THE INSTITUTE OF CHARTERED ACCOUNTANTS OF PAKISTAN Final Examinations Winter 2002 December 13, 2002 BUSINESS MANAGEMENT (MARKS 100) Module E Paper E-17 (3 hours) Q.1 (a) The Management of MNC Consumer Pakistan Limited is required to present

their Financial Business Plan to their Regional Management for the years 2003-2007. List down the various information templates that should be included in the presentation along with brief comments, where-ever needed.

(10)

(b) Explain briefly the following terms: (i) Vision (ii) Mission (iii) Values and Beliefs

(02) (02) (02)

Q.2 (a) List the most critical success factors for the design of a strategic management accountancy system.

(04)

(b) Do you agree that one of the success factors should be that the communication gap between the accountant and decision maker should be eliminated by the design of the accounting system and the consequent output? Explain with reasons.

(04)

Q.3 Why management should develop an “Ethical Culture” in an organization and what steps are required to create such culture?

(08)

Q.4

In an employee appraisal system, what is actually being appraised? Also explain the qualitative and quantitative aspects of an employee appraisal system.

(08)

Q.5 (a) What should be the process of training in an organization? (05) (b) As a training manager how would you carry out training needs analysis? (05)

Q.6 The Chief Executive of ABC Oil Company Limited has engaged you as a consultant

to assists in the development of their policy on Health, Safety and Environment. You are required to draft the policy statement of the Company.

(10)

Q.7 (a) What do you understand by “Segmentation” and “Targeting” (04) (b) Describe briefly benefits of market segmentation (04)

Q.8 What are the reasons for branding and not branding products? (12)

Q.9 What is “Protectionism”? What are the means through which governments provide

protection to the domestic procedures from foreign competition?

(08)

Q.10 What are the characteristics of multinational companies and the motives of these multinationals?

(12)

(THE END)

THE INSTITUTE OF CHARTERED ACCOUNTANTS OF PAKISTAN Final Examination Summer 2003 June 05, 2003 BUSINESS MANAGEMENT (MARKS 100) Module ‘E’ Paper E-17 (3 hours) Q.1 The Board of Directors of Synergy Leasing Company Limited, a medium sized public listed

company are concerned about the decline in the profitability of the company during the past five years. The situation has been specially worsened during the years ended December 31, 2001 and 2002 in view of declining mark-up rates and resultant decline in spreads witnessed by the leasing industry.

The Company was formed in 1985 and had flourished during the period 1985 to 1995. Although the Leasing Industry had also grown rapidly over that period, but the profitability of the company remained above the industry average.

Current Chief Executive of the Company was appointed on July 1, 1996. He had vast experience of successfully leading Resource Leasing Company Limited, a major leasing company of the country from 1988 to 1996. Soon after his appointment he made an in-depth analysis of the company’s operating procedures. He realized that their were serious flaws in the system of evaluating and approving leasing proposals. The company had formed policies, which gave many discretionary powers to various levels of Managers. Leasing proposals above Rs. 100 million were approved by the Board of Directors, whereas proposals above Rs. 25 million were approved by the Chief Executive. The General Manager Marketing and the Marketing Managers were authorized to carry out leasing below these limits subject to their assessments of each case based on specific parameters. The minimum rate of mark-up was fixed at 16%. The senior field staff including six Assistant Managers and two Managers were authorised to quote the Mark-up rates to the clients. He noticed that cases of default have increased over the last five years and the amount of Provision for Bad Debts had risen from Rs. 9.0 million in 1991 to Rs. 21.0 million in 1995. Moreover since there was no control over the rates of mark-up, the weighted average IRR had declined from 22% in 1991 to 20.5% in 1996 as against the decline in industry average from 22.5% in 1991 to 21.5% in 1996.

He therefore decided to implement the following procedures immediately:

q The leasing proposals would have to be approved as under:

• Upto Rs 0.5 million by Marketing Managers • From 0.5 million to 2.0 million by General Manager Marketing • Above Rs. 2.0 million by the Managing Director.

q Mark-up rate will be decided by the Chief Executive himself, based on his discussion

with General Manager Marketing.

(2)

Within a short period of time it became evident that the policy has succeeded. In his report to the Board of Directors he highlighted his successes as under: - Bad Debts for the year 1996 have been reduced by 7% as compared to 1995. - Weighted average IRR has increased from 20.5% on June 30, 1996 to 20.8% on

December 31, 1996 and will be increased further as new leases are written. - Net profit of the company in the second half of 1996 has increased by 6% as

compared to the first half of the year.

However, the staff of the Marketing department was not happy with the change as they felt that their authority has been diluted. They also objected to the increase in processing time of lease evaluation and approval, as a result of the above measures.

During 1997, the General Manager Marketing resigned. The company had a policy of promotion from within the organization as it helped in improving employee motivation. In line with this policy, the senior of the two Marketing Managers was promoted as head of the department. However, in view of his relatively limited experience, he was designated as Chief Manager Marketing. It also resulted in cost saving as the salary of the newly promoted Chief Manager was far less than that of his predecessor. During the same year, the Human Resource Manager retired as he reached the age of 60. It was decided that the post of Human Resource Manager would be abolished. The Chief Executive will himself control the Human Resource Function as even now most of the policy decisions were being taken after his approval. In 1997, the company’s profitability improved slightly i.e. by one percent.

During 1998, the over due lease rentals increased by 16% as one major lessee went bankrupt. The performance of recovery department was also found to have deteriorated. It was decided that a legal manager shall be appointed to deal with the increased number of defaulting lessees. The Legal Manager was appointed on July 1, 1999. On the recommendation of the Legal Manager, six recovery assistants were sacked as they were making little contribution towards recovery. The measure was strongly resisted by the Marketing Manager who was of the opinion that the visits by these recovery assistants made an invisible but significant contribution towards restraining the lessees from defaulting.

In the year 2000 the company diversified its operations and entered into the business of Money Market operations. An Assistant Manager – Trading was hired to carry out the routine matters, however, in view of the risks involved in this segment of the business, it was decided that that the Chief Executive will himself supervise the operations. The spreads in this segment were relatively smaller, however the Chief Executive in one of his periodic report, supported it in the following words, “Although the spreads are somewhat lower, the investments are much more secured”.

The year 2001 witnessed a decline in the net profit of the company for the third consecutive year. In the Annual General Meeting the shareholders were very critical of the company’s performance. However, their criticism was brushed aside by the Chairman of the Board, who claimed that it was on account of the declining trend being witnessed in the leasing industry.

(3)

The year 2002 witnessed a drastic decline in the mark-up rates of all financial institutions as the State Bank of Pakistan reduced the discount rate substantially. The company’s profits plunged to their lowest levels. The Chief Executive, in his report to the Board of Directors made the following remarks “The declining profitability of the company is the result of emerging trends in the financial sector including leasing. The enormous decline in mark-up rates, increased competition and rate war among lenders, excessive liquidity and the emergence of banks in the leasing business have all contributed to this state of affairs. The Board of Directors was not satisfied with this response.

They have decided to hire you to carry out a critical evaluation and review of the company’s operations and policies.

Besides the information given above you have been provided the following additional information.

1998 1999 2000 2001 2002

Weighted average cost of borrowings (%) 18.0 17.5 16.5 16.0 13.0 Weighted average IRR at the time of leasing 21.0 20.5 20.0 19.5 15.0 Weighted average return on investments 19.5 19.5 18.5 18.0 13.8 Overdue lease rentals (Rs. In millions) 175 183 310 465 600 No. of employees 56 52 54 52 53 New appointments 13 11 13 12 12

On investigation, you were able to ascertain that • Many good lessees with high IRR had resorted to premature termination of their leases. • The company could not avail the full benefit of reduction of borrowing rate, as it was

mostly committed for a period of three to five years. • Most of the company’s long-term loans have been obtained from three main banks with

whom the company has a long and cordial relationship since last 15 years.

Required:

(a) As a consultant you are required to write a report in the form of a letter addressed to the Board of directors, evaluating the key factors responsible for the decline in company’s profitability in the recent years with specific reference to its policies on

(i) Human Resource Management (05) (ii) Marketing (06) (iii) Borrowings (04) (iv) Diversification Strategy (04)

(b) Describe briefly why, in your opinion, the Chief Executive was unable to repeat the success story of his previous assignment with Resource Leasing Company Limited.

(08) Q.2 You have been appointed as a nominee director of a large and profitable company. You find

that while the company has been making enormous profits and paying excellent return to its share holders, it has not made any contributions to any welfare or charitable projects. You find this very discomforting and decide to raise the matter of social responsibility of the company in the next board meeting. You are required to develop your arguments to convince the board to adopt a policy of making significant contributions to some welfare or charitable institutions, in future. (08)

(4) Q.3 (a) Manpower planning is an integral part of corporate strategy. Discuss the importance

and concept of manpower planning as a part of strategic planning process. (07) (b) Why is succession planning considered a critical part of effective corporate

governance? Discuss. (08) Q.4 Strategy evaluation can be achieved through measuring organizational performance.

(a) What quantitative criteria would you use to evaluate strategies? (05) (b) What qualitative aspects would you look at? (05)

Q.5 Pricing decisions are a function of various elements. What are those factors and influences?

(07)

Q.6 Conflict at individual and group level is considered to be inevitable in every organization. Under what circumstances would you accept conflict and why would you want to avoid it? Discuss. (07)

Q.7 Describe different stages of Product Life Cycle. Does product life cycle always have an ‘S’

curve? Discuss. (08) Q.8 What are the strategic planning issues an organization must address before it decides to do

business internationally? (09)

Q.9 Multinational organizations typically compete in domestic and foreign markets on the basis of competitive advantages. What are these advantages? Give a list briefly explaining each one of them. (09)

(THE END)

THE INSTITUTE OF CHARTERED ACCOUNTANTS OF PAKISTAN Final Examinations Winter 2003 December 04, 2003 Business Management (MARKS 100) Module E (3 hours) Q.1 Sportsballs dominate Pakistan’s Sporting Goods export category since the mid-

1970s. Sialkot, the hub of this industry, has over 300 registered exporters out of which only around 150 own their production facilities. Fewer than 20% of exporters maintain complete vertical production units and stitcher networks. They export 80% of the approximately 35 million hand-stitched balls exported every year. Raw materials such as PVC artificial leather, cloth, rubber latex, and rubber air-bladders, are typically purchased from local suppliers upon receipt of orders and processed into ready-cut panels for hand-stitching. These panels are delivered to sub-contractors, called “makers” who have them stitched by village-based “stitchers”. Upon return, these stitched balls are inspected to buyer’s order specifications and packaged for shipment. One ball takes an average of 23-30 days from order to shipment.

Figure 1- Sportsball Exports from Pakistan*

*Estimated from consolidated industry figures. Record Sports Private Limited was formed in 1981. By 2002 it had become a front-

runner in the sporting goods industry, exporting 100% of its products under the logos of leading world brands. It was recognized by a number of national awards including the FPCCI Export Trophy. Competitors and customers both agree that Record’s success was due to its founder’s personal dynamism, his willingness to challenge traditional business models and his ability to select and groom professionals into decision-making positions.

