Q1. Explain in brief the origins of Just In Time. Explain the different types of wastes that can be

eliminated using JIT

Ans. Just in Time (JIT) is a management philosophy aimed at eliminating waste and continuously improving

quality. Credit for developing JIT as a management strategy goes to Toyota. Toyota JIT manufacturing started

in the aftermath of World War II.

Although the history of JIT traces back to Henry Ford who applied Just in Time principles to manage

inventory in the Ford Automobile Company during the early part of the 20th Century, the origins of the JIT as

a management strategy traces to Taiichi Onho of the Toyota Manufacturing Company. He developed Just in

Time strategy as a means of competitive advantage during the post World War II period in Japan.

The post-World War II Japanese automobile industry faced a crisis of existence, and companies such as Toyota

looked to benchmark their thriving American counterparts. The productivity of an American car worker was

nine times that of a Japanese car worker at that time, and Taiichi Onho sought ways to reach such levels.

Two pressing challenges however prevented Toyota from adopting the American way:

1. American car manufacturers made “lots” or a “batch” of a model or a component before switching

over to a new model or component. This system was not suited to the Japanese conditions where a

small market required manufacturing in small quantities.

2. The car pricing policy of US manufacturers was to charge a mark-up on the cost price. The low

demand in Japan led to price resistance. The need of the hour was thus to reduce manufacturing costs to

increase profits.

To overcome these two challenges, Taiichi Onho identified waste as the primary evil. The categories of waste

identified included

overproduction

inventory or waste associated with keeping dead stock

time spent by workers waiting for materials to appear in the assembly line

time spend on transportation or movement

workers spending more time than necessary processing an item

waste associated with defective items

Taiichi Onho then sought to eliminate waste through the just-in-timephilosophy, where items moved through

the production system only as and when needed.

Q2. What is Value Engineering or Value Analysis? Elucidate five companies which have incorporated VE with brief explanation.

Ans. Value Engineering(VE), also known as Value Analysis, is a systematic and function-based approach to improving the value of products, projects, or processes.VE involves a team of people following a structured process. The process helps team members communicate across boundaries, understand different perspectives, innovate, and analyze.When to use itUse Value Analysis to analyze and understand the detail of specific situations.Use it to find a focus on key areas for innovation.

Use it in reverse (called Value Engineering) to identify specific solutions to detail problems.It is particularly suited to physical and mechanical problems, but can also be used in other areas.

Quick X Long

Logical X Psychological

Individual X Group

How it worksValue Analysis (and its design partner, Value Engineering) is used to increase the value of products or services to all concerned by considering the function of individual items and the benefit of this function and balancing this against the costs incurred in delivering it. The task then becomes to increase the value or decrease the cost.

Q3. Explain different types of Quantitative models. Differentiate between work study and motion study.

Ans. Quantitative models are needed for a variety of management tasks, including

(a) identi¯cation of critical variables to use for health monitoring,

(b) antici- pating service level violations by using predictive models, and

(c) on-going op- timization of con¯gurations.

Unfortunately, constructing quantitative models requires specialized skills that are in short supply. Even worse,

rapid changes in provider con¯gurations and the evolution of business demands mean that quantitative models

must be updated on an on-going basis. This paper de-scribes an architecture and algorithms for on-line

discovery of quantitativemodels without prior knowledge of the managed elements. The architecture makes

use of an element schema that describes managed elements using the common information model (CIM).

Algorithms are presented for selecting a subset of the element metrics to use as explanatory variables in a

quantitative model and for constructing the quantitative model itself. We further describe a prototype system

based on this architecture that incorporates these algo-rithms. We apply the prototype to on-line estimation of

response times for

DB2 Universal Database under a TPC-W workload. Of the approximately 500 metrics available from the DB2

performance monitor, our system chooses 3 to construct a model that explains 72% of the variability of

response time.

In production and operations management, models refer to any simple representation of reality in different forms such as mathematical equations, graphical representation, pictorial representation, and physical models. Thus a model could be the well known economic order quantity (EOQ) formula, a PERT network chart, a motion picture of an operation, or pieces of strings stretched on a drawing of a plant layout to study the movement of material. The models help us to analyze and understand the reality. These also help us to work determine optimal conditions to for decision making. For example, the EOQ formula helps us to determine the optimum replenishment quantities that minimize the cost of storing plus replenishing.The number of different models we use in production and operations management run into hundreds, or even more than a thousand. These are really too many to enumerate in a place like these. I am listing below a random list of broad categories of models used in production and operations model.Operations research models. This is actually a very broad classification and covers many of the other categories in the list given here.

o Inventory models

o Forecasting models

o Network models

o Linear programming models

o Queuing models

o Production planning and control models

o Engineering drawings

o Photographs and motion pictures used in time and motion studies.

o Material movement charts

o Process flow diagrams

o Systems charts

o Statistical process control charts.

o Variance analysis

o Regression analysis

o Organization chart

o Fishbone chart

Work study and motion studyWork study includes a wide field of measurement tools and techniques. Motion study or method study is concerned with analyzing individual human motions (like get object, put object) with a view to improving motion economy.

Q1. Explain Logical process and Physical process modeling. What are the ingredients of Business

Process?

Ans

Business Process Modeling

A process is a coordinated set of activities designed to produce a specific outcome. There are processes for

saving a file, constructing a building, and cooking a meal. In fact, there is a process for almost everything we

do. A business process is a type of process designed to achieve a particular business objective.

Business processes consist of many components, including:

The data needed to accomplish the desired business objective

Individual work tasks that manipulate, review, or act upon the data in some way

Decisions that affect the data in the process or the manner in which the process is conducted

The movement of data between tasks in the process

Individuals and groups which perform tasks

Processes can be manual or automated, fully documented or simply knowledge in the minds of one or more

people. They can be simple or complex. They can be formal, requiring exact adherence to all details; or

flexible, provided the desired outcome is achieved.

Logical Process Modeling

Logical Process Modeling is the representation of a business process, detailing all the activities in the process

from gathering the initial data to reaching the desired outcome. These are the kinds of activities described in a

logical process model:

Gathering the data to be acted upon

Controlling access to the data during the process execution

Determining which work task in the process should be accomplished next

Delivering the appropriate subset of the data to the corresponding work task

Assuring that all necessary data exists and all required actions have been performed at each task

Providing a mechanism to indicate acceptance of the results of the process, such as, electronic

“signatures”

All business processes are made up of these actions. The most complex of processes can be broken down into

these concepts. The complexity comes in the manner in which the process activities are connected together.

Some activities may occur in sequential order, while some may be performed in parallel. There may be circular

paths in the process (a re-work loop, for example). It is likely there will be some combination of these.

The movement of data and the decisions made determining the paths the data follow during the process

comprise the process model. The contains only business activities, uses business terminology (not software

acronyms, technical jargon, etc.…), completely describes the activities of the business area being modeled, and

is independent of any individual or position working in the organization. Like its sibling, Logical Data

Modeling, Logical Process Modeling does not include redundant activities, technology dependent activities,

physical limitations or requirements or current systems limitations or requirements. The process model is a

representation of the business view of the set of activities under analysis.

Heretofore, many applications and systems were built without a logical process model or a rigorous

examination of the processes needed to accomplish the business goals. This resulted in applications that did not

meet the needs of the users and / or were difficult to maintain and enhance.

Problems with an unmodeled system include the following:

Not knowing who is in possession of the data at any point in time

Lack of control over access to the data at any point in the process

Inability to determine quickly where in the process the data resides and how long it has been there

Difficulties in making adjustments to a specific execution of a business process

Inconsistent process execution

. Ingredients of Business Process

1) Time: You must understand that time is money. In business, our objective is to make money. Period. But the

question is how productively you convert your time into money. Are you making full use of your time or you

just let the time pass by you?

How much you make depends on how good you are at converting time to money. If you are already

productive, then you may want to ask what are the things you can do to

improve further the ratio of dollar/second? If you are making $0.01/second, what you can do to make it

$0.02/second? Or even more. Remember time is the most valuable asset and once it’s gone, it’s gone. Also

time is also the fairest distribution of resources every human being receives.

2) People: To be successful in business, you must have people connections. I mean the right people. People

consist of customers, suppliers, partners, staff, and associates.

One thing that you must not leave out is your mentor or coach. Having genuine mentors or coaches is very

important and it can make a very big difference in your business.

To make sure that you have more profits, you must serve people well. Organize your database of people

connections. By simply knowing who does what, who supplies what, who needs what, where to get what make

you miles ahead of other people. To organize your connections, you can either use a paper folder or computer

spreadsheet.

3) Knowledge and Skills: When I talk about knowledge and skills, I am not referring to academic knowledge

that you find in schools or colleges. What’s more important to you

is knowledge and skills that can bring you results you want.

How many MBA holders that you know of have become business owners and have made tones of money?

That shows getting the right knowledge and skills is important. Don’t blindly go after knowledge that could

drown you. Go for knowledge and skills that are universally tested and proven.

Examples of right knowledge and skills are where to get what from who, money making trends, marketing

strategies, art of dealing with people, negotiation skills, selling skills, skills of managing and growing money,

investment skills, universal laws of success, and more. Don’t waste time on unnecessary knowledge as I went

through that before. There’s only so much that you need to know and learn. Be sharp and focus when you

acquire knowledge and skills. Don’t follow what normal people do.

4) Personal Health: In fact, this is the most important ingredient of all. How can you run a business without a

healthy body? In order to maintain an optimum health, you have to provide your body with proper nutrients

and sufficient exercise. And also don’t forget about emotional well being. Don’t let anger and other negative

emotions control you.

This is where positive and empowering attitudes come into play. Maintaining your body is just like

maintaining your car. If you send your car to workshop for regular service and pump petrol regularly, why

don’t you do the same for your body? It’s something for you to think about. Don’t be stingy over spending

money for your own health because physical and mental health can cause you a lot of money in the long run if

your body is not taken care of properly.

5) Money: Let’s face it. It does take money to make money even you need a little. But you might not need a lot

of money to start a business because there are many ways to

start one with low capital.

I meet a lot of people who want to be rich but are not willing to invest the money. You must invest in

something in order to for you to get something. The law of sowing and

reaping is at work. Don’t expect something without investing anything. Money is one of the investments you

need to make.

Even though you don’t need to have a capital for your business, but at least you must be able to cover your

expenses while building your business. You also need money to buy products to stock up and other stuff. So,

you must at least come up with whatever amount that you have to start a business.

These are the five basic ingredients of business success. Do your best to acquire or grow or invest in these

ingredients. But the good thing is you don’t need to have a perfect combination of ingredients to get started.

You can still perfect the ingredients along the way. Somehow, get it started with what you’ve got.

Article Source: http://EzineArticles.com/24925

Q2. Explain Project Management knowledge areas. With an example explain work Breakdown

Structure.

Ans.

The Project management knowledge areas are described in the following.

Project integration management describes the processes and activities needed to identify, define, combine,

unify and coordinate the various project management elements within the project management process groups.

The project management processes are develop project charter, develop preliminary project scope statement,

develop project management plan, direct and manage project execution, monitor and control project work,

integrated change control and close project.

Project scope management describes the processes needed to ensure that the project includes all the work

required – and only the work required – to complete the project successfully. The project management

processes are plan scope, define scope, create work breakdown structure, verify scope and control scope.

Project time management describes the processes required to ensure on-time project completion. The project

management processes are define project activities, sequence activities, estimate activity resources, estimate

activity duration and develop and control project schedule.

Project cost management describes the processes involved in planning, estimating, budgeting and controlling

costs to ensure that the project is completed within the approved budget. The project management processes

are cost estimating, cost budgeting and cost control.

Project quality management describes the processes involved in assuring that the project will satisfy the

objectives for which it was undertaken. The project management processes are quality planning, perform

quality assurance and perform quality control.

Project human resource management describes the processes that organise and manage the project team. The

project management processes are human resource planning, acquire project team, develop project team and

manage project team.

