UGC NET Paper 2: Management 30th Sep 2020 Shift 1 (Previous Year Paper)

The correct answer is Differentiating through Physical Evidence.

According to Philip Kotler, differentiation is the act of designing a set of meaningful differences to distinguish the company’s offerings (i.e., products) from competitors’ offerings. The goal of a differentiation strategy is to achieve a. competitive advantage by offering a unique product to customers. When a product becomes unique due to differentiation, it becomes attractive to customers.

In a differentiation strategy, a firm seeks to be unique in its industry along some dimensions that are widely valued by buyers. It selects one or more attributes that many buyers in an industry perceive as important and uniquely positions itself to meet those needs.

Important Points

Effective physical evidence strategy

• It is a strategy that helps in determining and identifying the service quality expectations and customer perceptions.
• It should also reflect how the business wants to be seen by its customers.
• For example, an expensive restaurant needs to ensure that the furniture, lighting and tableware all present an image of quality.
• Another example is Red Lounges launched by Coca-cola recently. It would a one-stop destination for the youth to hang out where they can surf the Internet, chat, watch TV on giant plasma screens and experience the entire portfolio of Coca-Cola, all under the same zone.

Additional Information

There are various differentiation strategies, here are some more specific types of differentiation strategies:

• Product Differentiation
• Service Differentiation
• Distribution/Channel Differentiation
• Relationship Differentiation
• Price Differentiation
• Brand Image Differentiation:
• As a source of competitive advantage, a company may differentiate itself from its competitors by image; the particular image or 'personality' it acquires is created by its logo and other symbols, its advertising, its atmosphere, its events and personalities. It is known as Differentiating the service utilizing Brand Image

Key Points

Export Trade: 

• When residents of another country purchase produced goods and services from one country, this is known as an export trade transaction.
• Since they give people and businesses access to a bigger market for their products, exports are essential to market democracies.

Important Points

The following documentation must be submitted for customs clearance when exporting goods from India:

• Shipping bill: A shipping bill is a significant piece of paperwork that acts as a quantifiable record and is typically submitted online using specialized software.
• Commercial invoice: A commercial invoice is used to determine the commodity's worth. The customs official contrasts the commodity's actual market value with the value provided on the business invoice. This tactic prevents importers from using dishonest methods like undercharging and overcharging.
• Airway bill: An airway bill is a document that contains information on the products they are carrying as well as the terms of delivery that are provided by the ship or airplanes that is transporting the commodities. The importer must submit it at the time of customs clearance.
• Packing list: Each package's contents are listed on a packing list (boxes, pallets, etc.). It contains specific lists of the items in each package, as well as weights and measurements. Freight forwarders use this document to calculate weights and freight charges.

Thus, the correct answer is A, B, C, D only.

Key Points

Artificial intelligence (AI):

• It is a technique for causing computer hardware and software to think critically, much like how people employ natural intelligence.
• Artificial intelligence uses computers and other devices to simulate how the human mind makes decisions and solves problems.

Some examples are:

• Chatbots employ AI to comprehend consumer issues more quickly and offer more effective solutions.
• To improve scheduling, intelligent assistants employ AI to extract crucial information from massive free-text datasets.
• On the basis of users' viewing patterns, recommendation engines can automatically suggest TV shows to them.

Important Points

Techniques of Artificial Intelligence are:

• Artificial neural networks: The biological neural networks that shape the structure of the human brain are where the phrase "artificial neural network" originates. Artificial neural networks also feature neurons that are interconnected to one another at different levels of the networks, much like the human brain, which has neurons that are interconnected to one another. Nodes are the names for these neurons.
• Genetic algorithm: A search-based optimization technique called a genetic algorithm (GA) is based on the concepts of natural selection and genetics. It is frequently used to locate ideal or almost ideal answers to challenging issues that would otherwise take a lifetime to solve. It is frequently employed in machine learning, research, and the solution of optimization problems.
• Fuzzy vector: Natural language processing and numerous other sophisticated applications of artificial intelligence use fuzzy logic. Fuzzy logic is frequently used in contemporary control systems, including expert systems. With roots in ancient Greek philosophy and cutting-edge applications in artificial intelligence, fuzzy systems are an alternative to conventional ideas of set membership and logic.

