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INTERMEDIATE COURSE – TEST SERIES FOR MAY 2024 EXAM

PAPER 6 – FINANCIAL MANAGEMENT & STRATEGIC MANAGEMENT
Day: Saturday Marks: 100
Date: 20th April, 2024 Time: 3 hours (Reading Time 15 mins Extra)

SECTION B: STRATEGIC MANAGEMENT

Part I - MCQs Questions (15 Marks) – Compulsory
➢ Case Study No. 1:
Aero Mind Bridge Technologies Ltd (AMBTL) is a software development company work as a solution
provider to airlines industry. The company was established more than a decade ago by Mr. Pranshu
Gupta having experience of working in the United States of America (USA). His entrepreneurial
desires brought him back to India to promote Aero Mind Bridge Technologies Ltd (AMBTL). The
company started its operations with a meager capital of ` 10 lakhs with limited workforce. Currently,
it enjoys a valuation of more than ` 50 crores. Almost everybody acknowledged the competency of
AMBTL in developing customised software for the airlines industry.
The high growth of the company was mainly on account of the heavy inflows of the funds in the
airlines industry from various big business houses that have diversified into airlines industry.
Currently, these business houses were in the manufacturing of FMCG, textiles, packaging etc. and
having good expertise and uniqueness in these industries.
However, AMBTL saw stagnation in last three years. The order position was shrinking day by day. The
margins were also reducing. Last year was particularly bad for the AMBTL and its annual sales
reduced by 20 % for the first time since its inception.
Most of the business houses that had entered in the airlines industry had less knowledge and
experience in the industry. However, their desire to diversify and seeing new opportunity in the
airlines industry prompted them to invest heavily into the industry.
However, things did not turn out to be as expected. The tough competition between several players,
reduction in the fare by railways and high prices of aviation fuel created problems for the industry.
The sector was not able to generate reasonable profits thus resulting difficulty in maintaining
operations. They were in need for hard to come by capital. Lately, the airlines industry is witnessing
some consolidation with companies planning for mergers or even contemplating closures.
The general global recession also resulted in the reduction of travel expenditure of corporates
resulting in decrease in the order position of AMBTL.
Based on the above case scenario, answer the Q.12 to Q.16. MCQs:

Q.12. Identify the nature of diversification by the business houses entering into airlines industry. (2 Marks)
(a) Concentric diversification (b) Conglomerate diversification
(c) Vertically integrated diversification (d) Horizontal integrated diversification
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Q.13. The big business houses were in the manufacturing of FMCG, textiles, packaging etc. and having good
expertise and uniqueness in these industries. But they are not performing well in airlines industry
because of (2 Marks)
(a) Non-availability of funds (b) Incompetent workforce
(c) Rapid technological changes (d) Lacking core competence

Q.14. According to Michael Porter’s model, identify the competitive pressures faced by airlines industry as
per the given scenario.
1. Competitive pressure among rival sellers
2. Competitive pressure from suppliers
3. Competitive pressure from substitute products
4. Competitive pressure from buyers
5. Competitive pressure from new entrants
Select the correct combination in the above scenario: (2 Marks)
(a) 1, 2 & 3 (b) 1, 3 & 4 (c) 2, 3 & 5 (d) 1, 4 & 5

Q.15. AMBTL could be easily marked as a Star as per BCG’s Growth Matrix in its early years. However, the
last three years have not been good for AMBTL. Where would you put it on the BCG Matrix?
(a) Dog (b) Question mark (c) Will remain a star (d) Cash cow (2 Marks)

Q.16. Mr. Pranshu Gupta as a core strategist of AMBTL has been authorised to bring about strategic change
in his company, how he will initiate “unfreezing of the situation”? (2 Marks)
(a) Promoting new ideas throughout the organization
(b) Promoting compliance throughout the organization
(c) Promoting change in process throughout the organization
(d) None of the above

➢ Compulsory Application Based Independent MCQs:

Q.17. Dr. Raman has been running a nursing home for about twenty-two years now and has gained
enormous name for his benevolence in Balram district of Chhattisgarh. Recently, his daughter, Dr.
Radhika completed her medicine degree from the United States of America and returned to her
hometown to be a part of her father’s practice. She has been given the baton to promote modern
medicine and retain the local skilled youth in their practice. However, their nursing home’s skilled
youth has been more inclined to E-Commerce employment opportunities. Dr. Radhika has taken it as
a challenge to imbibe the very essence of service in them, by being employed as nurses and
caretakers of the ill. This shall be very crucial in growing the practice as desired. Which of the
following phases of Kurt Lewin’s Model of Change will be most challenging for Dr. Radhika to
strategically positioning her father’s nursing home? (1 Mark)
(a) Compliance (b) Identification (c) Internalization (d) Transition
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Q.18. The management of Vadakara Limited, hitherto a successful ball valves maker headquartered in
Mumbai, is looking to launch a new SBU for its future forward integration plans abroad in Sudan. The
CEO is now faced with the opportunity-cum-challenge to make this foray into Sudan a successful but
time-bound business enterprise. The CEO has already asked his India Operations Head to make a
study of Sudan’s present market conditions and territory specific laws to enable the setup of a local
branch office for the proposed SBU. Meantime, the HR manager has come across a promising resume
of a person on LinkedIn, a social networking platform on internet, who is currently engaged in a
similar Deputy CEO position with another entity. The management is also in touch with a couple of
NRI angel investors based out of Singapore, to arrange for venture capital that would be required for
this venture.
From a strategic management perspective, Vadakara Limited is currently represented by which
strategic time phase: (2 Marks)
(a) Strategy formulation phase (b) Strategy change phase
(c) Strategy implementation phase (d) Strategy internalization phase