Project communications management describes the processes concerning the timely and appropriate

generation, collection, dissemination, storage and ultimate disposition of project information. The project

management processes are communications planning, information distribution, performance reporting and

manage stakeholders.

Project risk management describes the processes concerned with conducting risk management on a project.

The project management processes are risk management planning, risk identification, qualitative risk analysis,

quantitative risk analysis, risk response planning and risk monitoring and control.

Project procurement management describes the processes that purchase or acquire products, services or results

as well as contract management processes. The project management processes are plan purchases and

acquisitions, plan contracting, request seller responses, select sellers, contract administration and contract

closure.

Work Breakdown Structure

A work breakdown structure (WBS) in project management and systems engineering, is a tool used to

define and group a project‘s discrete work elements in a way that helps organize and define the total work

scope of the project.[1]

A work breakdown structure element may be a product, data, a service, or any combination. A WBS also

provides the necessary framework for detailed cost estimating and control along with providing guidance for

schedule development and control. Additionally the WBS is a dynamic tool and can be revised and updated as

needed by the project manager.

Example of a product oriented work breakdown structure of anaircraft system

Q3.Take an example of any product or project and explain Project Management Life Cycle.

In industry, product lifecycle management (PLM) is the process of managing the entire lifecycle of

a product from its conception, through design and manufacture, to service and disposal.[1] PLM integrates

people, data, processes and business systems and provides a product information backbone for companies and

their extended enterprise.[2]

‘Product lifecycle management’ (PLM) should be distinguished from ‘Product life cycle management

(marketing)‘ (PLCM). PLM describes the engineering aspect of a product, from managing descriptions and

properties of a product through its development and useful life; whereas, PLCM refers to the commercial

management of life of a product in the business market with respect to costs and sales measures.

Product lifecycle management is one of the four cornerstones of a corporation’sinformation

technology structure.[3] All companies need to manage communications and information with their customers

(CRM-Customer Relationship Management), their suppliers (SCM-Supply Chain Management), their

resources within the enterprise (ERP-Enterprise Resource Planning) and their planning (SDLC-Systems

Development Life Cycle). In addition, manufacturing engineering companies must also develop, describe,

manage and communicate information about their products.

One form of PLM is called people-centric PLM. While traditional PLM tools have been deployed only on

release or during the release phase, people-centric PLM targets the design phase.

Example

Recent (as of 2009) ICT development (EU funded PROMISE project 2004-2008) has allowed PLM to extend

beyond traditional PLM and integrate sensor data and real time ‘lifecycle event data’ into PLM, as well as

allowing this information to be made available to different players in the total lifecycle of an individual

product (closing the information loop). This has resulted in the extension of PLM into Closed Loop Lifecycle

Management

BenefitsDocumented benefits of product lifecycle management include:[4] [5]

Reduced time to market

Improved product quality

Reduced prototyping costs

More accurate and timely Request For Quote generation

Ability to quickly identify potential sales opportunities and revenue contributions

Savings through the re-use of original data

A framework for product optimization

Reduced waste

Savings through the complete integration of engineering workflows

Documentation that can assist in proving Compliance for RoHS or Title 21 CFR Part 11

Ability to provide Contract Manufacturers with access to a centralized product record

Q4. Explain PIMS. What is the difference between key Success Factor (KSF) and Knowledge (K)

Factor? Explain with example.

Ans. Project Management Information System (PMIS) are system tools and techniques used in project

management to deliver information. Project managers use the techniques and tools to collect, combine and

distribute information through electronic and manual means. Project Management Information System (PMIS)

is used by upper and lower management to communicate with each other.

Project Management Information System (PMIS) help plan, execute and close project management goals.

During the planning process, project managers use PMIS for budget framework such as estimating costs. The

Project Management Information System is also used to create a specific schedule and define the scope

baseline. At the execution of the project management goals, the project management team collects information

into one database. The PMIS is used to compare the baseline with the actual accomplishment of each activity,

manage materials, collect financial data, and keep a record for reporting purposes. During the close of the

project, the Project Management Information System is used to review the goals to check if the tasks were

accomplished. Then, it is used to create a final report of the project close.

To conclude, the project management information system (PMIS) is used to plan schedules, budget and

execute work to be accomplished in project management

Key Success Factors

Definition: The factors that are a necessary condition for success in a given market.

When writing a business plan, it’s crucial to identify what will make your business a success. Think of

key success factors as the small towns you must pass through to reach your destination. If you don’t

consult a map to found out where those towns are, you may miss a turnoff and your destination. Key

success factors, also known as critical success factors, keep you and your employees on track to make

your business a success.

Increasing the sales of a product or service is a common key success factor, but it should be linked to a

measurable goal, such as “sales of product X will increase by 30 percent in the fourth quarter.”

Measuring the outcome of the goals related to your key success factors is essential to keeping your

business on target.

Almost all businesses can benefit from having the key success factor “attract new customers.” Decide

how many new customers your business needs to succeed, and set a related goal, such as “increase

walk-in traffic by 25 percent by offering samples at the door.” Other examples of common key success

factors are, “retain quality employees,” “increase profit margin” and “increase customer satisfaction.”

Some businesses are subject to more regulation than others. Manufacturing facilities must comply

with OSHA regulations, and they may want to develop a key success factor that addresses the

company’s compliance. For example, “Provide all employees with hazardous material training.”

Key success factors should always be relevant to the business you are in. An example of an industry

specific key success factor is “increase load factor relative to the industry average.” This key success

factor is specific to the airline industry, as referenced in “Airline Industry Key Success Factors” in the

Graziadio Business Report. Fleet management is essential to airlines, limousine companies and taxi

services, but it’s not relevant to the development of computer games.

The key success factor “Build a manufacturing facility to produce 80 percent of inventory” is an

example of what RapidBi.com calls temporal factors. According to the web site, temporal factors

“relate to short-term situations, often crises. These CSF’s may be important, but are usually short-

lived.” In this example, once the manufacturing facility is constructed and operational, the key success

factor is no longer needed and can be replaced by a currently relevant one.

Measurable Key Success Factors

General Key Success Factors

Regulatory Key Success Factors

Industry Specific Key Success Factors

Temporal Key Success Factors

Knowledge factor

India may be a brain bank to the world. but it doesn’t help if other countries cash in on this more frequently

than india itself. The state of Indian higher education is the weak link in this chain it’s the reason why Indians

spend $3 billion annually seeking education abroad.

Those who study abroad tend to stay on abroad, while according to a NASSCOM-Mckinsey estimate only 10-

25 per cent of those earning a college degree in India are employable.

Now the National Knowledge Commission (NKC) has written to the prime minister stating that raising the

number of indian universities from 350 to 1,500 is critical if India’s growth is to be sustained.

As NKC Chairman Sam Pitroda notes, only 7 per cent of India’s population aged 18-24 enters higher

education, which is half the Asian average. China has created 1,250 new universities within just the last three

years.

India’s percentage of youth enrolled in college has to be brought up to at least asian levels while at the same

time enhancing academic standards.

The only way such a sweeping revamp can be carried out is if today’s centrally managed education mono-

polies are dismantled, and education is depoliticised and debureaucratised.

Q5. Explain the seven principles of supply chain management. Take an example of any product in the

market and explain the scenario of Bullwhip effect.

Ans. There is many steps which involved in SCM implementation are- Business Process, sales and marketing.

Logistics, costing, demand planning, trade- off analysis, environmental requirement, process stability,

integrated supply, supplier management, product design, suppiers, customers, material specifications, etc.

Some important aspect of SCM-

The level of competition existing in the market and the impact of competitive forces on the product

development.

Designing and working on a strategic logic for better growth through value invention. Working out new value

curve in the product development along with necessary break point.

Using it to analyses markets and the economies in product design. Tine, customer, quality of product and the

concept of survival of fittest.

Steps of SCM principals:

Group customer by need: Effective SCM groups, customer by tietinct service meeds those particular segment.

Customize the logistics networks: In designing their logistics network, companies need to focus on the service

requirement and profit potential of the customer segments identified.

Listen to signals of market demand and plan accordingly- sales and operations planners must monitor the

entire supply chain to detect early warning signals of changing customer demand and needs.

Differentiate the product closer to the customer-companies today no longer can afford to stock pile inventory

to compensate for possible forecasting errors, instead, they need to postpone product differentiation in the

manufacturing. Process closer to actual customer demand.

Strategically manage the source of supply-by working closely with their key suppliers to reduce the overall

casts of owning materials and services; SCM maximizes profit margins both for themselves, and their supplies.

Develop a supply chain wide technology strategy- as one of the cornerstones of successful SCM information

technology must be able to support multiple levels of decision making.

Adopt channel spanning performance measures- Excellent supply performance measurement systems do more

than just monitor internal functions. They apply performance criteria that embrace bathe service and financial

metrics, including as such as each accounts true profitability.

Q1. Discuss the objective of Profit maximization Vs Wealth maximization.

Ans. The financial management come a long way by shifting its focus from traditional approach to modern

approach. The modern approach focuses on wealth maximization rather than profit maximization. This gives a

longer term horizon for assessment, making way for sustainable performance by businesses.

A myopic person or business is mostly concerned about short term benefits. A short term horizon can fulfill

objective of earning profit but may not help in creating wealth. It is because wealth creation needs a longer

term horizon Therefore, Finance Management or Financial Management emphasizes on wealth maximization

rather than profit maximization. For a business, it is not necessary that profit should be the only objective; it

may concentrate on various other aspects like increasing sales, capturing more market share etc, which will

take care of profitability. So, we can say that profit maximization is a subset of wealth and being a subset, it

will facilitate wealth creation.

Giving priority to value creation, managers have now shifted from traditional approach to modern approach of

financial management that focuses on wealth maximization. This leads to better and true evaluation of

business. For e.g., under wealth maximization, more importance is given to cash flows rather than profitability.

As it is said that profit is a relative term, it can be a figure in some currency, it can be in percentage etc. For

e.g. a profit of say $10,000 cannot be judged as good or bad for a business, till it is compared with investment,

sales etc. Similarly, duration of earning the profit is also important i.e. whether it is earned in short term or

long term.

In wealth maximization, major emphasizes is on cash flows rather than profit. So, to evaluate various

alternatives for decision making, cash flows are taken under consideration. For e.g. to measure the worth of a

project, criteria like:

“present value of its cash inflow – present value of cash outflows” (net present value) is taken. This approach

considers cash flows rather than profits into consideration and also use discounting technique to find out worth

of a project. Thus, maximization of wealth approach believes that money has time value.

An obvious question that arises now is that how can we measure wealth. Well, a basic principle is that

ultimately wealth maximization should be discovered in increased net worth or value of business. So, to

measure the same, value of business is said to be a function of two factors – earnings per share and

capitalization rate. And it can be measured by adopting following relation:

Value of business = EPS / Capitalization rate

At times, wealth maximization may create conflict, known as agency problem. This describes conflict between

the owners and managers of firm. As, managers are the agents appointed by owners, a strategic investor or the

owner of the firm would be majorly concerned about the longer term performance of the business that can lead

to maximization of shareholder’s wealth. Whereas, a manager might focus on taking such decisions that can

bring quick result, so that he/she can get credit for good performance. However, in course of fulfilling the

same, a manager might opt for risky decisions which can put on stake the owner’s objectives.

Hence, a manager should align his/her objective to broad objective of organization and achieve a tradeoff

between risk and return while making decision; keeping in mind the ultimate goal of financial management i.e.

to maximize the wealth of its current shareholders.

Q2. Explain the Net operating approach to capital structure.

Ans. net operating income approach examines the effects of changes in capital structure in terms of net

operating income. In the net income approach discussed above net income available to shareholders is obtained

by deducting interest on debentures form net operating income. Then overall value of the firm is calculated

through capitalization rate of equities obtained on the basis of net operating income, it is called net income

approach. In the second approach, on the other hand overall value of the firm is assessed on the basis of net

operating income not on the basis of net income. Hence this second approach is known as net operating income

approach.