By early 2002, Record’s annual revenues stood at just under Rs. 600 million through an average daily output of about 9,000 units and an annual production capacity of just over two million units. This had already placed Record among the industry’s top tier of exporters, in a market characterized by seasonality, low product innovation and stable global demand. Record’s present client portfolio contained mid-level regional brands that sold high volumes of the mass-market category, matched by a healthy mix of match-grade balls. So far, Record had successfully avoided getting involved in the promotional category, but it was finding it tough to break into the professional category because of low volumes and highly entrenched competition. Record was recognized for its consistent quality and customer claims were within the 2% allowed. In-house reject rates, at almost 8%, were lower than

# PRODUCT CATEGORY (hand-stitched inflatable balls)

% -age

UNITS (million)

USD VALUE (million)

PKR VALUE (million)

1 Professional soccer-balls 3 1.05 6.56 380.48 2 Match-grade soccer-balls 22 7.70 48.13 2,791.54 3 Mass-market soccer-balls 46 16.10 100.63 5,836.54 4 Others, i.e. volleyball, rugby etc. 11 3.85 24.06 1,395.48 5 Promotional balls 18 6.30 39.38 2,284.04

100 35 218.76 12,688.08

Figure 2- Production Cost of Typical Sportsball # Item PKR USD A RAW MATERIALS 116.58 2.01 Artificial Leather 34.22 0.59 Natural Latex 10.44 0.18 Lining cloth 13.92 0.24 Rubber bladder 10.44 0.18 Accessories 5.80 0.10 Screen Printing 9.86 0.17 Packaging 25.52 0.44 Miscellaneous 6.38 0.11 B CONTRACT LABOUR 37.12 0.64 Maker 7.54 0.13 Stitcher 23.78 0.41 Screen Printer 5.80 0.10

C FACTORY OVERHEADS 132.24 2.28 Salaries 16.24 0.28 Utilities 13.34 0.23 Communication 24.36 0.42 Facilities Management 8.12 0.14 Marketing & Travel 69.60 1.20 Sampling & Testing 0.58 0.01 D TAXES & DUTIES 21.46 0.37 Tax @ 5% 14.50 0.25 Surcharges etc @ 2.5% 6.96 0.12 E COST OF SALE 307.40 5.30 F F.O.B. SALE PRICE 362.50 6.25 G PROFIT 55.10 0.95

* USD 1 = PKR 58

(2) the industry average of 10-11% because of selective automation of the quality inspection function. However, stitching rejects had to be sent back to the maker for repairs adding days to production time. It was usual practice to commission 10-12% more than the production order to ensure on-time customer shipments. Financially, Record showed healthy cash-flows and minimal borrowings against credit facilities, fixed assets estimated at over 165 million including almost 100,000 square feet of

newly constructed factory floor-space that is under-utilized. Yet, despite its brand new factory outside the city, Record still operated within the traditional cottage-industry model, which helped maintain low overheads and indirect labour costs.

However, things were beginning to change. Global brands were pushing for lower prices in all categories of balls. Forecasts by industry analysts predicted a price compression of 5-8% in the coming 3 years due to new production facilities opening up in China, where local raw materials were cheaper, utilities were less costly, worker efficiency was demonstrably higher, and shipment processing and time-to-market were faster than in Pakistan.

Meanwhile, the world was waking up to labour practice and workplace standards

because of revealing press coverage of sweatshop conditions in many factories in developing countries producing for major brand names. Bonded child labour in Pakistan’s carpet industry had already caused a major loss of confidence among buyers who were abandoning their Pakistani suppliers and moving to other places such as China and India. The cottage industry model was vulnerable because of its obvious dependence upon home-based cheap labour where there was no way of monitoring conditions of employment, such as voluntary adult workers, their human rights such as fair wages, legal working hours, occupational health & safety and freedom of association. It was quite clear that many customers who had traditionally ordered sportsballs from Pakistan were considering other sourcing options.

Record had the resources to double its infrastructure and the coordination capacity to expand its home-based stitcher workforce accordingly. Moreover, there was opportunity to diversify into allied product ranges like uniforms, goalie gloves and shin-pads at minimal investment. But buyers typically required a supplier to first show what it was capable of before considering any orders. For Record the question was whether buyers would approve of any new investment in allied product manufacturing by Record and whether its new products would be able to compete in price and quality. The challenge for the CEO was how to attract more business and break ahead of the competition in an environment where volume demand was unlikely to rise beyond the present level, selling prices were sure to decline, the cost of raw material and overheads were continuing to grow, more competitive suppliers in other countries were beginning to look attractive to buyers, and for the first time, workplace standards and workers’ rights were becoming important in customers’ buying decisions.

(3) The situation clearly called for a new business strategy. Consider yourself in the position of the consultant hired to help the CEO decide on the most appropriate action plan.

(a) What is Record’s market share in national sportsballs exports? In the given

context, at whose expense would Record strive to gain market share? Explain to the CEO the concept of “entry barriers” and how he would create and sustain competitive advantage by employing it.

(05)

(b) Within the market segmentation of product categories, which type of balls should Record focus on if it has to become most profitable? Why? List for the CEO all the possible sources of competitor information that can help him determine exact costs and quality levels of the competition.

(05)

(c) What element of the traditional sub-contracted stitching business model poses the highest risk in terms of managing product quality, turn-around time, resource optimization and human rights & workplace conditions? Knowing what you do about managing risk and establishing direct control, what will you say in response to the CEO’s argument that sub-contracting stitching is 10-15% cheaper than stitching all balls in factory controlled workshops?

(06)

(d) If forecasts about 5-8% price compression prove true over the next year, would Record still be able to retain profitability? Looking at the calculations for the cost of production, under which cost head do you see most potential for saving resources? Make a convincing case for the CEO to re-organize the pricing calculations to create a healthier profit margin.

(04)

(e)

List the key strategy issues that the CEO must consider when developing a business strategy for Record. Conduct a quick SWOT analysis of the situation at Record, keeping in mind the CEO’s aim of breaking ahead of the competition through innovations and diversification, but mindful of the local systems, external competition and buyer’s emerging attitudes.

Internal

S

W

External

O

T

(10)

Q.2 What is meant by the term “stakeholder”? List or draw a diagram of the possible

stakeholders for a large national publicly listed company. How do these stakeholders impact business strategies? What must a business do to maintain a balance between the relative powers and conflicting interests of its stakeholders?

(15)

Q.3 Human Resource Management is a strategic approach to acquiring, developing,

managing and motivating an organization’s people. How does it differ from the traditional “personnel” function? Compare the two approaches to prove which is more appropriate to modern business.

(11)

Q.4 Can the efficiency of an organization be measured in non-financial ways? If yes,

how can this be done? Describe what you understand by “key limiting factor” and how you would employ it as a technique to measure efficiency? Explain through a suitable example from the non-profit sector.

(11)

(4)

Q.5 Explain the following terms:

(i) Downsizing (ii) Total Quality Management (iii) Empowerment

(09)

Q.6 In today’s shrinking world many businesses consider the possibility of launching

operations in a new country. Give an example of a company you know of that has managed to compete successfully in a number of diverse cultures. What are some of the factors that can be considered as opportunities for global competition in the case of such a company? Likewise, what factors could be considered threats to global competition? What would you recommend to a company that wishes to compete globally?

(12)

Q.7 Do you agree that “international business is really a collection of domestic

industries”? Argue for or against the idea, keeping in mind the five factors that influence strategy for a company competing globally as compared to a national one. Draw Porter’s “diamond” of determinants of national competitive advantage and explain each segment briefly.

(12)

(THE END)

THE INSTITUTE OF CHARTERED ACCOUNTANTS OF PAKISTAN Final Examinations Summer 2004 June 09, 2004 BUSINESS MANAGEMENT (MARKS 100) (3 hours) Q.1 The Super-tea has been a highly successful company enjoying around 35% market

share in a very competitive market. Rivalry amongst a number of strong players is witnessed in the industry. They are all pursuing highly aggressive marketing strategies focusing on cost efficiency, capacity utilization, line extension, broad based communication programs. Market share of Super-tea Company has been stagnant for the last several years. Company’s marketing people blame the stagnant situation to slow growth of the market. Other members of management team feel that if an effort to increase the market share is not made, the company might start losing grounds in areas of its strengths. Competition might start taking share from us. Managing Director also shares the apprehension and would like to take a more aggressive approach. Director Marketing is however, reluctant to take a head-on war with the competition. He also assesses that increasing market share will also create problem of capacity expansion within two-three years time meaning thereby, a substantial investment as well as pressure on our cost and profitability. He, therefore, thinks that the company should go for “Market Share Maintenance” rather than “Market Share Expansion” strategy. How would you assess this situation? Please explain. What should be the decision of the company and why?

(10) Q.2 ``We believe our first responsibility is to the doctors, nurses and patients, to mothers

and fathers and all others who use our products and services. In meeting their needs everything we do must be of high quality. We must constantly strive to reduce our costs in order to maintain reasonable prices. Customers’ orders must be serviced promptly and accurately. Our suppliers and distributors must have an opportunity to make a fair profit. We are responsible to our employees, men and women who work with us throughout the world. Everyone must be considered as an individual. We must respect their dignity and recognize their merit. They must have a sense of security in their jobs. Compensations must be fair and adequate, and working conditions clean, orderly and safe. We must be mindful of ways to help our employees fulfil their family responsibilities. Employees must feel free to make suggestions and complaints. There must be equal opportunity for employment, development and advancement for those qualified. We must provide competent management and their actions must be just and ethical.

(2) We are responsible to the communities in which we live and work and to the world

community as well. We must be good citizens – support good works and charities and bear our fair share of taxes. We must encourage civic improvements and better health and education. We must maintain in good order the property we are privileged to use, protecting the environment and natural resources. Our final responsibility is to our stockholders. Business must make a sound profit. We must experiment with new ideas. Research must be carried on, innovative programs developed and mistakes paid for. New equipment must be purchased, new facilities provided and new products launched. Reserves must be created to provide for adverse times. When we operate according to these principles, the stockholders should realise a fair return.’’

(a) Identify the principal stakeholders addressed in the above mission statement. (02) (b) What set of core values do you think P & J Corporation, a multinational

corporation in pharmaceutical industry, cherishes and champions, as you see them reflected in the mission statement. Briefly list.

(04)

(c) As head of Strategic Planning for the company, you are assigned to draft a set of 5 corporate goals in the light of the above statement. (Hint: These goals should serve to provide direction to the business units and functions in setting their respective strategic objectives.)

(10)

Q.3 (a) What is the essence of a `learning organisation’? Elaborate. (02) (b) What distinguishing characteristics do you expect to see in a company that

claims to be a learning organisation, with respect to: • Learning approach to strategy • Use of information • Enabling structures • Inter-company learning

(08)

Q.4 (a) A number of laws in force empower the government to regulate the workplace

environment and industrial relations between employees and their employers. Why is this necessary? What would happen in your view, if these laws were not there?

(05)

(b) Who is responsible for health and safety at the workplace – government, employers or employees? Provide a detailed, well-reasoned answer. List the key elements of a workplace Health & Safety programme. How does a good working environment affect performance?

(05)

Q.5 Do you agree that multinational companies with their massive resources and global

reach are “in a position to abuse their power by acting as if they were independent of local laws and customs”? Explain with examples some of the typical characteristics of such corporations. What do you think are the motives of multinational companies when they expand across national and cultural boundaries? Why do you think large global corporations expand their supply chains to vendors in distant countries?

(10)

Q.6 A manufacturer of cosmetics and toiletries introduced a new product to increase

profitability. They developed a tooth paste which cleaned teeth better than any other brand of toothpaste in the market. They decided to brand the product as “SHINE”. The pack design featured smiling white teeth on a butter yellow color background .