Q.19. The employees of XYZ ltd have been facing problems regarding the difference between the
understanding of strategy formulation and strategy implementation. In order to address this
problem, you, the president operations, made four groups and asked each group to write in points
their understanding of the same. The following points were compiled from their knowing of strategy
formulation and implementation.
1. Strategy formulation focuses on efficiency while strategy implementation focuses on
effectiveness.
2. Strategy formulation requires motivation and leadership skills while strategic implementation
require conceptual intuitive and analytical skills.
3. Strategy formulation is an intellectual process while strategy implementation is primarily an
operational process.
4. Strategy formulation requires coordination between executives at middle and lower level while
strategy implementation requires coordination among the executives at the top levels.
Out of the following views, what all needs to be corrected? (2 Marks)
(a) 1, 3 & 4 (b) 1 & 2 & 3 (c) 1, 2 & 4 (d) 1, 2, 3 & 4

Part II – Descriptive Questions (35 Marks)

Question No. 1 is compulsory. Attempt any two questions out of the remaining three questions.
Q.1.
(a) Dharam Singh, the procurement department head of Cyclix, a mountain biking equipment company,
was recently promoted to look after sales department along with procurement department. His
seniors at the corporate level have always liked his way of leadership and are assured that he would
ensure the implementation of policies and strategies to the best of his capacity but have never
involved him in decision making for the company. Do you think this is the right approach? Validate
your answer with logical reasoning around management levels and decision making. [5 Marks]
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(b) Suresh Singhania is the owner of an agri-based private company in Sangrur, Punjab. His unit is
producing puree, ketchups and sauces. While its products have significant market share in the
northern part of country, the sales are on decline in last couple of years. He seeks help of a
management expert who advises him to first understand the competitive landscape. Explain the
steps to be followed by Suresh Singhania to understand competitive landscape. [5 Marks]

(c) Mr. Banerjee is head of marketing department of a manufacturing company. His company is in direct
competition with thirteen companies at national level. He wishes to study the market positions of
rival companies by grouping them into like positions. Name the tool that may be used by Mr.
Banerjee? Explain the procedure that may be used to implement the technique. [5 Marks]

Q.2.
(a) Mohan has joined as the new CEO of XYZ Corporation and aims to make it a dominant technology
company in the next five years. He aims to develop competencies for managers for achieving better
performance and a competitive advantage for XYZ Corporation. Mohan is well aware of the
importance of resources and capabilities in generating competitive advantage. Discuss the four major
characteristics of resources and capabilities required by XYZ Corporation to sustain the competitive
advantage and its ability to earn profits from it. [5 Marks]

(b) Gautam and Siddhartha, two brothers, are the owners of a cloth manufacturing unit located in
Faridabad. They are doing well and have substantial surplus funds available within the business. They
have different approaches regarding corporate strategies to be followed to be more competitive and
profitable in future. Gautam is interested in acquiring another industrial unit located in Faridabad
manufacturing stationery items such as permanent markers, notebooks, pencils and pencil
sharpeners, envelopes and other office supplies. On the other hand, Siddhartha desires to start
another unit to produce readymade garments. Discuss the nature of strategic choices being
suggested by the two brothers with reference to the payoffs and the risks involved. [5 Marks]

Q.3.
(a) X Pvt. Ltd. had recently ventured into the business of co-working spaces when the global pandemic
struck. This has resulted in the business line becoming unprofitable and unviable, and a failure of the
existing strategy. However, the other businesses of X Pvt. Ltd. are relatively less affected by the
pandemic as compared to the recent co-working spaces. Suggest a strategy for X Pvt. Ltd. with
reasons to justify your answer. [5 Marks]

(b) Delta is an organization specializing in Information Technology enables Services (ITeS) and
Communications business. Previous year the organization had successfully integrated an Artificial
Intelligence (AI) tool named ‘Zeus’ into the existing ERP system.
The AI tool using Deep Learning technique provided a digital leap transformation in various business
processes and operations. It has significantly diminished the role played by specialist managers of the
middle management. This technological tool in addition to saving organisational costs by replacing
many tasks of the middle management, has also served as a link between top and bottom levels in
the organization and assists in faster decision making. The skewed middle level managers now
perform cross-functional duties. Which type of organisational structure is the company transitioning
into? [5 Marks]
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Q.4.
(a) There are three types of networks of relationships between the three levels of management that
interlinks them. Explain them. [5 Marks]

(b) To discourage new entrants, existing firms can try to raise "Barriers to Entry" as per Porter's five force
model. Explain common barriers to entry. [5 Marks]
OR
(b) What do you mean by Strategic Performance Measures and why are they essential for organisations.
[5 Marks]

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