The NOI approach implies that (i) whatever may be the change in capital structure the overall value of the firm

is not affected. Thus the overall value of the firm is independent of the degree of leverage in capital structure.

(ii) Similarly the overall cost of capital is not affected by any change in the degree of leverage in capital

structure. The overall cost of capital is independent of leverage.

If the cost of debt is less than that of equity capital the overall cost of capital must decrease with the increase in

debts whereas it is assumed under this method that overall cost of capital is unaffected and hence it remains

constant irrespective of the change in the ratio of debts to equity capital. How can this assumption be justified?

The advocates of this method are of the opinion that the degree of risk of business increases with the increase

in the amount of debts. Consequently the rate of equity over investment in equity shares thus on the one hand

cost of capital decreases with the increase in the volume of debts; on the other hand cost of equity capital

increases to the same extent. Hence the benefit of leverage is wiped out and overall cost of capital remains at

the same level as before. Let us illustrate this point.

If follows that with the increase in debts rate of equity capitalization also increases and consequently the

overall cost of capital remains constant; it does not decline.

To put the same in other words there are two parts of the cost of capital. One is the explicit cost which is

expressed in terms of interest charges on debentures. The other is implicit cost which refers to the increase in

the rate of equity capitalization resulting from the increase in risk of business due to higher level of debts.

Optimum capital structure

This approach suggests that whatever may be the degree of leverage the market value of the firm remains

constant. In spite of the change in the ratio of debts to equity the market value of its equity shares remains

constant. This means there does not exist a optimum capital structure. Every capital structure is optimum

according to net operating income approach.

Q.3 What do you understand by operating cycle.

Ans. An operating cycle is the length of time between the acquisition ofinventory and the sale of that

inventory and subsequent generation of a profit. The shorter the operating cycle, the faster a business gets

a return on investment (ROI) for the inventory it stocks. As a general rule, companies want to keep their

operating cycles short for a number of reasons, but in certain industries, a long operating cycle is actually the

norm. Operating cycles are not tied to accounting periods, but are rather calculated in terms of how long goods

sit in inventory before sale.

When a business buys inventory, it ties up money in the inventory until it can be sold. This money may be

borrowed or paid up front, but in either case, once the business has purchased inventory, those funds are not

available for other uses. The business views this as an acceptable tradeoff because the inventory is an

investment that will hopefully generate returns, but keeping the operating cycle short is still a goal for most

businesses so they can keep their liquidity high.

Keeping inventory during a long operating cycle does not just tie up funds. Inventory must be stored and this

can become costly, especially with items that require special handling, such as humidity controls or security.

Furthermore, inventory can depreciate if it is kept in a store too long. In the case of perishable goods, it can

even be rendered unsalable. Inventory must also be insured and managed by staff members who need to be

paid, and this adds to overalloperating expenses.

There are cases where a long operating cycle in unavoidable. Wineries and distilleries, for example, keep

inventory on hand for years before it is sold, because of the nature of the business. In these industries, the

return on investment happens in the long term, rather than the short term. Such companies are usually

structured in a way that allows them to borrow against existing inventory or land if funds are needed

to finance short-term operations.

Operating cycles can fluctuate. During periods of economic stagnation, inventory tends to sit around longer,

while periods of growth may be marked by more rapid turnover. Certain products can be consistent sellers that

move in and out of inventory quickly. Others, like big ticket items, may be purchased less frequently. All of

these issues must be accounted for when making decisions about ordering and pricing items for inventory.

Q.4 What is the implication of operating leverage for a firm.

Ans.

Operating leverage: Operating leverage is the extent to which a firm uses fixed costs in producing its goods

or offering its services. Fixed costs includeadvertising expenses, administrative costs, equipment and

technology, depreciation, and taxes, but not interest on debt, which is part of financial leverage. By using fixed

production costs, a company can increase its profits. If a company has a large percentage of fixed costs, it has a

high degree of operating leverage. Automated and high-tech companies, utility companies, and airlines

generally have high degrees of operating leverage.

As an illustration of operating leverage, assume two firms, A and B, produce and sell widgets. Firm A uses a

highly automated production process with robotic machines, whereas firm B assembles the widgets using

primarily semiskilled labor. Table 1 shows both firm’s operating cost structures.

Highly automated firm A has fixed costs of $35,000 per year and variable costs of only $1.00 per unit, whereas

labor-intensive firm B has fixed costs of only $15,000 per year, but its variable cost per unit is much higher at

$3.00 per unit. Both firms produce and sell 10,000 widgets per year at a price of $5.00 per widget.

Firm A has a higher amount of operating leverage because of its higher fixed costs, but firm A also has a

higher breakeven point—the point at which total costs equal total sales. Nevertheless, a change of I percent in

sales causes more than a I percent change in operating profits for firm A, but not for firm B. The “degree of

operating leverage” measures this effect. The following simplified equation demonstrates the type of equation

used to compute the degree of operating leverage, although to calculate this figure the equation would require

several additional factors such as the quantity produced, variable cost per unit, and the price per unit, which are

used to determine changes in profits and sales:

Operating leverage is a double-edged sword, however. If firm A’s sales decrease by I percent, its profits will

decrease by more than I percent, too. Hence, the degree of operating leverage shows the responsiveness of

profits to a given change in sales.

Implications: Total risk can be divided into two parts: business risk and financial risk. Business risk refers to

the stability of a company’s assets if it uses no debt or preferred stock financing. Business risk stems from the

unpredictable nature of doing business, i.e., the unpredictability of consumer demand for products and

services. As a result, it also involves the uncertainty of long-term profitability. When a company uses debt or

preferred stock financing, additional risk—financial risk—is placed on the company’s common shareholders.

They demand a higher expected return for assuming this additional risk, which in turn, raises a company’s

costs. Consequently, companies with high degrees of business risk tend to be financed with relatively low

amounts of debt. The opposite also holds: companies with low amounts of business risk can afford to use more

debt financing while keeping total risk at tolerable levels. Moreover, using debt as leverage is a successful tool

during periods of inflation. Debt fails, however, to provide leverage during periods of deflation, such as the

period during the late 1990s brought on by the Asian financial crisis.

Q.1 What is product mix? What are the strategies involved in product mix and product line?

Ans.

The product mix of a business includes product lines and individual products. A product line is a set of

products in the product mix that are closely interrelated either because they serve in a similar way, sold to the

similar client groups or have same price range. A product is a unique component in the product line that is

different in size, cost, look, or some other attribute. Product choices at these levels are normally of 2 sorts:

Those that have variety and range of the product line and those that are modified in the product mix occur over

time.

Product Mix is the total number of product choices a company offers their customer. If you make muffins, and

you offer Blueberry and Cranberry, your product mix has 2 choices. The product mix grows as the number of

features on the product grows. A true evaluation of the mix can ONLY be done with a feature/option level

analysis. That is because customers buy features and options. The strength of the mix is based on how well

the feature choices are capturing sales and market demand.

Strategies involved in Product Mix and Product Line

When the product is a part of product-mix, there are five kinds of strategies involved:

I. Product Line Pricing In product line pricing, management must decide on the price steps to set between

various products in a line. This should take into account the differences in products features, customer

evaluations, competitor’s prices etc.

II. Optional-Product Pricing The pricing of optional or accessory products along with the main product. For

example, a car buyer may choose to order a CD changer as an optional product.

III. Captive-Product Pricing Setting a price for products which must be used along with the main product. For

example, HP makes printers and cartridges. It makes very low margins on its printer (the main product) but

very high margins on cartridges .

IV. By-Product Pricing Setting a price for the by-products. Like in processing meats, petroleum products,

chemicals etc. Using by-product pricing, the manufacturer will find a market for the by-products and should

accept any price that covers more than the cost of storing and delivering them. For example, at Alba, water is

obtained as a by-product while manufacturing aluminum. This water can now be sold to the market.

V. Product Bundle Pricing Combining several products and offering the bundle at a reduced price. For

example, fast food restaurants bundle a burger, French fires and soft drink at a combo price.

Q.2 What is a distribution channel? Explain the factors to be considered while setting up a distribution

channel

Ans. Distribution channel

Definition: Path or ‘pipeline‘ through which goods and services flow in onedirection (from vendor to

the consumer), and the payments generated by them flow in the opposite direction (from consumer to the

vendor). A distributionchannel can be as short as being direct from the vendor to the consumer or

mayinclude several inter-connected (usually independent but mutually dependent)intermediaries such

as wholesalers, distributors, agents, retailers. Each intermediary receives the item at one pricing point

and moves it to the next higher pricing point until it reaches the final buyer. Also called channel of

distribution or marketing channel.

Channel of Distributions

A channel of distribution or trade channel is defined as the path or route along which goods move from

producers or manufacturers to ultimate consumers or industrial users. In other words, it is a distribution

network through which producer puts his products in the market and passes it to the actual users. This channel

consists of :- producers, consumers or users and the various middlemen like wholesalers, selling agents and

retailers(dealers) who intervene between the producers and consumers. Therefore, the channel serves to bridge

the gap between the point of production and the point of consumption thereby creating time, place and

possession utilities.

A channel of distribution consists of three types of flows:-

Downward flow of goods from producers to consumers

Upward flow of cash payments for goods from consumers to producers

Flow of marketing information in both downward and upward direction i.e. Flow of information on

new products, new uses of existing products,etc from producers to consumers. And flow of information

in the form of feedback on the wants,suggestions,complaints,etc from consumers/users to producers.

An entrepreneur has a number of alternative channels available to him for distributing his products. These

channels vary in the number and types of middlemen involved. Some channels are short and directly link

producers with customers. Whereas other channels are long and indirectly link the two through one or more

middlemen.

These channels of distribution are broadly divided into four types:-

Producer-Customer:- This is the simplest and shortest channel in which no middlemen is involved

and producers directly sell their products to the consumers. It is fast and economical channel of

distribution. Under it, the producer or entrepreneur performs all the marketing activities himself and has

full control over distribution. A producer may sell directly to consumers through door-to-door

salesmen, direct mail or through his own retail stores. Big firms adopt this channel to cut distribution

costs and to sell industrial products of high value. Small producers and producers of perishable

commodities also sell directly to local consumers.

Producer-Retailer-Customer:- This channel of distribution involves only one middlemen called

‘retailer’. Under it, the producer sells his product to big retailers (or retailers who buy goods in large

quantities) who in turn sell to the ultimate consumers.This channel relieves the manufacturer from

burden of selling the goods himself and at the same time gives him control over the process of

distribution. This is often suited for distribution of consumer durables and products of high value.

Producer-Wholesaler-Retailer-Customer:- This is the most common and traditional channel of

distribution. Under it, two middlemen i.e. wholesalers and retailers are involved. Here, the producer

sells his product to wholesalers, who in turn sell it to retailers. And retailers finally sell the product to

the ultimate consumers. This channel is suitable for the producers having limited finance, narrow

product line and who needed expert services and promotional support of wholesalers. This is mostly

used for the products with widely scattered market.

Producer-Agent-Wholesaler-Retailer-Customer:- This is the longest channel of distribution in

which three middlemen are involved. This is used when the producer wants to be fully relieved of the

problem of distribution and thus hands over his entire output to the selling agents. The agents distribute

the product among a few wholesalers. Each wholesaler distribute the product among a number of

retailers who finally sell it to the ultimate consumers. This channel is suitable for wider distribution of

various industrial products.

An entrepreneur has to choose a suitable channel of distribution for his product such that the channel chosen is

flexible, effective and consistent with the declared marketing policies and programmes of the firm. While

selecting a distribution channel, the entrepreneur should compare the costs, sales volume and profits expected

from alternative channels of distribution and take into account the following factors:-

Product Consideration:- The type and the nature of products manufactured is one of the important

elements in choosing the distribution channel. The major product related factors are:-

Products of low unit value and of common use are generally sold through middlemen.

Whereas, expensive consumer goods and industrial products are sold directly by the producer

himself.

Perishable products; products subjected to frequent changes in fashion or style as well as

heavy and bulky products follow relatively shorter routes and are generally distributed directly

to minimize costs.

