BUSINESS

MANAGEMENT
Topic-wise Past Papers with Suggested
Solutions & Examiner Comments
[Winter 2015 – Summer 2008]
INDEX
STRATEGY & CSR................................................................................................................................. 2
HUMAN RESOURCES & CHANGE MANAGEMENT ...................................................................................... 48
MARKETING .................................................................................................................................... 116
INTERNATIONAL BUSINESS ................................................................................................................. 188

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Note:
document:
Comments for the following attempts could not be found:
 Summer 2010 Question
 Winter 2009
 Summer 2009 Examiner
 Winter 2008 Comments

Answer
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Gee Phone (GP) is a service provider and offers a wide range of electronic Winter 2015,
communication services to its customers. GP operates in a business environment Q. 1
which is dominated by four resourceful service providers who are continuously
striving to defend and increase their share in an expanding market. GP has created a
dedicated environment scanning unit to monitor the emerging events and develop
alternative strategic options to meet the challenges from its competitors.
Describe the different parameters which GP’s environment scanning unit should
monitor closely and the possible actions that GP may take on the basis of findings of
the monitoring exercise. (10)

In this question the candidates were asked to describe the different parameters that
are monitored by the environment scanning unit of a company involved in providing
communication services and the possible actions that may be taken on the basis of the
findings of the scanning unit, to meet the challenges from the competitors.
Performance of majority of the students was not satisfactory as they just explained in
detail the PESTEL factors without giving due consideration to the business
environment of the specific industry. Some students gave answers with respect to fast
moving consumer goods. Such students suggested changing the design and production
of the goods and spending more on the advertisement which obviously was incorrect.
Many replies unnecessarily revolved around Michael Porter’s five forces of
competition or focused on issues such as recruitment, training, employees’ welfare,
corporate social responsibility and adopting merger/acquisition strategies. Further,
many candidates identified the parameters but did not suggest any action.

The environment scanning unit of GP should closely monitor the different parameters
and on the basis of findings of the monitoring exercise take possible actions to meet the
challenges of its competitors as follows:
(i) Projection of demand for electronic communications services – The demand for
electronic communication services is dependent on the expansion of business
opportunities in the country, increase in population and level of economic
development. GP would have to expand its network capacity as it anticipates
increase in the demand for its services and also to explore new markets for its
services.
(ii) Technological changes – Changes in electronic communication technology and
variations in customers’ requirements would have considerable impact on GP’s
business prospects. GP would have to keep abreast of these changes and focus on
its R&D capabilities and introduce necessary modifications in its range of
products. This would involve substantial R&D expenditures and investments in
additional equipment.
(iii) Threat of entry of new competitors – GP is presently operating in a lucrative line
of business and earning attractive returns on investments. Therefore, the threat

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of new entrants who may pose competitive challenges to GP is always present. GP
should be prepared to meet the threat of new entrants and adopt appropriate
measures to maintain its competitive advantages by keeping close contact and
relationship with its customers and creating entry barriers of switching costs.
(iv) Competitive rivalry and prices of competing products – GP would have to create
significant competitive advantages in terms of quality of its products over its
competitors. It should therefore take cognizance of the strategies of its rivals who
would want to upgrade their services and may offer competitive prices to attract
GP’s customers. GP should adopt appropriate strategies to monitor these threats
and counter them effectively.

Highly responsible organisations adopt practices and values of integrity-based ethical Winter 2015,
approach in all aspects of their internal and external relationships. Identify the Q. 3(b)
common characteristics which are visible in the culture of such organisations. (03)

This part of the question required stating of common characteristics of highly

responsible organizations who adopt practices and values of integrity-based ethical
approach. A poor performance was witnessed as majority of the students were not
able to distinguish between the integrity-based and compliance-based ethical
behavior. Further, instead of mentioning the characteristics of the organizations,
candidates offered suggestions about adopting various CSR initiatives. Many
candidates talked about personal ethical values which were not relevant.

The most visible traits of integrity-based ethical behaviour which can be observed in
responsible organisations are:
(i) adhering to the principles of transparency and fair play in their internal and
external relationships
(ii) creating a reputation of reliability and predictability in dealing with all
stakeholders
(iii) creating an environment of absolute trust of superiors in their subordinates and
of subordinates in their superiors.

What is meant by short-termism? State why in your opinion certain companies are Winter 2015,
averse to policies of short-termism. (03) Q. 8(a)

In this question, the candidates were asked to define ‘short-termism’ and specify why
companies are averse to policies of short-termism and give two examples about
adverse impact of short termism. The overall response was satisfactory but somehow,
many students did not attempt this easy question which was a bit surprising.

Short-termism is an approach to business that places reliance on short-term

performance and results rather than pursuance of long-term objectives. Companies that
want to retain their competitive advantages and maximization of their long-term wealth

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on a sustainable basis are averse to the policies of short-termism because they believe
in the principle that it is not possible to achieve their objectives by maximizing incomes
during short-term periods.

Identify two practical business situations in which the policy of short-termism may Winter 2015,
have adverse impact on the prospects of a company. (02) Q. 8(b)

In this question, the candidates were asked to define ‘short-termism’ and specify why
companies are averse to policies of short-termism and give two examples about
adverse impact of short termism. The overall response was satisfactory but somehow,
many students did not attempt this easy question which was a bit surprising.

Examples:
A pharmaceutical company may not incur expensive R&D costs and be satisfied with its
existing line of products which are accepted by the medical doctors. Although such a
policy would result in high profits in the short-term, the long-term performance would
suffer as new and more effective medicines are introduced in the market by the
competitors.
A high profile biscuit manufacturing company which holds a substantial share of the
aggregate market may choose to defer advertising and promotion expenditures to
reduce its costs and report high profits. However, in the long-run, the company may
lose the efficacy of its brands and competitive advantage to other more aggressive
competitors.

The prime purpose of international strategic alliances is to co-operate to achieve Winter 2015,
mutually beneficial business objectives of the participants whilst retaining their Q. 10(a)
individual autonomy and flexibility. However, there are numerous instances where
the strategic alliances are not able to establish durable relationships and have
resulted in their breakdown. Explain briefly the reasons which result in failure of
strategic alliance arrangements. (06)

In this part of the question, the students were required to explain the reasons of
failure of international strategic alliances. The overall performance was average. A
large number of candidates were unable to understand the essence of the question
and mentioned totally irrelevant reasons like hidden agenda, lack of corporate
strategy, commitment of fraud, dispute on profit sharing, etc. which were not
appropriate in the given context. The students are advised to seek guidance from
ICAP’s suggested answer about broader strategic issues that were required to be
covered.

International strategic alliances often result in failure due to the following reasons:
(i) The participants in the strategic alliance do not have matching capabilities and
resources with the result that the weak partner is not able to make the expected
contribution on an ongoing basis as were envisaged which results in differences

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and consequent breakdown of the strategic alliance arrangement.
(ii) In the absence of full commitment and support of the top management of the
participants, the strategic alliances often face operational and working problems
of inadequate authority, responsibility and guidance from the higher levels which
results in poor performance and failure of the arrangement.
(iii) The strategic partners have major differences in terms of their products,
technologies, and markets with the result they are not able to dove-tail their
activities and provide any tangible advantages to each other and ultimately
consider that the relationship does not serve much purpose.
(iv) The cultures values, leadership styles, business experiences and size are too
diverse to establish sound working relationships among the participants which
results in the breakdown of the strategic alliance arrangements.

Strategy evaluation, as an essential element of the strategic management process, Summer

involves reviewing changes in the environment during the implementation phase of 2015, Q2
the strategy, comparing actual performance with the targets and taking timely
corrective measures to ensure that the operations remain on track. Explain briefly the
reasons why strategy evaluation has become a more challenging task in the present
rapidly changing global economic and political environment. (09)

In this question, the candidates were asked to explain briefly the reasons why strategy
evaluation has become a more challenging task in the present rapidly changing global
economic and political environment. It was a simple question and was well attempted
by majority of the candidates. However, a substantial number of candidates were
unable to comprehend the basic requirement of the question and stated advantages
of strategy evaluation. Some candidates mentioned organizational factors like
changes in manufacturing process, products and organizational structure which were
not relevant. A few candidates highlighted various competitive positioning strategies,
which were also not required.

Strategy evaluation has become a more challenging task in the rapidly changing global
economic and political business environment due to the following reasons:
(i) Domestic as well as global economic environments have become more volatile
which affect the business operations due to sharp variations in prices of raw materials,
disruptions in sources of supplies, economic and political upheavals in major markets
and changes in financial regulatory policies.
(ii) Rapidly changing technologies and development of new and more innovative
products which result in short term product life cycles and obsolescence of established
products.
(iii) Emergence of new and resourceful competitors who pursue aggressive promotional
marketing strategies to penetrate and capture the market held by existing suppliers.
(iv) Complex legislation such as those relating to environment, customer protection,

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transparency and privacy.
(v) Rapidly changing political scenarios in which countries realign their economic and
political alliances and strategies resulting in upsurge in uncertainties for business
entities.

Major business corporations regularly pursue and review their global strategies of Summer
acquisitions, mergers and sell-off/divesture. Explain briefly the different 2015, Q3
circumstances in which these business corporations may consider it advisable to
pursue strategies of sell-off/divesture of a division or a distinct portion of their overall
business operations. (06)

In this question, the candidates were required to explain briefly the circumstances in
which major business corporations pursue strategies of sell-off/diversification of a
division or a distinct portion of their overall business operations. The replies were
generally satisfactory. The most common error was that some students discussed
circumstances which result in forced closure of business and are not a planned
strategy; such as nationalization, operation of any law and failure to compete in the
market, etc.

Business corporations may pursue strategies of sell off/divesture in the following

circumstances:
(i) The corporation may decide to restructure its operations and concentrate its efforts
and resources in areas in which it has core competencies and competitive advantages.
(ii) The corporation may decide to sell-off/divest a division which is incurring losses.
(iii) The corporation may need liquid resources for its business and does not consider it
advisable to obtain additional financing through debt or equity sources. The selloff/
divesture may generate sufficient liquid resources for the requirements of its business.
(iv) The corporation may receive a lucrative offer from a prospective buyer for purchase
of a division which may lead to realisation of substantial profits.
(v) The corporation may consider a particular division as a ‘misfit’ in terms of the
division’s radically different management culture, values.

Paragon Chemicals Limited has recently experienced a sharp increase in the number Summer
of accidents in its factory. You have been appointed as a Safety Engineer to offer 2015, Q7(b)
recommendations for reducing the accident rates. State the different human,
environmental and mechanical/technical safety measures which you would
recommend to reduce the risks of accidents in each of these categories. (06)

In this part the candidates were required to state the different human, environmental
and mechanical/technical safety measures, to reduce the risks of accidents. The
question had mark allocation for each of these categories. Most of the candidates
acquired good marks as their replies were satisfactory and covered more or less the

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important measures in each category. However, a number of students were unable to
differentiate between the human, environmental and mechanical factors. They mixed
up the measures in different categories or ignored the categorization altogether and
wrote a general policy outline of a safety plan.

Management should adopt the following measures to reduce the risks of industrial
accidents by adopting the following measures:
Human Factors:
 Pursuing a culture in which adherence to safety standards is considered to be
absolutely necessary and any deviation is strictly condemned.
 Ensure wearing of proper safety/protective equipment.
 Proper training of employees for operating the equipment.
 Avoid excessive overtime.
 Regular medical check-ups, especially of employees worked in hazardous jobs.
Environmental Factors:
 Good housekeeping.
 Maintain appropriate levels of cooling/heating.
 Adequate lighting/ventiliation.
 Safe storage of materials avoiding congestion.
 Noise control.
Mechanical/Technical Factors:
 Establishment of proper standards operating procedures.
 Safe handling of hazardous materials.
 Proper tools and equipment.
 Adequate protective equipment or mechanical guards.
 Firefighting equipment which is readily accessible and properly serviced/ guarded.

What do you understand by the term Corporate Social Responsibility (CSR)? Explain Summer
briefly any four types of initiatives which a business organisation may take towards 2015, Q8
fulfilment of its CSR objectives. (06)

This question required the definition of the term ‘Corporate Social Responsibility’ (CSR)
and the types of initiatives that a business organization may take towards the
fulfillment of its CSR objectives. The performance was average. Most of the students
were unable to give correct and complete definition of Corporate Social Responsibility.
The basic point which most of the candidates missed was that it is a voluntary
business approach and such activities are undertaken to make a positive impact on
the society and the environment. The various CSR initiatives were mostly identified
correctly although some students also included steps such as healthcare for employees
and building a congenial work environment which were not correct.

Corporate social responsibility is a form of a voluntary business approach that business

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firms pursue to meet or exceed the expectations of its stakeholders by adopting social
and environmental initiatives. The goal of CSR is to make a positive impact through its
activities on the environment as well as its stakeholders for their sustainable benefit.
A business organisation may take the following initiatives towards meeting its corporate
social responsibilities by:
(i) providing funds, material contributions or other resources to help victims of floods,
earthquakes and other natural calamities
(ii) making contributions or donating a percentage of its revenues on product sales for a
specified period to support a specific charitable cause
(iii) sponsoring and supporting the creation and implementation of behavior change
campaigns intended to improve public health, traffic safety, etc. for the welfare of the
community
(iv) offering paid internships to students from educational institutions to help them
acquire hands-on exposure of a corporate business environment
(v) sponsoring health care facilities by providing special types of treatment/medical care
to employees and also to the poor and less privileged individuals
(vi) supporting social causes to improve community well-being by planting trees,
providing clean water to residents in adjoining areas, constructing of roads, etc.

Joint ventures and strategic alliances are popular modes of penetrating in foreign Winter 2014,
markets to achieve synergies and augment competitive advantages. Despite the Q4
potential benefits of these partnerships, the participants must be cognisant of the
risks of these arrangements and keep them within manageable proportions.
Identify and explain briefly the risks which should be considered while negotiating
agreements for joint ventures and strategic alliances. (08)

A considerable number of students were not able to comprehend correctly the risks
which should be considered by participants while entering into joint
ventures/collaboration agreements and keeping them within manageable limits. The
replies, therefore, lacked direction and revolved around issues of business failures,
insolvency, political and foreign currency risks. Other key risk factors in the context of
entering into joint ventures/strategic alliances arrangements namely, (i) lack of well-
defined strategy based on the purpose and need of the joint venture/strategic
alliance, (ii) inadequate understanding of the capabilities and resourcefulness of the
participants, (iii) lack of clarity on vital issues of extent and modes of management
and control, (iv) and differences in leadership and management styles, cultures and
values of the participants were largely ignored. Usually the off-the-target replies
revolved around issues such as disputes relating to sharing of profits and joint venture
partner becoming competitor.

The risks which should be considered by the participants entering into joint

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ventures/collaboration arrangements are:
(i) Lack of well defined strategy for the joint venture/strategic alliance arrangements –
The purpose and need of the joint venture/strategic alliance arrangement must be
clearly understood by the participants. In the absence of clearly defined benefits that
would be derived from the arrangements and their significance to the participants, the
joint venture/collaboration arrangement would not yield satisfactory results.
(ii) Inadequate knowledge of capabilities and resources of the participants – The
participants entering into the joint venture/strategic alliance must be aware of the
strengths and resources which each of them would bring to the joint venture/strategic
alliance arrangement and its synergy impact for achieving the desired outcome. Failure
to correctly ascertain the capabilities and resourcefulness of the participants would
create friction and result in unsatisfactory performance of the joint
venture/collaboration arrangement.
(iii) Lack of clarity on issues of management and control – In joint venture/strategic
alliance arrangements the management and control of the assets are shared between
the participants. In the absence of well-defined arrangements for sharing of
management and control and strong support by the top management the joint
venture/strategic alliance would not be able to achieve its objectives.
(iv) Inability to recognize differences in cultures between countries – Companies in
different countries have different leadership styles and in some cultures authoritarian
styles of leadership/management may be the norm and in other cultures participative
and consultative style of management is considered to be the appropriate style. Failure
to recognize differences in the cultures and make necessary adjustments in the working
styles may result in working incompatibility and failure of the joint ventures/strategic
alliance arrangement.

Quality is a strategic advantage which can be achieved by an enterprise through long- Winter 2014,
term commitment to excellence in all areas of operations. Q9(b)
Identify the factors you consider to be most critical for achieving quality as a
sustainable strategic advantage. (04)

The critical factors for achieving quality as a strategic advantage was well responded
by most of the students. A considerable number of answers addressed the pertinent
issues of compliance with the stated specifications, paying attention to customers
needs and preferences, striving to learn and improve on a continuous basis, giving
importance to customer feedback etc.

The critical factors for achieving quality as a sustainable strategic advantage are:
(i) Understanding the needs and preferences of the customers.
(ii) Paying attention to laid out specifications.
(iii) Striving to learn and improve continuously.

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(iv) Giving importance to customer feedback.
(v) Stress on quality assurance in all stage of the value chain.

Companies prepare formal mission statements which purport to define their unique Summer
characteristics and set them apart from other organisations. However, it is observed 2014, Q1(a)
that mission statements of a number of companies do not have much bearing and
relevance with their overall corporate culture and values, aspirations of their
employees and actual achievements. Identify and explain briefly four factors which
may be responsible for the variances in the objectives stated in the mission
statements of these companies and their culture, values and performance levels. (06)

The question required candidates to explain the factors because of which the
objectives expressed in the mission statements are different from the company’s
culture, values and aspirations. Though many candidates were able to produce
organized and to the point answers yet a significant number of candidates
misunderstood the question and explained why organizations fail to achieve
objectives of mission statement or why the objectives expressed in mission statements
differ from organization to organization.

The factors which may be responsible for the variances in the objectives stated in the
mission statements of companies and their culture, values and performance levels are
as follows:
(i) Mission statements of these organisations are primarily public relations exercises and
are not adopted with seriousness of purpose and commitment for decision making and
performance in the various tiers of the organisational hierarchy.
(ii) Mission statements prepared without the participation and involvement of the key
management team may not elicit their whole-hearted support towards the philosophy,
purpose and beliefs enunciated in the mission statement.
(iii) A culture of short-termism permeates among the individual departments without
any concern for achievement of the overall long-term objectives of the company as
enunciated in the mission statement.
(iv) Mission statements may be formulated under the influence of statements of other
successful organisations but lack the requisite culture of work ethics and values, human
and physical resources and other core strengths to achieve the objectives stated in the
mission statement.
(v) Mission statements may be based on generalised expressions and perceptions or
‘wish lists’ and popular concepts with exaggerated objectives prepared by individuals
who are neither responsible nor accountable for achievement of the objectives stated in
the mission statement.

Strategic Management is a long-term planning process undertaken to achieve the Summer

organisational goals during a period ranging between 3-5 years. Describe the 2014, Q2

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important stages involved in the Strategic Management process of major business
organisations. (09)

In this question, the candidates were required to explain the important stages of
strategic management process. It was an easy question straight out of the text-book.
Majority of the candidates identified the three stages i.e. strategy formulation,
implementation and evaluation correctly but their explanations were either incorrect
or incomplete or contained unnecessary details. Some candidates explained various
levels of strategy including corporate, business and operational strategy which were
not required. A few candidates wasted time and effort by unnecessarily giving
detailed explanation of objectives, SWOT analysis, strategy option generation and
selection, which were also irrelevant in the context of this question.

The important stages involved in the Strategic Management process are:

Strategy Formulation:
This includes developing the organisation’s vision and mission, identifying the
organisation’s external opportunities and threats, determining internal strengths and
weaknesses, establishing long-term objectives and selecting the particular strategies to
be pursued during a period of 3-5 years. Strategy formulation issues mainly include
allocation of resources among the different business segments and decisions whether
to expand existing business lines or to pursue diversification strategies.
Strategy Implementation:
Creating an effective organisational structure, directing marketing efforts, preparing
budgets, developing information systems and motivating the staff to create a culture to
achieve the objectives stated in the strategy formulation stage and aligning employee
performance with the target performance levels are activities involved in the strategy
implementation stage.
Strategy Evaluation:
This process involves obtaining information to ascertain whether or not the strategy is
working as envisaged originally. It includes reviewing external and internal factors on
the basis of which the strategy was originally formulated, measuring performance and
determining variances and taking timely corrective actions including modification of the
strategies due to changing external and internal factors to ensure continuity of the
organisation’s performance.

Various types of Benchmarking are used as points of reference or standards against Summer
which performances of organisations are measured. State the difference between 2014, Q4(b)
Internal Benchmarking and Functional Benchmarking. Give one example each of
Internal Benchmarking and Functional Benchmarking. (05)

Comments not available

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Internal Benchmarking is a method by which one operating unit or function is compared
with the other similar function within the same industry.
OR
is a method by which the best practices or functions are compared within the same
organisation.
Functional Benchmarking compares similar functions in one organisation with those of
other external entities who also perform that particular function regardless of the
industry in which these functions are performed.
Example of Internal Benchmarking: Gross profit percentage of one airline with gross
profit percentage of another airline.
Example of Functional Benchmarking: Compensation packages of the CEOs of a
pharmaceutical company and a company engaged in manufacturing of textile products.

Identify the business strategy/policy/definition which is most appropriate in each of Summer

the following situations: 2014, Q6
(i) A leading manufacturer of textile products is considering acquiring an existing fast-
food chain which has outlets throughout the country. It is pursuing a policy of
________.
(ii) Fortune Bank Limited envisages adding 50 new branches to its existing network of
450 branches in the country. The bank is launching a policy of ________.
(iii) Sunrise Juices Limited manufactures an assorted line of juices, jams and pickles.
The company is in the process of acquiring a fully developed 500 acre fruit and
vegetable farm to meet a significant proportion of its raw material requirements.
Sunrise Juices is pursuing a policy of ________.
(iv) Super Sports is engaged in the manufacture and export of hand-stitched footballs
and pays salaries to its employees according to the number of units stitched during
the course of a week. The employees are paid ________ salaries.
(v) The favourable impact which a well-entrenched brand has on customers
perceptions of quality of the product and would contribute to the future high earnings
potential of the company is known as ________.
(vi) A multinational company follows a policy of manufacturing products and adapting
its marketing strategies to the local environments in the different countries in which it
operates. This multinational company is pursuing a policy of ________.
(vii) Tests designed to evaluate the skills and competency levels of candidates to
perform the jobs actually required of these individuals are called ________.
(viii) The cumulative pool of education, knowledge, skills, expertise and training of the
individual workers in an organisation is known as ________.
(ix) A competitor who aggressively pursues a policy of undermining the status of the

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market leader is called a ________.
(x) A process by which a multinational company having a number of subsidiaries in
different countries may make adjustments of foreign currency transactions/balances
among the different subsidiaries is called ________. (10)

Strategy and CSR

HR and Change Management vii, viii, iv

Marketing i, ii, iii, ix, v

International Business vi, x,

This question contained 10 parts of one mark each in which the candidates were given
definitions of various business terms and were asked to correctly identify the
described term. Overall performance in the question was average as most of the
students secured around passing marks. Some students gave more than one choices. It
must be noted that in case there are more than one answers, all answers are
cancelled.

The appropriate business strategy/policy/definition are:

(i) diversification/conglomeration
(ii) market penetration / market expansion/ market development
(iii) backward integration
(iv) performance based
(v) brand equity
(vi) polycentrism
(vii) proficiency tests
(viii) human capital
(ix) market challenger
(x) multilateral netting

Zest Pharmaceutical Company Limited (ZPCL) had assigned some of the most talented Winter 2013,
individuals in the organisation to formulate the company’s strategic plan. The Q5
strategic plan was considered and approved by the top management, including the
board of directors. However, ZPCL’s actual performance was rather disappointing and
the company was not able to achieve the objectives envisaged in the strategic plan
due to shortcomings in the various stages of implementation of the strategic plan.
As an external consultant, identify and explain six critical factors in the strategy
implementation process which may have been responsible for the poor performance

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of ZPCL. (12)

The requirement of the question was to mention six critical factors in the strategy
implementation process, which may have been responsible for a company’s failure to
achieve its strategic objectives despite the fact that its strategic plan was designed by
competent personnel and approved at the highest level.
Overall performance in this question was average. Majority of the answers orbited
around inadequate employee participation and lack of resources whereas other major
factors were missed out.
Some students misunderstood the question and mentioned the shortcomings in the
strategy formulation process whereas many students wrote the general points for
developing successful strategic plans.

The important factors which may have been responsible for the poor performance in
ZPCL’s strategy implementation process in spite of formulation of a well-conceived
strategic plans are discussed below:
(i) Changes in business conditions
The actual business conditions may have unexpectedly deteriorated due to factors
beyond ZPCL’s control. These may have derailed the strategic plan and created
impediments in its implementation
(ii) Communication of objectives of the strategic plan
If the objectives of the strategic plan were not communicated fully to those responsible
for implementation of the strategic plan, the employees not being fully aware of the
goals envisaged in the strategic plan may have performed without complete knowledge
of the specific goals assigned to the various departments.
(iii) Non-supportive corporate culture
The management may not have been able to create a conducive organisational culture
which is necessary for promoting sound work ethics and thus obstacles may have been
created in the achievement of the objectives of the strategic plan.
(iv) Lack of alignment between the organisation structure and the strategic plan
The organisational structure comprising of production, R&D, marketing and human
resources departments may not have been able to work in close collaboration in pursuit
of the goals envisaged in the formulation of the strategic plan due to imbalances in the
allocation of powers and responsibilities.
(v) Improper allocation of resources
Resource allocation is a critical management activity which facilitates the
implementation of the strategic plan. The resource allocation process in ZPCL may not
have been in accordance with the strategic plan because of pressures from certain
groups and personal considerations.

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(vi) Inadequate monitoring of implementation of the strategic plan
ZPCL may not have established milestones and standards for measuring the
performance in the various stages of implementation of the strategic plan. This may
have prevented ZPCL from identifying any deviations and taking prompt corrective
actions to ensure that the implementation process was in accordance with the
objectives envisaged in the strategic plan.
(vii) Poor linkage between employee performance and rewards with the strategy
Decisions regarding salary structures, rewards and promotions must be aligned with the
aims of the strategic plan and be able to motivate the employees towards achievement
of the objectives of the strategic plan. The compensation and reward packages in ZPCL
may have been based on personal considerations and may have resulted in lack of
motivation among the employees which created impediments in the achievement of
the objectives of the strategic plan.
(viii) Inability to manage conflicts
Individuals and groups within the organisation may have had conflicts on certain issues.
Differences in expectations, perceptions, work schedules and departmental goals in
ZPCL may have resulted in conflicts which may have been impediments to the
achievement of the goals envisaged in the strategic plans.

Most companies prefer to achieve their objectives of expansion through Winter 2013,
organic/internal growth. Q8
Give any four reasons why a company may prefer to achieve expansion through
internal growth and not through acquisition of other entities. (06)

Majority of the students had a clear idea of the reasons why companies prefer to
pursue policies of growth by organic expansions and not through acquisitions.
However, some students did not read the question carefully and wrote benefits of
expansion only which was not required. Moreover, some students identified the
reasons correctly but could not describe them properly due to poor writing skills and
inappropriate vocabulary.

Companies prefer to pursue policies of growth by organic/internal expansion and not

through acquisition for the following reasons:
(i) Expansion of physical infrastructure and facilities can be planned more efficiently to
fulfill the organizational requirements. In case of acquisition, the company would have
to utilize the existing sites and facilities which may not be the most suitable option for
its requirements.
(ii) The cost of acquisition of an existing company may be much higher than the cost of
expansion of assets through internal growth.
(iii) The sizes of the entities presently available for acquisition may not be appropriate
for the particular need of the entity.

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(iv) In acquisitions, a company acquires all the functions of other companies resulting in
duplication of facilities or redundancies which ultimately results in inefficient
performance and lowering of employee morale.
(v) Human Resources can be utilized more effectively and with a greater degree of
cohesion of corporate culture by adopting strategies of organic growth. Also, in the case
of organic growth, better career development opportunities are provided to the
employees.

Briefly state what is meant by the following terms: Winter 2013,

Q11
(i) Human resource management
(ii) Offshore manufacturing
(iii) Behavioural interviews
(iv) Competency-based salary system
(v) Tax havens (10)

Strategy and CSR

HR and Change Management i, iii, iv

Marketing

International Business ii, v

This was a straightforward question which required meaning/definition of five

terms/concepts. The terms Human Resource Management and Competency Based
Salary System were generally well defined
In defining offshore manufacturing, majority of the students simply mentioned
manufacturing in other countries but only few could clearly state the motive and
methodology i.e. awarding contract to produce where labour and/or raw materials
are cheap and then importing them in the country where the firm which awarded the
contract is located. Many candidates confused it with offshore oil drilling and some of
them incorrectly stated that offshore manufacturing is carried out by establishing
plants outside the country.
Most of the students did not have any idea of the concept of behavioral interviews.
Many students made wild guesses, for example some of them mentioned that in
behavioral interviews, gestures and posture of the interviewees are observed.
Tax havens were better described but some students went to the extreme and stated
that in tax havens there are no taxes.

(i) Human resource management involves planning, organising, directing and

controlling the human resources by placing the right persons in the right places and

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providing them with training in order that they make effective contribution towards
achievement of the organisation’s corporate objectives.
(ii) Offshore manufacturing means an arrangement by which a firm in one country
enters into a contract with a foreign-based firm in another country to manufacture its
products or components on behalf of the firm which has awarded the contract.
(iii) Behavioural interviews are conducted to ascertain how the candidate responded to
various real-life job-related situations in the past.
(iv) Competency-based salary system means the employees are paid for the range of
skills and knowledge they provide to the employer, rather than for the positions or jobs
that the employees hold.
(v) Tax havens are countries that have highly generous tax laws to encourage foreign
citizens to conduct their operations in such countries.

Various studies show that in the present business environment, strategies of vertical Summer
expansion are pursued less frequently than the other strategies of business growth. 2013, Q3(a)
Explain briefly the reasons why firms do not always consider it advantageous to
pursue strategies of vertical expansion vis-á-vis the other strategies of business
growth.

The requirement was to give reasons as to why firms do not always consider it
advantageous to pursue strategies of Vertical Integration vis-à-vis the other strategies
of business growth. Majority of the students explained different growth strategies in
detail without realizing that the requirement as mentioned above, was quite different.

In the present environment, strategies of vertical expansion are not always considered
to be as advantageous as other strategies of business growth due to the following
reasons:
(i) Vertical expansion requires huge capital investments, diverse management
competencies and technical skills which are often beyond the capabilities of individual
firms.
(ii) Firms seek to achieve advantages of economies of scale which can be obtained only
if the volumes in their main lines of business are sufficiently large and enable specialist
firms to provide the products/render services at costs which are lower than those which
can be achieved through pursuance of policies of vertical expansion.
(iii) Vertical expansion requires long term commitments in different types of business
activities from which it may be difficult to withdraw in times of changes in business
environment. Therefore, firms prefer to enter into business relationships of long-term
contracts, alliances, franchising, licensing, etc with external parties rather than pursue
policies of vertical expansion.
(iv) Advantages of business specialisation outweigh the disadvantages on account of
lack of direct control of sources of raw materials or distribution channels. In present

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business situations, large and reputable manufacturers and service providers are
competing vigorously for securing business. Consequently, these firms prefer to
concentrate in their core business activities and procure supplies/services from
specialists in their chosen fields.

Mission of an organisation, articulated and clearly defined in its mission statement, is Summer
a combination of the inspiration and description of the road ahead for the 2013, Q3(b)
organisation.
State the essential elements which a progressive organisation would want to capture
and propagate amongst its employees in a well-crafted mission statement. (05)

Here again, the requirement was to state the essential elements of a mission
statement which a progressive organization would like to propagate amongst its
employees. Instead, majority of the students stressed upon the general characteristics
of a mission statement such as brevity/preciseness/clarity etc. Many students gave
points which were quite meaningless, in the given situation. For example the following
types of sentences appeared in many copies:
• Educate and train properly.
• Mission statement should keep in view the growth requirements.
• Mission statement should be compelling enough to motivate the employees.

The essential elements which an organisation would want to capture and propagate
amongst its employees in a well-crafted mission statement are as follows:
(i) purpose of existence of the organization
(ii) the manner in which the organisation defines success
(iii) strategy that should be pursued to achieve success
(iv) shared values and behaviour that the organisation expects from all its employees
(v) pursuance of the mission as a living statement that can be translated into goals and
objectives at different levels in the organisation.

Identify the business strategy/policy/definition which is most relevant in each of the Summer
following situations: 2013, Q5
(i) The process through which representatives of management and workers union
negotiate a labour agreement is known as __________
(ii) Promotion of a firm’s brand status and acceptability by increasing customer
perception of its superiority over other brands of similar products is __________
(iii) A form of promotion that links a brand of a consumer product to cultural, social,
sports or other activities of high public interest is known as __________
(iv) A company’s obligation to be sensitive to the needs of all its stakeholders and

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create an overall positive impact on the society is known as __________
(v) The approach in which a multinational company assigns the best employees to key
positions in its worldwide operations regardless of their nationalities is __________
(vi) The activities of two or more businesses when brought together create value that
is greater than the value which they can achieve individually is due to the effect of
__________
(vii) The protection granted by law to intangible assets such as patents, copyrights,
trade marks and authors of books is called __________
(viii) Purchase of all or part of a business from its owners by its managers is called
__________
(ix) Potential changes in political conditions in a country that may cause a company’s
operating performance or financial position to deteriorate are called __________
(x) Implementation of measures to reduce electricity, petrol/diesel and gas
consumption by efficient control and management and also to protect the natural
environment is called __________ (10)

Strategy and CSR vii, ix, x, vi, viii, v

HR and Change Management i

Marketing ii, iii

International Business v

This was an objective type question where 10 different situations were given and in
each case, the students were required to mention the term which could best describe
the given situation. An average performance was witnessed which was
understandable because each situation had a specific answer and only those students
who had good understanding of the topic could answer them. The advice here is that
specific terminology or business jargon should be used in such questions. Other terms
are not acceptable. For example in sub part (i), many students stated Labor Union
Agreement or Labor Management Negotiation whereas the correct answer was
Collective Bargaining.

(i) collective bargaining

(ii) brand positioning
(iii) event related marketing/promotion/sponsorship
(iv) corporate social responsibility
(v) geocentric staffing/orientation/geocentricism
(vi) synergy

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(vii) intellectual protection rights
(viii) management buy-out
(ix) political risks
(x) energy conservation

Identify the various steps involved in the Delphi Technique of decision making. (05) Summer
2013, Q9(b)

The replies to the question on Delphi Technique of decision making were, indeed,
disappointing. A large proportion of the students mentioned the general steps
involved in the decision making process. Distinguishing characteristics of the Delphi
Technique, i.e. the group members are required to give anonymous responses to a
carefully designed questionnaire, the replies are compiled and re-circulated to the
group members and the process is repeated until a consensus solution is reached to
the problem, were wholly missing in most of the replies.

The various steps involved in the Delphi Technique of decision making are:
(i) Problem is identified.
(ii) The group members (physically separated and unknown to each other) are asked to
offer solutions to the problem by providing anonymous responses to a carefully
designed questionnaire.
(iii) The responses given by all the group members to the questionnaire are compiled
and re-circulated to all the group members.
(iv) The group members are individually asked to offer a new solution to the problem
after having studied the individual responses given by all other group members.
(v) The steps at (iii) and (iv) above are repeated until a consensus solution of the
problem is reached by the group.

Identify the strategies/policies/objectives which are being pursued in each of the Winter 2012,
following cases: Q4
(i) Poshak Fashions (PF) are designers and manufacturers of superfine cotton
garments and have their two outlets in Karachi and Lahore. PF produces only limited
quantities of their exclusive designs of garments for the narrow niche market of the
most fashion-conscious customers. PF introduces new designs of garments for the
coming season and the unsold inventory at the end of the previous season is sold at
lower prices to other retailers in the country after removing PF’s prestigious labels. PF
is pursuing a __________ market strategy.
(ii) Super Beverages believes that the world is one big market for its products and its
various subsidiaries and divisions pursue a uniform marketing strategy for sale of its
products in different countries. Super Beverages has adopted a __________ strategy

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for marketing its products in different countries.
(iii) Sarmad Group is a pioneer in the textile industry in the country. The second
generation entrepreneurs of this Group have ambitious plans to launch new ventures
in telecommunications, electronic media and real estate development. The Group is
now seeking to follow __________ strategy.
(iv) To press for their demands, employees of Citizens Bank Limited have decided to
work strictly according to the terms of their contract of employment and refuse to
perform any extra tasks, resulting in slow down of banking services and causing
inconvenience to customers. The employees of Citizens Bank Limited are pursuing
__________ policy.
(v) Good Meats has recently established several retail outlets to sell selected cuts of
choice meats and establish its own brand name in a high growth market before new
competitors enter this market and set up their business on similar lines. Good Meats
wants to seize the __________ advantage of this market.
(vi) Neptune Chemicals, a manufacturer of industrial chemicals, has established
independent units who would be responsible for development of their own marketing
strategies within the company’s overall market and customer focus to be able to serve
the needs of the various categories of customers more efficiently. The independent
units are __________ of Neptune Chemicals. (06)

Strategy and CSR

HR and Change Management iv,

Marketing iii, v, vi, i

International Business ii,

In this question, six brief situations were given and the students were required to
identify the types of strategies, policies or objectives which the organization was
pursuing, in each of the given situations.
An average response was seen as most students were able to give 3 or 4 correct
answers. In response to part (ii) the appropriate answer was Global; but Geocentric
was also acceptable. However, many students wrote ethnocentric. Majority of the
students had no idea of the concepts of ‘Work to rule’ and ‘First mover advantage’.
Many students probably tried to use “write what you know” approach and just
identified whether the given situation reflected a policy, a strategy or an objective.
Most students were not familiar with the technical business terminology or jargons.
Specialized terms capture the complexity and specificity of business concepts. No other
words can encapsulate their meaning and if they are replaced by normal
“transliterated” words, then that meaning is lost. Many students gave explanatory
footnotes in support of their answers which were not required and resulted in wastage
of precious time. There were some students who generated multiple answers; such

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answers are not acceptable.

(i) Market skimming

(ii) Global
(iii) Conglomerate or Diversification
(iv) Work-to-rule
(v) First mover advantage
(vi) Strategic Business Units

The trend of outsourcing of certain activities by business firms to external entities has Winter 2012,
gained considerable momentum in the past few years. Identify four advantages Q5(b)
which, in your opinion, these firms expect to derive from outsourcing of selected
business activities to external entities. ( 04)

Outsourcing is the buzz word in business these days and hence very relevant. Its
advantages were asked and most students seemed to have a good idea and answered
fairly well.

Business firms expect to derive the following advantages by outsourcing of selected

business activities to external entities:
(i) Reduce requirements of capital investment and human resources as the facilities and
services are provided by the external entities to whom these activities have been
outsourced.
(ii) Place greater focus on core value-added activities of the business as the ancillary
activities are outsourced to external suppliers.
(iii) Achieve cost economies as the suppliers of the outsourced activities are able to
obtain the advantages of economies of scale.
(iv) Derive benefits of the particular expertise and innovations of the external entities
who provide these services.

Eagle Limited (EL) is a large conglomerate. The company is planning to establish a joint Winter 2012,
venture in Centralia, a country which has several untapped sectors. EL foresees Q10(a)
attractive opportunities for development of its business in Centralia. EL is therefore,
keen to pursue corporate and business policies which would be perceived favourably,
not only by the joint venture partner but also by the government and other
stakeholders. Adoption of these policies would facilitate EL to expand its business in
future.
Briefly describe four policies which, in your opinion, EL may pursue for achieving its
long term business objectives. (06)

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This question enquired about the policies which a large conglomerate should pursue
while entering the market in a country for the first time, by way of a joint venture and
which would be perceived favorably by the joint venture partner, the government and
other stakeholders in that country. The students didn’t seem to appreciate the essence
of this question. They struggled with explaining marketing and production policies
rather than getting to the gist of this question and identifying policies which would be
looked upon favourably in that country or in other words which would enable the
company to gain popularity. Some of them wrote that the company should pursue a
policy of CSR but did not explain any further.

Pursuance of the following policies by Eagle Limited would be perceived favourably by

the joint venture partner and other stakeholders and also contribute towards the
industrial development objectives of Centralia:
(i) Eagle Limited should act as a good corporate citizen and respect the culture, customs,
traditions and values of the host country.
(ii) Eagle Limited should offer its best manufacturing technologies and practices to the
joint venture in the host country.
(iii) Eagle Limited should allow the local partners to set their own rules and regulations
and adjust the manufacturing processes to match the skills of the local workers.
(iv) Eagle Limited should keep the expatriate employees to the minimum strength and
provide training to the local managers to enable them to acquire skills and assume
responsibilities at all levels.
(v) The joint venture should be encouraged to develop local R&D which would help to
reduce dependence on imported inputs.

Explain the term Business Ethics and discuss its increasing significance in the present Summer
business environment. (05 marks) 2012, Q7(b)

Quite a number of students confused the concept of Business Ethics with Corporate
Social Responsibility. Corporate Social Responsibility is not the same as Business Ethics
although there are some common grounds between the two, such as the need to
combat corruption. Corporate Social Responsibility refers to the responsibilities of an
organization on social and environmental issues, whereas Business Ethics relates to
matters such as honesty, trust and integrity.

Business Ethics are the moral principles of conduct applied in the commercial world.
Business ethics provide guidelines to individuals and organizations to determine
whether a particular action is right or wrong. Good business ethics are essential for
good strategic management as issues of ethics permeate in all areas of strategy
formulation, implementation and evaluation.
An ethical approach has become increasingly necessary both for corporate success and
a positive corporate image. The rapid expansion of information technology has created

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awareness and enhanced the importance of ethical behaviour in business all over the
world. Pressures from employees, consumers and other stakeholders for adherence to
ethical and responsible business practices have led many organizations to make public
commitment of their ethical business standards. An increasing number of organizations
now adopt concepts of personal and corporate accountability in all aspects of their
business conduct.Misleading advertisements, poor employee health and safety
procedures, causing harm to the natural environment, poor product or service safety
standards, insider trading and discrimination in dealing with employees are considered
to be violation of acceptable ethical behavior.

In the past two decades a number of Mergers and Acquisitions have been witnessed Summer
between some of the most prestigious and financially strong international 2012, Q8(a)
corporations in a wide range of businesses such as pharmaceutical and automobile
manufacturing companies, financial institutions, supermarkets, etc.
Narrate the principal objectives behind the mergers and acquisitions of companies
which are considered to be financially sound and well-established in their own
spheres of business. (05 marks)

The principal objectives behind merger and acquisition were required to be narrated.
Being students of accountancy, most candidates had a clear idea of the concept of
mergers and acquisition. Most of them were able to narrate the objectives such as
synergies, profit maximization, combating competition, cost saving, taking advantage
of the strengths of the other company, achieving economies of scale and
diversification of risks, etc. However, many students wasted time and left a bad
impression by quoting whatever benefit they could think of.

The principal objectives of mergers and acquisitions of financially strong and well-
established international corporations are as follows:
(i) To gain access to strategic proprietary assets/technical know-how and exploit these
strengths with greater effectiveness.
(ii) To gain market power and dominance, including access to strong distribution
channels in expanding and lucrative markets.
(iii) To achieve synergies in domestic and global operations across different industries
which offer complementary advantages.
(iv) To expand the size of operations to obtain advantages of economies of scale and
achieve competitive advantages in negotiations with suppliers, customers and financial
institutions from a position of greater strength.
(v) To diversify operations and spread risks over a more wide area.

Differentiate between the characteristics of Strategic Decisions and Tactical Decisions. Summer
(04 marks) 2012, Q8(b)

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This part required the candidates to differentiate between strategic and tactical
decisions. Most students had a clear idea of the concept of ‘Strategic Decisions’ which
determine the course and define the contours of the company’s main objectives. These
decisions are taken by the top management and have far reaching financial
repercussions. However, majority of the students confused the concept of Tactical
decisions with Operational decisions. Tactical or Business strategy is concerned with
achieving overall success in particular business markets and allocation of resources
whereas operational or functional strategy is concerned with the contribution of the
particular function or operation towards achievement of the business and corporate
strategies.

The distinguishing characteristics of Strategic Decisions and Tactical Decisions are:

(i) Strategic Decisions determine the course and define the contours of the company’s
main objectives, whereas the Tactical Decisions are concerned with the achievement of
targets within the framework of the main strategic objectives of the company.
(ii) Strategic Decisions are made at the board of directors/senior management level,
whereas Tactical Decisions are taken by middle-level managers.
(iii) Strategic Decisions have long-term implications, whereas Tactical Decisions have
consequences which are of medium-term nature.
(iv) Strategic Decisions have far-reaching financial repercussions, whereas Tactical
Decisions have relatively less financial bearing on the company’s results.

Business firms, at times, place excessive emphasis on Cost Reduction and Austerity Winter 2011,
policies to achieve their profit objectives. These policies may be in conflict with the Q3(a)
interests of customers, employees and the society as a whole. Identify any three
adverse effects of introduction of stringent Cost Reduction and Austerity policies on
each of the above stakeholders. (4.5 marks)

The performance in this easy question was good as most of the candidates were able
to identify the harmful effects of an Austerity Policy on various stakeholders i.e.
employees and society.

Stringent Cost Reduction and Austerity policies may be in conflict with the interests of
the stakeholders in the following situations:
(i) Customers
 the products may be of an inferior quality and perform unsatisfactorily
 the products may have a very limited useful life
 sub-standard quality of raw material inputs and packaging may be harmful for the
health of the customers
(ii) Employees
 working conditions may not be conducive for the health of the workers

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 poor maintenance of machinery and equipment may cause injuries and accidents
 inadequate compensation may result in financial difficulties for the workers
(iii) Society as a whole
 cause pollution and create environmental hazard
 lack of interest in charities, sports and community activities
 impose social cost on the society by making improper use of public assets

What is meant by the term Corporate Social Responsibility? (3.5 marks) Winter 2011,
Q3(b)

This part required definition of Corporate Social Responsibility. CSR is a well-known

concept in business management, but many candidates performed poorly. Many
candidates included all sort of responsibilities in CSR. For example, many students also
stated the responsibility to pay the salaries and taxes on time as a CSR.

Corporate Social Responsibility is a form of voluntary business approach that a business

firm pursues to meet or exceed the expectations of its stakeholders by adopting social,
ethical and environmental measures. The goal of CSR is to make a positive impact
through its activities on the environment as well as all its stakeholders.

Explain what is meant by Scenario Planning. (03 marks) Winter 2011,

Q5(a)

Both parts of this question were challenging as these topics had not been tested in the
past many examinations. The answers to this question strengthened the viewpoint
that the vast majority of students resort to selective studies.
(a) Only few students produced appropriate answers and lack of clarity in the
understanding of this topic was visible.

Scenario Planning is a technique which involves the process of identifying alternative

scenarios in the future, and on the basis of different assumptions that the strategists
may anticipate in the future, formulate corporate strategy. The process of scenario
planning on the basis of different assumptions enables the company to realign its
corporate strategy quickly in the changing business conditions. The purpose of scenario
planning is to avoid formulating corporate strategy on the basis of a single future
outcome which may not materialise. Rather, the objective is to re-evaluate the
relevance of the strategic objectives which would be valid for different
outcomes/events as they unfold from time to time.

Unique Textile Mills are leaders in the designing and manufacturing of cotton fabrics Summer
for ladies fashion clothing. Identify four Strategic Objectives which in your opinion 2011, Q2(b)
may be included in the strategic planning process of Unique Textile Mills. (03 marks)

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Four strategic objectives of a leading cotton fabric manufacturer were required. Most
candidates were not aware of the difference between strategies, tactics and goals.
Majority of the students referred to generic objectives irrespective of whether they
were strategic, operational or tactical. Students didn’t realize that leading
firms/companies capitalize on their established reputation and premium quality of
their products/services. Hence, objectives like cost cutting, price reduction, discounts
etc. were not of much relevance.

Unique Textile Mills should include the following objectives in its strategic planning
process:
(i) Maintain and consolidate its leadership status as designers and manufacturers of
high fashion fabrics.
(ii) Innovate; Bring new designs in the market well in advance of the competitors.
(iii) Minimize the time involved in the stages of Designing, Manufacturing and Marketing
of the products.
(iv) Play a pioneering role in introducing the latest technologies and textile machinery in
the country.
(v) New distribution channels: Create a network of company-owned retail outlets for
distribution of exclusive high-value fabrics.
(vi) Reduce the cost of manufacturing and venture into vertical integration

Highly Creative Strategic Planners in progressive organizations have innovative Summer

mindsets and do not merely project past strategies in the future but are continuously 2011, Q7
engaged in “out of the box” thinking to explore new opportunities beyond the existing
strategy framework.
Identify the distinguishing characteristics of organizations which pursue innovative
corporate strategies.

In this question, distinguishing characteristics of organizations which pursue

innovative corporate strategies were required to be identified. Innovative and forward
looking companies are continuously coming up with new products, better services and
technological advancements. They focus their strategies on the future and are able to
anticipate the threats and opportunities to better handle market requirements,
combat competition and avoid being obsolete. Some of the students were well
prepared and produced really good answers. However, the majority seemed to rely on
their general knowledge and could produce only two or three valid points. Most of
them emphasized on R & D and new products. Some students offered long winded
explanations, although the requirement was only to identify the characteristics of
organizations which pursue innovative corporate strategies.

The distinguishing characteristics of organizations which pursue innovative corporate

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strategies are:
(a) they compete in the market on the basis of their differentiated superior
products/services as compared to the offerings of other companies;
(b) they are continuously searching for new growth platforms for their business and are
several steps ahead of their competitors;
(c) they are able to anticipate threats from competitors and seek to respond with new
or better products/services to sustain their competitive advantage;
(d) they are always making efforts to develop new and innovative products to provide
greater customer value;
(e) they are forward looking visionaries and are continuously searching for means to
change their strategic direction;
(f) they value management cohesiveness at all levels and both the strategy planners and
those involved in implementation of the strategy work in close collaboration.

Briefly discuss the following: Summer

2011, Q11
(a) Business Ethics (2.5 marks)
(b) Environmental Scanning (2.5 marks)
(c) Tactical Planning (2.5 marks)
(d) Backward Integration Strategy (2.5 marks)

Short notes were to be written on four different topics. The comments are as under:
Business Ethics: Some students confused this concept with that of corporate social
responsibility. Majority of the candidates emphasized on rules and regulations. A
reference to values and culture would have been more appropriate.
Environmental Scanning: Most of the students were not clear about this concept and
described it as an exercise to control environmental pollution and keeping the world
clean!
Tactical Planning: Many candidates defined it as strategic level decision making and
planning and implementation at management level, although it is quite the contrary.
A number of students incorrectly described it as a medium term plan.
Backward Integration Strategy: Most of the students gave appropriate definition of
the concept with relevant examples. However, very few students explained the
situations in which this strategy is pursued.

(a) Business Ethics is a code of moral principles that management and employees follow
with respect to what is right and what is wrong from the standpoint of the
organization’s dealings and interactions with its stakeholders. Besides generally
acceptable values and norms, the organizational culture and internal policies of
individual organizations play a very important role in determining the ethical policies

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that are followed in the company. The guidelines for proper ethical conduct are
embodied in the company’s Formal Code of Ethics.
(b) Environmental Scanning is the process of collecting information about the external
marketing environment in order to identify and interpret potential trends. It includes
analysis of collected information to anticipate whether the trends represent
opportunities or threats. Environmental scanning includes assessment of political
developments, economic trends and social and cultural influences which would affect
the organization.
(c) Tactical Planning refers to the day-to-day plans regarding implementation of the
different work activities required to achieve the objectives of the strategic plans.
Tactical Plans pertain to the current and short-term activities performed by low-level
managers which are nevertheless of vital importance for implementation and
achievement of the objectives of the overall strategic plans.
(d) Backward Integration Strategy seeks the ownership or increased control of the
firm’s sources of important raw materials and other critical inputs and supplies.
Backward integration strategies are pursued in situations where the suppliers are
unable to adhere to the buyers specifications of quality, or are unreliable in meeting
their commitments or are few in number and dictate unreasonable terms or charge
exorbitantly high prices to take advantage of the buyers who are heavily dependent on
the inputs from these suppliers.

