engineering
and Human resources.
Functional structure is widely used because of its simplicity and low cost. A functional structure groups tasks and
activities by business function. Disadvantages of functional structure are that it forces accountability to the top,
minimizes career development opportunities etc.
Most large companies abandoned the functional structure in favour of decentralization and improved accountability.

4 Organisation Structure: Divisional Structure
Q.4.1 2017 - May [9] (b) Descriptive Give various reasons to justify that a division structure is costly. (3 marks)
Answer:
The divisional design is not without some limitations. Perhaps the most important limitation is that a divisional
structure is costly, for a number of reasons:
1. Each division requires functional specialists who must be paid. 2. There exists some duplication of staff services,
facilities and personnel;
for instance, functional specialists are also needed centrally to coordinate divisional activities.
3. Managers must be well qualified because the divisional design forces delegation of authority better-qualified
individuals requires higher salaries. A divisional structure can also be costly because it requires an elaborate,
headquarters- driven control system. Finally, certain regions, products or customers may sometimes receive special
treatment and it may be difficult to maintain consistent, company wide practices. Nonetheless, for most large
organizations and many small firms, the advantages of a divisional structure more than offset the potential
limitations.
Q.4.2 2018 - May [8] (d) Objective
Marketing function has no relation with production function. (2 marks)
Answer:
Incorrect
☐ Marketing function and production function complement each other.
They need to work in tandem to produce goods as per the needs and preferences of the customers. Marketing links
the production with the customers.

5 Organisation Structure: SBU Structure
Q.5.1 2009 - May [6] (c) Objective State with reason which of the following statement is correct or incorrect: SBU
concepts facilitate multi-business operations. (2 marks)
Answer:
Correct:
SBU concept is composed of different operating units where each unit represents a separate business in which the
top level officer delegates responsibilities for day to day operations. It facilitates strategic planning, gaining market-
related specialization, cost economies and more rational organisational structure.
Q.5.2 2012 - Nov [10] (ii) Descriptive Explain the meaning of the following concepts:
Strategic Business Unit (1 mark)
Answer:
Strategic Business Unit:
Strategic Business Unit (SBU) has been defined by Sharplin as "any part of a business organisation which is treated
separately for strategic management purposes".
When organisations face difficulty in managing divisional operations due to an increasing diversity, size, and
number of divisions, it becomes difficult for the top management to exercise strategic control. Here, the concept of
an SBU is helpful in creating an SBU- organisational structure.

Q.5.3 2014 - May [14] (Or) (b) Short Notes Write short note on the following:
Characteristics of Strategic Business Unit (SBU) (3 marks)
Answer:
A Strategic Business Unit (SBU) is a profit center which focuses on product offering and market segment. SBUs
typically have a discrete marketing plan, analysis of competition and marketing campaign, even though they may be
part of a larger business entity.
An SBU may be a business unit within a larger corporation, or it may be a business into itself or a branch.
Corporations may be composed of multiple SBUs, each of which is responsible for its own profitability. General
Electric is an example of a company with this sort of business organization. SBUs are able to affect most factors
which influence their performance. Managed as separate businesses, they are responsible to a parent corporation.
Characteristics of Strategic Business Unit (SBU):
1. It is a single business or collection of related business which offer scope
for independent planning & which might feasibly stand alone from the rest of the organization.
2. Has its own set of competitors.
3. Has a manager who has responsibility for strategic planning and profit performance, and who has control of profit
influencing functions.
Q.5.4 2016 - May [8] {C} (c), RTP Descriptive How a firm will be benefitted by using ideas of Strategic Business
Unit (SBU)? (3 marks)
Answer:
The firm shall be benefitted by SBU by using ideas which shall be known by advantages of SBU as follows:
☐ Within each SBU divisions producing similar products or/and using
similar technologies can be organized to achieve synergy. ☐ Individual SBUs are treated as profit centres and can
react quickly to
environmental changes.
☐ Corporate headquarters can concentrate on strategic planning rather
than operational control.
☐ SBU promotes accountability in respect of actions of each SBU. ☐ This enables the company to more accurately
monitor the performance
of individual business, simplifying control problems.
6 Organisation Structure: Matrix Structure

Q.6.1 2017 - May [8] {C} (c), RTP Descriptive
Davis and Lawrence have proposed three distinct phases to develop matrix structure. Explain. (3 marks) Answer :
For Development of matrix structure Davis and Lawrence have proposed three distinct phases:
1. Cross-functional task forces

Temporary cross-functional task forces are initially used when a new product line is being introduced. A project
manager is in charge as the key horizontal link.
2. Product/Brand Management
3. Mature Matrix
If the cross-functional task forces become more permanent, the project manager becomes a product or brand
manager and a second phase begins.
The third and final phase of matrix development involves a true dual-authority structure. Both the functional and
product structures are permanent. All employees are connected to both a vertical functional superior and a horizontal
product manager. Functional and product managers have equal authority and must work well together to resolve
disagreements over resources and priorities.

7 Organisation Structure: Network Structure
Q.7.1 2010 - Nov [14] (a), 2013 - May [14] (Or) (b) Short Notes Write short note on the following :
Network structure (4, 3 marks) OR 2012 - Nov [8] {C} (e) Descriptive ‘A network structure is suited to unstable
environment.’ Elaborate. (3 marks) Answer :
Meaning The increasing volatility of the environment, coupled with the emergence of knowledge-based industries,
has led to the creation of a network structure. It is also known as the 'spider's web structure' or the 'virtual
organisation'.
Composed of ☐ The network structure is "composed of a series of
project groups or collaborations linked by constantly changing non-hierarchical cobweb-like networks".
• This structure is highly decentralised and organised around customer groups or geographical regions. Rather than
being located in one place, the business functions are scattered far and wide.
☐ The core organisation is only a shell with a small headquarter acting as a 'broker' connected to the suppliers and
the specialised functions performed by autonomous teams and workforce.
☐ The network structure is most suited to organisations that face a continually changing environment requiring
quick response, high level of adaptability, and strong innovations skills.
☐ This structure makes extensive use of the outsourcing of support services required to produce and market
products or services.
There are few internal resources and a network structure, firm relies heavily on outsiders who are specialised in their
respective areas.
Structure
Advantages 1. High level of flexibility to change structural arrangements in line with business requirements 2.
Permits concentration on core competencies of the firm
3. Adaptability to cope with rapid environmental change

Disadvantages 1. Loss of control and lack of coordination as there are several partners
2. Risks of over specialisation as most tasks are performed by others

3. High costs as a duplication of resources could be there
8 Organisation Structure : Hour glass Structure

Q.8.1 2015 - May [8] {C} (e), 2019 - May [10] (b) Descriptive
What is an Hour glass structure? How it is beneficial for an organization? (3,3 marks) Answer:
* Hour Glass Structure:
☐ In the recent years information technology and communications have significantly altered the functioning of
organizations.
☐ The role played by middle management is diminishing as the tasks performed by them are increasingly being
replaced by the technological tools.
* Structure benefits an Organization as follows:
☐ Hour glass organization structure consists of three layers with constricted middle layer.
☐ The structure has a short and narrow middle-management level.
☐ Information technology links the top and bottom levels in the organization taking away many tasks that are
performed by the middle level managers.

9 Strategic Leadership
What do you mean by strategic leadership ? What are two approaches to leadership style ? To bring in strategic
change which three steps may be initiated ? (3 + 3 + 4 = 10 marks)
Answer :
Strategic Leadership
Meaning Strategic leadership entails the ability to anticipate,
envision, maintain flexibility, and empower others to create strategic change as necessary. In other words, strategic
leadership represents complex form of leadership in companies. A manager with strategic leadership skills exhibits
the ability to guide the company through the new competitive landscape by influencing the behavior, thoughts, and
feelings of coworkers, managing through others and successfully processing or making sense of complex,
ambiguous information by successfully dealing with change and uncertainty. Strategic leaders are at the top of the
company. Other commonly recognized strategic leaders include members of the board of directors, the top
management team, and division general managers. The most critical skill that a strategic leader possesses is the
ability to manage human capital.
The Strategic Leader has

several
responsibilities, including the following
•
•
•
•
• Managing human capital (perhaps the most critical of the strategic leader’s skills). Effectively managing the
company’s operations.
Sustaining high performance over time. Being willing to make candid, courageous, yet pragmatic, decisions.
Seeking feedback through face–to–face communications.
Having decision–making responsibilities that cannot be delegated.
Thus, the strategic leadership skills of a company’s managers represent resources that affect company performance.
And these resources must be developed for the company’s future benefit.
Leadership Style
1 Democratic Style
Democratic style of leadership is based upon positive assumption about human beings. It encompasses equal
participation of management and subordinates in decision making process. It brings about a substantial level of
satisfaction to both the leader and his followers.
2 Autocratic Style
The autocratic leader accomplishes his task through the use of authority and power. Here the authority is centralised
and the decision making power solely vests in the level of the leader. Some of the consequences of this approach is
resentment, absenteeism and high turnover.
3 Steps to bring in Strategic Change
1. Analysis which aspects of the present culture are strategy supportive and which are not.
2. Influence successful strategic actions to incorporate the change.
3. Formulation and implementation of strategies to achieve strategic effectiveness to establish a new culture more in
time with the strategy.