Thus, the correct answer is A, C, E only.

Key Points

The International Cooperation (IC) Scheme was undertaken by the Ministry of Micro, Small and Medium Enterprises with the aim of boosting MSMEs' competency, expanding the markets for their goods, researching cutting-edge technologies to increase production capacity, etc. 

Objectives of The Scheme:

• Technology infusion and/or upgradation of Indian micro, small and medium enterprises (MSMEs
• Promotion of the exports of MSMEs
• Modernisation of MSMEs

Important Points

The scheme supports the following activities: 

• Delegations of MSMEs' visit other nations to explore new technologies, advance technology, facilitate joint ventures, expand the market for MSMEs' products, engage in international partnerships, attend international trade shows, etc.
• Participation of Indian MSMEs at international trade shows, exhibitions, and buyer-seller events abroad.
• Participation in international exhibitions and trade shows staged in India that draw visitors from abroad.
• Holding global symposiums and conferences on subjects and issues relevant to Indian MSMEs'.

Thus, the correct answer is A, and C only.

An oligopoly market is a real situation market where a number of consumer goods and services, as well as producer goods, are sold. Common models that explain the oligopoly firm's pricing and output decisions*.* 

First Mover Advantage:

• First Mover Advantage is a competitive advantage acquired by the first significant occupant of a market segment.
• First Mover Advantage enables a firm to establish customer loyalty, brand recognition, and early purchase of resources before other firms enter the market segment.
• First Movers of the industry are mostly always followed by other firms that attempt to capitalise on the firms first mover's success.

Important Points 

 Stackelberg Model:

• A Stackelberg oligopoly firm is a firm that is the leader of the market and other firms are its followers.
• Stackelberg model applies where the following conditions are met:
• the firms sell homogeneous products,
• competition is based on output, and
• firms choose their output sequentially and not simultaneously.
• This leading firm here is basically a first-mover who chooses its output before other firms can do it.
• Here other firms must set their own output decision given the leader's output decision, the leader in the Stackelberg oligopoly firm has a larger market share and higher profit than other firms in the oligopoly.

Additional Information

• In the Cournot model of oligopoly, firms compete by choosing the quantity of output to produce. It is named after Antoine Augustin Cournot, the economist who developed the model. The model assumes that firms make their output decisions simultaneously, taking into account the anticipated reactions of their competitors.
• The Bertrand model, on the other hand, is a different oligopoly model where firms compete on the basis of price rather than quantity.
• Each firm sets its price independently, and consumers choose the product with the lowest price. This model is named after Joseph Bertrand, the economist who introduced it.
• The kinked demand curve model, also known as the Sweezy model, is another oligopoly model that explains price rigidity in certain markets. It suggests that firms in an oligopoly face a demand curve with a kink or a bend at the existing price level.
• The model assumes that firms will match price decreases by their competitors but will not follow price increases. This leads to a sticky or rigid price.

Therefore, Stackelberg Model is an oligopoly firm whose architectural framework is often described as the FirstMover Advantage Model.

The rational decision-making model is a logical, multi-step model used to choose between alternatives that follow an orderly path from problem identification to finding an appropriate solution. The idea of rational decision is easily noticeable in economic terms.

Assumptions of Rational Decision Making Model:

• A rational decision-making model brings a structured problem or reasonable thought process to the act of deciding.
• This model assumes that people will make choices from the alternatives that will provide maximum benefits and minimize any costs for reaching an agreed goal.
• This model assumes that people will choose the object that provides the greatest reward at the lowest cost.
• This model assumes that an individual has complete information on which to base a choice.
• This model assumes that there is a high level of certainty regarding the environment i.e. where the data can be collected and analyzed.
• This model assumes that the individual has the cognitive ability, time, and resources to evaluate each alternative against the others.

Therefore, Incomplete information is NOT an assumption underpinning the rational decision-making model.

Important Points

• The rational decision-making model assumes that decision-makers have access to complete and accurate information to evaluate all available options and make an optimal choice.
• In practice, decision-makers often face limited information, uncertainty, and ambiguity, which can impact their decision-making process. Therefore, "incomplete information" is not an assumption but rather a deviation from the idealized rational decision-making model.