(3)

The distribution was done on a large scale in all retail outlets in the city, and the product placed on a shelf with other tooth pastes. The final retail price decided by the company was 70% above all other toothpastes, because of the upscale positioning. Promotion was executed on national T.V. and newspapers. However, after eight months, it was clear that sales targets were not being met. You are the marketing consultant of the company and have been asked by the Director to analyze the situation and state assumptions as to what you think were the reasons for the poor response? You are also asked to suggest strategies which would revitalize the brand and ensure its success. (11)

Q.7 What is a marketing audit? Why is there a need for such an audit? When should it be

carried out? What are the factors studied in a marketing audit? (10)

Q.8 Despite many obvious advantages of going multinational, what are some of the

complexities that companies confront when deciding on overseas expansion? Give at least five points along with your reasons. What are some of the alternate ways to enter foreign markets? Give a detailed answer by describing each distinct possibility with examples where possible.

(10)

Q.9 Why is it advisable to integrate HR development activity with a company’s strategic

objectives and organizational culture? Explain by the help of an appropriate example. What are some of the methods available to organizations for individual and team development? List at least five methods, and in table form, discuss their respective advantages and disadvantages.

(10)

Q.10 Describe, with real-life example for each of the following Product-Market

Diversification options for growth available to companies.

• Horizontal Integration • Concentric Diversification • Conglomerate Diversification

(03)

(THE END)

THE INSTITUTE OF CHARTERED ACCOUNTANTS OF PAKISTAN Final Examinations Winter 2004 December 09, 2004

BUSINESS MANAGEMENT (MARKS 100) (3 hours) Q.1 (a) What do you understand by the term “Value Chain”? (03) (b) Can the performance of a business organization be measured in non-financial

ways? If yes, how can this be done? What is meant by a “Socially Responsible” Business? Give your understanding of the concept of Corporate Social Responsibility (CSR) supported by at least two examples of companies you think exhibit CSR Values.

(06)

(c) A major international cigarette company is running advertisements about how it

is working to save the environment by planting trees etc. What is your opinion about the ethical issues arising from situations like this in which companies that sell a potentially injurious product show their keenness to help society or the environment? Give your argument on why this is “right” or “wrong”.

(07)

Q.2 Excel Chemicals has been operating as a leading fertilizer company in Pakistan for

the last 35 years. At the time of its inception, the company was the sole manufacturer of fertilizer, and in no time created a monopoly situation by driving out the imported brands from the market. Over the years, several other companies entered the fertilizer market by investing heavily in manufacturing facilities. Excel Chemicals saw rapid loss of its market share in the next two decades to the new entrants. The cost advantages that it initially enjoyed, owing to its world class manufacturing plant that was run on near-capacity levels, were also eroded due to ever reducing demand for its brands, resulting in dwindling profitability. The competitors not only came in with smaller and more cost-efficient manufacturing facilities, but also brought in innovative products that were clearly differentiated from Excel’s single standard product offering. These differentiated offerings catered separately to different crops, different application timing, and different soil types in different parts of the country. Today, while Excel Chemicals still enjoys market share leadership, it no longer leads in terms of profitability. It still makes a decent amount of profit on its operations, and has an awesome cash flow position. The Board of Directors is meeting to conduct a marketing strategy review of the company. They will decide on short-term and long-term marketing strategies to adopt in order to ensure that the:

• company regains its competitive advantage in the core fertilizer business, and • pursues other high growth business opportunities, both inside and outside the

agriculture sector

(2) You, as Head of Strategic Planning, have been asked to present your

recommendations in the meeting. Using the Ansoff Product / Market Matrix Concept, how would you make recommendations under the following strategic growth options:

• Market Penetration • Market Development • Product Development • Diversification

(10)

Q.3 (a) Different people in an organisation have different styles of learning, depending

on what type of persons they are. Describe the learning styles best suited to the following personality types:

(i) Theorists (ii) Reflectors (iii) Activists (iv) Pragmatists

(06)

(b) The interview is an extremely popular and effective method of selecting

employees. List and briefly describe the different types of interview used in selection process.

(07)

Q.4 Quality has become an increasingly important factor in determining business

advantage. How does a company that is positioning itself on high quality product assess its relative quality as perceived by its customers? When customers are not prepared to pay a premium for increased quality, what should a company do to still gain a potentially attractive competitive advantage? Give an example to prove your point.

(10)

Q.5 What are the pitfalls in strategic planning that management in an organization should

watch out for or avoid? Identify any five pitfalls. (08) Q.6 (a) What do you understand by the term Political Risk faced by multinationals?

What are the common manifestations of this risk in everyday business? (04)

(b) The Pakistan automotive industry has recently been the subject of heated

discussions in the media due to the very rapid demand growth for cars witnessed in the country, and its consequent problems of insufficient supply, delayed availability, and high prices. The automotive industry represents sizeable foreign investment in Pakistan. As a safeguard to their ROI, and in return for the promised technology transfer and increasing extent of local manufacture (under the Deletion Programmes), the multinational car assemblers have been protected through trade barriers. Consumers accuse these companies of charging much higher prices than in the country next door, and complain about having to suffer long delivery periods against their fully paid orders. What possible policy measures can the Pakistan government exercise to make sure that the multinational automotive manufacturers operating in the country:

• Transfer technology and help develop local industry • Charge competitive prices from local consumers

(08)

(3) Q.7 What do you understand by the Investors in People standard of TQM? Elaborate on

the key areas of performance where an organization needs to perform satisfactorily for obtaining the standard.

(09)

Q.8 Any business deciding to go international broadly has two modes of entry into the

overseas market: through Exporting, or through Overseas production. Describe the following strategic options available under each of the above options of the above-noted modes of international business.

• Indirect Exporting • Direct Exporting • Licensing • Joint Venture

(08)

Q.9 Do you agree that mature and declining products must be replaced with newer

products? Give an example from your own experience where you have seen this happen. How does your example relate to the stages of product development? Describe the Product Development Process in detail. What are the factors that might hinder this process?

(10)

Q.10 Define Benchmarking, and describe the process involved in this exercise. What are

Internal, Functional and Competitive types of Benchmarking? (04)

(THE END)

THE INSTITUTE OF CHARTERED ACCOUNTANTS OF PAKISTAN Final Examinations Summer 2005 June 09, 2005 BUSINESS MANAGEMENT (MARKS 100) (3 hours) Q.1 (a) What do you understand by the terms Acquisition and Merger? Briefly list the

common reasons or justifications cited by the business leaders for doing acquisitions and mergers.

(08)

(b) While expansion and diversification are obvious and desirable growth strategies for

healthy businesses, sometimes companies are also left with no choice but to cease operations, withdraw from the market and thus abandon a particular business altogether. Although this might be the best option in a given situation, there are likely to be exit barriers to doing so.

What do you think could be some of these barriers that keep managers from taking the abandonment decision?

(06)

Q.2. Fillers - the largest global brand in sports & leisure shoes – has been in the news in recent times for maintaining appalling working conditions in its offshore location factories in Asia. These factories – termed ‘sweatshops’ – are located in poor countries where government standards for minimum acceptable working conditions are non-existent, and thus labour exploitation is commonplace. On learning about this shocking disparity between working conditions in the US factories and in those in the 3rd World countries, some Public Action Groups in the US started their protest against exploitation of labour by this large MNC. Under protest, they called for consumer boycott of Fillers products. The company had to make amends under pressure, and lost considerable consumer goodwill in the process. If you were in charge of managing this ‘goodwill disaster’ for the company, what steps would you take to rectify the situation, from:

• An HR / Operational Management standpoint, to fix the working conditions and bring them up to international standards.

• A Public Relations standpoint, to recoup the lost goodwill with the host countries

governments & communities where the factories are located, and in the eyes of consumers all over the world.

(09)

Q.3 Incentive Pay Schemes tie an extra monetary reward for employees with their achievement of

quantifiable performance targets. These incentive plans/schemes are considered to be a useful means of motivating and directing the efforts of employees towards overall organizational goals. However, incentive plans are not always successful in real life. Highlight some common situations where incentive schemes fail to achieve their intended purpose.

(06)

(2)

Q.4 Zodiac Corporation has long been the global leader in the business of photographic equipment, accessories, supplies and services. The key thrust of its R&D efforts has, for long, been on development of superior quality photographic films and paper. The advent of digital photography took Zodiac by surprise. While Zodiac was busy developing the better film, digital technology eliminated the need for films altogether. The company woke up to the changed market realities and set about covering lost ground. It has made considerable progress in adopting digital photographic technology, but has lost initiative and market share to the pioneers, in the time to catch up. How would you describe Zodiac’s (previous) orientation to its market? How should companies prevent their offerings from becoming obsolete in a dynamic market?

(07)

Q.5 (a) Not-for-Profit Organisations, like charities, are not driven by the motive to maximise monetary gains. Do you think such organisations should still pursue the objective to carry out their activities Economically, Effectively, and Efficiently?

(04)

(b) Many companies declare Ethics to be one of their Core Values that govern their business mission and strategies. Can you think of examples showing how earnest adoption of ethics as a core value can have a significant impact on the conduct of an organization towards the following stakeholders:

• Customers • Employees • Environment • Government and other regulatory agencies

(08)

Q.6 (a) How would you define the process of Performance Appraisal? What in your opinion should be the general criteria of integrity and effectiveness based on which the process of Employees’ Performance Appraisal should be assessed and evaluated?

(09)

(b) List and briefly describe at least five ways in which on-the-job training can be imparted to

employees. (05)

Q.7 Consumer goods are often classified under the following heads:

• Convenience Goods • Shopping Goods • Speciality Goods • Unsought Goods

Explain with examples, the above classification.

(08)

Q.8 Packaging is a key component of the physical product. The cost of packaging often comprises a substantial part of the total product cost. What do you think are the important functions that packaging serves in the effective marketing of a product?

(05)

(3)

Q.9 MILEAGE International, a recognized name in the electronics market made a very aggressive entry into the Asia Pacific markets during 1990s. As compared to its close rivals PRODIGY and CONSUMER ELECTRIC, Mileage decided to invest in building its own organizations across these markets to position itself ‘right’ strategically and operationally rather than adopting a policy of indirect entry into these important markets. In the regional management, all the positions for Regional Directors, Functional Heads and Product Managers were filled with expatriates. Furthermore, in the newly established factories, Plant Managers were also called in from its European factories. Even at the national level, expatriates were placed on key positions such as Managing Directors, Finance Directors and Plant Managers.

The company during its establishment phase did quite well with these expatriates. Problems, however, started coming in at operational levels when the business was further expanded and performance of expatriate managers was seen affected. The company in its Board meeting decided to adopt a new organizational strategy of gradually replacing expatriates at national level with locals. As a first step to this strategy a local Director of Human Resources was selected and appointed and was given the task of preparing a phase wise replacement program in this connection.

(a) (b)

Please trace reasons for placement of expatriates by MILEAGE International in Asia Pacific on a large scale during its establishment phase.

Why did the company decide to go for a replacement program of expatriates with local managers?

(06) (06)

Q.10 “Real effect of abolition of the quotas against export of textiles and clothing from

developing countries is still to come. With textile, clothing and fibers making up close to three quarters of Pakistan’s exports, much needs to be done to face the new challenges.” Key exporters and industry experts comment.

(a) What are quotas and the basic economics/issues of having quotas in international trade?

(05)

(b) Describe any four implications of quota free regime and free trade under WTO (World Trade Organization) arrangements.

(04)

(c) How can Pakistan face the new challenges in textiles and clothing industry? Give at least four recommendations.