Q.9.2 2013 - May [13] (a) Distinguish Between Distinguish between the following:
Transformational leadership style and Traditional leadership style.
(4 marks) Answer :
Difference between Transformational and Traditional Leadership style:
Transformational Leadership
1 In transformational leadership, leader motivates and empowers e m p l o y e e s c o mp a n y ’ s appealing to

higher ideas and values.
toachieve
objectivesby
Traditional Leadership
Traditional leadership borrowed its concept from formal Top-down type of leadership such as in the military. 2
Transformational leadership
w o r k t o c h a n g e t h e organiz a t i o n a l c u l t u re by implementing new ideas.
3 Transformational leaders have b e h a v i o u r a l c a p a c i t y r e c o g n i z e a n d r e a c t complexities in the

environment. t o t o Traditional leadership is more focused in getting the work done in routine environment.
In traditional leadership, followers are loyal to the position and what it represents rather than who happens to be
holding that position.
4 In transformational leadership followers dedicate and admire the quality of the leader not of its position.
Traditional leaders are effective in achieving the set objectives and goals.

What are the different responsibilities of a strategic leader? (3 marks) Answer :

The Strategic Leader has Several Responsibilities, including the
following :
• Managing human capital (perhaps the most critical of the strategic leader’s skills). Effectively managing the
company’s operations.
• Sustaining high performance over time.
• Being willing to make candid, courageous, yet pragmatic, decisions.
• Seeking feedback through face–to–face communications.
• Having decision–making responsibilities that cannot be delegated. Thus, the strategic leadership skills of a
company’s managers
represent resources that affect company performance. And these resources
must be developed for the company’s future benefit.
Q.9.4 2014 - May [11] (a), 2019 - May [9] (a) Descriptive Discuss the leadership role played by the managers in
pushing for good strategy execution. (4,5 marks)
Answer :
Strategic leaders are those at the top of the company but other commonly redesigned strategic leaders include
members of the board of directors, the top management team and divisional general managers. The ability to manage
human capital may be the most critical skill that a strategic leader possesses. In the today’s competitive landscape,
strategic leaders are challenged to adopt their frames at reference so that they can deal with rapid, complex changes.
A managerial frame of reference is the set of assumptions, premises and accepted wisdom that bounds a manager’s
understanding of the company, the industry in which it competes and the core competencies that it exploits in the
pursuit of strategic competitiveness. Managers have five leadership roles to play in pushing for good strategy
execution:
1. Staying on top of what is happening, closely monitoring progress,
working through issues and obstacles.

2. Promoting a culture that mobilizes and energizes organizational
members to execute strategy and perform at a high level. 3. Keeping the organization responsive to changing
conditions, alert for
new opportunities and remain ahead of rivals in developing competitively
valuable competencies and capabilities.
4. Ethical leadership and insisting that the organization conduct its affairs
like a model corporate citizen.
5. Pushing corrective actions to improve strategy execution and overall
strategic performance.
Q.9.5 2015 - Nov [13] (a) Distinguish Between Distinguish between the following:
Transformational Leadership Style and Transactional Leadership Style.
(4 marks) Answer :
Transformational Leadership Style:
It uses charisma and enthusiasm to inspire people to exert them for the good of the organization. Transformational
leadership style may be appropriate in turbulent environments, in industry at the very start or end of their life cycles,
in poorly performing organisations when there is a need to inspire a company to embrance major changes.
Transformational leaders offer excitement, vision, intellectual stimulation and personal satisfaction.
Transactional Leadership Style:
It focus more on designing systems and controlling the organisation’s activities and are more likely to be associated
with improving the current situation. Transactional leaders try to build on the existing culture and enhance current
practices. Transactional leadership style uses the authority of its office to exchange rewards, such as pay and status.
They prefer more formalized approach to motivation, setting clear goals with explicit rewards or penalties for
achievement or non-achievement. Transactional leadership style may be appropriate in settled environment, in
growing or mature industries and in organizations that are performing well. The style is better suited in persuading
people to work efficiently and run operations smoothly.

Q.9.6 2019 - Nov [10] (a) Distinguish Between Distinguish between transformational leadership style and
transactional leadership style. (5 marks)
Q.9.7 2018 - May [9] (b) Practical
Ram and Shyam are two brothers engaged in the business of spices. Both have different approaches to management.
Ram prefers the conventional and formal approach in which authority is used for explicit rewards and punishment.
While, on the other hand, Shyam believes in democratic participative management approach, involving employees
to give their best.
Analyse the leadership style followed by Ram and Shyam. (5 marks)
Answer:
☐ Ram is a follower of transactional leadership style that focuses on designing systems and controlling the
organization’s activities. Such a leader believes in using authority of its office to exchange rewards, such as pay and
status. They prefer a more formalized approach to motivation, setting clear goals with explicit rewards or penalties
for achievement or non- achievement. Transactional leaders try to build on the existing culture and enhance current
practices. The style is better suited in persuading people to work efficiently and run operations smoothly.
☐ On the other hand, Shyam is follower of transformational leadership style. The style uses charisma and
enthusiasm to inspire people to exert them for the good of the organization. Transformational leaders offer
excitement, vision, intellectual stimulation and personal satisfaction. They inspire, involvement in a mission, giving
followers a ‘dream’ or ‘vision’ of a higher calling so as to elicit more dramatic changes in organizational
performances. Such a leadership motivates followers to do more than originally affected to do by stretching their
abilities and increasing their self-confidence, and also promote innovation throughout the organization.
10 Strategy Supportive Culture

Q.10.1 2008 - May [6] (c), RTP Objective
State with reasons which of the following statement is correct/incorrect: “Resistance to change is an impediment in
building of strategic supportive corporate culture.” (2 marks)
Answer :
Correct:
It is the strategy implementor’s work, once the strategy is chosen, to change whatever factors of the corporate
culture hinders effective execution. This is because, once a culture is executed, it is difficult to change.

Q.10.2 2008 - Nov [6] (e) Objective
State with reason which of the following statement is correct/incorrect: An Organisation’s culture is always an
obstacle to successful strategy implementation. (2 marks)
Answer :
Incorrect:
Culture is not always an obstacle. Strong culture promotes good strategy execution when there is fit.

Q.10.3 2009 - Nov [6] (b) Objective State with reasons which of the following statement is correct or incorrect: A
corporate culture is always identical in all the organizations. (2 marks)
OR 2018 - May [8] (c) Objective
Corporate culture is always identical in all the business organizations.
(2 marks) Answer :
Incorrect:
A Corporate culture is never identical in all the organisation. Every organisation has its own philosophy, principles
its over way of problem solving. Moreover every organisation have their own climate, work ethics. Due to these
Corporate cultures differ from organisation to organisation.
Q.10.4 2011 - May [12] (b) Descriptive How a corporate culture can be both strength and weakness of an
organisation? Answer :
Strong Culture
As Strength
(3 marks)
Strong culture is said to exist where staff respond to stimulus because of their alignment to organizational values. A
“strong” culture may be especially beneficial to firms operating in the service sector since members of these
organizations are responsible for delivering the service and for evaluations important constituents make about firms.
Corporate culture can become strength of an organization in the following ways :

1. Better aligning the company towards achieving its
vision, mission, and goals.

2. High employee motivation and loyalty.
3. Increased team cohesiveness among the company’s various departments and divisions.
4. Promoting consistency and encouraging coordination and control within the company.
5. Shaping employee behavior at work, enabling the organization to be more efficient.
As Weakness A corporate culture can become a weakness of an organization also: Where culture is strong-
people do things because they believe it is the right thing to dothere is a risk Groupthink. “Groupthink” was
described by Irving L. Janis. This is a state where people, even if they have different ideas, do not challenge
organizational thinking, and therefore there is a reduced capacity for innovative thoughts. Innovative organizations
need individuals who are prepared to challenge the status quo-be it groupthink or bureaucracy, and also need
procedures to implement new ideas effectively. It discourages individual thought and contributions therefore growth
of a company may hamper.

Q.10.5 2011 - Nov [14] (b), RTP Short Notes
Write short note on the following :

Importance of Corporate Culture. ( 3 marks) Answer :
Importance of Corporate Culture :
A Culture built around such business principles as listening to customers, encouraging employees to take pride in
their work, and giving employees a high degree of decision-marking Responsibility is very conducive to successful
execution of a strategy of delivering superior Customer service.
A strong strategy-supportive culture nurtures and motivates people to do their jobs in ways conducive to effective
strategy execution; it provides structure, standards, and a value system in which to operate; and it promotes strong
employee identification with the company's vision, performance targets, and strategy. All this makes" employees
feel genuinely better about their jobs and work environment and the merits of what the company is trying to
accomplish.
Where the culture matches the conditions for good strategy execution it does the following positives to the
organisation
1. Provides a system of informal rules and peer pressure regarding how to
conduct business internally and how to go about doing one’s job. 2. Shape the mood, temperament, and motivation
the workforce, positively
affecting organizational energy, work habits and operating practices, the
degree to which organizational units cooperate, and how customers are
treated.
3. Nurtures and motivates people to do their jobs in ways conducive to
effective strategy execution;
4. It provides structure, standards, and a value system in which to operate;
and it promotes strong employee identification with the company's vision,
performance targets, and strategy.
5. This makes employees feel genuinely better about their jobs and work
environment and the merits of what the company is trying to accomplish.
Explain briefly the role of culture in promoting better strategy execution. (4 marks) Answer :
• A ‘good fit’ between Culture and Strategy makes employees
stimulated to take on the challenge of realizing the Company’s vision, do their jobs competently and with
enthusiasm, and collaborate with others, to effectively implement the strategy.
• A culture grounded in values, practices, and behavioral norms helps energize people throughout the company,
to do their jobs in a strategy– supportive manner, adding significantly to the power and effectiveness of strategy
execution.
• A culture with creativity, embracing change, and challenging the status quo is conducive to successful
execution of a product innovation and technological leadership strategy.
• A culture built around business principles like motivating employees for their work, and enabling employees to
take part in decision-making promotes strategy of superior customer service.