Strategy and CSR c, b, a

HR and Change Management

Marketing D

International Business

List and explain briefly four factors which in your opinion create Exit Barriers and Winter 2010,
prevent existing participants from quitting a loss-incurring industry. (08 marks) Q2

In this question ‘exit barriers’ that prevent going concerns from quitting the business
were to be explained. Answers were mostly good however, at this level it is expected
that terms like severance payments, redundancy costs and ancillary costs associated
with closure of business etc. are understood and mentioned. Some candidates were
unable to understand the question and in haste mentioned reasons that would lead a
corporation to wind up and leave.

The factors which create Exit Barriers and prevent existing participants from quitting a
loss-incurring industry are:
Substantial Investment in Highly Specialized Fixed Assets:
This is particularly relevant in capital-intensive industries which require very large
investments in specific-purpose building and machinery. These assets do not have

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alternative uses and their salvation value is usually low. The substantial initial capital
costs and low salvation value of the assets would result in heavy losses and create exit
barriers.
High Redundancy Costs:
Organizations having a large workforce with high salaries or contracts that stipulate high
redundancy payments have to incur substantial costs by way of severance payments to
its employees to exit from the industry. These payments require heavy cash outflows
and act as exit barriers.
Ancillary Costs of Closure of Business:
The organization may have entered into long-term contractual agreements with
important suppliers or buyers and tenancy agreements carrying substantial penalties in
the event of premature termination of these agreements. The high costs of premature
termination of agreements are exit barriers as the closure of business would cause huge
losses.
High Fixed Operating Costs :
An organization which has very high fixed operating costs and is faced with
unfavourable business conditions may continue operations if it is able to recover its
variable costs fully and a portion of its fixed costs. This is particularly relevant if the
unfavourable conditions are considered to be of a temporary nature and the firm is
optimistic about the prospects of an upturn and recovery from its current difficulties.
This type of composition of preponderance of fixed costs acts as an exit barrier.

Identify the business strategy/policy/tool which an organisation is pursuing in each of Winter 2010,
the following situations: Q3
(a) In 1990, Sony launched the first High Definition (HD) TV in the market at a price of
$43,000 per set. These TV sets were purchased by customers who could afford to pay
the high price for the new technology. After reaping the maximum profits and
recovery of the sunk R&D costs, the price was gradually reduced in 1993 to $ 6,000 for
a 28” TV set to attract new customers. This strategy is called __________.
(b) The management tool that enables a firm to classify its range of products
according to their current market share and expected growth is called __________.
(c) The assessment tool used to compare and identify the variance between a firm's
current market coverage and potential market opportunities for its products is called
__________.
(d) A company which has capabilities to manufacture a complete line of superior
quality ball bearings for a wide range of original equipment manufacturers and
industrial users is pursuing a strategy of __________.
(e) If a company engaged in the textile manufacturing business acquires majority
holdings in a sugar mill, a motor car manufacturing plant and a private airline; it is
pursuing a __________ strategy.

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(f) The chief executive officer who makes alternative plans to deal with emergencies
or unexpected situations prior to their occurrence is pursuing a __________ strategy.
(g) A firm uses different brands of essentially the same product to target different
market segments is pursuing a __________strategy.
(h) A bank which strives to develop better understanding of the customer’s needs and
satisfy them to create customer loyalty is adopting a policy of __________.
(i) A method of demand forecasting in which a firm markets its new products in a
limited geographical area to ascertain consumer response and from this sample
develops projections of the size of market over a larger area is called __________.
(09 mark)

Strategy and CSR f,

HR and Change Management

Marketing h, i, b, c, d, e, g, a

International Business

Students’ knowledge of various business strategies was tested through this question.
This style of testing the knowledge should be encouraged. Few students scored well,
others just did guess work. This shows that concepts are just skimmed through and
students do not make any effort to practically understand the strategies.

The business strategy/policy in each of these situations is:

(a) Market Skimming Pricing Strategy
(b) BCG Matrix
(c) Gap Analysis
(d) Product Specialization
(e) Conglomerate Diversification or Conglomerate Expansion Strategy
(f) Contingency Planning Strategy
(g) Multi-brand Strategy
(h) Relationship Marketing
(i) Test Marketing

Management has to expend considerable efforts in devising business strategies to Winter 2010,
achieve corporate objectives and goals effectively. Q9(a)
(a) Why do companies accord importance to the pursuance of a formal Strategic
Planning Process? (06 marks)

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Students were lost whilst attempting this question. Some had no grip on the concept
of strategic planning. Those who had a fair idea could not express themselves due to
lack of reading. Mostly, vague and general answers were given.

Companies accord importance to the pursuance of a formal Strategic Planning Process

to achieve the following objectives:
(i) A formal Strategic Planning Process helps to indentify the opportunities and risks
involved in the company’s business. The company can make well-considered strategies
and adopt measures to seize the opportunities accruing from its internal and external
strengths and also reduce the various business risks.
(ii) A formal Strategic Planning Process enables the company’s top management to be
involved in proactive thinking of the business objectives and taking coordinated actions
relating to deployment of resources to achieve its strategic goals.
(iii) A formal Strategic Planning Process ensures the participation of management and
the staff who are seized with the task of achievement of the business objectives. The
staff at all levels develop understanding of the productivity-reward relationship in the
strategic plans which increases their motivation and reduces the adverse impact of
resistance to change.
(iv) A formal Strategic Planning Process is essential to create alignment of the
company’s short-term, medium-term and long-term targets for achievement of the
company’s objectives.
(v) A formal Strategic Planning Process is essential for optimum coordination of the
corporate, business and functional strategies for achievement of the Company’s
objectives.

(b) Explain the different steps which the management has to undertake in the Winter 2010,
formulation and implementation of a well-considered business strategy. (09 marks) Q9(b)

Steps in the implementation of a well considered business strategy were required in

this part. It seemed like students had difficulty in organizing their responses and
hastily tried to get over this part. Students ignored important areas like policies,
systems and resource allocation. Most answers left a lot to be desired.

In the formulation of a well-considered Business Strategy, the management conducts an

Appraisal of the company’s internal and external environment. For this purpose SWOT
Analysis may be carried out in order to find ways for (a) exploiting the company’s
strengths to help achieve short-term and long-term objectives and (b) reviewing the
weakness and threats faced by the company from the following standpoints.
The steps in the implementation of a well-considered Business Strategy are:
(i) Organizational Structure: Organization Structure is suitably integrated for achieving
harmony among the various departments and functions and co-ordination at all levels.

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(ii) Human Resources: Human resources with necessary skills and proper motivation are
deployed in appropriate positions for effective implementation of strategy.
(iii) Availability of Financial Resources: Adequate financial resources should be made
available in time for implementation of the strategy.
(iv) Technology: Appropriate technological inputs are made available to support the
performance necessary to achieve the objectives of the strategic plans.
(v) Decision Process: Sound policies and processes are developed to ensure that all
significant decisions are taken on time and in a coordinated manner.
(vi) Monitoring and Control Systems: Appropriate systems are established to ensure
that progress is monitored against the established standards on a continuous basis and
deviations if any are identified for taking timely corrective actions for implementation of
the strategic plans.

Fine Sugar Mills Limited (FSML) owns and operates a sugar cane crushing plant for Summer
manufacture of refined sugar. The affairs of FSML are looked after by a team of 2010, Q4
professional management and the company ranks third amongst all the sugar mills in
the country in terms of its sales and profitability. The Company has developed an
extensive network of growers spread over a wide area who deliver cane at the factory
site which is then crushed in the minimum possible time to achieve high rates of
sucrose recoveries.
Identify the key stakeholders of FSML and explain briefly why you consider each of
these constituent stakeholders to be of vital importance for the sustainable and long-
term profitable operations of the Company. (09)

Comments not available.

Key stakeholders of FSML and their importance for the sustainable and long-term
profitable operations of the Company are :
(a) Shareholders: The shareholders are the ultimate owners of the Company and it is
important to maximize their wealth through sustained growth in real earnings and
profitable expansion of the business.
(b) Distributors and Customers: The distributors and customers are important as the
Company can operate profitably only if it is able to build long-term relationship with the
distributors and the ultimate customers by offering quality products and value for
money.
(c) Cane Growers: The sugar cane farmers are critical stakeholders as the Company has
to build ongoing relationship with them for supply of good quality cane according to the
pre-determined delivery schedules.
(d) Employees: The employees are important as the staff have to be trained and
motivated to enable the Company to maintain and strengthen its reputation as a
progressive company and be able to continue to operate as a profitable entity.

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(e) Creditors: The creditors, including the banks, are important stakeholders as
substantial amounts of finances are required by FSML for making payments to the cane
growers, financing of stocks of sugar manufactured during the crushing season,
purchase of components, parts and spares, etc The creditors are important stakeholders
as they have to provide funds to meet FSML’s requirements.
(f) Government: The government officials at various levels play an effective role for the
smooth operations of FSML for movement of heavy traffic, maintaining law and order
particularly during the crushing season, its role for fair pricing of sugar and ensuring its
availability for the consumers throughout the country.
(g) Community: The neighbouring community has to accept the Company as a socially
responsible and conscientious corporate citizen mindful of its obligations to the
community and its overall welfare.

Management of Business Organizations are invariably seized with numerous problems Summer
and expend a considerable proportion of their energy and time in making decisions to 2010, Q7
solve these problems.
Explain briefly the various stages involved in the Decision Making Process. (09)

Comments not available.

The various stages of the Decision Making Process are:

(a) Identification of the objectives: The first stage in the decision making process
involves identification of the objectives which may vary considerably. It is important at
this stage to specify the criteria for measuring the extent to which the objective has
been achieved.
(b) Collection of information and ideas: The importance of outcome of the decision
would determine the extent of the efforts that should be made to collect the
information and ideas and the degree of accuracy of the input data required to reach a
well-considered decision.
(c) Analyses of information and ideas: The information and ideas collected have to be
analyzed to assess the alternative courses of action. Decisions which cannot be reversed
readily and have serious long-term consequences require more in-depth and accurate
analysis of the data and evaluation of the ideas obtained from the different sources.
(d) Making of the Decision: This is the most important stage of the decision making
process as the decision maker has to select a particular course of action. Reaching the
right decision is important because this process involves selection of a particular course
of action to the exclusion of the various other alternatives. At times the decision maker
may require additional information to reach a well-considered decision.
(e) Communication of the Decision: Quite often the persons making the decision are
different from those who have to implement the decision. Consequently it is necessary
to issue instructions to all individuals who would be affected by the decision or who

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would be required to implement the decisions.
(f) Evaluation of the results of the decision: Decision makers have to evaluate the
outcome of the decision. It enables them to modify the course of action or revise the
objectives etc.

Why mission–oriented business strategists do not view the Short-termism approach Winter 2009,
favourably? (02) Q5(a)

Comments not available.

Mission-oriented business strategists do not view the strategy of short-termism outlook

favourably because it ignores the principle that long-term economic maximization of
wealth and pursuit of objectives on a sustainable basis cannot be achieved by
maximizing economic wealth in each of the individual short-term periods.

Give two examples of typical business situations to highlight the defects of pursuing a Winter 2009,
policy of short-termism. (03) Q5(b)

Comments not available.

Examples:
A pharmaceutical company may not incur expensive R&D costs and be satisfied with its
existing line of products which are popular. Although this would result in high profits in
the short-term, the long-term performance would suffer as new and more effective
medicines are introduced in the market by the competitors.
A beverage company may prefer to defer advertising expenditures to reduce the costs
and report high profits. However, in the long-run, the company may lose the efficacy of
its brands and competitive advantage to other more aggressive competitors.

Superb Engineering Limited (SEL) manufactures parts and components for Winter 2009,
assembly/manufacture of automobiles. During the past few years, the company has Q6
witnessed phenomenal growth in its product lines and sales revenues have registered
significant growth. However, the overall profitability has not shown a corresponding
increase. SEL considers that a substantial proportion of the efforts and energies of the
management and staff at various levels are expended in handling a very wide range of
diversified activities. SEL is, therefore, examining the feasibility of outsourcing certain
activities of its operations to outside parties.
You are required to identify four advantages and disadvantages each of Business
Process Outsourcing in the above situation for SEL. (06)

Comments not available.

The advantages of Business Process Outsourcing are:

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(i) Outsourcing would enable the managers and the staff to concentrate in activities
which are of critical importance for the achievement of the corporate mission, thus
improving their core competencies and the overall productivity.
(ii) Outsourcing may help to reduce the operating costs of SEL.
(iii) Outsourcing would enable SEL to reduce the amount of capital investment that it
would otherwise have to incur in the facilities which would be provided by the
outsourced agency. Also enable SEL to improve core activities performance.
(iv) Careful selection of outsourcing companies would help to acquire new know-how
and expertise from the outsource agencies as they would be providing similar services
to their several customers.
The disadvantages of Business Process Outsourcing are:
(i) Outsourcing involves loss of some control and places excessive reliance on outsiders.
(ii) Outsourcing can result in loss of valuable in-house skills.
(iii) Outsourcing may result in creation of competition in future.
(iv) Outsourcing may result in disclosure of critical confidential information to outsiders.
(v) If the level of the performance is not the same then it might result in brand dilution
and shift in brand loyalty.

Strategic Planning and Management is an exercise undertaken at the highest levels of Winter 2009,
the management hierarchy and involves decisions concerning formulation, Q7
implementation and evaluation of cross-functional activities which would enable an
organization to achieve its stated objectives. In spite of the cumulative skills and
considerable experience of the senior management team, it has been observed that a
number of organizations are not able to achieve significant success and the actual
performance often falls short of the set goals.
Explain the key factors, which in your opinion, are responsible for the management’s
inability to achieve all of the goals envisaged in the Strategic Plans. (09)

Comments not available.

The key factors which contribute towards the achievement of only a limited number of
goals envisaged in the Strategic Plans are:
(i) Inadequate understanding of the strategic plans and failure at the business and
functional levels to realize that sustained and coordinated efforts are required to
achieve the goals.
(ii) Poor allocation of resources, organizational as well as human. Lack of support from
the management in providing adequate resources for the achievement of the goals set
in the strategic plans.
(iii) Weak organizational culture, leading to lack of involvement of the management at

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the business and operational levels who feel that they are not on board in the strategic
planning exercise and therefore there is lack of “ownership” of the plans and goals from
their side.
(iv) Consideration of the strategic planning as a ritual exercise and not as a day-to-day
sustained effort for achievement of the objectives of the plan, indifferent attitude and
lack of commitment and motivation on the part of the line managers towards the
achievement of the goals.
(v) Poor Communication and lack of coordination between the top, middle and
operational level of management leading to poor goal definitions and unawareness of
the departments role in achieving the goal.
(vi) Pre-occupation of the operational level managers with the achievement of their
short-term targets and lack of awareness of the contribution of their own efforts
towards achievement of the overall objectives.
(vii) Inability to integrate and coordinate the various functions of research and
development, HR management, procurement, production, marketing and finance with
the result that these activities are working independently and at cross purposes.
(viii) Absence of a proper system to measure actual performance from time-to-time and
compare the results with the targets to take timely corrective measures in the event of
any new development or unfavorable variances.

Pan Pacific Steel Mills Limited was established in 1960 to manufacture steel products Summer
such as iron bars, wire rods, girders and steel sheets. In 2006, a team of professional 2009, Q1
management assumed charge of the Company’s operations. The new management
team made ambitious plans to increase the rated capacity, diversify the product-mix
and upgrade the quality of the products to bring the Company’s operations at par
with the leading players in the country’s steel industry. In spite of formulation of
Corporate and Business Strategy on sound lines by the multi-disciplinary management
team, the Company is experiencing serious problems in achieving its objectives due to
lack of cohesion between the formulation of strategic plans and their actual
implementation.
(a) Explain the relationship between Strategy Formulation and Strategy
Implementation.
(b) What essential elements should the management of Pan Pacific Steel Mills Limited
consider for creating an environment of good relationship between Strategy
Formulation and Strategy Implementation? (10)

Comments not available.

(a) Strategy formulation policies can be successful only if the strategic plans are
implemented effectively by converting the plans into well-conceived actions designed to
achieve the objectives of the organization. Strategic plans and strategy implementation
have to be synchronized to perform in close interaction to achieve optimum results.

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(b) The essential elements which should be considered by the management of PPSML
for creating good relationship between formulation of strategic plans and strategy
implementation are:
(i) Organizational Structure: Organizational structure creates the formal pattern of
interactions and coordination amongst the management, supervisors and workers to
link the tasks and efforts of the individuals and groups to implement and achieve the
strategic plans. The management should ensure that the Organization Structure is
suitably integrated for achieving harmony among the various functions and greater co-
ordination at all levels.
(ii) Human Resources: Human resources with necessary skills should be deployed in
appropriate positions, for effective strategy implementation.
(iii) Technology: Technology comprises the knowledge, equipment and work techniques
necessary to deliver the products or services. Technology is an important factor in
strategy implementation. The management should ensure that appropriate and
adequate technological inputs are available to support the performance necessary to
achieve the objectives of the strategic plans.
(iv) Decision Process: Decision processes are required for the resolution of problems
encountered in the operations of the business and achievement of the objectives of the
strategic plan. Decisions relating to allocation of resources are particularly important for
strategy implementation because timely availability of resources are crucial for the
success of strategic plans. Sound policies and processes should be developed to ensure
that all significant decisions are taken on a timely basis and in a co-ordinated manner.
(v) Monitoring and Control Systems: Appropriate system should be established to
ensure that progress is monitored against the established standards on a continuous
basis and deviations if any, are identified for taking timely corrective actions.
(vi) Reward System: A well-conceived reward system comprising salaries, benefits,
promotions and recognition should be developed to provide necessary motivation to
the workforce for successful implementation of the strategic plans.

Companies which seek expansion of business can achieve their objectives either Summer
through organic/internal expansion or by pursuing acquisition strategies. 2009, Q4(a)
(a) Explain the key differences between strategies of expansion by organic/internal
growth and by acquisition. (06)

Comments not available.

Organic/internal growth is a strategy to achieve growth by expansion in the company’s

own line of products and market portfolio. It relates to increasing the market share in
the existing market or entering new markets by bringing high value products.
Acquisition strategies involve expansion by way of purchase of controlling interest in
another existing companies.

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The key differences between the two strategies are as follows:
(i) In internal growth strategy, expansion is achieved in a steady and planned manner
extending over a phase-wise schedule, whereas in an acquisition strategy, rapid
expansion is achieved through acquisition of existing assets of another company.
(ii) In expansion by internal growth, the success of the strategy is dependent, to a
considerable extent, on the management’s ability to formulate and implement sound
plans, whereas in growth by acquisition, the success of the strategy is also linked with
achievement of corporate, business and operational level synergies.
(iii) In a strategy of internal growth, the level of competition can become more intense,
particularly if there are relatively few strong players, but in expansion by acquisition the
level of competition may be reduced by acquiring a rival competitor.

(b) Give any four reasons why organizations generally prefer to achieve expansion Summer
through internal growth and not through policies of acquisition. (06) 2009, Q4(b)

Comments not available.

A company may pursue a policy of growth by organic/internal expansion and not

through acquisition for the following reasons:
(i) Expansion of its physical infrastructure and facilities can be planned more efficiently
to fulfill the organizational requirements. In case of acquisition, the company would
have to utilize the existing sites and facilities which may not be the most suitable option
for its requirements.
(ii) The cost of acquisition of an existing company may be much higher than the cost of
expansion of assets through internal growth.
(iii) Often, acquisitions require substantial investment outlays and the acquiring
companies resort to heavy borrowings which may extend financial leverage beyond
prudent limits.
(iv) In acquisitions, a company acquires functions of other companies which may result
in duplication of facilities or redundancies which ultimately results in lowering of
employees morale.
(v) Human Resources can be utilized more effectively and with a greater degree of
cohesion of corporate culture by adopting strategies of organic growth. Also, in the case
of organic growth, better career development opportunities are provided to the
employees. In case of expansion by acquisition of other businesses, the company usually
has to acquire and assimilate the staff of those businesses.

Briefly explain the following concepts: Summer

2009, Q11
 Business Ethics
 Pull Strategy of Promotion
 Licensing

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 Benchmarking (10)

Strategy and CSR Benchmarking, Business Ethics

HR and Change Management

Marketing Licensing, Pull Strategy of Promotion

International Business

Comments not available.

Business Ethics is a code of moral principles that the employees follow with respect to
what is right or wrong from the viewpoint of the organization’s dealings and
interactions with its stakeholders. The organizational culture and internal policies and
systems have far-reaching ethical implications and reinforce the set of values to be
upheld by the employees in all their business dealings. The standards of ethical conduct
may be embodied in the Company’s Formal Code of Ethics.
Pull Strategy of Promotion is a promotional strategy based on aggressive advertising of
brands to build-up consumer demand. In a successful Pull Strategy, the customers ask
for the brand by name, inducing retailers or distributors to acquire stocks of the
company’s goods.
Licensing is a technique of entering a specific market in which the licensor enters into
an agreement with a licensee, by offering the licensee the right to use the
manufacturing process, trade mark, patent, trade secret or any other item of value for a
fee or royalty.
Benchmarking is the process of comparing the company’s products and processes with
those of the competitors or leading firms in other industries or any other accepted
standards against which the performance of the company is measured.

It is widely realized that companies pass through various stages of growth during the Winter 2008,
different periods of their existence. State four dominant characteristics which would Q2
be apparent in a company which is in:
(a) the start-up or initial stage of its business;
(b) the rapid and dynamic growth stage of its existing business. (06)

Comments not available.

The dominant characteristics of a company which is in the start-up stage of its

business are:
(i) High financial costs.
(ii) Limited cohesiveness in the senior management team.

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(iii) Organization’s systems and procedures are not in place.
(iv) Extremely high workload for key personnel with conflicting and multiple priorities.
(v) Resources are not sufficient to meet multiple demands.
(vi) Relationships with suppliers, customers and other stakeholders are in the
developing stage.
The dominant characteristics of a company which is witnessing rapid and dynamic
growth of its existing business are:
(i) New markets, products and technology are being introduced.
(ii) Multiple and conflicting demands for allocation of management, technical and
financial resources.
(iii) Rapidly expanding organizational structure.
(iv) Unequal growth in various sectors within the organization.
(v) Shift in power structures as the organization witnesses expansion in business.
(vi) Constant dilemma between doing current work and building support systems for the
future.

What are the distinctive ingredients of Vision and Mission Statements? (03) Winter 2008,
Q5(a)

Comments not available.

Vision and Mission Statements are manifestations of the unique identities of an

organization. They are enduring statements containing:
 business philosophy
 unique purpose
 goals of business
The above are inter-twined with the competitive advantages which distinguishes it and
sets it apart from others.

It has been observed that certain companies adopt, with minor modifications and Winter 2008,
changes in emphasis, the basic ingredients of Vision and Mission Statements of the Q5(b)
more successful rival companies in an attempt to achieve similar results.
Describe the drawbacks of adopting such an approach in formulation of Vision and
Mission Statements. (04)

Comments not available.

The drawbacks of adopting Vision and Mission Statements of more successful rival
companies, with certain changes and modifications, are as follows:

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(i) Vision and Mission Statement of a firm is inextricably inter-linked with its
management philosophy, purpose of business and distinctive capabilities which cannot
be replicated in their entirety by other firms.
(ii) The imitated version of a Vision and Mission Statement cannot be an enduring or
permanent feature and frequent lapses or deviations in actual performance are bound
to create resentment and suspicion among the internal and external stakeholders.

Currently, a large number of progressive companies are in the various stages of Winter 2008,
adopting policies of Corporate Social Responsibility. Explain what do you understand Q7(a)
by the term Corporate Social Responsibility. (03)

Comments not available.

Corporate Social Responsibility involves an organization’s obligation to provide benefits

to society in ways that protect and improve the welfare of the society, along with
pursuance of the organization’s own business interests.

In your opinion what are the major concerns which prevent organizations from Winter 2008,
adopting and implementing comprehensive policies of Corporate Social Q7(b)
Responsibility? (05)

Comments not available.

The major concerns which prevent organizations from adopting and implementing
comprehensive policies of CSR are:
(i) Concerns that they may adopt a comprehensive CSR policy while their competitors
may not do so with the result that they may incur costs which may place them at a
competitive disadvantage.
(ii) Organizations may not feel a sense of commitment and urgency to address to the
various issues which are of a societal nature.
(iii) There are no accepted standards on CSR issues.
(iv) At times it may be difficult to identify the stakeholders and the audience for the CSR
reports which may be ambiguous and could undermine the quality of the reports.
(v) Belief that efforts of the traditional philanthropists are sufficient to take care of the
social needs of the society.
(vi) Reporting on the entire scope of a company’s impact upon the society and the
environment is a complex exercise which is beyond an individual organization’s
capabilities and scope of activities.

Briefly explain the following: Winter 2008,

Q11
(a) Business Ethics

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(b) Core Competence
(c) Environment Management
(d) Job Description (12)

Strategy and CSR b, a

HR and Change Management d, c

Marketing

International Business

Comments not available.

(a) Business Ethics refers to the code of moral principles and values which are applied
by individuals and organizations in their dealings in the commercial world. Business
ethics provide guidelines for acceptable behaviour by organizations in their strategy
formulation and day-to-day operations.
(b) Core Competence is the key ability or strength that an organization has acquired
which differentiates it from others, gives it competitive advantage and contributes to its
long- term success. Core competence accrues due to its favourable location, access to
superior quality raw materials, unique capabilities of equipment, acumen of
management, skills and competence of workers and marketing insight . Core
competence is valuable, rare and difficult for competitors to imitate.
(c) Environment Management is a systematic approach to minimize the damage caused
by an organization to the environment in which it operates. Environment management
has assumed considerable importance because all the stakeholders expect
organizations to be responsible for the preservation of the environment and
management are increasingly being held responsible and liable for their organization’s
environmental performance. Environment management involves reducing
pollution/waste and consumption of natural resources in judicious manner.
(d) Job Description is a structured and factual statement of a job’s functions and
objectives. It defines the boundaries of the job-holder’s authority and responsibility and
includes the job title, department, job site, and reporting channels.

East-West Centre of Diabetes (EWCD), a non-profit organization has recently received Summer
substantial donations from a group of overseas Pakistani philanthropists. EWCD has 2008, Q2
ambitious plans to develop the institution into an absolutely world-class research and
teaching university-cum-hospital in the country. The Hospital would provide
infrastructure facilities and medical care by a team of highly reputable consultants. It
is envisaged to provide treatment for diabetes which is growing at an alarming rate
and adversely affecting the health of a large segment of the population in all age
groups. The University would also help to produce qualified doctors who would

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specialize in the treatment of patients suffering from this highly debilitating disease.
You are required to prepare a Mission Statement for EWCD stating its purpose and
identifying its core values. The Mission Statement should be brief, simple and clearly
highlight the important purpose, intent and aspirations of EWCD. (06)

The Question pertaining to the preparation of a Mission Statement of a nonprofit

organization contained within itself all the vital information and candidates having an
understanding of the concept of a Mission Statement were able to score satisfactory
marks in spite of rather weak grammar and inadequate vocabulary. Some of the
students attempted to explain the purpose and objectives of a Mission Statement
which was not required.

Mission Statement
EWCD is committed to the development of human capabilities through the sharing of
knowledge and application through service. It seeks to prepare individuals who would
be exemplary doctors and nurses, through excellence in research and education, all
dedicated to provide meaningful contribution to society in the treatment of diabetes.

What do you understand by Code of Ethics in the context of a business organization? Summer
State four advantages which in your opinion are important for adopting a Code of 2008, Q3
Ethics? (07)

Most of the students described the Code of Ethics in a business environment quite
satisfactorily and mentioned that it provides a guideline to the moral principles and
values by which an organization conducts its business with respect to what is right or
wrong. The Code of Ethics applies both to the organization as well as its employees in
all spheres of their business dealings.
The replies to the part of the question relating to the advantages of adopting a Code
of Ethics were generally satisfactory as they adequately covered the following
important elements:
 provides specific guidance to the employees of their responsibilities in their ethical
conduct and behavior;
 enhances the organization’s reputation and inspires confidence among the public;
 creates a sense of awareness of the organization’s expectations of appropriate
conduct among all the stakeholders, including the management;
 promotes a culture of excellence by demonstrating the organisation’s
commitment to ethical behavior
It was observed that some of the students repeated the same point(s) with variations
in emphasis and usage of words.

Code of Ethics provides a guideline to the moral principles or values by which an

organization conducts its business with respect to what is right or wrong.

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The Code of Ethics applies both to the organization as well as its employees in all their
business dealings.
The advantages of adopting a formal code of ethics are:
 Provides an explicit guidance to employees so that they know what is expected
from them in terms of ethical behavior.
 Enhances the organisation’s reputation and inspires public confidence.
 Creates an awareness of the organisation’s expectations of proper conduct among
all the stakeholders, including the management.
 Promotes a culture of excellence by demonstrating the organisation’s commitment
to ethical behavior.

In the current economic scenario, business organizations are under continuous stress Summer
to achieve economies in their production and operating costs. The pressures for cost 2008, Q6
reduction emanate from the management as well as the competitors and customers.
Identify eight operational and strategic areas which must be scanned continuously by
an industry leader to achieve cost economies and maintain its competitive advantage.
(08)

This Question was designed to identify those areas of activities which an industry
leader has to scan continuously to achieve economies in production and operating
costs in order to maintain its competitive advantage. A significant number of the
candidates who scored high marks covered the following important points:
(i) exploring alternate sources of cheaper raw materials and components
(ii) undertaking negotiations with existing suppliers of raw materials and components
for obtaining more favourable terms
(iii) relocating facilities to those areas which have lower costs
(iv) improving capacity utilization to achieve economies in operating costs
(v) improving worker and machine efficiencies
(vi) re-engineering processes to bring cost reductions
(vii) hiring contract workers with the objective to reduce costs
(viii) outsourcing processes/ manufacturing of components to low cost suppliers
(ix) adoption of efficient inventory management practices such as just-in-time
inventory management techniques.

The economies in production and operating costs can be achieved by focusing in the
following areas:
(i) exploring alternate sources of cheaper raw materials and components.
(ii) negotiating with existing suppliers of raw materials and components for more
favourable terms.

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(iii) relocating facilities to areas which have lower costs.
(iv) improving capacity utilization to achieve economies in costs.
(v) introducing modifications in production designs to reduce costs.
(vi) improving machine and worker efficiencies.
(vii) re-engineering processes to eliminate activities and bring cost reductions.
(viii) hiring contract workers with the objective to reduce labour costs.
(ix) outsourcing processes/ manufacturing of components to low cost suppliers if quality
control measures can be implemented.
(x) adopting efficient inventory management practices such as just-in-time inventory
management techniques.

Narrate important points that should be considered in the decision making process. Summer
(03) 2008, Q8(a)

In this question, students were expected to state the important points to be

considered in the decision making process. The essential elements of the decision
making process are: developing a clear perspective of the goals, setting time-frame
limits for reaching decisions, analyzing the nature of the problem in sufficient detail
commensurate with the significance of the decision outcome, examination of the
different options and weighing the possible consequences of selecting any one option.
Quite a number of replies covered these points satisfactorily. However, certain
students mentioned decision implementation and monitoring strategies which were
not required.

The following important points should be considered when one is involved in the
decision making process:
(i) have a clear perspective of the goals to be achieved.
(ii) develop the timeframe for reaching the final decision.
(iii) analyse the nature of the problem in sufficient detail according to the importance
of the final outcome of the decision.
(iv) examine the various available options.
(v) weigh the possible consequences of selecting any one or combination of actions.

Union Group of Companies has diversified interests in fertilizer, sugar, cement and Summer
steel industries. Each entity operates as a strategic business unit and executives in the 2008, Q8(b)
individual companies have powers to take all decisions at the operational level and
only limited decisions at the tactical level. The Group Management Team which
monitors and controls the performance of the different strategic business units has
retained for itself the powers to make all strategic decisions.

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Describe the distinguishing features of decision making process at Operating, Tactical
and Strategic levels. (09)

The answers regarding particular characteristics of decisions at operational, tactical

and strategic levels were quite satisfactory as they adequately covered the underlying
features of the decision making process in these different organizational tiers. Those
students who scored high marks mentioned the following points:
 Operational Level Decisions pertain to day-to-day systems and procedures, are
highly structured and of a routine nature. Their impact is immediate and of a
short-term nature and involves relatively fewer risks.
 Tactical Level Decisions relate to short to medium term objectives, influence
implementation and success of strategic decisions and are concerned with
overseeing, and handling of budgets, personnel schedules and resources. Risks of
failure of decisions at this level are moderate.
 Strategic Level Decisions are concerned with long-term goals and future direction
of the business, are of a conceptual nature, involve elements of higher
uncertainties with far-reaching consequences and are taken at the highest
management and board levels.

Operational Level Decisions

 decisions are concerned with day-to-day systems and procedures.
 decisions are more structured and are of a routine nature.
 outcomes of decisions are immediate and of short term nature.
 decisions involve fewer risks.
Tactical Level Decisions
 decisions are concerned with short to medium term objectives.
 decisions are often related with implementation and success of strategic decisions.
 decisions are concerned with overseeing and handling of budgets, personnel,
schedules and resources.
 risks of failure of decisions are moderate.
Strategic Level Decisions
 decisions are concerned with long-term goals and future direction of business.
 decisions are more conceptual and have elements of uncertainty.
 decisions have far-reaching consequences and are therefore of considerable
importance.
 decisions are taken at the highest management and board levels.

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Zypher Refinery Limited (ZRL) is in the advanced stage of establishing a major oil Winter 2015,
refinery in the country. The newly appointed director of human resources is presently Q. 3(a)
involved in the formulation of a comprehensive human resource plan which would be
presented to the board of directors for approval. The HR report would be of
considerable importance and would include the various aspects of human resource
planning process for ZRL’s operations. Discuss the various aspects of the HR planning
process which should be included in the report to enable the board to reach a well-
considered decision and accord its approval. (09)

This part of the question required candidates to discuss the various aspects of HR
planning which can be included in the Human Resource Plan to be prepared by the HR
director of a company which was in the advanced stage of establishing a major oil
refinery. The performance of the candidates was not good as most of the candidates
ignored the context in which the question was framed. They were not able to focus on
the planning aspect and discussed general HR policies of an organization.
Consequently, important points such as source of hiring, tasks to be performed and
number of employees to be hired at different levels and their qualifications and
experience, etc. were quite often missed.

The various aspects of human resource planning process which should be incorporated
in the report to be submitted to the board are as follows:
(i) Identifying the environment for availability of suitably qualified and experienced
personnel sources and the extent of competition for hiring their services by
prospective employers.
(ii) Complete investigation of the various tasks to be performed in ZRL, contents of
the jobs and the required skills for these positions at different levels in the
organizational hierarchy.
(iii) Developing recruitment plans for the number of personnel to be hired, sourcing
of these personnel, their qualifications, work skills and competencies.
(iv) Documenting authorities and responsibilities of the employees at various levels to
achieve efficiencies and ensure smooth day-to-day working.
(v) Formulating remuneration packages, including fringe benefits to attract, retain
and motivate the most suitable employees.
(vi) Training of employees as persons with requisite skills in sufficient numbers may
not be readily available.

In June 2011, Jaleel Ahmed was appointed human resource manager of Bliss Winter 2015,
Entertainment Limited, a holiday resort, which provides a wide range of rest and Q. 6(a)
recreation facilities to customers. Jaleel Ahmed is of the opinion that the human
resource performance of the company has improved significantly during the preceding
4 years.
Identify and briefly explain the significance of any four human resource performance

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indexes/indicators which should be incorporated in Jaleel’s report to the management
to substantiate his viewpoint. (06)

In this part of the question, the students were required to briefly explain any four
human resource performance indicators. Majority of the candidates performed well.
However, a large number of candidates were not able to comprehend the basic
requirement of the question and stated the various human resource management
functions including recruitment, training and employee development and welfare
activities. Many candidates did not seem to understand that performance indicators
must be specific and clearly measurable and stated general indicators such as lower
level of supervision, increase in revenue, decrease in costs, full utilization of resources,
increased cohesion amongst the employee, etc.

The following indexes/indicators of human resource performance and their significance

should be incorporated in HR manager’s report to the management:
(i) Lower employee absenteeism rate – Comparative figures of lower employee
absenteeism rates to demonstrate that the employees are now more committed
and motivated and work with greater dedication.
(ii) Lower employee turnover rate – Comparative figures of employee turnover rates
in the years prior to 2011 and subsequent to Jaleel’s appointment to show that
the employees are now more satisfied with their jobs and have less tendency to
seek alternative opportunities elsewhere.
(iii) Decline in rate of accidents and injuries – The staff are now more vigilant and
trained in the maintenance and handling of the various equipment and facilities in
the resort resulting in greater safety of customers, staff and equipment.
(iv) Lower rate of customer complaints – Decline in the rates of customer
complaints/negative feedback during the preceding four years which reflects the
efficiency and high morale of the employees as they render more attentive and
better customer care services to the visitors.
(v) Increased internal promotions from within the company – The employees are
now more competent and perform their duties with dedication with the result
that a high proportion of the next level job openings are filled internally by the
employees. This results in greater employee motivation, reduced time to fill in
jobs and lower recruitment costs.

Assume you are Manager Recruitment of a leading company which is in the process of Winter 2015,
recruiting personnel at the middle management level in the organisational hierarchy. Q. 7(a)
You are required to draft an advertisement in an appropriate format, to be placed in a
widely-circulated national newspaper inviting applications from prospective
candidates. The advertisement should contain information to elicit interest of suitable
candidates to send their applications to match with the requirements of the position.
You may make any assumptions that you consider important in the advertisement.

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(08)

In this part of the question, the students were required to draft an advertisement for
the recruitment of personnel at the middle management level in an organization.
Performance was generally satisfactory in majority of the cases as the students
covered most of the essential components of the advertisement and incorporated the
required information/criteria for the prospective applicants, thereby securing good
marks. However, many candidates failed to produce an appropriate format of the
advertisement. Two important things which were missed by most of the candidates
were (i) last date of submission of application and (ii) how and to whom the
application had to be sent. Many candidates did not write anything about the
company and its business. Surprisingly, some candidates produced letter format and
wrote terms like ‘yours truly’ & ‘best regards’, etc.

No suggestion

Briefly explain the advantages of introducing a Formal Succession Planning Scheme in Winter 2015,
a large organisation. (05) Q. 7(b)

In this part of the question, the requirement was to specify advantages of formal
succession planning. The response was generally satisfactory. Majority of the students
had a clear idea of the main advantages which would accrue by introducing a formal
succession-planning scheme. However, many students gave very general points such
as better quality of output, innovative ideas, gaining competitive advantage, etc.
which were not appropriate in the given context.

The main advantages which would accrue by introducing a Formal Succession Planning
Scheme are :
(i) It would enable the company to anticipate HR requirements in advance and avoid
unforeseen problems arising due to delays in identifying and recruiting suitable
employees from external sources to fill-in key vacancies.
(ii) It would enable the company to identify high-potential employees at an early
stage whose career paths can be planned for promotion to higher levels in the
organization hierarchy.
(iii) It would align the HR function of career path planning of employees with the
overall corporate and strategic planning objectives.
(iv) It would provide internal promotion opportunities for the employees resulting in
increased level of motivation and commitment towards the company.
(v) It would reduce the risk of inducting employees from external sources at higher
levels who may not be able to assimilate in the company’s corporate culture to
work in a cohesive team environment.
(vi) It would result in savings of recruitment costs which would otherwise have to be

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incurred in placement of advertisements inviting applications from candidates,
time and effort in the conduct of interviews of candidates and reference checks of
selected candidates.

Until recently the affairs of Premier Associates (PA), a profitable family-owned Summer
business enterprise, were managed by the family members. The old family members 2015, Q5
have now transferred the management of the business to the new generation who
are highly qualified and have ambitious plans to expand the scope of the business and
manage it professionally. A Human Resources Manager has been appointed at a
senior level with far-reaching powers to formulate and implement organisational and
HR policies to enable PA to achieve the objectives set by the new management.
State and describe briefly the specific responsibilities which would be entrusted to the
Human Resource Manager who is involved in the task of formulation and
implementation of organisational and HR policies to enable PA to perform as a goal-
oriented organisation. (10)

In this question, the candidates were required to describe the specific responsibilities
of an HR manager who was entrusted the task of formulating policies in an
organization which wanted to transform itself from a family owned organization to a
professionally managed organization. The performance was average as candidates
who performed well were accompanied by almost an equal number of candidates who
were unable to comprehend the basic requirement of the question and delved into
areas such as preparation of mission statement and setting objectives/goals of the
organization. Many candidates limited the role of HR to setting-up of an equitable
reward system. Some of them even discussed matters such as maintaining of
employees recruitment data, conducting exit interviews and corporate social
responsibilities etc. which were totally irrelevant in the given context.

The Human Resource manager who is involved in the formulation and implementation
of organisational and HR policies for Premier Associates would be entrusted with the
following responsibilities:
(i) Designing of an appropriate organisational structure to achieve the overall
objectives of PA. The organisational structure should optimize the internal strengths
and remove internal weaknesses for achievement of the objectives.
(ii) Communicating PA’s objectives and goals and ensuring that they are properly
understood by the employees at all levels.
(iii) Directing the managers at all hierarchical levels to make effective plans to achieve
the business and operational goals and targets assigned to their respective
departments.
(iv) Defining the job descriptions and job specifications precisely and ensuring that
these are followed strictly by employees at all levels.
(v) Pursuing well-defined policies of recruitment, training, job rotations, career path

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and succession planning which are implemented in an objective and fair manner.
(vi) Designing a reward system, based on a fair system of employee evaluation
including benefits and policies of promotion in order to achieve optimum employee
performances at all levels.
(vii) Adopting non-monetary initiatives and measures to keep the employees fully
motivated and committed to achieve the business objectives. The employees should
take pride and feel that they have a role in the success of the PA.
(viii) Ensuring that the various departments work in close coordination to achieve the
goals and objectives of PA. Areas of friction and conflict which may undermine
performance are identified and rectified promptly at appropriate levels.

Vision Consultants (VC) is a partnership firm of four professional engineers which Summer
provides comprehensive services for establishing major power generation units on a 2015, Q7(a)
turn-key basis. VC has a staff of twelve qualified engineers who are working at various
levels in the organisation. VC operates in an environment in which it has to face
numerous challenges of meeting stringent deadlines, keeping abreast of rapidly
changing technologies, interacting with demanding clients and complying with the
regulatory requirements.
Identify and briefly explain the policies which would enable VC to create and
encourage a good team environment in the firm. (07)

This was a scenario based question pertaining to a firm of engineers which was
working in a very challenging environment. The candidates were required to identify
and briefly explain the policies to encourage a good team environment in the firm. The
question had a specific dimension of involving highly qualified team members and
challenging atmosphere which majority of the candidates ignored. Students had no
idea of ‘Creation of a good team environment’. Most of the answers were given from
the point of view of routine human resource management practices, which did not fit
the requirements of the question.

VC would be able to create, develop and encourage a good working environment of

supporting individual and team effort by adopting the following policies:
(i) pursuing a leadership style and performance culture based on mutual consultation
(ii) recognising the professional competencies, experience and contribution of the
partners as well as the staff as highly valuable resources
(iii) integrating the efforts of the partners and the staff through open horizontal and
vertical communications to reach optimal solutions of the problems
(iv) ensuring commitment of the partners and the staff towards achievement of the
tasks through maximum input of individual knowledge and team efforts
(v) recruiting employees on the basis of their professional competencies and ability to
work in a team environment

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(vi) evolving a system of sharing profits among the partners based on their respective
contribution and rewarding the employees on a fair and equitable basis.

Due to changes in business environments, firms are forced to make far-reaching Summer
changes in the organisational structures, corporate and business policies, processes 2015, Q9(a)
and procedures to achieve their corporate objectives. These changes invariably meet
strong resistance from existing employees at various levels.
(i) State five reasons why existing employees are averse to changes and offer strong
resistance. (05)
(ii) What measures, in your opinion, may be adopted by the management to reduce
resistance to change? (03)

This was a frequently tested topic whereby candidates were required to state reasons
for resistance to change by the existing employees and the measures which can be
adopted by the organization to reduce the resistance to change. Most of the replies
were reasonably good and more or less covered the important points. However, in
many cases, the steps to reduce resistance were restricted to the issue of proper
communication which was stated repeatedly in two, three or even four points whereas
the other important steps were missed.

(i) Existing employees are averse to changes and offer strong resistance because of the
following reasons:
 The employees may have concerns of financial insecurity due to loss of their jobs or
decline in their existing level of compensation.
 The employees may fear that they may lose their present position/status, power
and authority because of induction of new employees.
 The employees may anticipate that changes in work assignments, alterations in
work processes and transfers would threaten their present work routines, patterns
of social-on-the-job interactions and friendships.
 The employees may fear uncertainties in the new organizational design, attitudes
and working styles of new supervisors.
 The uncertainty or discomfort created by what is new or different is a psychological
process which causes resistance to change.
(ii) Management may adopt following measures to reduce resistance to change:
 Management must communicate to the employees in a convincing manner the
reasons and need for change to dispel any suspicions and apprehensions which
create resistance to change.
 Management can reduce resistance to change by empathizing with the employees
and recognizing their valid objections and taking steps to alleviate their fears.
 Management can minimize the negative impact of change by implementing the
change in a manner which is perceived by the employees to be fair and equitable.

What are the advantages of having appropriately designed Job Application Forms? Winter 2014,

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(03) Q2(b)

This question regarding appropriately designed Job Application Forms elicited a

significant number of correct replies. A number of students correctly stated that
standard formats of job application forms ensure that all the requisite information is
presented in a sequential order which facilitates comparison of particulars of the job
applicants. However, the point that the job application forms help to retain
permanent and standardized records of candidates for future reference was missed by
a large number of the students.

The following advantages can be derived by adopting appropriately designed Job

Application Forms:
(i) They facilitate obtaining information regarding the applicants in a specified format
which facilitates comparison of particulars of the various applicants.
(ii) They help to obtain comprehensive information regarding applicant’s age,
qualifications, previous work history, job related skills, general interests, etc.
(iii) They help in retaining a permanent record of the candidate for future reference.

Some organisations are moving towards policies of more frequent exercises of Winter 2014,
Employee Performance Appraisal as compared to Annual Appraisals. Explain briefly Q2(c)
the main objectives of such shift in Employee Performance Appraisal policies. (05)

In this part of the question, the candidates were supposed to discuss the main
objectives of a policy whereby employee appraisals are carried out more frequently as
against the normal practice of having annual appraisals. Important points that
frequent employee appraisals facilitate taking of timely corrective measures for
removal of deficiencies in performances of employees and aligning performances of
employees with the corporate objectives and standards were mentioned by a limited
number of students only. A number of students who did not read the question closely,
highlighted the features of performance appraisal without drawing any comparison
between frequent performance appraisal and an annual appraisal.

The main objectives of shift in policies towards more frequent Employee Performance
Appraisal exercises are as follows:
(i) They ensure that frequent employee performance appraisals for pay and promotions
are reflective of the full year’s performance rather than a single appraisal which assigns
greater weight to performance during the most recent few months.
(ii) They help to identify deficiencies and training needs on a regular basis.
(iii) They help to improve performance by providing timely and regular feedback to the
staff.
(iv) They enable establishment of realistic performance standards and targets for the
employees.

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(v) They ensure that the performance of the staff remains fully aligned with the
objectives of the strategic plans by taking timely corrective measures.

Alpha Enterprises, a partnership firm, intends to launch a major expansion program Winter 2014,
for which a large number of employees would be recruited for appointment at Q3(a)
different tiers in the firm. As Manager Human Resources advise the partners of the
main advantages and shortcomings of recruitment tests. Also identify and state the
key features of any four types of recruitment tests. (08)

Replies to the question regarding advantages and shortcomings of recruitment tests

lacked direction and exhibited poor knowledge of the topic. In a few cases, the
students were not even able to distinguish between the advantages and shortcoming
of recruitment tests. However, the features of different types of recruitment tests and
their principal attributes were identified by the majority of the students.

The advantages of recruitment tests:

(i) They help to assess the behavioural and competency aspects of the applicants to
perform the assigned jobs
(ii) Well-designed recruitment tests provide reliable and valid results of the applicants
capabilities and skills on a consistent basis.
The shortcomings of recruitment tests:
(i) They may not be designed to measure the specific qualities which are essential for
the actual performance of the job
(ii) They may give unrealistic and spurious sense of accuracy to complex issues.
The different types of tests and their key attributes are given below:
(i) Psychological/personality tests – Psychological/personality tests are administered by
asking a series of questions to ascertain the applicant’s basic attitude and temperament
profile.
(ii) Intelligence tests – Intelligence tests are designed to assess the applicant’s
intellectual abilities of general knowledge and comprehension skills.
(iii) Proficiency tests – Proficiency tests are designed to ascertain the applicant’s ability
and competence level to perform the assigned work satisfactorily.
(iv) Aptitude tests – Aptitude tests are administered to obtain information about the
applicant’s overall mental and numerical abilities and physical dexterity.
(v) Psychometric tests –Psychometric tests are administered by asking questions and
obtaining applicant’s responses to enable the recruiters to measure the applicant’s
psychological characteristic such as intelligence, personal outlook and motivation.

Business entities often fail to realise that high rates of employee turnover not only Winter 2014,
result in high operating costs but also have adverse repercussions on the overall Q3(b)

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performance of the organisation. Identify the different costs and disadvantages
associated with high rates of employee turnover. (07)

A good performance was witnessed in this question relating to the different costs and
disadvantages of high rates of employee turnover. However, a number of students
offered unspecific and vague replies, e.g. high operating costs, poor performance, lack
of motivation, etc.

Business entities which experience high rates of employee turnover incur high costs and
also result in disadvantages for the organisations as follows:
(i) Administration costs of completing formalities of the leaving employees such as out-
of-turn preparation of salaries, calculation of benefits and completion of formalities
involved in the discharge of the employee.
(ii) Opportunity cost of time spent by line managers and other staff during the course of
recruitment, training and induction of the leaving employee.
(iii) Direct cost of recruiting replacements by way of advertisements, interviews,
administration of tests and reference checks.
(iv) Cost of training new employee to develop necessary skills for the performance of
the required job.
(v) Cost of loss of output before the replacement employee is adequately trained and
capable of assuming the necessary responsibilities.
(vi) High turnover may lead to key employees joining rival competitors and disclosing
company’s secret policies and working methods.
(vii) High turnover may be indicative of flaws in HR policies and would create negative
feelings amongst the existing employees.
(viii) Employees who leave on account of job dissatisfaction prove bad ambassadors
resulting in bringing disrepute for the organization.

In your role as an internal human resource specialist, explain briefly the human Winter 2014,
resource policies you would recommend for a learning organisation which pursues Q7
and implements a system of efficient knowledge management at all levels of the
organisational hierarchy. (09)

The focus of the question was implementation of a system of efficient knowledge

management at all levels of the organizational hierarchy specifically in the context of
a learning organization. Majority of the students included a number of general points
mainly revolving around encouraging and rewarding knowledgeable employees.
Areas such as promoting culture of knowledge sharing and developing IT systems for
capturing and disseminating information were rarely discussed. The key point that the
entity is a learning organization was not illustrated at all in many replies.

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As an internal specialist in a learning organisation, I would recommend the following
human resource policies for pursuing and implementing a system of efficient knowledge
management at the various levels of the organisational hierarchy:
(i) Designing an organisation structure which facilitates knowledge sharing through the
various channels of communication and promotes teamwork at all levels in the
organisation hierarchy
(ii) Adopting merit–based policies of recruitment whereby the organization is able to
identify, induct and retain employees who can contribute towards creation of
knowledge and its sharing in the organisation
(iii) Adopting result-based recruitment polices with well designed procedures to short
list, evaluate and select employees
(iv) Hiring professionally qualified and experienced HR manager and staff to manage the
HR functions
(v) Creating a culture of commitment and trust in which the values and norms
emphasize importance of sharing knowledge amongst the employees at various levels in
the organisation
(vi) Pursuing human resources policies with necessary flexibility for motivating and
rewarding employees who focus on personal achievement of knowledge and its sharing
with colleagues, systems thinking and team learning
(vii) Encouraging training by participation in workshops, conferences and seminars to
ensure dissemination of knowledge amongst the employees
(viii) Developing IT systems for capturing and coding explicit and tacit knowledge for use
by employees at various levels from time to time.