Industrial products requiring demonstration, installation and after sale service are often sold

directly to the consumers. While the consumer products of technical nature are generally sold

through retailers.

An entrepreneur producing a wide range of products may find it economical to set up his own

retail outlets and sell directly to the consumers. On the other hand, firms producing a narrow

range of products may their products distribute through wholesalers and retailers.

A new product needs greater promotional efforts in the initial stages and hence few

middlemen may be required.

Market Consideration:- Another important factor influencing the choice of distribution channel is

the nature of the target market. Some of the important features in this respect are:-

If the market for the product is meant for industrial users, the channel of distribution will not

need any middlemen because they buy the product in large quantities. short one and may as they

buy in a large quantity. While in the case of the goods meant for domestic consumers,

middlemen may have to be involved.

If the number of prospective customers is small or the market for the product is

geographically located in a limited area, direct selling is more suitable. While in case of a large

number of potential customers, use of middlemen becomes necessary.

If the customers place order for the product in big lots, direct selling is preferred. But, if the

product is sold in small quantities, middlemen are used to distribute such products.

Other Considerations:- There are several other factors that an entrepreneur must take into account

while choosing a distribution channel. Some of these are as follows:-

A new business firm may need to involve one or more middlemen in order to promote its

product, while a well established firm with a good market standing may sell its product directly

to the consumers.

A small firm which cannot invest in setting up its own distribution network has to depend on

middlemen for selling its product. On the other hand, a large firm can establish its own retail

outlets.

The distribution costs of each channel is also an important factor because it affects the price

of the final product. Generally, a less expensive channel is preferred. But sometimes, a channel

which is more convenient to the customers is preferred even if it is more expensive.

If the demand for the product is high, more number of channels may be used to profitably

distribute the product to maximum number of customers. But, if the demand is low only a few

channels would be sufficient.

The nature and the type of the middlemen required by the firm and its availability also affects

the choice of the distribution channel. A company prefers a middlemen who can maximize the

volume of sales of their product and also offers other services like storage, promotion as well as

after sale services. When the desired type of middlemen are not available, the manufacturer will

have to establish his own distribution network.

All these factors or considerations affecting the choice of a distribution channel are inter-related and

interdependent. Hence, an entrepreneur must choose the most efficient and cost effective channel of

distribution by taking into account all these factors as a whole in the light of the prevailing economic

conditions. Such a decision is very important for a business to sustain long term profitability.

Q.3 Discuss the communication development process with examples.

Ans. Everyone communicates. Some better than others. Understanding the communication process can help

improve communication at home, at work and with friends.

Communication seems so natural and one generally assumes that there is no need of working on it. It is so

untrue. Most fights or arguments with spouses, children or friends are the result of bad communication. How

much of an argument is caused by ineffective communication? How much of what is said is taken in the wrong

context? How much of the meaning was changed or lost? How much was totally misunderstood or came out

wrong? All of those are examples of broken communication.

Development Communication designs communication strategies for development projects and reform

programs, economic and sector work, Country Assistance Strategies and Poverty Reduction Strategies.

Building on the communication audit, which provides an understanding of the social, cultural and political

nuances and assessment of local communication capacity, theDevelopment Communication division works

with task teams and government counterparts to prepare communication strategies with the objective of

promoting constituencies for support and putting in place a transparent and inclusive development process.

This involves:

segmenting audiences based on their positions,

framing the issues,

preparing appropriate messages to mobilize support and address the right concerns,

finding the most effective mix of channels to reach audiences,

creating communication capacity on the ground to implement the process,

building consensus, and

designing mechanisms for supervision and evaluation.

Development Communication is creating a repository of knowledge based on its own experience and

international best practices in development communications. This intellectual base of Development

Communicationoperational and capacity building work is continually updated and customized to meet

country-specific needs. The division also maintains a database of communication professionals around the

world and their market costs so their expertise can be harnessed when needed.

Q.4. Select any mobile handset and mobile company and then evaluate its positioning strengths or

weakness in terms of attributes, benefits, values, brand name and brand equity.

Ans. Strength or Weakness of HTC Mobile Handset

INTRODUCTION

HTC is one of the leading manufacturers of PDAs and smart phones around the world. It is one of the fastest

growing companies in the world and maximizing its market share rapidly.

SWOT ANALYSIS

SWOT is the tool to see that where organization stands, which areas required improvement, which areas

required serious consideration, which would be the source of growth, which things need avoidance and so on.

The SWOT of HTC will help to understand the position of HTC in the market.

STRENGTHS

It is the leading maker of PDAs smart phones in the world. It is establishing in the world rapidly and attracting

more and more customers from all around the world.

It has successfully recognized its brand name and has got the good image about the product quality. Its

products are considered as reliable products and its gaining more and more success rapidly.

The research and development in HTC has been given more importance as it is the way to know what

customers want.

There is the strong set up of research and development in HTC.

The portfolio of HTC is quite wide it has made 42 smart phones product up till now.

The customer base of HTC is also very wide as it caters the customer national and international both and the

no. of customers also increasing as the time passes.

WEAKNESSES

As its weakness, HTC is not a very much recognized brand in the market. Its competitors, which are Nokia,

Blackberry, Apple etc. are way much popular and have acquired a big share of market.

Another weakness is that, they got a very small range of cell phones models as compared to their competitor,

Nokia, which has got a huge variety of smart phones, from cheapest to most expensive one.

OPPORTUNITIES

HTC is providing Touch Screen Cell Phones, which are very much in demand these days, most of the people,

who use expensive cell phones, goes for Touch Screen. On the other side, Since HTC collaborated with

Google and launched their cell phones with Google Android OS install in it, their market also got increased. It

is also said that, because of the name of Google, HTC got popularity. Google popularity plays a huge role in

the success of HTC.

3G technology has been launched all over the world, and is getting launched in other countries as well. Since

HTC cell phones have got 3G technology support, so it is an opportunity for HTC company that where ever the

3G technology launches, HTC’s cell phones demands would raise their.

THREATS

The major threat to HTC, or any other Smartphone company, is a very much popular and highly in-demand

brand, Apple iPhone. It is a big hindrance in the demand of HTC cell phones.

Apart from that, the financial crunch could also be the threat for the company. That’s because HTC smart

phones are expensive and are not affordable for many of the smart phones users. On the other side Nokia’s

smart phones are way cheaper, and are providing the same characteristics, which a Smartphone should have.

So lot of people prefers Nokia on HTC.

Q. 5 What is retailing? Explain the functions and different types of retailing with its key features.

Ans.

Retailing involves selling products and services to consumers for their personal or family use. Department

stores, like Burdines and Macy’s, discount stores like Wal-Mart and K-Mart, and specialty stores like The Gap,

Zales Jewelers and Toys ‘R’ Us, are all examples of retail stores. Service providers, like dentists, hotels and

hair salons, and on-line stores, like Amazon.com, are also retailers.

Retailers play a significant role as a conduit between manufacturers, wholesalers, suppliers and consumers. In

this context, they perform various functions like sorting, breaking bulk, holding stock, as a channel of

communication, storage, advertising and certain additional services.

Sorting

Manufacturers usually make one or a variety of products and would like to sell their entire inventory to a few

buyers to redu7ce costs. Final consumers, in contrast, prefer a large variety of goods and services to choose

from and usually buy them in small quantities. Retailers are able to balance the demands of both sides, by

collection an assortment of goods from different sources, buying them in sufficiently large quantities and

selling them to consumers in small units.

The above process is referred to as the sorting process. Through this process, retailers undertake activities and

perform functions that add to the value of the products and services sold to the consumer. Supermarkets in the

US offer, on and average, 15,000 different items from 500 companies. Customers are able to choose from a

wide range of designs, sizes and brands from just one location. If each manufacturer had a separate store for its

own products, customers would have to visit several stores to complete their shopping. While all retailers offer

an assortment, they specialize in types of assortment offered and the market to which the offering is made.

Westside provides clothing and accessories, while a chain like Nilgiris specializes in food and bakery items.

Shoppers’ Stop targets the elite urban class, while Pantaloons is targeted at the middle class.

Breaking Bulk

Breaking bulk is another function performed by retailing. The word retailing is derived from the French word

retailer, meaning ‘to cut a piece off’. To reduce transportation costs, manufacturers and wholesalers typically

ship large cartons of the product, which are then tailored by the retailers into smaller quantities to meet

individual consumption needs.

Holding Stock

Retailers also offer the service of holding stock for the manufacturers. Retailers maintain an inventory that

allows for instant availability of the product to the consumers. It helps to keep prices stable and enables the

manufacturer to regulate production. Consumers can keep a small stock of products at home as they know that

this can be replenished by the retailer and can save on inventory carrying costs.

Additional Services

Retailers ease the change in ownership of merchandise by providing services that make it convenient to buy

and use products. Providing product guarantees, after-sales service and dealing with consumer complaints are

some of the services that add value to the actual product at the retailers’ end. Retailers also offer credit and

hire-purchase facilities to the customers to enable them to buy a product now and pay for it later. Retailers fill

orders, promptly process, deliver and install products. Salespeople are also employed by retailers to answer

queries and provide additional information about the displayed products. The display itself allows the

consumer to see and test products before actual purchase. Retail essentially completes transactions with

customers.

Channel of Communication

Retailers also act as the channel of communication and information between the wholesalers or suppliers and

the consumers. From advertisements, salespeople and display, shoppers learn about the characteristics and

features of a product or services offered. Manufacturers, in their turn, learn of sales forecasts, delivery delays,

and customer complaints. The manufacturer can then modify defective or unsatisfactory merchandise and

services.

Transport and Advertising Functions

Small manufacturers can use retailers to provide assistance with transport, storage, advertising and pre-

payment of merchandise. This also works the other way round in case the number of retailers is small. The

number of functions performed by a particular retailer has a direct relation to the percentage and volume of

sales needed to cover both their costs and profits.

Q. 6 a. What is CRM? What are its objectives? (2 marks)

b. Write a short note on Brand development. (8 marks)

Ans. CRM stands for Customer Relationship Management. It is a process or methodology used to learn

more about customers’ needs and behaviors in order to develop stronger relationships with them. There are

many technological components to CRM, but thinking about CRM in primarily technological terms is a

mistake. The more useful way to think about CRM is as a process that will help bring together lots of pieces of

information about customers, sales, marketing effectiveness, responsiveness and market trends.

CRM helps businesses use technology and human resources to gain insight into the behavior of customers and

the value of those customers.

Objectives of CRM

CRM, the technology, along with human resources of the company, enables the company to analyze the

behavior of customers and their value. The main areas of focus are as the name

suggests: customer , relationship , and the management of relationship and the main objectives to implement

CRM in the business strategy are:

To simplify marketing and sales process

To make call centers more efficient

To provide better customer service

To discover new customers and increase customer revenue

To cross sell products more effectively

The CRM processes should fully support the basic steps of customer life cycle . The basic steps are:

Attracting present and new customers

Acquiring new customers

Serving the customers

Finally, retaining the customers

Brand development

A plan to improve the performance of a particular product or service. For example, as part of brand

development a firm may initiate a new advertising campaign that includes free samples.

Q1. How hardware & software support in various MIS activities of the organization? Explain the

transaction stages from manual system to automated systems?

Ans. Generally hardware in the form of personal computers and peripherals like printers, fax, machines,

copier, scanners etc are used in organization to support various MIS activities of the organization. Computers

are widely used to support in MIS activities. Some of the types commonly used in business are desktop

computer, notebook computer, PDA etc.

Advantage of PC in Organization for MIS activities

Speed: A PC can process data at a very high speed. It can process millions of instructions within fractions of

seconds.

Storage: A PC can store large amount of data in a small space. Information can easily transform from one

place to another place.

Communication: PC with internet is used as a powerful tool of communication for every business activity.

Accuracy: A PC is highly reliable in the sense that it could be used to perform calculations continuously for

hours with a great degree of accuracy.