Q.10.7 2013 - Nov [9] (a) (ii) Objective State with reason which of the following statement is correct or incorrect:
Culture promotes better execution of strategy. (2 marks)
Answer :
Correct:
Culture is not always an obstacle. Strong culture promotes good strategy execution.
1. As it provides a system of informal rules and peer pressure regarding
how to conduct business internally and how to go about doing one’s job. 2. It nurtures and motivates people to do
their jobs in ways conducive to
effective strategy execution.
Briefly describe the impact of corporate culture on an organization. (3 marks) Answer :

Corporate Culture is described as the personality of an organisation or simply as ‘how things are done around here’.
It guides how employee think, act and feel. Corporate Culture is a broad term used to define the unique personality
or character of an organisation, and includes such elements as faith, values and beliefs, corporate ethics, and rules of
behavioural norms that are shared by people and groups in an organisation and that control the way they interact
with each other and with stakeholders outside the organisation.
Impact:
1. Provides a system of informal rules and peer pressure regarding how to conduct business internally and how to go
about doing one’s job.
2. Shape the mood, temperament, and motivation the workforce, positively affecting organizational energy, work
habits and operating practices, the degree to which organizational units cooperate, and how customers are treated.
3. Nurtures and motivates people to do their jobs in ways conducive to effective strategy execution;
4. It provides structure, standards, and a value system in which to operate; and it promotes strong employee
identification with the company's vision, performance targets, and strategy.
5. This makes employees feel genuinely better about their jobs and work environment and the merits of what the
company is trying to accomplish. Space to write important points for revision
Q.10.9 2014 - Nov [8] {C} (e) Descriptive What steps would you suggest to change a company’s problem culture?
(3 marks) Answer :
1. Recognize the need for change
2. Create a Shared Vision to Manage Change
3. Institutionalise the Change
The first step is to diagnose which facets of the present corporate culture are strategy supportive and which are not.
Objectives and vision of both individuals and organisation should coincide. There should be no conflict between
them.
This is basically an action stage which requires implementation of changed strategy. Creating and sustaining a
different attitude towards change is essential to ensure that the firm does not slip back into old ways of thinking.
Describe the concept of corporate culture. Elaborate the problems that business houses are facing while changing
their culture to remain adaptive with the globally changing scenario. (7 marks)
Answer :
Corporate Culture:
Corporate Culture refers to a company’s values, beliefs, business principles, traditions, ways to operating and
internal work environment. Corporate Culture is described as the personality of an organisation or simply as ‘how
things are done around here’. It guides how employee think, act and feel. Corporate Culture is a broad term used to
define the unique personality or character of an organisation, and includes such elements as faith, values and beliefs,
corporate ethics and rules of behavioural norms that are shared by people and groups in an organisation and that
control the way they interact with each other and with stakeholders outside the organisation. Culture Changing
Problems:
While being out front personally and symbolically leading the push for new behaviours and communicating the
reasons for new approaches is crucial strategy implementators have to convince all those concerned that the culture
changing effort is more than cosmetic. Talk and symbolic have to be complemented by the culture changing effort
and real movement. ☐ The Culture changing value are more affecting the business. The
change in culture of organization shall amount to change in all factors of the organization which it is trying to
develop. The change in culture shall lead to change in organization behaviour. For culture changing situations the
organization shall:
☐ Identify the supportive and non-supportive elements of the culture.
☐ Hold candid discussions with all basis for cultural change and its benefits to all that have to be changed.
☐ Communicate to employees the basis for cultural change and its benefits to all concerned.
Q.10.11 2018 - Nov [10] (a) Descriptive Describe corporate culture. Elaborate the statement “Culture is a strength
that can also be a weakness”. (5 marks)
Answer:
The phenomenon which often distinguishes good organizations from bad ones could be summed up as ‘Corporate
Culture’. Corporate Culture refers to a companies values, beliefs, business, principles, traditions, way of operating
and internal work environment. Every corporation has a culture that exerts powerful influences on the behaviour of
managers. Culture affects not only the way managers behave within an organization but also the decisions they
make about the organization’s relationships with its environment and its strategy.
“Culture is a strength that can also be a weakness”. This statement can be explained by spitting it in to two
parts.
Culture as a Strength :
As a strength, culture can facilitate communication, decision making and control and create cooperation and
commitment. An organization’s culture could be strong and cohesive when it conducts its business according to a
clear and explicit set of principles and values, which the management devotes considerable time to communicating
to employees and which values are shared widely across the organization.
Culture as a Weakness :
As a weakness, culture obstruct the smooth implementation of strategy by creating resistance to change. An
organization’s culture could be characterized as weak when many subcultures exist, few values and behavioral
norms are shared and traditions are rare. In such organizations, employees do not have a sense of commitment and
loyalty with the organization.

1 Organisation Structure
1. Change in corporate strategy often require changes in the way an organisation is structured for the major reasons:
(a) Structure largely dictates how operational objectives and policies will
be established to achieve the strategic objectives.

(b) Changes in structure is that structure dictates how resources will be
allocated to achieve strategic objectives.
(c) Only (a)
2. __________ is the company’s formal configuration of its intended roles, procedures, governance mechanisms,
authority, and decision-making processes.
(a) Organisational Structure
(b) Organisational Performance
(c) Functional Structure
(d) Divisional Structure
3. To coordinate more complex organisational functions, companies should ab and on the _________ in favour of
the functional structure. (a) Organisational Structure
(b) Simple Structure
(c) Divisional Structure
(d) Matrix Structure
4. In business organisation functional type structure is widely used because of its _____________.
(a) Simplicity
(b) Low Cost
(c) Easy function
(d) Simplicity and Low Cost
5. Divisional structure can be organised is the way of:
(a) By Geo graphic area,
(b) By product or service
(c) By Customer
6. M-Form Structure was developed in
(a) 1901
(b) 1902
(c) 1920
(d) 1928
7. Multidivisional structure was developed in response to coordinate and
control related problems in __________.
(a) Small firms
(b) Mid-size firms
(c) Large firms
8. Strategic Business Units structure is relevant for:
(a) Complex Organisation
(b) Complex Structure
(c) Multi product enterprises
(d) Multi product, multi-business enterprises.
9. A Strategic Business Unit (SBU) structure consists of _______ levels.
(a) two
(b) three
(c) At least three
(d) At least three but not more than 8.
10. __________ in a most complex structure because it depends upon both
vertical and horizontal flows of authority and communication.
(a) Complex Structure (b) Multi Divisional Structure
(c) Strategic Business Unit Structure (d) Matrix Structure 11. Matrix structure is very useful when the external
environment is ____.
(a) Very complex
(b) Very unpredictable
(c) Extremely changing
(d) Very complex and changeable.
12. Benefits of Hour glass structure is/are__________.
(a) It reduces the cost of operation
(b) It enhancing responsiveness by simplifying decision making
(d) Both (a) and (b).
2 Strategic Leadership
13. “A leader lives in the field with his troops is stated by

(a) H. Ross Perot
(b) Sun zi
(c) Dale Me Conkey
(d) Gary Armstrom.
14. A strategic leader has not responsible for:

(a) Making strategic decisions
(b) Creating separate divisions for distinct business
(c) Formulating policies and action plan to implement strategic decision (d) Creating and sustaining strong corporate
culture.
3 Strategy Supportive Culture
15. “Managerial Leadership is wider than strategic leadership”. Statement is (a) True
(b) False
(c) Partly True
(d) None.
16. Which is the basic style of leadership?

(a) Transformational Leadership Style
(b) Transactional Leadership Style
(c) Transitional Leadership Style
17. Which is the role of culture in strategy execution?
(a) Strong culture promotes good strategy execution when there’s fit and impedes execution when it is fit.
(b) Strong culture promotes good strategy execution when there’s not fit and impedes execution when there’s
negligible fit.
(c) Strong culture promotes good strategy execution when there’s fit and impedes execution when there’s negligible
fit.
4 Entrepreneurship and Intrapreneurship
18. Which involves creation of a business idea and the fusion of capital, technology and human talent to give
practical shape to the idea. (a) Entrepreneurship
(b) Intrapreneurship
(c) Extra preneurship
19. Entrepreneur who operates within the boundaries of an organisation, is known as

(a) Enterpreneur
(b) Intrapreneur
(c) Extrapreneur
(d) Multipreneur.
ANSWER
1. (d) 2. (a) 3. (b) 4. (d) 5. (d) 6. (c) 7. (c) 8. (d) 9. (c) 10. (d) 11. (d) 12. (d) 13. (a) 14. (b) 15. (b) 16. (d) 17. (c) 18.
(a) 19. (b)
CHAPTER
8
Strategy Implementation and Control
Chapter Comprises: ☹Strategy Implementation ☹Issues in Strategy Implementation ☹Strategic Change ☹Strategic
Control ☹Strategy Audit ☹Business Process Re-engineering ☹Benchmarking.
Legend
book.
7.608
TIME MANAGER
i.e.....
1. Budgeted
2. Actual
3. Variance (1-2)
............ Day 1 16
Instant
Revision (in hours)

i.e.... i.e. on ........... ...........
Day 2 Day 8
4.00 3.12
(in hours)

2.20 1.35 1.35

1.1, 4.3
1.1, 4.1 1.1, 2.3, 4.3, 5.1
1 Strategy Implementation
Q.1.1 2008 - Nov [7] (b), RTP Distinguish Between Briefly answer the following :
Difference between Strategy formulation and Strategy implementation. (2 marks)
OR 2011 - May [13] (a), 2015 - May [13] (a), Distinguish Between 2019 - May [10] (Or) (b)
Strategy Formulation and Strategy Implementation. (4+4+3 =11 marks) OR 2016 - Nov [8] {C} (e) Descriptive
Discuss any three differences between strategy formulation any strategy implementation. (3 marks) Answer:
Strategy implementation is fundamentally different from strategy formulation. Strategy formulation and
implementation can be contrasted in following ways :
Basis Strategy Formulation

Meaning
Focus
S t rategy f o r mu l a t i o n i s positioning forces before the action.
Strategy formulation focuses on effectiveness.