(04)

(THE END)

THE INSTITUTE OF CHARTERED ACCOUNTANTS OF PAKISTAN Final Examinations Winter 2005 December 08, 2005 BUSINESS MANAGEMENT (MARKS 100) (3 hours) Q.1 (a) Team development process may comprise of the following four successive

stages i.e. forming, storming, norming and performing. What team dynamics do you expect to see in action, in each of these stages?

(04)

(b) List and briefly describe the characteristics of an ideally functioning team. (04) Q.2 Shahbaz, the Managing Director of a large multinational company was successful in

convincing the Board of Directors to take a decision of making an investment of Rs.500 million in new machines and technical infrastructure. His plea was that as per the company’s aggressive marketing plan, existing capacity shall exhaust within 3 years, hence the company will need more capacity to fill market demand. The business unit where the investment was decided to be made was contributing 70% of the turnover and profits. Unfortunately, immediately after the new investment, competition became very aggressive and some new competition also entered into the market with new competitive advantage. This resulted into price pressure as well as loss of market share to the multi national company. The company came into severe problems though they were in a comfortable position before the new investments.

(a) What mistakes did Shahbaz make? Please explain. (06) (b) What alternative courses of action were available to Shahbaz, which would have

been less risky? (06) Q.3 Beatles Corporations, a good name in Domestic Appliances business are considering

launching a new product. The product is the result of the R&D efforts of the company and has several new features expected to give the company a competitive edge. Cost of the product will definitely be higher than their existing products. Company’s higher management would like to go for market skimming price strategy with minimum 20% higher price than the current product. A feedback meeting with the Channel of Distributors however, confused the Brand Manager, as all of them were insisting to begin marketing of the new product with initial price equal to existing products and as customer response grows, increase the price gradually to the desired level.

(a) How would you differentiate between market skimming and penetration pricing

strategies? (04) (b) Would you recommend the company to go with the suggestions of the

distributors? What are the risks involved? (04) (c) What would be your decision as the Brand Manager of the new product in

Beatles Corporation? Please explain with reasons. (03) Q.4 Many multinational companies now believe that streamlining cross company

processes (supplier process improvement programs) is the great frontier for reducing costs, reducing wastage, enhancing quality and speeding operations. It’s where the next decade’s productivity wars will be fought.

(2) (a) Please comment on the above statement. (04) (b) Give your recommendations for supplier process improvement program for

multinationals investing in Pakistan. (06) Q.5. Synergy Chemicals are in the business of manufacturing and marketing agrochemicals

mainly fertilizers and have been quite successful. Recently, they started experiencing a stagnant market share growth and all initiatives including new products, gave them no positive results. Management team of the company was in a meeting to decide upon the strategic direction of the company. The Chief Marketing Officer (CMO), Asim Saleem, while concluding his presentation, finally remarked, “Gentlemen, all our efforts to improve our competitive position for the last several years have gone to waste. It is only feasible that we diversify into new business while maintaining our position in our current business. I mean a new business unit. Our Marketing Research department has prepared a feasibility report on Fast Moving Consumer Goods which show a consistent growth pattern. It suggests cartoned milk as an excellent option at this point in time. This may look different but not difficult as the return of our investment is well guaranteed.” The Chief Financial Officer was not very convinced of the idea of Asim Saleem. He was of the opinion that the company should still focus on intensive growth strategies rather than jumping on the conclusion of stagnant product life cycle of their existing business.

Management team was not able to make any decision and adjourned for the next meeting after two days. The Chairman got an opportunity to count on several options for both the strategies given by two of his senior managers.

(a) What type of growth strategy is being proposed by the CMO? Evaluate pros and

cons of the strategy.

(08) (b) If the management adopts the CFO’s idea of intensive growth, what are various

options on which they should work? (03) Q.6 Inter departmental conflict is an important issue in any organization. A number of

methods are used by experts in positively using departmental conflict for integrated business results.

(a) List down some of the key reasons for inter departmental conflict. (03) (b) What are various methods to resolve them? (03) Q.7 The marketing arena is dominated by market leaders, setting the pace of the market

with runners-up challenging the leader. Then we have follower companies, who prefer to follow taking the lead from the leaders and runner-ups rather than challenging them. Generally, such companies are defined as HIGH TURNOVER, LOW MARGIN companies. Low margin is compensated with High Turnover and gives them the required profits. But then there is another segment of companies, who work on the principle of LOW TURNOVER, HIGH MARGIN, they are called Niche Marketers.

(a) Who are Niche Marketers and what is meant by Niche Market? (02) (b) The key idea in nichemanship is specialization. List at least eight specialist roles

available to niche marketers. (08)

(3) Q.8 (a) Every international affiliate has different relationships with its parent company.

These inter company relationships require different payments to its parent company. Identify the various types of payments made to the parent company.

(05)

(b) An industry is a group of firms that offer a product or class of products that are

close substitutes for each other. Accordingly a company's closest competitors are those pursuing the same target markets and the same strategy. The above two statements clearly identify the need for detailed information on competitors activities to keep ahead in the competition to redefine corporate strategy and plans based on the new rules devised by the competitors. List at least eight sources that are available to the company to obtain information on the competitors' activities.

(04)

Q.9 In the wake of industrial accidents like Union Carbide – Bhopal, and environmental

disasters such as Exxon Valdez – Alaska, Oil and chemical companies have become very sensitive to Safety, Health and Environment (SHE) concerns. Nearly all companies have made SHE a part of their core values and mission statement, and keep close track of their performance in these areas. Obviously SHE initiatives command a sizeable budget and demand time of managers. DO you agree that besides being a good Corporate Social Responsibility practice, adopting SHE standards makes any business sense as well? If yes, what in your opinion could be the bottom line benefits of such policies?

(06)

Q.10 Just as physical climate is described by such variables as temperature, humidity, and

precipitation, corporate culture is composed of such factors as friendliness, risk taking, open communication amongst others. The culture existing within a firm influences the employees' degree of satisfaction with the job as well as the level and quality of their performance.

(a) Define Corporate Culture. (02) (b) List the internal factors that affect the Corporate Culture. (05) (c) Culture is often viewed in terms of level of participation within the organization.

What do you think are the various benefits derived when the top executives encourage the process of participation by employees in the decision making process?

(05)

Q.11 “Superior product quality is the key to higher return on Investment of any business.”

Do you agree? Please explain. (05)

(THE END)

THE INSTITUTE OF CHARTERED ACCOUNTANTS OF PAKISTAN Final Examinations Summer 2006 June 08, 2006 BUSINESS MANAGEMENT (MARKS 100) (3 hours) Q.1 Keeping in view the fast changing environmental factors, please comment on the

viability of the following statements: (a) Strategic management is solely a top management job. (03) (b) Organizations should go for highly challenging goals rather than following

normal growth. (03) (c) Organizations should pursue only those objectives which match their internal

capabilities. (03) Q.2 (a) “Strategic vision (core purpose) of an organization should never change.

What can change are operating procedures, cultural norms and business strategies”. Do you agree with this statement? Kindly explain your view point and also discuss the various strategic aspects related to the core values of a company. (06)

(b) Strategic Planning and Control Cycles are meant to go hand-in-hand. What do

you understand by the term control in the context of planning? Why is control important? (05)

Q.3 Many public sector organizations in Pakistan have recently been privatised or are in

the process of being sold to private entrepreneurial sector. These include banks, utility companies, large scale manufacturing firms etc. The privatisation process will be followed by huge changes within the organizations to which the employees will have to adjust and adapt.

(a) What different types of organizational changes do you see taking place in

these enterprises? (04) (b) It is expected that the employees may resist the impending change. In what

way do you think change may affect individuals in these organizations, leading to their resistance? (06)

(c) You are a consultant appointed to facilitate introduction of change in one of

these organzations. What factors would you bear in mind in dealing with resistance to change with respect to the following:

• Pace • Manner • Scope of change (04)

(2) Q.4 (a) Describe the following branding strategies with real life example from your

observation. • Family branding • Brand extension • Multi-branding (06)

(b) Market Segmentation is based on the recognition of the diverse needs of

potential buyers. From your personal observation, what basis of market segmentation do you see being used whilst marketing the following:

• soaps • financial services • newspapers / publications

Elaborate with at least 2 examples each (06) Q.5 On January 01, 2004 Sherry was appointed as General Manager, Marketing and

Sales of the consumer products division in Neon International, a company having its headquarters in Germany. Sherry spent a couple of weeks taking inventory of the situation. He made the following assessments: • Sales of consumer division has been stagnant over the last four years which

was around Rs.1.2 billion with the quantitative turn over of 40 million pieces per annum.

• Market size was estimated at 120 million pieces per annum which means the company commanded around 33% market share. Research findings have confirmed that market growth has slowed down in urban market whereas rural market is growing by 10%.

• The company had a good distribution infrastructure in urban towns whereas rural market penetration was extremely poor.

• Competitive environment was becoming very aggressive. Local competition was focusing on the strategy of ‘profit through cost management’ and market prices (both trade and consumer) remained constant over the last several years confirming ‘price erosion’ in the industry.

• Price differential between company’s brand and that of competition was as high as 15%.

• With lower market prices, competitors were able to capture a big chunk of the rural market.

Sherry concluded that times ahead will be quite difficult and the company has to re-visit its core as well as operational direction. He therefore decided to discuss the overall scenario with the Marketing and Sales team before preparing a presentation for the executive committee of the company. Some of the key recommendations received from the Marketing and Sales team were: • Prices must be brought at par with competition. • Advertising budget must be increased from 1.5% to at least 5% of the total

turnover. • Low cost brands should be introduced in the rural market to fight competition. • Trade margins shall be increased to keep our brand attractive to trade partners. • Distribution channels shall be pushed to improve distribution efficiency.

(3) While Sherry was still thinking where to begin for the proposed presentation, news

came from the Regional Headquarters that one of the closest international rivals has announced entry into Pakistani market and it was quite obvious that their initial target would be urban markets.

(a) Make an objective assessment of the situation and bring out key threats being

faced by the company. (04) (b) What should be the new strategic direction that Sherry should propose to the

Executive Committee? (05) (c) Please suggest key operational strategies that should be immediately adopted

by the company to salvage this situation. (06) Q.6 What is dumping? Why do countries impose anti-dumping measures? Give some

examples of anti-dumping measures used by countries. (05) Q.7 In selecting candidates for employment, interviews are often supplemented by

Tests. Briefly describe the different types of tests that are available, and the advantages and shortcomings of using them. (10)

Q.8 (a) What do you think are some of the reasons for companies to venture outside

their home markets through exporting or making overseas investment? (08) (b) Many foreign fast-food companies have come to Pakistan by appointing local

franchisees. These franchisees have license to use the franchisor’s brand name and are supported by the franchisor in all the business processes through training and transfer of know-how. As a result, the quality of service remains up to the franchisor’s international standards. What in your opinion are the likely advantages to the franchisor in such an arrangement? What are some of the potential pitfalls? (06)

Q.9 Organizations particularly Fast Moving Consumer Goods companies should strike

a balance between push and pull strategies to successfully achieve their sales and distribution goals. Those who overdo push and do not well balance it with pull, come into serious problems.

(a) Differentiate between push and pull strategies. (04) (b) What problems do you think a company might face if they overdo push

and do not balance it with the desired level of consumer pull? (06)

(THE END)

THE INSTITUTE OF CHARTERED ACCOUNTANTS OF PAKISTAN Final Examinations Winter 2006 December 7, 2006 BUSINESS MANAGEMENT (MARKS 100) Module E (3 hours) Q.1 (a) What do you understand by the concept of Ethical Marketing?

What possible ethical issues do you see in the following areas?