Conferencing: A PC with internet offers facility of video conferencing worldwide. Business people across the

globe travel a lot to meet their business partner, colleague and customer etc to discuss about business activities.

Software support in MIS activities

MS-Windows: Windows is an operating system. It supports various applications like MS-Office, Lotus Smart

Suite, Outlook etc.

MS-Excel: It is used to make charts, graphs, pivot tables and MIS reports etc.

MS-WORD: It is used for letter drafting.

MS-Power Point: Power point is used for presentation

Q2. Explain the various behavioral factors of management organization? As per Porter, how can

performance of individual corporations be determined?

Ans. The value of Information is not present day discovery. We have always observed that the Information is

the asset of any organization. The existence of information is since the Big bang happened and then on it went

on. But the value of information is being used only after the industrial revolution. Before, it was only in the

record which we are using now in an efficient way. The first information was binary. Information is generated

by interactions; information is

by interaction, as without comparison, without a context, without interaction, there is nothing.

Traditional information systems are said to contain data, which is then processed. The processed data is called

information. The processing of data takes place by selecting the required fact and organizing it in a way to

form meaningful information which is used for some organizational needs.

In Manual systems, a series of action takes which may be similar as well as different to

processing in traditional systems. For instance, in hospital information systems the patient details

can be viewed by the administrator as well as patient. But the views perceived by these are

different. One may view it as a record to take print and other may be the source of his ailment

description. What is common to the two systems is the idea of transformation. Transformation

occurs when systems participants are faced with cues from their environment, which may be data

or situations, and the participants then define and redefine what to do next, either processing data

or developing a situation, altering the system each time to transform it to a state closer to the

participants goal or objective. When a fact from either type of system is presented for

manipulation, a transformation can occur. Thus, transformation is common to both types of

systems.

A transformation had to necessarily go through the following stages ±

a) appraisal of the procedures b) types of documents c) storage systems d) formulations and coding e)

verification and validation f) review g) documentation

After the industrial revolution slowly manual systems were transformed into digital form by

means of computer and related instrument

Q2. Explain the various behavioral factors of management organization? As per Porter, how can

performance of individual corporations be determined?

Ans:

Behavioral factors

The implementation of computer based information systems in general and MSS in particular is affected by the

way people perceive these systems and by how they behave in accepting them. User resistance is a major

behavioral factor associated with the adoption of new systems. The following are compiled by Jiang et al.

(2000); reasons that employees resist new systems:

· Change in job content

· Loss of status

· Change in interpersonal relationships

· Loss of power, Change in decision making approach

· Uncertainty or unfamiliarity or misinformation

· Job security

The major behavioral factors are

a) Decision styles symbolic processing of AI is heuristic; DSS and ANN are analytic

b) Need for explanation ES provides explanation, ANN does not, DSS may provide partial explanation.

Explanation can reduce resistance to change

c) Organizational climate ± some organizations lead and support innovations and new

technologies whereas others wait and lag behind in making changes

d) Organizational expectations ± over expectation can result in disappointments and termination

of innovation. Over expectation was observed in most early intelligent systems.

e) Resistance to change can be strong in MSS because the impacts may be significant.

Performance

Out of many possible interpretations of a strategy an organization adopts in business, it is found

that a majority is concerned with competition between corporations. Competition means

cultivating unique strengths and capabilities, and defending them against imitation by other

firms. Another alternative sees competition as a process linked to innovation in product, market,

or technology. Strategic information systems theory is concerned with the use of information

technology to support or sharpen an enterprises competitive strategy. Competitive strategy is an

enterprises plan for achieving sustainable competitive advantage over, or reducing the edge of,

its adversaries. The performance of individual corporations is determined by the extent to which

they manage the following (as given by Porter)

a) the bargaining power of suppliers b) the bargaining power of buyer c) the threat of new entrants;

d) the threat of substitute products; and e) Rivalry among existing firms.

Porters Forces Driving Industry Competition (Porter 1980)

There are two basic factors which may be considered to be adopted by organization in their

strategies:

a) low cost

b) product differentiation

Enterprise can succeed relative to their competitors if they possess sustainable competitive advantage in either

of these two. Another important consideration in positioning isµ competitive scope, or the breadth of the

enterprises target markets within its industry, i.e. the range of product varieties it offers, the distribution

channels it employs, the types of buyers it serves, the geographic areas in which it sells, and the array of

related industries in which it competes. Under Porters framework, enterprises have four generic strategies

available to them whereby

they can attain above-average performance.

They are:

a) cost leadership b) differentiation c) cost focus d) focused differentiation.

Q 3. Compare various types of development aspect of Information System? Explain the various stages of

SDLC?

Ans:

Development of Information Systems

a) Development and Implementation of the MIS

Once the plan for MIS is made, the development of the MIS, calls for determining the strategy of

development. As discussed earlier, the plan consists of various systems and subsystems. The

development strategy determines where to begin and in what sequence the development can take

place with the sole objective of assuring the information support.

The choice of the system or the sub-system depends on its position in the total MIS plan, the size of the

system, the users understanding of the systems and the complexity and its interface with other systems. The

designer first develops systems independently and starts integrating them with other systems, enlarging the

system scope and meeting the varying information needs.

Determining the position of the system in the MIS is easy. The real problem is the degree of

structure, and formalisation in the system and procedures which determine the timing and

duration of development of the system. Higher the degree of structured-ness and formalisation,

greater is the stabilization of the rules, the procedures, decision-making and the understanding of

the overall business activity. Here, it is observed that the users and the designers interaction is

smooth, and their needs are clearly understood and respected mutually. The development

becomes a method of approach with certainty in input process and outputs.

b) Prototype Approach

When the system is complex, the development strategy is Prototyping of the System. Prototyping is a process

of progressively ascertaining the information needs, developing methodology, trying it out on a smaller scale

with respect to the data and the complexity, ensuring that it satisfies the needs of the users, and assess the

problems of development and implementation.

This process, therefore, identifies the problem areas, inadequacies in the prototype vis-à-vis

fulfillment of the information needs. The designer then takes steps to remove the inadequacies.

This may call upon changing the prototype of the system, questioning the information needs,

streamlining the operational systems and procedures and move user interaction.

In the prototyping approach, the designers task becomes difficult, when there are multiple users of the same

system and the inputs they use are used by some other users as well. For example, a lot of input data comes

from the purchase department, which is used in accounts and inventory management.

The attitudes of various users and their role as the originators of the data need to be developed

with a high degree of positivism. It requires, of all personnel, to appreciate that the information is

a corporate resource, and all have to contribute as per the designated role by the designer to fulfil

the corporate information needs. When it comes to information the functional, the departmental,

the personal boundaries do not exist. This call upon each individual to comply with the design

needs and provide without fail the necessary data inputs whenever required as per the

specification discussed and finalised by the designer.

Bringing the multiple users on the same platform and changing their attitudes toward informa-

tion, as a corporate resource, is the managerial task of the system designer. The qualification,

experience, knowledge, of the state of art, and an understanding of the corporate business, helps

considerably, in overcoming the problem of changing the attitudes of the multiple users and the

originators of the data.

Stages of SDLC

System development cycle stages are sometimes known as system study. System concepts which are important

in developing business information systems expedite problem solving and improve the quality of decision-

making. The system analyst has to do a lot in this connection. They are confronted with the challenging task of

creating new systems an planning major changes in the organization. The system analyst gives a system

development project, meaning and direction.

The typical breakdown of an information systems life cycle includes a feasibility study,

requirements, collection and analysis, design, prototyping, implementation, validation, testing

and operation. It may be represented in the form of a block diagram as shown below:

a)Feasibility study: It is concerned with determining the cost effectiveness of various alternatives in the

designs of the information system and the priorities among the various system components.

b) Requirements, collection and analysis: It is concerned with understanding the mission of the information

systems, that is, the application areas of the system within the enterprise and the problems that the system

should solve.

c) Design: It is concerned with the specification of the information systems structure. There are two types of

design: database design and application design. The database design is the design of the database design and

the application design is the design of the application programs.

d) Prototyping: A prototype is a simplified implementation that is produced in order to verify in practice that

the previous phases of the design were well conducted.

e) Implementation : It is concerned with the programming of the final operational version of the information

system. Implementation alternatives are carefully verifies and compared.

f) Validation and testing: It is the process of assuring that each phase of the development process is of

acceptable quality and is an accurate transformation from the previous phase.

Q4. Compare & Contrast E-enterprise business model with traditional business organization

model? Explain how in E-enterprise manager role & responsibilities are changed? Explain how

manager is a knowledge worker in E-enterprise?

Ans:

Managing the E-enterprise

Due to Internet capabilities and web technology, traditional business organisation definition has

undergone a change where scope of the enterprise now includes other company locations,

business partners, customers and vendors. It has no geographic boundaries as it can extend its

operations where Internet works. All this is possible due to Internet and web moving traditional

paper driven organisation to information driven Internet enabled E-business enterprise. E-

business enterprise is open twenty-four hours, and being independent, managers, vendors,

customers transact business anytime from anywhere.

Internet capabilities have given E-business enterprise a cutting edge capability advantage to

increase the business value. It has opened new channels of business as buying and selling can be

done on Internet. It enables to reach new markets across the world anywhere due to

communication capabilities. It has empowered customers and vendors / suppliers through

secured access to information to act, wherever necessary. The cost of business operations has

come down significantly due to the elimination of paper-driven processes, faster communication

and effective collaborative working. The effect of these radical changes is the reduction in

administrative and management overheads, reduction in inventory, faster delivery of goods and

services to the customers.

In E-business enterprise traditional people organisation based on µCommand Control¶ principle

is absent. It is replaced by people organisations that are empowered by information and

knowledge to perform their role. They are supported by information systems, application

packages, and decision-support systems. It is no longer functional, product, and project or matrix organisation

of people but E-organisation where people work in network environment as a team or work group in virtual

mode.

E-business enterprise is more process-driven, technology-enabled and uses its own information and knowledge

to perform. It is lean in number, flat in structure, broad in scope and a learning organisation. In E-business

enterprise, most of the things are electronic, use digital technologies and work on databases, knowledge bases,

directories and document repositories. The business processes are conducted through enterprise software like

ERP, SCM, and CRM supported by data warehouse, decision support, and knowledge management systems.

Today most of the business organisations are using Internet technology, network, and wireless

technology for improving the business performance measured in terms of cost, efficiency,

competitiveness and profitability. They are using E-business, E-commerce solutions to reach

faraway locations to deliver product and services. The enterprise solutions like ERP, SCM, and

CRM run on Internet (Internet / Extranet) & Wide Area Network (WAN). The business

processes across the organisation and outside run on

E-technology platform using digital technology. Hence today¶s business firm is also called E-

enterprise or Digital firm.

The paradigm shift to E-enterprise has brought four transformations, namely:

a) Domestic business to global business. b) Industrial manufacturing economy to knowledge-based service

economy. c) Enterprise Resource Management to Enterprise Network Management d)· Manual document

driven business process to paperless, automated, electronically transacted business process.

These transformations have made conventional organisation design obsolete. The basis of

conventional organisation design is command & control which is nowcol l aborat es& cont rol .

This change has affected the organisation structure, scope of operations, reporting mechanisms,

work practices, workflows, and business processes at large.

In E-enterprise, business is conducted electronically. Buyers and sellers through Internet drive

the market and Internet-based web systems. Buying and selling is possible on Internet. Books,

CDs, computer, white goods and many such goods are bought and sold on Internet. The new

channel of business is well-known as E-commerce. On the same lines, banking, insurance,

healthcare are being managed through Internet E-banking,

E-billing, E-audit, & use of Credit cards, Smart card, ATM, E-money are the examples of the E-

commerce application.

The digital firm, which uses Internet and web technology and uses E-business and E-commerce solutions, is a

reality and is going to increase in number.

MIS for E-business is different compared to conventional MIS design of an organisation. The

role of MIS in E-business organization is to deal with changes in global market and enterprises.