Nature S t r a tegy
primarily process. fo r mu l a t i o n i s an intellectual
Skill Required
Co-ordination Vs
Combination
Strategy formulation requires good incitive and analytical skills.
Strategy formulation requires co-ordination among a few individuals.

Strategy r e q u i r e s among many individuals.

Strategy
Implementation
Strategy implementation is managing forces during action.
Strategy Implementation focuses on efficiency.
Strategy Implementation is primarily process.
Strategy requires leadership skills. an operational
implementation motivation and

implementation c o m b i n a t i o n
Q.1.2 2012 - May [8] {C} (e) Descriptive Elaborate the interrelationship between strategy formulation and
implementation. (3 marks)
Answer:
Strategic implementation is concerned with translating a decision into action, with presupposes that the decision
itself (i.e., the strategic choice) was made with some thought being given to feasibility and acceptability. A firm will
definitely be successful only when the strategy formulation is sound and strategy implementation is excellent.
Hence, organizational success is a function of a good strategy and proper implementation. This is represented by
the following matrix :
Strategy
Formulation
Sound A C
Flawed
Sound B D (Success)
Excellent Weak Strategy Implementation
Square A
Square B
is a situation where Strategy formulation is flowed and strategy implementation is weak which results in difficulty in
formulation.
is a situation where Strategy formulation is sound and strategy implementation is excellent which results in success
of a company. This is an ideal situation. Every firm wants to be at this square.
Square C
Square D
is a situation where Strategy formulation is flawed & strategy implementation is weak which results in failure in
formulation and implementation both. So a firm here has to redesign the complete strategic model.
is a situation where Strategy formulation is sound and strategy implementation is weak which results in failure in
implementation.

Describe the principal aspects of strategy-execution process, which are included in most situations. (5 marks)
Answer:
In most situations, strategy - execution process includes the following principal aspects :
☐ Developing budgets that steer ample resources into those activities
critical to strategic success.

☐ Staffing the organization with the needed skills and expertise,
consciously building and strengthening strategy, supportive
competencies and competitive capabilities, and organizing the work
effort.
☐ Ensuring that policies and operating procedures facilitate rather than
impede effective execution.
☐ Using the best-known practices to perform core business activities and
pushing for continuous improvement.
☐ Installing information and operating systems that enable company
personnel to better carry out their strategic roles day in and day out. ☐ Motivating people to pursue the target
objectives energetically. ☐ Creating a company culture and work climate conducive to successful
strategy implementation and execution.
☐ Exerting the internal leadership needed to drive implementation froward
and keep improving strategy execution. When the organization
encounters stumbling blocks or weaknesses, management has to see
that they are addressed and rectified quickly.
2 Strategic Change
Q.2.1 2008 - May [6] (d) Objective
State with reasons which of the following statement is correct/incorrect: “Changes of any type are always
disquieting, sometimes they may be threatening.” (2 marks)
Answer:
Incorrect : The toughest management task is to talk about change. This is because of heavy anchor of deeply held
values and habits – people cling emotionally to the old and familiar. However, favourable changes either in the
external environment on internal environment are not threatening or disquieting.

State with reasons which of the following statement is correct or incorrect: There is both opportunity and challenge
in ‘Change’. (2 marks) Answer:
Correct: Business works in an climate of change. Change is what makes business dynamic as it poses both
challenge and opportunity. Challenge to accept the change which necessitates appropriate action. Opportunity to
face the future in a more determined way. It calls for innovative thinking to new potentials to be unfurled in future.

Q.2.3 2011 - May [11] (b), RTP Descriptive ABC Ltd. plans to introduce changes in its structure, technology and
people. Explain how Kurt Lewin's change process can help this firm.
(3 marks) Answer:
An early model of change developed by Kurt Lewin described change as a three-stage process. Kurt Lewin
theorized a three-stage model of change that is known as the unfreezing-change-refreeze model that requires prior
learning to be rejected and replaced. Lewin’s theory states behavior as “a dynamic balance of forces working in
opposing directions. “For Lewin, the process of change entails creating the perception that a change is needed, then
moving toward the new, desired level of behavior and finally, solidifying that new behavior as the norm.
1st Stage He called “unfreezing”. It involved overcoming inter alia and dismantling the existing “mind set”. Defense
mechanisms have to be bypassed.
2nd Stage The change occurs. This is typically a period of confusion and transition. We are aware that the old ways
are being challenged but we do not have a clear picture as to what we are replacing them with yet.
3rd Stage He called “freezing”. The new mind set is crystallizing and one’s comfort level is returning to previous
levels. This is often misquoted as “refreezing”. So ABC Ltd. can change its structure, technology and people as per
Kurt Lewin’s change process.

Q.2.4 2012 - Nov [14] (a) Short Notes Write short note on the following:
Steps for initiating a strategic change. (4 marks)
Answer:
Strategic change refers to organisation wide change which is a fundamental and radical reorientation of the way an
organisation operates. It affects the entire organisation and often goes against the values held by members in the
organisation. It may relate to change in goals and objectives, change in technology mergers, collaborations,
acquisition.
Basically there are five implementation process. stages of corporate strategy formulation
Stage 1 Developing a Strategic Vision
First a firm must determine what directional path the firm should take and what changes in the firm’s product-
market-customertechnology-focus would improve its current market position and its future prospect. Top
management's views and conclusions about the firm’s direction and the productc u s t o m e r - m a r k e t - t e c h n
o l o g y f o c u s constitute a strategic vision for the company.
Stage 3 Developing a
Strategy to
Achieve the Vision and Objective
Stage 4 Implementation of Strategy
Stage 2 Setting Objectives Corporate objectives represent the quantum of growth the firm seeks to achieve in the
given time frame. It provides the basis for the major decisions of the firm and the performance to be realized at each
level. The purpose of setting objectives is to convert the strategic vision into specific performance targets i.e. results
the management wants to achieve and then use these objectives as yardsticks for tracking the firm's progress and
performance.
The strategizing process generally has proceeded from the corporate level to the business level and then from the
business level to the functional and operating levels. Mid level and frontline managers cannot do good strategy
making without understanding the firm’s long-term direction and higherlevel strategies. Good communication of
strategic themes and guiding principles serves a valuable strategy-unifying purpose. Developing a strategic vision,
setting objectives, and crafting a strategy are basic direction-setting tasks.
To convert strategic plans into actions and results, a manager must be able to direct organizational change, motivate
people, b u i l d a n d s t r e n g t h e n c o m p a n y competencies and competitive capabilities, create a strategy-
supportive work climate, and meet or beat performance targets.
Stage 5 Monitoring
Developments, Evaluating
Performance and making Corrective Adjustments
A firm's vision, objectives, strategy, and approach to strategy execution are never final. Evaluating the firm's
progress, assessing the impact of new external deployments, and making corrective adjustments are continuous
method. Whenever a firm encounters disruptive changes in its external environment, questions need to be raised
about the appropriateness of its direction and strategy. It is to be expected that a company will modify its strategic
vision direction objectives, and strategy over time.