Fixing of prices in collaboration with competitors. Premium pricing for brands versus unbranded generic products. Advertising.

(02) (06)

(b) Employees are important stakeholders and responsible organizations lay down

appropriate rules/principles to govern their conduct towards the employees. Give any four examples which you consider important for inclusion in the Code of Ethics relating to employer and employee relationship. (08)

Q.2 Sterling Corporation is an integrated manufacturing and marketing concern dealing in

industrial chemicals. The company employs a large number of staff which is mainly engaged in manufacturing, office support services and outdoor sales. The occupational health and safety record of the company has been quite poor with regular incidents occurring across the organisation. Typical incidents reported are:

Factory Floor: Inhalation of toxic fumes; cuts & burns in handling machines; slips and falls due to poor housekeeping.

Office: Ergonomic ailments due to poorly designed furniture; eyesight

impairment due to extended hours of computer work.

Road Travel: Road accidents and resulting injuries. The management has woken up to the need to improve health and safety performance of its employees. It wants to champion zero-tolerance for unsafe and unhealthy work practices and understands that this requires joint ownership of responsibility by management and employees. You are assigned to:

Draft a Corporate Health & Safety Policy statement stating the management’s vision and everyone’s responsibilities.

Recommend some safety measures to be undertaken by the company for the employees to help reduce accidents.

Suggest some measures, against which to monitor safety performance in the following three areas:

Factory Floor Office Road Travel

(03) (03) (06)

(2)

Q.3 Despite the proven advantages of specialisation in terms of gaining comparative advantage, many countries actively try to avoid specialising their economies. What might be some of the arguments against pursuit of specialisation? (08)

Q.4 Marketing Research is a powerful tool that helps in improving the quality of marketing

decisions. There are different approaches available to pre-test a marketing idea or strategy. Some of these pre-testing tools are:

• Motivational Research • Laboratory Tests • Ratings Tests • Test Marketing • Simulated Store Technique • Controlled Test Marketing

Describe any four of the above types of pre-tests. (08) Q.5 (a)

What is meant by forecasting and why is it done by business managers?

(02)

(b) What may be the most common reasons for failures in forecasting? (03) Q.6 (a) Why, in your opinion, are properly designed Job Application Forms important and

what is their main purpose? (03) (b) What are the main objectives of undertaking Performance Appraisal exercises at

regular intervals? (06) Q.7 Ahmer and Company manufactures and markets motor cycles in Pakistan. It has started

facing severe price competition from some of the new entrants in the industry. Some of the competitors’ prices are very low according to the company. These new entrants are mostly local companies which operate with Chinese collaboration. They are attempting to change the rules of the game by bringing in new model of business focusing on ‘Best Cost Strategy’. Ahmer, the owner of the company is quite concerned about this situation. It is putting pressure on both profitability and market share of his company. He can manage some cost reduction by better negotiation with his existing vendors and component manufacturers but these do not seem sufficient to fight against the new competition. He is of the opinion that he cannot compromise on quality to the extent that it earns his brand a bad name in the market.

(a) Please make a brief assessment of the above situation highlighting the importance

of cost management as an on going activity of organizational strategic fit. (03) (b) What other options do you think Ahmer has, to fight the new competition? Please

present a case to Ahmer for strategic cost management to make a breakthrough. (08) Q.8 Research proves that most successful companies have ‘Purpose Beyond Profit’ which

give them better return on investment and shareholder value. (a) Explain your understanding of the concept of ‘Purpose Beyond Profit’. (03) (b) Give three examples of purpose beyond profit which a business organization could

have. (03)

(3)

Q.9 Many top executives believe in ‘Constant Re Invention’, as they remark, “the minute you have developed a new business model, it’s extinct, because somebody is going to copy it”. Hence, the organizations should develop Sustainable Competitive Advantage (SCA).

(a) What do you understand by Sustainable Competitive Advantage? Explain. (03) (b) How can product innovation and technology up gradation result in developing an

SCA? (03) (c) In the context of product development, list the different types of ‘new products’? (03) (d) List various sources of ‘new products’. (03) (e) While bringing a new product in the market, what important marketing

considerations should be taken into account to make it successful? Explain briefly. (03) Q.10 What are global (multi-national) companies? What are the different threats and

opportunities these companies face? Please explain briefly. (10)

(THE END)

THE INSTITUTE OF CHARTERED ACCOUNTANTS OF PAKISTAN Final Examinations Summer 2007 June 7, 2007 BUSINESS MANAGEMENT (MARKS 100) (3 hours) Q.1 (a) What do you understand by the terms Primary Data and Secondary Data? (04) (b) What are the advantages of using Secondary Data in Market Research? (02) (c) Give at least four sources in Pakistan from which Secondary Data regarding

business and industry can be obtained. (03) Q.2 Branding plays a critical role in the marketing of Fast Moving Consumer Goods

(FMCGs) and companies incur substantial expenditures for promotion of their brands. (a) Explain what is meant by Branding? (03) (b)

Under what conditions do companies pursue aggressive Branding Strategies for marketing of their FMCGs? (06)

Q.3 GMP Pharmaceuticals Limited is engaged in the manufacture of a wide range of

pharmaceutical products. The company has a highly qualified and skilled professional cadre of employees whose competence and ability to work in a team-environment are vital for the manufacture of top quality products. The company has well-defined Rules of Service and expects strict adherence to these rules by its employees at all levels. Required: Describe briefly the various stages of Disciplinary Actions which GMP Pharmaceuticals may take against employees who violate the rules and regulations of the company. Identify the situations in which a certain type of Disciplinary Action is considered to be appropriate. (10)

Q.4 A UK-based group of overseas Pakistani investors intends to make substantial

investment in a new cement project in Pakistan and has engaged you as a consultant to undertake an industry and competitive analysis on their behalf. The investors have mentioned that the proposed cement plant of latest EU technology and manufacturing process is based on most efficient fuel consumption and environment-friendly parameters and it would be the first plant of its kind in Pakistan. Since fuel efficiency is a critical success factor for the cement industry, the proposed unit would offset the advantages accruing to the competitors who had set up their units earlier at significantly lower capital costs. Moreover, the new cement project would be completed within an extremely tight implementation period of one year as compared to the units of the competitors which were set up in 3-4 years and involved higher financial costs. The proposed cement unit would involve a significant investment decision with far-reaching consequences. Required: Identify what strategic factors relating to the industry and competitive outlook for cement industry in Pakistan would you consider in your report to enable your client to reach a sound investment decision. (12)

(2)

Q.5 (a) What are the distinguishing characteristics of a company which pursues a Strategy of Globalization? (04)

(b) What are the main advantages of adopting an aggressive Global Strategy? (04) Q.6 (a) Explain what is Distinctive Competitive Advantage? (03) (b) What are the factors which contribute towards the creation of Distinctive

Competitive Advantage? (05) Q.7 The success of even the well-formulated Strategic Plans depends to a considerable

extent on their implementation. What are the factors that make the organizational environment conducive for successful implementation and achievement of the objectives conceived in the Strategic Plan? (09)

Q.8 In Pakistan, the Mobile Telephone companies are promoting their products to meet the

various Social Needs of different segments of the market. Identify five types of social needs that the Mobile Telephone companies are targeting in their promotion campaigns? (05)

Q.09 In all well-managed organizations, Performance Appraisal is an important Human

Resource Management function. What are the objectives of undertaking Performance Appraisal exercises at regular intervals? (10)

Q.10 BNG Textile Mills Limited operates an integrated textile mill having spinning,

weaving and finishing facilities. It has a work force of 2,000 employees. Approximately 90% of the workers are deployed in the spinning, weaving and finishing departments where the work is of a strenuous and repetitive nature. In your opinion, what kind of work environment should BNG Textile Mills adopt and promote to attract and retain a dedicated and stable work force committed to achieve its business goals?

(09) Q.11 (a) An increasing number of firms have entered into International Contract

Manufacturing arrangements in the past few years. Explain what do you understand by International Contract Manufacturing arrangement? (03)

(b) List three advantages of entering into such arrangements. (03) Q.12 At present a significant volume of international trade is facilitated by use of

Documentary Credit. Briefly explain what do you understand by Documentary Credit? (05)

(THE END)

THE INSTITUTE OF CHARTERED ACCOUNTANTS OF PAKISTAN Final Examinations Winter 2007 December 6, 2007 BUSINESS MANAGEMENT (MARKS 100) (3 hours) Q.1 Super Candy Company Limited is engaged in the manufacture of sweets, candies,

chocolates and bubble gums consumed by children. The Company has achieved phenomenal growth in the preceding 3-4 years. This growth is attributable to the highly aggressive marketing and promotional efforts launched by the incoming Marketing Director who has considerable experience in the confectionary industry. During this period, the strength of the employees has increased from 250 to 500. It is envisaged to induct 300 more workers during the next 24 months. The Human Resource Management functions have been largely neglected and are not capable of addressing the needs of a large-sized company aspiring to be the “industry leader.” As the newly appointed General Manager, Human Resources, identify six functions of HR management which would receive your urgent attention. Give brief reasons for considering these functions important for the sound planning and development of HR practices in the company. (12)

Q.2 A large number of business organizations pursue Related and Unrelated

Diversification Strategies to increase their share of the market and also their overall profitability. Explain what do you understand by the terms “Related Diversification” and “Unrelated Diversification”? (05)

Q.3 (a) Explain the difference between “strategic objectives” and “financial objectives”. (04) (b) Give two examples each of strategic and financial objectives of a company

engaged in the manufacture of fast moving consumer goods. (04) Q.4 Explain what do you understand by Corporate Social Responsibility (CSR)? What are

the essential features of CSR-conscious organizations? (06) Q.5 Define Product Life Cycle. What characteristics of Sales, Costs, Profits and

Competition are dominant during the different stages of the Product Life Cycle? (10) Q.6 All progressive organizations have formal Employee Performance Appraisal (EPA)

systems and considerable time and effort is spent periodically in the compilation, processing and review of the EPA information. Identify four main reasons for giving EPA function high importance in Human Resource Management. (08)

(2)

Q.7 Explain the following concepts:

Branded Merchandise Competitive Advantage Global Company Contract Manufacturing (12)

Q.8 (a) It is observed through various empirical studies that employee motivation holds

the key to the success of leading organizations in widely diversified business situations. Identify six factors which in your opinion would contribute towards achievement of high levels of motivation. (06)

(b) Explain the concept of benchmarking. Why do firms undertake benchmarking

exercises? (06) Q.9 Briefly explain what are the different entry barriers which make it difficult for

prospective new comers to make investment in any particular industry. (06) Q.10 (a) The last two decades have witnessed significant growth in all spheres of

international business operations and this trend continues to gain further momentum. In your opinion, what are the advantages which global companies seek to achieve by pursuing international operations? (09)

(b) Identify any five constraints which in your opinion act as impediments towards

attracting foreign investments in a typical underdeveloped country. (05) Q.11 Space Age Game Technologies Ltd has developed an entirely new line of electronic

game cube for playing video games for children between the ages of 10-15 years. This new game cube has been developed after considerable market research and at a very high initial R&D cost. The company has created awareness of the unique features of this new product through selective promotion campaigns, including physical demonstrations at prestigious electronic stores. After careful evaluation of the various pricing options, the management has decided to launch the new product by pursuing a “market-skimming strategy.” (a) Briefly state what is meant by market-skimming strategy. (b) In your opinion what are the factors which could have contributed to the

management’s decision to select this pricing strategy? (07)

(THE END)

THE INSTITUTE OF CHARTERED ACCOUNTANTS OF PAKISTAN Final Examinations Summer 2008 June 5, 2008 BUSINESS MANAGEMENT (MARKS 100) (3 hours) Q.1 The sponsors of Seaside Resorts Limited (SRL) are considering to set up a major

project on the sea coast at a distance of 85 kilometers east of Karachi. The project 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) Q.2 East-West Centre of Diabetes (EWCD), a non-profit organization has recently received

substantial donations from a group of overseas Pakistani philanthropists. EWCD has 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 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)

Q.3 What do you understand by Code of Ethics in the context of a business organization?