MIS produces more knowledge-based products. Knowledge management system is formally

recognized as a part of MIS. It is effectively used for strategic planning for survival and growth,

increase in profit and productivity and so on.

To achieve the said benefits of E-business organisation, it is necessary to redesign the organisa- tion to realize

the benefits of digital firm. The organisation structure should be lean and flat. Get rid of rigid established

infrastructure such as branch office or zonal office. Allow people to work from anywhere. Automate processes

after re-engineering the process to cut down process cycle time. Make use of groupware technology on Internet

platform for faster response processing.

Another challenge is to convert domestic process design to work for international process, where

integration of multinational information systems using different communication standards,

country-specific accounting practices, and laws of security are to be adhered strictly.

Internet and networking technology has thrown another challenge to enlarge the scope of

organisation where customers and vendors become part of the organisation. This technology

offers a solution to communicate, co-ordinate, and collaborate with customers, vendors and

business partners. This is just not a technical change in business operations but a cultural change

in the mindset of managers and workers to look beyond the conventional organisation. It means

changing the organisation behaviour to take competitive advantage of the E-business technology.

The last but not the least important is the challenge to organise and implement information

architecture and information technology platforms, considering multiple locations and multiple

information needs arising due to global operations of the business into a comprehensive MIS.

Q5. What do you understand by service level Agreements (SLAs)? Why are they needed? What is the

role of CIO in drafting these? Explain the various security hazards faced by an IS?

Ans. A service level agreement (frequently abbreviated as SLA) is a part of a service contractw here the level

of service is formally defined. In practice, the term SLA is sometimes used to refer to the contracted delivery

time (of the service) or performance. As an example, internet service providers will commonly include service

level agreements within the terms of their contracts with customers to define the level(s) of service being sold

in plain language terms (typically the (SLA) will in this case have a technical definition in terms ofM TTF,M

TT R, various data rates, etc.)

A service level agreement (SLA) is a negotiated agreement between two parties where one is the customer and

the other is the service provider. This can be a legally binding formal or informal “contract” (see internal

department relationships).Contracts between the service provider and other third parties are often (incorrectly)

called SLAs as the level of service has been set by the (principal) customer, there can be no “agreement”

between third parties (these agreements are simply a “contract”). Operating LevelAgreements or OLA(s),

however, may be used by internal groups to support SLA(s).

Role of CIO in drafting SLAS

One of the major responsibilities of the CIO is to establish the credibility of the systems organization. The

systems department should not only focus on providing better service to the various lines of business but also

help businesses operate better. If the CIO wants to be taken seriously, he needs to do what other executives do

and have his own business metrics and performance measurements, so that he can effectively measure his

internal business

performance. Other business departments have them, but CIOs generally do not because IT has always been

viewed as a cost center. Measurements in IT tend to be vague and lacking in context. For example, ‘I had 14

projects last year, and I did them well.’ But there is no real business measurement there. How many projects

should the manager have had? Did he really have the capacity to handle 14 projects? ACIO should explore

running their area more like a service operation rather than a cost center, and develop metrics that track the

performance of the information systems staff, as well as the equipment comprising the applications,

infrastructure, and networks under the CIO’s control. The first step, they say, is to implement service level

agreements (SLAs) with business units. It sets the expectation on the technical areas of theCIO’s operations.At

a minimum, they should set up what is expected and what levels of service the equipment will provide. The

underlying SLAs should be some sort of a chargeback system with business units, particularly when it comes

to apportioning staff time. If information systems are now providing a service, the staff needs to understand

where the service is being used to be properly remunerated or to demonstrate where the value is. The second

part of the IT operations equation is computer equipment, and CIOs must have a firm

handle on how that equipment is being used. There are softwares to help with the people picture, and there are

other products that can monitor hardware performance, such as network and server uptime. One of the major

roles of the CIO is to make the organization information systems savvy and increase the technological maturity

of the information systems organization.A major part of the CIO’s job is to make the users aware of the

opportunities arising as a result of technical innovations, how this can help them perform better, and

familiarizing them with computers and information systems applications. The information systems

management also has the job of helping the end users adapt to the changes caused by information systems, and

to encourage their use. Finally, CIOs need to institute life cycle management with their applications and

computer equipment. Most IT organizations do not have any idea of the life cycle of an application how

long they want it to last, and when it needs to be refurbished, replaced, or

disposed of. Lacking this knowledge, it is easy for applications to linger long after they should be gone, and for

companies to spend far too much money on maintaining ailing applications.

Security Hazards faced by an Information system:

Security of the information system can be broken because of the following reasons:

i)Malfunctions: In this type of security hazard, all the components of a system are involved. People, software

and hardware errors course the biggest problem. More dangerous are the problems which are created by human

beings due to the omission, neglect and incompetence.

ii) Fraud and unauthorized access: This hazard is due to dishonesty, cheating or deceit. This can be done

through

a) Infiltration and industrial espionage

b) Tapping data from communication lines

c) Unauthorized browsing through lines by online terminals, etc.

iii) Power and communication failure: In some locations they are the most frequent hazards than any other else

because availability of both of them depends upon the location. Sometimes communication channel are busy or

noisy. There are power cuts and sometimes high voltage serge destroys a sensitive component of the computer.

Q6. Case Study: Information system in a restaurant.

Ans. CASE SUMMARY

A waiter takes an order at a table, and then enters it online via one of the six terminals located in the restaurant

dining room. The order is routed to a printer in the appropriate preparation area: the cold item printer if it is a

salad, the hot-item printer if it is a hot sandwich or the bar printer if it is a drink. A customers meal check-

listing (bill) the items ordered and the respective prices are automatically generated. This ordering system

eliminates the old three-carbon-copy guest check system as well as any problems caused by a waiters

handwriting. When the kitchen runs out of a food item, the cooks send out an out of stock message, which

will be displayed on the dining room terminals when waiters try to order that item. This gives the waiters faster

feedback, enabling them to give better service to the customers. Other system features aid management in the

planning and control of their restaurant business. The system provides up-to-the-minute information on the

food items ordered and breaks out percentages showing sales of each item versus total sales. This helps

management plan menus according to customers tastes. The system also compares the weekly sales totals

versus food costs, allowing planning for tighter cost controls. In addition, whenever an order is voided, the

reasons for the void are keyed in. This may help later in management decisions, especially if the voids

consistently related to food or service. Acceptance of the system by the users is exceptionally high since the

waiters and waitresses were involved in the selection and design process. All potential users were asked to give

their impressions and ideas about the various systems available before one was chosen

Q1. What are the essential characteristics of Operation Research? Mention different phases in an

Operation Research study. Point out some limitations of O.R?

Ans. Characteristics of Operations Research

Operations research, an interdisciplinary division of mathematics and science, uses statistics, algorithms and

mathematical modeling techniques to solve complex problems for the best possible solutions. This science is

basically concerned with optimizing maxima and minima of the objective functions involved. Examples of

maxima could be profit, performance and yield. Minima could be loss and risk. The management of various

companies has benefited immensely from operations research.

Operations research is also known as OR. It has basic characteristics such as systems orientation, using

interdisciplinary groups, applying scientific methodology, providing quantitative answers, revelation of newer

problems and the consideration of human factors in relation to the state under which research is being

conducted.

Systems Orientationo This approach recognizes the fact that the behavior of any part of the system has an effect on the system as

a whole. This stresses the idea that the interaction between parts of the system is what determines the

functioning of the system. No single part of the system can have a bearing effect on the whole. OR attempts

appraise the effect the changes of any single part would have on the performance of the system as a whole. It

then searches for the causes of the problem that has arisen either in one part of the system or in the interrelation

parts.

Interdisciplinary groupso The team performing the operational research is drawn from different disciplines. The disciplines could

include mathematics, psychology, statistics, physics, economics and engineering. The knowledge of all the

people involved aids the research and preparation of the scientific model.

Application of Scientific Methodologyo OR extensively uses scientific means and methods to solve problems. Most OR studies cannot be

conducted in laboratories, and the findings cannot be applied to natural environments. Therefore, scientific and

mathematical models are used for studies. Simulation of these models is carried out, and the findings are then

studied with respect to the real environment.

New Problems Revealedo Finding a solution to a problem in OR uncovers additional problems. To obtain maximum benefits from

the study, ongoing and continuous research is necessary. New problems must be pursued immediately to be

resolved. A company looking to reduce costs in manufacturing might discover in the process that it needs to

buy one more component to manufacture the end product. Such a scenario would result in unexpected costs

and budget overruns. Ensuring flexibility for such contingencies is a key characteristic of OR.

Provides Quantitative Answerso The solutions found by using operations research are always quantitative. OR considers two or more

options and emphasizes the best one. The company must decide which option is the best alternative for it.

Human Factorso In other forms of quantitative research, human factors are not considered, but in OR, human factors are a

prime consideration. People involved in the process may become sick, which would affect the company’s

output.

PHASES OPERATIONS RESEARCH

· Formulate the problem: This is the most important process, it is generally lengthy and time consuming.

The activities that constitute this step are visits, observations, research, etc. With the help of such activities, the

O.R. scientist gets sufficient information and support to proceed and is better prepared to formulate the

problem. This process starts with understanding of the organizational climate, its objectives and expectations.

Further, the alternative courses of action are discovered in this step.

Develop a model: Once a problem is formulated, the next step is to express the problem into a

mathematical model that represents systems, processes or environment in the form of equations,

relationships or formulas. We have to identify both the static and dynamic structural elements, and

device mathematical formulas to represent the interrelationships among elements. The proposed model

may be field tested and modified in order to work under stated environmental constraints. A model may

also be modified if the management is not satisfied with the answer that it gives.

Select appropriate data input: Garbage in and garbage out is a famous saying. No model will work

appropriately if data input is not appropriate. The purpose of this step is to have sufficient input to

operate and test the model.

Solution of the model: After selecting the appropriate data input, the next step is to find a solution. If

the model is not behaving properly, then updating and modification is considered at this stage.

Validation of the model: A model is said to be valid if it can provide a reliable prediction of the

system’s performance. A model must be applicable for a longer time and can be updated from time to

time taking into consideration the past, present and future aspects of the problem.

Implement the solution: The implementation of the solution involves so many behavioural issues and

the implementing authority is responsible for resolving these issues. The gap between one who provides

a solution and one who wishes to use it should be eliminated. To achieve this, O.R. scientist as well as

management should play a positive role. A properly implemented solution obtained through O.R.

techniques results in improved working and wins the management support.

Limitations

Dependence on an Electronic Computer: O.R. techniques try to find out an optimal solution taking

into account all the factors. In the modern society, these factors are enormous and expressing them in

quantity and establishing relationships among these require voluminous calculations that can only be

handled by computers.

Non-Quantifiable Factors: O.R. techniques provide a solution only when all the elements related to a

problem can be quantified. All relevant variables do not lend themselves to quantification. Factors that

cannot be quantified find no place in O.R. models.

Distance between Manager and Operations Researcher: O.R. being specialist’s job requires a

mathematician or a statistician, who might not be aware of the business problems. Similarly, a manager

fails to understand the complex working of O.R. Thus, there is a gap between the two.

Money and Time Costs: When the basic data are subjected to frequent changes, incorporating them

into the O.R. models is a costly affair. Moreover, a fairly good solution at present may be more

desirable than a perfect O.R. solution available after sometime.

Implementation: Implementation of decisions is a delicate task. It must take into account the

complexities of human relations and behaviour.

Q2. What are the common methods to obtain an initial basic feasible solution for a transportation

problem whose cost and requirement table is given? Give a stepwise procedure for one of them?

Ans.

Transportation Problem & its basic assumption

This model studies the minimization of the cost of transporting a commodity from a number

of sources to several destinations. The supply at each source and the demand at each

destination are known. The transportation problem involves m sources, each of which has

available.

i (i = 1, 2, …..,m) units of homogeneous product and

n destinations, each of which requires

bj (j = 1, 2…., n) units of products. Here a

i and bj are positive

integers. The cost cij of transporting one unit of the product from the

ith source to the

jth destination is given for each

i and j

. The objective is to develop an integral transportation schedule that meets all demands

from the inventory at a minimum total transportation cost.It is assumed that the total supply

and the total demand are equal.i.e.