Q.2.5 2014 - Nov [13] (b) Distinguish Between
Distinguish between:
Unfreezing the situation and Refreezing - the two stages of Kurt Lewin change process. (3 marks)
Answer:
The process of Unfreezing simply makes the individuals or organizations aware of the necessity for change and
prepares them for such a change. Lewin proposes that the changes should not come as a surprise to the members of
the organization. Sudden and unannounced change would be socially destructive and morale lowering.
Refreezing occurs when the new behaviour becomes a normal way of life. The new behaviour must replace the
former behaviour completely for successful and permanent change to take place. In order for the new behaviour to
become permanent, it must be continuously reinforced so that this new acquired behaviour does not diminish or
extinguish.
Q.2.6 2018 - Nov [12] (a) Short Notes Write a short note on strategic change and explain the process of strategic
change. (7 marks)
Answer:
The changes in the environmental forces often require businesses to make modifications in their existing strategies
and bring out new strategies. Strategic change is a complex process and it involves a corporate strategy focused on
new markets, products, services and new ways of doing business.
To make the change lasting, Kurt Lewin proposed three phases of the change process for moving the organization
from the present to the future. These stages are unfreezing, changing and refreezing.
(a) Unfreezing the Situation :
The process of unfreezing simply makes the individuals or organizations aware of the necessity for change and
prepares them for such a change. Lewin proposes that the changes should not come as a surprise to the members of
the organization. Sudden and unannounced change would be socially destructive and morale lowering. The
management must pave the way for the change by first, “unfreezing the situation”, so that members would be
willing and ready to accept the change. Unfreezing is the process of breaking down the old attitude and behaviors,
customs and traditions so that they start with a clean slate. This can be achieved by making announcements, holding
meetings and promoting the ideas throughout the organization.
(b) Changing to New Situation :

Once the unfreezing process has been completed and the members of the organization reorganize the need for
change and have been fully prepared to accept such change, their, behaviour patterns need to be redefines. H.C.
Kellman has proposed three methods for reassigning new patterns of behaviour. These are compliance, identification
and internalisation.
1. Compliance:
It is achieved by strictly enforcing the reward and punishment strategy for good or bad behaviour. Fear of
punishment, actual punishment or actual reward seems to change behaviour for the better.
2. Identification:
Identification occurs when members are psychologically impressed upon to identify themselves with some given
role models whose behaviour they would like to adopt and try to become like them.
3. Internalization:
Internalization involves some internal changing of the individual’s thought processes in order to adjust to a new
environment. They have given freedom to learn and adopt new behaviour in order to succeed in the new set of
circumstances.
(c) Refreezing:
Refreezing occurs when the new behaviour becomes a normal way of life. The mew behaviour must replace the
former behaviour completely for successful and permanent change to take place. In order for the new behaviour to
become permanent, it must be continuously reinforced so that this newly acquired behaviour does not diminish or
extinguish. Change process is not a one time application but a continuous process due to dynamism and ever
changing environment. The process of unfreezing, changing and refreezing is a cyclical one and remains
continuously in action.
3 Strategy Audit
Q.3.1 2018 - May [12] (a) Descriptive Explain the concept and need of Strategy Audit. Why is it more difficult in
present scenario? (7 marks)
Answer:
Strategy Audit:
Concept ☐ Companies review their business plans and strategies on regular basis to identify weaknesses and
shortcomings to enable a successful development plan. The strategy audit secures that all necessary information for
the development of the company are included in the business plan and that the management supports it.
☐ A strategy audit is an examination and evaluation of areas affected by the operation of a strategic management
process within an organization.
☐ A strategy audit provides an excellent platform for discussion with the top management regarding necessary
corporate actions or changes in the existing business plan. It also identifies the need to adjust the existing business
strategies and plans.
Need of ☐ A Strategy Audit is needed under the following Strategy Audit conditions.
☐ When the performance indicators reflect that a strategy is not working properly or is not producing desired
outcomes.
☐ When the goals and objectives of the strategy are not being accomplished.
☐ When a major change takes place in the external environment of the organization.
When the Top Management Plans

☐
☐
☐
☐
☐
Reasons why Strategy

Evaluation
(audit) is more difficult in
Present cenario include the
following
trends
(a) to fine tune the existing strategies and introduce new strategies and.
(b) to ensure that a strategy that has worked in the past continues to be in-tune with subtle internal and external
changes that may have accured since the formulation of strategies.
A dramatic increase in the environment’s complexity.

The increasing difficulty of predicting the future with accuracy.
The increasing number of variables in the environment.
The rapid rate of obsolescence of even the best plans.
The increase in the number of both domestic and world events affecting organizations.
The decreasing time span for which planning can be done with any degree of certainty.

Q.3.2 RTP Descriptive What is Strategy Audit? Explain briefly the criteria for strategy audit given by Richard
Rumelt’s.
Answer:
A Strategy Audit is an examination and evaluation of areas affected by the operation of a strategic management
process within an organization. Richard Rumelt’s Criteria for Strategy Audit
(a) Consistency A Strategy should not present inconsistent goals and policies. Organizational conflict and
interdepartmental bickering are often symptoms of managerial disorder, but these problems may also be a sign of
strategic inconsistency. Three guidelines help determine if organizational problems are due to inconsistencies in
strategy:
• If managerial problems continue despite
changes in personnel and if they tend to be issue-based rather than people-based, then strategies may be inconsistent.
• If success for one organizational department means, or is interpreted to mean, failure for another department, then
strategies may be inconsistent.
• If policy problems and issues continue to be brought to the top for resolution, then strategies may be inconsistent.
(b) Consonance Consonance refers to the need for strategists to examine sets of trends, as well as individual trends,
in auditing strategies. A strategy must represent an adaptive response to the external environment and to the critical
changes occurring within it. One difficulty in matching a firm’s key internal and external factors in the formulation
of strategy is that most trends are the result of interactions among other trends. For example, the day-care
school/centre came about as a combined result of many trends that included a rise in the average level of education,
need for different education pedagogy, increase in income, inflation, and an increase in women in the workforce.
Although single economic or demographic trends might appear steady for many years, there are waves of change
going on at the interaction level.
(c) Feasibility
(d) Advantage
A Strategy must neither overtax available resources nor create unsolvable sub-problems. The final broad test of
strategy is its feasibility; that is, can the strategy be attempted within the physical, human, and financial resources of
the enterprise? The financial resources of a business are the easiest to quantify and are normally the first limitation
against which strategy is audited. It is sometimes forgotten, however, that innovative approaches to financing are
often possible. Devices, such as captive subsidiaries, sale-leaseback arrangements, and tying plant mortgages to
long-term contracts, have all been used effectively to help win key positions in suddenly expanding industries. A
less quantifiable, but actually more rigid, limitation on strategic choice is that imposed by individual and
organizational capabilities. In auditing a strategy, it is important to examine whether an organization has
demonstrated in the past that it possesses the abilities, competencies, skills, and talents needed to carry out a given
strategy.
A Strategy must provide for the creation and/or maintenance of a competitive advantage in a selected area of
activity. Competitive advantages normally are the result of superiority in one of three areas:
(1) resources, (2) skills, or (3) position.
The idea that the positioning of firm’s resources that enhance their combined effectiveness is familiar to military
theorists and chess players. Position can also play a crucial role in an organization’s strategy. Once gained, a good
position is defensible- meaning that it is so costly to capture that rivals are deterred from full -scale attacks.
Positional advantage tends to be self-sustaining as long as the key internal and environmental factors that underlie it
remain stable. This is why entrenched firms can be almost impossible to unseat, even if their skill levels are only
average. Although not all positional advantages are associated with size, it is true that larger organizations tend to
operate in markets and use procedures that turn their size into a d v a n t a g e , w h i l e s ma l l e r f i r ms s e e k
product/market positions that exploit other types of advantage. The principal characteristic of good position is that it
permits the firm to obtain advantage from policies that would not similarly benefit rivals without the same position.
Therefore, in auditing strategy, organizations should examine the nature of positional advantages associated with a
given strategy.

4 Strategic Control
Q.4.1 2012 - May [11] (b), RTP Descriptive What is strategic control? Briefly explain the different types of
strategic control. (1 + 3 = 4 marks) OR 2016 - Nov [10] Descriptive What is strategic control? Explain the types of
strategic controls. (7 marks)
OR 2018 - May [12] (b) Descriptive Explain different types of strategic control in brief. (3 marks)
Answer:
Strategic Control focuses on the dual questions of whether: (1) the strategy is being implemented as planned; and (2)
the results produced by the strategy are those intended.
There are Four types of Strategic Control:
Premise Control
Strategic
Surveillance
Special Alert Control
Implementation Control
A Strategy is formed on the basis of certain assumptions or premises about the environment. Premise control is a
tool for systematic and continuous monitoring of the environment to verify the validity and accuracy of the premises
on which the strategy has been built.
Strategic surveillance is unfocussed. It involves general monitoring of various sources of information to uncover
unanticipated information having a bearing on the organizational strategy.
At times unexpected events may force organizations to reconsider their strategy. Sudden changes in government,
natural calamities, unexpected merger/acquisition by competitors, industrial disasters and other such events may
trigger an immediate and intense review of strategy.
Managers implement strategy by converting major plans into concrete, sequential actions that form incremental
steps. Implementation control is directed towards assessing the need for changes in the overall strategy in light of
unfolding events results.

Q.4.2 2012 - Nov [10] (vi) Descriptive

Premise control (1 mark) Answer:
Premise Control is a tool for systematic and continuous monitoring of the environment to verify the validity and
accuracy of the premises on which the strategy has been built. It primarily involves monitoring two types of factors:
(a) Environmental factors such as economic (inflation, liquidity, interest
rates), technology, social and regulatory.

(b) Industry factors such as competitors, suppliers, substitutes. Space to write important points for revision
Q.4.3 2013 - Nov [13] (b), 2017 - Nov [13] (a) Distinguish Between

Operational Control and Management Control. (3, 4 marks) Answer:
Difference between Operational Control and Management Control:
Operational Control Management Control 1. Controls individual tasks or Controls the entire function of a
transaction thus narrow scope. department or organisation thus wides in scope.
2. Basic purpose is to formulate a Basic purpose is to achieve the set of standard, plan or organisational goal.
instructions for a task or
transaction.