Allcom Limited (AL) has been established recently to provide internet services. AL has Summer
received numerous complaints of the poor quality of services of the company’s 2014, Q1(b)
customer care personnel. State what measures AL’s management should adopt to
improve the performance of its front-line customer care staff. (04)

The requirement here was to identify the measures that a recently established
internet services provider should take to improve the performance of its front line
customer care staff. The overall performance here was above average; however, many
candidates mentioned general steps whereas they were required to focus on
employees who are engaged in public dealing and client facilitation.

Allcom’s management should implement the following measures to improve the

performance of its front-line customer care staff:
(i) The customer care personnel should have good soft skills and be able to handle the
difficult and demanding customers tactfully.
(ii) The personnel should be provided adequate training so that they are fully

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conversant with the offerings of products/packages and can respond to the customers
queries satisfactorily.
(iii) The front-line customer care personnel should be delegated sufficient discretionary
powers and autonomy to resolve the routine problems faced by the customers
promptly.
(iv) The telephone conversations between the front-line customer care personnel and
the customers should be monitored to ensure that the quality of the services provided
to the customers are satisfactory and up to the required standards.
(v) Management should obtain feedback from customers to ascertain whether or not
the quality of customers care services are satisfactory. Appropriate corrective actions
should be taken to improve the skills of those individuals whose customer-care
performance feedback is not up to the mark.

Briefly explain the reasons why certain organisations prefer to outsource functions Summer
concerning recruitment of new employees to private employment agencies and 2014, Q3(a)
professional recruiters rather than to handle these functions themselves. (08)

In this part the candidates were asked to mention the reasons because of which
organizations may prefer to outsource the recruitment of new employees to private
employment agencies. Majority of the candidates could mention some of the more
common reasons such as costs, lack of expertise and saving time of senior executives.
However, some very important points like (i) preference for maintaining
confidentiality as regards hiring/turnover of/in important positions and (ii) because
senior executives usually prefer to apply only through good reputable employment
agencies instead of applying to the organizations directly were some of the reasons
which were mentioned by few candidates only. Moreover, some candidates went into
unnecessary details whereas many of the candidates wrote too brief answers giving 2-
4 points but with no explanation.

Organisations prefer to outsource functions regarding recruitment of new employees to

private employment agencies and professional recruiters because :
(i) These organisations may not have adequately trained staff in their human resources
departments to prepare and place suitable advertisements in the media,
handling/scrutinizing the applications for identification of suitable candidates and
subsequent processing of their applications.
(ii) These organisations may not want to disclose to their competitors that they are in
the process of recruiting particular types of professionals as it may reveal the direction
of their expansion schemes.
(iii) These organisations may anticipate an overwhelming response to the advertised
position(s) and consider that it would be cost-effective to appoint professional
employment agencies to process and screen the large number of applicants and short-
list the most suitable applicants for final selection by the organisation.

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(iv) These organisations may consider that placement of advertisements for recruitment
of personnel may provide clues to the rates of their employee turnover and create
negative perceptions of their human resource policies among their stakeholders and
rival competitors.
(v) Private employment agencies generally maintain databanks of potential candidates
from which the most suitable candidates can be identified readily if the particular
position has to be filled-in quickly.
(vi) Many senior level personnel may not consider it discreet to respond directly to
advertisements placed in the media as it would compromise the confidentiality of their
personal information to outsiders and disclosure of their interest in change of jobs
which may not materialise. These individuals would be comfortable in dealing with the
professional head-hunters who would match the suitable candidates and the
prospective employers prior to pursing the matter any further.

Interviews are a widely accepted method of the recruitment process and often play a Summer
major role in the decision whether to accept or reject a candidate for a particular 2014, Q3(b)
position. However, the results of these interviews may not always be reliable due to
the weaknesses in the process of the interviews which may result in erroneous
recruitment outcomes.
Describe four shortcomings in the interview process which, in your opinion, may
result in erroneous recruitment outcomes. (06)

This question required the candidates to describe four shortcomings of the interviews
process which many result in erroneous selection. Though performance in this
question was reasonable yet many candidates focused on the personal shortcomings
of the interviewer instead of covering all aspects of the interview process.

The recruitment interviews may result in erroneous selection outcomes because of the
following shortcomings:
(i) Interviewers do not possess the requisite job knowledge and/or interviewing skills to
evaluate objectively the suitability of the candidates for the particular position.
(ii) Interviewer’s judgments may be influenced by the candidate’s affiliations with
educational institutions, racial backgrounds and political leanings.
(iii) Interviewers often make up their minds about a candidate within the first few
minutes of the interview on the basis of the candidate’s CV, mannerisms and
appearance and do not utilize the available time for objective evaluation.
(iv) Interviewers are not able to concentrate at the same level over prolonged periods
when they are required to interview several candidates in a single session.
Consequently all the candidates may not receive the same degree of attention and
discerning evaluative capability from the interviewers.
(v) In panel interviews individual interviewers often assign widely different marks on the

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rating scale because of lack of specific criteria and on the basis of their own perceptions.

Sigma Corporation Limited (SCL) is engaged in the business of manufacturing assorted Summer
range of components and parts for different types of original equipment 2014, Q4(a)
manufacturing and assembling units. SCL wants to implement high performance work
systems in the different stages of the manufacturing processes.
State the practices that SCL must adopt to achieve high performance work systems in
all their manufacturing processes. (06)

In this question, the candidates were required to explain various practices that may be
followed in order to achieve high performance work systems in the manufacturing
process. Significant number of candidates performed well as they covered important
areas like recruitment, training, job description/specifications, working environment,
communication, equitable rewards/compensation system etc. However, some
candidates highlighted points such as procurement of high quality raw material (JIT)
inventory control system and conducive relationship with external suppliers etc. which
were irrelevant. Some candidates mentioned very general points like innovative
thinking and hiring of consultants for system design, etc. Moreover, some of the
answers were too brief; for example, many students mentioned a point just in two
words i.e. ‘job description’ or ‘employee selection’ without explaining as to what they
wanted to say.

SCL must adopt and implement the following policies to achieve high performance work
systems in the manufacturing process:
(i) well-designed policies for recruitment, selection, training and development of the
workers involved in the manufacturing processes;
(ii) having properly aligned job descriptions and job specifications and ensuring that all
positions are filled-in by trained and skilled workers in the different stages of the
manufacturing processes;
(iii) having a congenial and safe working environment in which the workers are provided
proper tools and equipment to perform the task assigned to the different individuals.
(iv) having both formal as well as open systems for sharing and exchange of information
between the workers at the floor levels and their supervisors.
(v) appropriate promotion and compensation systems for recognition and rewards to
achieve high levels of work performance .

Identify the business strategy/policy/definition which is most appropriate in each of Summer

the following situations: 2014, Q6
(i) A leading manufacturer of textile products is considering acquiring an existing fast-
food chain which has outlets throughout the country. It is pursuing a policy of
________.
(ii) Fortune Bank Limited envisages adding 50 new branches to its existing network of

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450 branches in the country. The bank is launching a policy of ________.
(iii) Sunrise Juices Limited manufactures an assorted line of juices, jams and pickles.
The company is in the process of acquiring a fully developed 500 acre fruit and
vegetable farm to meet a significant proportion of its raw material requirements.
Sunrise Juices is pursuing a policy of ________.
(iv) Super Sports is engaged in the manufacture and export of hand-stitched footballs
and pays salaries to its employees according to the number of units stitched during
the course of a week. The employees are paid ________ salaries.
(v) The favourable impact which a well-entrenched brand has on customers
perceptions of quality of the product and would contribute to the future high earnings
potential of the company is known as ________.
(vi) A multinational company follows a policy of manufacturing products and adapting
its marketing strategies to the local environments in the different countries in which it
operates. This multinational company is pursuing a policy of ________.
(vii) Tests designed to evaluate the skills and competency levels of candidates to
perform the jobs actually required of these individuals are called ________.
(viii) The cumulative pool of education, knowledge, skills, expertise and training of the
individual workers in an organisation is known as ________.
(ix) A competitor who aggressively pursues a policy of undermining the status of the
market leader is called a ________.
(x) A process by which a multinational company having a number of subsidiaries in
different countries may make adjustments of foreign currency transactions/balances
among the different subsidiaries is called ________. (10)

Strategy and CSR

HR and Change Management vii, viii, iv

Marketing i, ii, iii, ix, v

International Business vi, x,

This question contained 10 parts of one mark each in which the candidates were given
definitions of various business terms and were asked to correctly identify the
described term. Overall performance in the question was average as most of the
students secured around passing marks. Some students gave more than one choices. It
must be noted that in case there are more than one answers, all answers are
cancelled.

The appropriate business strategy/policy/definition are:

(i) diversification/conglomeration

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(ii) market penetration / market expansion/ market development
(iii) backward integration
(iv) performance based
(v) brand equity
(vi) polycentrism
(vii) proficiency tests
(viii) human capital
(ix) market challenger
(x) multilateral netting

Peak Corporation Limited (PCL) has acquired your services as an HR Consultant for Winter 2013,
preparation of employee disciplinary procedures to be implemented in the Q2
organisation. The draft procedures would be presented to the management for
approval and inclusion in the Employee Handbook, copies of which would be provided
to all the employees.
State the important aspects of the guidelines that you would cover in the draft of
employee disciplinary procedures in PCL. (08)

This was a direct question in which the candidates were required to state the
important aspects of the guidelines that are covered in employee disciplinary
procedures.
The overall performance was average as many students did not adhere to the exact
requirements of the question. Some of them tried to draft the disciplinary procedures
which were not required. Some students mentioned guidelines related to routine
matters also which were not asked for.

The important aspects of guidelines of the draft disciplinary procedures of PCL should
include the following:
(i) Specific mention that whether the procedures would apply to all the employees or
only to certain categories of employees in the organisation.
(ii) List of the types of improper conduct/offences that would constitute violation of
rules and warrant disciplinary action.
(iii) Statement of the manner of communication of the specific charge of
misconduct/offence which may be an oral warning or in the form of a memo in writing
to the concerned employees.
(iv) Statement of the types of disciplinary actions that would be taken for the various
offences committed by the employees.
(v) Stipulation that every case would be properly investigated before any disciplinary

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action is proposed against the concerned employees.
(vi) Stipulation that the reason(s) for imposition of any penalty would be provided to the
concerned employees.
(vii) Clear statement that the concerned employees would be provided an opportunity
to respond to the charges and present their case within a specified time limit.
(viii) The employees right to appeal and the procedure for filing of appeal against any
disciplinary action/imposition of any penalty.
(ix) Level of the officials who would be responsible for instituting enquiries against
employees in various grades.
(x) The time limit in which all the matters would be disposed of to ensure prompt and
speedy action.

Governments in all countries consider it their responsibility to promulgate and Winter 2013,
implement laws and policies concerning health, safety and security of workers. State Q7(a)
five objectives which governments seek to achieve by making these laws and ensuring
their compliance. (05)

In this part the candidates were required to state the objectives that governments
seek to achieve by promulgating health and safety laws. It was an easy question and
most students did well. However, some students seemed confused. They covered it
more from employer’s perspective and discussed matters such as good image and
corporate social responsibility.
Some students offered detailed explanation of each objective without realizing that
this was a five mark question and each objective carried just one mark.

Governments seek to achieve the following objectives by promulgating comprehensive

laws and enforcing compliance of these laws for the health, safety and security of
workers:
(i) Encouraging employers and employees to reduce hazards in the work place and
strengthening the health, safety and security programs.
(ii) Establishing minimum safety and health standards.
(iii) Creating an effective legal framework for enforcement of the rules and regulations.
(iv) Framing procedures for reporting of job-related accidents, injuries, illnesses and
deaths.
(v) Preventing employment of child workers.
(vi) Providing special facilities for female workers.

State what is meant by the term ‘Employee Attitude Survey’. How an Employee Winter 2013,
Attitude Survey is conducted and what are the different purposes for conducting the Q9

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survey? (05)

In this question the students were asked to state the meaning of employee attitude
surveys and to explain how and for what purpose they are conducted. Most of the
students mentioned about the use of questionnaires and interviews for the conduct of
surveys. However, very few of them could give the purpose of such surveys except that
these are conducted to obtain employees’ opinions.
Many students seemed very much confused as they also discussed entirely unrelated
issues like employee disciplinary procedures, performance appraisals and behavioral
interviews, etc.

Employee Attitude survey is a systematic investigation of the views and opinions of the
employees in an organisation on issues relating to the work of the organisation or their
role within the organisation.
Employee attitude survey may be conducted by means of questionnaires or interviews.
Employee attitude survey may be undertaken:
(i) to make a general assessment of employee morale
(ii) to obtain their opinion/input regarding introduction of any new policy in the
organization
(iii) to encourage employee commitment in the planning and implementing new
initiatives in the organization
(iv) to give the employees a sense of ownership in the organization’s decision making
process.

Goodhope Enterprises had implemented several employee incentive schemes with Winter 2013,
the expectations that they would raise the level of motivation amongst the employees Q10
and improve their overall performance. However, the incentive schemes failed to
yield the desired results and the company’s management has initiated enquiries to
determine the reasons for the lack of success of the incentive schemes.
Identify and explain three factors which in your opinion may have contributed to the
lack of success in the implementation of the incentive schemes. (06)

The question referred to a situation which is commonly faced by many companies, i.e.
where incentive schemes fail to achieve the desired results. The candidates were
required to discuss any three factors that may give rise to such a situation. The
performance in this question was good as the students usually had good idea of such
factors.

Lack of success in implementation of incentive schemes by Goodhope Enterprises may

be due to the following factors:
(i) Increased earnings may not have been an incentive for some individuals. Employees

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who already have enjoyed adequate income may be more concerned with other aspects
of their work, such as leisure time.
(ii) Employees may have felt that their efforts have not received adequate recognition
due to external impediments or inefficiencies prevailing elsewhere in the organisation.
This may have led to frustration and discontentment amongst such employees and
adversely affected their performance.
(iii) Even if employees were motivated by money, the effects may have not been
altogether in the best interests of the company. An individual orientation may
encourage self-interest at the expense of teamwork; it may lead to emphasis on output
at the expense of quality and lowering of standards to achieve bonus incentives.
(iv) Employees may have perceived that the targets set by the management in the
incentive schemes are not achievable in spite of their best efforts and that the scheme
is a ploy to extract more work from them. Further, the employees may have considered
that the incentive schemes to be of a discriminatory nature and may be manipulated to
favour certain individuals rather than to be adopted equitably for the entire workforce.

Briefly state what is meant by the following terms: Winter 2013,

Q11
(i) Human resource management
(ii) Offshore manufacturing
(iii) Behavioural interviews
(iv) Competency-based salary system
(v) Tax havens (10)

Strategy and CSR

HR and Change Management i, iii, iv

Marketing

International Business ii, v

This was a straightforward question which required meaning/definition of five

terms/concepts. The terms Human Resource Management and Competency Based
Salary System were generally well defined
In defining offshore manufacturing, majority of the students simply mentioned
manufacturing in other countries but only few could clearly state the motive and
methodology i.e. awarding contract to produce where labour and/or raw materials
are cheap and then importing them in the country where the firm which awarded the
contract is located. Many candidates confused it with offshore oil drilling and some of
them incorrectly stated that offshore manufacturing is carried out by establishing
plants outside the country.

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Most of the students did not have any idea of the concept of behavioral interviews.
Many students made wild guesses, for example some of them mentioned that in
behavioral interviews, gestures and posture of the interviewees are observed.
Tax havens were better described but some students went to the extreme and stated
that in tax havens there are no taxes.

(i) Human resource management involves planning, organising, directing and

controlling the human resources by placing the right persons in the right places and
providing them with training in order that they make effective contribution towards
achievement of the organisation’s corporate objectives.
(ii) Offshore manufacturing means an arrangement by which a firm in one country
enters into a contract with a foreign-based firm in another country to manufacture its
products or components on behalf of the firm which has awarded the contract.
(iii) Behavioural interviews are conducted to ascertain how the candidate responded to
various real-life job-related situations in the past.
(iv) Competency-based salary system means the employees are paid for the range of
skills and knowledge they provide to the employer, rather than for the positions or jobs
that the employees hold.
(v) Tax havens are countries that have highly generous tax laws to encourage foreign
citizens to conduct their operations in such countries.

Grand Shipping Company Limited (GSCL) operates a fleet of container ships and plies Summer
on some of the busiest sea routes. To render efficient services in a competitive 2013, Q1
business environment, it is critical for GSCL to develop and retain a trained and
motivated workforce comprising of onboard crew, staff at the ports and office
personnel. GSCL makes concerted efforts to implement high-performance systems in
all spheres of its operations in which the human resources are of vital importance.
Describe the human resource policies and practices which may have contributed
towards GSCL’s success in achieving high-performance systems in its operations. (09)

This question pertained to a company which was involved in shipping operations but
most of the students mentioned the general functions of a Human Resource
Department with no specific points that may be applicable to a shipping company. For
example, majority of the students mentioned hiring duly qualified employees, their
training and development and performance based pay but specific issues such as
cultural flexibility, ability to work in diverse working conditions and pursuance of
transformational style of management were covered by few students only.

The following human resource policies and practices may have contributed towards
GSCL’s success in achieving high-performance systems in its operations:
(i) Selective Hiring – Pursuance of rigorous hiring procedures and recruitment of only
those individuals who have necessary qualifications/skills, fitness, aptitude and

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willingness to perform in challenging and demanding work environments.
(ii) Extensive Training Programs – GSCL would have accorded high priority to the
learning proficiencies, cultural flexibility and open mindsets of its staff to perform in
diverse working conditions because official regulations, working environment and
cultures vary considerably from ports to ports. Comprehensive training would have
been provided on a continuous basis to enable the employees to meet the challenges in
the performance of their duties.
(iii) Self-managed teams and decentralised decision making – GSCL would have
developed effective work groups and teams of individuals of diverse backgrounds, both
on the ships and at the ports, because they are required to take timely actions, reach
well-considered decisions and assume responsibilities.
(iv) Emphasis on high-quality performance – A culture of high quality performance from
the employees would have been expected and encouraged at all levels since their
cumulative efforts are of critical importance for achievement of GSCL’s goals.
(v) Pay for performance rewards – A performance related rewards system would have
been instituted in GSCL in order to retain a motivated and committed workforce. Such a
reward system must have been perceived by the employees to be fair, equitable and
merit-based.
(vi) Employment security – GSCL would have provided security to its employees in order
to gain their loyalty and commitment for achieving top quality performance.
(vii) Transformational leadership – The top leadership would have pursued a
transformational style of management whose positive impact permeates at all levels in
GSCL. This style of leadership would be a source of continuous inspiration and
motivation for the employees who have to work as a coordinated team.

State the advantages of pursuing a policy of congenial human relations management Summer
in a large-sized industrial organisation having several divisions/departments. (05) 2013, Q4(a)

This was a very easy question. However, most of the answers were restricted to
explaining that a policy of congenial human relations management in a large-sized
industrial organization would increase motivation, efficiency and commitment among
the staff and that pursuance of this policy would facilitate two way open
communication in the organization. The points that such a policy would minimize
industrial conflicts and create an environment for amicable settlement of grievances
and disputes were missed by a number of students. Some students kept on stressing
the same point, mostly about motivation, in different words and lost easy marks.

(i) A policy of congenial human relations management would enable the organisation to
achieve harmonious working relationships between the management, employees at
various levels in different departments and the workers union.
(ii) A policy of congenial human relations management would encourage commitment
and motivation among the employees at all levels to achieve high levels of productivity

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and profitability to achieve the corporate objectives.
(iii) A policy of congenial human relations management would minimise industrial
conflicts and establish procedures for prompt and amicable settlements of grievance
and disputes.
(iv) A policy of congenial human relations management would facilitate two way
communication and dissemination of information between the management and the
employees at different levels and build trust and promote better relations in the
organisation.
(v) A policy of congenial human relations management would achieve optimal employee
flexibility.

In the course of selection process, candidates are administered various kinds of tests Summer
to ascertain their suitability for the positions. These tests must show a high degree of 2013, Q4(b)
Reliability and Validity.
State what is meant by Reliability and Validity of these tests and why these concepts
are considered important in the selection process. (05)

The question pertained to the reliability and validity of selection tests. Surprisingly, a
very large number of the replies were off the mark. Some of the answers did not bear
even remote awareness of the concepts of reliability and validity. For example, while
discussing reliability, many candidates discussed matters related to confidentiality and
invigilation during the test. While discussing the importance of reliability and validity
many candidates gave general comments such as these would ensure selection of
suitable candidates or elimination of inappropriate candidates. Such comments should
be avoided as these are indicative of the fact that the candidate does not understand
the exact concept, because selection of the right candidate is the ultimate objective.
How reliability of the test is important, for achieving this objective, requires a more
specific answer.

Reliability means that the tests yield consistent scores when the same test is
administered to an individual on two or more different occasions. Reliability is
important because if an intelligence test is given to an individual on two separate
occasions and the results show marked variations, then there would not be much faith
in the consistency of the results and it would lead erroneous decisions.
Validity denotes the accuracy with which a test is able to measure what it purports to
measure. Validity of a test refers to the correctness of the inference that can be made
on the basis of the results of the test. The result of a high test score administered to an
engineer should reflect on the candidate’s on-the-job performance to substantiate the
validity of the test. A selection test must show valid results, otherwise there would be
no justification to continue with the particular test.

Identify the business strategy/policy/definition which is most relevant in each of the Summer

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following situations: 2013, Q5
(i) The process through which representatives of management and workers union
negotiate a labour agreement is known as __________
(ii) Promotion of a firm’s brand status and acceptability by increasing customer
perception of its superiority over other brands of similar products is __________
(iii) A form of promotion that links a brand of a consumer product to cultural, social,
sports or other activities of high public interest is known as __________
(iv) A company’s obligation to be sensitive to the needs of all its stakeholders and
create an overall positive impact on the society is known as __________
(v) The approach in which a multinational company assigns the best employees to key
positions in its worldwide operations regardless of their nationalities is __________
(vi) The activities of two or more businesses when brought together create value that
is greater than the value which they can achieve individually is due to the effect of
__________
(vii) The protection granted by law to intangible assets such as patents, copyrights,
trade marks and authors of books is called __________
(viii) Purchase of all or part of a business from its owners by its managers is called
__________
(ix) Potential changes in political conditions in a country that may cause a company’s
operating performance or financial position to deteriorate are called __________
(x) Implementation of measures to reduce electricity, petrol/diesel and gas
consumption by efficient control and management and also to protect the natural
environment is called __________ (10)

Strategy and CSR vii, ix, x, vi, viii, v

HR and Change Management i

Marketing ii, iii

International Business v

This was an objective type question where 10 different situations were given and in
each case, the students were required to mention the term which could best describe
the given situation. An average performance was witnessed which was
understandable because each situation had a specific answer and only those students
who had good understanding of the topic could answer them. The advice here is that
specific terminology or business jargon should be used in such questions. Other terms
are not acceptable. For example in sub part (i), many students stated Labor Union
Agreement or Labor Management Negotiation whereas the correct answer was

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Collective Bargaining.

(i) collective bargaining

(ii) brand positioning
(iii) event related marketing/promotion/sponsorship
(iv) corporate social responsibility
(v) geocentric staffing/orientation/geocentricism
(vi) synergy
(vii) intellectual protection rights
(viii) management buy-out
(ix) political risks
(x) energy conservation

Mercury Telecom Limited (MTL) recognises the need for developing a cadre of trained Summer
management staff to provide efficient services to its customers. You have been 2013, Q10
engaged by MTL as an external consultant to prepare and implement a Training and
Development Program for its new management trainees.
Describe the essential steps you may take to develop a comprehensive Training and
Development Program which would meet the management training objectives of
MTL. (07)

This last question was about training steps. The essential steps to develop a
comprehensive training and development program had to be described. The
performance was below average. Generally, the students tried to give lengthy
answers by going into too much detail, whereas, important points such as gap
analysis and issues related to training material and training methods were mostly
missing. A common error was that review or evaluation of the training program was
mentioned after mentioning the implementation of training steps. Validation has to
be done before the implementation else all the resources deployed may go down the
drain. Instead of giving steps involved, many candidates described the matters that
should be taken care of, to ensure that the training program is successful. Most such
points were irrelevant and did not fetch any marks.

The creation of a comprehensive Training and Development program for the new
management trainees would involve the following steps:
(i) Conduct a need analysis approach to identify the required job performance skills and
match them broadly with the levels of present skills of the management trainees and
develop specific objectives to overcome the deficiencies.
(ii) Design and compile the training program material, including instruction manuals,
exercise workbooks for providing job related learning skills and computer-assisted

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learning modules.
(iii) Devise a validation program which would be presented to a small group of trainees
so that the initial flaws and shortcomings, if any, in the training material are rectified.
(iv) Administer the training and development program by imparting training to the
individuals nominated by MTL to participate in the program. The training would be
provided through lecture sessions, participative seminars and simulated on-the-job
learning techniques.
(v) Evaluate the effectiveness of the training and development program by assessing the
extent of success of the program towards enhancing work skills among the trainees and
achieving the objectives of MTL.

Sitara Limited is a well-known manufacturer of a wide range of chromium plated Winter 2012,
sanitary fittings in Pakistan. The company has recently negotiated several long-term Q2(a)
contracts for export of various items of sanitary fittings. Consequently, the work force
would have to be increased significantly in a short period to expand the production.
Prior to recruiting the new workers, Adnan Khan, the Human Resources Manager,
intends to prepare a HR Skills Information Database of the existing employees. Briefly
discuss the purpose, usefulness and relevance of compilation of HR Skills Information
Database in the areas of recruitment, training and development and succession
planning of Sitara Limited. (06)

This question pertained to HR Skills Information Database and its usefulness in the
areas of Recruiting, Training and Succession Planning especially with reference to an
organization which is about to recruit new workers, to expand production. Generally,
the students performed well. However, some of them confused it with normal HR
database rather than HR Skills database.

The compilation of Human Resource Skills Information Database has relevance and
usefulness in the recruitment, training and development and succession planning in
Sitara Limited in the following areas:
(i) Recruitment – Compilation of HR Skills Information Database in a systematic manner
would help Sitara Limited to identify the pool of skills and experiences of the employees
currently available within the organization and fill in the skill gaps by induction of new
employees for the expansion of the facilities and efficient functioning of the
organization to meet its corporate objectives. This is necessary to ensure recruitment of
only such skilled employees who can contribute to the company’s requirements for
expansion of its manufacturing capabilities.
(ii) Training and Development – HR Skills Information Database would help to identify
the deficiencies and weaknesses among the existing workers and adopt appropriate
training and skills development programs to enable them to perform their work more
effectively and strengthen the HR capabilities of Sitara Limited.
(iii) Succession Planning – HR Skills Information Database would help to identify

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employees who are most suitable for promotion to higher levels in the organization
hierarchy due to the creation of new openings in the firm and also in the event of
retirement or death of an employee. A proper HR Skills Information Database would
help to match these individuals with the HR requirements at various levels and fill in the
vacant position promptly without causing any disruptions or delays.

A number of firms prefer to conduct Performance Appraisal of their skilled workers on Winter 2012,
a quarterly basis rather than as an annual exercise. Identify three advantages of Q2(b)
pursuing this policy of quarterly Performance Appraisal of skilled workers. (03)

This part required identification of advantages of quarterly performance appraisal of

skilled workers rather than as an annual exercise. Majority of the answers were quite
satisfactory. However, some students did not read the question carefully and
mentioned advantages of performance appraisal without discussing the main issue,
i.e. how often should appraisal be carried out. Some students discussed the
advantages from the point of view of employees instead of discussing from the
employers point of view.

The advantages of a policy of Quarterly Performance Appraisal of skilled workers by

such firms are:
(i) Employees efforts and capabilities are recognised promptly and they are suitably
rewarded for their performance resulting in enhanced performance level of the
individual employees in terms of productivity and low material losses due to defects in
workmanship.
(ii) The employer can ensure that the quality specifications of its products are strictly
adhered to.
(iii) The employer is able to identify and retain the highly skilled workers and promptly
replace those workers who are unable to meet the quality standards
(iv) Employees make sustained efforts throughout the year, rather than strive to achieve
high levels of performance close to the year end to earn good appraisal rating.

Although companies experiencing high rate of employee turnover are in a position to Winter 2012,
recruit new workers quickly to replace the outgoing employees, most of them are not Q2(c)
aware of the real costs of the high rate of turnover of their employees. Briefly
describe the different types of costs which are associated with high rate of turnover of
employees. (04)

This part required the students to describe the different types of costs that are
associated with high rate of employee turnover. These costs may be enormous but are
quite often ignored. The students generally performed well and identified and
described the relevant costs such as training and recruitment costs, cost of lost
productivity/sales and the loss of competitive advantage, etc.

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The costs associated with a high rate of turnover of employees include:
(i) Hiring Costs – comprising of recruiting and advertising expenses, salaries of
interviewers, employee testing costs, verification and reference checking time and
expenses.
(ii) Training Costs – including cost of orientation time of new workers, staff time and
salaries of trainers, cost of training materials, supervisors’ and co-workers “coaching”
time and salaries.
(iii) Productivity Costs – including lost productivity due to “break-in time” of new
employees and lack of awareness of the company’s products and services.
(iv) Separation Costs – such as HR staff and time of supervisors and salaries to process
separation formalities and exit interview time and costs.
(v) Disclosure of Confidential Information – former employees may pass on expert
knowledge or disclose important confidential information to competitors.

Identify the strategies/policies/objectives which are being pursued in each of the Winter 2012,
following cases: Q4
(i) Poshak Fashions (PF) are designers and manufacturers of superfine cotton
garments and have their two outlets in Karachi and Lahore. PF produces only limited
quantities of their exclusive designs of garments for the narrow niche market of the
most fashion-conscious customers. PF introduces new designs of garments for the
coming season and the unsold inventory at the end of the previous season is sold at
lower prices to other retailers in the country after removing PF’s prestigious labels. PF
is pursuing a __________ market strategy.
(ii) Super Beverages believes that the world is one big market for its products and its
various subsidiaries and divisions pursue a uniform marketing strategy for sale of its
products in different countries. Super Beverages has adopted a __________ strategy
for marketing its products in different countries.
(iii) Sarmad Group is a pioneer in the textile industry in the country. The second
generation entrepreneurs of this Group have ambitious plans to launch new ventures
in telecommunications, electronic media and real estate development. The Group is
now seeking to follow __________ strategy.
(iv) To press for their demands, employees of Citizens Bank Limited have decided to
work strictly according to the terms of their contract of employment and refuse to
perform any extra tasks, resulting in slow down of banking services and causing
inconvenience to customers. The employees of Citizens Bank Limited are pursuing
__________ policy.
(v) Good Meats has recently established several retail outlets to sell selected cuts of
choice meats and establish its own brand name in a high growth market before new
competitors enter this market and set up their business on similar lines. Good Meats
wants to seize the __________ advantage of this market.

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(vi) Neptune Chemicals, a manufacturer of industrial chemicals, has established
independent units who would be responsible for development of their own marketing
strategies within the company’s overall market and customer focus to be able to serve
the needs of the various categories of customers more efficiently. The independent
units are __________ of Neptune Chemicals. (06)

Strategy and CSR

HR and Change Management iv,

Marketing iii, v, vi, i

International Business ii,

In this question, six brief situations were given and the students were required to
identify the types of strategies, policies or objectives which the organization was
pursuing, in each of the given situations.
An average response was seen as most students were able to give 3 or 4 correct
answers. In response to part (ii) the appropriate answer was Global; but Geocentric
was also acceptable. However, many students wrote ethnocentric. Majority of the
students had no idea of the concepts of ‘Work to rule’ and ‘First mover advantage’.
Many students probably tried to use “write what you know” approach and just
identified whether the given situation reflected a policy, a strategy or an objective.
Most students were not familiar with the technical business terminology or jargons.
Specialized terms capture the complexity and specificity of business concepts. No other
words can encapsulate their meaning and if they are replaced by normal
“transliterated” words, then that meaning is lost. Many students gave explanatory
footnotes in support of their answers which were not required and resulted in wastage
of precious time. There were some students who generated multiple answers; such
answers are not acceptable.

(i) Market skimming

(ii) Global
(iii) Conglomerate or Diversification
(iv) Work-to-rule
(v) First mover advantage
(vi) Strategic Business Units

HR Managers often deal with delinquent employees and encourage them to change Winter 2012,
their attitude and behaviour and adopt a positive approach towards their Q5(a)
responsibilities to the organisation. Consequently, HR Managers have to exercise
considerable discretion and provide proper guidance to the employees, rather than

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resort to immediate extreme punitive measures. Identify and explain briefly the
various stages of dealing in a fair and equitable manner with employees involved in
wrongful behavior/actions. (08)

Students displayed lack of knowledge of the issue namely the stages of dealing with
employees involved in serious offences or gross misconduct. The question specifically
required identification and brief explanation of the various stages. However, many
students patched all the stages together in one long point. They generalized their
answers stating that after oral and written warning if the behavior does not show
signs of improvement, the employee should be discharged. Some of them only listed
down possible actions against such employees with few even concluding that HR
should try to be polite. In many cases, the stages identified by the students were
unorganized and indistinguishable.
Some students broke down the initial stage of investigation into multiple points, each
describing the different ways the matter should be investigated. So much detail was
not required.
While discussing the last stage of Discharge or Termination, many students ignored a
very important point i.e. that the legal formalities should be complied with while
terminating an employee; otherwise it may have serious implications for the
employer.
After describing the various stages many students stated that the process should be
fair, equitable and confidential which was not really required as it was mentioned in
the question itself.

A competent HR Manager should pursue the following stages in handling employees

who have been involved in behavior/actions which are contrary to the rules of company
discipline :
(i) Investigation – A thorough investigation should be undertaken of the nature of the
delinquent behavior of the employee and the factors which have led the employee to
behave and conduct himself in a manner which is contrary to the accepted norms of the
firm’s rules and discipline.
(ii) Counseling – The objective in this phase is to create awareness among the
employees of organizational policies and rules. Often, creating awareness of rules and
knowledge of disciplinary actions may prevent violations by the employees. Counseling
by the immediate supervisor can have positive effects.
(iii) Written documentation – If change in behavior is not achieved, then a second
session of meeting with the concerned employee would become necessary. Whereas,
the first phase took place as a conversation between the supervisor and employee, the
proceedings of this meeting are documented in written form in which the employee and
the supervisor prepare written solutions to prevent further continuation of the
problem.
(iv) Final warning – When the employee does not follow the written solutions noted in

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the second step, a final warning meeting is held. In this session, the HR official
emphasizes to the employee the importance of rectifying the inappropriate
behavior/actions. Employers may also demote employees or temporarily suspend their
services for a limited period with pay. The demotion/suspension period is used to
demonstrate the seriousness of the problem and the organisation’s determination to
bring a change in the behavior of the employee.
(v) Discharge – If the employee fails to follow the action plan that was developed and
the problem continues to persist, then the services of the employee are terminated
after giving notice and keeping all the legal implications of the action in perspective.

Blue Transport Company (BTC) operates a fleet of 150 buses which provides inter-city Winter 2012,
transport services. The company takes considerable pride in the superior quality of its Q8(a)
services. BTC accords a high degree of importance to the human relationship
management of its employees, comprising of the ticketing staff, drivers and
maintenance crew as it believes that the commitment of its staff is a critical factor for
the success of its business.
Describe the benefits that BTC expects to derive by pursuing a well-conceived policy
of good human relations management between the employer and the employees.
(05)

Students performed well in this question as almost all the students could mention the
benefits which BTC (name of company) expects to derive by pursuing a well-conceived
policy of good human relations management between the employers and the
employees.

BTC expects to derive the following benefits by pursing a well-conceived policy of good
human relations management between the employer and the employees:
(i) The employees at all levels would be committed to achieve high levels of
performance in providing good service resulting in customer satisfaction.
(ii) A more co-operative work environment would encourage better team work among
the various cadres of employees leading to safety of the passengers, vehicles and staff.
(iii) The reduced lost time due to good maintenance of the vehicles and more efficient
handling of customers would result in low operating costs and higher profitability.
(iv) The staff would be satisfied with the management’s good relations policy which
would result in low absenteeism and minimum employee turnover rate.
(v) There would be open communication between the management and the staff and
sharing of information to achieve positive results.
(vi) The good human relations policy would encourage training and development of the
staff at all levels.

What is meant by Competency–based Job Descriptions? (03) Winter 2012,

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Q8(b)

Very few students could appropriately explain as to what is meant by a Competency

Based Job Description. Most students could not mention the most important
distinguishing factor i.e. that Competency Based Job Descriptions are primarily
worker-performance focused rather than work-description focused.

Competency–based job descriptions define observable and measurable behaviour traits

of skills and performance that individuals must exhibit to do the job efficiently.
Competency–based job descriptions are primarily worker performance-focused rather
than work description-focused and place high degree of emphasis on achievements.
Competency–based job descriptions specify that the employees must be capable of
achieving high levels of performance and commitment in demanding and highly
challenging work environments.

Employee Training is an important function of Human Resource Department of Apollo Summer

Engineering Limited, a company which considers workers skills at the factory floor 2012, Q3(a)
level to be critical for achieving the overall strategic objectives. The HR Department
classifies the factory employees in 3 categories as follows:
(i) Competent to perform in the present position.
(ii) More than competent to perform in the present position.
(iii) Not yet competent to perform in the present position.*
*Note: These employees are not incompetent
Briefly discuss the Training Needs of employees in each of the above categories and
explain how they would help Apollo Engineering Limited to improve motivation
amongst the employees at all levels. (08 marks)

The Training Needs of employees in three categories namely competent, more than
competent and not yet competent to perform in their present positions were to be
discussed in this question. Also how this training would enhance motivation at all
levels was required.
Training and learning and development are common and usual organizational
activities aimed at improving the performance of individuals. Therefore, it was
expected that students would give apt answers from their cognitive awareness and
observations if not from text book learning. Quite regrettably, the answers did not
meet the examiners’ expectations. Most of the students could not differentiate
between the training needs of the different categories of employees, mentioned in the
question.
A number of students stated that training is not required for competent employees
and extensive training is required for not so competent ones. There was no mention of
how specifically to train them or which skills should be provided.

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Training Needs of employees of Apollo Engineering Limited in the different categories
are:
(i) Competent to perform in the present position: These employees should be provided
training by way of lecture sessions and skills enhancement programs to enable them to
be able to handle assignments in the next stage of competence. Appropriate training
programs for these employees would upgrade their work skills and retain their
motivation levels.
(ii) More than competent to perform in their present positions: These employees
should be provided training opportunities through participation in seminars, job
enrichment and job rotation to assume greater challenges and to facilitate them to
move to higher positions. In case it is not possible to promote such employees, their job
satisfaction level can be increased by delegation of authority and responsibilities and
redesigning their jobs. Such measures will increase their level of motivation and deter
them from seeking job opportunities elsewhere.
(iii) Not yet competent to perform in the present position: The specific areas of
weaknesses of these employees should be identified and on the job training should be
provided to enable them to overcome their weaknesses and perform efficiently. Since
employees in this category are not incompetent, providing proper training through
lecture sessions, workshops and on the job training would improve their skills and help
them to achieve competency in their present positions.

Appropriate Employee Compensation and Reward Packages are central to a healthy Summer
and enduring relationship between the employer and the employees. These 2012, Q3(b)
Compensation and Reward Packages comprise of salaries and fringe benefits, pleasant
working environment, career growth opportunities, challenging work, self-respect and
sense of achievement, etc.
What principal objectives should an employer seek to achieve through a well-
formulated Employee Compensation and Reward system for a service-oriented
company operating in a competitive business environment? (06 marks)

A very important issue in Human Resource Management is Reward and Compensation

System. The aims and objectives of rewards were the issues to be analyzed here. The
performance in this part was good as the students were able to mention at least some
of the points. However, some of the students gave entirely irrelevant answers like
types of rewards and basis or criteria on which rewards should be based, etc.

The Employee Compensation and Reward system for a service-oriented company

operating in a competitive business environment should be designed to achieve the
following objectives:
(i) Obtaining support of employees for the main strategic objectives of the service-
oriented company for innovation, efficiency, teamwork and high standards of customer
service.

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(ii) Building of a durable and mutually beneficial long-term relationship between the
employer and the employees.
(iii) Deriving significant value-addition at all the stages of customer service chain
because human resources are strategic assets of a service-oriented company and
personnel costs account for a substantial portion of the total administration costs.
(iv) Inducting and retaining a pool of suitably skilled and motivated work force.
(v) Inculcating a sense of financial transparency and fairness of the compensation and
reward system among the employees.
(vi) Articulating in precise terms the organization’s expectations of employee
performance and service standards to create a competitive business advantage.
(vii) Aligning the compensation and reward packages with the comparative packages
offered by the competitors.

What is Wilful Misconduct? State why acts of Wilful Misconduct are considered as Summer
serious offences by employers. Identify four situations in which an employee may be 2012, Q4(a)
guilty of Wilful Misconduct. (04 marks)

Wilful Misconduct was to be explained and situations where an individual was guilty
of the same were to be identified. Most students were able to correctly explain the
term and also quoted the four situations in which an employee would be guilty of
wilful misconduct. However, many students gave incorrect examples also. It must be
noted that late coming and absenteeism would not be considered as wilful misconduct
unless it is done with the malicious intent of foul play and to hamper/paralyze the
working of the organization. An important point which many students ignored is that
any explanation of Wilful Misconduct would be incomplete unless it is mentioned that
the misconduct was done on purpose. Just stating that an employee committed a
misconduct or an act which harmed the organization is not adequate.

Wilful Misconduct is a deliberate act of violation of rules of employment by an

employee. Acts of Wilful Misconduct are considered to be serious offences as they can
cause serious financial loss to the employers and their reputation or pose grave risks to
the health and safety of other employees.
The situations in which an employee may be liable to be guilty of Wilful Misconduct are:
(i) Theft.
(ii) Fraud.
(iii) Misuse of official properties/assets.
(iv) Damage to employer’s property with malicious intent.
(v) Harassment of other employees.
(vi) Gross misbehaviour with supervisors, peers and junior staff.

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(vii) Conduct or actions which pose threat to the employee’s own life or the lives of
others.

Sona Sugar Mills is being established in the outskirts of a small rural town. The Summer
management has engaged a Chief Security Officer to plan for the security of the 2012, Q4(b)
employees and plant facilities.
State five measures which the Chief Security Officer should adopt to meet the
objectives of security of employees and physical facilities of Sona Sugar Mills. (05
marks)

Five security measures were to be identified which the Chief Security Officer should
adopt for the security of the employees of a Sugar Mill which is located at the
outskirts of a small rural town. Implicitly it is a remote, deserted and isolated region.
The most prevalent and common error here was that security was confused with
health and safety, presumably because these have been asked several times in the
previous examinations.

The following measures should be adopted by the Chief Security Officer to meet the
objectives of security of employees and physical facilities of Sona Sugar Mills:
(i) Access to the factory premises should be properly controlled by installation of CCTV
cameras and deployment of trained security personnel. Only employees on duty and
authorised visitors should be allowed entry inside the factory premises.
(ii) All vehicles/trucks carrying sugar cane and other supplies should be thoroughly
checked at certain designated points before they are allowed to enter the factory area.
(iii) Security awareness training and orientation should be provided to the employees
who should immediately bring any suspicious activity to the attention of the security
personnel.
(iv) Crisis Management/Emergency Training should be provided to the employees,
including procedures to be followed in the event of a bomb threat, armed attack, fire or
any other emergency and communicated to the employees.
(v) Policy regarding zero tolerance of any criminal activity should be adopted and
communicated clearly and understood by the employees for strict compliance.
(vi) Personal records of employees should be investigated to ensure that they do not
have affiliation with any groups engaged in criminal activities. This investigation exercise
should be conducted in a discreet manner without causing any undue concern or panic
among the employees.

Research in a number of organisational settings shows that efforts to introduce major Summer
changes for achieving the objectives of corporate turn-around and improvements 2012, Q7(a)
invariably meet with strong resistance from employees at various levels.
Identify the reasons why employees offer strong resistance to major organisational

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changes and prefer to continue with the existing status. (05 marks)

Most of the students had a clear idea of the reasons why Employees offer strong
resistance to major organizational changes and prefer to continue with the existing
status.

Employees offer strong resistance to major organisational changes and prefer to

continue with the existing status because of the following reasons:
(i) The employees may have concerns of financial insecurity due to loss of their jobs or
decline in their existing level of compensation.
(ii) The employees fear that they may lose their present position/status, power and
authority.
(iii) The employees may anticipate that changes in work assignments, alterations in
work processes and transfers would threaten their present work routines, patterns of
social-on-the-job interactions and friendships.
(iv) The employees may fear uncertainties in the new organizational design, attitudes
and working styles of new supervisors and their own status in the organisation in the
revised set-up.
(v) The failure of management to communicate to the employees in a convincing
manner the reasons and need for change which gives rise to suspicions and
apprehensions and results in resistance to change.
(vi) The fear of dissonance because employees may have to confront with new and
different process, systems, technology or expectations. The dissonance or discomfort
created by what is new or different is a psychological process which causes resistance to
change.

Sound Health Pharmaceuticals Limited (SHPL) is a reputable international company Winter 2011,
engaged in the business of manufacture of a wide range of medicines with facilities Q1
located in several countries. SHPL‘s products have been developed after long periods
of research at considerable costs and are prescribed by medical consultants for
patients suffering from life-threatening diseases. As Director of Human Resources, you
have to recruit Director Public Relations and Media Affairs to replace the incumbent
official who is expected to retire shortly.
Identify and explain briefly eight critical skills and competencies you would seek in the
prospective candidates for this high-profile position in SHPL’s senior management
hierarchy. (08 marks)

The Public Relations job means moving people to action by creating credible and
meaningful relationships between an organization and the people and groups
important to its success. This question required the candidates to specify the critical
skills required for the position of Director Public Relations. Skills like problem solving,
experience and knowledge of the business, interpersonal and communication skills,

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multi-tasking, leadership, writing skills, coordination with senior level executives, and
good management skills were mentioned by most of the students but appropriate
explanations were often missing. Moreover, since the question required eight critical
skills and competencies many candidates repeated similar skills using different words.
The students must understand that such techniques cannot impress the examiner and
simply result in wastage of time.

The critical Skills and Competencies required for the position of Director Public Relations
and Media Affairs of SHPL are:
(a) good understanding of SHPL’s mission, goals and objectives and the ability to
communicate them to all the stakeholders
(b) deep understanding and insight of the role of the various media channels in
projecting a positive image of the reputation and standing of SHPL
(c) demonstrable track record and experience in media relations and media contacts to
handle unforeseen situations which may affect SHPL’s reputation and image
(d) excellent interpersonal and communication skills with ability to deliver messages by
adopting appropriate styles, tools and techniques depending on the type of information
and the intended recipients
(e) good management and organisational skills and be able to prioritize and plan
activities taking into account factors such as deadlines and resources
(f) work closely with senior level executives as an effective member of the top
management.
(g) assimilate complex information and take independent action where necessary and
handle multiple projects and work demands at a time
(h) excellent writing skills with a high level of capability to attend to details
(i) qualities of leadership and a positive frame of mind
(j) proficient in developing web-site content ,maintenance and supporting the in-house
broadcasting department

State five important factors which should be included in developing an effective Winter 2011,
Accident Prevention and Reporting System for a company involved in heavy Q3(c)
mechanical and engineering operations. (05 marks)

This part of the question required five factors which should be included in developing
an Effective Accident Prevention and Reporting System for a company. Students
attempted this question fairly well. However, many candidates also indulged in
repetition to complete the five factors. In some cases, the fact that the company was
involved in heavy engineering operations was ignored.

The following important factors should be included in developing an effective Accident

Prevention and Reporting System for a company involved in heavy mechanical and

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engineering operations:
(i) All accidents should be reported on Accident Reporting Forms and proper records
should be maintained of accidents resulting in death and major injuries.
(ii) Identification of particularly more risky activities and adopting special precautionary
measures such as installation of safety grills to prevent accidents.
(iii) Periodic training of employees for compliance with the safety rules and procedures
so that they are fully aware of the accident hazards while performing their duties.
(iv) Regular maintenance of plant and machinery to ensure that all the parts and
components are repaired/ replaced promptly so that they do not cause injuries to the
workers due to malfunction or breakdown of the equipment.
(v) Periodical review of the safety conditions should be carried out by an independent
person.
(vi) Statistical trends of recurring accidents must be monitored closely to identify and
examine the need for introduction of special measures.
(vii) Procedures for reporting ‘near-misses’ should be laid down: anonymously, if
necessary to encourage timely corrective actions and openness in reporting of such
incidents.

Accurate Engineering Limited is engaged in the business of manufacturing precision Winter 2011,
earth drilling tools used by the oil exploration industry. The Company employs a high Q4(a)
proportion of skilled and experienced workers for the smooth and efficient
manufacture of its quality-sensitive high-value products. Recently, the company has
been facing an unusually High Rate of Employee Turnover which is a matter of serious
concern for the management.
Identify five disadvantages which Accurate Engineering Limited would experience due
to the unusually High Rate of Employee Turnover. (05 marks)

Overall performance in this question was good. Students were able to correctly point
out the disadvantages that Accurate Engineering Limited would experience due to
High Employee Turnover. Some students tried to repeat the same points which was a
sheer waste of time.

Accurate Engineering Limited would experience the following disadvantages due to the
exceptionally High Rate of Employee Turnover:
(i) Loss of important confidential and proprietary information and knowledge of work
processes to competitors.
(ii) Disruptions and delays in manufacturing operations as new workers would have to
be recruited and would require training to learn the work processes.
(iii) Deterioration and inconsistency in the quality of the products as the new workers
would require time and hands-on experience to acquire the levels of proficiency and

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skills necessary to manufacture precision earth drilling tools.
(iv) Effort and cost incurred in training of employees who leave the organisation are
irrecoverable losses. Additional effort and costs would be involved in the training of
new workers who would replace the outgoing workers.
(v) The new workers would require time to assimilate in the Company’s organisation
culture.
(vi) Additional costs of placement of advertisements, background verification, medical
examination and conducting interviews would have to be incurred in the hiring of new
workers.
(vii) Staff morale and motivation would be adversely affected which would create a
sense of insecurity among the remaining workers and result in low employee
productivity.

Selection and recruitment of candidates requires careful assessment of the diversified Winter 2011,
attributes of the prospective candidates. Besides interviews, different types of tests Q10(a)
are administered to ascertain the suitability of candidates for the positions for which
they are being considered for appointment.
(a) Explain briefly the purpose of each of the following types of tests which are
administered to candidates in the selection process.
(i) Intelligence Tests
(ii) Proficiency Tests
(iii) Aptitude Tests (03 marks)

Purpose of Intelligence, Proficiency and Aptitude tests was required to be explained.

Unfortunately almost all the examinees had no idea about the exact purpose of these
tests and just played around the words, especially in the case of Intelligence and
Aptitude tests.

The purpose of different types of tests administered to the prospective candidates are:
(i) Intelligence Tests: Intelligence Tests are administered to measure the candidate’s
ability to think logically, analyse the pros and cons of problems and make rational
decisions. Intelligence Tests may also be used to determine the candidate’s
understanding of social values and customs.
(ii) Proficiency Tests: Proficiency Tests are designed to evaluate the candidate’s level of
skills, expertise and competence to perform the particular task for which the individual
is being considered for recruitment.
(iii) Aptitude Tests: Aptitude Tests are conducted to ascertain the candidate’s ability to
work with others in a team environment, handle work-related stress and cope with the
various demands of the job.

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State two qualities of a well-conceived Selection Test and indicate why they are Winter 2011,
important. (02 marks) Q10(b)

Two qualities of a well conceived selection test were required. In this part also, the
students lacked specific knowledge and mostly tried to mention generic points.

A well-conceived Selection Test should have the following qualities:

(i) a high degree of validity - that is it should be capable of measuring attributes which it
seeks to evaluate in the candidate
(ii) a high degree of reliability – that is should provide results which have a high degree
of consistency among the various candidates.

Identify the different situations in which it may be considered necessary for an Winter 2011,
organisation to dismiss an employee. (05 marks) Q10(c)

In which situation does it become necessary for an organization to dismiss an

employee, was the question. The overall performance was reasonable because on the
basis of the practical experiences, most students were able to discuss the relevant
points. However, many students wrote incorrect points and then tried to repeat them
in different words. For instance “not obeying instructions” and “not following orders
of seniors” were listed as two separate points.