Condition (1)The condition (1) is guaranteed by creating either a fictitious destination with a

demand equal to the surplus if total demand is less than the total supply or a (dummy)

source with a supply equal to the shortage if total demand exceeds total supply. The cost of

transportation from the fictitious destination to all sources and from all destinations to the

fictitious sources are assumed to be zero so that total cost of transportation will remain the

same.

Formulation of Transportation Problem

The standard mathematical model for the transportation problem is as follows. Let xij be number of units of the

homogenous product to be transported from source i to the

destination j Then objective is to

Theorem:

A necessary and sufficient condition for the existence of a feasible solution to the

transportation problem (2) is that

Q3. a. What are the properties of a game? Explain the “best strategy” on the basis of minmax criterion

of optimality.

b. State the assumptions underlying game theory. Discuss its importance to business decisions.

Ans. a)

Minimax (sometimes minmax) is a decision rule used in decision theory,game

theory, statistics and philosophy for minimizing the possible loss whilemaximizing the potential gain.

Alternatively, it can be thought of as maximizing the minimum gain (maximin). Originally formulated for

two-player zero-sum game theory , covering both the cases where players take alternate moves and those where

they make simultaneous moves, it has also been extended to more complex games and to general decision

making in the presence of uncertainty.

Game theoryIn the theory of simultaneous games, a minimax strategy is a mixed strategywhich is part of the solution to a

zero-sum game. In zero-sum games, the minimax solution is the same as the Nash equilibrium.

MINIMAX THEOREM

The minimax theorem states:

For every two-person, zero-sum game with finitely many strategies, there exists a value V and a mixed strategy

for each player, such that (a) Given player 2′s strategy, the best payoff possible for player 1 is V, and (b) Given

player 1′s strategy, the best payoff possible for player 2 is −V.

Equivalently, Player 1′s strategy guarantees him a payoff of V regardless of Player 2′s strategy, and similarly

Player 2 can guarantee himself a payoff of −V. The name minimax arises because each player minimizes the

maximum payoff possible for the other—since the game is zero-sum, he also maximizes his own minimum

payoff.

This theorem was established by John von Neumann,[1] who is quoted as saying “As far as I can see, there

could be no theory of games … without that theorem … I thought there was nothing worth publishing until

the Minimax Theorem was proved”.[2]

See Sion’s minimax theorem and Parthasarathy’s theorem for generalizations; see also example of a game

without a value.

EXAMPLE

The following example of a

zero-sum game,

where A and B make

simultaneous moves,

illustrates minimax solution

s. Suppose each player has

three choices and consider

the payoff

matrix for A displayed at

right. Assume the payoff

matrix for B is the same matrix with the signs reversed (i.e. if the choices are A1 and B1 then B pays 3 to A).

Then, the minimax choice for A is A2 since the worst possible result is then having to pay 1, while the simple

minimax choice for B is B2 since the worst possible result is then no payment. However, this solution is not

stable, since if B believes A will choose A2 then B will choose B1 to gain 1; then if A believes B will choose

B1 then A will choose A1 to gain 3; and then Bwill choose B2; and eventually both players will realize the

difficulty of making a choice. So a more stable strategy is needed.

Some choices are dominated by others and can be eliminated: A will not choose A3 since either A1 or A2 will

produce a better result, no matter what B chooses;B will not choose B3 since some mixtures of B1 and B2 will

produce a better result, no matter what A chooses.

A can avoid having to make an expected payment of more than 1/3 by choosing A1 with probability 1/6 and

A2 with probability 5/6, no matter what B chooses.B can ensure an expected gain of at least 1/3 by using a

B chooses B1 B chooses B2 B chooses B3

A chooses A1 +3 −2 +2

A chooses A2 −1

 0

+4

A chooses A3 −4 −3 +1

randomized strategy of choosing B1 with probability 1/3 and B2 with probability 2/3, no matter

what Achooses. These mixed minimax strategies are now stable and cannot be improved.

b)

Brandenburger and Nalebuff discuss how game theory works and how companies can use the principles to

make decisions. The authors state that managers can use the principles to create new strategies for competing

where the chances for success are much higher than they would be if they continued to compete under the

same rules. A classic example used in the article is the case of General Motors. The automobile industry was

facing many expenses due to the incentives that were being used at the retailers. General Motors responded by

issuing a new credit card where the cardholders could apply a portion of their charges towards purchasing a

GM car. GM even went so far as to allow cardholders to use a smaller portion of their charges towards

purchasing a Ford car, allowing both companies to be able to raise their prices and increase long term profits.

This action by GM created a new system where both GM and Ford could be better off, unlike the traditional

competitive model where one company must profit at the expense of another.

The authors state that while the traditional win-lose strategy may sometimes be appropriate, but that the win-

win system can be ideal in many circumstances. One advantage to win-win strategies is that since they have

not been used much, they can yield many previously unidentified opportunities. Another major advantage is

that since other companies have the opportunity to come out ahead as well, they are less likely to show

resistance. The last advantage is that when other companies imitate the move the initial company benefits as

well, in contrast to the initial company losing ground as they would in a win-lose situation.

The authors also state that there are five elements to competition that can be changed to provide a more

optimal outcome. These elements are: the players (or companies competing), added values brought by each

competitor, the rules under which competition takes place, the tactics used, and the scope or boundaries that

are established. By understanding these factors, companies can apply different strategies to increase their own

odds of success.

The first way that companies can increase their chances of success involves changing who the companies are

that are involved in the business. One way that companies can improve their odds of success is by introducing

new companies into the business. For example, both Coke and Pepsi wanted to get a contract to have

Monsanto as a supplier. Since Monsanto had a monopoly at the time, they encouraged Holland Sweetener

Company to compete with Monsanto. Since it seemed Monsanto no longer had a monopoly on the market, they

were able to get more favorable contracts with Monsanto. Another way that companies can improve their

chances is by helping other companies introduce more or better complimentary products.

Companies can also change the added values of themselves or their competitors. Obviously, companies can

build a better brand or change their business practices so they operate more efficiently. However, the authors

discuss how they can also lower the value of reducing the value of other companies as a viable strategy.

Nintendo reduced the added value of retailers by not filling all of their orders, thus leaving a shortage and

reducing the bargaining power of the stores buying its products. They also limited the number of licenses

available to aspiring programmers, lowering their added value. They even lowered the value held by comic

book characters when they developed characters of their own that became widely popular, presumably so that

they wouldn’t have to pay as much to license these characters.

Changing the rules is another way in which companies can benefit. The authors introduce the idea of judo

economics, where a large company may be willing to allow a smaller company to capture a small market share

rather than compete by lowering its prices. As long as it does not become too powerful or greedy, a small

company can often participate in the same market without having to compete with larger companies on

unfavorable terms. Kiwi International Air Lines introduced services on its carriers that were of lower prices to

get market share, but made sure that the competitors understood that they had no intention of capturing more

than 10% of any market.

Companies can also change perceptions to make themselves better off. This can be accomplished either by

making things clearer or more uncertain. In 1994, the New York Post attempted to make radical price changes

in order to get the Daily News to raise its price to regain subscribers. However, the Daily News misunderstood

and both newspapers were headed for a price war. The New York Post had to make its intentions clear, and

both papers were able to raise their prices and not lose revenue. The authors also show an example of how

investment banks can maintain ambiguity to benefit themselves. If the client is more optimistic than the

investment bank, the bank can try to charge a higher commission as long as the client does not develop a more

realistic appraisal of the company’s value.

Finally, companies can change the boundaries within which they compete. For example, when Sega was

unable to gain market share from Nintendo’s 8-bit systems, it changed the game by introducing a new 16-bit

system. It took Nintendo 2 years to respond with its own 16-bit system, which gave Sega the opportunity to

capture market share and build a strong brand image. This example shows how companies can think outside

the box to change the way competition takes place in their industry.

Brandenburger and Nalebuff have illustrated how companies that recognize they can change the rules of

competition can vastly improve their odds of success, and sometimes respond in a way that benefits both

themselves and the competition. If companies are able to develop a system where they can make both

themselves and their competitors better off, then they do not have to worry so much about their competitors

trying to counter their moves. Also, because companies can easily copy each other’s ideas, it is to a firm’s

advantage if they can benefit when their competitors copy their idea, which is not usually possible under the

traditional win-lose structure.

This article has some parallels with the article “Competing on Analytics” by (). The biggest factor that both of

these articles have in common is how crucial it is for managers to understand everything they can about their

business and the environment in which they work. In “Competing on Analytics”, the authors say that it is

important to be familiar with this information so that managers can change the way they compete to improve

their chances of success. At the end of “The Right Game: Use Game Theory to Shape Strategy”, the authors

discuss how in order for companies to be able to change the environment or rules under which they compete

they need to understand everything they can about the constructs under which they are competing. Whether a

manager intends to use analytics or game theory to be successful, he or she must first have all available

information and use that information to understand how to make the company better off. However, the work

shown in “Competing on Analytics” tends to place an emphasis almost exclusively on the use of quantitative

data to improve efficiency or market share of the company. “The Right Game”, however focuses more on

using information to find creative ways of changing the constructs or rules applied between companies, often

yielding a much broader impact.

Q4. a. Compare CPM and PERT explaining similarities and mentioning where they mainly differ.

Ans.

The Major Differences and Similarities between CPM and PERT

CPM (Critical Path Method) & PERT(Program Evaluation and Review Technique)

1)PERT is a probabilistic tool used with three 1)CPM is a deterministic tool, with only single

Estimating the duration for completion of estimate of duration.

2)This tool is basically a tool for planning 2)CPM also allows and explicit estimate of and control of time.

costs in addition to time, therefore CPM can control both time and cost.

3)PERT is more suitable for R&D related 3)CPM is best suited for routine and those projects where the project

is performed for projects where time and cost estimates can the first time and the estimate of duration be

accurately calculated are uncertain.

4)The probability factor i major in PERT 4)The deterministic factor is more so values or so outcomes may not

be exact. outcomes are generally accurate and realistic.

Extensions of both PERT and CPM allow the user to manage other resources in addition to time and money, to

trade off resources, to analyze different types of schedules, and to balance the use of resources. Tensions of

both PERT and CPM allow the user to manage other resources in addition to time and money, to trade off

resources, to analyze different types of schedules, and to balance the use of resources.

Graphs

_ In mathematics, networks are called graphs, the entities are nodes, and the links are edges

_ Graph theory starts in the 18th century, with Leonhard Euler

_ The problem of Königsberg bridges

_ Since then graphs have been studied extensively.

Graph Theory

_ Graph G=(V,E)

_ V = set of vertices

_ E = set of edges 2

_ An edge is defined by the

two vertices which it

connects

_ optionally: 1 3

A direction and/or a weight

_ Two vertices are adjacent

if they are connected by

an edge 4 5

_ A vertex’s degree is the

number of its edges

Graph G=(V,E) 2

V = set of vertices

E = set of edges

Each edge is now an 1 3

arrow, not just a line ->

direction

The indegree of a vertex

is the number of 5

incoming edges 4

The outdegree of a vertex

is the number of outgoing

edges

Q.1 Explain the nine steps which take project management to a New Horizon

Ans.

The following nine steps are suggestive measures to provide new dimensions to the management of projects.

Step 1:

Believing in discontinuity and not continuity with incremental improvements

Continuity or the status quo is a function of quantum of changes. Incremental improvements are valid only

when the rate of change is not excessive. Both the continuity and incremental improvements are linked with

the rate of change and quantum. Beyond a threshold of rate of change, one cannot go with the continuity and

incremental improvements. The modern day Internet and technological based world has witnessed the

unprecedented rate of change and explosion in the quantum of changes. It is this process which has resulted in

making continuity theory as baseless. Continuity in principle is to preserve the past where as discontinuity

breaks the linkage with the past to the extent it can have fewer constraints to move into the future. There is no

choice except to believe in discontinuity as only then mind and body is prepared to accept the unknowns and

be ready to face it and control thereafter.