Q.4.4 2015 - Nov [14] (b) Short Notes Write short note on the following:
Implementation Control (3 marks)
Answer:
Implementation Control
Managers implement strategy by converting major plans into concrete, sequential actions that form incremental
steps, Implementation control is directed towards assessing the need for changes in the overall strategy in light of
unfolding events and results associated with incremental steps and actions. Strategic implementation control is not a
replacement to operational control. Strategic implementation control, unlike operational controls, continuously
monitors the basic direction of the strategy.
Basic Forms of Implementation Control (i) Monitoring Strategic
Trusts
(ii) Milestone Reviews
☐ Monitoring strategic trusts helps the managers to determine whether the overall strategy is progressing as desired
or whether there is need for readjustment.
☐ All key activities necessary to implement strategy are segregated in terms of time, events or major resource
allocation. It normally involves a complete reassessment of the strategy. It also assesses the need to continue or
refocus the direction of an organization.

5 Business Process Re-engineering
Q.5.1 2009 - May [9] Descriptive Define Business Process Re-engineering. Briefly outline the steps therein. (4 ☐ 6
= 10 marks) OR RTP Question Short Note Write short notes on Implementation steps in BPR
Answer:
Business Process Re-engineering Concept of BPR
Features of BPR
Advantage of BPR
Steps of BPR : 1. Determining
BPR is defined as the analysis and redesign of workflows and processes both within and between the organization
and the external entities like suppliers, distributors and service providers.
BPR is an approach to bring improvement in operating effectiveness through the redesigning of critical business
process and supporting business activities.
Business process re-engineering is an approach which seeks improvement in operating effectivity through the re-
designing of core business processes and other supporting systems.
It intends at starting all over, starting from scratch. It begins with re-thinking with a totally free state of mind without
having any pre-notion or motive. It first determines what must be done and then decides how to do it.
1. It aims at taking advantage of its operational excellence.

2. It leads to process orientation which basically analyses what work is being done and how is it being done.
3. It prepares to survive and tackle competition.
4. It brings about fresh ideas and proceeds without being influenced by old ideas.
It helps in building a comprehensive Objectives and foundation for the re-engineering process. Framework This
will provide the required focus, direction,
motivation etc, for redesign process.
2. Identify Customers and Determine their needs
3. Study the Existing Process

4. Formulate a Redesign a Process Plan
5 Implement the Redesign
The designers have to understand the customers needs and wants, their profits, their steps in acquiring, using and
disposing a product and the purpose is to provide added value to the customer.
This will provide an important base for the redesigners. The purpose of this is to understand the “what” and “why”
of the targeted process.
The information gained through the earlier steps is translated into an ideal redesign process. In this step, alternative
process are considered and the best is selected. It is easy to formulate new process but to implement them is hard.
Implementation of the redesign process and application of other knowledge gained from the previous step is to
achieve dramatic improvement.

Q.5.2 2011 - May [10] (vi) Descriptive

Business Process Re-engineering (1 mark) Answer:
Concept of BPR:
BPR is defined as the analysis and redesign of workflows and processes both within and between the organization
and the external entities like suppliers, distributors and service providers.
BPR is an approach to bring improvement in operating effectiveness through the redesigning of critical business
process and supporting business activities.
Q.5.3 2011 - Nov [14] (a) Short Notes Write short note on the following :
Role of IT in Business Process Re-engineering. (4 marks) Answer:
BPR +
Information
Technology
Tools =
Business Engineering
The Impact of IT on BPR can be Identified as
Information
Technology
Increases Business Values in terms of
The Role played by IT in BPR can be summarised as
Today BPR and Information Technology term known as Business Engineering. Business Engineering combines the
innovations of Information Technology with BPR and focus on better business processes. The main trust of using
information technology in BPR lie in far-reaching (best procedure based) processes oriented solutions.
• Drastic reduction in operational time,

• Defeating restrictions of geographical area,
• Provide timely, reliable and accurate information, and
☐ Efficiency - by way of increased productivity, ☐ Effectiveness - by way of better management, ☐ Innovation -

by way of improved products and
services.
• It increases the efficiency by way of increased productivity.

• It enhances the effectiveness through better management.
• It brings about innovation by developing improved products and services.
• It leads to compression of time.
• It helps in overcoming geographic restrictions.
• It re-structures relationship.
Being a strategic professional, analyze and redesign the work force in the context of business process re-
engineering. (3 marks)
Answer:
Business Process Re-engineering:
Business Process Re-engineering is an approach which seeks improvement in operating effectivity through the re-
designing of core business processes and other supporting systems.
having any pre-notion or motive. It first determines what must be done and then decides how to do it. Redesigning
the work force in the context of BPR:
• The workflows are to be studied, appraised and improved in terms of
time, cost, output, quality, and responsiveness to customers.

• The re-design effort aims to simplify and streamline a process by
eliminating all extra avoidable steps, activities, and transactions.
• With the help of re-designing workflows, organizations can drastically
reduce the number of stages of work, and improve their performance.
Thus increasing the efficiency.
What is the rationale behind Business Process Re-engineering (BPR)? What steps would you recommend to
implement BPR in an organization? (7 marks)
Answer:
Rationale behind BPR:
1. To obtain in the performance of the process in terms of time, quantum cost, output, quality, and responsiveness
to gains customers;
2. To simplify and Streamline the

process by
(i)
(ii)
(iii) eliminating all redundant and non-value adding steps, activities and transactions, reducing drastically the
number of stages or transfer points of work, and
speeding up the work-flow through the use of info-tech systems.
3. To obtain
dramatic
improvement
Steps of BPR :
1 Determining Objectives and Framework
business systems.
2 Identify Customers and Determine their needs
3 Study the Existing Process

4 Formulate a Redesign a Process Plan
It foundation for the re-engineering process. This will provide the required focus, direction, motivation etc, for
redesign process.
The designers have to understand the customers needs and wants, their profits, their steps in acquiring, using and
disposing a product and the purpose is to provide added value to the customer.
This will provide an important base for the redesigners. The purpose of this is to understand the “what” and “why”
of the targeted process.
The information gained through the earlier steps is translated into an ideal redesign process. In this step, alternative
process are considered and the best is selected. in operational effeciveness, by re-designing core
processes and supporting business

helps in building a comprehensive
5 Implement the Redesign
It is easy to formulate new process but to implement them is hard. Implementation of the redesign process and
application of other knowledge gained from the previous step is to achieve dramatic improvement.

Q.5.6 2015 - Nov [9] (a) (i) Objective
State with reason which of the following statement is correct or incorrect: Business Process Reengineering (BPR)
means partial modification or marginal improvement in the existing work processes. (2 marks)
Answer:
Incorrect: Business Process Reengineering refers to the full change in business process from starting to the end and
improvement in the work processes. Business process re-engineering is an approach which seeks improvement in
operating effectivity through the re-designing of core business processes and other supporting systems.
having any pre-notion or motive. It first determines what must be done and then decides how to do it.
Q.5.7 2018 - Nov [12] (b) Descriptive Identify three aspects of impact of IT Systems on Business Process
Reengineering and list three areas where it provides business value.
(3 marks) Answer:
☐ Impact of IT - Systems on Business process Re-engineering are
identified as:
☐ Compression of time
☐ Overcoming restrictions of geography and / or distance ☐ Restructuring of relationships
☐ IT initiatives provide business values in three distinct areas: ☐ Efficiency - by way of increased productivity,
☐ Effectiveness - by way of better management,
☐ Innovation - by way of improved products and services.

Q.5.8 2019 - Nov [10] (b)
Explain concept and nature of BPR.
6 Bench Marking
Which of the following statement is correct and which is incorrect ? Give reasons in brief for your answer.
There is no distinction between Bench Marking and Business Process Reengineering. (2 marks)
Answer:
Incorrect:
Bench marking relates to setting goals and measuring productivity based on best industry practices. The idea is to
learn from the practices of competitors and others to improve the firm’s performance. On the other hand, business
process re-engineering relates to analysis and redesign of work flows and processes both within and between
organizations.

Q.6.2 2019 - May [10] (a), RTP Descriptive What is Benchmarking? Explain the various steps in Benchmarking
process. (7 marks)
Answer: Meaning
Steps Involved in Banchmarking Process
Benchmarking is an approach of setting goals and measuring productivity of firms based on best industry practices
or against the products, services and practices of its competitors or other acknowledged leaders in the industry. It
developed out of need to have information against which performance can be measured. Benchmarking helps
businesses in improving performance by learning from the best practices and the processes by which they are
achieved. Thus, benchmarking is a process of continuous improvement in search for competitive advantage. Firms
can use bencmarking practices to achieve improvements in diverse range of management functions like product
development, customer services, human resources management , etc.
(i) Identifying the need for benchmarking: This step will define the objectives of the benchmarking exercise. It
will also involve selecting the type of benchmarking. Organizations identify realistic opportunities for
improvements.
(ii) Clearly understanding existing decisions processes: The step will involve compiling information and data on
performance.
(iii) Identify best processes: Within the selected framework best processes are identified. These may be within the
same organization or external to them.
(iv) Comparison of own process and performance with that of others: Benchmarking process also involves
comparison of performance of the organization with performance of other organization. Any deviation between the
two is analysed to make further improvements.
(v) Prepare a report and implement the steps necessary to close the performance gap: A report on
benchmarking initiatives containing recommendations is prepared. Such a report also contains the action plans for
implementation.
(vi) Evaluation: Business organizations evaluate the results of the benchmarking process in terms of improvements
vis-a-vis objectives and other criteria set for the purpose. It also periodically evaluates and reset the benchmarks in
the light of changes in the conditions that impact the performance.