It may be necessary for an organisation to dismiss an employee in the following

situations:
(i) The abilities of the employee have been impaired and it is not possible for the
individual to continue to perform the assigned duties satisfactorily.
(ii) The employee has indulged in serious misbehaviour/indiscipline with the supervisor
or peers and this conduct is not conducive to the good working environment of the
organisation.
(iii) The employee cannot continue to work as it would be in contravention of the legal
requirements/ laws of the country.
(iv) The employee is involved in corruption/misappropriation of the employer’s
properties.
(v) The employee has divulged company’s confidential/proprietary information to
competitors.
(vi) The employee has attempted or made unauthorized access in the company’s
confidential information network with malicious intent.

A leading manufacturer of automobiles attaches high degree of importance to the Summer

competencies and skills of its front-line operational managers in the manufacturing 2011, Q1(a)
and assembly lines.

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Identify and briefly explain the different types of competencies and skills required for
effective performance by these managers. (05 marks)

The question pertained to skills essential for frontline operational managers. Very few
actually knew the difference between skill and function, although both of these are
basic topics of business management. Most students emphasized on achieving
objectives and crafting strategies. These can not be categorized as skills. Skills
essential for frontline operational managers include resource allocation, conflict
resolution, motivating employees, communicating effectively etc. Some of the
students discussed strategic level decision-making; which is not the responsibility of
frontline managers.

The different types of competencies and skills required by front-line operational

managers of an automobile manufacturing and assembly unit are:
Technical Competencies and Skills: Technical competencies and skills are necessary for
knowledge of procedures and rules, performance and management of day-to-day
activities and for understanding the manufacturing operations.
Technical skills are essential for applying the procedures for routine work, such as
setting work priorities, quality control, meeting schedules and conserving resources at
the floor level. These skills are important for the front-line managers because they have
to guide and supervise the production workers.
Human Competencies and Skills: These are interpersonal competencies and skills which
enable managers to work effectively with other employees as team players. Human
competencies and skills also include communication skills and the ability to motivate
and lead subordinates and ensure discipline. Human Skills are important for front-line
managers because they have to liaise with the workers as well as with other managers.

Employee Participation is often considered to be vital for the growth and Summer
development of individuals and teams to enable them to make effective contribution 2011, Q1(b)
towards achievement of the goals of the organisation. List five advantages which
employers seek to achieve by encouraging Employee Participation in the affairs of the
organisation. (05 marks)

A very basic yet interesting question. What benefits do organizations reap by

“Employee Participation”? Most candidates mentioned Employee motivation and
commitment as the main benefits. These points were rephrased and broken down into
3-4 points with the same matter being repeated in different words. Advantages like
better working relationship, greater willingness to implement the decisions, reducing
the need for supervision etc. were missed out.

The advantages of Employee Participation in the affairs of the organization are:

(i) Employee Participation would improve decision making as the employees would
acquire the necessary knowledge and insight to contribute effectively in this process.

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(ii) Employee Participation would make the workers more willing to implement the
decisions in which they have also been involved.
(iii) Employee Participation would help to improve internal communication and
coordination and contribute towards better working relationships at all levels.
(iv) Employee Participation would tend to reduce the extent of supervision as the
workers would be more conversant with the actual work because of their close
involvement.
(v) Employee Participation would enable the employees at all levels to acquire new skills
and develop leadership qualities.
(vi) Create an attitude change and ownership of the organization and tasks improving
the productivity.

Symco Bank Limited has introduced significant changes in its organizational structure Summer
and downsized its operations so that it may be able to provide more efficient services 2011, Q3(a)
to its customers and meet intense competition from other banks.
(a) Define Downsizing and very briefly describe its impact on the Bank’s organizational
structure. (03 marks)

This question required the students to define downsizing, its effects on the
organization and then explain what considerations should a HR manager keep in
perspective while pursuing a policy of downsizing.
Most students could write that downsizing means reducing the number of employees
and it results in a flatter hierarchical structure. However, while discussing matters
requiring consideration of the HR manager, hardly anyone did justice to the question.
Most students emphasized on payment of due compensations and the legal and social
consequences. Important considerations like employee morale, effect on workload,
transparency, objectivity and image of the bank etc. were less frequently mentioned.

Downsizing is the process of reducing the number of employees with the purpose of
making the organization more efficient and responsive to the changes in its business
environment. It results in more flat organizational structures, greater delegation of
authority and responsibilities, improved communication within the bank and more
functions being performed at the lower echelons in the organization, close to the points
of interaction with the customers.

List the important considerations which should be kept in perspective by the HR Summer
Manager of the bank while pursuing a policy of downsizing. (05 marks) 2011, Q3(b)

This question required the students to define downsizing, its effects on the
organization and then explain what considerations should a HR manager keep in
perspective while pursuing a policy of downsizing.
Most students could write that downsizing means reducing the number of employees

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and it results in a flatter hierarchical structure. However, while discussing matters
requiring consideration of the HR manager, hardly anyone did justice to the question.
Most students emphasized on payment of due compensations and the legal and social
consequences. Important considerations like employee morale, effect on workload,
transparency, objectivity and image of the bank etc. were less frequently mentioned.

HR Manager of the bank should keep the following considerations in perspective while
pursuing a policy of downsizing and laying off of employees:
(i) The downsizing process should be transparent and objective and not convey any
impression of favouritism or create a feeling of victimization.
(ii) The laying off of employees should not demoralize the surviving employees or pose a
threat to their job security concerns which would affect their morale and performance.
(iii) The layoffs should not result in loss of all employees who are performing important
functions and are conversant with the internal procedures of the bank.
(iv) The remaining staff should not be excessively overburdened as they would have to
carry the additional workload which was handled by the employees who have been laid
off.
(v) The downsizing should not lead towards excessive consolidation of duties and
responsibilities which may result in compromising the important controls and security
aspects of the bank’s operations.
(vi) The bank should not have negative image in the financial circles nor should the
customers have any apprehensions about the goodwill and long-term financial standing
of the bank and its ability to continue to render good service to the customers.
(vii) Before downsizing there should be a fresh appraisal / performance competence
done and results taken in consideration

You have recently been appointed as Human Resource Manager of Fine Electrical Summer
Company Limited (FECL), a leading manufacturer of a wide range of household 2011, Q5(a)
appliances. The company has over 800 employees working in the various departments
involved in the manufacture of its different product lines. You have observed that
FECL does not have a system of Formal Succession Planning Scheme in the company.
Required:
(a) Explain briefly what is meant by Formal Succession Planning. (03 marks)

Unfortunately, majority of the examinees were not clear about the concept of
Succession Planning. Many students wrote that it is the taking over and handing over
of duties by a new employee when the old employee resigns or retires. Wholly
irrelevant answers were given, like formulating plans for making the employees
successful. Some of the better replies simply discussed fulfillment of future
requirements but missed out key points such as identification, grooming, training etc.

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Formal Succession Planning is an important HR function as it ensures availability of
sufficient number of appropriately qualified and competent employees from internal
sources to meet the future HR needs of the organization. Suitable employees are
identified in the early stages of their careers and are groomed through a process of job
rotation and training, to assume more responsible positions in the organization arising
due to promotions, transfers, retirement or death of key employees.

(b) Briefly explain to the management of FECL the advantages of introducing a Formal Summer
Succession Planning Scheme in the company. (05 marks) 2011, Q5(b)

This part of the question required mentioning advantages of formal succession

planning. As discussed in part (a), those who were not aware of the basic concept,
ended up stating wholly irrelevant points. However, this part was better handled;
although it is felt that students have to thoroughly read and understand these topics
to be able to produce good answers in a specific scenario and to express themselves
better.

The main advantages which would accrue to FECL by introducing a Formal Succession
Planning Scheme are as follows:
(i) It would enable FECL to anticipate HR requirements in advance and avoid awkward
problems arising due to delays in identifying and recruiting suitable employees from
external sources to fill in key vacancies.
(ii) It would enable the company to identify high-potential employees at an early stage
whose career paths can be planned for promotion to higher levels in the organization
hierarchy.
(iii) It would align the HR function of career path planning of employees with the overall
corporate and strategic planning objectives.
(iv) It would increase the managerial depth within the organization which can readily fill
in the positions when necessary.
(v) It would provide internal promotion opportunities for the employees to increase
their level of motivation and commitment towards the company.
(vi) It would reduce the risk of inducting employees from external sources at higher
levels who may not be able to assimilate in the corporate culture of FECL and work in a
cohesive team environment.
(vii) Positive goals for key personnel, which will help keep them with the company and
will help assure the continuing supply of capable successors for each of the important
positions included in the succession plan.
(viii) Defined career paths, which will help the company recruit and retain better people.

List ten responsibilities/obligations which employers must fulfill to ensure that the Summer
issues of Health and Safety are addressed adequately in a manufacturing 2011, Q10

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environment. (05 marks)
Note: Explanations are not required

Students were fairly able to list the responsibilities which employers must fulfill in
order to ensure that issues of Health and Safety are addressed adequately in a
manufacturing environment. Some students advised about buying health and life
insurance policies and bearing medical expenses, which were not relevant for this
question. Many students wrote 4 to 5 points, where a single point would have been
sufficient. For example, a student wrote that health policy should be crafted,
implemented, monitored and reviewed as four different points.

(i) The plant and equipment must be maintained according to the specified standards.
(ii) The employees must be provided training for compliance with the safety procedures.
(iii) The Safety Policy should be communicated to all the employees
(iv) Instructions for proper handling of equipment should be displayed prominently in
the work areas.
(v) Employees who are exposed to risks should be provided proper safety gear.
(vi) All moving parts which may cause injuries to the workers should have protective
fencing.
(vii) All slippery floors areas should display adequate warning signs.
(viii) First aid boxes with necessary supplies should be provided at various points.
(ix) Fire Alarms and fire fighting facilities should be provided and checked and refilled at
regular intervals.
(x) Health and Safety Advisors should conduct Workshops and Seminars at regular
intervals.
(xi) Employees should immediately report all accidents on the prescribed Accident
Reporting Forms.

Briefly discuss the following: Summer

2011, Q11
(a) Business Ethics (2.5 marks)
(b) Environmental Scanning (2.5 marks)
(c) Tactical Planning (2.5 marks)
(d) Backward Integration Strategy (2.5 marks)

Short notes were to be written on four different topics. The comments are as under:
Business Ethics: Some students confused this concept with that of corporate social
responsibility. Majority of the candidates emphasized on rules and regulations. A
reference to values and culture would have been more appropriate.

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Environmental Scanning: Most of the students were not clear about this concept and
described it as an exercise to control environmental pollution and keeping the world
clean!
Tactical Planning: Many candidates defined it as strategic level decision making and
planning and implementation at management level, although it is quite the contrary.
A number of students incorrectly described it as a medium term plan.
Backward Integration Strategy: Most of the students gave appropriate definition of
the concept with relevant examples. However, very few students explained the
situations in which this strategy is pursued.

(a) Business Ethics is a code of moral principles that management and employees follow
with respect to what is right and what is wrong from the standpoint of the
organization’s dealings and interactions with its stakeholders. Besides generally
acceptable values and norms, the organizational culture and internal policies of
individual organizations play a very important role in determining the ethical policies
that are followed in the company. The guidelines for proper ethical conduct are
embodied in the company’s Formal Code of Ethics.
(b) Environmental Scanning is the process of collecting information about the external
marketing environment in order to identify and interpret potential trends. It includes
analysis of collected information to anticipate whether the trends represent
opportunities or threats. Environmental scanning includes assessment of political
developments, economic trends and social and cultural influences which would affect
the organization.
(c) Tactical Planning refers to the day-to-day plans regarding implementation of the
different work activities required to achieve the objectives of the strategic plans.
Tactical Plans pertain to the current and short-term activities performed by low-level
managers which are nevertheless of vital importance for implementation and
achievement of the objectives of the overall strategic plans.
(d) Backward Integration Strategy seeks the ownership or increased control of the
firm’s sources of important raw materials and other critical inputs and supplies.
Backward integration strategies are pursued in situations where the suppliers are
unable to adhere to the buyers specifications of quality, or are unreliable in meeting
their commitments or are few in number and dictate unreasonable terms or charge
exorbitantly high prices to take advantage of the buyers who are heavily dependent on
the inputs from these suppliers.

Strategy and CSR c, b, a

HR and Change Management

Marketing d

International Business

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Identify the business strategy/policy/tool which an organisation is pursuing in each of Winter 2010,
the following situations: Q3
(a) In 1990, Sony launched the first High Definition (HD) TV in the market at a price of
$43,000 per set. These TV sets were purchased by customers who could afford to pay
the high price for the new technology. After reaping the maximum profits and
recovery of the sunk R&D costs, the price was gradually reduced in 1993 to $ 6,000 for
a 28” TV set to attract new customers. This strategy is called __________.
(b) The management tool that enables a firm to classify its range of products
according to their current market share and expected growth is called __________.
(c) The assessment tool used to compare and identify the variance between a firm's
current market coverage and potential market opportunities for its products is called
__________.
(d) A company which has capabilities to manufacture a complete line of superior
quality ball bearings for a wide range of original equipment manufacturers and
industrial users is pursuing a strategy of __________.
(e) If a company engaged in the textile manufacturing business acquires majority
holdings in a sugar mill, a motor car manufacturing plant and a private airline; it is
pursuing a __________ strategy.
(f) The chief executive officer who makes alternative plans to deal with emergencies
or unexpected situations prior to their occurrence is pursuing a __________ strategy.
(g) A firm uses different brands of essentially the same product to target different
market segments is pursuing a __________strategy.
(h) A bank which strives to develop better understanding of the customer’s needs and
satisfy them to create customer loyalty is adopting a policy of __________.
(i) A method of demand forecasting in which a firm markets its new products in a
limited geographical area to ascertain consumer response and from this sample
develops projections of the size of market over a larger area is called __________.
(09 mark)

Strategy and CSR f,

HR and Change Management

Marketing h, i, b, c, d, e, g, a

International Business

Students’ knowledge of various business strategies was tested through this question.
This style of testing the knowledge should be encouraged. Few students scored well,
others just did guess work. This shows that concepts are just skimmed through and

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students do not make any effort to practically understand the strategies.

The business strategy/policy in each of these situations is:

(a) Market Skimming Pricing Strategy
(b) BCG Matrix
(c) Gap Analysis
(d) Product Specialization
(e) Conglomerate Diversification or Conglomerate Expansion Strategy
(f) Contingency Planning Strategy
(g) Multi-brand Strategy
(h) Relationship Marketing
(i) Test Marketing

Recruitment of the right type of staff is of critical importance for the short term as Winter 2010,
well as the long-term success of an organisation. Induction of unsuitable employees Q4(a)
creates difficulties for an organization in the achievement of its goals, undermines the
morale of other employees and has adverse effects on the individuals themselves as
they are misfit and unable to make worthwhile contribution towards the organization.
Briefly describe qualities that a skilled recruiter should possess in order to be able to
evaluate prospective candidates for recruitment in a performance–oriented
organization. (06 marks)

(a & b)
Both the parts of this question were generally attempted nicely and show that
recruitment is a topic that is commonly liked and understood. However, it is suggested
that extensive reading should be done and reference books should be consulted to
improve the quality of responses. Some of the students seemed to be in a hurry and
missed to mention some very mandatory points like required qualification or job
description.

A skilled recruiter should:

(i) Possess knowledge about the job to be filled – The recruiter should have a clear
understanding of the job and be able to ascertain whether it is necessary to induct a
new employee or the work can be handled adequately by reorganizing or reallocating
other jobs. If the job is necessary then the duties and responsibilities attached to the job
should be clearly spelt out.
(ii) Possess insight in the attributes and qualities of the individuals to perform the job
– The recruiter should be aware of the qualifications, experience and skills necessary to
perform the job.

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(iii) Have knowledge of the sources and the means of attracting a range of suitable
candidates – In case it is necessary to recruit from external sources, the recruiter should
be aware of the sources where suitable applicants are available, identify the potential
candidates and adopt appropriate methods of recruitment.
(iv) Possess skills to evaluate the candidates who are most suitable for the job – The
recruiter should have insight in the methods of obtaining information about the
candidates and be able to apply the appropriate methods for selection of the right
candidate.

A leading hospital which has a network of facilities at several locations in Karachi and Winter 2010,
also in other cities intends to invite applications for the posts of Laboratory Q4(b)
Technicians at its various facilities.
List six important items that should be contained in an advertisement to be placed by
the hospital in a newspaper having wide circulation in several cities in the country. (03
marks)

(a & b)
Both the parts of this question were generally attempted nicely and show that
recruitment is a topic that is commonly liked and understood. However, it is suggested
that extensive reading should be done and reference books should be consulted to
improve the quality of responses. Some of the students seemed to be in a hurry and
missed to mention some very mandatory points like required qualification or job
description.

The advertisement should contain the following information:

(i) Requirements of the job specifications stating main tasks to be performed and the
responsibilities associated with the position.
(ii) Outline of the hospital’s network and its reputation, working conditions, the facilities
available in the hospital and professional capabilities of the staff.
(iii) Location(s) at which the technicians would be posted.
(iv) Compensation package including fringe benefits.
(v) Specifications of job requirements such as education, professional training, particular
skills and experience.
(vi) Name /designation of the individual to whom the application should be sent and last
date for receipt of applications.

The role of Human Resource Managers in companies which have a very large Winter 2010,
workforce has assumed increasing importance and they are now more closely Q8(a)
involved and proactive in the Formulation and Implementation of Strategies at the
corporate level.
State the areas of specific responsibilities which fall in the domain of a Senior Human

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Resource Manager involved in the Formulation and Implementation of overall
Corporate Strategy of an integrated textile mill having over 15,000 employees in
various cadres. (10 marks)

The objectives to be achieved by Human Resource Managers are several including fair
compensation management, recruiting the most suitable workforce, updating the
skills of Employees through training & development, maintaining a peaceful
environment by conflict management etc. There are several more of them but most
candidates could mention not more than four.
Despite the fact that this question pertained to basics of Business Management,
students not being able to do well shows a lack of commitment on their part. Many
students did not understand that HR manager’s duties of strategy formulation and
implementation are being discussed and included points such as maintenance of
personal records etc.

A Senior Human Resource Manager involved in the Formulation and Implementation of

Strategy at the corporate level of a textile mill having 15,000 employees should have
responsibilities to achieve the following objectives :
(i) The organizational structure should be appropriately designed to achieve the overall
corporate objectives. The organizational structure should capitalize on internal
strengths and strive to remove internal weaknesses which may be impediments to the
achievement of the objectives.
(ii) The company’s objectives and goals should be communicated and well understood
by the employees at all levels.
(iii) The various divisions and departments should work in close coordination to achieve
the main goals and objectives of the company. Areas of friction and conflict which may
undermine performance should be identified and rectified at appropriate levels.
(iv) The managers at all hierarchical levels should make effective plans to achieve the
business and operational goals and targets entrusted to their respective departments.
(v) The job descriptions and job specifications should be precisely defined and clearly
understood by the employees at all levels.
(vi) The organization’s reward system, including benefits and policies of promotion
should be fair and equitable and designed to achieve optimum employee performance
at all levels.
(vii) The policy issues of training, job rotations, career path and succession planning
should be accorded the necessary degree of importance and be implemented in an
objective and fair manner.
(viii) The employees should be kept fully motivated and their morale and commitment
should be high at all times. The employees should take pride in their association with
the company.

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One common factor which distinguishes well-managed and highly profitable service- Winter 2010,
oriented companies from their competitors is the competence and commitment of Q10
their human resources. The top companies assign very high priority towards the
training and development of their staff and genuinely consider their human resources
as their “key strategic assets.” In these companies, training and up-gradation of the
quality of human resources, at all levels, is a continuous endeavour with active
involvement of the senior management.
Explain what competitive advantages these service-oriented companies expect to
derive by committing resources towards training and development of a competent
and committed workforce. (09 marks)

This question again did not require any text book learning just some logical,
knowledge & wit. It just required students to give a point-wise enumeration of
advantages of conducting training. The same points were repeated in many different
ways. 3-4 points were created out of one. This manifested in the form of a lengthy
answer but not the one which was desired.
It was observed that students talked only about the benefits to the employees like
higher prospects for promotion etc. Benefits to the organization, clients and overall
business were often ignored. Competitive advantage in service-oriented companies
was touched upon by some. However, the true essence of distinguishing oneself on the
basis of good quality service did not come out.

The well-managed service–oriented companies give high importance to staff training

and development and create a cadre of competent and committed employees to derive
the following advantages:
(i) The cadre of properly trained and competent staff who are fully knowledgeable of
their duties and responsibilities can handle customers in a highly professional and
courteous manner The competent staff inspires confidence in the customers and helps
to retain their loyalty which brings repeat business.
(ii) Success of even the well-conceived corporate and business strategies of service-
oriented companies depend to a considerable extent on the competence of their staff
at various levels to deal with a variety of situations where proper handling is of vital
importance towards the achievement of the corporate goals.
(iii) Properly trained and competent employees are able to avoid and handle accidents
and mishaps and contribute towards the safety and security of customers, other
members of the staff as well as the valuable physical assets.
(iv) A well-trained and competent work force at all levels requires less directions and
supervision and is able to handle the various day-to-day issues promptly in a responsible
manner to the satisfaction of the management. These companies can operate efficiently
with relatively flat organization structures and lower operating costs.
(v) A competent, committed and motivated workforce is able to create a high degree of

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cohesion and team effort among the staff at various levels.
(vi) A well-trained and competent workforce with multi-skilled capabilities is able to
handle varied and different assignments.
(vii) The new inductees who undergo formal training programs are better absorbed in
the culture of the organization.

Identify the important functions which have to be performed by the Human Resources Summer
Department of a commercial bank which has a strength of 17,500 employees 2010, Q2(a)
deployed in a network of 800 branches located throughout the country. The
commercial bank is a well-reputed organization known for its fair business policies,
progressive outlook and concern for development of a competent and well motivated
cadre of employees. (06)

Comments not available.

The important functions which have to be performed by the Human Resources

Department of the commercial bank are:
(i) Human Resource Planning
(ii) Recruitment, selection and induction of employees
(iii) Organisation of departments and design of work flows
(iv) Preparation of job specifications and job descriptions of employees
(v) Salary and wage administration, including reward systems
(vi) Planning for posting and transfers of suitable staff in the various branches
(vii) Training and development of staff
(viii) Measuring and monitoring of staff performance
(ix) Instituting measures for improving motivation and morale of employees
(x) Succession planning of competent staff
(xi) Handling of employee grievances and complaints
(xii) Employee welfare, health and safety
(xiii) Compliance with employment legislation and other legal requirements.
(xiv) Maintenance of centralised records of all the branches.
(xv) Ensuring equality amongst all the branches, policies should be made at central level
with equal remuneration and training opportunities for all the 17500 employees.

Research Studies by Human Resource experts have shown that successful Summer
organizations create internal work environments in which the employees are able to 2010, Q2(b)
operate at their optimal levels of productivity.

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What are the important Human Resource Management practices which, in your
opinion, contribute towards workforce optimization in a manufacturing plant with
several integrated workshops and departments? (09)

Comments not available.

The important Human Resource Management practices which contribute towards

workforce optimization in a manufacturing plant with several integrated workshops and
departments are:
(i) Hiring of Workers: Workers are selected carefully on the basis of their skills to
undertake the specialized jobs they are required to perform.
(ii) Workforce Planning : The strength of workers in various categories are determined
in anticipation of the expected workload and measures are taken for ensuring their
availability at the required point of time
(iii) Work Processes: Work processes are well-defined and training is provided to the
employees to enable them to perform their tasks in an efficient manner.
(iv) Working Conditions: The internal working conditions are conducive for maximum
achievement and the management supports high levels of performance.
(v) Performance Management Systems: Well-designed employee performance systems
are instituted in the organizations which are communicated and accepted by all the
concerned employees.
(vi) Conflict Management: Conflicts due to differences in perceptions, role ambiguities
and competition for resources must be contained and resolved by management in a fair
and equitable manner to promote team effort for the achieving the organizational
objectives.
(vii) Reward System: High level of performance is expected from the workers and they
are adequately rewarded in a transparent manner for their good performance. Also
reduce Staff turnover rate by providing adequate compensation and support.
(viii) Employee Service: Make sure that the staff is provided with healthcare incentives,
proper maintenance of records and information system

What are the four main types of information that a properly designed Job Application Summer
Form is expected to provide to the recruiter in the preliminary process of screening of 2010, Q5(a)
a prospective candidate? (04)

Comments not available.

A properly designed Job Application Form is expected to provide the following

information to the recruiter in the process of preliminary screening of a prospective
candidate:
(i) Enable the recruiter to assess whether the applicant has the basic educational

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qualifications, and technical skills to meet the requirements of the job.
(ii) Enable the recruiter to evaluate whether the applicant has relevant work experience
to meet the requirement of the job.
(iii) Enable the recruiter to draw tentative conclusions about the applicant’s suitability
for the position under consideration on the basis of previous work record.
(iv) Enable the recruiter to predict whether the applicant would fit in the cultural and
social structure of the organization.
(v) Enable the recruiter to reach a decision whether it would be worthwhile to process
the application further and call the applicant for test or interview.

Describe briefly the following methods of selection of candidates: Summer

2010, Q9(a)
(i) Group/Panel Interview
(ii) Structured Interview (05)

Comments not available.

Group/Panel Interview consists of multiple interviewers who independently record and

rate the applicant’s responses during the interview session. The panel normally includes
the immediate supervisor, a representative of the HR Department and a Job Expert.

Structured Interview is a procedure in which interviewers ask the same set of questions
in the same order to all the candidates. The questions are based on job analysis of the
position and the responses from the candidates are reviewed for their relevance,
accuracy and bias.

State two advantages of each of the above methods of interviews. (04) Summer
2010, Q9(b)

Comments not available.

The advantages of Group/Panel Interview are:

(i) Reduces the biases of an interview conducted by a single interviewer.
(ii) Increases the reliability and validity of the interview.
(iii) The candidate is simultaneously evaluated by all those individuals who are relevant
to the appointment.
(iv) Less time consuming and can provide the candidate insight of how the staff works
together and interacts
The advantages of Structured Interview are:
(i) The interview is highly focused and all the candidates are assessed according to their

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responses to the specific job related questions.
(ii) It is easy to ensure that all relevant information has been collected.
(iii) Ensures that answers can be reliably aggregated and that comparisons can be made
with confidence between subgroups or between different survey periods.

List eight Health and Safety hazards which are often faced by workers in a typical Summer
manufacturing environment. (04) 2010, Q10

Comments not available.

The Health and Safety hazards which are faced by workers in typical manufacturing
environment are:
(a) Contact with chemicals and other harmful materials.
(b) Excessive noise and vibrations of heavy machines.
(c) Extreme temperatures.
(d) Poorly designed equipment which affect postures of workers.
(e) Slippery floors and passage ways.
(f) Absence of safety guards on moving parts of equipment.
(g) Poor illumination e.g. light glare, insufficient light.
(h) Improper ventilation.
(i) Lack of safety rules and regulations
(j) (k) Faulty /Outdated safety equipment
(l) (m) Improper machine maintenance
(n) Excessive humidity

It is observed that work-related stress often pose a heavy burden in organizations and Winter 2009,
is manifested by frequent absenteeism, late-coming, accidents and decline in the Q4
ability of employees to perform in an efficient manner. In these situations, Employee
Counseling can help to create a secure and an enabling environment for mitigating the
adverse effects of stress on employees and enabling them to perform at peak levels of
efficiency.
Identify the scope of Employee Counseling and explain briefly how such counseling
sessions can help employees to reduce work stress. (08)

Comments not available.

Employee-Counseling includes working with individuals to promote and nurture

relationships which are supportive, psychotherapeutic, providing guidance for dispelling

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fears and apprehensions and resolving of work-related problems.
The scope of Employee Counseling could be to:
1. help the employee identify areas that need improvement.
2. support the psychological equilibrium of employee
3. Bring in focus the nature of problem
4. explore the impact of the problems and exploring all possible solutions.
5. Create a constructive environment mutually beneficial to employees and
organization.
Functions of Counseling:
(i) Provide Reassurance:
Offering reassurance to employees by inspiring them and giving confidence to handle
problems and inculcating in them a sense of direction and purpose in the discharge of
their responsibilities and duties.
(ii) Help to release of Emotional Tensions:
Employee Counselor can help to create a conductive non-critical and objective attitude
by providing suitable opportunities to employees to communicate and explain their
problems to counselors who are receptive and sympathetic to the problems faced by
the employees so that the tensions are released.
(iii) Clarification of Thought Process:
Enable employees to clarify their thought process and motivate them to accept
responsibilities and adopt a realistic approach in dealing with work-stress. It revives the
employee’s level of aspirations and motivates them to high levels of actual
achievement.

Excel Chemicals Limited (ECL) owns and operates facilities for the manufacture of Winter 2009,
industrial chemicals, including various types of highly corrosive acids. The Company’s Q9
operations involve processes of procurement, production, packaging, storage and
transportation of chemicals which can result in serious fire, physical injuries and other
environmental and health hazards in the event of any lapses in the safety procedures.
Identify and explain briefly six safety steps which should be adopted and
implemented by the management of ECL as a responsible employer. (06)

Comments not available.

The management of ECL should take the following Safety Policy measures to minimize
the risks of accidents in the plant for the manufacture of industrial chemicals:
(i) Involvement and active supervision by the top management and participation of the
employees in introducing effective safety policies in the entire premises.

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(ii) Creation of a Safety Committee to review the safety measures and monitor the
implementation of the safety rules and procedures periodically to create a safe and
secure working environment.
(iii) Preparation of Safety Rules and Instruction Manuals for strict compliance by
employees at all levels.
(iv) Education and training of the workers on a continuous basis and dissemination of
information by posting of safety charts, posters and installation of safety equipment at
all sensitive areas in the premises.
(v) Creation of an environment where the equipment and machines which are properly
maintained and the workers are provided protective uniforms.
(vi) Installation of proper warning/alarm systems and conduct of regular safety drills and
exercises.
(vii) Adoption of a policy which ensures that the workers are not required to work for
very long hours which may adversely affect their concentration and result in
performance lapses.

The pursuit of goals of achieving cost economies and operating with lean and more Winter 2009,
flat organizational structures has resulted in creation of an environment in which the Q10
staff at the managerial levels are required to perform with greater business
competencies and responsibilities. Consequently, managers at various levels have to
acquire all-round competencies of external business environment awareness as well
as deep understanding of the concepts of internal business management to be able to
fulfill their responsibilities and perform in an intensely challenging and rapidly
changing business environment.
You are required to identify four different types of competencies each of external
business environment and internal business management which in your opinion are
most important for the present-day managers to enable them to perform successfully
in the prevailing corporate environment. (08)

Comments not available.

The different types of external business environment and internal business

management competencies requirements of managers to perform in the prevailing
corporate environment are:
External Business Environment Competencies:
(i) Capable of evaluating external environment and be able to see the “whole picture”.
(ii) Capable of quick thinking and be able to make timely decisions regarding changes in
the external environment.
(iii) Being proactive in anticipating the changing environment.
(iv) Being sensitive to the interests and concerns of the different stakeholders in the

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organization in which new complex business relationships such as partnerships,
alliances, joint ventures are prevalent.
(v) Ability to take and manage external business threats.
Internal Business Management Competencies:
(i) Awareness of the overall organizational objectives, rather than being limited to the
day-to-day operations of the organization.
(ii) Capable of handling increased workloads and pressures.
(iii) Responsible for building effective work groups and developing teams.
(iv) Flexible in handling human relations and in managing internal challenges of group
work performance.
(v) Initiative for self-development, learning and acquiring financial and information
management and IT skills.

Capital Bank Limited is a leading financial institution and is well-known for its strength Winter 2009,
in rendering highly efficient professional services to its customers and keeping ahead Q11
of the competitors. The Bank follows a policy of recruiting staff at the entry level after
careful evaluation of the qualifications of the candidates, their potential for
advancement, professional aptitude and career objectives. The staff is groomed and
entrusted with increasing responsibilities after careful career-path planning for each
employee. The Bank operates in a highly competitive environment where the skills,
knowledge and commitment of its human resources are of critical importance for the
success of its business. The competitors are always on the lookout to identify
professional staff and hire them at more attractive compensation packages.
Required:
(a) What do you understand by the term Employee Compensation Package? (02)
(b) List and explain the essential steps involved in the formulation and
implementation of a well-conceived Employee Compensation Strategy which the Bank
should incorporate in developing its overall HR strategy. (09)

Comments not available.

(a)
Employee Compensation Package refers to all forms of pay and rewards received by the
employees for the performance of their jobs, including cash, bonuses, benefits, facilities
and perquisites.
(b)
The steps which should have been followed in the formulation and implementation of a
well-conceived Employee Compensation Strategy are:

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(i) Identification of the Objectives of the Employee Compensation Strategy
Compensation objectives should have been identified and articulated as part of the
Bank’s overall planning process. The objectives should be in line with the organization's
overall corporate strategy and lead to the creation of a work force that is capable of
implementing its plans.
(ii) Review of Compensation Plan
Examination of the strengths and weaknesses of the existing compensation policies
should have been carried on a regular basis to enable the management to formulate
new or improved compensation package.
(iii) Identification of the Positions and Prepare their Job Descriptions
Identification of the positions at various levels and precisely defined job descriptions are
essential for the development of a meaningful compensation program. Job descriptions
should be reviewed periodically to ensure that they are in conformity with the
employee skill requirements, assignments and responsibilities.
(iv) Evaluation of the relative importance of the Positions and their significance for
achieving the objectives of the Bank
Evaluation and comparison of the positions is necessary to establish their relative
importance and the relationship between the compensation for different positions. The
standards must be well-defined and applied specifically to the positions rather to the
individuals in these positions.
(v) Comparison of the Compensation Packages with the packages offered by the
competitors.
Development of a rational compensation program in accordance with the competitive
environment by collecting relevant data of compensation packages offered by the
competitors. The Bank should identify the competitors and offer competitive
compensation packages to attract and retain skilled and motivated employees.
(vi) Administration of the Compensation Program
Administration of a comprehensive compensation program to be applied uniformly for
all employees. By adopting formal procedures and standards, arbitrary or unfair
personnel decisions can be avoided.
(vii) Communication of the Compensation Package
Communication of all aspects of the compensation package to the concerned parties
including the employees, supervisors, administrators and management who must have
a thorough knowledge of the program to avoid any misunderstandings.

Apollo Mining Company Limited owns and operates integrated facilities of mining of Summer
coal and iron ore along with power generation and distribution facilities. Although 2009, Q3
these facilities have been developed at a substantial investment cost, the
management has been indifferent to the conditions of its workforce of 1500

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employees. A major accident in the coal mines, which occurred recently, resulting in
the death of 120 workers, has triggered wide-spread resentment and agitation among
the workers due to the poor safety conditions and they have demanded strict
compliance with the Mine Safety Rules and Regulations. Due to the aggressive
attitude of the striking workers and to safeguard its assets, the Company has
deployed private armed guards at a considerable cost. After 28 days of complete
closure of all mining and other business activities due to stand-off and strikes, the
management and the Workers’ Union have agreed to enter into negotiations through
a process of collective bargaining.
(a) State four factors which, in your opinion, are responsible for the indifferent
attitude of the management of Apollo Mining Company Limited towards its workers.
(b) Briefly describe five different measures that the management should take to
satisfy the demands of the workers and help to achieve a conducive working
environment. (09)

Comments not available.

(a) The indifferent attitude of management of Apollo Mining Company Limited towards
the workers may be attributed to:
(i) Abundance of workers seeking jobs and comparatively few opportunities for
employment in the area.
(ii) Unsatisfactory enforcement of Mining Rules and Regulations by the concerned
regulatory authority.
(iii) The Management does not believe in ethics, justice and fair play in its dealings with
the workers.
(iv) The Workers and their Union is not fully aware of the rights of the workers and their
bargaining strength.
(b) The management of Apollo Mining Company Limited should take the following
measures to satisfy the demands of the striking workers:
(i) Compensation for the Affected Workers: Management should pay compensation to
the dependents of the workers who have lost their lives in the accident. Proper
arrangements should be made for treatment, including hospitalization, of workers who
have been injured in the accident.
(ii) Safety Equipment: Management should install proper safety equipment in the mines
and protective personal gear for ensuring safe working conditions in the mines.
(iii) Formal Safety Training of the Workers: Management should introduce Safety
Training Programs and educate the workers of the positive results achieved through the
introduction and implementation of these programs.
(iv) Provide Medical Facilities to the Workers: Management should provide adequate
medical facilities, including hospitalization for the workers and their families.

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(v) Group Life Insurance: Management should provide Group Life Insurance coverage
for the workers.
(vi) Social Needs of the Workers: Management should sponsor recreational and social
activities for the workers and their families.

Rapidly changing economic, technology and social environment along with the Summer
pressures to produce more value-added products and services at lower costs compel 2009, Q5(a)
organizations to adopt measures to utilize their resources in the most efficient
manner. Although Human Resources are not reflected as assets in the Financial
Statements, they play a critical role in the achievement of the Company’s business
strategies.
Explain how sound Human Resource Management and Planning policies can play an
important role to enable a Company to successfully achieve its business objectives.
(08)

Comments not available.

The Human Resource Management and Planning policies can play an important role in
the achievement of business objectives by:
(i) Determining Requirements of Human Resources: an essential element of HR
Management and Planning function is to ascertain accurately HR requirements to avoid
problems of manpower shortages, wastages, mismatch of work skills with the job
requirements and redundancies due to over staffing.
(ii) Ascertaining Training Needs: an important HR planning function pertains to
preparation and conduct of training programs to ensure that a cadre of skilled
workforce is available to meet the requirements of the organization.
(iii) Career Path Planning for Managers: Career path planning of trained and
experienced officers/managers is essential in order to retain them and keep them
motivated to meet the present and future requirements of personnel in all
management positions.
(iv) Fair Compensation: Fair compensation plans, including fringe benefits are essential
for inducting and retaining a motivated and performance–oriented team and work force
at all levels.
(v) Industrial Relations: Properly conceived industrial relations strategies are essential
for maintaining a skilled and motivated work force and ensure continuity of smooth
operations.

Although managers at various levels are frequently involved in the Performance Summer
Appraisal of their subordinates, there are certain weaknesses in this process. 2009, Q5(b)
Knowledgeable Human Resource Managers are aware of these weaknesses and take
measures to minimize their adverse impact.
In your opinion what kind of limitations should be kept in perspective by Human

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Resource Manger while reviewing Performance Appraisal Reports? (06)

Comments not available.

The limitations of Performance Appraisal are:

(i) Performance Appraisals often focus on employee’s efforts for short-term rewards
rather than on issues that are important to the long-term success of the organization.
(ii) Supervisors involved in Performance Appraisal often consider them in the context of
reward-punishment exercises and not on the overall skills and potential of the
employee.
(iii) Performance Appraisal is often considered as a routine paperwork exercise rather
than conducting an objective critique of the individual’s performance.
(iv) Individuals being appraised consider the exercise as being biased or unfair.
(v) Subordinates react negatively when evaluators offer unfavorable comments.
(vi) Personal biases and inconsistencies of the individual conducting the Performance
Appraisal may undermine the efficacy of the entire exercise.

You have been entrusted with the task of hiring an individual for the position of Summer
General Manager Marketing for Good Health Dairies Limited. The company has been 2009, Q6
established recently and is in the process of establishing marketing network for
distribution of its products throughout the country.
Identify and explain briefly, what kinds of managerial competencies would you
examine and seek in the prospective candidates for the position. (09)

Comments not available.

In order to recruit a suitable candidate for the position of General Manager, Marketing,
I will examine and seek the following managerial competencies:
(i) Communication Competency: The ability to effectively transfer and exchange
information with senior management and subordinates as well as other stakeholders.
(ii) Planning and Administrative Competency: The ability to plan and organize activities
and make decisions especially related to resource allocation, costs, etc.
(iii) Teamwork Competency: The ability to complete the tasks through individuals who
have to work collectively in a team environment.
(iv) Strategic Action Competency: The ability to understand the overall mission and
strategies of the organization and be able to achieve the objectives of the company.
(v) Global Awareness Competency: Ability to explore and seize business opportunities.
The Marketing Manager should have knowledge of different cultures and a receptive
and open mind.

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(vi) Self-management Competency: The General Manager should have a sense of
integrity and good ethics and be willing to accept responsibilities.

According to Maslow’s Theory of Hierarchy of Human Needs, all human beings have Summer
different kinds of needs. Competent marketing managers must have insight in the 2009, Q10
Hierarchy of Needs to be able to create appropriate promotional strategies for
successful marketing of their products.
In the context of Maslow’s Theory of Human Needs, which type of human needs
would be satisfied by the following:
(i) health insurance
(ii) cosmetics
(iii) flowers for a sick friend
(iv) tandoori nan
(v) burglar alarm system in a bungalow
(vi) rare and expensive work of art
(vii) membership of an exclusive golf club
(viii) wages received by a daily worker
(ix) sponsoring of a charitable hospital
(x) a luxury car (05)

Comments not available.

The products / services would satisfy the following types of Human Needs:

Product/Service Type of Need

(i) health insurance security

(ii) cosmetics social//friendship/love

(iii) flowers for a sick friend social/friendship/love

(iv) tandoori nan physiological

(v) burglar alarm system in a bungalow security

(vi) rare and expensive work of art self-actualization

(vii) membership of an exclusive golf club esteem

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(viii) wages of a daily worker physiological

(ix) sponsoring of a charitable hospital self-actualization

(x) a luxury car esteem

Briefly explain the following concepts: Summer

2009, Q11
 Business Ethics
 Pull Strategy of Promotion
 Licensing
 Benchmarking (10)

Strategy and CSR Benchmarking, Business Ethics

HR and Change Management

Marketing Licensing, Pull Strategy of Promotion

International Business

Comments not available.

Business Ethics is a code of moral principles that the employees follow with respect to
what is right or wrong from the viewpoint of the organization’s dealings and
interactions with its stakeholders. The organizational culture and internal policies and
systems have far-reaching ethical implications and reinforce the set of values to be
upheld by the employees in all their business dealings. The standards of ethical conduct
may be embodied in the Company’s Formal Code of Ethics.
Pull Strategy of Promotion is a promotional strategy based on aggressive advertising of
brands to build-up consumer demand. In a successful Pull Strategy, the customers ask
for the brand by name, inducing retailers or distributors to acquire stocks of the
company’s goods.
Licensing is a technique of entering a specific market in which the licensor enters into
an agreement with a licensee, by offering the licensee the right to use the
manufacturing process, trade mark, patent, trade secret or any other item of value for a
fee or royalty.
Benchmarking is the process of comparing the company’s products and processes with
those of the competitors or leading firms in other industries or any other accepted
standards against which the performance of the company is measured.

Orient Cement Limited (OCL) aspires to be included in the category of a select group of Winter 2008,
progressive companies in the country and is considering a proposal for introducing Q1
significant changes in its labour welfare policies which would offer tangible benefits to

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the workers. This would include construction of a housing colony, provision of medical
benefits, subsidized canteen facilities, besides payment of partial fees for dependent
children of the employees.
In your opinion what important benefits would accrue to OCL by introducing welfare–
oriented labour policies? (06)

Comments not available.

The introduction of welfare-oriented labour policies would offer significant benefits to

OCL by way of:
(i) Improvement in goodwill, image and reputation of the Company.
(ii) Increase in efficiency and productivity of the workers.
(iii) More congenial working relationship and better harmony with the workers union.
(iv) Ability to attract and retain competent and more committed work force.

Shakeel Ahmed, a competent and hard working young officer, is at the initial stage of Winter 2008,
his professional career in a leading insurance company. He has an ambitious goal to Q3(a)
reach senior management position within a period of seven years. He intends to plan
his career path well in advance and pursue a Personal Development Plan (PDP) with a
high degree of zeal and commitment.
(a) What do you understand by Personal Development Plan? (03)

Comments not available.

Personal Development Plan is a plan which outlines the process of improving and
upgrading one’s work skills, knowledge and capabilities in order to enhance its
effectiveness and adaptability. Personal Development Planning is a continuous process
to improve and utilize one’s full potential at each stage of the chosen career path.

(b) What are the principal advantages of adopting and pursuing a well-formulated Winter 2008,
Personal Development Plan? (04) Q3(b)

Comments not available.

The principal advantages of adopting and pursuing a well-formulated Personal

Development Plan are:
(i) continuous appraisal of the individual’s career path and upgrading of skills.
(ii) acquisition and accumulation of new skills thus minimizing the chances of the
existing skills becoming obsolete or redundant.
(iii) continuous monitoring of progress in one’s career to ensure that it is on the right
path and taking timely corrective measures, if considered necessary.

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(iv) creating a sense of achievement and commitment to reach the set targets within
specified time-limits.

New Age Automobile Company Limited intends to diversify its operations by Winter 2008,
establishing a separate division for manufacture of a less-expensive brand of tractors. Q4
The tractors would be used primarily by agriculturists having small farm-holdings. The
Management is contemplating whether to promote personnel from the automobile
division for certain middle-level technical positions in the tractor division and induct
new entry level personnel in the automobile division, or alternatively recruit foremen
level personnel from external sources for the tractor division by advertising for the
positions in the news media.
Narrate and explain briefly the advantages and disadvantages of internal promotion
and transfer of foremen level personnel for the tractor division from the automobile
division. (10)

Comments not available.

The advantages of promotion from internal sources, for the tractor division are:
(i) Improvement of Morale – The internal transfers and promotions would provide an
impetus to the morale of the workers. They would feel assured that the company has a
policy to provide opportunities to the existing employees rather than to outsiders.
(ii) Proper Evaluation of Employees - The management is in a better position to
evaluate the performance of existing employees before considering them for higher
positions. The past performance of existing employees is a better guide to their skills,
competency levels and commitment as compared to interviews with outsiders.
(iii) More effective team work - Since the existing employees know the middle and
senior level managers, they would be motivated to put in their maximum efforts leading
to more effective team work.
(iv) Cost-effective - Internal transfer from within the organization is less costly than
recruitment from external sources.
The disadvantages of transfer and promotion from the automobile division are:
(i) Absence of Fresh Ideas - Transfer from internal sources prevents introduction of
fresh blood and new ideas which are essential for innovations.
(ii) Biases and Personal Preferences of Managers- The managers may not necessarily
promote deserving employees strictly on merit because of their personal likes and
dislikes for certain individuals.
(iii) Limitations on the number of employees to be transferred –Since the transfer has
to be made from within the organization, the number of individuals who are eligible to
apply would be restricted. The individuals outside the organization who are more
talented would not be given an opportunity to serve the organization.
(iv) Rather than being motivated to work hard, employees may become complacent

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because of their assured promotion and seniority.

Briefly explain the following: Winter 2008,

Q11
(a) Business Ethics
(b) Core Competence
(c) Environment Management
(d) Job Description (12)

Strategy and CSR b, a

HR and Change Management d, c

Marketing

International Business

Comments not available.

(a) Business Ethics refers to the code of moral principles and values which are applied
by individuals and organizations in their dealings in the commercial world. Business
ethics provide guidelines for acceptable behaviour by organizations in their strategy
formulation and day-to-day operations.
(b) Core Competence is the key ability or strength that an organization has acquired
which differentiates it from others, gives it competitive advantage and contributes to its
long- term success. Core competence accrues due to its favourable location, access to
superior quality raw materials, unique capabilities of equipment, acumen of
management, skills and competence of workers and marketing insight . Core
competence is valuable, rare and difficult for competitors to imitate.
(c) Environment Management is a systematic approach to minimize the damage caused
by an organization to the environment in which it operates. Environment management
has assumed considerable importance because all the stakeholders expect
organizations to be responsible for the preservation of the environment and
management are increasingly being held responsible and liable for their organization’s
environmental performance. Environment management involves reducing
pollution/waste and consumption of natural resources in judicious manner.
(d) Job Description is a structured and factual statement of a job’s functions and
objectives. It defines the boundaries of the job-holder’s authority and responsibility and
includes the job title, department, job site, and reporting channels.

As a Senior Manager in the Human Resources Department of Apex Bank Limited, you Summer
have been entrusted with the task of conducting a Disciplinary Enquiry against Mr. 2008, Q4
Hameed Khan, an Assistant Manager in the Bank Square Branch. The Branch Manager,

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who is a highly respected senior officer with considerable experience, has leveled
charges of aggressive attitude and gross misbehavior against the Assistant Manager in
dealings with his colleagues. What steps would you take to ensure that the
Disciplinary Enquiry is conducted in a fair and impartial manner and the final outcome
is based on principles of equity? (12)

In this question the students were required to identify and explain the necessary steps
to ensure that the Disciplinary Enquiry is conducted in a free and impartial manner
and the final outcome is based on principles of equity. A substantial number of the
students were unable to comprehend the basic requirements of the question and
instead stated the various types of disciplinary actions/ punishment on the premise
that the charges against the Assistant Manager have already been duly established.
However, quite a few replies were very well elucidated and adequately mentioned the
following steps:
(i) Obtain complete written evidence from the Branch Manager stating the specific
nature of the Assistant Manager’s misconduct, their dates and timings and names of
the colleagues who had lodged the complaint.
(ii) Acquire insight in the source of the problem from information obtained from
complainants and other colleagues
(iii) Investigate the Assistant Manager’s personal record to ascertain if there are any
evidences of indiscipline or aggressive behavior in the past.
(iv) Prepare a comprehensive report on the allegations leveled by the Branch Manager
and the replies of the Assistant Manager and on the basis of the findings, offer
recommendations for the proposed line of action along with their rationale.

In order to conduct the Disciplinary Enquiry in a fair and impartial manner, I would
adopt the following steps:
(i) Obtain complete written evidence from the Branch Manager stating the specific
nature of the Assistant Manager’s misconduct, their dates and timings and the names of
colleagues with whom the Assistant Manager was involved in the offensive conduct.
(ii) Make efforts to obtain specific information from the complaints as well as other
colleagues regarding any special circumstances inside the office or outside which may
help to explain the source of the problem.
(iii) Investigate into the Assistant Manager’s personal record to ascertain if there is any
evidence of indiscipline, aggressive behaviour or misconduct in the past.
(iv) Study the Bank’s disciplinary rules bearing in mind the Assistant Manager’s past
record and the nature and intensity of the offence.
(v) Direct the Assistant Manager to give a written reply to the various allegations of
aggressive conduct and misbehaviour offering his explanations to the charges made by
the Branch Manager.
(vi) A meeting would be held with the Assistant Manager in which he would be provided

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an opportunity to explain his viewpoint and circumstances leading to the Branch
Manager’s complaint. Structure the enquiry and make noting of the important points to
be covered in the enquiry. The Assistant Manager would be informed of the date, time
and place of the enquiry and the reason why he has to appear for the enquiry.
(vii) Examine similar cases in the past and the nature of punishment meted to the
defaulters.
(viii) After hearing of the Assistant Manager’s explanation in an objective, fair and
consistent manner, I would draw my conclusions regarding the nature of the allegations
and the intensity of the misconduct.
(ix) Prepare a comprehensive report on the allegations leveled by the Branch Manager,
written and verbal replies of the Assistant Manager and my findings along with the
course of proposed line of action and rationale for my recommendations.

The governments generally promulgate comprehensive laws for health, safety and Summer
security of the workers. State five objectives which are expected to be achieved 2008, Q10(a)
through these laws. (05)

In this question the students were required to identify five objectives which the
governments expect to achieve by promulgation of laws for health, safety and security
of the workers.
Essentially, governments seek to achieve the following objectives i) to reduce hazards
in the workplace by strengthening health, safety and security programs ii) to establish
minimum safety and health standards iii) to create an effective framework for
enforcement of regulations iv) to lay down procedures for reporting of job related
accidents, injuries, illnesses and deaths v) to prevent employment of child workers and
vi) to provide special facilities for female workers.
Several students could not comprehend the requirements of the question and offered
general replies in the context of welfare and improvement in the living standards of
the citizens. Some students mentioned the advantages which organisations expect to
achieve instead of mentioning the objectives which the governments expect to
achieve.

The objectives of promulgating comprehensive laws for the health, safety and security
of the workers are:
(i) To encourage employers and employees to reduce hazards in the work place and to
strengthen the health, safety and security programs.
(ii) To establish minimum safety and health standards, particularly in hazardous
industries such as steel, mining and construction.
(iii) To create an effective framework for enforcement of the regulations.
(iv) To frame procedures for reporting of job related accidents, injuries, illnesses and
deaths.