State four advantages which in your opinion are important for adopting a Code of Ethics? (07)

(2)

Q.4 As a Senior Manager in the Human Resources Department of Apex Bank Limited, you have been entrusted with the task of conducting a Disciplinary Enquiry against Mr. Hameed Khan, an Assistant Manager in the Bank Square Branch. The Branch Manager, 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)

Q.5 All leading global business organizations possess certain distinctive marketing

capabilities and competitive advantages which set them apart from those companies 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)

Q.6 In the current economic scenario, business organizations are under continuous stress to

achieve economies in their production and operating costs. The pressures for cost 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)

Q.7 (a) Lazzat Foods Limited is engaged in the business of manufacture of packaged

masalas, jellies and jams. The Company’s sales have been stagnant since the past two years due 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 participation in the Trade Fair. (04)

(b) State six reasons why companies enter into international alliances. Give two

examples of industries in which international alliances are most common and identify a logical reason for such an alliance. (08)

Q.8 (a) Narrate important points that should be considered in the decision making

process. (03) (b) Union Group of Companies has diversified interests in fertilizer, sugar, cement

and steel industries. Each entity operates as a strategic business unit and executives in the 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.

Describe the distinguishing features of decision making process at Operating,

Tactical and Strategic levels. (09) Q.9 Tameer Construction Company, a UAE-based entity, has ambitious plans to develop

major real estate projects in Pakistan through a subsidiary company. The parent 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)

(3)

Q.10 (a) The governments generally promulgate comprehensive laws for health, safety and security of the workers. State five objectives which are expected to be achieved through these laws. (05)

(b) Safety Engineers are convinced that industrial accidents are attributable to

inadequate Human, Environmental and Mechanical/Technical security factors. How can responsible management effectively reduce the risks of accidents in each of these categories? (09)

Q.11 What do you understand by transfer pricing in the context of multinational companies.

List two advantages of adopting market-based transfer pricing policies. (04)

(THE END)

THE INSTITUTE OF CHARTERED ACCOUNTANTS OF PAKISTAN Final Examinations Winter 2008 December 4, 2008 BUSINESS MANAGEMENT (MARKS 100) (3 hours) Q.1 Orient Cement Limited (OCL) aspires to be included in the category of a select group of

progressive companies in the country and is considering a proposal for introducing significant changes in its labour welfare policies which would offer tangible benefits to 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) Q.2 It is widely realized that companies pass through various stages of growth during the

different periods of their existence. State four dominant characteristics which would 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) Q.3 Shakeel Ahmed, a competent and hard working young officer, is at the initial stage of

his professional career in a leading insurance company. He has an ambitious goal to 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) (b) What are the principal advantages of adopting and pursuing a well-formulated

Personal Development Plan?

(04) Q.4 New Age Automobile Company Limited intends to diversify its operations by

establishing a separate division for manufacture of a less-expensive brand of tractors. 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)

(2)

Q.5 (a) What are the distinctive ingredients of Vision and Mission Statements? (03) (b) It has been observed that certain companies adopt, with minor modifications and

changes in emphasis, the basic ingredients of Vision and Mission Statements of the 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) Q.6 Corporate and Business Strategies of marketing-focused organizations operating in

different product lines pursue entirely different approaches depending on customer, 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 Orientation:

Emphasis on plans and actions of competitors as only few competitors dominate the market e.g. branded edible oil.

Inter-functional Coordination:

Marketing is considered to be an all-encompassing 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) Q.7 (a) Currently, a large number of progressive companies are in the various stages of

adopting policies of Corporate Social Responsibility. Explain what do you understand by the term Corporate Social Responsibility. (03)

(b) In your opinion what are the major concerns which prevent organizations from

adopting and implementing comprehensive policies of Corporate Social Responsibility? (05)

Q.8 (a) Governments in developing countries are often concerned that global companies

with substantial financial and technical resources are in a position to exploit the 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) (b) Multinational Enterprises are classified as Ethnocentric, Polycentric and

Geocentric companies depending on the strategies and policies pursued by their top management.

List the distinguishing characteristics of each of the above types of international

companies. (06)

(3)

Q.9 Paragon Polyester Company Limited (PPCL), a Korean company, is considering a proposal for a substantial investment to establish a polyester plant in a foreign 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)

Q.10 Strategists involved in the marketing of Fast Moving Consumer Goods (FMCG) keep a

close watch on the various stages of the Life Cycle of their products and adjust their 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)

Q.11 Briefly explain the following:

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

(THE END)

THE INSTITUTE OF CHARTERED ACCOUNTANTS OF PAKISTAN Final Examinations Summer 2009 June 4, 2009

BUSINESS MANAGEMENT (MARKS 100) (3 hours) Q.1 Pan Pacific Steel Mills Limited was established in 1960 to manufacture steel products

such as iron bars, wire rods, girders and steel sheets. In 2006, a team of professional 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)

Q.2 Euro Motors Limited is engaged in the business of manufacturing and marketing of an

extended line of motor cars catering to the varied needs of a wide segment of the 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)

Q.3 Apollo Mining Company Limited owns and operates integrated facilities of mining of

coal and iron ore along with power generation and distribution facilities. Although these facilities have been developed at a substantial investment cost, the management has been indifferent to the conditions of its workforce of 1500 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)

(2)

Q.4 Companies which seek expansion of business can achieve their objectives either through organic/internal expansion or by pursuing acquisition strategies.

(a) Explain the key differences between strategies of expansion by organic/internal

growth and by acquisition. (06) (b) Give any four reasons why organizations generally prefer to achieve expansion

through internal growth and not through policies of acquisition. (06) Q.5 (a) Rapidly changing economic, technology and social environment along with the

pressures to produce more value-added products and services at lower costs compel 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)

(b) Although managers at various levels are frequently involved in the Performance

Appraisal of their subordinates, there are certain weaknesses in this process. 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

Resource Manger while reviewing Performance Appraisal Reports? (06) Q.6 You have been entrusted with the task of hiring an individual for the position of General

Manager Marketing for Good Health Dairies Limited. The company has been 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)

Q.7

Companies which pursue market-driven business strategies consider that sponsorship of high profile and attractive events are communication techniques to create 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)

Q.8 In the preceding five decades, a significant number of companies have pursued well-

conceived strategies of Globalization in order to seize the immense business 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)

(3)

Q.9 Competition for attracting direct foreign investments among countries has always been intense. Countries such as Singapore, Malaysia and Cyprus have been able to 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)

Q.10 According to Maslow’s Theory of Hierarchy of Human Needs, all human beings have

different kinds of needs. Competent marketing managers must have insight in the 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)

Q.11 Briefly explain the following concepts: Business Ethics

Pull Strategy of Promotion Licensing Benchmarking (10)

(THE END)

THE INSTITUTE OF CHARTERED ACCOUNTANTS OF PAKISTAN Final Examinations Winter 2009 December 10, 2009 BUSINESS MANAGEMENT (MARKS 100) (3 hours) Q.1 Red Balloon Clothing Limited (RBCL) is engaged in the business of manufacturing a wide

range of children clothing since the past six years. The Company has built a 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) Q.2 Although Strategies of Cost Leadership and Product/Service Differentiation appear to be

highly attractive, many companies are often not able to achieve much success 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) Q.3 (a) List and explain briefly any four important packaging features which would

influence the decision of a consumer to purchase an edible consumer product. (06) (b) Market researchers often place reliance on external databases as the information can

be obtained readily with minimum of effort and at a low cost. However, experienced 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) Q.4 It is observed that work-related stress often pose a heavy burden in organizations and is

manifested by frequent absenteeism, late-coming, accidents and decline in the 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)

(2)

Q.5 (a) Why mission–oriented business strategists do not view the Short-termism approach favourably? (02)

(b) Give two examples of typical business situations to highlight the defects of pursuing a

policy of short-termism. (03) Q.6 Superb Engineering Limited (SEL) manufactures parts and components for

assembly/manufacture of automobiles. During the past few years, the company has 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) Q.7 Strategic Planning and Management is an exercise undertaken at the highest levels of the

management hierarchy and involves decisions concerning formulation, 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) Q.8 In your opinion, what types of complexities are generally encountered by parent companies

in the planning and control of operations of their foreign subsidiaries? (06) Q.9 Excel Chemicals Limited (ECL) owns and operates facilities for the manufacture of

industrial chemicals, including various types of highly corrosive acids. The Company’s 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)

Q.10 The pursuit of goals of achieving cost economies and operating with lean and more flat

organizational structures has resulted in creation of an environment in which the 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)

(3)

Q.11 Capital Bank Limited is a leading financial institution and is well-known for its strength in rendering highly efficient professional services to its customers and keeping ahead 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)

Q.12 (a) List the following steps involved in the operation of a typical Letter of Credit in their

logical order of sequence. (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

behalf of the importer. (06) (b) Identify five advantages which a multinational corporation expects to achieve by

establishing manufacturing facilities in foreign countries. (05)

(THE END)

THE INSTITUTE OF CHARTERED ACCOUNTANTS OF PAKISTAN Final Examinations Summer 2010 June 10, 2010 BUSINESS MANAGEMENT (MARKS 100) (3 hours) Q.1 Dandy Candies Limited (DCL) are manufacturers of a wide range of chocolates, candies and

sweets catering primarily to the market segment comprising of children in the age 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 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) Q.2 (a) Identify the important functions which have to be performed by the Human Resources

Department of a commercial bank which has a strength of 17,500 employees 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)

(b) Research Studies by Human Resource experts have shown that successful organizations

create internal work environments in which the employees are able to operate at their optimal levels of productivity.

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)

Q.3 (a) Identify and explain briefly six factors which have contributed to the significant

increase in importance of International Trade in the preceding 3-4 decades. (09) (b) According to Michael Porter the nature of competitiveness in any industry is a

composite of Five Forces. The Competitive Analysis model developed by Porter is widely followed for formulating business strategies in many industries. List the five Competitive Forces stated by Michael Porter. (05)

(2)

Q.4 Fine Sugar Mills Limited (FSML) owns and operates a sugar cane crushing plant for manufacture of refined sugar. The affairs of FSML are looked after by a team of 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)

Q.5 (a) What are the four main types of information that a properly designed Job Application

Form is expected to provide to the recruiter in the preliminary process of screening of a prospective candidate? (04)

(b) State five different situations in which it would be advisable for a firm to pursue

policies of Unrelated Diversification. (05) Q.6 In any market of significant size for products which have a widely diversified and dispersed

customer base there are a large number of firms, each, competing for its 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)

Q.7 Management of Business Organizations are invariably seized with numerous problems and

expend a considerable proportion of their energy and time in making decisions to solve these problems. Explain briefly the various stages involved in the Decision Making Process. (09)

Q.8 (a) Accurate Engineering Limited is a company located in Europe and is engaged in the

business of manufacturing a wide range of high precision metallurgical components 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)

(3)

(b) A Multinational Corporation has subsidiaries in several developing countries with majority shareholdings in each of them. The MNC pursues a policy of centralized 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) Q.9 (a) Describe briefly the following methods of selection of candidates: (i) Group/Panel Interview (ii) Structured Interview (05) (b) State two advantages of each of the above methods of interviews. (04) Q. 10 List eight Health and Safety hazards which are often faced by workers in a typical

manufacturing environment. (04)

(THE END)

 The Institute of Chartered Accountants of Pakistan 

 

Business Management

Final Examinations – Winter 2010 December 9, 2010 Module E 100 marks - 3 hours

Q.1 (a) Dental Equipments Limited (DEL) is engaged in the business of manufacture of a wide range

of equipments used by private dentists as well as leading hospitals. The 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.