Q.6.3 RTP Practical
Swift Ltd. and Quick Ltd. are two companies that are in the business of light industrial machines. While Swift is the
market leader the sales of Quick has been falling. In the year 2017-18 the market share of the two companies was
forty per cent and five per cent respectively. During the last five years the market share of quick reduced from third
to sixth position. As an immediate corrective measure top management of Quick decided to emulate the successful
standards of Swift Ltd. and set them as their own yardsticks. With the help of standards they intended to compare,
measure and judge their performance.
What is the strategic tool Quick Ltd. is adopting? How is it implemented?
Answer:
The Top Management of Quick Ltd. is doing benchmarking. The benchmarking helps an organization to get ahead
of competition. A benchmark may be defined as a standard or a point of reference against which things may be
compared and by which something can be measured and judged. In simple words, benchmarking is an approach of
setting goals and measuring productivity based on best industry practices. In recent years, different commercial and
non-commercial organizations are discovering the value of benchmarking and are applying it to improve their
processes and systems.
Benchmarking processes used by different organisations lack standardization. However, common elements are as
follows:
I. Identifying the need for benchmarking: This step will define the objectives of the benchmarking exercise. It
will also involve selecting the type of benchmarking. Organizations identify realistic opportunities for
improvements.
II. Clearly understanding existing business processes: This step will involve compiling information and data on
performance. This will include mapping processes.
III. Identify best processes: Within the selected framework, best processes are identified. These may be within the
same organization or external to it.
IV. Compare own processes and performance with that of others: While comparing gaps in performance
between the organization and better performers is identified. Further, gaps in performance are analysed to seek
explanations. Feasibility of making the improvements is also examined.
V. Prepare a report and Implement the steps necessary to close the performance gap: A report on the
Benchmarking initiatives containing recommendations is prepared. Such a report includes the action plan(s) for
implementation.
VI. Evaluation: A business organization must evaluate the results of the benchmarking process in terms of
improvements vis-à-vis objectives and other criteria set for the purpose. It should also periodically evaluate and reset
the benchmarks in the light of changes in the conditions that impact its performance.

1 Strategy Implementation
1. In which concept managerial exercise of putting a freshly chosen strategy into action?
(a) Strategy allocation
(b) Strategy Implementation
(c) Strategy formulation
(d) Functional Implementation
2. Success of a company depends when:

(a) Strategy formulation is sound
(b) Strategy implementation is excelled
3. Strategy implementation is primarily an operational process whereas strategy formulation is __________.

(a) organisational process
(b) implementation process
(c) designing process
(d) intellectual process.
4. Strategy formulation focuses on effectiveness whereas strategy implementation focuses on ______.

(a) efficiency
(b) objectives
(c) diversification
(d) None
5. Strategy formulation requires coordination among the executives at the _________.

(a) Lower Level
(b) Middle Level
(c) Top Level
(d) Middle and lower levels.
6. Strategy implementation requires __________. (a) Conceptual intuitive and analytical skills (b) motivation skills
(c) Leadership skills
(d) Motivational and leadership skills
2 Issues in Strategy Implementation
7. Project implementation, procedural implementation, Resource allocation followed by ___________ are the
sequential issues in strategy implementation.
(a) Structural implementation
(b) Functional implementation
(c) Behavioural implementation
3 Strategic Change
8. Strategic change is a _________ that involves a corporate strategy focused on new markets, products, services
and new ways of doing business.
(a) Simple process
(b) Complex process
(c) Managerial process
(d) Controlling process.
9. Which is/are the important phase(s) in Kurt Lewin’s Model of change? (a) Unfreezing the situation
(b) Changing to the new situation
(c) Refreezing
4 Strategic Control
10. Which is not a type of organisational control

(a) Operational control
(b) Management control
(c) Strategic Control
11. __________ is the process of evaluating strategy as it is formulated and implemented.

(a) Operational control
(b) Management control
(c) Strategic control
12. Which are the major types of strategic control except?

(a) Premise control
(b) Strategic surveillance
(c) Operational control
(d) Implementation control
5 Strategy Audit
13. Core of the Strategy Audit lies on
(a) How well is the current strategy working and how it is working in future?
(b) How can this be evaluated in present and future?
(c) How urgent is there a need to change the strategy?
14. Strategy Audit includes basic activities except:
(a) Examining the underlying bases of a firm’s strategy
(b) Comparing expected results with actual results.
(c) Examining the factors not directly effecting the organisation
(d) Taking corrective actions to ensure that performance conforms to plans.
15. Which is the reason that strategic evaluation is more difficult today? (a) The rapid rate of obsolescence of even
the best plans. (b) A dramatic increase in the environment’s complexity (c) The decreasing time span for which
planning can be done with any degree of certainty
6 Business Process Re-engineering

16. What is a business process?
(a) A process is a set of logically related tasks or activities oriented towards achieving a specified outcome.
(b) Business process is a collection of activities which creates an output of value to the customer and often
transcends departmental or functional boundaries
(c) Both (a) and (b)
17. The core process of a company may change over a period of time
according to the shifting requirements of its _________.
(a) need
(b) effectiveness
(c) competitiveness
(d) demand and supply position.
18. Process refers to the analysis and redesign of work flows and processes
both within and between the organisation, is known as
(a) Strategic Business Process
(b) Business Process Engineering
(c) Functional Process Re-engineering
(d) Functional Process Re-engineering
19. Which is not an element of a Business Process Reengineering? (a) Re-engineering begins with a fundamental
rethinking (b) Re-engineering involves radical redesigning of process (c) Re-engineering aims at achieving dramatic
improvement in performance
20. The generic business processes of a firm needing redesign may be clarified in various categories except:
(a) Processes comprising management activities
(b) Process involving interface(s) with customers
(c) Process pertaining to development and delivery of product(s) and/or services
7 Bench Marking
21. Which is not a step in Benchmarking Process?

(a) Identifying the need for benchmarking
(b) Clearly understanding existing decisions processes and identify best
processes
(c) Prepare a report and implement the steps necessary to close the
performation gap and evaluation
22. Benchmarking is a process of continuous improvement in search for ________.
(a) growth of the firm
(b) facing the competition
(c) competitive advantage
(d) product development.
ANSWER
1. (b) 2. (d) 3. (d) 4. (a) 5. (c) 6. (d) 7. (d) 8. (b) 9. (d) 10. (d) 11. (c) 12. (c) 13. (d) 14. (c) 15. (d) 16. (c) 17. (c) 18.
(c) 19. (d) 20. (d) 21. (d) 22. (c)
May - 2019
(New Syllabus)
Section - B
Question paper comprises 5 questions. Answer Question No. 6 which is compulsory and any 3 out of the remaining
4 questions.
6. Gautam and Siddhartha two brothers are the owners of a cloth manufacturing unit located in Faridabad. They are
doing well and have substantial surplus funds available within the business. They have different approaches
regarding corporate strategies to be followed to be more competitive and profitable in future.
Gautam is interested in acquiring another industrial unit located in Faridabad manufacturing stationery items such as
permanent markers, notebooks, pencils and pencil sharpeners, envelopes and other office supplies. On the other
hand, Siddhartha desires to start another unit to produce readymade garments.
Discuss the nature of corporate strategies being suggested by two brothers and risks involved in it. (5 marks)
7. (a) ‘Strategic Management is not a panacea for all the corporate ills, it has its own pitfalls which can’t counter all
hindrances and always achieve success’.
Do you agree with this statement? Discuss. (5 marks)
(b) What do you understand by ‘Competitive Landscape’? What are steps to understand the competitive landscape?
(5 marks) 8. (a) What are the characteristics which must be possess by objectives, to be meaningful to serve the
intended role? (5 marks) (b) Explain the prominent areas where the Human Resource Manager can play a strategic
role. (5 marks) 9. (a) Discuss the leadership roles played by the managers in pushing for good strategy execution. (5
marks) (b) What do you mean by differentiation strategy? How it is achieved? (5 marks)
7.644
10. (a) What is Benchmarking? Explain the various steps in Benchmarking process. (7 marks) (b) What is an Hour
glass structure? How it is beneficial for an organization?
Distinguish between Implementation.

(3 marks) OR
Strategy Formulation and Strategy (3 marks)
7.646 O Scanner CA Inter Gr.II Paper - 7B (New Syllabus)
November - 2019 CA Inter Gr. II Paper - 7 (New Syllabus) Strategic Management
(MCQs). Question paper comprises 5 questions. Answer Question No. 1 which is compulsory and any 3 out of the
remaining 4 questions.
PART - II
Section - B
6. An XYZ Company is facing continuous losses. There is decline in sales and product market share. The products
of the company became uncompetitive and there is persistent negative cash flow. The physical facilities are
deteriorating and employees have low morale. At the board meeting the board members decided that they should
continue the organization and adopt such measures that the company functions properly. The board has decided to
hire young executive Shayamli for improving the functions of the organization. What corporate strategy should
Shayamli adopt for this company and what steps to be taken to implement the corporate strategy adopted by
Shayamli? (5 marks)
7. (a) “Strategic Management concepts are useful for educational institutions.” Explain with reasons. (5 marks) (b)
“Industry and competitive analysis begins with an overview of the industry’s dominant economic features.” Explain
and also narrate the factors to be considered in profiling in industry’s economic features. (5 marks) 8. (a) Why an
organisation should have a mission? What considerations are to be kept in mind while writing a good mission
statement of a company? (5 marks) (b) Explain the Strategic Alliance. Describe the advantages of Strategic Alliance.
(5 marks) 9. (a) Discuss in what conditions rivalry among competitors tends to be cut-throat and profitability of the
industry goes down. (5 marks) (b) Discuss the various approaches for evaluating the worth of a business. (5 marks)
10. (a) Distinguish between transformational leadership style and transactional leadership style. (5 marks) (b)
Explain concept and nature of BPR. (5 marks) OR
(b) Write a short note on the concept of cost leadership strategy and how to achieve it? (5 marks)
Test Series
CA Inter Gr. II Paper -7 (New Syllabus) Enterprise Information Systems & Strategic Management
Section - A
Question No. 1 is compulsory.