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(v) To prevent employment of child workers.
(vi) To provide special facilities for female workers.

Safety Engineers are convinced that industrial accidents are attributable to Summer
inadequate Human, Environmental and Mechanical/Technical security factors. How 2008, Q10(b)
can responsible management effectively reduce the risks of accidents in each of these
categories? (09)

Responsible management can reduce risks of industrial accidents arising from Human,
Environmental and Mechanical security factors by ensuring strict compliance with
safety rules, avoidance of excessive overtime, good housekeeping, proper lighting and
ventilation, safe storage of inflammable material, proper tools and equipment and
proper protective equipment.
Although some of the aforesaid points were well presented by several students, there
were numerous instances where the same point was repeated in different words.

Responsible Management can reduce the risks of industrial accidents by adopting the
following measures:
Human Factors:
 Strict compliance with safety rules
 Proper operation of equipment
 Avoid excessive overtime
Environmental Factors:
 Good housekeeping
 Proper ventilation
 Adequate lighting
Mechanical/Technical Factors:
 Safe storage and handling of inflammable materials
 Proper tools and equipment
 Adequate protective equipment or mechanical guards

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 MARKETING
Discuss the advantages which prominent manufacturers of fast moving consumer Winter 2015,
goods achieve by pursuing strategies of competing in diversified product lines. (06) Q. 2(a)

This was a very simple question from the textbook regarding advantages which
prominent manufacturers of FMCG achieve by competing in diversified product lines. A
large number of students were able to perform well. However, a number of students
identified general advantages such as enhancement of management expertise,
increase in profitability and market share, etc. which were not appropriate in the
given context.

The advantages which prominent manufacturers of fast moving consumer goods

achieve by competing in diversified product lines are as follows:
(i) Meet threats from competitors – If a company relies on one product line for
success, a competitor can enter the market, undercut the price, and capture the
market share. A company with more diversified product lines can meet threats
from competitor’s aggressive actions more effectively than a company which has
a single product line.
(ii) Achieve economies in utilisation of resources – Diversified product lines enable
these companies to make optimum utilisation of resources by spreading operating
and marketing costs over a range of products to reduce these costs for all its
products.
(iii) Offset seasonal fluctuations in sales – Companies which offer products with
marked seasonal variations in demand pursue diversified product lines to counter
declines in sales during the off-peak seasons.
(iv) Achieve positive market impact – Diversified product lines enable a company to
create a positive impact in the market. A company offering diversified lines of fast
moving consumer goods is often more important to both consumers and the
distribution channels.
(v) Promotional campaigns of multiple products – Customers can be locked-in by
special promotional campaigns which may on purchase of any one product offer
another product at a substantial discount to promote sales of multiple products
e.g. on purchase of a bag of washing powder for clothes, a bottle of dish washing
liquid can be purchased at half of its normal price.

Empirical studies show that a large number of business entities use external data for Winter 2015,
monitoring competition and business intelligence, providing credibility to research Q. 2(b)
projects and presentation of reports to management. State the inherent limitations
which should be kept in perspective while using external data. (05)

This part of the question on limitations of using external data was answered well too.
Most of the relevant points were duly covered.

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 MARKETING
The limitations of external data are:
(i) The intervals in the collection of data, units of measurement and proper cross-
comparison may not be appropriate as the data has not been collected from
representative samples.
(ii) The external data may have been gathered to present information more
favourably for certain specific users.
(iii) Data from international sources may be presented in a foreign language and
translations may distort their correct interpretation.
(iv) The data may have copyrights and its use without prior permission can lead to
legal complications.
(v) The data may be outdated and inaccurate due to changes in environment and
technology.

Hi-fi Garments (HG) are manufacturers of a wide range of designer garments for the Winter 2015,
affluent segments of the market. HG has established its own retail outlets in the Q. 4(a)
leading malls in various cities involving substantial capital investments as well as
recurring management and other expenses.
State briefly five reasons why HG may have followed the policy of marketing/selling of
fashion garments through its own outlets rather than through independent retailers.
(05)

This question required mentioning the reasons because of which an organization

would prefer to follow the policy of marketing/selling through its own outlets rather
than through independent retailers. This part of the question was attempted well and
majority of the candidates were able to gain good marks. However, some students
included general points such as increasing profits and market share, etc. which were
not appropriate in the given situation.

HG may have followed the policy of selling its products in its own outlets in the major
malls in the various cities rather than through independent retailers to achieve the
following objectives:
(i) The shops/outlets of the independent retailers would not be of the standard
which would attract the affluent class of customers which is the target market of
HG.
(ii) HG would like the products to be displayed in fashionable company-owned
outlets in malls to attract the affluent customers.
(iii) The independent retailers would seek liberal credit terms resulting in blocking of
funds with external parties and entail risks of defaults.
(iv) The designer garments are sold at high profit margins at the retail stage and HG
may not want to pass these lucrative profits to the independent retailers.

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(v) HG may pursue a policy of price skimming and sell the new designs at high prices
and then reduce prices by clearance sales to dispose of the slow moving
inventories.
(vi) The retailers would also carry inventories of other manufacturers which would
not be in line with the latest fashions and quality products of HG. This would
adversely affect the image of HG amongst its prospective fashion-conscious
customers.
(vii) All the self-owned outlets would have attractive and uniform configuration of
shop designs and displays to facilitate customers to recognize HG’s distinct
identity.
(viii) The salesmen at the outlets would be appointed after careful selection process
and would be provided training to guide and serve the customers.
(ix) The staff at the outlets would obtain feedback from the customers to create
fashions and designs which meet the requirements of the customers.

Explain briefly what is meant by product positioning strategy. Give one practical Winter 2015,
example of a product and its brand and mention the particular customer need that is Q. 4(b)
stressed while pursuing product positioning strategy. (04)

This part required brief explanation of product positioning strategy and one example
of a product with its brand and the particular customer needs which are stressed while
pursuing product positioning strategy. Majority of the candidates seemed to
understand the concept of product positioning to some extent but had difficulty in
explaining it properly. Most candidates failed to convey the main idea, i.e. creation of
a perception among the customers about the particular need which the product would
fulfill. Many candidates were totally misguided and defined product positioning as
placing the products at prominent places in the shop. Many candidates showed their
lack of understanding by using the term ‘position’ instead of ‘positioning’.

Product positioning strategy envisages to identify the specific needs of a select class of
target customers and fulfil their particular need(s) more effectively relative to the other
competing products available in the market.
Examples:
 Head and Shoulder Shampoo for users who have dandruff.
 Mercedes vehicles for customers who have achieved a high status in their
careers/lives.
 Rolex watches for affluent customers who have discerning tastes, insist for superior
quality products and ‘value their time’.
 Junaid Jamshed Sherwanis for rich fashion-conscious bridegrooms to create an
impression on the invitees.

Shalimar Dairies Limited (SDL) is engaged in the business of producing, processing and Winter 2015,

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marketing of packaged milk. SDL has excess milk processing capacity and is Q. 5(a)
considering launching an aggressive marketing penetration strategy to increase its
sales and share of the growing market.
Explain briefly the factors which SDL should consider prior to launching of aggressive
market penetration strategy. (06)

In this part of the question, the candidates were required to explain the factors that
should be considered prior to the launching of an aggressive market penetration
strategy. Majority of the candidates failed to notice that those factors were asked
which are considered prior to launching the market penetration strategy and instead,
they tried to identify factors which are considered in the development of a market
penetration strategy. Further, many candidates ignored the fact that the organization
was already in business and stated points related to the start of a new business such
as market analysis, demographic characteristics, survey of the customers’ needs, etc.
Many candidates suggested that the company should see whether it has excess
capacity whereas it was already stated in the question.

The factors which should be considered carefully by SDL prior to launching aggressive
market penetration strategies are as follows:
(i) Responses from competitors – Market penetration strategies of offering
packaged milk at low prices or highly aggressive promotional campaigns can result
in competitors also pursuing policies of matching responses to retain their share
of the market.
(ii) Perception of quality of milk in the minds of the customers – Pursuance of an
aggressive penetration strategy by lowering the prices may convey an impression
in the minds of the customers of unwholesome quality of milk.
(iii) Subsequent price increases – Customers expect the prices to remain low for
prolonged periods and in the event of subsequent increase in prices they may
switch to competitors products which would result in loss of market share gained
previously. Keeping prices low for a long period may involve high costs.
(iv) Brand loyalty – Market penetration strategies should take into consideration the
fact that customers who have loyalties and strong brand preferences for
competitors’ products would not necessarily switch to the company’s brand.
Aggressive penetration policies usually attract customers who seek bargains of
low prices.

Placed below are products A, B, C and D along with their characteristics: Winter 2015,
Q. 5(b)

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In the context of Boston Consulting Group matrix, identify the categories to which the
above products pertain. (04)

This part of the question was based on Boston Consulting Group matrix. The
candidates were asked to complete the matrix for which they needed to identify the
categories to which each specified product belonged, by considering the growth rate
and market share, which was provided in the question. This was the best attempted
question as majority of the candidates were able to identify all the four categories
correctly.

The products can be classified according to their characteristics as per the BCG matrix as
follows:

Evaluation of a firm’s strengths and weaknesses includes comparison of the efficiency Winter 2015,
of its value chain vis-à-vis those of its competitors. Q. 6(b)
State the specific measures which a firm should take if it is faced with a situation in
which weak linkages in its value chain create cost disadvantages and impair its
competitive position. (05)

The requirement in this part was to specify the measures that are to be taken if a
company is faced with a situation of weak linkages in its value chain. The performance
was below average. A significant number of students were confused between the
concepts of Supply chain and Value chain and gave answers from the point of view of
Supply chain only. Many students discussed about cost of raw materials and dealing
with distributors only and ignored all other factors. Outsourcing was a valid point but
instead, many candidates mentioned hiring of contractual employees and/or
downsizing which was not appropriate.

A firm may take the following measures if it is faced with a situation of weak linkages in
its value chain which create cost disadvantages and impair its competitive position:

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(i) Identify activities in the value chain which are either unnecessary or inefficient.
(ii) Re-engineer work processes to achieve greater productivity.
(iii) Introduce more efficient equipment to reduce wastages, achieve economies in
labour costs and energy consumption rates.
(iv) Eliminate expensive work activities in the value chain by introducing cost-saving
technologies and automation.
(v) Relocate high-cost activities to those geographical areas where they can be
performed at low costs.
(vi) Outsource activities to vendors or external service providers who can offer these
services at lower costs.

Regal Motors Limited (RML) is a manufacturer of cars and caters to the requirements Summer
of the mid-level segment of the market for automobiles. RML has manufacturing 2015, Q1
facilities in several countries and achieved world-wide reputation for its cars which
are both affordable and durable and is one of the preferred brands as they meet the
requirements of a significant portion of customers in the target market. RML now
intends to launch luxury cars for the highly discerning customers for whom the brand
of their cars reflect their social status. Besides, features of ultimate luxury, high
standards of reliability and safety of the cars are of critical importance for these
customers. RML considers that this niche market which is presently dominated by 3-4
other car manufacturers would witness significant growth in the foreseeable future.
Explain briefly the various factors which RML should consider to be important in
formulating its entry strategy to compete in this market which is presently the
stronghold of a few well-entrenched car manufacturers. (09)

In this question, the candidates were required to explain briefly the various factors,
which should be considered in formulating the entry strategy for launching luxury cars
in a market with 3-4 well entrenched manufacturers. Apparently, it was a simple
question but somehow the response received was not very good. Most of the
candidates only stressed on valuing the cars at a very high price without giving any
justification thereof. Many students mixed up correct points like study of the size of
the niche market, identification of strengths in various areas of manufacturing and
selection of appropriate location for establishing manufacturing facilities with
irrelevant points such as distribution network and availability of parts and
components. Many students discussed Porter’s model of five competitive forces which
was totally irrelevant.

RML should consider the following factors in the formulation of its strategy for entry in
the market for luxury cars which is presently dominated by 3-4 well-entrenched
manufacturers :
(i) RML should assess the size of the market and the key segments of the market which
it plans to target such as key executives, business tycoons, etc.

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(ii) RML should determine the optimum capacity of the plant based on the size of the
target market from the short-term and long-term growth perspectives.
(iii) RML should identify the most suitable location for establishing the car
manufacturing facilities to avail advantages of, availability of infrastructure facilities,
skilled workers and accessibility to the market.
(iv) RML should examine the strategies of the leading manufacturers to ascertain the
critical factors of product quality, distinctive luxury features, promotional policies,
distribution network and after sales service which have contributed to their success.
(v) RML should evaluate its particular strengths in terms of its car designing
competencies, plant and equipment, manufacturing processes and expertise of its
workers and assess how these can be utilized in the manufacture of luxury cars.
(vi) RML should identify the specific innovative features of design, engine power and
luxury it should incorporate in its cars to offer more attractive products and acquire a
fair share of the existing and expanding market.
(vii) RML should develop estimates of funding requirements for establishing facilities
for manufacturing luxury vehicles, advertising and promotion of its vehicles,
development of dealership network and staff to successfully market the luxury cars.

State four reasons (in each situation) why some businesses: Summer
2015, Q9(b)
(i) give brand names to their products
(ii) do not give brand names to their products. (06)

This was a challenging question which tested the students’ knowledge as regards
branding of products but in a somewhat unique manner as the candidates were
required to specify four reasons because of which companies prefer to introduce
branded products and also four reasons because of which some businesses may prefer
not to give brand names to their products. The overall performance was average as
most of the students stated the reasons for giving brand names correctly but very few
were able to give proper reasons for dealing in products without a brand name.

(i) Businesses give brand names to their products to:

 market, promote and advertise readily identifiable products
 assure customers of consistent good quality of the products
 benefit from the company’s reputation in the market
 help introduce different qualities/varieties of the same product in the market.
(ii) Businesses do not give brand names to their products because they:
 do not want to incur expenditures on promoting a particular brand
 are not in a position or willing to maintain consistent quality of the products
 sell low quality products which do not have to comply with regulatory standards
 sell products which cannot be physically differentiated from the products of
competitors such as simple items of hardware (nails, nuts and bolts), ice, etc.

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 sell low price products in the low-income segments of the market.

List ten typical questions which may be included in the conduct of a comprehensive Summer
market audit exercise. (05) 2015, Q10(a)

In this part of the question, the candidates were asked to list the typical questions,
which may be included in the conduct of a comprehensive market audit exercise. The
performance was quite poor as very few students seemed to understand the term
‘market audit’. A substantial number of candidates were unable to comprehend the
basic requirement and stated the questions that form part of a market survey of the
consumers. Some candidates raised general questions as regards strengths,
weaknesses, opportunities and threats which were not appropriate in the given
situation.

The following questions may be included in the conduct of a comprehensive market

audit exercise:
(i) Are markets segmented effectively?
(ii) Is the organization positioned well among competitors?
(iii) Has the firm’s market share been increasing?
(iv) Are present channels of distribution reliable and cost-effective?
(v) Does the firm have an effective sales organization?
(vi) Does the firm conduct market research?
(vii) Are firm’s product quality and customer service satisfactory?
(viii) Are the firm’s products and services priced appropriately?
(ix) Does the firm have an effective promotion, advertising, and publicity strategy?
(x) Are marketing, planning, and budgeting strategies effective?
(xi) Do the firm’s marketing managers have adequate experience and skills?

Identify any six demographic variables for segmentation of the market for a new Summer
magazine which would be published on a monthly basis. (03) 2015, Q10(b)

This question required the candidates to list the demographic variables of market
segmentation for a monthly magazine. The performance in this part was good as
majority of the candidates were able to list down the relevant demographic variables
such as age group, gender, occupation, education level, etc.

The market for a new magazine which would be published on a monthly basis may be
segmented according to the following demographic variables:
(i) age group of the target readers

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(ii) gender of the readers
(iii) occupations/professional affiliations of the target readers
(iv) income levels of the prospective readers
(v) education levels of the target readers
(vi) racial/ethnic affiliations of the target readers
(vii) religious backgrounds of the target readers

Aroma Tea Limited (ATL) is engaged in an intensely competitive line of business in Summer
which three powerful companies launch aggressive advertising and promotional 2015, Q11
campaigns to retain and increase their share of the market. ATL has instituted a
Marketing Intelligence System to monitor the effectiveness of its advertising and
promotional campaigns. Briefly describe the different sources from which ATL would
be able to obtain information/data for its Marketing Intelligence System. (06)

The question was regarding the sources that can be used for obtaining
information/data for Marketing Intelligence System. It was an easy question and most
of the students were able to perform well and a significant number of candidates
obtained full marks.

ATL would be able obtain information from the following sources for development of its
Marketing Intelligence System:
(i) Sales force that provide feedback regarding products/policies.
(ii) Distributors, retailers and other intermediaries who obtain important information
and can pass it to ATL.
(iii) Obtain feedback from customers by way of market feedback and surveys.
(iv) Participation in trade shows and exhibitions to obtain insight of competitors’
products and their promotion strategies.
(v) Information from competitors’ published reports.
(vi) Published government statistics relating to population, incomes, imports of tea, etc.
(vii) Purchase of information from professional suppliers of data and information.

Rivalry among competing firms is usually considered to be the most powerful of Winter 2014,
Michael Porter’s Five-Forces Model of competitive analysis. Identify and illustrate the Q1
circumstances in which rivalry among the competitors would be intense. Also identify
any one business in Pakistan in which you consider rivalry among competitors to be
intense and give a reason for your choice. (09)

In this question pertaining to Michael Porter’s Five-Forces model of competitive

analysis, students were asked to identify and illustrate the circumstances in which the
rivalry among the competitors would be intense. Quite a number of the students did

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not adhere to the exact requirement of the question and proceeded to describe the
five forces model of competition. A few students erroneously mentioned irrelevant
points like pursuit of high profits, government regulations, acquisitions and mergers,
etc.

Rivalry among the competitors will be intense/high:

(i) if the number of competitors is high and they are equal in size, strength and
capabilities.
(ii) in case the overall market is not expanding and the competitors resort to price
cutting and aggressive promotion to capture a larger share of the aggregate market.
(iii) if there is not much brand loyalty among the customers and it is easy and less costly
for them to switch suppliers.
(iv) in industries which have to incur substantial fixed costs. The competitors would
strive hard to manufacture and sell larger quantities to spread and recover their fixed
costs from sale of a large number of units.
(v) if the products are perishable or have limited shelf lives as the competitors would
resort to price cutting and aggressive promotion to dispose of their stocks.
(vi) when there are major exit barriers and alternatives uses of the assets are limited.
Example: Manufacturers of soaps/soft drinks/biscuits etc., mobile/telephone service
providers.
Reasons: These are relatively low value-products and are purchased frequently by the
customers at convenient outlets. The customers can be persuaded easily to change their
preferences and hence their brand loyalties.

Identify the key stages involved in the process of conducting market research. (05) Winter 2014,
Q5(a)

This question required identification of key stages in the process of conducting market
research. Generally the students performed well. Nevertheless, certain replies referred
to irrelevant issues like formulating marketing plans and their implementation and
the role of market research in the formulation of marketing plans and strategies.

The key stages involved in the process of conducting market research are:
(i) defining the marketing problem and stating objectives of the research
(ii) determining the sources of information, whether data should be obtained from
primary or secondary sources
(iii) designing of strategy for collection of data – methodology of collection of data by
observation or personal interviews, etc. and ensuring the representative nature of the
data

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(iv) actual collection of data
(v) analysis of data including editing, coding and tabulating the data
(vi) presentation of the market report in accordance with the objectives of the research.

In the present business environment, consumer power is accorded more importance Winter 2014,
by marketers than in the past. Explain briefly the factors which are responsible for the Q5(b)
increase in consumer power. (05)

The requirement of this part of the question was to briefly explain the factors that are
responsible for increase in consumer power. Most of the replies were reasonably
satisfactory and covered the essential points. However, some students seemed too
confused and stated increased resourcefulness of the business firms, market
challenger postures of firms, building long-term relationships with customers, etc. as
the reasons for increase in consumer power; which were obviously incorrect. Many
students got stuck on the point of effective consumer protection laws and repeated it
by writing the same point over and over again with respect to (i) government laws, (ii)
consumer unions, (iii) awareness of consumer protection laws etc.

The increase in consumer power is attributable to the following factors:

(i) Better means of communications: The consumers are able to make well-informed
decisions based on the quality, product attributes and prices comparisons of different
products offered by the competing suppliers as they can access information from
several different sources.
(ii) Greater knowledge among the consumers: The consumers are now more
knowledgeable about their tastes and preference and have therefore become more
assertive regarding the quality standards in accordance with the specifications
proclaimed by the manufacturers /service providers.
(iii) Greater flexibility to purchase goods at their convenience: The ability to make
online purchases of their choice of goods and services at their door steps have
strengthened the consumers powers as they can purchase the goods and services from
suppliers who more fully meet their requirements.
(iv) Effective consumer protection laws: Governments in several countries have
promulgated laws to safeguard the interests of the consumers and ensure that the
products do not cause injuries or result in any harmful affects to the users of the
products.
(v) Ready access to information: Consumer powers have increased considerably as they
are now in a position to make comparisons of goods easily at large departmental stores
and shopping malls which carry wide ranges of different products.

Identify the strategy/policy that the companies are pursuing in each of the scenarios Winter 2014,
given below and state the important features/characteristics of the strategy/policy: Q6
(i) Saaf Soap Company (SSC) is a manufacturer of washing soap for clothes whose

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target market comprises of low income consumers. SSC’s strategy is highly focussed
and it successfully fulfils the needs of customers who want to economise on their day-
to-day household expenditures.
(ii) Wholesome Meat Company (WMC) is engaged in the business of selling meat and
caters to affluent customers who prefer to purchase good quality meat in a clean
environment. WMC’s prices are approximately 25 percent higher than the prices
charged by the traditional meat shops.
(iii) Strong Steel Limited (SSL), a manufacturer of steel billets, intends to acquire and
develop its own iron ore mines within the country. Shipments of imported iron ore
are often delayed due to transportation bottlenecks and besides, the foreign suppliers
manipulate prices during peak demand periods causing uncertainties for SSL.
(iv) Winall Appliances Company (WAC) is a leading manufacturer of refrigerators and
is rated among the four top players in the country. WAC is presently in the advanced
stage of establishing facilities for manufacture of air conditioners. (08)

Strategy and CSR

HR and Change Management

Marketing i, ii, iii, iv

International Business

In this question, four business scenarios were presented and the students were
required to identify the related strategy/policy and highlight its important
features/characteristics.
(i) Saaf Soap Company –This company pursues a cost leadership strategy and
strives to minimize its costs at every stage of its value chain to be able to meet
the requirements of its price conscious low income customers. A number of
students stated market penetration strategy which was not correct in the
given context. The correct answer was overall cost leadership strategy.
(ii) Wholesome Meat Company- This company pursues a differentiated marketing
or a niche marketing strategy to cater to the needs of customers who perceive
quality of meat, shop environment and customer service of value and are
willing to pay a premium price. A number of students incorrectly stated
market/price skimming strategy where high price is charged from a limited
number of affluent class customers who can afford to purchase a newly
introduced product in the market and then the price is reduced to meet the
demands of the relatively less affluent and more wide segments of the
market; which was not the case in the given situation.
(iii) Strong Steel Limited – The correct reply of backward vertical integration and
its essential characteristics were highlighted by a significant number of the
students.

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(iv) Winall Appliances company – The correct answer is related/concentric
diversification strategy or a horizontal integration strategy by adding a new
but related product line to the existing business lines to avail related
advantages of technical expertise, marketing insight and selling through the
same distribution channels. Most of the students answered this correctly.

(i) Overall cost leadership strategy: SSC is pursuing a cost leadership strategy which
creates a low cost position vis-à-vis other manufacturers of washing soaps. Companies
pursing this strategy have to place emphasis on reducing the costs in the entire value
chain to be able to maintain the low prices for its target customers.
(ii) Differentiation strategy: WMC pursues a differentiation strategy of creating an
impression of superior quality of its products and services which the customers perceive
to be of value and are willing to pay premium prices.
OR
Niche marketing strategy: WMC is pursuing a niche marketing strategy as it caters to a
narrowly defined customer group seeking distinctive benefits of good quality meat in a
clean environment and for which they a willing to pay premium prices.
(iii) Backward vertical integration strategy: SSL intends to pursue a policy of backward
vertical integration as it intends to acquire ownership and control of its own sources of
raw materials within the country and thus reduce its dependence on imported iron ore.
(iv) Related/concentric diversification/horizontal integration strategy: WAC is pursuing
a policy of related diversification/integration by adding a new but related product line
to its business to seize advantages of related technical competencies, marketing insight
and sales of the products through its existing network of distributors.

The edible oil industry in Pakistan is characterised by a large and expanding market in Winter 2014,
which the leading players pursue aggressive ‘pull marketing strategies’. Identify and Q8(a)
explain briefly the main objectives and important features/characteristics of the pull
marketing strategies which might be pursued by these companies. (06)

Reply to this question regarding objectives and characteristics of pull marketing

strategies should have been tailored in the context of edible oil industry in Pakistan. In
quite a few instances, the issues of pull marketing strategy were stated in general
terms without any reference to the edible oil business. Some students mentioned
strategies which do not from part of the pull marketing strategy such as product
customization or customer satisfaction.

The main objectives and important features/characteristics of pull marketing strategies

designed to target the end users of edible oil are:
(i) launching aggressive advertising and promotional campaigns to strengthen the brand
loyalties of the existing customers and remind them that the use of the particular brand

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of edible oil is essential for preparation of delicious and nutritious meals which are
enjoyed by a happy family
(ii) persuading customers of other competitive brands of edible oil to change their
loyalties and preferences in favour of the advertised brand of edible oil
(iii) offering incentives in the form of gifts, special discounts, extra quantity at the same
prices to increase sales to existing customers and attract new customers
(iv) emphasizing points of purity and necessary vitamins of the advertised brand to
differentiate it from other competing brands
(v) encouraging the distributors of edible oil to stock up the particular brand.

State the advantages which firms seek to achieve by developing ongoing relationships Winter 2014,
with a base of loyal customers. (04) Q8(b)

This part required the advantages which firms seek to achieve by developing ongoing
relationships with a base of loyal customers and the performance of most of the
students was quite satisfactory. However, an important point regarding locking in
retailers/distributors to ensure uninterrupted availability of the products was
mentioned by only a handful of students.

The advantages which firms seek to achieve by developing ongoing relationship with a
base of loyal customers are:
(i) achieving sustainable revenues and higher profitability from a base of loyal
customers
(ii) serving costs associated with catering to existing customers are generally lower than
identifying and serving new customers
(iii) word of mouth positive information conveyed by satisfied customers can lead to
generation of sales revenue from new customers
(iv) strong customer preferences lock in retailers/dealers to ensure the availability of
the products in their stores.

Aggressive marketing and promotional campaigns of consumer products through Summer

repetitive TV advertisements, eye-catching displays on large-sized billboards 2014, Q5(a)
reinforced by appealing slogans and attractive advertisements in prominent
newspapers and magazines are launched by marketeers to attract customers.
Explain briefly the different objectives of these aggressive marketing and promotional
campaigns on which substantial expenses are incurred by the manufacturers of
consumer products. (06)

The requirement in this question was to explain the objectives of aggressive marketing
and promotional campaigns. A reasonable performance was witnessed, however,
some candidates could not understand the key aspect of the question and made the

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following types of errors:
 The general objectives of advertisements were quoted instead of the requirement
of quoting objectives of aggressive marketing campaigns.
 Some candidates gave separate objectives for different promotional mediums.

Aggressive marketing and promotion campaigns of consumer products launched

through repetitive TV advertisements, displays on billboards and advertisements in
newspapers and magazines are undertaken to achieve the following objectives:
(i) Pursuance of pull marketing strategies to appeal to customers to demand the
products.
(ii) Encourage the market intermediaries such as distributors, wholesalers and retailers
to build up inventories of new products/brands introduced in the market.
(iii) Obtain trial purchases from customers in response to offerings of discount
prices/coupons for special offers, etc. to encourage first time purchases of new
products.
(iv) Counter competitive advertising and sales promotion campaigns to offset the
impact of competitors’ marketing and sales promotion efforts.
(v) Increase in consumption levels of the aggressively promoted products by existing
customers.
(vi) Enhance the image of the brand in the market to create and strengthen brand
equity.
(vii) Generating greater enthusiasm among the sales field force to promote sales of
redesigned or improved products.

What is meant by the term Test Marketing? (03) Summer

2014, Q5(b)

Approximately 50% of the students had no idea of test marketing. Some students gave
incomplete descriptions as they explained that test marketing is used to project sales
but there was no mention of the geographical area.

Test Marketing is a method of forecasting demand where a new product is marketed in

a limited geographical area to determine the consumer response to the product and on
the basis of the findings, sales are projected over a larger area.

Identify the business strategy/policy/definition which is most appropriate in each of Summer

the following situations: 2014, Q6
(i) A leading manufacturer of textile products is considering acquiring an existing fast-
food chain which has outlets throughout the country. It is pursuing a policy of
________.
(ii) Fortune Bank Limited envisages adding 50 new branches to its existing network of

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450 branches in the country. The bank is launching a policy of ________.
(iii) Sunrise Juices Limited manufactures an assorted line of juices, jams and pickles.
The company is in the process of acquiring a fully developed 500 acre fruit and
vegetable farm to meet a significant proportion of its raw material requirements.
Sunrise Juices is pursuing a policy of ________.
(iv) Super Sports is engaged in the manufacture and export of hand-stitched footballs
and pays salaries to its employees according to the number of units stitched during
the course of a week. The employees are paid ________ salaries.
(v) The favourable impact which a well-entrenched brand has on customers
perceptions of quality of the product and would contribute to the future high earnings
potential of the company is known as ________.
(vi) A multinational company follows a policy of manufacturing products and adapting
its marketing strategies to the local environments in the different countries in which it
operates. This multinational company is pursuing a policy of ________.
(vii) Tests designed to evaluate the skills and competency levels of candidates to
perform the jobs actually required of these individuals are called ________.
(viii) The cumulative pool of education, knowledge, skills, expertise and training of the
individual workers in an organisation is known as ________.
(ix) A competitor who aggressively pursues a policy of undermining the status of the
market leader is called a ________.
(x) A process by which a multinational company having a number of subsidiaries in
different countries may make adjustments of foreign currency transactions/balances
among the different subsidiaries is called ________. (10)

Strategy and CSR

HR and Change Management vii, viii, iv

Marketing i, ii, iii, ix, v

International Business vi, x,

This question contained 10 parts of one mark each in which the candidates were given
definitions of various business terms and were asked to correctly identify the
described term. Overall performance in the question was average as most of the
students secured around passing marks. Some students gave more than one choices. It
must be noted that in case there are more than one answers, all answers are
cancelled.

The appropriate business strategy/policy/definition are:

(i) diversification/conglomeration

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(ii) market penetration / market expansion/ market development
(iii) backward integration
(iv) performance based
(v) brand equity
(vi) polycentrism
(vii) proficiency tests
(viii) human capital
(ix) market challenger
(x) multilateral netting

Narrate (with brief comments) the different types of promotional strategies which are Summer
adopted for marketing of consumer goods in the following stages of their Product Life 2014, Q7(a)
Cycles:
(i) Introduction stage
(ii) Growth stage
(iii) Maturity stage
(iv) Declining stage (06)

Here the students were required to provide brief comments on the promotional
strategies which are appropriate for different stages of the product life cycle.
Generally, the students did well. However, some students seemed confused and
discussed in detail the various stages of the product life cycle with very little emphasis
on promotional strategies. Similarly, many candidates restricted their discussion to
media strategies like advertisement in the newspaper, television, billboards, etc. and
ignored the other promotional activities which may be carried out at different stages
of the product lifecycle.

Marketers pursue the Promotional Strategies consumer for goods in the different stages
of their Product Life Cycles as follows:
(i) Introduction Stage
(i) inform and educate the potential customers of the existence of the product
(ii) encourage trial of product and create awareness of the benefits that would
accrue to the customers by using the product and how it should be used
(iii) secure distribution in leading retail outlets
(iv) place heavy emphasis on personal selling and promotion in trade shows
and exhibitions

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(ii) Growth Stage
(i) stimulate demand in selected market segments and promote the particular
brand as competition increases
(ii) increase emphasis on advertising to capture a large share of the growing
market
(iii) enter new markets and expand coverage
(iv) identify new distribution channels
(v) shift emphasis from product awareness to the individual firm’s brand
preference through aggressive advertising
(iii) Maturity Stage
(i) focus on promotion and advertising to persuade the customers to purchase
the particular brand rather than to provide information about the product
(ii) selective promotion only as intense competition and increase in promotion
expenditures would result in lower profits
(iii) increase R&D budgets to improve product quality vis-a-vis competitors
(iv) extend product lines to meet niche customer demand.
(iv) Declining Stage
(i) reduce promotion expenses as the size of the market is shrinking
(ii) focus of promotion towards reminding remaining customers.

State what is meant by the term Brand. What brand attributes are important for Summer
creating a successful image of the brand in the market? (05) 2014, Q7(b)

The question called for definition of the term “Brand” and the attributes which are
important for creating a successful image of the brand in the market. Majority of the
candidates were able to provide correct definition of the term “Brand” but were
unable to distinguish between attributes and advantages of a Brand and mainly
focused their answers on advantages rather than attributes.

Brand is the distinctive proprietary name, symbol or trade mark that differentiates a
particular product or service from other competing products and services available in
the market.
The important brand attributes for creating a successful image of the brand in the
market are that it should be :
(i) able to attract attention of the target market

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(ii) easy to remember and communicate
(iii) reflective of the positioning of the product in the selected target market
(iv) distinctive and different from brands of other competing brands.

Discuss the relevant competitive environment in the context of Michael Porter’s Five- Summer
Forces Model of Competition in each of the three scenarios presented below. 2014, Q8
Substantiate your answer by stating the significant characteristics of competitive
environment facing the organisations in each of the scenarios.
(i) Ocean Ship Breaking Company is located in a country which has access to skilled
low-cost manpower, convenient berthing/ship-dismantling facilities, liberal tax
incentives and an expanding domestic market for sale of steel scrap. Despite the
above favourable factors, very few entrepreneurs have interest in this so called ‘dirty
and demanding’ business. On the other hand, the shipping industry is facing a surplus
of unserviceable vessels. These vessels have to be scrapped as early as possible due to
their high maintenance costs and port charges.
(ii) Two companies have developed genetically modified rice seeds after intensive
research at a considerable cost. These companies have also made substantial
investments in physical facilities for producing the seeds. These seeds have resulted in
unprecedented increase in per acre yields in the three countries in which these seeds
have been marketed to-date. Both the companies expect phenomenal increase in
their revenues and earnings after they launch their products in other rice growing
countries due to the envisaged demand in these countries.
(iii) In Country PQR there are six cement manufacturers of similar strength and
resourcefulness. These manufacturers share among themselves 90 percent of the
aggregate market which is expected to remain stagnant due to lack of demand for
new housing and absence of plans for major infrastructure projects in the country in
the foreseeable future. (09)

In this question, three different scenarios were given and the candidates were
required to discuss the competitive environment prevailing in each case with reference
to Michael Porter’s Five-Forces Model of Competition. Instead of identifying the
relevant competitive force in each situation, significant number of candidates
formulated their answers by applying and substantiating each of the five competitive
forces in all the three given scenarios which was incorrect. Some of the other
observations in each scenario are discussed below:
(i) Most of the candidates discussed Ocean Ship Breaking company’s competitive
position as a supplier whereas the company’s competitive position as a buyer was
mostly ignored.
(ii) According to the given scenario two companies had developed a significantly
improved quality of rice seeds and intended to introduce them in many countries. In
this case, most of the students discussed bargaining power of the supplier which was
incorrect. Most of them could not identify threat of new entrants as the critical

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competitive force.
(iii) In this scenario regarding six cement manufacturers of similar strength and
resourcefulness, a large number of candidates identified bargaining power of buyer as
relevant competitive force, which was incorrect. The answer was intensity of
competition among the suppliers in a stagnant market environment.

(i) Bargaining Power of Buyers

Ocean Ship Breaking Company enjoys an exceptionally strong bargaining position vis-à-
vis the ship-owners. OSBC can purchase ships at very low prices. Besides, OSBC has the
significant advantages of low ship dismantling costs, favourable tax policies and a ready
market for sale of steel scrap material combined with limited number of interested
entrepreneurs in this line of business which would strengthen its position vis-à-vis the
ship owners
(ii) Potential Threat of Entry of New Competitors
Since the market for genetically modified rice seeds is expected to offer significant
growth prospects resulting in increase in revenues and lucrative profits by the two
companies, there would be a strong attraction for other resourceful research-oriented
companies to enter this market. Although the new entrants would have to incur huge
R&D costs to develop the specialized products, and make substantial investments in
creation of production facilities yet threats from potential competitors cannot be ruled
out.
(iii) Rivalry among Existing Firms
Since six companies of equal size and strength are involved in competition in the market
for cement which is not expected to show any growth, the strategies pursued by only
those companies would be successful to the extent that they have competitive
advantages over the strategies of their rivals.
Price competition, campaigns for creation of perceptions of better quality of cement,
free onsite delivery to bulk buyers and aggressive promotional strategies would be
common features among the competing firms.

Marketing policies relating to five different types of businesses/products/services are Winter 2013,
presented in the following table: Q1

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You are required to identify the policies which you consider to be inappropriate along
with brief reasons to support your point of view.
Note: Policies which are considered to be appropriate may not be discussed. (11)

This was a practical question and tested the students understanding of some basic
business strategies i.e. those related to pricing, place of business and selection of
media for carrying on promotional activities. A practical situation was given in which
five different businesses were identified and policies followed by them in each of the
above areas were specified. The students were required to identify the policies which
seemed inappropriate in the given situation and to justify their decision.
Generally the response was good but many students could not properly explain why
they considered a policy inappropriate. A common mistake was that most of the
students could not identify the following inappropriate policies:
• in case of high-end ladies beauty parlor the policy of discount to groups is incorrect.
• there is no need for extreme price competition in the case of school uniforms.

Fast-food restaurant
(i) Skimming pricing is inappropriate – should be based on market penetration policy.
(ii) Location is inappropriate- should be in highly–frequented and busy areas.
(iii) Promotion in prestigious business magazine is incorrect – should be promoted on
billboards and widely circulated newspapers.
High-end ladies beauty parlour
(i) Discount pricing policy for large groups is inappropriate – ladies prefer to visit beauty
parlours alone or with selected few family members/friends.
Branded pickles and jams
(i) Prices substantially lower than established competitors are inappropriate – it may
convey an image of inferior quality of products.

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(ii) Selling in company owned outlets is an inappropriate policy – pickles and jams are
purchased at large number of dispersed locations such as super markets, grocery shops
and local convenience stores.
(iii) Limited promotion in national newspapers and TV cooking shows is inappropriate –
products are purchased frequently and customers have to be reminded continuously of
the brand and superior quality of the products.
Uniforms for students in government schools
(i) Extreme price cutting competitive policy is inappropriate – school uniforms are
almost of the same quality, hence there is no need for extreme price competition.
(ii) Distributors in leading shopping malls is inappropriate – school uniforms for students
in government schools are purchased in outlets located close to the schools and
through retail outlets.
(iii) Promotion in live cricket matches on TV is inappropriate – TV advertisements are
expensive and uniforms are normally sold at reasonable prices and at the beginning of
the school sessions.
Locally manufactured refrigerators and air conditioners
(i) Pricing policy is not appropriate – customers prefer to purchase locally-manufactured
refrigerators and air conditioners only if the prices are considerably lower than
imported products of well-known brands.
(ii) Location at a distance from main markets for similar products is not appropriate –
customers prefer to shop around and compare product features and their prices in the
main markets.
(iii) Promotion policy is not appropriate as prospective customers do not place reliance
on advertisements in local newspapers for these products.

Define the term Consumerism. Identify the inherent rights of consumers in the Winter 2013,
prevailing business environment. (06) Q4(a)

The requirement was to define consumerism and identify the inherent rights of
consumers. Most of the students did not have any idea of the term ‘consumerism’ and
described it as consumption pattern. However, they had a good idea of the inherent
rights of the consumers and therefore the overall performance in this question can be
termed as average.

Consumerism is an organised movement of the consumers to strengthen their rights

and powers by forming consumer groups and impressing upon the producers that
consumer satisfaction is essential for the long-term profitability of the producers.
In the prevailing business environment, consumers have:
(i) the right to expect that the product would perform according to the claims made by
the manufacturer

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(ii) the right to have information about the ingredients/composition of the products
(iii) the right to be protected against unfair exploitation or intrusion of privacy by the
manufacturer
(iv) the right to expect that the product would be safe for the user
(v) the right to good quality of life and protection of the environment for the existing
and future generations of consumers.

While formulating its marketing strategy, a manufacturer must decide whether it Winter 2013,
intends to pursue a pull marketing strategy or a push marketing strategy. State the Q4(b)
salient features of a pull marketing strategy and a push marketing strategy and
indicate the situations in which each of these strategies would yield optimal results.
(07)

Most of the students seemed to understand the push and pull marketing strategies
and stated the salient features of the strategies in detail. However, in majority of the
cases, they were unable to correctly identify the situations in which these strategies
may be used which showed that their success in correctly describing the two strategies
was more on account of memorization rather than conceptual understanding.

Pull Marketing Strategy:

 In a pull marketing strategy, the manufacturer places greater reliance on
advertising, direct promotion and other forms of direct communication with the
consumers to persuade them to demand the product from the intermediaries and
thus induce the intermediaries to place orders with the manufacturer.
 A pull marketing strategy would yield optimal results when there is strong brand
loyalty for the product and the consumers are convinced of the superiority of the
product and demand the particular brand by name from the intermediary.
Push Marketing Strategy:
 In a push marketing strategy, the manufacturer deploys own sales force and offers
attractive margins and extended credit terms to the intermediaries to encourage
them to carry, promote and sell the product to the end users.
 A push marketing strategy may be adopted when there is low brand loyalty for the
product or the intermediary is in a position to influence the customer’s decision or
the product is an impulse purchase item.

Long-life Concrete Limited (LCL) is a manufacturer of pavement blocks and enjoys a Winter 2013,
sustainable cost-leadership position in its line of business. Recently, a number of Q6(a)
competitors have posed serious challenges to the favourable cost-leadership
advantage enjoyed by LCL over its rivals.
State the different strategies and tactics that LCL should pursue to sustain its cost-
leadership advantage over its competitors. (06)

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In this part, the candidates were required to state the strategies which an
organisation would need to pursue in order to be able to maintain its cost leadership
position.
The question was quite simple and a high performance was expected. However,
majority of the students failed to realize that they should restrict the replies to the
cost aspects but they delved on unrelated issues like innovative products. Some of the
students went into excessive details relating to cost cutting of individual expenses
rather than discussing the overall approach. On the other hand, many students
restricted themselves to purchase of raw materials and did not cover other important
aspects like efficient plant operations and inventory management.

Long-Life Concrete Limited should adopt the following strategies and tactics to meet the
challenges posed by the competitors and maintain its sustainable cost-leadership
advantages:
(i) Efficient operation of the physical facilities – The manufacturing plant, raw material
handling equipment and packaging and loading facilities should operate at high
capacities with minimum down-time for maintenance, repairs and other stoppages.
(ii) Vigorous pursuance of policies of purchase of raw materials in optimal quantities to
minimise costs, including inventory carrying costs and overall financial costs.
(iii) Exercise of tight control on all operating costs, such as salaries and wages, power
and fuel and other overhead expenses.
(iv) Continuous review and revision of marketing strategies to make them more
effective and customer-value oriented.

Innovative companies allocate dedicated resources to identify and explore Winter 2013,
opportunities for developing new products. List the basic attributes which are Q6(b)
essential to make a new product viable and worthwhile for expending further time
and effort on its consideration. (04)

This was a straight question which required listing of basic attributes which make
introduction of a new product viable and worthy of further investment in terms of
time and effort.
About fifty percent of the students did quite well. However, the rest were rather
confused as regards the requirement of the question and instead of mentioning the
relevant attributes they explained the steps that the company may need to take to
make the new product successful which was not required.

The new product should possess the following basic attributes to make it worthwhile to
expend further time and effort:
(i) The new product should offer an attractive opportunity for its acceptance in the
market, i.e. there must be demand potential for the new product.

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(ii) The opportunity for development of the new product must be practicable and
physically possible.
(iii) The opportunity must have potential for profitability and the benefits must exceed
the cost of the product by a significant margin.
(iv) The opportunity must be attractive for a considerable period that is the opportunity
must be available for a reasonable period to make it worthwhile for consideration.

Briefly state what is meant by the following terms: Winter 2013,

Q11
(i) Human resource management
(ii) Offshore manufacturing
(iii) Behavioural interviews
(iv) Competency-based salary system
(v) Tax havens (10)

Strategy and CSR

HR and Change Management i, iii, iv

Marketing

International Business ii, v

This was a straightforward question which required meaning/definition of five

terms/concepts. The terms Human Resource Management and Competency Based
Salary System were generally well defined
In defining offshore manufacturing, majority of the students simply mentioned
manufacturing in other countries but only few could clearly state the motive and
methodology i.e. awarding contract to produce where labour and/or raw materials
are cheap and then importing them in the country where the firm which awarded the
contract is located. Many candidates confused it with offshore oil drilling and some of
them incorrectly stated that offshore manufacturing is carried out by establishing
plants outside the country.
Most of the students did not have any idea of the concept of behavioral interviews.
Many students made wild guesses, for example some of them mentioned that in
behavioral interviews, gestures and posture of the interviewees are observed.
Tax havens were better described but some students went to the extreme and stated
that in tax havens there are no taxes.

(i) Human resource management involves planning, organising, directing and

controlling the human resources by placing the right persons in the right places and
providing them with training in order that they make effective contribution towards

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achievement of the organisation’s corporate objectives.
(ii) Offshore manufacturing means an arrangement by which a firm in one country
enters into a contract with a foreign-based firm in another country to manufacture its
products or components on behalf of the firm which has awarded the contract.
(iii) Behavioural interviews are conducted to ascertain how the candidate responded to
various real-life job-related situations in the past.
(iv) Competency-based salary system means the employees are paid for the range of
skills and knowledge they provide to the employer, rather than for the positions or jobs
that the employees hold.
(v) Tax havens are countries that have highly generous tax laws to encourage foreign
citizens to conduct their operations in such countries.

Markets are often demarcated into different segments on the basis of their unique Summer
characteristics and attributes. The different market segments may be classified as: 2013, Q2
(i) Geographic or location segments (ii) Demographic segments
(iii) Time segments (iv) Usage or consumption segments
Appropriate pricing strategies must be adopted for each of these market segments to
achieve the desired objectives.
Explain and illustrate with appropriate examples the pricing strategies which may be
pursued for each of the above market segments to achieve specific objectives. (10)

This question pertained to demarcation of markets on the basis of

geographic/location, demography, time and usage/consumption segments. It posed
problems for a large number of students. Approximately 7.3 % of the students did not
attempt this question which carried 10 marks. The difference in pricing strategies for
geographic segments and time segments were better explained. However, segments
based on demography and usage were not clear to most of the students. Many
students also discussed irrelevant issues like market penetration, skimming strategies,
etc.

(i) Geographic or location segments – High prices are charged for the same
products/services in posh locations where customers are willing to pay the high prices
and low prices are charged in relatively less affluent areas where the consumers are not
well-off or have different types of needs, although the cost of offering may be the same
in both the locations. A bottle of water of 1.5 liters may sell for Rs 25 in the super
market, but in a prestigious restaurant the price charged for the same brand of bottled
water may be as high as Rs 95.
(ii) Demographic segments – Different prices may be charged from different customers
for the same product/service on the basis of differences in their age, gender or
profession. Lower entry fees may be recovered from students and senior citizens to
encourage them to visit a museum or an amusement park as compared to the entry

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fees charged from other visitors.
(iii) Time segments – The market may be segmented to recover high prices for use of
the service during peak business hours and low prices for use of the same service during
the slack or off-peak periods. A provider of telephone services may levy a higher tariff
structure for calls made during the business hours and lower rates for services provided
after the normal business hours. This pricing strategy would encourage more customers
to make their calls during the off-peak periods.
(iv) Usage or consumption segments – Marketers often differentiate the market
segments on the basis of customers volume of purchases, frequency of usage or their
particular types of use and reward them with low prices as compared to the high prices
charged from those customers who make their purchases in small quantities or usage
for specific purposes. A supermarket may offer special discounts on certain items to
those customers whose purchases are in excess of a specified quantity to encourage
bulk purchases. Also, lower tariff structures may be charged for electricity used for
drawing water from tube wells for agricultural purposes to reduce costs of inputs used
in the production of agricultural products and higher rates for electricity consumed in
commercial establishments.

Identify the business strategy/policy/definition which is most relevant in each of the Summer
following situations: 2013, Q5
(i) The process through which representatives of management and workers union
negotiate a labour agreement is known as __________
(ii) Promotion of a firm’s brand status and acceptability by increasing customer
perception of its superiority over other brands of similar products is __________
(iii) A form of promotion that links a brand of a consumer product to cultural, social,
sports or other activities of high public interest is known as __________
(iv) A company’s obligation to be sensitive to the needs of all its stakeholders and
create an overall positive impact on the society is known as __________
(v) The approach in which a multinational company assigns the best employees to key
positions in its worldwide operations regardless of their nationalities is __________
(vi) The activities of two or more businesses when brought together create value that
is greater than the value which they can achieve individually is due to the effect of
__________
(vii) The protection granted by law to intangible assets such as patents, copyrights,
trade marks and authors of books is called __________
(viii) Purchase of all or part of a business from its owners by its managers is called
__________
(ix) Potential changes in political conditions in a country that may cause a company’s
operating performance or financial position to deteriorate are called __________
(x) Implementation of measures to reduce electricity, petrol/diesel and gas

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consumption by efficient control and management and also to protect the natural
environment is called __________ (10)

Strategy and CSR vii, ix, x, vi, viii, v

HR and Change Management i

Marketing ii, iii

International Business v

This was an objective type question where 10 different situations were given and in
each case, the students were required to mention the term which could best describe
the given situation. An average performance was witnessed which was
understandable because each situation had a specific answer and only those students
who had good understanding of the topic could answer them. The advice here is that
specific terminology or business jargon should be used in such questions. Other terms
are not acceptable. For example in sub part (i), many students stated Labor Union
Agreement or Labor Management Negotiation whereas the correct answer was
Collective Bargaining.

(i) collective bargaining

(ii) brand positioning
(iii) event related marketing/promotion/sponsorship
(iv) corporate social responsibility
(v) geocentric staffing/orientation/geocentricism
(vi) synergy
(vii) intellectual protection rights
(viii) management buy-out
(ix) political risks
(x) energy conservation

Fine Foods Limited, a recognised name in the packaged food industry, intends to Summer
launch its new line of cereal-fruit based products for infants. 2013, Q6(a)
State the important information which should be presented/contained in the labels
on the new line of products. (04)

This was an easy question in which the students were required to identify the
information that may be available on the label of a cereal meant for infants. Since the
answer was to be based on matters which we routinely observe, replies were quite

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satisfactory and a large number of students were able to score high marks.

The labels on the cereal-fruit based products for infants should provide/contain the
following information:
(i) name of the manufacturer and country of origin
(ii) statement that the product is for consumption of infants
(iii) price of the product
(iv) ingredients used in the manufacture of the product
(v) nutritional values of the product
(vi) net weight of the contents of the product
(vii) date of manufacture of the product and expiry date
(viii) easy-to-understand information/instructions on how to use the product
(ix) method of storage of the product - before and after opening the package
(x) warning about potential misuse
(xi) contact point with the company in the event of any complaint/additional
information.

State how manufacturing companies find and develop new product ideas. (04) Summer
2013, Q6(b)

The requirement here was to identify as to how manufacturing companies find and
develop new product ideas. Answers were fairly up to the mark and covered most of
the essential points. However, the point regarding re-engineering of different products
available in the market to develop new products was mentioned by few students only.

Manufacturing companies find and develop new product ideas by:

(i) conducting formal research and development in R&D departments
(ii) brain storming sessions in internal meetings
(iii) suggestions/ideas put forward by employees
(iv) market surveys of customer needs
(v) tracking of offerings by competitors
(vi) re-engineering of different products available in the market
(vii) information provided by distributors and retailers regarding consumers problems
and needs
(viii) ideas gained in trade and industrial shows and exhibitions.