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) (b) State the situations in which an MNC would prefer to operate in a foreign country as a branch

instead of establishing a subsidiary company. (04 marks) Q.2 List and explain briefly four factors which in your opinion create Exit Barriers and prevent

existing participants from quitting a loss-incurring industry. (08 marks) Q.3 Identify the business strategy/policy/tool which an organisation is pursuing in each of the

following situations: (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)

Business Management Page 2 of 3 

Q.4 (a) Recruitment of the right type of staff is of critical importance for the short term as well as the long-term success of an organisation. Induction of unsuitable employees 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) (b) A leading hospital which has a network of facilities at several locations in Karachi and also in

other cities intends to invite applications for the posts of Laboratory 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) Q.5 (a) List the following methods of payment for the imported products which are most

advantageous from the perspective of an importer in descending order. (i) Open Account (ii) Sight Letter of Credit (iii) Consignment (iv) Usance Letter of Credit (02 marks) (b) State six constraints which in your opinion act as impediments towards attracting foreign

investments in an underdeveloped country. (03 marks) (c) List four advantages of adopting market-based transfer pricing policies. (04 marks) Q.6 (a) A well-established and successful Chinese company engaged in the business of manufacturing

of a wide range of home appliances such as refrigerators, washing 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.

(b) Some companies enter into Licensing arrangements with the overseas companies as an

alternative to direct exporting. Identify the advantages that such companies seek to achieve by following this strategy. (05 marks)

Q.7 (a) Explain the meaning of Brand Equity. (02 marks) (b) Silkfinish Paints Limited (SPL) are manufacturers of a wide variety of superior quality paints

which are used in interior and exterior finishing of residential, commercial and 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)

Business Management Page 3 of 3 

Q.8 (a) The role of Human Resource Managers in companies which have a very large workforce has assumed increasing importance and they are now more closely 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

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) (b) What is meant by a Strategic Business Unit (SBU)? (03 marks) Q.9 Management has to expend considerable efforts in devising business strategies to achieve corporate

objectives and goals effectively. (a) Why do companies accord importance to the pursuance of a formal Strategic Planning

Process? (06 marks) (b) Explain the different steps which the management has to undertake in the formulation and

implementation of a well-considered business strategy. (09 marks) Q.10 One common factor which distinguishes well-managed and highly profitable service-oriented

companies from their competitors is the competence and commitment of 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)

(THE END)

 The Institute of Chartered Accountants of Pakistan 

 

Business Management

Final Examinations Reading time – 15 minutes

June 9, 2011 Module E – Summer 2011 100 marks – 3 hours

Q.1 (a) A leading manufacturer of automobiles attaches high degree of importance to the

competencies and skills of its front-line operational managers in the manufacturing and assembly lines.

Identify and briefly explain the different types of competencies and skills required for

effective performance by these managers. (05 marks) (b) Employee Participation is often considered to be vital for the growth and development of

individuals and teams to enable them to make effective contribution 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)

Q.2 (a) Identify the force of competition which is relevant in the context of Michael Porter’s Five

Forces Model of Competition in each of the scenarios presented below. 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 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)

(b) Unique Textile Mills are leaders in the designing and manufacturing of cotton fabrics for

ladies fashion clothing. Identify four Strategic Objectives which in your opinion may be included in the strategic planning process of Unique Textile Mills. (03 marks)

Q.3 Symco Bank Limited has introduced significant changes in its organizational structure and

downsized its operations so that it may be able to provide more efficient services 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) (b) List the important considerations which should be kept in perspective by the HR Manager of

the bank while pursuing a policy of downsizing. (05 marks)

Business Management Page 2 of 2

Q.4 (a) What is meant by Market Research? (02 marks) (b) Give four basic reasons why companies conduct market research. (04 marks) Q.5 You have recently been appointed as Human Resource Manager of Fine Electrical Company

Limited (FECL), a leading manufacturer of a wide range of household 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) (b) Briefly explain to the management of FECL the advantages of introducing a Formal

Succession Planning Scheme in the company. (05 marks) Q.6 (a) What is Market Penetration Policy? Identify the conditions in which Market Penetration

Policy may be pursued to achieve optimum results. (06 marks) (b) Explain briefly what you understand by the term Market Segmentation. State the criteria

which are essential for classification of markets in different segments. (05 marks) Q.7 Highly Creative Strategic Planners in progressive organizations have innovative mindsets and do

not merely project past strategies in the future but are continuously 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. (09 marks) Q.8 (a) Distinguish between a global business strategy and a multi-domestic/adaptive business

strategy. Identify a real life example of each strategy and give reason for your choice. (06 marks)

(b) What are the key financial decisions which should be made by the management while

contemplating direct investment in a foreign country by formation of a subsidiary company? (05 marks)

Q.9 A multinational company which has its headquarters in the UK pursues a strategy of exercising

very close control and centralization of all important decision-making 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) Q.10 List ten responsibilities/obligations which employers must fulfill to ensure that the issues of Health

and Safety are addressed adequately in a manufacturing environment. (05 marks) Note: Explanations are not required

Q.11 Briefly discuss the following: (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)

(THE END)

The Institute of Chartered Accountants of Pakistan

Information Technology Management, Audit and Control

Final Examination 9 December 2011 Winter 2011 100 marks - 3 hours Module E Additional reading time - 15 minutes

Q.1 Thriving Limited (TL) is a fast growing distribution company. In a short period of time, the IT function of TL has become the prime facilitator and enabler of its business and consequently the management has taken various steps to improve its efficiency and effectiveness. In this regard an IT Strategy and Steering Committee has been formed. The Committee has taken various steps that include devising new strategies and plans, restructuring of IT department, upgradation of facilities and human resources within IT department and documentation of internal controls and procedures etc. to achieve the desired result.

You have been hired as an IT and Management Consultant to carry out a critical evaluation of the

steps taken by the Committee. Required: (a) Specify the information which you would like to gather as regards TL’s IT strategy. (05 marks) (b) Identify the matters that you would consider in evaluating: (i) the strategic planning process; and (05 marks) (ii) the organisation of TL’s IT function. (08 marks) Q.2 Database failures are a cause of concern for many organisations. You are required to prepare a note

explaining the following: (a) four common causes of database failures; and (04 marks) (b) four common database backup strategies, to minimise the risk of loss of data. (08 marks) Q.3 WAO Limited is facing fierce competition. Besides other problems, customers’ satisfaction surveys

have suggested that the customer support function is not performing effectively and efficiently. Consequently, the company is losing its market share day by day. It has therefore decided to re-organise the customer support function.

As part of the above exercise, you have been assigned the task of revamping the customers’ help

desk to ensure that it is able to meet its objectives effectively. Required: Identify key objectives of the help desk function and briefly explain what actions are needed to

achieve them. (09 marks) Q.4 E–commerce has gained a significant share of the overall market for goods and services in many

countries. However, in addition to its advantages, e–commerce has several limitations including risks for commercial organizations as well as individual consumers.

Required: Briefly explain the risks associated with the use of e–commerce, from the customers as well as the

sellers’ point of view and suggest measures that can be adopted to mitigate them. (12 marks)

Information Technology Management, Audit and Control Page 2 of 2

Q.5 You are working as Manager IT Audit in YEP Consultants. Trade Power (TP), which is a midsized retailing and distribution company, has approached your firm for post-implementation review of its recently established Virtual Private Network.

Required: List the steps that you would undertake: (a) while planning the high level risk assessment of TP’s Virtual Private Network; and (b) in determining the scope and objectives of the above assignment. (06 marks) Q.6 The management of Utmost Textiles (UT) has decided to acquire an ERP solution. The ERP

consultant hired by the management is of the view that UT must conduct a business process re-engineering (BPR) exercise before acquiring the ERP solution. However, in order to save time, the management wants to conduct the BPR exercise concurrently with the implementation of the ERP solution.

Required: (a) Explain the benefits of carrying out the BPR exercise. (03 marks) (b) Comment on the management’s plan of concurrently carrying out BPR along with ERP

implementation. (05 marks) (c) What matters should be considered while evaluating and selecting a suitable ERP package?

(05 marks) Q.7 (a) Identify any six factors that need to be considered while making a decision as regards the use

of Computer Assisted Audit Techniques (CAATs). (06 marks) (b) Describe the steps that need to be taken while planning the use of CAATs. (07 marks) Q.8 As part of an IS audit, you are documenting the IT general controls and mapping them with the

best practices. You have noted that all the users have access to the entire printing options. The client is of the view that this practice makes the system user friendly and enhances its operating efficiency. The client also believes that it would not create any threat.

Required: Comment on the arguments provided by the client and state what action would you take. (05 marks) Q.9 Your firm is engaged in the audit of an information system processing facility. You have been

assigned the task of evaluating the effectiveness of the logical and environmental controls related to the following areas:

(i) Data confidentiality, integrity and availability (ii) Power and fire hazards Required:

Specify the questions that you would ask and the matters that you would like to observe to assess the effectiveness of controls related to the above areas. (12 marks)

(THE END)

The Institute of Chartered Accountants of Pakistan

Business Management

Final Examination 7 June 2012 Summer 2012 100 marks - 3 hours Module E Additional reading time - 15 minutes

Q.1 Fintex Company Limited (FCL) is in the advanced stage of implementing facilities for manufacture

of home textile products such as curtain draperies, sofa cloth, bed linen, 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 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)

Q.2 According to the Boston Consulting Group Matrix, business organisations which have multi-divisions and compete in different industries pursue separate strategies for their 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)

Q.3 (a) Employee Training is an important function of Human Resource Department of Apollo Engineering Limited, a company which considers workers skills at the factory floor 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)

(b) Appropriate Employee Compensation and Reward Packages are central to a healthy and enduring relationship between the employer and the employees. These 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)

Business Management Page 2 of 3

Q.4 (a) What is Wilful Misconduct? State why acts of Wilful Misconduct are considered as serious

offences by employers. Identify four situations in which an employee may be guilty of Wilful Misconduct. (04 marks)

(b) Sona Sugar Mills is being established in the outskirts of a small rural town. The management has engaged a Chief Security Officer to plan for the security of the 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)

Q.5 Consumer Products are classified by marketers in different categories as follows:

(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:

Price Customer Buying Behaviour

• expensive • less frequent purchase/keen comparison of price, quality and style

• low price • special purchase effort/brand loyalty

• high price • frequent purchase/less planning

Distribution Promotion

• distribution in few outlets • advertising and personal selling by producer/resellers

• widespread distribution at convenient locations

• mass promotion/advertising by producer

• outlets in specialised markets/shopping malls

• carefully targeted promotion by producer/resellers

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)

Q.6 All leading global business organisations possess certain distinctive capabilities and competitive advantages which set them apart from those companies whose 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)

Q.7 (a) Research in a number of organisational settings shows that efforts to introduce major changes for achieving the objectives of corporate turn-around and improvements invariably meet with strong resistance from employees at various levels.