Step2:

Owning the problems and sharing the solutions

More one owns problem, more he becomes experienced. It is not the number of years of service one has

performed for a company but how much number of problems was faced and owned is now becoming the

benchmark to define an experienced person from inexperienced. The true spirit of entrepreneurial outlook is to

own the problems and solve the same and in this process make Money. The fixed mould mentality is to

empower the problems to be faced outside than oneself and get the credit for solutions.

Step 3:

Breaking the status quo mentality

No change means perpetuation of the Present into the Future. This is in contradiction to the nature as Future is

not the extension of Present. Breaking the status quo mentality implies in taming the future as it is the future

which becomes Present at some point of time. Focusing into Future and affecting the Present is

antiestablishment and require concerted efforts to move out from the comfortable zones. Project managers can

hardly afford to have status quo mentality as day in and day out they are involved in acting in present to affect

Future. At times, when we do not get away from the status quo mentality, contradictions fall apart everywhere

in the project between the two types of group- the champions of future and those who believe in extending

Present.

Step 4:

Stepping out of comfortable zone

As apart of the step 3 and in a way extension of it, the comfortable zone is to dear to break and cross. Fear of

uncertainties makes the comfortable zone more comfortable than if the fear did not exist. The project managers

of tomorrow are those who have so called comfortable zone carve out from that area which conventionally is

uncomfortable and that is the zone of uncertainties. If we seek comforts in conquering the uncertainties with

planning and indomitable spirit of winning, then we are able to provide project leadership and inspire the team

members to plunge into risk taking.

Step 5:

Human Capital by passing Financial Capital

While the agriculture society witnessed the Nature as the foremost, the 20th century saw the men-machine

interaction as the key factor for the capital formation. 21st century in this Internet age is beginning to see the

human capital surpassing the financial capital. Venture capitalists were all over the place to fund any idea,

which they thought would create a brave new world. Its consequent failure in the last couple of years could not

be attributed to the over faith in Human capital but absence of effective filtering mechanism from good to bad

idea. While Return On Investment (ROI) could be seen as financial driven phenomena, Return On Time

Invested (ROTI) is basically based human efforts and its deployment. ROTI will be more meaningful to ROI in

the context of new processes on their way to unfold in the beginning of 21st century.

Step 6:

Transform work culture from 5 to 7 dimensions

Conventionally we all live in the conventional 5 dimensions of space i.e. X, Y and Z, Time and Mind. We need

to supplement on these 5 dimensions the additional 2 dimensions of Passion and Joy If we do what we want do

then the gap between Wish and Reality is so little that one is in position to provide its very best. It is his/her

added 2 dimensions, which make the total difference. The new miracles in project management will take place

when we bring the work of joy like in the art domain of music and paintings in our project work.

Step 7:

Real number of encounters replacing number of years of experience

The experience profile should be redefined by the number of encounters and problems faced instead of number

of years. The wisdom evolved based on encounters is far richer than accumulated simply by repeating the same

encounters n number of times in one’s employee ship. The secret is to increase the encounters meaningful to

ones own dream or passion profile.

Step 8:

Seeking meaning out of change

Change is first degree. It is a must. Change can be threat or an opportunity. It depends how one looks at it. If

change is resisted, it becomes all the more difficult to see the real outcome of the change as it is partly

distorted. Project implies change and that too a temporary one. It is essential to make people to have a real

communication about the change. One of the major strategies to bring about a change is to communicate,

communicate and communicate.

Step 9:

Detachment from the fruits of the results

To act is within one’s control. To get the reward as a reaction to the action is not within one’s purview. Too

much emphasis on that part, which is not within our control, is a wasteful exercise instead concentrates on

actions to the best of one’s ability. The results so arrived at must be analyzed from the cause and effect

relationship and constant learning must be made out of all such actions or group of actions. Attachment with

the results of the actions often dilute one’s own energy and may shift one’s focus from the main road to its

detour. Detachment from the results does not imply one should not demand or expect materialistic benefits, no,

it only means that in case you do not get what you deserve, leave it and move forward rather than brooding

over that part which is not within one’s control. The journey comes to a standstill if we get attached to the

surroundings and to the results of the present beyond a small time frame. Project managers and team members

are never stationary. They must move on. In summary, the new discovery or dimensions in project

management heavily depends on the human factor of breaking ceilings, getting motivated all the time, working

with passion, detachment with the results rather than with the actions, human capital surpassing that of

financial capital, breaking the status quo mentality, owning the problems and solutions and creating

discontinuity. The journey has just begun and it must continue as in the human race, there is no finishing

line.

Q.2 Discuss the traits of a successful project manager.

ANS. TEN TRAITS OF A SUCCESSFUL PROJECT MANAGER

This short article highlights some of the best traits of a successful project manager. He or she has many of

these abilities:

1. In Touch – Regularly checks the “pulse” of the project. The balance is in checking often enough for

scope and length of the project, without over-checking.

2. Good Vibrations – Has inner and outer warmth. The manager understands people, and can use humor

as a relief.

3. Rock-solid – Has a solid character. Everyone respects and trusts the manager and his actions.

4. Does the Job – Has a preference for action – doesn’t wait for issues to resolve themselves.

5. Good Reactions – Anticipates problems and plans as he can to handle or avoid them.

6. Not Scattered – Can handle mulitple tasks with proper focus. His management style is balanced

between multi-tasking and focusing on the important details and tasks. This trait is connected to good

time management.

7. Focused Picture – When buried in details, she can also look at the big picture, and understands how

the teams efforts are integrated in the whole of the project.

8. Quality Workmanship - Through leading by example, quality outcomes and products are achieved.

9. Bends, but Unbreakable – Has flexibility, but can make firm decisions. It is a key trait to be able to

understand when decisions have to be made by the manager (as opposed to letting others intercede or

make decisions for the manager by default.)

10. Leverages Tools – Learns and uses tools to help manage projects. A good PM doesn’t get buried

learning complex project management tools – especially if she does not yet know the theories or uses

behind techniques (such as earned-value management or PERT charts).

Q.3 Define the change management model.

Ans.

1) Change management is a systematic approach to dealing with change, both from the perspective of an

organization and on the individual level. A somewhat ambiguous term, change management has at least three

different aspects, including: adapting to change, controlling change, and effecting change. A proactive

approach to dealing with change is at the core of all three aspects. For an organization, change management

means defining and implementing procedures and/or technologies to deal with changes in the business

environment and to profit from changing opportunities

Successful adaptation to change is as crucial within an organization as it is in the natural world. Just like plants

and animals, organizations and the individuals in them inevitably encounter changing conditions that they are

powerless to control. The more effectively you deal with change, the more likely you are to thrive. Adaptation

might involve establishing a structured methodology for responding to changes in the business environment

(such as a fluctuation in the economy, or a threat from a competitor) or establishing coping mechanisms for

responding to changes in the workplace (such as new policies, or technologies).

Terry Paulson, the author of Paulson on Change, quotes an uncle’s advice: “It’s easiest to ride a horse in the

direction it is going.” In other words, don’t struggle against change; learn to use it to your advantage.

2) In a computer system environment, change management refers to a systematic approach to keeping track of

the details of the system (for example, what operating system release is running on each computer and which

fixes have been applied).

The Change Management Model

The model follows a 3-phase, 8-step process which is represented graphically below. Click on the graphic

below to view the phase and step descriptions.

A change management model

Dealing With The Truths of Change

Leaders of change take note:

• Emotional reactions are at least as important as any other aspect of implementing change.

• The higher the involvement in change, the less negative the inevitable reactions.

• The intensity of emotional reaction is proportionate to the speed of change.

• The unresolved effects of change are cumulative.

• The longer a group / individual / situation has remained static, the greater the investment in the status quo.

Therefore, the greater the resistance and reaction.

• Rewards and incentives can cause people to change, but they will not neutralise their feelings of loss.

Dealing With Change Misconceptions

• Change happens quickly

• Survivors are glad they have a job

• Time takes care of everything

• Everyone who is not on board has something wrong with them

• The weak people are the ones who leave

• During change, those who appear OK really are

• People “hear” what senior management communicates

• People take senior management communication at face value

• If the communication is done “right” the first time, it is enough

• By changing the formal relationship, how we “do business” will change

• The transition behaviour of the senior management is invisible to the rest of the organisation

• Pressures that caused the change will be seen in a rational manner

We suggest these misconceptions require a thoughful approach from those leading change.

What Happens when your Organisation Undergoes Change?

People frequently feel overwhelmed when there are major changes within their organisation. They are often

uncertain of their future, and the future of their colleagues in the organisation. Consequently the following fear

of change reactions may occur.

People generally feel smaller, ie.

Self-conscious - the only one feeling the effects

Missing - opportunities, job, status, security taken away

Alone - nobody understands, the unlucky one

Lethargic- commitment goes, energy levels drop

Limits - each person has limits to the amount of change they’re comfortable with

Enough - when those limits are reached they cry enough and resist further change

Revert - people easily revert back to known behaviours

Because we are all individuals we react differently. Some of the common reactions to change result in the

following behaviours at work:

Drop in morale

Drop in work outputs and

Drop in productivity

Drop in Manager’s credibility

Drop in Commitment to the organisation and work

Drop in levels of service

Staff resisting change or conflict and making life difficult. This especially happens when people have been in

the organisation for a long time.

Staff “bad mouthing” the organisation/management or behaving in negative ways because they feel angry

and/or threatened and want to hit back at the organisation.

Effective leaders of change are aware of these not uncommon individual reactions to change. They plan how to

deal with change by acccepting that employee anticipation and fear of change is a significant organisational

risk unless people can be encouraged to learn and engage with the change and reflect upon the choices and

options available to them.

“The dogmas of the quiet past are inadequate to the stormy present.The occasion is piled high with

difficulty, and we must rise with the occasion. As our case is new, so we must think anew and act anew”

Abraham Lincoln

Q.4 Describe the three major classification and categories of Risk management.

Ans.

Risk management is a structured approach to managing uncertainty related to a threat, a sequence of human

activities including: risk assessment, strategies development to manage it, and mitigation of risk using

managerial resources.

About Types of Risk Management

Commercial enterprises apply various forms of risk management procedures to handle different risks because

they face a variety of risks while carrying out their business operations. Effective handling of risk ensures the

successful growth of an organization.

Various types of risk management can be categorized into the following:

· OPERATIONAL RISK MANAGEMENT:

Operational risk management deals with technical failures and human errors

· FINANCIAL RISK MANAGEMENT:

Financial risk management handles non-payment of clients and increased rate of interest

· MARKET RISK MANAGEMENT:

Deals with different types of market risk, such as interest rate risk, equity risk, commodity risk, and currency

risk

TYPES OF RISK MANAGEMENT TECHNIQUES

Risk management is a business process in which a business analyzes risk in an effort to miminize the effects of such risk. Organizations must identify risks and assess how dangerous each risk could be to the organization. Taking steps to eliminate risks will reduce the possibility of a financial loss. Risk management should be continuous and revisited at intervals the organization deems appropriate.y

Q.5 List and explain the 10 rules which serve as the guidelines for development of high technology.

Ans.

Guidelines for development of high technology

Some guidelines in the form of rules which help organization to be strong in this area.

Rule1. Identify the critical technology and make a deliberate choice for indigenous development.

Rule2. Always aim one step higher in performance.

Rule3. Focus on multi use technologies.

Rule4. Spot the competency of divisions and empower them for technology development.

Rule5. Ensure redundancy for critical systems and technologies.

Rule6. Focus efforts through Programme/Projects/Mission oriented approach.

Rule7. Build concurrency into every activity.

Rule8. Build long term partnership with all the stake holders.

Rule9. Focus on Problem Forecasting and Prevention.

Rule10. Ensure continuous and integrated Performance Measurement