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What are the different types of entry barriers which may discourage entrants from Summer
establishing new manufacturing units in spite of substantial demand/supply gap for 2013, Q9(a)
products in any industry? (07)

The requirement was to mention the different types of entry barriers which may
discourage new entrants from establishing manufacturing units inspite of the
substantial demand/supply gap for products in an industry. The major factors are
those which are created by competitors. Most of the students mentioned correct as
well as incorrect points. Here again, guesswork was quite visible as students
mentioned all sorts of points which they could think of, such as, policy of
nationalization, threat of being taken over by competitors, threats by influential
persons who run competing businesses, etc. These were totally irrelevant points and
did not secure any marks.

The different types of entry barriers which may discourage new entrants from
establishing new manufacturing units in spite of the substantial demand/supply gap for
products in any industry are:
(i) It may be difficult to achieve economies of scale quickly due to technical/operating
constraints with the result that the new entrants may sustain substantial losses for a
considerable period.
(ii) The technology and specialised know-how for manufacture of the products may be
held closely by a few suppliers and it may be difficult or too expensive for new entrants
to gain access to such technology.
(iii) The existing suppliers may have deeply-entrenched brands and enjoy strong
customer loyalty which may make it difficult for the new entrants to compete with
them.
(iv) The existing suppliers may be financially resourceful and enter into price wars to
deter new entrants.
(v) The initial capital requirements may be too large and beyond the capacity of
potential new entrants.
(vi) It may be difficult for new entrants to have access to sources of raw materials as the
existing manufacturers may have highly favourable ownership/lease rights of these
sources.
(vii) The existing suppliers may have well-established relations with knowledgeable and
resourceful distribution channels and the new entrants may find it difficult to develop
new marketing channels for distribution of their products.
(viii) The government regulatory policies may prohibit new entrants from establishing
new units to provide protection to state-owned industries.

A sound system of Environment Scanning is of critical importance in the formulation Winter 2012,
of Strategic Plans of any progressive company operating in a fast-changing and Q1

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competitive business environment. Hawk Engineering Limited (HEL) is engaged in the
business of manufacturing of small motors which are installed in printers. HEL has
made substantial investments in manufacturing facilities and R&D and has developed
its own in-house technology and manufacturing processes. This gives HEL competitive
advantage over its rivals in terms of meeting the stringent requirements of its quality
conscious customers. Important customers of HEL are the original equipment
manufacturers of precision laser printers. Although motors account for a nominal
proportion of the cost of the laser printers, their efficient and reliable performance
are of crucial importance for HEL’s customers who provide performance guarantees
for their products. HEL is one of the few firms who manufacture these types of small
motors. It is able to achieve high profit margins and returns on its investments
because of the superior quality of its products for which its customers are willing to
pay premium prices. Identify and explain briefly four factors which HEL should
monitor closely to anticipate the emerging business environment in which it operates
and its impact in the formulation of its Strategic Plans. (10)

A short scenario was given which pertained to a company which is a leading supplier
of a small motor which is installed in printers. The candidates were required to identify
and explain the factors which the company should strictly monitor to anticipate the
emerging business environment (challenges) and which can have a profound impact
on its Strategic Plans. General understanding of the business environment was
required to answer the question. Unfortunately, most of the candidates did not read
the question carefully. They were more focused on social, political and environmental
factors and overlooked important points like projection of future demand, competitive
rivalry and diversification. Some students also included internal factors like skilled
human resources which was not required. Some of them discussed SWOT, PESTEL,
Porter & Ansoff analysis which were entirely irrelevant.

HEL should closely monitor the following factors in the emerging business environment
in which it operates and its impact in the formulation of its strategic plans:
(i) Projection of future demand for laser printers in the international market – The
demand for motors by the original equipment manufacturers of laser printers is a
derived demand and changes in the demand for these printers can have considerable
impact on the business prospects of HEL. HEL would have to expand its manufacturing
capacity if it anticipates increase in the demand for laser printers or alternatively
explore new markets for its products if it foresees decline in demand for these printers
in its existing markets.
(ii) Technological changes – Changes in models and designs of laser printers due to
variations in customers requirements can have considerable impact on HEL’s business
prospects. HEL would have to keep abreast of these changes, continuously enhance its
R&D capabilities and introduce necessary modifications in its manufacturing processes,
designs and tooling. This would involve substantial R&D expenditures and investments
in additional equipment which would have to be incorporated in its strategic planning
process.

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(iii) Threat of entry of new competitors – HEL is presently earning high profit margins
and realizing attractive returns on investments. Therefore, the threat of new entrants
who may pose competitive challenges to HEL is always present. HEL should be prepared
to meet the threat of new entrants and adopt appropriate measures to maintain its
competitive advantages and face threats posed by potential competitors by interacting
closely with its important customers and creating barriers of high switching costs. This
would involve continuous upgrading of technology and improvement of manufacturing
process to retain its competitive advantage.
(iv) Competitive rivalry and prices of Competing Products – Although HEL has
significant competitive advantages in terms of quality of its products over its
competitors, it should take cognizance of the strategies of its rivals who would want to
improve the quality of their products and may offer competitive prices to attract HEL’s
customers. HEL should adopt appropriate strategies to monitor these threats and
counter them effectively.
(v) Diversification – HEL’s present customer base and product range is considered to be
quite narrow. It may like to explore the prospects of marketing its products to other
original equipement manufacturers such as manufacturers of photocopiers, computers,
etc. and also introduce related products (other than small motors).

What is meant by the term Customer Database? (02) Winter 2012,

Q3(a)

This 2 mark question was rather easy and almost all the students met the requirement
i.e. to portray the correct meaning of the term Customer Database.

A Customer Database is an organized and updated collection of comprehensive

information of existing and prospective customers names and addresses, telephone
numbers, demographic information of age, income, number of family members,
business activities, interests, purchases and other useful information.

Why, in your opinion, it is useful for a commercial bank planning to launch its credit Winter 2012,
card marketing scheme to create, maintain and update the database of its existing Q3(b)
and prospective customers? (07)

This question required a very focused answer i.e. usefulness of a customer database
for a bank, which is about to launch its credit card. Instead, most students gave
general answers where usefulness of the database for a bank was discussed with little
or no reference to the specific situation i.e. launching of credit card.

(i) Identify prospective customers – The customer database would help the bank to
identify prospective customers and contact them by telephone calls, personal visits and
promotion letters to convince them of the advantages of acquiring the bank’s credit
card facilities.
(ii) Formulation of marketing policies – Credit Cards have different features e.g.

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platinum cards, gold cards, etc. with varying credit limits, bonus points, payment or
waiver of initial and annual fees, etc. Information obtained from the customer database
can help the bank to formulate policies for the different needs of customers and
offerings of types of credit cards which best serve their needs.
(iii) Provide vital information of high-value customers – Information from the customer
database can enable the bank to create a profile of privileged customers and cater to
the special needs of these customers.
(iv) Negotiate Terms with suppliers to benefit high-value customers – Information
from the customer database can be used by the bank to seek concessional special terms
for its customers from relevant institutions such as hotels, travels agents, selected retail
outlets, etc.
(v) Adopt proactive competitive strategies – The bank can use the information from the
customer database to upgrade the cards and enhance the credit limits of customers
who have shown good performance in terms of customer profitability and timely
payments of their dues to compete effectively with the products offered by the
competitors.

Identify the strategies/policies/objectives which are being pursued in each of the Winter 2012,
following cases: Q4
(i) Poshak Fashions (PF) are designers and manufacturers of superfine cotton
garments and have their two outlets in Karachi and Lahore. PF produces only limited
quantities of their exclusive designs of garments for the narrow niche market of the
most fashion-conscious customers. PF introduces new designs of garments for the
coming season and the unsold inventory at the end of the previous season is sold at
lower prices to other retailers in the country after removing PF’s prestigious labels. PF
is pursuing a __________ market strategy.
(ii) Super Beverages believes that the world is one big market for its products and its
various subsidiaries and divisions pursue a uniform marketing strategy for sale of its
products in different countries. Super Beverages has adopted a __________ strategy
for marketing its products in different countries.
(iii) Sarmad Group is a pioneer in the textile industry in the country. The second
generation entrepreneurs of this Group have ambitious plans to launch new ventures
in telecommunications, electronic media and real estate development. The Group is
now seeking to follow __________ strategy.
(iv) To press for their demands, employees of Citizens Bank Limited have decided to
work strictly according to the terms of their contract of employment and refuse to
perform any extra tasks, resulting in slow down of banking services and causing
inconvenience to customers. The employees of Citizens Bank Limited are pursuing
__________ policy.
(v) Good Meats has recently established several retail outlets to sell selected cuts of
choice meats and establish its own brand name in a high growth market before new

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competitors enter this market and set up their business on similar lines. Good Meats
wants to seize the __________ advantage of this market.
(vi) Neptune Chemicals, a manufacturer of industrial chemicals, has established
independent units who would be responsible for development of their own marketing
strategies within the company’s overall market and customer focus to be able to serve
the needs of the various categories of customers more efficiently. The independent
units are __________ of Neptune Chemicals. (06)

Strategy and CSR

HR and Change Management iv,

Marketing iii, v, vi, i

International Business ii,

In this question, six brief situations were given and the students were required to
identify the types of strategies, policies or objectives which the organization was
pursuing, in each of the given situations.
An average response was seen as most students were able to give 3 or 4 correct
answers. In response to part (ii) the appropriate answer was Global; but Geocentric
was also acceptable. However, many students wrote ethnocentric. Majority of the
students had no idea of the concepts of ‘Work to rule’ and ‘First mover advantage’.
Many students probably tried to use “write what you know” approach and just
identified whether the given situation reflected a policy, a strategy or an objective.
Most students were not familiar with the technical business terminology or jargons.
Specialized terms capture the complexity and specificity of business concepts. No other
words can encapsulate their meaning and if they are replaced by normal
“transliterated” words, then that meaning is lost. Many students gave explanatory
footnotes in support of their answers which were not required and resulted in wastage
of precious time. There were some students who generated multiple answers; such
answers are not acceptable.

(i) Market skimming

(ii) Global
(iii) Conglomerate or Diversification
(iv) Work-to-rule
(v) First mover advantage
(vi) Strategic Business Units

Briefly explain the salient features of the terms which are usually incorporated in a Winter 2012,
typical Franchising Agreement. Give one example of a Franchise Relationship between

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an international company and a Pakistani enterprise. (05) Q6(b)

This part required the salient features of the terms of a franchising agreement with
brief explanation and an example of a franchise relationship. Since the students do
come across various agreements, during their training, many of them jotted down a
long list of general clauses instead of those pertaining specifically to franchising
agreements. Some of the important clauses that form part of such agreements are
those relating to achievement of desired sales in the defined territory and the
undertaking to purchase input materials from the franchisor or a specified supplier.
These were generally missed.

The terms which are incorporated in a typical Franchise Agreement are:

(i) The franchisor authorizes the franchisee to use the franchisor’s complete brand
concept, goodwill and business operating systems and methods to conduct business as
defined in the franchise agreement.
(ii) The franchisee undertakes to make investment of a specified amount in the business
and operate within a defined territory.
(iii) The franchisee undertakes to achieve predetermined sales targets.
(iv) The franchisee is entitled to benefit from the promotion and advertising campaigns
of the franchisor to facilitate the franchisee to achieve the sales targets in the defined
territory.
(v) The franchisee makes an initial payment of the stated amount and further
commission or royalties on the amount of sales.
(vi) The franchisee undertakes to purchase selected material inputs from the franchisor
or a specified supplier.
Examples: McDonald, Burger King, Dunkin Doughnut, Marriot Hotel, etc.

Progressive business organizations, which have substantial share of the market, are Winter 2012,
continuously engaged in the planning of their marketing strategies to achieve specific Q7(a)
objectives in their existing markets and also to identify and seize opportunities in new
markets.
Explain briefly the various objectives which these organizations aim to achieve
through their marketing strategies in their existing markets as well as in the new
markets. (07)

A below average performance was seen in this part of the question in which the
requirement was to provide the objectives that progressive organizations aim to
achieve through their marketing strategies. Most students wrote any and every thing
about marketing that they knew, repeating the same things again and again. Quite
often the answers were equivocal and mostly mentioned that through marketing, the
firms introduce new products, enter new markets, increase sales and profitability,
promote brand extension etc. Objectives such as market penetration, overcoming

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competitive pressure, creating goodwill and strengthening relationship with
customers were covered by few candidates.

Progressive organizations aim to achieve the following objectives by pursuing various

marketing strategies:
(i) They pursue marketing strategies to achieve maximum market penetration and
increase their share of the existing and expanding market.
(ii) They plan their strategies to achieve market leadership status or to hold on to their
second or third tier positions in the market depending upon their own resourcefulness
and objectives and the relative strengths and competitive advantages of the market
leader.
(iii) They pursue marketing strategies to overcome competitive pressures by special
price offers and more aggressive promotion and advertising campaigns and
modifications in product specifications to create differentiation advantages.
(iv) They create market acceptability for their products and pursue marketing strategies
to consolidate their position through aggressive promotion, more efficient distribution
and creating stronger linkages with the distribution channels.
(v) They pursue marketing strategies to maintain market visibility, create goodwill and
strengthen relations with their stakeholders to improve their business reputation in
order to counter threats from competitors.
(vi) They also pursue marketing strategies to explore new markets to diversify into those
markets which offer higher profitability prospects and to identify and seize new
opportunities which would create synergy effects with the existing product mix.

Successful companies make concerted efforts to retain their competitive advantages Winter 2012,
vis-à-vis their competitors as an ongoing exercise encompassing all spheres of their Q7(b)
business operations.
Narrate six measures which these companies usually take to retain and further
consolidate their competitive advantages. (06)

This part required the measures which companies take to retain and further
consolidate their competitive advantage. The performance was quite reasonable as
majority of the students were able to cover the main points specially those relating to
marketing and HR. However, efficient organizational structure and capable leadership
was touched upon by very few students.

Successful companies must take the following measures to retain and consolidate their
competitive advantages vis-à-vis their competitors by:
(i) Developing, retaining and motivating a cadre of corporate leadership which has a
strong value-driven vision of the company’s mission.
(ii) Creating an efficient and flexible organizational structure to achieve the objectives of

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the company in changing business environments.
(iii) Making continuous efforts to improve their performance capabilities in all spheres
of their business activities and achieve competitive advantage.
(iv) Providing superior and value-added products/services to their customers as
compared to the competitors.
(v) Protecting their intellectual property rights and ensuring that they are not infringed
by any unscrupulous competitors.
(vi) Training and development of employees and empowering them to achieve the
company’s objectives and share the company’s values.
(vii) Stating clear performance standards and fair and equitable reward systems to the
employees to obtain high levels of motivation.

Zest Dairy Company Limited intends to launch a new line of frozen fruit yogurts in the Winter 2012,
major cities which would cater to the tastes of the customers for packaged food Q9
products. Assume that you are their advertising media advisor and have to give a
presentation on the advantages and disadvantages/limitations of placing
advertisements for the new yogurt products on each of the following media channels:
(i) Television
(ii) Widely Circulated Newspapers and
(iii) Billboards (Hoardings)
Identify and list three advantages and disadvantages/limitations of placement of
advertisements of each of these different types of media. Explanations and
illustrations are not required. (08)

This question required Advantages and Disadvantages of advertising in TV,

Newspapers and Billboards. It was quite easy but majority of the students could only
mention one or two advantages and disadvantages in each case. They mostly
discussed costs, reach to the audience/customers and attractiveness of the
advertisement. Other areas were rarely covered.

The advantages and disadvantages/limitations of placement of advertisements by Zest

Diary Company for introducing their frozen fruit yoghurt products on the various types
of media are:

Advantages Disadvantages/Limitations

Television
(i) offers combined effects of highly (i) entails high cost.
attractive sights, sound and motion to
(ii) has very short exposure.
appeal to the audience.

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(ii) captures high attention of the (iii) has minimum audience selectivity.
audience.
(iv) audience can move away from the TV
(iii) reaches a large segment of the sets during advertisement breaks.
prospective market.
(iv) qualities of the product can be
highlighted more effectively.

Widely circulated newspapers

(i) extensive coverage of different (i) newspapers have a very short life and
categories of the prospective audience. advertisements are effective only if they
are repeated frequently.
(ii) a large part of the audience may read
the newspaper in their free time or when (ii) quality of the advertisements are
required when it is more easier to generally not ‘audience attention
respond. captivating type’.
(iii) customers can refer back to the (iii) newspapers have a very restricted
newspaper whenever there is a need for ‘pass-on’ or secondary audience.
the product.
(iv) busy readers glance through the
(iv) captures attention of the audience newspapers to read the headlines and
for a relatively longer duration. ignore the advertisements.

Billboards(Hoardings) (i) limited audience selectivity.

(i) high repeated exposure to the passing (ii) ignored by the fast moving traffic on
traffic. busy roads.
(ii) can be installed at most strategic (iii) billboards placed too closely are
locations. eyesore for the audience and are
ignored.
(iii) colourful digital graphic billboards
attract attention of large audience. (iv) audience often find the similar
colours on billboard boring and therefore
avoid looking at them.
(v) high costs are involved in the
maintenance and upkeep of the
billboards.

Fintex Company Limited (FCL) is in the advanced stage of implementing facilities for Summer
manufacture of home textile products such as curtain draperies, sofa cloth, bed linen, 2012, Q1
towels, table covers, etc.
FCL intends to market its products to customers through 20 company-owned retail
outlets to be established in the major cities. FCL’s Institutional Marketing Division
(IMD) would sell the company’s products, as well as workers uniforms to be procured
from external vendors, to institutional customers such as hotels, hospitals, industrial

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companies and government organisations.
FCL’s principal corporate objectives are to create a sustainable competitive advantage
and obtain a firm foothold in the substantial and fast growing target market of middle
class customers. These customers are keen shoppers who want quality products at
affordable prices. FCL’s IMD also wants to aggressively pursue marketing strategies to
cater to the requirements of the institutional customers who are a source of repeat
business.
Identify and explain briefly four Critical Success Factors which in your opinion would
create sustainable long-term competitive advantage for FCL. (10 marks)

This question required identification of four critical success factors which would create
sustainable long-term competitive advantage for a company that is in advanced stage
of implementing its facilities for manufacture of home textile products. Most students
limited themselves to good quality of products and low prices but could not identify
other important points. Many students just provided the points and gave no or
inadequate explanation, ignoring the fact that it was a 10 mark question and only
four points were required.

The Critical Success Factors which would create sustainable long term competitive
advantage for FCL and enable the company to obtain a firm foothold in the target
market are:
(i) Management and Organizational Competence:
The knowledge, skills and attitude of the management relating to understanding of the
home textile industry, the objectives and role of FCL, including insight in FCL’s strengths
and weakness and pursuance of appropriate corporate and business strategies to
achieve the objectives would be critical success factors .The management of FCL would
have to develop necessary competence for identifying opportunities, formulating,
implementing and monitoring sound corporate strategies, creating a supporting
organizational structure and mobilizing resources.
(ii) Manufacturing Capability and Production Process:
FCL should acquire and develop the best manufacturing capabilities and introduce
sound technical processes. It needs to manufacture products which would satisfy the
needs of its customers who want new and better products at affordable prices.
(iii) Skilled and Motivated Employees:
FCL must adopt sound policies relating to hiring, training, development, performance
evaluation, working environment and compensation of its employees. These policies
would promote motivation and commitment of the employees at all levels towards the
achievement of the objectives of the company.
(iv) Marketing Know-how and Promotion Strategies:
Market research and knowledge of the target market is essential for sustained growth in
sales. Marketing programs would have to be developed to meet the needs of the

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customer groups. Company-owned retail outlets would enable FCL to achieve high rates
of sales turnover through finely tuned marketing policies and also retain high profit
margins which otherwise would be demanded by prominent retailers. Ability of the
Institutional Marketing Division to develop a supply chain of reliable vendors who can
manufacture products of the required specifications to be sold to the institutional
customers would also be a critical success factor for FCL.

According to the Boston Consulting Group Matrix, business organisations which have Summer
multidivisions and compete in different industries pursue separate strategies for their 2012, Q2
various business divisions. The BCG Matrix describes the characteristics of the markets
and the relative competitive position of the various business divisions as Stars, Cash
Cows and Dogs.
Explain the distinctive characteristics of each of these types of business divisions in
terms of their relative market positions. Also mention the types of business strategies
which should be pursued by each of these types of business divisions. (09 marks)

This question required the students to explain the characteristics of the markets and
the relative competitive positions of Stars, Cash Cows and Dogs. This should be a very
familiar topic for anyone studying or related to management/business studies. Most
of the students mentioned market growth and market share but did not mention the
appropriate business strategies to be pursued in each case. Many students
emphasized quality as a descriptive characteristic of these business units whereas
there was no mention of quality in the entire matrix analysis. Many students gave
explanation of Problem Child which was not required. One wonders whether it was
lack of thorough reading of the question or flaunting of their knowledge. This exhibit
of their knowledge, however, did not gain them any extra marks! Students are advised
to use the allotted time wisely, and avoid giving irrelevant material.

The distinctive characteristics of the different types of business divisions in terms of

their relative market positions and pursuit of business strategies are as follows:
(i) Stars -- Star business divisions have a relatively large share of the market in high-
growth industries and offer lucrative opportunities for growth and profitability in the
long-run. Substantial investment should be made in Star business divisions to maintain
and strengthen their dominant positions. Strategies of vertical and horizontal
integration, market penetration and product development may be considered to further
consolidate the well-entrenched position of the Star business divisions and to compete
aggressively in the market.
(ii) Cash Cows -- Cash Cows are business divisions which have a relatively large market
share but compete in a low-growth industry. The Cash Cows are in a position to
generate substantial funds because of their strong competitive position. However, their
requirements of funds for expansion are minimal and they are therefore in a position to
generate funds which are in excess of their requirements. The Cash Cows are ‘milked’ as
a source of corporate resources for utilization of funds in other business divisions which
offer long-term growth prospects and in which competitive advantages can be achieved.

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Quite often the Star divisions with the passage of time are relegated to the position of
Cash Cows.
(iii) Dogs -- Dogs are those business divisions which have a relatively small share of the
market and compete in a slow or no-growth industry. Dog business divisions are not
able to earn fair profits and generally incur losses. Therefore such divisions are often
liquidated or divested or subjected to policies of retrenchment to curtail expenditures
on salaries and other associated costs. It may not always be advisable to liquidate or
divest the Dog divisions as their assets can be disposed of only at throw–away prices
because of the company’s weak bargaining position. This strategy may pay off if there is
a business turnaround at a later stage.

Consumer Products are classified by marketers in different categories as follows: Summer

2012, Q5
(i) Convenience Products detergents, packaged milk, newspapers, soft drinks, etc
(ii) Shopping Products readymade clothes, furniture, carpets, shoes, etc
(iii) Speciality Products televisions, refrigerators, branded watches, etc
The marketing mix of each category of Consumer Products comprises of the following
ingredients:

You are required to identify the most appropriate characteristics of each ingredient of
the marketing mix for the above categories of Consumer Products. (09 marks)

This was a very interestingly designed question. Students were required to identify the
most appropriate characteristic of each ingredient of the marketing mix for the given
category of Consumer Products. The four categories were: Price, Consumer Buying
Behavior, Distribution and Promotion. Since the question was framed differently from
the questions which are normally asked, only those with good conceptual
understanding were able to do well and score high marks.

Identification of appropriate characteristics of each category of the Marketing Mix for

the different categories of Consumer Products are as follows:

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Convenience Shopping Specialty
Products Products Products

(i) Price Low price High price Expensive

(ii) Consumer Frequent purchase/ Less frequent Special

Buying less planning purchase/keen purchase
Behaviour comparison of effort/brand
price, quality loyalty
and style

(iii) Distribution Widespread Distribution in Outlets in

Channels distribution at few outlets specialised
convenient locations markets/shop
ping malls

(iv) Promotion / Mass promotion by Advertising Carefully

Advertising producer and personal targeted
selling by promotion by
producer/resel producer/resel
lers lers

Firms ranking in second and third positions in highly competitive industries Summer
demonstrate significant business strengths and hold a sizeable share of the aggregate 2012, Q9
market. Often these firms have to make strategic marketing decisions whether to
challenge the Market Leader to achieve the top position or to continue to hold on to
their Market Follower status.
Discuss the concepts of Market Challenger Strategy and Market Follower Strategy and
briefly explain the circumstances in which a firm would prefer to pursue a particular
market strategy. (10 marks)

Performance in this question was below average. Most of the students did not have a
clear idea of the difference between a Market Challenger and a Market Follower.
Most of them gave very brief answers. Many of them described the two concepts by
repeating the words as were given in the question and offered very little discussion
about when and why does a firm decide to pursue a particular strategy. Many
students were of the erroneous view-point that a firm would always like to challenge
the Market Leader to acquire that position. In fact, quite often firms are satisfied as
market followers, specially when they lack the resources to challenge the market
leader or when they do not want to provoke retaliation from the market leader.

Market Challenger Strategy - In this strategy, firms which are placed in second and third
positions launch aggressive marketing campaigns to capture a larger share of the
market to dislodge the market leader from its number one position. A market

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challenger must have substantial resources and sustaining capability to challenge the
market leader. A resourceful market challenger may launch a full frontal attack to match
the market leader’s main strengths, i.e. product, pricing, advertising and distribution
efforts. The outcome of the challenge would depend on the relative strengths of each of
the firms. Alternatively a market challenger may pursue a strategy of indirect attack on
the competitor’s weaknesses and gradually make inroads in the market to achieve the
top position. A market challenger may also pursue a strategy of acquisition of smaller
companies to eliminate competition and steadily increase its share of the market to
achieve top position.
Market Follower Strategy - In a market follower strategy, a firm prefers to retain its
runner-up position in the industry rather than to attack and dislodge the market leader.
When the market follower realizes that the market leader would put up strong
resistance and not yield easily from its well-entrenched position or the market follower
lacks the resources to meet the capabilities of the market leader, it decides to maintain
its existing status.
A market follower may be satisfied with its existing runner-up position as it would not
have to incur the high expenditure on developing new products and educating the
consumers of the new product in the market. A market follower learns from the market
leader’s products and programs usually with less investment. A market follower retains
the current customers and plans to achieve a fair share of the market expansion and
also avoids retaliation from the market leader. A market follower strives to keep its
manufacturing costs and prices low and maintain the quality of its products to meet its
targets of market share, sales revenue and profitability without inviting retaliation from
the market leader.

Explain briefly the following types of Growth Strategies pursued by Business Winter 2011,
Organisations. Give one example of each of these types of strategies. Q2
(a) Horizontal Integration Strategy (04 marks)
(b) Forward Integration Strategy (04 marks)
(c) Conglomerate Growth Strategy (04 marks)

In this question the candidates were required to explain three types of Growth
Strategies. Most of the students were able to define them and were able to give
relevant examples. However, the explanations were mostly incomplete or
inappropriate. While explaining Forward Integration, many students confused it with
Backward Integration which is the acquisition of source of raw material.

(a) Horizontal Integration Strategy:

This strategy seeks to achieve growth by ownership/acquisition or merging of functions
of organisations which operate on a similar level. It is characterized by integration of
firms producing the same kind of goods or operating at the same stage of the supply
/value chain. This strategy is pursued to achieve economies of scale by sharing of

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resources and competencies to gain significant competitive advantages.
Example:
A profitable cement company acquiring another cement manufacturing unit.
(b) Forward Integration Strategy:
It is a strategy which envisages gaining ownership or taking control of distribution
channels when the existing external distribution channels insist on unduly high profit
margins or are unreliable or are unable of meeting the firm’s distribution objectives.
Forward Integration strategy is most beneficial when significant competitive advantages
can be achieved through ownership or effective control of the distribution channels.
The firm must have sufficient capital and human resources for pursuing a successful
forward integration strategy.
Example:
A leading manufacturer of branded fashion clothing establishing its own network of
retail outlets.
(c) Conglomerate Growth Strategy:
This strategy seeks to create diversified business units/entities, each of which is capable
of achieving excellent financial performance in its respective line of business. Firms
which pursue conglomerate growth strategies search across different industries for
opportunities for expansion and purchase of companies whose assets are undervalued
and therefore can be acquired at low prices, yet have the potential to offer high returns
on the investment. Firms which have excellent top management capabilities and can
effectively plan, manage and control individual units in different industries pursue
conglomerate growth industries.
Example:
A prominent textile group establishing or making acquisition of a power generation unit.

(i) Briefly explain what is meant by a Differentiation Strategy. (02 marks) Winter 2011,
Q4(b)
(ii) List six types of skills and resources which are critical for the pursuance of a
successful Differentiation Strategy. (03 marks)

A very basic marketing term, “Differentiation” was to be explained here. A large

number of students confused differentiation with segmentation. Many students
picked up the word differentiation and elaborated its dictionary meaning in different
contexts without addressing the concept in its marketing parlance. While identifying
the skills and resources required to pursue a differentiation strategy, the students
generally gave a long list of relevant as well as irrelevant points.

(i)
In a Differentiation Strategy, the firm is in a position to provide a product or service
which the customer perceives to be of a higher value than those offered by other

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competitors. The customer considers that the additional cost of purchasing the
particular product or service is well below what the product or service is worth as
compared to the other available alternatives.
(ii)
The types of skills and resources which are critical for the pursuance of a successful
Differentiation Strategy are:
 Strong marketing capabilities, including support of marketing channels.
 Sound capabilities for research and product engineering.
 Corporate reputation for technical and professional leadership.
 Good reputation for high standard of products and consistent quality.
 Strong relations with the suppliers of major inputs and services.
 Tradition of positive and prompt response to customers’ queries.
 incentives based on subjective measures
 stress continuous improvement and innovation

In highly competitive business environments dominated by relatively few equally Winter 2011,
powerful players, the participants make concerted efforts to implement effective Q5(b)
Marketing Intelligence Systems.
(i) What is meant by the term Marketing Intelligence System? (03 marks)
(ii) List five different sources which help in the creation of an effective Marketing
Intelligence System. (05 marks)

(b)
(i) The performance in this part was average. Most of the students had vague ideas of
Marketing Intelligence System and believed it to be an informal system of collecting
information about competitors. In identification of sources which help in creating an
effective Market Intelligence System, the performance was comparatively better
probably because most students were able to respond on the basis of their general
understanding and experience.
(ii) Some students talked about concepts such as decision support system etc., which
were not relevant.

(i)
Marketing Intelligence System is an ongoing and organised procedure to generate,
organise, store, disseminate, analyse and retrieve large amount of data from internal as
well as external sources for use in making marketing decisions.
(ii)
The different sources would facilitate in the creation of an effective Marketing
Intelligence System are:
a. Well trained and motivated sales force to provide inputs on the improvements

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required in the company’s current marketing mix as well as identify new market
opportunities.
b. Motivated distributors, retailers and other intermediaries who would obtain
important information and pass it on to the company to improve the overall quality of
products and consumer services.
c. Obtain feedback from customers regularly to improve the quality of the products and
services in order to offer more value to the customers.
d. Participation in trade shows and examination of competitors products and their
advertisements etc.
e. Collect information from competitors’ published reports, suppliers, couriers and
transporters.
f. Published government statistics relating to population, agricultural production,
manufacturing data, etc. to extract information which can be incorporated usefully in
the Marketing Intelligence System.
g. Purchase of information from professional suppliers of data and information. These
external firms have access to useful data and sell them to the interested parties.

Alpha Equipments is a Taiwanese manufacturer of various types of photocopiers and Winter 2011,
has recently decided to export its products to Pakistan. Alpha Equipments is Q6(b)
considering to appoint a Single Distributor in Pakistan who would represent the
exporter and would be responsible for the entire marketing operations in this
country.
State six different advantages that Alpha Equipments would achieve through the
appointment of a Single Distributor for import and distribution of its products in
Pakistan. (06 marks)

This part required identification of advantages of appointment of a single distributor

in Pakistan, by a Taiwanese company manufacturing photocopier machines.
Approximately fifty percent of the candidates were able to identify most of the points
correctly. However, a common mistake observed in many answer scripts was that
candidates compared appointment of distributor against opening a subsidiary in
Pakistan. Some of the students just mentioned advantages of having distributors and
missed the actual question. Such basic mistakes are not expected at this level of
examinations.

The advantages of appointment of a Single Distributer in Pakistan by Alpha Equipments

are:
(i) The large volume of business would attract a competent and resourceful distributor
who would wield considerable influence in the local business community in Pakistan.
(ii) The appointment of a knowledgeable Single Distributor who is conversant with the
local business practices, culture and marketing channels would ensure smooth handling

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of all marketing operations in a more professional and purposeful manner.
(iii) The Single Distributor would be able to coordinate promotional efforts and
exchange vital information with Alpha Equipments on a continuous basis and in a
purposeful manner.
(iv) Training and marketing efforts of the retailers located in the various cities in
Pakistan would be coordinated in a much more effective manner.
(v) The Single Distributor would be able to maintain sufficient level of inventories as he
would have a better perception of the market demand and as a result make prompt
dispatches of supplies to the retailers as and when required.
(vi) The Single Distributor would have high stakes in the business which would lead to
greater effort and a better principal – distributor relationship.
(vii) The logistics of exports including transportation costs would be less cumbersome
and more economical.

Foresight Electronics is a knowledge-based company and is known for its ability to Winter 2011,
manufacture innovative and new-to-the-market electronic products and sell them in Q7(a)
specifically identified niche markets. The company follows a Market Skimming
Strategy to achieve its profitability objectives.
Narrate four conditions which are essential for Foresight Electronics to be able to
successfully adopt its Market Skimming strategy. (06 marks)

The major issue with answering this question was that a number of students were
unable to understand the precise requirements of the question and defined what
skimming and penetration is, instead of listing the situations in which the respective
strategy can be beneficially adopted. Further, there were a number of students who
had no idea about the concepts of skimming and penetration.

Foresight Electronics would be able to adopt its Market Skimming Strategy successfully
in the following conditions:
(i) when the niche market for its products comprises of customers who can afford and
are willing to buy the product at the high prices.
(ii) when the firm is in a position to obtain the advantage of initial high price of its
products for the duration that it intends to pursue its market skimming pricing strategy.
(iii) when the high price would create and convey an image of superior quality products
among the buyers.
(iv) when the unit cost of manufacturing a small quantity of output is not so high so as
to offset the advantage of selling the product at the high price.
(v) there should be a high entry barrier of the industry.

Household Furniture Co. are manufacturers of a wide range of furniture products used Winter 2011,

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primarily by customers in the middle income group. Q7(b)
Identify four different types of conditions in which it would be advantageous for the
firm to pursue Market Penetration Strategy. (04 marks)

The major issue with answering this question was that a number of students were
unable to understand the precise requirements of the question and defined what
skimming and penetration is, instead of listing the situations in which the respective
strategy can be beneficially adopted. Further, there were a number of students who
had no idea about the concepts of skimming and penetration.

It would be advantageous for Household Furniture Company to pursue a Market

Penetration Strategy in the following situations:
(i) when the demand for household furniture is price elastic.
(ii) when the firm is in a position to achieve significant economies of scale by producing
and selling a large volume of output.
(iii) when the quality of the furniture sold by Household Furniture Company and its
promotional strategies are designed to capture a large share of the expanding market.
(iv) when there is intense competition in the market and Household Furniture Company
wants to retain/expand its share of the market to derive benefits in future.

Horizon Limited (HL) is engaged in the business of manufacturing and marketing of a Winter 2011,
wide range of consumer durable products. The company’s products are in different Q8
stages of their Product Life Cycles. Consequently, HL pursues different promotional
strategies for products depending on the stage of their Product Life Cycles.
State the types of Promotional Strategies which HL may pursue for marketing of its
wide range of products in the (i) Introduction, (ii) Growth, (iii) Maturity and (iv)
Declining stages of their Product Life Cycle. (07 marks)

The result of this question was very poor. The candidates are familiar with the basic
features of Product Life Cycle. This time they were asked to suggest the types of
promotional strategies required in different stages of the Product Life Cycle. Most
candidates had no clue. Majority of them mentioned more or less the same
promotional strategies in the introduction, growth and maturity stages. Many
students repeated the same points with variations in emphasis and usage of words.
Some of the candidates were so confused that they suggested Price Skimming
Strategy for the Declining Stage of the product life cycle.

Horizon Limited may pursue Promotion Strategies in the marketing of its consumer
durable products in their different stages of Product Life Cycles as follows:
(a) Introduction Stage
(i) inform and educate the potential customers of the existence of the product

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(ii) encourage trial of product and create awareness of the benefits that would accrue to
the customers by using the product and how it should be used
(iii) secure distribution in leading retail outlets
(iv) place heavy emphasis on personal selling and promotion in trade shows and
exhibitions.
(b) Growth Stage
(i) stimulate demand in selected market segments and promote the particular brand as
competition increases
(ii) increase emphasis on advertising to capture a large share of the growing market.
(iii) enter new markets and expand coverage
(iv) identify new distribution channels
(v) shift emphasis from product awareness to the individual firm’s brand preference
through aggressive advertising.
(vi) Promote differentiation
(c) Maturity Stage
(i) focus on promotion and advertising to persuade the customers to purchase the
particular brand rather than to provide information about the product
(ii) selective promotion only as intense competition and increase in promotion
expenditures would result in lower profits
(iii) increase R&D budgets to improve product quality vis-a-vis competitors
(iv) extend product lines to meet niche customer demand.
(d) Declining Stage
(i) reduce promotion expenses as the size of the market is shrinking
(ii) focus of promotion towards reminding remaining customers.
(iii) Rejuvenate old products to make them look new.

Identify the force of competition which is relevant in the context of Michael Porter’s Summer
Five Forces Model of Competition in each of the scenarios presented below. 2011, Q2(a)
Substantiate your answer by highlighting the salient features of the Model of
Competition selected by you in each of these scenarios.
(i) Four companies of similar size and strength are engaged in the manufacture of
detergent powder for washing clothes. These companies are key market players and
jointly share 95% of the aggregate market which is not expected to witness any
significant growth in the foreseeable future.
(ii) Soundhealth Pharmaceuticals and Goodcare Pharmaceuticals are manufacturers of
two new medicines for treatment of cancer. The medicines have been developed after

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a long period of research at a very substantial R&D cost and are highly effective. Both
the existing manufacturers are earning exceptionally high profits in a market which is
expected to witness growth in the future.
(iii) Lucky Coal Mines Limited is the sole supplier of coal to a cement plant located in
close proximity to the mines. The cement plant requires substantial quantities of coal
for firing of its kilns. Quality of this coal is most suitable for the cement plant and also
cost effective due to low transportation costs. Lucky Coal Mines has several buyers
who are willing to purchase the coal because of its high calorific value. (09 marks)

Porter’s Five Forces Model of Competition: in this question, students were given three
different scenarios and they had to identify and highlight the salient features of the
model of competition that would be appropriate in each scenario. Most candidates
were able to identify the model that would be apt in each scenario. However, the
reasons to support their choice were brief, incomplete and weak. Some students
mentioned 2 or 3 models under each scenario which were contradictory and defeated
the purpose of the question. Many students confused “Threat of New Entrant” with
“Threat of Substitute Product”.

(i) Rivalry among Existing Firms

Since companies of equal size and strength are involved in competition in a market
which is not expected to show any growth, the strategies pursued by any one company
can be successful to the extent that it has competitive advantage over the strategies of
its rivals.
Price competition, campaigns for creation of perceptions of quality differentiation,
more convenient and attractive packaging features and aggressive promotion would be
observed among the competing firms.
(ii) Potential Threat of Entry of New Competitors
Since the market has significant growth prospects and present firms are earning
lucrative profits, there would be a strong attraction for other resourceful companies to
enter this market. Although a new entrant would have to incur huge research and
development costs to develop the specialized products, yet threats from successful and
experienced companies would always be present.
(iii) Bargaining Power of the Supplier
Lucky Coal Mines is in a strong bargaining position. It can sell its coal to many other
buyers whereas the cement plant would have to incur high transportation costs -
switching costs - if it were to procure coal from other mines which are located at a
considerable distance. Furthermore, the quality of coal from other sources may not be
as suitable for the cement plant. Lucky Coal Mines can therefore dictate its terms e.g.
price, advance payments on placement of orders and recovery of transportation costs
from the cement plant.

What is meant by Market Research? (02 marks) Summer

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2011, Q4(a)

Students did have a fair idea about ‘market research’ but definitions lacked substance
and it was apparent that many students had difficulty expressing themselves.

Market Research is the systematic designing, collection, analysis and reporting of data
relevant to distribution and selling of goods and services in a specific marketing
environment facing an organization.

Give four basic reasons why companies conduct market research. (04 marks) Summer
2011, Q4(b)

Most of the students mentioned the basic reasons for undertaking market research
and scored good marks. Performance in this part was good as most of the students
could frame answers based on their general knowledge and such answers did fit in.

The basic reasons for undertaking market research are as follows:

(i) to identify market opportunities and problems and determine the need for changes
in marketing plans;
(ii) to evaluate and predict consumers behavior which may influence their decisions for
purchase of various goods and services;
(iii) to analyse the marketing strategies of competitors and their impact on the firm’s
business;
(iv) to formulate product development, pricing, promotion and distribution strategies to
achieve optimal results.

What is Market Penetration Policy? Identify the conditions in which Market Summer
Penetration Policy may be pursued to achieve optimum results. (06 marks) 2011, Q6(a)

Market Penetration proved to be a difficult topic as very few students were able to
define this simple term which means increasing market share/sales volume by
lowering prices. Some students confused Market Penetration Policy with Market
Skimming Policy. Very few students could specify that this policy is adopted when a
firm has excess capacity and is in a position to achieve economies of scale or when
cost reduction is possible by using new technology, etc.

Market Penetration Policy aims to charge low prices of the product to capture a large
share of the market or achieve large volume of sales.
Market Penetration Policy may be pursued to achieve optimal results under the
following conditions:
(i) Discourage existing and potential competition in a highly competitive market.
(ii) Sufficient production capacity exists and the firm is prepared to sacrifice short- term

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profits to capture a major share of the market.
(iii) Market is price sensitive and a low price would result in rapid growth of the market.
(iv) Manufacturing and distribution costs would show a downward trend with increase
in production and the size of the market.

Explain briefly what you understand by the term Market Segmentation. State the Summer
criteria which are essential for classification of markets in different segments. 2011, Q6(b)
(05 marks)

The concept of Market Segmentation was better understood as the students were able
to produce average, if not good answers. Many students knew the basic concept and
the bases on which the markets are divided.

Marketing Segmentation is a process of dividing the total market into several distinct
groups with each group having certain homogeneous characteristics. The groups can be
formed on the basis of their geographic locations, income levels, age groups ,
educational qualifications, psychological behavior, buying habits and cultural
backgrounds, etc.
The markets can be divided into segments if the segment fulfill the following criterion:
(i) The market segment must be capable of classification as a distinctly identifiable and
measurable group having common characteristics.
(ii) The market segment must be of a size which is sufficiently large to elicit interest of
the seller in term of its sales revenue and profit potential.

Briefly discuss the following: Summer

2011, Q11
(a) Business Ethics (2.5 marks)
(b) Environmental Scanning (2.5 marks)
(c) Tactical Planning (2.5 marks)
(d) Backward Integration Strategy (2.5 marks)

Short notes were to be written on four different topics. The comments are as under:
Business Ethics: Some students confused this concept with that of corporate social
responsibility. Majority of the candidates emphasized on rules and regulations. A
reference to values and culture would have been more appropriate.
Environmental Scanning: Most of the students were not clear about this concept and
described it as an exercise to control environmental pollution and keeping the world
clean!
Tactical Planning: Many candidates defined it as strategic level decision making and
planning and implementation at management level, although it is quite the contrary.

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A number of students incorrectly described it as a medium term plan.
Backward Integration Strategy: Most of the students gave appropriate definition of
the concept with relevant examples. However, very few students explained the
situations in which this strategy is pursued.

(a) Business Ethics is a code of moral principles that management and employees follow
with respect to what is right and what is wrong from the standpoint of the
organization’s dealings and interactions with its stakeholders. Besides generally
acceptable values and norms, the organizational culture and internal policies of
individual organizations play a very important role in determining the ethical policies
that are followed in the company. The guidelines for proper ethical conduct are
embodied in the company’s Formal Code of Ethics.
(b) Environmental Scanning is the process of collecting information about the external
marketing environment in order to identify and interpret potential trends. It includes
analysis of collected information to anticipate whether the trends represent
opportunities or threats. Environmental scanning includes assessment of political
developments, economic trends and social and cultural influences which would affect
the organization.
(c) Tactical Planning refers to the day-to-day plans regarding implementation of the
different work activities required to achieve the objectives of the strategic plans.
Tactical Plans pertain to the current and short-term activities performed by low-level
managers which are nevertheless of vital importance for implementation and
achievement of the objectives of the overall strategic plans.
(d) Backward Integration Strategy seeks the ownership or increased control of the
firm’s sources of important raw materials and other critical inputs and supplies.
Backward integration strategies are pursued in situations where the suppliers are
unable to adhere to the buyers specifications of quality, or are unreliable in meeting
their commitments or are few in number and dictate unreasonable terms or charge
exorbitantly high prices to take advantage of the buyers who are heavily dependent on
the inputs from these suppliers.

Strategy and CSR c, b, a

HR and Change Management

Marketing d

International Business

Dental Equipments Limited (DEL) is engaged in the business of manufacture of a wide Winter 2010,
range of equipments used by private dentists as well as leading hospitals. The Q1(a)
Company strives hard to achieve sustainable growth and meet the requirements of
highly demanding dentists who want the “very best and the latest” equipments to
serve their patients.

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DEL has recently observed a trend of unethical practices followed by its sales
representatives. The sales representatives who are not able to meet their targets,
book fictitious sales at year ends and later record them as sales returns. They also
share a portion of their commissions with the purchase representatives of the major
hospitals.
State what policy measures should DEL adopt to eliminate the unethical practices of
the sales representatives. (06 marks)

This common ethical dilemma was given to test the candidates’ personal ethical and
moral judgment. Students were required to give measures that DEL should adopt, in
order to eliminate unethical practices by sales representatives. Most candidates
mentioned measures like:
• Sales reps should be given written instructions about acceptable behaviour and
norms.
• Consequences of indulging in unethical practices should be made clear.
• Training workshops should be held.
• Sales targets should not be superficially high as that may demoralize the employees.
Very few touched on the important point of circulating a written Code of ethics. Some
candidates mentioned that surveys of hospitals and feedback from doctors, etc. should
be sought, which was completely irrelevant as an organization would not degrade its
employees by secretly seeking feedback from customers.

DEL should adopt the following policy measures to eliminate the unethical practices
followed by the sales representatives:
(i) Create a written Company Code of Ethics and circulate it to each member of the sales
department. This would eliminate the ambiguities and help the employees to
differentiate between what is considered to be acceptable behaviour and what is
unethical behavior.
(ii) Issue clear and specific instructions, requiring adherence to the norms of ethical
behaviour. These instructions would be deterrent for the sales representatives and
dissuade them from engaging in unethical practices.
(iii) The consequences of indulging in unethical behavior should be stated clearly in the
Code of Ethics.
(iv) Sales Representatives who are unable to achieve their allocated targets fully should
also be rewarded on an appropriate basis.
(v) DEL should sponsor and organize seminars and workshops on Ethics to emphasize
the importance of ethical behaviour.

Identify the business strategy/policy/tool which an organisation is pursuing in each of Winter 2010,
the following situations: Q3

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(a) In 1990, Sony launched the first High Definition (HD) TV in the market at a price of
$43,000 per set. These TV sets were purchased by customers who could afford to pay
the high price for the new technology. After reaping the maximum profits and
recovery of the sunk R&D costs, the price was gradually reduced in 1993 to $ 6,000 for
a 28” TV set to attract new customers. This strategy is called __________.
(b) The management tool that enables a firm to classify its range of products
according to their current market share and expected growth is called __________.
(c) The assessment tool used to compare and identify the variance between a firm's
current market coverage and potential market opportunities for its products is called
__________.
(d) A company which has capabilities to manufacture a complete line of superior
quality ball bearings for a wide range of original equipment manufacturers and
industrial users is pursuing a strategy of __________.
(e) If a company engaged in the textile manufacturing business acquires majority
holdings in a sugar mill, a motor car manufacturing plant and a private airline; it is
pursuing a __________ strategy.
(f) The chief executive officer who makes alternative plans to deal with emergencies
or unexpected situations prior to their occurrence is pursuing a __________ strategy.
(g) A firm uses different brands of essentially the same product to target different
market segments is pursuing a __________strategy.
(h) A bank which strives to develop better understanding of the customer’s needs and
satisfy them to create customer loyalty is adopting a policy of __________.
(i) A method of demand forecasting in which a firm markets its new products in a
limited geographical area to ascertain consumer response and from this sample
develops projections of the size of market over a larger area is called __________.
(09 mark)

Strategy and CSR f

HR and Change Management

Marketing h, i, b, c, d, e, g, a

International Business

Students’ knowledge of various business strategies was tested through this question.
This style of testing the knowledge should be encouraged. Few students scored well,
others just did guess work. This shows that concepts are just skimmed through and
students do not make any effort to practically understand the strategies.

The business strategy/policy in each of these situations is:

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(a) Market Skimming Pricing Strategy
(b) BCG Matrix
(c) Gap Analysis
(d) Product Specialization
(e) Conglomerate Diversification or Conglomerate Expansion Strategy
(f) Contingency Planning Strategy
(g) Multi-brand Strategy
(h) Relationship Marketing
(i) Test Marketing

Explain the meaning of Brand Equity. (02 marks) Winter 2010,

Q7(a)

“Brand Equity” is a well-known concept in management studies but most students

gave wrong answers. Equity was mistaken for equality, students thought that it
meant having equal value or same name of many products launched under one brand.

Brand Equity is the differential effect of awareness and familiarity of the brand name on
the customer response to the quality of a product or service. It is a measure of the
brand’s ability to capture and retain the preference and loyalty of the consumers. A
brand has positive brand equity when consumers react more favourably to it than to
any generic or other branded versions of the same product.

Silkfinish Paints Limited (SPL) are manufacturers of a wide variety of superior quality Winter 2010,
paints which are used in interior and exterior finishing of residential, commercial and Q7(b)
industrial buildings. SPL intends to launch an aggressive “Pull Strategy” to counter
competition from new entrants who are offering lucrative margins to the retailers to
promote their products which are inferior in quality and priced much below the prices
of SPL’s products.
(i) What is meant by Pull Strategy? (02 marks)
(ii) Explain briefly what advantages SPL is seeking to achieve by launching an
aggressive Pull Strategy. (03 marks)

The Pull Strategy is not an alien concept for anyone having some knowledge of
product management. It is a strategy in which promotional expenses are incurred with
the aim of attracting potential consumers and reduce reliance on sales persons. The
response was generally satisfactory.

(i)
A Pull Strategy is a promotional strategy in which considerable expenses are incurred in

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advertising and customer promotion to attract the final consumers who seek to
purchase the products on the strength of its brand name.
(ii)
SPL intends to launch an aggressive Pull Strategy to achieve the following advantages:
 Further strengthen the brand image for its products and create greater brand
awareness among the quality conscious customers.
 Differentiate its products from those of the competitors and create value for the
customers who would be willing to pay a premium price for the products.
 Create customer loyalty by emphasizing that the long-term advantages of superior
quality paints far outweigh the apparent savings offered by competitors by way of
lower prices.

What is meant by a Strategic Business Unit (SBU)? (03 marks) Winter 2010,
Q8(b)

The basic definition of SBU is “an independent unit which has its own resources and
products and strategy” and because SBUs have independent objectives they allow the
owning conglomerate to respond quickly to changing economic or market situations.
Many students incorrectly mentioned that SBU is a department of the organization
which plays an important role in achieving its strategy.

A Strategic Business Unit (SBU) is an independent unit within a large organization and
has its own staff, financial resources and products. A separate SBU pursues its own
marketing strategy and is established on the premise that a single strategic approach is
not always appropriate in a large diversified organisation which markets different
products to serve the needs of a wide range of customers.