Identify the reasons why employees offer strong resistance to major organisational changes and prefer to continue with the existing status. (05 marks)

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

Business Management Page 3 of 3

Q.8 (a) In the past two decades a number of Mergers and Acquisitions have been witnessed between some of the most prestigious and financially strong international 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)

(b) Differentiate between the characteristics of Strategic Decisions and Tactical Decisions. (04 marks)

Q.9 Firms ranking in second and third positions in highly competitive industries demonstrate significant business strengths and hold a sizeable share of the aggregate 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)

Q.10 (a) Multinational Corporations (MNCs) which have widely dispersed operations in several countries often prefer to centralise their cash management functions and conduct all 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)

(b) Give five reasons why the process of Globalization has assumed great importance in the present business environment. (05 marks)

(THE END)

The Institute of Chartered Accountants of Pakistan

Business Management

Final Examination 6 December 2012 Winter 2012 100 marks - 3 hours Module E Additional reading time - 15 minutes

Q.1 A sound system of Environment Scanning is of critical importance in the formulation of Strategic Plans of any progressive company operating in a fast-changing and 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)

Q.2 (a) Sitara Limited is a well-known manufacturer of a wide range of chromium plated sanitary fittings in Pakistan. The company has recently negotiated several long-term 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)

(b) A number of firms prefer to conduct Performance Appraisal of their skilled workers on a quarterly basis rather than as an annual exercise.

Identify three advantages of pursuing this policy of quarterly Performance Appraisal of skilled workers. (03)

(c) Although companies experiencing high rate of employee turnover are in a position to recruit new workers quickly to replace the outgoing employees, most of them are not 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)

Q.3 (a) What is meant by the term Customer Database? (02)

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

Business Management Page 2 of 3

Q.4 Identify the strategies/policies/objectives which are being pursued in each of the following cases:

(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)

Q.5 (a) HR Managers often deal with delinquent employees and encourage them to change their attitude and behaviour and adopt a positive approach towards their responsibilities to the organisation. Consequently, HR Managers have to exercise considerable discretion and provide proper guidance to the employees, rather than 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)

(b) The trend of outsourcing of certain activities by business firms to external entities has gained considerable momentum in the past few years.

Identify four advantages which, in your opinion, these firms expect to derive from outsourcing of selected business activities to external entities. (04)

Q.6 (a) Explain briefly the factors which have contributed to the creation and significant expansion of Global Markets during the preceding 20-25 years. (06)

(b) Briefly explain the salient features of the terms which are usually incorporated in a typical

Franchising Agreement. Give one example of a Franchise Relationship between an international company and a Pakistani enterprise. (05)

Business Management Page 3 of 3

Q.7 (a) Progressive business organizations, which have substantial share of the market, are continuously engaged in the planning of their marketing strategies to achieve specific 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)

(b) Successful companies make concerted efforts to retain their competitive advantages vis-à-vis

their competitors as an ongoing exercise encompassing all spheres of their business operations.

Narrate six measures which these companies usually take to retain and further consolidate

their competitive advantages. (06) Q.8 (a) Blue Transport Company (BTC) operates a fleet of 150 buses which provides inter-city

transport services. The company takes considerable pride in the superior quality of its 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) (b) What is meant by Competency–based Job Descriptions? (03) Q.9 Zest Dairy Company Limited intends to launch a new line of frozen fruit yogurts in the major

cities which would cater to the tastes of the customers for packaged food 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) Q.10 (a) Eagle Limited (EL) is a large conglomerate. The company is planning to establish a joint

venture in Centralia, a country which has several untapped sectors. EL foresees 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) (b) State the main reasons why leading companies obtain cross-border financing including

equity, debt and bank financing in different countries. (04)

(THE END)

Business Management

Final Examination 6 June 2013 Summer 2013 100 marks - 3 hours Module E Additional reading time - 15 minutes

Q.1 Grand Shipping Company Limited (GSCL) operates a fleet of container ships and plies on some of the busiest sea routes. To render efficient services in a competitive 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)

Q.2 Markets are often demarcated into different segments on the basis of their unique characteristics and attributes. The different market segments may be classified as:

(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)

Q.3 (a) Various studies show that in the present business environment, strategies of vertical expansion are pursued less frequently than the other strategies of business growth.

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. (08)

(b) Mission of an organisation, articulated and clearly defined in its mission statement, is a combination of the inspiration and description of the road ahead for the 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)

Q.4 (a) State the advantages of pursuing a policy of congenial human relations management in a large-sized industrial organisation having several divisions/departments. (05)

(b) In the course of selection process, candidates are administered various kinds of tests to ascertain their suitability for the positions. These tests must show a high degree of 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)

Business Management Page 2 of 3

Q.5 Identify the business strategy/policy/definition which is most relevant in each of the following situations:

(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)

Q.6 (a) Fine Foods Limited, a recognised name in the packaged food industry, intends to

launch its new line of cereal-fruit based products for infants.

State the important information which should be presented/contained in the labels on the new line of products. (04)

(b) State how manufacturing companies find and develop new product ideas. (04) Q.7 (a) The magnitude of Foreign Direct Investments has increased significantly in recent

times and the momentum of its expansion continues as an ongoing process. Describe any five factors which in your opinion have contributed to the expansion of

foreign direct investments in recent times. (7.5) (b) State three advantages of market-value based transfer pricing transactions among

inter-group companies. (4.5) Q.8 Products of leading multinational companies have firm footholds in the markets in several

countries around the world. State six strategic factors which contribute towards the success of these companies in such

highly diversified business conditions and market environments. (09)

Business Management Page 3 of 3

Q.9 (a) What are the different types of entry barriers which may discourage entrants from establishing new manufacturing units in spite of substantial demand/supply gap for products in any industry? (07)

(b) Identify the various steps involved in the Delphi Technique of decision making. (05) Q.10 Mercury Telecom Limited (MTL) recognises the need for developing a cadre of trained

management staff to provide efficient services to its customers. You have been 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)

(THE END)

Business Management

Final Examination 5 December 2013 Winter 2013 100 marks - 3 hours Module E Additional reading time - 15 minutes

Q.1 Marketing policies relating to five different types of businesses/products/services are

presented in the following table: ---------------------------Policies---------------------------

Businesses/Products Price Place Promotion

i) Fast food restaurant Skimming pricing Proximity to

exclusive restaurants

Prestigious business

magazines

ii) High-end ladies beauty parlour

Discounted prices for large groups

Highly affluent areas of the city

Both beauty and elite social magazines

iii) Branded pickles and

jams

Prices substantially

lower than competitors

Sold at company

owned outlets

Limited promotion in

national newspapers/ TV and cooking shows

iv) Uniforms for students in government schools

Extreme price competition

Through distributors in leading shopping

malls

Live cricket matches on TV

v) Locally manufactured refrigerators and air- conditioners

Higher than imported brands

Located at a distance from main markets of similar products

Advertisements in local newspapers

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) Q.2 Peak Corporation Limited (PCL) has acquired your services as an HR Consultant for

preparation of employee disciplinary procedures to be implemented in the 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) Q.3 (a) Eastern Company Limited (ECL) is located in Country A and its assorted line of

fast-moving consumer goods are well accepted in the domestic market. ECL is presently 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)

(b) Give two examples each of products which are usually marketed as: � standardized products � customized products (02)

Business Management Page 2 of 3

Q.4 (a) Define the term Consumerism. Identify the inherent rights of consumers in the prevailing business environment. (06)

(b) While formulating its marketing strategy, a manufacturer must decide whether it

intends to pursue a pull marketing strategy or a push marketing strategy. State the 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)

Q.5 Zest Pharmaceutical Company Limited (ZPCL) had assigned some of the most talented

individuals in the organisation to formulate the company’s strategic plan. The 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 of ZPCL. (12)

Q.6 (a) Long-life Concrete Limited (LCL) is a manufacturer of pavement blocks and enjoys a

sustainable cost-leadership position in its line of business. Recently, a number of 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) (b) Innovative companies allocate dedicated resources to identify and explore

opportunities for developing new products. List the basic attributes which are essential to make a new product viable and worthwhile for expending further time and effort on its consideration. (04)

Q.7 (a) Governments in all countries consider it their responsibility to promulgate and

implement laws and policies concerning health, safety and security of workers. State five objectives which governments seek to achieve by making these laws and

ensuring their compliance. (05) (b) Give three reasons why multinational companies often enter into agreements of

collaboration with partners in foreign countries to seize certain advantages instead of operating entirely on their own in these foreign countries. (06)

Q.8 Most companies prefer to achieve their objectives of expansion through organic/internal

growth. Give any four reasons why a company may prefer to achieve expansion through internal

growth and not through acquisition of other entities. (06) Q.9 State what is meant by the term ‘Employee Attitude Survey’. How an Employee Attitude

Survey is conducted and what are the different purposes for conducting the survey? (05)

Business Management Page 3 of 3

Q.10 Goodhope Enterprises had implemented several employee incentive schemes with the expectations that they would raise the level of motivation amongst the employees 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) Q.11 Briefly state what is meant by the following terms: (i) Human resource management (ii) Offshore manufacturing (iii) Behavioural interviews (iv) Competency-based salary system (v) Tax havens (10)

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Business Management

Final Examination 5 June 2014 Summer 2014 100 marks - 3 hours Module E Additional reading time - 15 minutes

Q.1 (a) Companies prepare formal mission statements which purport to define their unique

characteristics and set them apart from other organisations. However, it is observed 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)

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

Q.2 Strategic Management is a long-term planning process undertaken to achieve the organisational goals during a period ranging between 3-5 years. Describe the important stages involved in the Strategic Management process of major business organisations. (09)

Q.3 (a) Briefly explain the reasons why certain organisations prefer to outsource functions concerning recruitment of new employees to private employment agencies and professional recruiters rather than to handle these functions themselves. (08)

(b) Interviews are a widely accepted method of the recruitment process and often play a major role in the decision whether to accept or reject a candidate for a particular 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)

Q.4 (a) Sigma Corporation Limited (SCL) is engaged in the business of manufacturing assorted range of components and parts for different types of original equipment 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)

(b) Various types of Benchmarking are used as points of reference or standards against which performances of organisations are measured. State the difference between

Internal Benchmarking and Functional Benchmarking. Give one example each of Internal Benchmarking and Functional Benchmarking. (05)

Business Management Page 2 of 3

Q.5 (a) Aggressive marketing and promotional campaigns of consumer products through repetitive TV advertisements, eye-catching displays on large-sized billboards 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)

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

Q.6 Identify the business strategy/policy/definition which is most appropriate in each of the following situations:

(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 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)

Q.7 (a) Narrate (with brief comments) the different types of promotional strategies which are adopted for marketing of consumer goods in the following stages of their Product Life Cycles:

(i) Introduction stage (ii) Growth stage (iii) Maturity stage (iv) Declining stage (06)

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

Business Management Page 3 of 3

Q.8 Discuss the relevant competitive environment in the context of Michael Porter’s

Five-Forces Model of Competition in each of the three scenarios presented below. 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)

Q.9 (a) Purex Limited (PL) has considerable experience in its particular line of business and is considering making direct foreign investments in an African country. Besides the political risks, state what other factors PL should consider while making a decision regarding direct foreign investment in that country. (05)

(b) Nova Cosmetics Limited (NCL) considers that there are favourable business

opportunities for its assorted line of cosmetic products due to rise in income levels in 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)

Q.10 Explain briefly the reasons why certain global corporations consider it essential to pursue highly centralised decision making strategies to achieve their overall global objectives. (08)

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