Candidates are also required to any Four question from the remaining Five questions.
1. (a) An Enterprise Information System can be used to:

(a) increase business productivity
(b) reduce service cycle
(c) reduction in product development cycle and marketing life cycles (d) All of them. (1 mark)
(b) The ________ is the flow of information, customized by value-added tasks, that begins with the primary contact
with a potential customer and continues through deliverance of a finished product. (a) Business Process
(b) Business Information Process
(d) Automated Business Control (1 mark)
(c) An Internal Control System:

(a) Facilitate the effectiveness and efficiency of operations. (b) Assists compliance with applicable laws and
regulations. (c) Helps safeguarding the assets of the entity.
(d) All of the above. (1 mark)
(d) _________ is an enterprise wide information system designed to coordinate all the resources, information, and
activities needed to complete business processes such as order fulfillment or billing. (a) Enterprise Resource
Planning
7.648
(b) Integrated Resource Planning

(c) Integrated Information System
(d) Overall Resource Planning (1 mark)
(e) Fundamental objectives of an audit of controls ________ in an ERP Environment.

(a) can Change
(b) may be change
(c) do not change
(d) change automatically (1 mark)
(f) Basic Purpose of Information System Controls in an organisation is to ensure that the basic objectives are
achieved and undesired risk events is/are ___________.
(a) prevented
(b) detected
(c) corrected
(d) all of the above (1 mark)
(g) __________ means to create a virtual version of a device or resource, such as a server, storage device, network
or even an operating system where the framework divides the resource into one or more execution environments.
(a) Visualisation
(b) Virtualisation
(c) Vertilisation
(d) Verification (1 mark)
(h) Green Computing is also known as _________.

(a) Green Accounting
(b) Green Evaluation
(c) Green Financing
(d) Green IT (1 mark)
(i) Concept of virtuatisation lies in partitioning which divides a single physical server into ________ logical servers.
(a) Two
(b) Four
(c) Eight
(d) Multiple (1 mark)
(r) The dependence on technology in banking for most of the key banking services and processes has led to various
challenges except:
(a) Frequent changes or obsolescence of technology (b) Multiplicity and complexity of systems
(c) Facilitate ECS
(d) Dependence on vendors due to out sourcing of IT services
(1 mark) 2. (a) What is meant by ‘controls’ in BPA? What are their major objectives? (4 marks) (b) “Enterprise Risk
Management (ERM) does not create a risk-free environment; rather it enables management to operate more
effectively in environments filled with risks”. In view of this statement, explain the various benefits, which Board of
Directors and Management of an entity seek to achieve by implementing the ERM process within the entity. (6
marks) 3. (a) A book publisher of Information Technology offers discount to its customers on the basis of customer
type as detailed below:
Customer Type Discount

Book Seller 30%
Library 20%
Student 10%
Further if number of copies purchased is more than 20, then additional discount of 5% is allowed irrespective of
customer type. Number of books, unit price of each book and customer type are given as input.
Draw a flow chart to calculate the net amount after all discount and print customer type, number of copies and net
amount. (6 marks) (b) What is Server? Briefly explain any four types of servers based on
the nature of service they provide. (4 marks) 4. (a) Explain various Control Objectives of e-commerce or m-
commerce. (5 marks) (b) Discuss the constraints that need to be taken into consideration while developing a secured
Grid Architecture. (5 marks) 5. (a) Briefly describe the four stages of processing Credit Card transactions. (5 marks)
(b) In line with the suggestions of RBI, M/s. ABC Bank is planning to obtain ISO 27001 : 2013 certification for its
Information Security Management System. As an IS Auditor, you are required to prepare a sample list of Risks w.r.t.
Information Security for the Bank.
(5 marks)
Question No. 7 is compulsory.

Candidates are also required to answer any Four question from the remaining Five Questions.
Section - B
6. (a) Company’s strategy is __________action.

(a) Proactive
(b) Reactive
(c) Subjective
(d) Partly proactive and partly reactive (1 mark)
(b) “I believe we do a far better job of strategic management than any company I kwon” said by __________.
(a) Richard Cyert
(b) Christensen
(c) William F. Glueck
(d) Igor H. Ansoff (1 mark)
(c) Analytical sequence is form strategic appraisal of the external and internal situation:
(a) To evaluation of alternatives
(b) To Choice of strategy
(c) To evaluation of dynamics
(d) Both (a) and (b) (1 mark)
(d) Product life cycle a _________.

(a) U Shaped curve
(b) S Shaped curve
(c) Cyclic shaped curve
(d) Down shaped curve (1 mark)
(e) The ADL matrix is a portfolio analysis technique is based on________.

(a) Business life cycle
(b) Market life cycle
(c) Product life cycle
(d) Industry’s life cycle (1 mark)
(f) Which is the best reason for combination strategy?
(a) The organisation is composed of different business, each of which lies in a different industry requiring a different
response.
(b) The organisation is large and faces complex environment.
(c) Both of (a) and (b)
(d) None of above (1 mark) (g) Which is not a basic feature of corporate strategies?
(a) Stability
(b) Expansion
(c) Combination
(d) Procurement (1 mark)
(h) Porter’s Generic Strategies allow organisations to gain competitive advantage from different bases, except:
(a) Customers
(b) Cost Leadership
(c) Differentiation
(d) Focus. (1 mark)
(i) Differentiations strategy should be made on the basis of_________. (a) Product
(b) Pricing
(c) Organisation
(d) Any of the above. (1 mark)
(j) Objective of the Best -Cost Provider strategy is to keep cost and price those of other sellers of comparable
products. (a) Higher than
(b) Lower than
(c) Equal to
(d) None of the above (1 mark) 7. (a) Which of the following statement is ‘correct’ and which is ‘incorrect’? Give
reason, in brief, for your answer:
Human Resource Manager’s role is significant in building up core competency of the firm. (5 marks)
(b) Can a business succeed in the long run by focusing only on profit as its primary objective? What are other
objectives of a business? (5 marks) 8. (a) Examine the significance of KSFs (Key Success Factors) for competitive
success. (5 marks)
(b) What does the concept of ‘question marks’ in the context of BCG Growth-Share matrix signify? What strategic
options are open to a business firm which has some ‘question marks’ in the portfolio of its businesses? (5 marks) 9.
(a) From the following information relating to X Ltd. company, prepare BCG Matrix and also analyse it.
Product Revenues Percent Profit Percent Percentage Percentage (in `) Revenues (in `) Profit Market Share Industry
Growth Rate A 60 Crore 48 1200 Lakh 48 80 +15

B 40 Crore 32 500 Lakh 20 40 +10
C 20 Crore 16 750 Lakh 30 60 ☐20
D 05 Crore 04 50 Lakh 02 05 ☐10
Total 125 Crore 100 2500 Lakh 100
(5 marks) (b) XYZ Ltd. is a multi-product company, suffering from continuous losses since last few years and has
accumulated heavy losses which have eroded its net worth.
What strategic option is available to the management of this sick company? Advise with reasons. (5 marks) 10. (a)
“Human resources are now viewed as a source of competitive advantage.” Discuss the four activities when
performed properly can increase the competency of workforce. (5 marks) (b) Explain the marketing mix in the
context of modern marketing.
(5 marks)
☐
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Paper 7 - Enterprise Information Systems & Strategic Management

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Paper - 7 _______________ Enterprise Information Systems & Strategic Management

☐ Study Material Based Contents 7.3

Section B - Strategic Management

Enterprise Information Systems

Study Material Based Contents

C.N. Study Chapters P.N.

Paper 7 Enterprise Information Systems (100 marks) & Strategic Management

3. Information Systems and Its Components:

(ii) Mapping of Organization structure with segregation of duties in Information Systems.

5. Core Banking Systems:

Examination Trend Analysis

Category Page No.

2017 1. (a) {C} 1 Automated Business Processes 2

2018 1. (a) {C} 2 Financial and Accounting Systems 2

" 217 " 294

" 252 " 100

Systems and Its (b) 3 Information

Components 5. (a) 4 E-Commerce,

Table Showing Importance of Chapter on the Basis of Marks

Time First Indepth learning

Next After day 7 days

After After After Fix as 30 days 60 days 90 days per your

2.20 1.35 1.35

Principles that guide design of measures

Q.1.2 RTP Descriptive

Discuss Executive information systems (EIS) and its components. Answer:

Executive Information Systems (EIS):

Components of an EIS Components Hardware

Tools to be used Key Considerations

A single process, a department, the entire company.