Dandy Candies Limited (DCL) are manufacturers of a wide range of chocolates, candies Summer
and sweets catering primarily to the market segment comprising of children in the age 2010, Q1
group of 6-15 years. DCL’s products are well accepted in the market in Karachi and its
adjoining metropolitan areas and two of its main brands are quite popular in the
middle class segment of the market.
The management has now realized that in spite of substantial capital investment in
fixed assets and good quality of its products, DCL has not been able to exploit the full
potential of the rapidly growing size of the market and achieve high level of operating
capacity.
The Board has recently appointed a new Marketing Director and has given him a
target to increase DCL’s annual sales from the current level of Rs. 600 million
approximately in each of the preceding 2 years to Rs. 1200 million in the next 3 years.
Achievement of this target would launch DCL in the league of key market players and
also significantly increase its profitability. The incoming Marketing Director has a track
record of good performance in the consumer goods industry and achieving high sales
targets by pursuing aggressive marketing policies through deep insight of the market

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dynamics. The Marketing Director is confident that he would be able to achieve the
sales target set by the Board of DCL.
Briefly explain the Marketing Penetration Strategies which the Marketing Director
should pursue to achieve the sales target set by the Board. (10)

Comments not available.

The incoming Marketing Director of DCL may pursue the following Marketing
Penetration Strategies to increase the Company’s annual sales from Rs 600 million to Rs
1200 million in the next 3 years.
(a) Pricing: DCL should reduce its prices to achieve a larger share of the growing market.
This strategy would be particularly rewarding as the target market for children is
assumed to be highly price sensitive and will result in substantial increase in the sales
revenue. Besides, DCL’s average cost would decline with increase in production and
better utilization of existing capacity. Pursuance of this pricing policy would therefore
contribute towards increase in sales revenue as well as overall profitability of DCL.
(b) Increase in Promotion and Distribution Support: DCL should launch well-conceived
advertising and promotion campaigns to attract those segments of the market in which
its products are not consumed at present. It would also be necessary to identify and
appoint competent new distributors who would aggressively promote DCL’s products.
DCL should provide support to the retailers by way of prizes and gifts for distribution
among the children and also sponsor special events to increase awareness of its
products in the target market. DCL might have to explore both the push and pull
marketing strategy along with media advertising.
(c) Product Modifications: DCL should introduce further product improvements and
change design features from time to time to make the products more attractive for the
children. This strategy would enable DCL to gain a larger share of the market as the
consumers would increase the frequency of their purchases.
(d) Incentives to Marketing Staff: DCL should offer performance related incentives and
special benefits to the marketing staff who are able to achieve and exceed the sales
targets given to them.
(e) Market Development: DCL should introduce its products in new geographic areas
besides Karachi which offer good opportunities of achieving larger share of the market
and increase in sales revenue.

According to Michael Porter the nature of competitiveness in any industry is a Summer

composite of Five Forces. The Competitive Analysis model developed by Porter is 2010, Q3(b)
widely followed for formulating business strategies in many industries. List the five
Competitive Forces stated by Michael Porter. (05)

Comments not available.

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The Competitive Forces stated by Michael Porter are:
(i) Potential threat of entry of new competitors
(ii) Potential threat of substitutes
(iii) Bargaining power of buyers
(iv) Bargaining power of suppliers
(v) Rivalry among existing competitors

State five different situations in which it would be advisable for a firm to pursue Summer
policies of Unrelated Diversification. (05) 2010, Q5(b)

Comments not available.

It would be advisable for a firm to pursue policies of Unrelated Diversification in the

following situations:
(i) The firm operates in an extremely competitive market or in a no-growth industry
characterized by declining industry-wide profitability and low returns on investments.
(ii) The firm considers it advantageous to control sources of supplies or marketing
channels by backward or forward integration.
(iii) The firm’s existing channels of distribution can be gainfully utilized to market the
new products and services.
(iv) The firm has an opportunity to purchase an unrelated business at a very low cost
with prospects of attractive rate of return on investment.
(v) The new products offer counter cyclical sales patterns compared to the firm’s
existing product lines.

In any market of significant size for products which have a widely diversified and Summer
dispersed customer base there are a large number of firms, each, competing for its 2010, Q6
respective share of the market by pursuing different competitive marketing strategies.
In such a market environment, an individual firm has to identify its distinctive role and
positioning which then determines the type of marketing strategy which it would
pursue to achieve its objectives.
You are required to list the distinctive characteristics of a firm which pursues
Competitive Marketing Strategies of:
(a) A Market Leader
(b) A Market Challenger
(c) A Market Follower and
(d) A Niche Marketer. (09)

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Comments not available.

A Market Leader
(a) develops strategies to expand the total size of the market
(b) pursues strategies to expand its own current market share
(c) defends its own market share vigorously
(d) Is customer driven and innovative
(e) Flexible and adaptive
(f) It tends to be on the cutting edge of new technologies and new production
processes. It sometimes has some market power in determining either price or output
A Market Challenger
(a) retains a substantial portion of the market share
(b) launches direct and indirect attacks on the Market Leader in areas in which there are
apparent signs of weakness of the Market Leader
(c) attacks firms other than the Market Leader to increase its own share of the market ]
(d) Offers price discounts and reduces own cost.
(e) Chooses only one target at a time, assesses the strength of the target competitor.
Considers the amount of support that the target might muster from allies
A Market Follower
(a) imitates and attempts to adopt the policies of the Market Leader
(b) adopts a secondary or runner-up position as it lacks the resources to challenge the
Market Leader
(c) follows its particular strengths and skills to maintain its market share and profitability
as it considers that pursuing any other strategy would result in a less favourable
outcome.
(d) no expensive R&D failures as best practices are already established.
(e) Employ “play it safe” strategy, the rationale is that by developing strategies that are
parallel to those of the market leader, they will gain much of the market from the leader
while being exposed to very little risk.
A Niche Marketer
(a) is a relatively small or a medium-sized firm
(b) specializes in a narrow segment of the market according to customer size or fulfilling
specific customer requirements
(c) meets the requirements of a particular geographical area.

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(d) They tend to market high end products or services, and are able to use a premium
pricing strategy
(e) They tend to keep their operating expenses down by spending less on R&D,
advertising, and personal selling.
(f) The firm typically looks to gain a competitive advantage through effectiveness rather
than efficiency.

Red Balloon Clothing Limited (RBCL) is engaged in the business of manufacturing a Winter 2009,
wide range of children clothing since the past six years. The Company has built a Q1
reputation for good quality products of latest designs and its brand name is very
popular in the middle class segment of the market. The Company strongly believes in
a policy of giving “value for the customers money.” At present, RBCL markets its
products through a widely dispersed network of independent retailers who sell the
company’s brands along with the products of other manufacturers.
RBCL is considering a proposal of forward integration and establishing its own chain of
retail outlets for sale of its products. RBCL would however, continue to sell its
products through the network of existing retailers also.
You are required to identify and explain briefly the different factors which RBCL
should examine while evaluating the proposal for establishing its own network of
retail outlets. (10)

Comments not available.

RBCL should consider the following factors while evaluating the decision to establish its
own network of retail outlets:
(i) Examine the existing network of retailers of RBCL to ascertain the extent to which
they have advantages of location of their shops in important shopping centers.
(ii) Compare the capital expenditure involved in the establishment of retail stores and
their recurring operating expenses and inventory carrying costs with the costs incurred
under the existing set-up.
(iii) Estimate the envisaged number of RBCL’s own retail stores to be established to
cater to the requirements of the target segment of the market.
(iv) Determine the ability of RBCL to mobilise sufficient financial resources required to
establish and operate the business of retail marketing of its products
(v) Examine whether sufficiently experienced and trained staff at various levels would
be available to manage and operate the retail outlets.
(vi) Ascertain the profit margins currently earned by the independent retailers on the
Company’s products and the impact of the self-owned retail outlets on the company’s
profitability.
(vii) Consider the impact of the decision to establish own retail outlets on the

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Company’s future relationships with the independent retailers.
(viii) Examine the need to revise the terms and conditions relating to sales to be offered
to the independent retail outlets.
(ix) Enquire into the business policies of competitors who have their own retail network
and whether RBCL would be able to enjoy a competitive advantage over the
independent retailers.
(x) Examine the extent to which the availability of more reliable information of future
market and fashions trends would be an advantage after RBCL establishes its own retail
outlets.
(xi) Analysis of the industry growth expected and the market share to be captured, carry
out a viability study of the share of market available
(xii) Analyze the value addition by gaining ownership of retail outlets; evaluate the
possibility of brand dilution in independent retail houses.

Although Strategies of Cost Leadership and Product/Service Differentiation appear to Winter 2009,
be highly attractive, many companies are often not able to achieve much success Q2
because they lack the necessary capabilities to implement these strategies
successfully.
(a) Explain what do you understand by the term Cost Leadership Strategy. (02)
(b) What is meant by Product/Service Differentiation Strategy? (02)
(c) In your opinion what kind of capabilities are of crucial importance for the
successful implementation of a Product/Service Differentiation Strategy? (04)

Comments not available.

(a)
Cost Leadership is a strategy that seeks to establish long-term competitive advantages
by emphasizing that value chain activities can be achieved at costs which are
substantially below what competitors are able to match on a sustained basis. This
allows a firm to compete primarily by charging a price lower than the competitors and
still earn satisfactory levels of profits.
(b)
A Product/Service Differentiation Strategy is a strategy which promotes and emphasizes
that the product/service offered by the firm is different from other available
products/services of a similar nature. The differences are based on certain desirable
features and performance attributes and therefore the high prices are justified.
(c)
The capabilities which are most important for the success of a Product/Service
Differentiation Strategy are:

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(i) Strong and functional research and development department, able to correctly
anticipate and assess the consumer behavior and desire.
(ii) Strong coordination between research and development, Marketing and Technical
departments.
(iii) Innovative Management allowing better ideas to be cultivated.
(iv) Deep insight of the market and close association with the distribution channels.
(v) Strong brand name.
(vi) Strong connection and cooperation from well-established vendor network.
(vii) Capital Allocated for attracting technical and creative human resources enabling
ability to create a unique value/attribute that is hard to copy by competitors.
(viii) Protection of research should be available in order to ensure that resources are not
imitated.

List and explain briefly any four important packaging features which would influence Winter 2009,
the decision of a consumer to purchase an edible consumer product. (06) Q3(a)

Comments not available.

The packaging features which would influence a consumer’s decision to purchase an

edible consumer product are:
(i) Convenience of the Size of the Package– The consumer should be able to chose from
a range of sizes available, that is, a sachet for a single use, or a size which would meet
the requirements for a period of say, one month or an economy package for a large
family.
(ii) Preserve the Quality of the Product–The packaging should be capable of preserving
the quality of the edible product from the elements e.g. sunlight, humidity or moisture.
(iii) Product Information–The packaging should provide vital information regarding the
ingredients of the food item, their nutritional value and expiry date
(iv) Attractiveness of the Package–The packaging should be attractive in its
presentation and colour scheme to draw the attention and interest of the customer at
the point of display of the product on the shelves in the retail outlets. The design and
color should be in line with the brand and brand name should be displayed prominently
(v) Convenience of Handling the Package –The packaging should make it easy to take
out the edible product for use and also close the package easily after use.
(vi) Convenience of Storage–The package containing the edible product can be stored
conveniently and occupy minimum storage space.
(vii) Disposal of the Package–The package, after consumption of the contents, can be
disposed of safely from the environmental viewpoint

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Market researchers often place reliance on external databases as the information can Winter 2009,
be obtained readily with minimum of effort and at a low cost. However, experienced Q3(b)
market researchers are aware of the limitations of the external databases and use
them discreetly on a selective basis realizing fully the shortcomings of the
information.
(i) State four limitations of using external databases.
(ii) Identify one specific situation in which it may not be advisable to use external
databases. Give reason for your selection of the particular example. (06)

Comments not available.

The limitations of external databases are:

(i) The external database may not be accurate and it may not be possible for the user to
determine the extent to which the database is inaccurate.
(ii) The external database may not be current for the purpose of arriving at the decision
in the present changed circumstances.
(iii) The external data may not be impartial and may have been prepared with a bias for
a particular purpose.
(iv) The information required to reach reliable and rational conclusions may not be
available in the external databases.
(v) The data might be unrepresentative as every research has a different criteria for the
target segment depending on the in its objectives.
Examples: Launching of a new food product in which reliable feedback and consumer
reactions for taste, eating habits, price considerations, type of packaging, etc are very
important information. The external database may not be able to address to the issues
required to evaluate these factors for the particular type of food product.
OR
Obtaining information of prospective subscribers and circulation of existing magazines
for launching a new high fashion magazine. Information regarding income, age,
educational profiles of the prospective subscribers may be available but information
regarding their particular interests would not be available in the external databases.

Euro Motors Limited is engaged in the business of manufacturing and marketing of an Summer
extended line of motor cars catering to the varied needs of a wide segment of the 2009, Q2
automobile market. The Company operates in a dynamic market environment
dominated by four well-entrenched and strong companies competing aggressively to
achieve leadership status and expand their respective share of the market.
List six performance indicators, which in your opinion, would help to measure the
success of marketing strategy of Euro Motors Limited. (06)

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Comments not available.

The performance indicators to measure the success of marketing strategy of Euro

Motors Limited which is engaged in the business of manufacturing and marketing of
automobiles in a dynamic and highly competitive business environment may be as
follows:
(a) Growth in sales revenue
(b) Increase in market share.
(c) Percentage increase in sales achieved through customer retention/brand loyal
customers.
(d) Product development speed time i.e. time to develop, manufacture and market a
new product.
(e) Number of customer complaints lodged. Percent increase/decrease in number of
customer complaints.
(f) Number of new distributorships appointed in the year.
(g) Sales of new products / models lodged in the year as a proportion of the Company’s
annual turnover.

Companies which pursue market-driven business strategies consider that sponsorship Summer
of high profile and attractive events are communication techniques to create 2009, Q7
awareness and affiliation of their companies and brands with the target market.
These companies enter into agreements and provide financial and non-financial
support for social, cultural, literary and sports events to a group, organization or an
individual celebrity in anticipation of creation of a lasting awareness of the company’s
name or its brand among the audience. Sponsorship by leading companies, as a
promotional alternative, has gained world-wide prominence in recent years.
Briefly describe six main objectives which are envisaged to be achieved through
sponsorship of such high profile and attractive events? (09)

Comments not available.

Companies which pursue market-driven business strategies consider sponsorship of

attractive and high profile events to achieve the following objectives:
(a) Increased Visibility
The wide exposure such events receive in both the electronic and print media provides
sponsors with vast publicity opportunities.
(b) Business-to-business Promotion:
Competition for prominent positioning of products in the shelf-spaces of popular retail
outlets is a big challenge for companies. Various types of sponsorships e.g. paid

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overseas holidays or complimentary tickets/passes for popular events can be used to
attract retailers, dealers and other intermediaries in the distribution channel to
promote the company’s products.
(c) Differentiate Product from Competitors
Sponsorship provides companies a competitive selling advantage because it offers
opportunities for category exclusiveness which can be used as product differentiation
strategy for creating greater acceptability amongst the customers. Sponsorships help
companies to create exclusive attributes for their products in the minds of the
customers to fulfill their needs and objectives.
(d) Active Display of Product Attributes
Sponsorship allows companies to draw special attention of the audience to the
advantages and unique attributes of their product by promoting special events e.g. tyre
manufacturers may sponsor car-racing events to demonstrate their products in action.
(e) Cost Effectiveness
Sponsorships are usually more cost effective specially when a specific category of
audience is to be targeted.
(f) Targeted Sponsorship
Properly planned sponsorship programs integrated with predetermined objectives and
focused on specific audience targets can create lasting impact.
(g) Captive Viewership
Advertisements on TV are often avoided by the viewers, for example by changing the
channels. In case of popular programs/shows, it is possible to retain the attention of the
captive viewership.

Briefly explain the following concepts: Summer

2009, Q11
 Business Ethics
 Pull Strategy of Promotion
 Licensing
 Benchmarking (10)

Strategy and CSR Benchmarking, Business Ethics

HR and Change Management

Marketing Licensing, Pull Strategy of Promotion

International Business

Comments not available.

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Business Ethics is a code of moral principles that the employees follow with respect to
what is right or wrong from the viewpoint of the organization’s dealings and
interactions with its stakeholders. The organizational culture and internal policies and
systems have far-reaching ethical implications and reinforce the set of values to be
upheld by the employees in all their business dealings. The standards of ethical conduct
may be embodied in the Company’s Formal Code of Ethics.
Pull Strategy of Promotion is a promotional strategy based on aggressive advertising of
brands to build-up consumer demand. In a successful Pull Strategy, the customers ask
for the brand by name, inducing retailers or distributors to acquire stocks of the
company’s goods.
Licensing is a technique of entering a specific market in which the licensor enters into
an agreement with a licensee, by offering the licensee the right to use the
manufacturing process, trade mark, patent, trade secret or any other item of value for a
fee or royalty.
Benchmarking is the process of comparing the company’s products and processes with
those of the competitors or leading firms in other industries or any other accepted
standards against which the performance of the company is measured.

Corporate and Business Strategies of marketing-focused organizations operating in Winter 2008,

different product lines pursue entirely different approaches depending on customer, Q6
competitor and inter-functional orientations. The features of each of the different
types of orientations are:

Customer Orientation: Entire focus on customer e.g. Jeweler boutique selling

expensive designer jewelry to a select niche market.

Competitor Emphasis on plans and actions of competitors as only few

Orientation: competitors dominate the market e.g. branded edible oil.

Inter-functional Marketing is considered to be an all-encompassing

Coordination: company-wide responsibility and all the departments are
geared to contribute towards the marketing efforts e.g. a
shipyard manufacturing ocean-going vessels for major
foreign buyers.

List four characteristics which, in your opinion, would determine the direction of
marketing policies and efforts in each of the above three types of business
orientations. (09)

Comments not available.

The determinants of competitive policies and efforts in the different categories of

business are :

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Customer orientation
 Customer commitment.
 Creation of customer value.
 Understanding of customer needs and objectives.
 Measure customer satisfaction.
 After-sales service.
Competitor orientation
 Sales force shares competitors’ information among themselves.
 Individual organizations respond rapidly to competitors actions.
 Senior managers frequently discuss competitors’ strategies and tactics.
 Keen to seize opportunities for competitive advantage.
 Constant struggle to achieve market leader status.
Inter-functional coordination
 Inter-functional calls on customers.
 Technical, procurement, customer and market information is shared closely among
different functions/departments.
 Close integration among different functions and departments in implementation of
strategy.
 Functions are geared towards creation and satisfaction of individual customer
needs.
 Resources are shared frequently among the various business units.

Strategists involved in the marketing of Fast Moving Consumer Goods (FMCG) keep a Winter 2008,
close watch on the various stages of the Life Cycle of their products and adjust their Q10
strategies accordingly.
List the type of marketing-mix strategies of Products, Pricing, Distribution and Sales
Promotion which should be pursued to meet the requirements of the products which
are in the introduction, growth, maturity and decline stages of their product life cycle.
(12)

Comments not available.

The marketing-mix strategies in different stages of Product Life Cycle should be pursued
on the following lines:

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Briefly explain the following: Winter 2008,

Q11
(a) Business Ethics
(b) Core Competence
(c) Environment Management
(d) Job Description (12)

Strategy and CSR b, a

HR and Change Management d, c

Marketing

International Business

Comments not available.

(a) Business Ethics refers to the code of moral principles and values which are applied
by individuals and organizations in their dealings in the commercial world. Business
ethics provide guidelines for acceptable behaviour by organizations in their strategy
formulation and day-to-day operations.
(b) Core Competence is the key ability or strength that an organization has acquired
which differentiates it from others, gives it competitive advantage and contributes to its
long- term success. Core competence accrues due to its favourable location, access to
superior quality raw materials, unique capabilities of equipment, acumen of
management, skills and competence of workers and marketing insight . Core

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competence is valuable, rare and difficult for competitors to imitate.
(c) Environment Management is a systematic approach to minimize the damage caused
by an organization to the environment in which it operates. Environment management
has assumed considerable importance because all the stakeholders expect
organizations to be responsible for the preservation of the environment and
management are increasingly being held responsible and liable for their organization’s
environmental performance. Environment management involves reducing
pollution/waste and consumption of natural resources in judicious manner.
(d) Job Description is a structured and factual statement of a job’s functions and
objectives. It defines the boundaries of the job-holder’s authority and responsibility and
includes the job title, department, job site, and reporting channels.

The sponsors of Seaside Resorts Limited (SRL) are considering to set up a major Summer
project on the sea coast at a distance of 85 kilometers east of Karachi. The project 2008, Q1
would have facilities of guest houses, swimming pools, golf courses, tennis and squash
courts and scuba diving. It would also have modern facilities of conference rooms and
auditoriums for holding business meetings, training courses, conferences and
symposia.
This first-of-its-kind project in Pakistan would involve substantial capital investment
and also require well-planned physical facilities and selection of state-of-the-art
specialized equipment. A cadre of highly trained and dedicated work force having
diversified skills would be crucial for the successful operations of the project. The
sponsors who were seized with these overwhelming problems were considering
acquiring the services of an expatriate executive to implement this project and
operate it in the initial years. However, the uncertainties associated with the hiring of
an individual on contract basis and entrusting him with such far-reaching authorities
and responsibilities was a source of grave apprehension for the sponsors.
In the meantime, Oriental Resorts Inc, a Thailand-based company with experience of
managing of similar high profile luxury resort projects in several far-eastern countries
has approached SRL and offered to provide guidance and expertise for
implementation and operation of the proposed project under a franchise
arrangement.
Explain what is a Franchise Arrangement? Also identify four advantages that would
accrue to SRL by entering into a Franchise Arrangement with Oriental Resorts Inc. (09)

The Question on Franchise Arrangement was attempted by almost all the students. In
essence, in a franchise arrangement one business entity who is the franchisor grants a
license to another business entity called the franchisee to use the name, brand/ trade
mark of the franchisor and conduct the business in accordance with tested processes,
methods, administrative and marketing techniques developed by the franchisor. A
number of candidates did not identify the parties as franchisor and franchisee and
erroneously illustrated the arrangement in the context of a partnership.

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This part of the question specifically asked for the advantages which would accrue to
the franchisee, viz
 investment by the franchisee in a proven business format and therefore
elimination of the risks inherent in establishing a completely new business;
 access to a well-known brand name which enjoys wide customer acceptance;
 availability of guidance and advice on selection of project design and equipment
according to pre-tested specifications of the franchisor;
 responsibilities for purchase of inventories, staff training, marketing and
advertisement are substantially assumed by the franchisor which enables the
franchisee to concentrate on the day-today running of the business;
 availability of sound managerial advice and expert guidance on overcoming any
unforeseen business problems.
A number of the students who did not read the question carefully, mentioned the
advantages from the franchisor’s standpoint and therefore lost valuable marks.

(a)
In a Franchise Arrangement, one business entity who is the franchisor grants a license to
another business entity called the franchisee to use the name and brand/trademark of
the franchisor and conduct the business according to the tested processes, methods,
administration and marketing techniques developed by the franchisor.
(b)
SRL would be able to gain the following advantages of entering into a franchise
arrangement with Oriental Resorts Inc. :
(i) The franchisee is able to make investment in a proven business format and can
eliminate the risks and difficulties of establishing a completely a new business.
(ii) The franchisee can use a well-known brand name which is promoted aggressively
and has wide customer acceptance.
(iii) The franchisee receives guidance and advice on selection of a suitable project design
and equipment according to the pre-tested specifications of the franchisor.
(iv) The franchisee can concentrate wholly on the day-to-day operations of the business
as the responsibilities of purchasing stocks, staff training, marketing and advertising are
handled by the franchisor.
(v) The franchisee can seek managerial advice and guidance to overcome any problems
which he may encounter in the business.

Lazzat Foods Limited is engaged in the business of manufacture of packaged masalas, Summer
jellies and jams. The Company’s sales have been stagnant since the past two years due 2008, Q7(a)
to intense competition and aggressive promotion by the competitors in the domestic
market. The Management has proposed to explore new markets abroad and has
suggested that the Company consider participation in a Trade Fair to be held in
Colombo. Give four advantages which are expected to be achieved by the Company’s

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participation in the Trade Fair. (04)

This Question was based on international trade fairs and students were required to
describe the advantages which companies expect to obtain by participation in these
fairs. The widely accepted advantages of participation in international trade fairs are:
(i) trade fairs serve as a vehicle for securing orders for the company’s products
(ii) trade fairs help to create awareness of the products among prospective customers
(iii) participants from other countries may show interest in the products which may
lead to sales and joint ventures in these countries
(iv) participation in trade fair would lead to contacts and opportunities for
appointment of agents and distributors in Sri Lanka
A number of students offered other logical reasons and were able to earn marks.

The expected advantages of participation in the Trade Fair are:

 The Trade Fair can serve as a vehicle for securing orders for the Company’s
products.
 The Trade Fair can create awareness of the products among the prospective
customers.
 The participants in the Trade Fair from other countries may show interest in the
products which may lead to sales and joint ventures in these countries.
 The Trade Fair may lead to contacts and opportunities for appointment of agents
and distributors in Sri Lanka.

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‘Going global acting local’ is often the proclaimed slogan of multinational corporations Winter 2015,
who actively pursue strategies of global expansion. Q. 9(a)
State briefly five different actions by which multinational corporations can
demonstrate that they are implementing the strategy of ‘going global and acting local’
in their overseas businesses. (05)

This part of the question required the candidates about the different actions by which
multinational corporations can demonstrate that they are implementing the strategy
‘of going global and acting local’ in their overseas businesses. The overall response
was satisfactory. However, most of the students who scored passing marks could not
obtain high marks as two important points, i.e. being responsive to the environmental
concerns and transferring of technology, were not mentioned by them.
Further, quite a few students only focused on the aspect of going global and ignored
the acting local part and consequently their answers revolved around matters such as
centralized policy making, standardization, etc. whereas some such students gave
advantages of following a global approach.

Multinational corporations can demonstrate that they are pursuing the strategy of
‘going global acting local’ in true perspective by taking the following actions:
(i) Being a good corporate citizen in the countries in which they operate by
respecting their cultures, customs, traditions and languages.
(ii) Transferring their manufacturing technologies and procedures to their companies
located in foreign countries.
(iii) Keeping the number of expatriates to the minimum level and providing the local
nationals with the training and skills to assume positions of responsibilities.
(iv) Developing R&D facilities in the overseas companies to enable them to
manufacture products according to the tastes and preferences of the local
customers.
(v) Being responsive to the environmental concerns of the host countries by
conserving energy, reducing pollution and disposing effluents and wastages
properly.

LLC Group, a European multinational company, producing an assorted range of Winter 2015,
chocolate products, is considering to establish manufacturing facilities in Zenya, an Q. 9(b)
underdeveloped country which is a leading producer of cocoa.
List eight factors that may create impediments and negatively influence LLC Group’s
decision to establish manufacturing facilities in Zenya. (04)

This question required identification of factors which create impediments and

negatively influence a multinational company’s decision to establish manufacturing
facilities in an underdeveloped country. This part was attempted well and majority of

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the candidates scored high marks. However, very few candidates could raise issues
such as ‘weak compliance with laws relating to patents, trademarks and copyrights’
and ‘policies relating to repatriation of profits’. Many candidates again made a very
common mistake, i.e. to achieve the tally of eight points, they broke down the political
factor into a number of points whereas they have been advised quite often to avoid
repetitions and mention distinct points only.

Multinational corporations can demonstrate that they are pursuing the strategy of
‘going global acting local’ in true perspective by taking the following actions:
(i) Being a good corporate citizen in the countries in which they operate by
respecting their cultures, customs, traditions and languages.
(ii) Transferring their manufacturing technologies and procedures to their companies
located in foreign countries.
(iii) Keeping the number of expatriates to the minimum level and providing the local
nationals with the training and skills to assume positions of responsibilities.
(iv) Developing R&D facilities in the overseas companies to enable them to
manufacture products according to the tastes and preferences of the local
customers.
(v) Being responsive to the environmental concerns of the host countries by
conserving energy, reducing pollution and disposing effluents and wastages
properly.

List the reasons why foreign individuals and institutional investors choose to invest in Winter 2015,
the capital markets of developing countries. (04) Q. 10(b)

In this part, the candidates were required to give the reasons which motivate
institutional investors to invest in capital markets of developing countries. The overall
response was below average. Only those students who keep themselves abreast about
the key features of the global economy and the investment climate, were able to
produce relevant answers. A large number of students mentioned reasons in the
context of overseas manufacturing like availability of cheap labor/raw material, loans
at low interest rate, etc. which were not appropriate in the given context.

Foreign individuals/institutional investors choose to invest in the capital markets of

developing countries for the following reasons:
(i) To obtain high returns on investments based on higher interest rates in the capital
markets in these countries as compared to the developed countries
(ii) To avail the benefits of high growth rates in economies of developing countries as
the developed economies are facing situations of low or no growth.
(iii) To obtain benefits of investing in companies which possess strategic assets or
exercise control over critical businesses in the developing countries.

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(iv) To diversify the investment portfolio among different countries and regions.
(v) To obtain tax benefits offered by the developing countries.

State the reasons why companies may consider that establishing manufacturing Summer
facilities in foreign countries is more advantageous than exporting to these countries. 2015, Q4(a)
(05)

In this part of the question, candidates were required to state reasons why businesses
prefer to establish manufacturing facilities in foreign countries instead of exporting to
these countries. Most of the replies were reasonably good and more or less covered
the important reasons. However, some students did not read the question carefully
and mentioned the problems associated with establishment of manufacturing
facilities. Many candidates repeated the same points using different words and
phrases.

Companies may consider it more advantageous to establish manufacturing facilities in

foreign countries than exporting to these countries to:
(i) seize the advantages of low production costs in the foreign country
(ii) avoid high transportation costs, particularly for heavy and bulky goods
(iii) overcome the constraints of manufacturing capacity in their home countries (skilled
labour, raw materials, energy, etc.)
(iv) manufacture substantially modified products to better serve the needs and
preferences of customers in the host countries
(v) meet the requirements of governments in the host countries who discourage
imports by imposing high tariff and non-tariff barriers
(vi) cater to the preferences of customers who may prefer to buy locally manufactured
goods.

Multinational Corporations are classified as Ethnocentric, Polycentric and Geocentric Summer

companies depending on the strategies and policies pursued by their top 2015, Q4(b)
management. List the distinguishing characteristics of each of the above types of
multinational corporations. (06)

In this part, the candidates were required to list the distinguishing characteristics of
ethnocentric, polycentric and geocentric types of multinational companies. About 30-
40% of the replies were satisfactory. However, 17% of the students did not attempt
this question probably because they were not familiar with these terms. The
remaining candidates either gave too lengthy answers in which each characteristic
was discussed in detail or mixed up the characteristics of the three types of
multinational companies. Many candidates related ethnocentric multinational
company to a specific ethnic group and culture which was not appropriate.

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Ethnocentric oriented companies follow policies that are primarily home-grown and
the management assumes that the practices which work in the headquarters or in the
home country are most suitable and should be adopted and pursued in all their
international operations.
Polycentric oriented companies follow the philosophy that the organization located in
the host country should be staffed by local individuals to the maximum extent as they
are expected to understand more closely their culture, work ethics and markets.
Consequently, subsidiaries in various countries operate under the directions of locals
and are controlled by the parent company through appropriate financial reporting
systems.
Geocentric orientation is an approach in which the management considers that a
worldwide focus, both at the headquarters and also in the host countries, offers optimal
advantages. Competent individuals, regardless of their home or host country origin,
should be engaged to solve company problems. Major issues of headquarters and
subsidiaries, such as raising of funds, building of plants, research and development are
viewed from the entire global perspective.

Multinational Companies (MNCs) may at times adopt strategies of highly centralized Summer
decision making at their corporate headquarters and delegate minimum powers to 2015, Q6
their subsidiaries in different countries. Explain briefly four factors which in your
opinion are responsible for exercising policies of centralized decision making by the
MNCs. (08)

In this question, the candidates were required to explain four factors, because of
which MNCs prefer to follow policies of centralized decision making. This was an easy
question and most of the students welcomed this opportunity and gained high marks.

The factors which are responsible for the MNC’s strategies of exercising centralized
decision making are:
(i) Large size of the subsidiary companies and substantial capital investment – Due to
the large size of the individual entities and substantial investment by the MNCs the
performance of the subsidiaries can have far-reaching impact on the financial standing
and profitability of the MNC.
(ii) Access to technology and manufacturing process – The manufacturing technologies
and processes have been developed by the MNC at a very high R&D cost and the MNC
would not want to pass these to the subsidiaries.
(iii) Closely integrated and inter-dependent operations – When the operations of the
various subsidiaries are closely linked and interdependent that important decisions
cannot be delegated to the individual subsidiaries in isolation but have to be made after
due consideration of their implications for the group as a whole.
(iv) Stringent targets – If the products manufactured by the subsidiaries have to
conform to strict quality control specifications or if the operations are of a highly

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environmentally sensitive nature, then the parent company would consider it important
to exercise close control of the subsidiaries.
(v) Reduce operating costs – MNCs strive to economize their overall financial and
human relations management and administration expenses by centralizing these
functions at the corporate headquarters rather than creating duplicate facilities at the
individual subsidiaries.

MNCs pursue policies of managing their foreign businesses through local nationals of Winter 2014,
the countries in which the MNCs conduct their operations. Give four significant Q2(a)
advantages which the MNCs seek to achieve by appointing local staff in the countries
in which they conduct their business operations. (04)

The candidates were supposed to mention the advantages which MNC’s seek to
achieve by managing their foreign businesses by employing nationals of the countries
in which they conduct their operations. A significant number of the students stated
only two points i.e. that the remuneration packages of the local staff are lower than
the expatriate staff and that they are conversant with the local conditions. Repetition
of the above points using different words was witnessed in quite a number of the
instances. Other points such as companies that hire local staff are looked at more
favourably by the local authorities and that local staff is more at ease while working
with local managers were mentioned by few only.

MNCs seek to achieve the following advantages by appointing local staff in the countries
in which they conduct their business:
(i) The salary packages of local nationals are substantially less than the salary packages
and other allowances which would have to be paid to the expatriate staff in the host
countries.
(ii) The host countries look upon favourably towards MNCs who appoint local managers
as these individuals can have access to attractive job opportunities.
(iii) The local staff prefers to work with local managers because they can communicate
with them more easily and share common cultures.
(iv) The local staff are better capable of interpreting and dealing with local conditions
than expatriate staff.
(v) The expatriate staff would suffer career setbacks and poor morale in case of
unsatisfactory performance in their overseas assignments.
(vi) The host country staff who have work experience in foreign countries are
conversant with the norms and cultures of international business and can interface with
the top management of the MNCs easily.

A phenomenon witnessed in several progressive business groups is to own and Winter 2014,
manage diversified businesses. Q9(a)
Identify and describe significant corporate level strategies which these groups pursue

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for successful management and operations of their diverse business enterprises. (08)

In this question the students were required to identify and describe the corporate level
strategies pursued by management who own and manage diversified business
entities. It appears that this question could not be comprehended by a vast number of
the students in spite of the specific mention of ‘diverse business enterprises’ in the
question. The replies, in most of the cases, were based on highly confused and vague
perceptions of the general issues of business management. Irrelevant and meandering
references in the areas of marketing, business finance as well as human resource
management, and global business operations were stated by the students.

Business groups pursue following corporate strategies for successful management of

their diverse business enterprises:
(i) The groups continuously explore opportunities of acquisitions, mergers and strategic
alliances to achieve maximum competitive advantages.
(ii) The groups evaluate whether the different business entities are competing in the
most suitable businesses considering the opportunities and threats that are present in
the environment.
(iii) The groups consider whether they should realign strategies of related or unrelated
diversification and decide which businesses should be divested from their portfolio to
achieve optimum strategic fits.
(iv) They follow aggressive and proactive business policies and set high standards of
performances and continuous and critical evaluation thereof.
(v) The groups make concerted efforts to identify and attract top caliber individuals and
motivate their senior corporate executives to function as teams and manage the various
business risks in a prudent manner.

Certain companies prefer penetrating in foreign markets through licensing Winter 2014,
arrangements in the target countries instead of exporting or making direct foreign Q10(a)
investments.
Describe briefly the advantages which companies seek to achieve by pursuing
strategies of entry in foreign markets through licensing arrangements. (04)

This question regarding penetration in foreign markets through licensing

arrangements received satisfactory replies. The important points, viz. licensor’s low
capital costs, taking advantage of licensee’s local expertise and contacts, rapid
penetration of the market and elimination of political risks as the licensee is perceived
as a domestic entity were mentioned by a significant number of the students.

The advantages of penetrating into foreign markets through licensing arrangements

with local entrepreneurs in foreign countries are:
(i) the licensor obtains the benefit of the expertise and contacts of the licensee in the

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foreign market
(ii) entry in foreign markets through licensing arrangements can enable the licensor to
make rapid penetration in the markets in these countries
(iii) licensing arrangements are more attractive than exporting because high tariffs,
quotas or other import restrictions in overseas markets increase the costs of exports
(iv) licensing arrangements do not require substantial financial resources of the
licensors
(v) licensing arrangements helps to minimize political risks because the licensee is
considered as a domestic entity in the licensee’s country

Identify six major impediments in attracting foreign investments in an Winter 2014,

underdeveloped country. (03) Q10(b)

Impediments in attracting foreign investments in an underdeveloped country include

poor infrastructure facilities, absence of laws relating to patents and copyrights,
widespread corruption, unstable system of governance, non-availability of reliable
economic and financial data and lack of education and absence of a skilled work force.
However, many students referred to causes such as lack of investment opportunities,
low profits, small markets etc. which are not relevant in the case of most
underdeveloped countries.

The impediments in attracting foreign investment in an underdeveloped country are:

(i) poor infrastructure facilities of roads and communications and unreliable network of
utilities
(ii) absence of laws relating to patents, copyrights and intellectual properties
(iii) widespread corruption in the government and other social sectors
(iv) an unstable system of governance
(v) lack of education and absence of a skilled work force
(vi) absence of generally accepted accounting principles
(vii) uncertain economic and financial policies
(viii) non-availability of reliable economic and financial data

Identify the business strategy/policy/definition which is most appropriate in each of Summer

the following situations: 2014, Q6
(i) A leading manufacturer of textile products is considering acquiring an existing fast-
food chain which has outlets throughout the country. It is pursuing a policy of
________.
(ii) Fortune Bank Limited envisages adding 50 new branches to its existing network of

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450 branches in the country. The bank is launching a policy of ________.
(iii) Sunrise Juices Limited manufactures an assorted line of juices, jams and pickles.
The company is in the process of acquiring a fully developed 500 acre fruit and
vegetable farm to meet a significant proportion of its raw material requirements.
Sunrise Juices is pursuing a policy of ________.
(iv) Super Sports is engaged in the manufacture and export of hand-stitched footballs
and pays salaries to its employees according to the number of units stitched during
the course of a week. The employees are paid ________ salaries.
(v) The favourable impact which a well-entrenched brand has on customers
perceptions of quality of the product and would contribute to the future high earnings
potential of the company is known as ________.
(vi) A multinational company follows a policy of manufacturing products and adapting
its marketing strategies to the local environments in the different countries in which it
operates. This multinational company is pursuing a policy of ________.
(vii) Tests designed to evaluate the skills and competency levels of candidates to
perform the jobs actually required of these individuals are called ________.
(viii) The cumulative pool of education, knowledge, skills, expertise and training of the
individual workers in an organisation is known as ________.
(ix) A competitor who aggressively pursues a policy of undermining the status of the
market leader is called a ________.
(x) A process by which a multinational company having a number of subsidiaries in
different countries may make adjustments of foreign currency transactions/balances
among the different subsidiaries is called ________. (10)

Strategy and CSR

HR and Change Management vii, viii, iv

Marketing i, ii, iii, ix, v

International Business vi, x,

This question contained 10 parts of one mark each in which the candidates were given
definitions of various business terms and were asked to correctly identify the
described term. Overall performance in the question was average as most of the
students secured around passing marks. Some students gave more than one choices. It
must be noted that in case there are more than one answers, all answers are
cancelled.

The appropriate business strategy/policy/definition are:

(i) diversification/conglomeration

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(ii) market penetration / market expansion/ market development
(iii) backward integration
(iv) performance based
(v) brand equity
(vi) polycentrism
(vii) proficiency tests
(viii) human capital
(ix) market challenger
(x) multilateral netting

Purex Limited (PL) has considerable experience in its particular line of business and is Summer
considering making direct foreign investments in an African country. Besides the 2014, Q9(a)
political risks, state what other factors PL should consider while making a decision
regarding direct foreign investment in that country. (05)

In this part, the candidates were required to state the factors (other than political
risks) that should be considered while taking a decision as regards foreign direct
investment in an African country. Generally the replies were satisfactory and a
number of candidates were able to obtain good marks. However, some of the
candidates did not try to understand the question and offered vague replies. Some
students also mentioned political risks like import quotas/tariffs, law and order etc.,
whereas it was specifically mentioned in the question that political risks are not
required to be stated.

PL should consider the following factors to determine whether or not it should make
investments in the African country:
(i) the legal, demographic, cultural and technological forces in the African country to
ascertain whether the environment is conducive for making investment in that country,
(ii) the availability of adequate infrastructure facilities in the African country to enable
PL to undertake its business operations satisfactorily,
(iii) the strengths and weaknesses of the local and other foreign competitors in the
African country to evaluate the nature of competition,
(iv) the monetary policies in the African country, availability and access to financial
facilities, stability of exchange rates and the regulations regarding repatriation of
profits,
(v) availability and reliability of economic and marketing data/statistics for estimating
the size of the market and potential for growth,
(vi) tax laws and foreign exchange regulations prevailing in the African country and
special incentives offered to the foreign investors.

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Nova Cosmetics Limited (NCL) considers that there are favourable business Summer
opportunities for its assorted line of cosmetic products due to rise in income levels in 2014, Q9(b)
a number of countries. NCL realises that tax considerations can have far reaching
impact on its policies related to international business operations. List the types of
decisions relating to international business operations where NCL is likely to be
influenced by tax considerations.
Note: List the types of decisions only – explanations are not required. (04)

In this part of the question, the candidates were required to list the types of decisions
related to international business operations which would be influenced by tax
considerations. Very few candidates could give satisfactory replies. Most students did
not read the question carefully and instead of identifying the types of decisions which
are influenced by tax considerations, they listed the various types of tax issues that
are faced by multi-national companies e.g. double taxation and transfer pricing, etc.

The different tax considerations which would influence and impact NCL’s international
business decisions are:
(i) Location of business facilities/operations in countries which offer tax exemptions or
low tax rates.
(ii) Operating forms of business whether to export, enter into licensing, franchising
arrangements, etc. to minimise tax liabilities.
(iii) Structuring of entities for international business operations by way of overseas
subsidiaries, branches or appointment of distributors to obtain tax advantages.
(iv) Policies for determining transfer prices for transactions among inter-group
companies to obtain tax advantages.
(v) Raising financing through equity or debt sources to minimise tax liabilities.

Explain briefly the reasons why certain global corporations consider it essential to Summer
pursue highly centralised decision making strategies to achieve their overall global 2014, Q10
objectives. (08)

The requirement was to provide brief explanation of the reasons because of which
global corporations may adopt highly centralized decision making strategies.
Generally the students could identify one or two reasons only. A large number of
answers were rather vague, generalized in nature and revolved around the
advantages of centralized decision making process in general rather than with
reference to global corporations.

Certain global corporations pursue highly centralised decision-making strategies to

achieve the following objectives:
(i) They sell their products through coordinated market strategies and distribution
channels which consider the world as one market with no differences in consumer

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tastes and preferences. These firms provide quality products at attractive prices to the
customers.
(ii) They launch coordinated financial strategies and implement standardised worldwide
financial controls systems.
(iii) They monitor closely the performances of the individual entities which have far-
reaching implications on the financial standing and profitability of the global
corporation.
(iv) They ensure maximum security and confidentiality of the manufacturing process
involving sophisticated technology which has been developed by the global corporation.
(v) They ensure that the closely integrated subsidiaries perform according to their
assigned targets as shortfall in any one subsidiary can have adverse impact on the
overall group performance.
(vi) They comply with the stringent quality control requirements in highly
environmentally sensitive industries in which any lapse or mishap by any subsidiary can
adversely affect the standing and reputation of the global corporation.

Eastern Company Limited (ECL) is located in Country A and its assorted line of fast- Winter 2013,
moving consumer goods are well accepted in the domestic market. ECL is presently Q3(a)
considering to expand its operations and establish manufacturing facilities in three
overseas countries.
List four different types of factors/influences which would form the basis for
determining whether ECL should adopt policies of product standardisation vis-a-vis
policies of product customisation, in the market environments in different countries.
(06)

According to the situation given in the question a successful local company intended
to expand its operations and establish manufacturing facilities in three different
countries. The candidates were required to list four factors and influences which
would help the company to choose between policies of product standardization and
policies of product customization and to give two examples each of standardized and
customized products.

The factors/influences which would form the basis for determining whether ECL should
adopt policies of product standardisation vis-à-vis policies of product customisation in
markets in different countries are:
(i) If the needs and preferences of customers in the markets in the three countries are
of a homogeneous nature, ECL should adopt policies of product standardization.
Conversely, if the needs and preference in the countries show considerable variations,
ECL should adopt policies of product customization to cater to the needs and
preferences of customers in the different countries.
(ii) If the income levels in all the three countries are more or less the same, ECL should
follow a policy of standardisation of products. However, if there are marked differences

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in the income levels among the countries, a policy of customization of products would
enable ECL to develop products which can meet the requirements of customers in the
target market segments at affordable prices in the different countries.
(iii) If significant economies of scale can be achieved by manufacturing homogeneous
products for the different markets, it would be advisable to adopt policies of
standardisation. However, if the economies of scale are not available, it would be
preferable to adopt policies of product customization according to the economies which
can be obtained in each of the markets.
(iv) If significant advantages of efficiencies in marketing, distribution and after-sales
services can be achieved by adopting uniform policies in all the three countries, it would
be advisable to manufacture standardised products. However, if the promotional
strategies have to be tailored to appeal to the different cultures prevailing in the
different countries, it would be necessary to adopt policies of product customisation for
the different countries.
(v) If it is necessary to face aggressive marketing policies of domestic manufacturers in
different countries, ECL would have to adopt policies of product customisation to
counter the policies of the competitors in the markets in different countries. In the
event the marketing policies of domestic competitors would not have much bearing on
the products of ECL, it would be advantageous to adopt policies of product
standardisation in all the countries.

Give two examples each of products which are usually marketed as: Winter 2013,
Q3(b)
 standardized products
 customized products (02)
The performance was below average. Many candidates did not know the exact
meaning of the terms product standardization and product customization. Many
others gave partially correct answers as they could only cover factors related to
customers e.g. their income levels and preferences. Factors not directly related to
customers such as economies of scale and efficient marketing and distribution were
missed.

Examples:
Standardised products: Lux soaps, Head and Shoulders shampoo, Sony TVs, HP Laptop
computers, etc.
Customised products: McDonald Burgers, Suzuki vehicles, Zong mobile phone services,
etc.

Give three reasons why multinational companies often enter into agreements of Winter 2013,
collaboration with partners in foreign countries to seize certain advantages instead of Q7(b)
operating entirely on their own in these foreign countries. (06)

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The requirement was to give three reasons due to which multi-national companies
enter into agreements with local partners in foreign countries instead of operating
entirely on their own. This was also quite easy and almost all students did well.

Multinational companies enter into agreements with partners in foreign countries to

seize the following advantages:
(i) Obtain country-specific advantages – Differences in cultural, economic and political
conditions may create barriers which may make the entry difficult for the MNC in the
foreign country. The MNC may therefore need to collaborate with a knowledgeable
local partner to establish the asset base quickly on favourable terms.
(ii) Overcome regulatory constraints – Many countries impose restrictions on ownership
of majority shareholding by foreign companies. Moreover, a local investor is better
placed to understand and implement the regulatory requirements, particularly where
the MNC does not intend to make a very major investment.
(iii) Reduce political risks – MNCs are concerned that political and economic changes
would adversely affect the safety of their assets and earnings in foreign countries.
Collaboration arrangements with domestic partners would help to reduce political risks
by limiting their overall investment exposure in such countries.

Briefly state what is meant by the following terms: Winter 2013,

Q11
(i) Human resource management
(ii) Offshore manufacturing
(iii) Behavioural interviews
(iv) Competency-based salary system
(v) Tax havens (10)

Strategy and CSR

HR and Change Management i, iii, iv

Marketing

International Business ii, v

This was a straightforward question which required meaning/definition of five

terms/concepts. The terms Human Resource Management and Competency Based
Salary System were generally well defined
In defining offshore manufacturing, majority of the students simply mentioned
manufacturing in other countries but only few could clearly state the motive and
methodology i.e. awarding contract to produce where labour and/or raw materials
are cheap and then importing them in the country where the firm which awarded the

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contract is located. Many candidates confused it with offshore oil drilling and some of
them incorrectly stated that offshore manufacturing is carried out by establishing
plants outside the country.
Most of the students did not have any idea of the concept of behavioral interviews.
Many students made wild guesses, for example some of them mentioned that in
behavioral interviews, gestures and posture of the interviewees are observed.
Tax havens were better described but some students went to the extreme and stated
that in tax havens there are no taxes.

(i) Human resource management involves planning, organising, directing and

controlling the human resources by placing the right persons in the right places and
providing them with training in order that they make effective contribution towards
achievement of the organisation’s corporate objectives.
(ii) Offshore manufacturing means an arrangement by which a firm in one country
enters into a contract with a foreign-based firm in another country to manufacture its
products or components on behalf of the firm which has awarded the contract.
(iii) Behavioural interviews are conducted to ascertain how the candidate responded to
various real-life job-related situations in the past.
(iv) Competency-based salary system means the employees are paid for the range of
skills and knowledge they provide to the employer, rather than for the positions or jobs
that the employees hold.
(v) Tax havens are countries that have highly generous tax laws to encourage foreign
citizens to conduct their operations in such countries.

Identify the business strategy/policy/definition which is most relevant in each of the Summer
following situations: 2013, Q5
(i) The process through which representatives of management and workers union
negotiate a labour agreement is known as __________
(ii) Promotion of a firm’s brand status and acceptability by increasing customer
perception of its superiority over other brands of similar products is __________
(iii) A form of promotion that links a brand of a consumer product to cultural, social,
sports or other activities of high public interest is known as __________
(iv) A company’s obligation to be sensitive to the needs of all its stakeholders and
create an overall positive impact on the society is known as __________
(v) The approach in which a multinational company assigns the best employees to key
positions in its worldwide operations regardless of their nationalities is __________
(vi) The activities of two or more businesses when brought together create value that
is greater than the value which they can achieve individually is due to the effect of
__________

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(vii) The protection granted by law to intangible assets such as patents, copyrights,
trade marks and authors of books is called __________
(viii) Purchase of all or part of a business from its owners by its managers is called
__________
(ix) Potential changes in political conditions in a country that may cause a company’s
operating performance or financial position to deteriorate are called __________
(x) Implementation of measures to reduce electricity, petrol/diesel and gas
consumption by efficient control and management and also to protect the natural
environment is called __________ (10)

Strategy and CSR vii, ix, x, vi, viii, v

HR and Change Management i

Marketing ii, iii

International Business v

This was an objective type question where 10 different situations were given and in
each case, the students were required to mention the term which could best describe
the given situation. An average performance was witnessed which was
understandable because each situation had a specific answer and only those students
who had good understanding of the topic could answer them. The advice here is that
specific terminology or business jargon should be used in such questions. Other terms
are not acceptable. For example in sub part (i), many students stated Labor Union
Agreement or Labor Management Negotiation whereas the correct answer was
Collective Bargaining.

(i) collective bargaining

(ii) brand positioning
(iii) event related marketing/promotion/sponsorship
(iv) corporate social responsibility
(v) geocentric staffing/orientation/geocentricism
(vi) synergy
(vii) intellectual protection rights
(viii) management buy-out
(ix) political risks
(x) energy conservation

The magnitude of Foreign Direct Investments has increased significantly in recent Summer

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times and the momentum of its expansion continues as an ongoing process. 2013, Q7(a)
Describe any five factors which in your opinion have contributed to the expansion of
foreign direct investments in recent times. (7.5)

The requirement was to describe any five factors which have contributed to the
expansion of foreign direct investments. The performance was above average as
generally the students mentioned the relevant points. However, a number of students
mentioned incorrectly that relaxation of custom duties also provides impetus to the
growth of foreign direct investment. In fact, it is to overcome the unfavourable impact
of high custom duties, that companies make direct investments in host countries.

The factors which have contributed towards the expansion of foreign direct investments
in recent times are:
(i) Expansion of global markets and competition to secure business globally require
firms to operate simultaneously in several countries by making direct foreign
investments in the host countries.
(ii) Foreign direct investments allow the firms to gain first-hand advantages of the
prevailing and emerging business opportunities in the host countries.
(iii) Foreign direct investments enable firms to overcome barriers to trade and operate
abroad as domestic entities without the unfavourable impact of customs duties, tariffs
and other import restrictions.
(iv) Foreign direct investments are channeled in business opportunities to seize
advantages of low costs of labour, raw materials and energy in the host countries and
ensure their uninterrupted supplies.
(v) Foreign direct investments in manufacturing facilities in host countries create a
perception of locally manufactured products among the buyers.
(vi) Various countries offer attractive incentives such as tax holidays and facilities of
special export/industrial zones to companies to attract them to make foreign direct
investments.

State three advantages of market-value based transfer pricing transactions among Summer
inter-group companies. (4.5) 2013, Q7(b)

The advantages of market-based transfer pricing transactions among inter-group

companies were well understood and most of the students secured good marks in this
part of the question.

Market-value based transfer pricing transactions among inter-group companies offer

the following advantages:
(i) The selling entity would have to offer good quality products as the buying entity has
the option to purchase the goods/services from other sources. Consequently, there
would be all round improvement in the levels of efficiency within the transacting

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entities of the group.
(ii) Market-value based transfer pricing are free from administrative biases and help in
accurate measurement of performance of individual entities.
(iii) Since the individual entities function as independent cost/profit centers, the
chances of internal disputes over determination of prices of inter-company transactions
would be eliminated.
(iv) The tax authorities would more readily accept the tax returns filed by the different
entities based on market-value based transfer pricing transactions.

Products of leading multinational companies have firm footholds in the markets in Summer
several countries around the world. 2013, Q8
State six strategic factors which contribute towards the success of these companies in
such highly diversified business conditions and market environments. (09)

The question was about factors which contribute towards the success of leading multi-
nationals in highly diversified business conditions. This was an easy question. Majority
of the students had a clear idea of those factors and secured good marks. However,
some students identified the factors in 3 or 4 words and did not give any description.
Some students gave very general and irrelevant points such as proper supervision,
compliance with regulatory requirements, licencing and registration, compliance
audits and departmentalization etc.

The strategic factors which contribute towards the success of leading multinational
companies in several countries having diversified business conditions and market
environments are:
(i) These companies have well-defined corporate missions which are important part of
their business strategy formulation process and are implemented at all levels in their
organisational hierarchy.
(ii) These companies have strong and competent global business leadership with sound
knowledge of the business environment in the countries in which they operate.
(iii) These companies view the entire world as a potential target market and often adapt
products to cater to the needs of the markets in different countries. The MNCs also
launch global as well as country-specific advertising/promotional campaigns to attract
and create satisfied customers.
(iv) These companies have created internationally recognised trademarks and brands
which are their most valuable assets. Customers in their target markets have strong
brand preferences and loyalties and purchase the products by their popular brand
names.
(v) These companies have developed effective distribution systems which deliver the
products to the different markets located in the cities as well as in the remote villages.
(vi) These companies have abundant financial resources which are allocated intelligently

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in countries in which they can earn high returns on investment.

Identify the strategies/policies/objectives which are being pursued in each of the Winter 2012,
following cases: Q4
(i) Poshak Fashions (PF) are designers and manufacturers of superfine cotton
garments and have their two outlets in Karachi and Lahore. PF produces only limited
quantities of their exclusive designs of garments for the narrow niche market of the
most fashion-conscious customers. PF introduces new designs of garments for the
coming season and the unsold inventory at the end of the previous season is sold at
lower prices to other retailers in the country after removing PF’s prestigious labels. PF
is pursuing a __________ market strategy.
(ii) Super Beverages believes that the world is one big market for its products and its
various subsidiaries and divisions pursue a uniform marketing strategy for sale of its
products in different countries. Super Beverages has adopted a __________ strategy
for marketing its products in different countries.
(iii) Sarmad Group is a pioneer in the textile industry in the country. The second
generation entrepreneurs of this Group have ambitious plans to launch new ventures
in telecommunications, electronic media and real estate development. The Group is
now seeking to follow __________ strategy.
(iv) To press for their demands, employees of Citizens Bank Limited have decided to
work strictly according to the terms of their contract of employment and refuse to
perform any extra tasks, resulting in slow down of banking services and causing
inconvenience to customers. The employees of Citizens Bank Limited are pursuing
__________ policy.
(v) Good Meats has recently established several retail outlets to sell selected cuts of
choice meats and establish its own brand name in a high growth market before new
competitors enter this market and set up their business on similar lines. Good Meats
wants to seize the __________ advantage of this market.
(vi) Neptune Chemicals, a manufacturer of industrial chemicals, has established
independent units who would be responsible for development of their own marketing
strategies within the company’s overall market and customer focus to be able to serve
the needs of the various categories of customers more efficiently. The independent
units are __________ of Neptune Chemicals. (06)

Strategy and CSR

HR and Change Management iv,

Marketing iii, v, vi, i

International Business ii,

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In this question, six brief situations were given and the students were required to
identify the types of strategies, policies or objectives which the organization was
pursuing, in each of the given situations.
An average response was seen as most students were able to give 3 or 4 correct
answers. In response to part (ii) the appropriate answer was Global; but Geocentric
was also acceptable. However, many students wrote ethnocentric. Majority of the
students had no idea of the concepts of ‘Work to rule’ and ‘First mover advantage’.
Many students probably tried to use “write what you know” approach and just
identified whether the given situation reflected a policy, a strategy or an objective.
Most students were not familiar with the technical business terminology or jargons.
Specialized terms capture the complexity and specificity of business concepts. No other
words can encapsulate their meaning and if they are replaced by normal
“transliterated” words, then that meaning is lost. Many students gave explanatory
footnotes in support of their answers which were not required and resulted in wastage
of precious time. There were some students who generated multiple answers; such
answers are not acceptable.

(i) Market skimming

(ii) Global
(iii) Conglomerate or Diversification
(iv) Work-to-rule
(v) First mover advantage
(vi) Strategic Business Units

Explain briefly the factors which have contributed to the creation and significant Winter 2012,
expansion of Global Markets during the preceding 20-25 years. (06) Q6(a)

Most of the students had fair idea of the factors which have contributed to the
creation and significant expansion of Global Markets. Usually they mentioned the
correct points. However, some of them also included points which were not relevant
such as cheap labour and raw material, growing competition, absolute and
comparative advantage, increase in demand and increase in number of wealthy
people in the developing countries, etc. Many students mentioned the relevant points
such as greater specialization but were unable to clearly spell out as to how it results
in greater globalization.

The factors which have contributed to the creation and significant expansion of the
Global Markets are:
(i) Specialisation of Products – Certain countries have achieved high degrees of
specialisation in the manufacturing of specific types of goods which have worldwide
demand. These products are promoted on a worldwide scale through aggressive

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advertising campaigns to create and expand their global markets.
(ii) Reduction in tariff barriers and relaxation of direct foreign investment regulations
– MNCs have been able to increase their exports significantly and expand global
markets as policies of liberalisation of trade restrictions and relaxation of foreign
investment regulations have received worldwide acceptance.
(iii) Economies of Scale – Access to global markets allow MNCs to obtain benefits of
economies of scale which are achieved by manufacturing large quantities that can be
sold in several markets in different countries.
(iv) High R&D expenditures on Products – A number of knowledge-based products
involve exceptionally large R&D costs which can be incurred only in countries with
substantial financial resources and technical human resource base. Worldwide demand
for such R&D-intensive products is responsible for creation of global markets for these
types of products.
(v) Reduction in Communication and Transportation Costs – Efficient and fast means of
communications and reduction in transportation costs have provided considerable
impetus to the growth of global markets for a large number of products

State the main reasons why leading companies obtain cross-border financing including Winter 2012,
equity, debt and bank financing in different countries. (04) Q10(b)

The candidates were supposed to identify the main reasons why leading companies
obtain cross-border financing. The performance was quite poor. Most of the students
could identify low interest cost as the only reason. Other reasons such as exchange
liberalization, broad based debt and equity markets, etc. were rarely covered.
Surprisingly, some students also mentioned reasons on account of which cross-border
financing is discouraged such as risk of exchange fluctuations and exchange controls.

Leading MNCs engage in international or cross-border financing and raising funds,

including equity, debt and bank financing in different countries:
(i) to obtain financing at overall lower costs, comprising of interest costs and impact of
any adverse fluctuations in exchange rates.
(ii) because of liberalization of foreign exchange regulations which allows easy and free
movement of capital in the important financial centers.
(iii) because financing can be obtained conveniently in different countries in which
MNCs conduct significant business operations.
(iv) fund raising in certain countries is easier because the debt and equity markets there
are broad-based and have greater market depth.
(v) to seize strategic advantages of their presence and relationships in important
financial centers in many countries.

All leading global business organisations possess certain distinctive capabilities and Summer

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competitive advantages which set them apart from those companies whose 2012, Q6
operations are confined within their limited geographical areas.
Describe at least six core capabilities which are observed in leading global
organisations regardless of their special lines of business. (09 marks)

This question pertaining to core capabilities of leading global organizations was not as
well answered as it should have been. Students incorrectly perceive global
organizations as trouble-free and limitless entities, whereas practically every
organization has its strengths and weaknesses. Other observations are as follows:
• Most of the students gave the difference between local companies and global
companies which was not asked in the question.
• Many students listed a large number of “Capabilities” supposed to be possessed by
good organizations, whereas they were required to mention the “Core Capabilities”.

The core capabilities which are commonly observed in leading global business
organizations are:
(i) In-depth knowledge of the organisation’s products/services, their strengths and
special customer service skills.
(ii) Highly developed marketing skills by way of insight of consumer behavior, market
segments, share of the market and distributions channels.
(iii) Capacity for continuous innovation and research which is a prerequisite for
maintaining and consolidating of their global leadership status in a highly competitive
business environment.
(iv) Creation and retention of a pool of talented and motivated management team and
work force aligned with the strategic objectives of the organisation.
(v) Financial resourcefulness with the capability to utilize the funds effectively with
sound planning and control structures.
(vi) Assessment of the strengths and weaknesses of the competitors in the different
territories in terms of their market share, competitive advantages and anticipated
business strategies.

Multinational Corporations (MNCs) which have widely dispersed operations in several Summer
countries often prefer to centralise their cash management functions and conduct all 2012, Q10(a)
their major cash operations from pools located in internationally recognised financial
centres. This policy requires each subsidiary to retain minimum cash for its own
transaction purposes and remit all excess funds to a central cash depository.
Explain the advantages which MNCs seek to achieve through centralised cash
management policies and pooling of all excess cash balances at prominent
international financial centres. (06 marks)

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Highly centralized treasury function allows automation of basic processes and
information flows, sophisticated risk management techniques and highly specialized
functional competencies. Most of the students seemed to possess only basic
understanding of the issue. Instead of mentioning the key strategic factors, most
answers revolved round earning interest and saving financial costs.

Multinational Corporations seek to achieve the following advantages through policies of

centralised cash management and establishment of cash pools at prominent financial
centers:
(i) Security and Convenience: Centralised cash pools are maintained at major financial
centers which offer advantages of political and economic stability, convertibility of
currencies, access to international communication facilities and well defined legal
procedures. The pooling of cash funds at such locations provides security and
convenience of prompt transfer of funds from and to the subsidiaries.
(ii) Availability of Information: Location of cash pools at major financial centers provide
advantages of immediate access to latest information of the relative strengths and
weaknesses of various currencies, fluctuations in rates of return on financial
instruments in various currencies and ease of execution of financial transactions.
(iii) Holding of Minimum Surplus Funds for Precautionary Purposes: The pooling of
funds at centralised locations in excess of the transaction requirements of the
subsidiaries enables the MNCs to reduce the overall size of the cash pool without any
loss of level of protection to any individual subsidiary.
(iv) Reduction in Interest Costs: The large size of the pooled funds enables financial
managers to negotiate borrowings most effectively and thus reduce borrowing costs.
(v) Acquisition of Services of Competent Personnel: The funds can be managed by
highly competent financial managers whereas individual subsidiaries may not be in a
position to acquire the services of such executives.

Give five reasons why the process of Globalization has assumed great importance in Summer
the present business environment. (05 marks) 2012, Q10(b)

Performance in this question was extremely poor. Instead of providing reasons why
globalization has assumed importance in the present environment a great number of
students mentioned the advantages of globalization, which were not required.

Globalization has assumed great importance in the present business environment due
to the following reasons:
(i) Adoption of free market economic policies by increasing number of countries has
created opportunities for capital investment and significant economic growth.
(ii) Rapid improvement in communications have reduced costs of transportation and
facilitated quick movement of goods, services and financial resources.

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(iii) Technological advances have made it possible to manage and control business
operations in different countries through electronic mail, internet and frequent travel
by key management and other professional staff.
(iv) The development of the emerging markets has expanded the demand for products
and services worldwide.
(v) Global companies seek competitive advantages by locating production facilities of
components and parts in those countries where the costs are the lowest.

Explain what is meant by Geocentric Orientation in the context of global business Winter 2011,
companies. (05 marks) Q6(a)

In this question on Geocentric Orientation, most of the students wrote “think globally
and act locally” but the explanations that followed this sentence were mostly
incorrect, irrelevant or vague. Some students got totally confused and discussed the
concept of ethnocentric orientation.

A Geocentric orientation is an approach followed by companies having global scale of

operations. The management of such companies considers a worldwide focus both at
the headquarters and also in the host countries to obtain optimal advantages. Major
issues such as raising of funds, building of plants, research and development are
centralised in the entire global perspective. At the same time, the company also
considers designing its products and services to cater to the local differences in tastes
and cultures to add maximum customer value and achieve optimal results.

In your opinion what important factors have led leading Japanese companies to Winter 2011,
establish automobile assembling/manufacturing plants in selected developing Q9(a)
countries?
Identify five factors and substantiate them with brief explanations. (05 marks)

This was a very easy question and most students were able to secure high marks.
However, many students ignored the fact that each factor consisted of one mark only
and offered very detailed explanations.

The leading Japanese companies have established automobile assembling or

manufacturing plants in selected developing countries due to the following reasons:
(i) The developing countries are witnessing significant economic growth and increase in
population which have created very large markets for various types of vehicles.
Establishment of automobile assembly/manufacturing plants locally would fulfil the
demand/supply gaps in these countries.
(ii) Labour and other manufacturing costs are on the high side in Japan and the high
prices of imported vehicles from Japan would be beyond the reach of a large segment of
the market.
(iii) The strong Japanese Yen makes the price of imported vehicles very expensive in the

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developing countries and would restrict the size of the market
(iv) Transfer of technology and creation of job opportunities are viewed favourably by
the governments in the developing countries and they offer liberal tax concessions to
the Japanese companies to establish assembling/manufacturing facilities in their
countries
(v) The domestically assembled/manufactured vehicles of various types and models are
adapted to meet the local requirements in terms of prices and their suitability for the
particular developing countries.

Describe briefly the Political Factors which should be taken into consideration by a Winter 2011,
multinational corporation while evaluating a decision to make substantial direct Q9(b)
investment in a foreign country. (03 marks)

This part required description of political factors to be taken into consideration by a

multinational, while making direct investment in a foreign country. The performance
was reasonable although many students also included financial/commercial factors.
Again, a lot of duplication of points was also witnessed in both parts of this question.

The following Political Factors should be taken into consideration by a multinational

company while evaluating a decision to make substantial direct investment in a foreign
country:
(i) Form of the Government and its Stability - a government having the support of its
citizens and enjoying political stability would provide continuity to its economic and
financial policies which would be beneficial for MNC.
(ii) Attitude towards Private and Foreign investment - a government which pursues
policies of encouragement towards private investment, including foreign investment,
would be considered favourably as against policies which pursue government
ownership of business enterprises.
(iii) Relations with other countries - a country which has good relations with other
countries would be considered favourably as it would provide stability and sustained
long-term operations for MNC’s business

Distinguish between a global business strategy and a multi-domestic/adaptive Summer

business strategy. Identify a real life example of each strategy and give reason for 2011, Q8(a)
your choice. (06 marks)

Majority of the students appeared to be confused while distinguishing between a

global business strategy and a multi-domestic/adaptive business strategy. Most of
them wrote that companies pursuing global business strategies ‘think globally and act
locally’! Multi-domestic strategy was defined as a firm that serves the local market
only and does not do business globally. All such students were apparently placing
reliance on guesswork and need to consult good books.

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A global business strategy specifies a standardized worldwide product and marketing
strategy by which a firm sells the same product in essentially the same manner
throughout the world by highlighting its main features such as quality, specifications,
warranty, packaging, etc.
A multi-domestic or adaptive business strategy is one in which the firm treats each
market in a different manner and develops products and marketing strategies which
appeal to the varying customs, tastes and buying habits in the different national
markets.
Real Life Example of a Global Business Strategy - photocopiers, medical equipments,
chemicals, cement, steel, etc are not sensitive to differences in cultures and are sold in
different markets highlighting similar features and attributes such as quality and
convenience, etc.
Real Life Example of Multi-domestic or Adaptive Products strategy - Food products
such as fast foods, apparel and clothing, cosmetics, etc. which are adapted to meet the
consumption habits, tastes and cultural sensitivities and unique requirements of the
different markets.

What are the key financial decisions which should be made by the management while Summer
contemplating direct investment in a foreign country by formation of a subsidiary 2011, Q8(b)
company? (05 marks)

In this question, the students were required to list the key financial decisions that need
to be made by MNCs contemplating direct investment in a foreign country through a
subsidiary company. Most of the students did not appreciate that their answers
should be limited to financial considerations only. Consequently, many irrelevant
points were mentioned, whereas relevant points were missed.

The key financial decisions which should be made by the management while
contemplating investment in a foreign subsidiary company are:
(i) Should the parent company invest in the subsidiary as a wholly owned company or
should the parent company retain only a majority interest in the subsidiary?
(ii) If the parent company decides to retain only a majority interest, then should the
subsidiary raise equity through a resourceful local investor in the host country or should
it make a public offering of its shares?
(iii) Should the subsidiary be financed substantially through equity investment or should
it raise debt financing to meet a large proportion of its capital costs?
(iv) Should the subsidiary make the borrowings in the local currency of the host country
or in any other currency to avail benefits of exchange fluctuations?
(v) Should the subsidiary distribute a large portion of its profits as high dividends or
should it retain a substantial portion of its earnings to meet the cost of its expansion
strategy?

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(vi) Should the subsidiary raise the bulk of its working capital requirements through
borrowings from banks or should it place heavy reliance on trade credit?

A multinational company which has its headquarters in the UK pursues a strategy of Summer
exercising very close control and centralization of all important decision-making 2011, Q9
processes of all of its four overseas subsidiary companies.
Identify four factors which in your opinion may have influenced the MNC’s strategy of
implementing highly centralized decision making policies for its subsidiary companies.
(10 marks)

This was one of the most poorly attempted question. Most students mentioned that
an MNC adopts a policy of centralized decision-making only when it wishes to exercise
close control over the subsidiary companies. Other important points like safeguarding
access to specialized technology and highly interdependent nature of operations were
mentioned by very few candidates.

The factors responsible for the MNC’s policy of close control and centralized decision
making for the subsidiary companies are:
(i) Large size of the subsidiary companies and Substantial Capital Investment - Due to
the large size of the individual entities and substantial investment of the MNC in the
subsidiary companies, their performance can have far-reaching implications on the
financial standing and profitability of the MNC.
(ii) Access to technology and manufacturing process - The manufacturing process in the
subsidiary companies involves sophisticated technology which has been developed by
the MNC at a very high R&D cost. The technology is closely-guarded and the parent
company wants to ensure maximum security and confidentiality of this technology.
(iii) Operations of the subsidiary companies are closely integrated and inter-
dependent - The operations of the subsidiaries are closely integrated and
interdependent and unsatisfactory performance of any one company can have adverse
impact on the performance of other group companies, including the MNC itself. There is
therefore the need for more centralized control and supervision of the subsidiaries .
(iv) Stringent Targets - If the products manufactured by the subsidiaries have to
conform to stringent quality control requirements stipulated by the parent company or
if the operations are of a highly environmentally sensitive nature, then the parent
company would want to exercise more close control of the subsidiary companies. Any
lapse or mishap by the subsidiary can have far-reaching adverse impact on the standing
and reputation of the parent company.

Briefly discuss the following: Summer

2011, Q11
(a) Business Ethics (2.5 marks)
(b) Environmental Scanning (2.5 marks)

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(c) Tactical Planning (2.5 marks)
(d) Backward Integration Strategy (2.5 marks)

Short notes were to be written on four different topics. The comments are as under:
Business Ethics: Some students confused this concept with that of corporate social
responsibility. Majority of the candidates emphasized on rules and regulations. A
reference to values and culture would have been more appropriate.
Environmental Scanning: Most of the students were not clear about this concept and
described it as an exercise to control environmental pollution and keeping the world
clean!
Tactical Planning: Many candidates defined it as strategic level decision making and
planning and implementation at management level, although it is quite the contrary.
A number of students incorrectly described it as a medium term plan.
Backward Integration Strategy: Most of the students gave appropriate definition of
the concept with relevant examples. However, very few students explained the
situations in which this strategy is pursued.

(a) Business Ethics is a code of moral principles that management and employees follow
with respect to what is right and what is wrong from the standpoint of the
organization’s dealings and interactions with its stakeholders. Besides generally
acceptable values and norms, the organizational culture and internal policies of
individual organizations play a very important role in determining the ethical policies
that are followed in the company. The guidelines for proper ethical conduct are
embodied in the company’s Formal Code of Ethics.
(b) Environmental Scanning is the process of collecting information about the external
marketing environment in order to identify and interpret potential trends. It includes
analysis of collected information to anticipate whether the trends represent
opportunities or threats. Environmental scanning includes assessment of political
developments, economic trends and social and cultural influences which would affect
the organization.
(c) Tactical Planning refers to the day-to-day plans regarding implementation of the
different work activities required to achieve the objectives of the strategic plans.
Tactical Plans pertain to the current and short-term activities performed by low-level
managers which are nevertheless of vital importance for implementation and
achievement of the objectives of the overall strategic plans.
(d) Backward Integration Strategy seeks the ownership or increased control of the
firm’s sources of important raw materials and other critical inputs and supplies.
Backward integration strategies are pursued in situations where the suppliers are
unable to adhere to the buyers specifications of quality, or are unreliable in meeting
their commitments or are few in number and dictate unreasonable terms or charge
exorbitantly high prices to take advantage of the buyers who are heavily dependent on
the inputs from these suppliers.

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Strategy and CSR c, b, a

HR and Change Management

Marketing d

International Business

State the situations in which an MNC would prefer to operate in a foreign country as a Winter 2010,
branch instead of establishing a subsidiary company. (04 marks) Q1(b)

Establishment of branch operations instead of an overseas subsidiary:

Students need to understand the difference between incorporating a branch in a
foreign country and an overseas subsidiary. A branch is simply a part, division or
section of an entity that is set apart to undertake certain tasks or responsibilities in
order to carry on business and derive revenues in a foreign country. An overseas
subsidiary however, has a separate legal and corporate existence and is not a part of a
larger entity with at least 50% shareholding of the parent company.
Students were unable to score high marks in this part as they mostly mentioned
benefits like cost savings and lesser legal formalities in case of establishing a branch.
The tax implications and long term benefits were not touched upon.

It would be advantageous to establish branch operations in a foreign country instead of

an overseas subsidiary company in the following situations:
(i) If the foreign business is not expected to be profitable in the initial years and
therefore the losses of the subsidiary company can have a negative effect on the image
of the MNC.
(ii) If the legal and accounting formalities of the branch operations are more simple vis-
à-vis those involved in a subsidiary company.
(iii) If the MNC does not intend to have a long term presence in the foreign country, it
would prefer to establish branch operations.
(iv) If the amount of investment involved in the foreign country is of a nominal amount
and it may be advisable to set up branch operations instead of a subsidiary company.
(v) If it is advisable to have a low operating profile to achieve the business objectives.

Identify the business strategy/policy/tool which an organisation is pursuing in each of Winter 2010,
the following situations: Q3
(a) In 1990, Sony launched the first High Definition (HD) TV in the market at a price of
$43,000 per set. These TV sets were purchased by customers who could afford to pay
the high price for the new technology. After reaping the maximum profits and
recovery of the sunk R&D costs, the price was gradually reduced in 1993 to $ 6,000 for

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a 28” TV set to attract new customers. This strategy is called __________.
(b) The management tool that enables a firm to classify its range of products
according to their current market share and expected growth is called __________.
(c) The assessment tool used to compare and identify the variance between a firm's
current market coverage and potential market opportunities for its products is called
__________.
(d) A company which has capabilities to manufacture a complete line of superior
quality ball bearings for a wide range of original equipment manufacturers and
industrial users is pursuing a strategy of __________.
(e) If a company engaged in the textile manufacturing business acquires majority
holdings in a sugar mill, a motor car manufacturing plant and a private airline; it is
pursuing a __________ strategy.
(f) The chief executive officer who makes alternative plans to deal with emergencies
or unexpected situations prior to their occurrence is pursuing a __________ strategy.
(g) A firm uses different brands of essentially the same product to target different
market segments is pursuing a __________strategy.
(h) A bank which strives to develop better understanding of the customer’s needs and
satisfy them to create customer loyalty is adopting a policy of __________.
(i) A method of demand forecasting in which a firm markets its new products in a
limited geographical area to ascertain consumer response and from this sample
develops projections of the size of market over a larger area is called __________.
(09 mark)

Strategy and CSR f,

HR and Change Management

Marketing h, i, b, c, d, e, g, a

International Business

Students’ knowledge of various business strategies was tested through this question.
This style of testing the knowledge should be encouraged. Few students scored well,
others just did guess work. This shows that concepts are just skimmed through and
students do not make any effort to practically understand the strategies.

The business strategy/policy in each of these situations is:

(a) Market Skimming Pricing Strategy
(b) BCG Matrix
(c) Gap Analysis

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(d) Product Specialization
(e) Conglomerate Diversification or Conglomerate Expansion Strategy
(f) Contingency Planning Strategy
(g) Multi-brand Strategy
(h) Relationship Marketing
(i) Test Marketing

List the following methods of payment for the imported products which are most Winter 2010,
advantageous from the perspective of an importer in descending order. Q5(a)
(i) Open Account
(ii) Sight Letter of Credit
(iii) Consignment
(iv) Usance Letter of Credit (02 marks)

Four methods of payment against imports were given. These had to be arranged in
order of preference for the importer in descending order. It was felt that students
were not sure about the meaning of descending; so many answers were given in
reverse order which resulted in loss of easy marks.

The methods of payment in the order of preference for the importers are:
(i) Consignment
(ii) Open Account
(iii) Usance Letter of Credit
(iv) Sight Letter of Credit

State six constraints which in your opinion act as impediments towards attracting Winter 2010,
foreign investments in an underdeveloped country. (03 marks) Q5(b)

Students had to list the obstacles in attracting foreign investment in underdeveloped

countries. There are so many factors that make up this answer, some are: corruption,
instability of government & its policies, inflation, lawlessness etc. The question was
mostly attempted well.

The constraints which act as impediments towards attracting foreign investment in an

underdeveloped country are:
(i) Poor infrastructure facilities of roads and communications.
(ii) Currency depreciation of the underdeveloped country.
(iii) High costs of energy inputs and their unreliable availability.

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(iv) Absence of laws relating to patents, copyrights and intellectual properties.
(v) High Risk of political instability in the country.
(vi) Widespread corruption in the government and other social sectors.
(vii) Lack of education and non-availability of a skilled and competent work force.
(viii) Absence of generally accepted accounting principles.
(ix) Uncertain long-term economic and financial policies.

List four advantages of adopting market-based transfer pricing policies. (04 marks) Winter 2010,
Q5(c)

The advantages of market based transfer pricing, asked in this question are: fair
pricing, competition between depts., resulting in improved efficiency, tax benefits,
easy performance evaluation etc. Most students could mention one or two points
only.

The advantages of market-based transfer pricing policies are:

(i) The individual units would achieve high level of efficiency as they can negotiate most
favourable market-based prices as if they were independent units.
(ii) The selling unit would make efforts to improve the quality of the products in
accordance with the requirements of the purchasing unit.
(iii) The performance of the individual units can be evaluated more objectively.
(iv) The tax authorities would accept more favourably a market-based transfer pricing
policy.

A well-established and successful Chinese company engaged in the business of Winter 2010,
manufacturing of a wide range of home appliances such as refrigerators, washing Q6(a)
machines, microwave ovens and assorted juicers and blenders intends to launch its
products in Pakistan. The Company’s management is of the opinion that its products
have significant cost and quality advantages and can capture 4-5 percent share of
Pakistan’s market in 5 years.
Identify and list at least twelve key parameters which should be considered by the
company for an objective evaluation of the Export Market Potential. (06 marks)
Note: Only list the key parameters – explanations are not required.

The easiest question of this paper and a golden opportunity to score quick marks.
There are numerous factors which a Chinese company would reflect on before going
ahead with the decision of whether or not to export. Almost all students secured
atleast passing marks in this part of the question.

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Current Market Size: Economic Stability:
(i) Population Size and Growth (xi) Balance of Payments Position
(ii) GDP Size and Growth (xii) Taxation Policy
(iii) Domestic Production of Appliances (xiii) Monetary and Trade Policy
Regulations
(iv) Volume of Import of Appliances
(v) Sources of Import of Appliances

Market Accessibility: Miscellaneous :

(vi) Import duties and tariffs
(vii) Existing distribution channels
(viii) Pricing methods and credit terms
(ix) Promotional and advertising
practices
(x) Resourcefulness of potential
distributors
(xiv) Non-tariff barriers
(xv) Attitude towards Chinese products
(xvi) Political stability
(xvii) Cultural differences within the
country
(xviii) Level of education

Some companies enter into Licensing arrangements with the overseas companies as Winter 2010,
an alternative to direct exporting. Identify the advantages that such companies seek Q6(b)
to achieve by following this strategy. (05 marks)

This question asked the benefits availed by the licensor by entering into a Licensing
Arrangement. Most common error here was that students gave the benefits availed
by the Licensee instead of the Licensor. This usually happens when students hurry to
answer after reading two three words of the question. It is advisable to take at least
the initial five minutes to just read the paper CAREFULLY before attempting to answer
it.

Companies enter into Licensing Arrangements with overseas companies instead of

direct exporting to obtain the following advantages:
(i) Direct Exporting may be unattractive because of tariffs, quotas or other import
restrictions in overseas markets.
(ii) Licensing may allow fairly rapid penetration of overseas markets.
(iii) Licensing does not require substantial financial resources.
(iv) Political risks are reduced since the licensee is likely to be a local company.
(v) Local production may be the only feasible option in the case of bulky products such
as cement and flat glass.

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Identify and explain briefly six factors which have contributed to the significant Summer
increase in importance of International Trade in the preceding 3-4 decades. (09) 2010, Q3(a)

Comments not available.

The factors which have contributed to the increase in importance of International Trade
in the preceding 3-4 decades are:
(i) Reduction in tariffs, quotas, exchange controls and liberalization of trade and
investments have resulted in making the imported products competitive in local
markets.
(ii) Phenomenal improvement in communication and transportation technologies have
resulted in rapid movement of goods and consequent reduction in transportation costs.
(iii) Development of free-trade zones such as European Union and North American Free
Trade Agreement have resulted in increase in international trade owing to preferential
movement of goods and dismantling of high tariff regimes.
(iv) Global standardization and worldwide brand building with local adaption have
created significant market opportunities in different countries.
(v) Substantial expenditures have been incurred on R&D and standardization of
manufacturing and marketing techniques by global companies in industries such as
manufacturing of pharmaceutical products, energy development, telecommunications,
fast food, etc and such companies seek opportunities to apportion these costs to
markets in different countries.
(vi) Important raw material exporting countries now have a growing class of affluent
citizens and foreign residents which have resulted in the creation of substantial markets
for import of vehicles, construction materials, equipment, edible products and luxury
goods.

Accurate Engineering Limited is a company located in Europe and is engaged in the Summer
business of manufacturing a wide range of high precision metallurgical components 2010, Q8(a)
for the automobile, medical equipment and miscellaneous engineering industries. The
Company’s customers are sensitive to quality and require components conforming to
most stringent tolerance standards. The Company is presently incurring high labour
costs and is considering a proposal to locate a portion of its facilities in Asia to achieve
cost economies.
Narrate at least six different types of Political Risks which should be considered by
Accurate Engineering Limited while evaluating an investment involving substantial
capital with long-term implications. (06)

Comments not available.

The different types of Political Risks which should be evaluated by Accurate Engineering

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Limited are:
(i) The assets may be nationalized or expropriated by the government of the host
country.
(ii) The Asian country may impose stringent exchange control restrictions which would
make it difficult to repatriate the profits and investments.
(iii) The country may face domestic instability such as revolution, social and political
unrest and terrorist activities which would be detrimental to the interests of Accurate
Engineering Limited.
(iv) The country may be involved in conflict, disputes and war with other countries
which would cause disruptions in business.
(v) Deterioration of relationships between the investor country and the country in
which the investment is proposed would pose difficulties in the business operations of
Accurate Engineering Limited.
(vi) Frequent changes in the government with far reaching shifts in its policies.
(vii) Risk of sovereign default by the host country.
(viii) Maintenance of the tolerance standards, relaxation in any way could impact the
demand.

A Multinational Corporation has subsidiaries in several developing countries with Summer

majority shareholdings in each of them. The MNC pursues a policy of centralized 2010, Q8(b)
financial decision making and the subsidiary companies are required to retain only
minimum balances to meet their immediate operating requirements and transfer
surplus funds to the parent company.
List various advantages the MNC seeks to achieve by pursing such a centralized
financial decision making policy. (06)

Comments not available.

The MNC seeks to obtain the following advantages by pursuing a centralized financial
decision making policy:
(i) The parent Company has superior fund management skills which are not available in
the subsidiaries.
(ii) The risks of losses on account of devaluation in the currency of the host countries
are minimized.
(iii) The funds can be promptly invested in avenues which offer optimal returns.
(iv) The risks of expropriation of funds by the governments of the host countries are
reduced considerably.
(v) The pooling of funds can help to implement a more coordinated and effective overall

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fund management strategy.
(vi) The parent company can obtain facilities on more favourable terms from the
bankers due to the substantial size of the pooling of funds.

In your opinion, what types of complexities are generally encountered by parent Winter 2009,
companies in the planning and control of operations of their foreign subsidiaries? (06) Q8

Comments not available.

The types of complexities generally encountered by parent companies in the planning

and control of operations of their foreign subsidiaries are:
Physical and Cultural Distances
The geographical and cultural distances separating the parent company increases the
duration, expenses and barriers in communications between the headquarters and their
foreign subsidiary companies and creates difficulties in the planning and control
process.
Diverse Economic Conditions
The parent company has to adjust operations to the situations prevailing in the
countries in which the subsidiary companies are located. Differences in size of the
market, nature of competition, type of the products, labor costs and currency
implications render the tasks of setting standards and evaluating performance of
foreign subsidiaries extremely complicated.
Uncontrollable Factors
Planning and control is effective only in situations when timely corrective actions can be
taken in the event of deviations in performances. Corrective action may not produce
positive results because many foreign subsidiaries operate in conditions which are very
different from those of the parent company.

List the following steps involved in the operation of a typical Letter of Credit in their Winter 2009,
logical order of sequence. Q12(a)
(i) The exporter’s bank endorses the documents (bill of lading/airway bill) and delivers
them to the importer’s bank.
(ii) The importer’s bank pays the proceeds to the exporter’s bank.
(iii) The importer obtains the bank’s promise to pay the specified amount on behalf of
the importer.
(iv) The exporter ships the goods and obtains the Bill of Lading/Airway Bill.
(v) The exporter delivers the documents to his banker.
(vi) The importer’s banker promises the exporter to pay the specified amount on

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behalf of the importer. (06)

Comments not available.

The steps involved in the operation of a letter of credit in their logical sequence are:
(i) The importer obtains the bank’s promise to pay the specified amount on behalf of
the importer.
(ii) The importer’s banker promises the exporter to pay the specified amount on behalf
of the importer.
(iii) The exporter ships the goods and obtains the Bill of Lading / Airway Bill.
(iv) The exporter delivers the documents to his banker.
(v) The importer’s bank pays the proceeds to the exporter’s bank.
(vi) The exporter’s bank endorses the documents (bill of lading/airway bill) and delivers
them to the importer’s bank.

Identify five advantages which a multinational corporation expects to achieve by Winter 2009,
establishing manufacturing facilities in foreign countries. (05) Q12(b)

Comments not available.

The major advantages of establishing manufacturing facilities in foreign countries are:

(i) To utilize cheap raw materials, energy and human resources.
(ii) To achieve economies of large-large production opportunities available in certain
countries.
(iii) To eliminate or achieve economies in costs of transportation of raw materials and
finished goods.
(iv) To overcome high tariff rates and various non-tariff barriers.
(v) To obtain available tax concessions and tax holidays.
(vi) To achieve advantages of lower financial costs in certain countries.

In the preceding five decades, a significant number of companies have pursued well- Summer
conceived strategies of Globalization in order to seize the immense business 2009, Q8
opportunities by operating on a worldwide basis. These companies have achieved
notable success in the expansion of their business globally and have manufacturing
facilities and marketing networks spread in several countries.
State and briefly explain six significant objectives of multinational companies in
pursuing policies of Globalization. (09)

Comments not available.

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The significant objectives of multinational companies in pursuing strategies of
globalization are:
(i) To achieve significant economies of scale in management and other functional
operations of the global companies.
(ii) To recover extremely high Research and Development expenditures required in the
manufacturing of knowledge-based products from widely dispersed target markets
located in different countries.
(iii) To gain access to wide global markets without incurring substantial expenditures on
product development in different markets.
(iv) To seize the advantages offered by growing economies, such as dismantling of trade
restrictions, growth of free trade zones and relaxation of regulations regarding direct
foreign investments.
(v) To enter into widely diversified markets and achieve maximum profits through
transfer pricing and tax concessions.
(vi) To derive maximum advantages of access to cheap sources of labour, raw materials
and energy.

Competition for attracting direct foreign investments among countries has always Summer
been intense. Countries such as Singapore, Malaysia and Cyprus have been able to 2009, Q9
satisfactorily fulfill the requirements of the foreign investors and achieve significant
growth through these investments. However, a large number of third world countries
have not been so successful in attracting direct foreign investments mainly due to the
high level of Political Risks perceived by the prospective investors.
(a) Explain what is meant by the term Political Risk in the above context.
(b) What are the different types of Political Risks which have to be considered by a
prospective investor while evaluating opportunities of direct foreign investment in a
third world country? (07)

Comments not available.

(a) Political risk is the probability that political decisions or events would negatively
affect the long-term security and profitability of an investment in a foreign country.
(b) The different types of Political Risks which would adversely affect the security and
long-term profitability of direct foreign investment in a third world country are:
(i) Domestic Instability – Domestic instability relates to the risks of subversion,
revolution, internal conflict and government crisis.
(ii) Foreign Conflict – Foreign conflict pertains to the extent of hostility and disputes
that a country has with other country(ies).
(iii) Political Climate – Political climate can be affected by radical shifts in government

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policies and can be influenced by the number of political parties, their level of maturity,
political and economic agenda and approaches towards free or restrictive foreign
investment policies.
(iv) Economic Culture – Economic culture refers to the risks of significant shifts in
policies concerning government involvement and control of economic activities as well
as financial markets, including currency fluctuations, inflation, repatriation of capital
and dividends, regulation of prices of essential inputs and development and
maintenance of infrastructure.
(v) Level of Corruption – Level of corruption refers to the degree to which the various
institutions, including the government, are perceived to be untrustworthy, open to
bribes and involved in various types of fraudulent and unethical practices.

Briefly explain the following concepts: Summer

2009, Q11
 Business Ethics
 Pull Strategy of Promotion
 Licensing
 Benchmarking (10)

Strategy and CSR Benchmarking, Business Ethics

HR and Change Management

Marketing Licensing, Pull Strategy of Promotion

International Business

Comments not available.

Business Ethics is a code of moral principles that the employees follow with respect to
what is right or wrong from the viewpoint of the organization’s dealings and
interactions with its stakeholders. The organizational culture and internal policies and
systems have far-reaching ethical implications and reinforce the set of values to be
upheld by the employees in all their business dealings. The standards of ethical conduct
may be embodied in the Company’s Formal Code of Ethics.
Pull Strategy of Promotion is a promotional strategy based on aggressive advertising of
brands to build-up consumer demand. In a successful Pull Strategy, the customers ask
for the brand by name, inducing retailers or distributors to acquire stocks of the
company’s goods.
Licensing is a technique of entering a specific market in which the licensor enters into
an agreement with a licensee, by offering the licensee the right to use the
manufacturing process, trade mark, patent, trade secret or any other item of value for a
fee or royalty.
Benchmarking is the process of comparing the company’s products and processes with

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those of the competitors or leading firms in other industries or any other accepted
standards against which the performance of the company is measured.

Governments in developing countries are often concerned that global companies with Winter 2008,
substantial financial and technical resources are in a position to exploit the Q8(a)
opportunities in a manner which are detrimental to the interests of the host
countries. It is also feared that the domestic industries which are in the infant stages
of their development may face grave problems due to the highly aggressive policies of
the global companies.
Identify and briefly explain six types of policy decisions which governments in the
developing countries may take to meet the threats from the global companies. (09)

Comments not available.

The Governments in developing countries may take the following policy decisions to
protect their interests in the face of threats from global companies:
(i) Impose quotas which would prescribe limits on the quantities and values of raw
materials that the global company may import from its affiliated/parent companies.
(ii) An import tariff structure may be imposed which may make the imported goods
expensive and enable the domestic manufacturers to compete in the local market.
(iii) The government may place restrictions on the ability of global companies to acquire
domestic companies, especially those which are engaged in business of a sensitive
nature such as defense, utilities, etc.
(iv) The government may impose restrictions on the maximum per cent of shares that a
global company can hold in a domestic business entity.
(v) Legal standards of safety and quality of imported goods may be imposed to prevent
global companies from importing goods which are considered to be of a substandard or
inferior quality.
(vi) Impose stringent conditions of deletion programs.
(vii) Stipulate that a certain proportion of the local personnel should be hired by the
global company.

Multinational Enterprises are classified as Ethnocentric, Polycentric and Geocentric Winter 2008,
companies depending on the strategies and policies pursued by their top Q8(b)
management.
List the distinguishing characteristics of each of the above types of international
companies. (06)

Comments not available.

Ethnocentric oriented companies follow policies that are primarily home-grown and

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the management assumes that the practices which work in the headquarters or in the
home country are most suitable and should be adopted and pursued in all their
international operations.
Polycentric oriented companies follow the philosophy that the organization located in
the host country should be staffed by local individuals to the maximum extent as they
are expected to understand more closely their culture, work ethics and markets.
Consequently, subsidiaries in various countries operate under the directions of locals
and are controlled by the parent company through well-conceived financial reporting
systems.
Geocentric orientation is an approach in which the management considers that a
worldwide focus, both at the headquarters and also in the host countries, offers optimal
advantages. The best people, regardless of their home or host country origin, should be
used to solve company problems. Major issues of headquarters and subsidiaries, such as
raising of funds, building of plants, research and development are viewed in the entire
global perspective.

Paragon Polyester Company Limited (PPCL), a Korean company, is considering a Winter 2008,
proposal for a substantial investment to establish a polyester plant in a foreign Q9
country. PPCL has considerable technology and expertise in its particular line of
business which is available in only a few countries. PPCL is examining the pros and
cons of setting the project as a wholly-owned subsidiary company or entering into a
joint venture with one of the local entrepreneurs.
In your opinion, what are the distinctive advantages and disadvantages of
undertaking overseas manufacturing operations through a wholly-owned subsidiary
company? (08)

Comments not available.

The advantages and disadvantages of undertaking overseas manufacturing operations

through a wholly-owned subsidiary company are:
Advantages
(i) The Korean company would not have to share its profits with any other entity.
(ii) The Korean company would not have to share its technology and know-how with any
foreign entity.
(iii) The Korean company would not have communication problems which are
frequently experienced in joint venture operations.
(iv) The overseas manufacturing operations of the Korean company would be fully
integrated and aligned with its overall international operations.
Disadvantages
(i) The substantial amount of investment may prevent or discourage the Korean

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company from undertaking wholly-owned overseas manufacturing operations.
(ii) The risks of nationalization and losses are much greater in the event the host
government introduces major changes in its policies towards foreign investments.
(iii) It may be difficult to recruit suitable high-level technical and management personnel
in the host country in the absence of benefits of equity ownership.
(iv) The wholly-owned subsidiary may not be able to avail the benefits of the overseas
partner’s valuable knowledge and expertise of the domestic conditions, local markets
and distribution channels etc.

Briefly explain the following: Winter 2008,

Q11
(a) Business Ethics
(b) Core Competence
(c) Environment Management
(d) Job Description (12)

Strategy and CSR b, a

HR and Change Management d, c

Marketing

International Business

Comments not available.

(a) Business Ethics refers to the code of moral principles and values which are applied
by individuals and organizations in their dealings in the commercial world. Business
ethics provide guidelines for acceptable behaviour by organizations in their strategy
formulation and day-to-day operations.
(b) Core Competence is the key ability or strength that an organization has acquired
which differentiates it from others, gives it competitive advantage and contributes to its
long- term success. Core competence accrues due to its favourable location, access to
superior quality raw materials, unique capabilities of equipment, acumen of
management, skills and competence of workers and marketing insight . Core
competence is valuable, rare and difficult for competitors to imitate.
(c) Environment Management is a systematic approach to minimize the damage caused
by an organization to the environment in which it operates. Environment management
has assumed considerable importance because all the stakeholders expect
organizations to be responsible for the preservation of the environment and
management are increasingly being held responsible and liable for their organization’s
environmental performance. Environment management involves reducing

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pollution/waste and consumption of natural resources in judicious manner.
(d) Job Description is a structured and factual statement of a job’s functions and
objectives. It defines the boundaries of the job-holder’s authority and responsibility and
includes the job title, department, job site, and reporting channels.

All leading global business organizations possess certain distinctive marketing Summer
capabilities and competitive advantages which set them apart from those companies 2008, Q5
whose operations are confined within their limited geographical areas.
Describe five core capabilities which are observed in leading global organizations
regardless of special lines of business. (10)

In this question, the students were required to describe five core capabilities which are
observed in all leading global business organisations. A number of students were
unable to understand the precise requirements of the question and offered vague
replies pertaining to the advantages of global business organisations engaged in the
manufacturing of fast moving consumer goods. However, the well-formulated replies
were able to mention the following core capabilities of leading global business
organisations.
 in-depth knowledge of their products, their strengths and special customer service
skills.
 developed marketing skills by way of insight of consumer behaviour, market
segments, share of the market and distribution channels.
 capacity for innovation and research which is necessary for maintaining and
consolidating of global leadership status in a highly competitive business
environment.
 creation and retention of a pool of talented and motivated management team
and work force aligned with the strategic objectives of the organization.
 financial resourcefulness with the ability to utilize the funds efficiently with sound
planning and control structures.
 assessment of strengths and weaknesses of competitors in different territories by
way of their market share, competitive advantages and business strategies.

The core capabilities which are commonly observed in leading global business
organizations are:
(i) in-depth knowledge of the organisation’s products, their strengths and special
customer service skills.
(ii) highly developed marketing skills by way of insight of consumer behaviour, market
segments, share of the market and distributions channels.
(iii) capacity for continuous innovation and research which is a prerequisite for
maintaining and consolidating of their global leadership status in a highly competitive
business environment.
(iv) creation and retention of a pool of talented and motivated management team and

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work force aligned with the strategic objectives of the organization.
(v) financial resourcefulness with the capability to utilize the funds effectively with
sound planning and control structures.
(vi) assessment of the strengths and weaknesses of the competitors in the different
territories in terms of their market share, competitive advantages and anticipated
business strategies.

State six reasons why companies enter into international alliances. Give two examples Summer
of industries in which international alliances are most common and identify a logical 2008, Q7(b)
reason for such an alliance. (08)

The replies to the part of the question relating to reasons for entering into
international alliances were quite satisfactory as they covered the key points such as
gaining access to foreign markets, more effective utilization of complementary
facilities, sharing of research costs, business risks and different skills and abilities.
International alliances can also help to achieve certain important business objectives
without seeking ownership of overseas operations.
The replies to the question regarding examples of industries in which international
alliances were common showed awareness among the students and pharmaceuticals,
airline and banking sectors were mentioned in a number of the replies.

The reasons for entering into international alliances are:

 To gain access to foreign markets.
 To effectively utilize complementary technologies.
 To co-operate to reduce research costs.
 To minimize risk for any individual participant.
 To take advantages of firms with different skills and abilities.
 To avoid ownership of overseas operations.
Examples of industries in which International Alliances are common:
 Pharmaceutical Industry --- to reduce research costs and use complementary skills.
 Manufacture of computers and electronics --- to utilize complementary
manufacturing facilities and skills.
 Airline Industry ---to share passenger load and utilize available capacity.

Tameer Construction Company, a UAE-based entity, has ambitious plans to develop Summer
major real estate projects in Pakistan through a subsidiary company. The parent 2008, Q9
company’s principal office in Dubai is largely managed by expatriate executives who
are committed to a policy of highly centralized control of the Company’s financial
resources and are reluctant to delegate financial powers to the overseas subsidiary.
As the Chief Executive Officer of the subsidiary, you are required to advise the parent
company of the disadvantages of pursuing a highly centralized financial policy.
Identify four disadvantages of pursuing such a centralized policy. (06)

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Replies to the question regarding difficulties in pursuing a highly centralized financial
policy in a situation where the parent company and the subsidiary are located in
different countries were quite satisfactory. The more focused replies listed the typical
problems arising in such a situation on the following lines:
(i) Staff at the parent company would not be fully conversant with the local rules and
regulations in the country where the subsidiary is located.
(ii) Delays in decisions by the parent company may hamper the operations of the
subsidiary, resulting in higher costs and inefficiencies.
(iii) Executives at the principal office may be overburdened with numerous decisions
pertaining to the subsidiary.
(iv) Morale and initiative of the staff at the subsidiary may suffer as they would have
to be dependent on even minor decisions on the principal office.
(v) Overall operating costs would be higher owing to duplication of work, additional
travel and other incidental costs.

The major difficulties expected to be faced by the parent and subsidiary companies in
pursuing a highly centralized financial policy are:
(i) The staff at the parent company would not be fully conversant with the local rules
and regulations in Pakistan.
(ii) The operations of the subsidiary may suffer due to delays in the decisions by the
parent company resulting in higher costs and inefficiencies.
(iii) The executives at the parent company would be overburdened as they would have
to take numerous decisions pertaining to the subsidiary.
(iv) The morale and initiative of the local staff may be affected as they would have to
obtain approvals for decisions which can be taken here readily by responsible officers.
(v) The overall costs would increase considerably due to duplication of work and
additional traveling and incidental costs.

What do you understand by transfer pricing in the context of multinational Summer

companies. List two advantages of adopting market-based transfer pricing policies. 2008, Q11
(04)

The replies to this question pertaining to international transfer pricing were generally
satisfactory as a large number of students rightly stated that it is the price at which
goods and services are transacted between units of the same company located in
different countries.
The part of the question in which students were required to list the advantages of
pursuing a market-based pricing policy drew rather vague and irrelevant replies. The
appropriate replies should have stated that the individual units would achieve high
levels of efficiency as they would be able to negotiate most favourable prices. As a

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result, more objective evaluation of the performance of the individual units would be
possible. Consequently, both the units would continue to remain motivated to improve
their performance.

International transfer pricing is the price at which products or services are transacted
between units of the same company which are located in different countries.
The advantages of market-based transfer pricing are:
(i) The individual units would achieve high level of efficiency as they can negotiate most
favourable market-based prices as if they were independent units.
(ii) The selling unit would make efforts to improve the quality of the products in
accordance with the requirements of the purchasing unit.
(iii) The performance of the individual units can be evaluated more objectively.

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