The Process of Rational Decision Making:

This path includes:

• Formulating goal(s)
• Identifying the criteria for making the decision
• Identifying alternatives
• Performing analysis
• Making a final decision.

Therefore, a team comprises people with complementary skills committed to a common purpose, common performance goals, and an approach for which they hold themselves mutually accountable.

A barrier in communication is anything that prevents the receiver from understanding the messages others use to convey their information, ideas, and thoughts.

Therefore, the problems arising from expression in communication are called Semantic problems.

Paradigm:

• A paradigm means a set of overarching and interconnected assumptions about the nature of reality (Maykut and Moorehouse 1994).
• A paradigm is an example serving as a model.
• Any paradigm is based on a number of assumptions that deal with the nature of reality.
• It provides the basis on which knowledge can be verified and the paradigm itself cannot be tested.
• It provides the largest framework within which research takes place.
• In the research world, the use of quantitative research methods, sometimes known as the positivist approach, is the dominant paradigm; qualitative research, on the other hand, is fundamentally based on a different set of assumptions so it constitutes an alternate paradigm - a paradigm that is not fully developed yet.
• A paradigm shift is a term used by Thomas Kuhn in his famous 1962 book The Structure of Scientific Revolutions to describe the process and result of a change in basic assumptions within the ruling theory of science.
• He discussed two view phases of research in science i.e. normal and revolutionary.
• During the normal phase, science advances by advancing in the directions predicted by existing theories, and the postulates are assumed to be self-evident truths.
• During the revolution phase, scientists encounter anomalies that cannot be explained by the universally accepted paradigm within which scientific progress has thereto been made and the paradigm is not simply the current theory, but the entire worldview in which it exists, and all of the implications that come with it.
• Following are some examples of paradigm shifts that took place in the last few centuries:
• The development of Darvin's theory of evolution replacing the dominant creation theory.
• The English King singing the Magna Carta that shifted rights away from the absolute monarch.
• The transition from the Newtonian physics worldview to Einstien's Relativistic worldview.
• The Prussian military model based on the General staff that revolutionized warfare.

Therefore, a paradigm is an example serving as a model.

Key Points

Entrepreneurship:

• The tendency of the mind to accept calculated risks with assurance in order to accomplish a predetermined economic or industrial purpose is called entrepreneurship.
• An entrepreneur is a person who sets up a business with the aim of making a profit.

Important PointsAs a multifaceted undertaking, entrepreneurship is defined differently by various authorities.

• Richard Cantillon: Entrepreneurship is a matter of foresight and willingness to assume risks, which is not necessarily connected with the employment of labour in some productive process.
• William Diamond: Entrepreneurship is equivalent to "enterprise," which involves the willingness to assume risks in undertaking an economic activity, particularly a new one.

Additional Information

Other Definitions of Entrepreneurship:

• Leon Walrus : Entrepreneurship is not itself a factor of production, but rather a function that can be carried on by an agent.
• Peter F. Drucker: Entrepreneurship is neither a science  nor an art. It is a practice. It has a knowledge base. Entrepreneurship knowledge is a means to an end. It is not just about making money. It is about imagination, flexibility, creativity, willingness to think conceptually, readiness to take risks, the ability to mobilize agents of production and the capacity to see change as an opportunity. It is also about marrying passion and purpose with a good dose of perseverance.
• Joseph Alois Schumpeter: Schumpeter described entrepreneurship as a process of shattering the status quo through new combinations of resources and new methods of commerce.

Demonstration:

• The word demonstration means to give demos or to perform a particular activity.
• In the demonstration training method, the teaching-learning process is carried in a systematic way.
• Demonstration type of training method is used to train workers.
• Demonstration occurs when the workers are having a hard time connecting theories to actual practice or when workers are unable to understand the application of theories.
• In order to make the demonstration method successful few things are important:
• The object being demonstrated should not be small i.e. it should be visible clearly to everyone.
• During the demonstration, clear language must be used so that the workers are able to understand concepts easily.
• The workers should be able to question demonstrators in order to clear their doubts.
• Steps of demonstration method as a teaching strategy:
• Planning and preparation
• Introducing the lesson
• Presentation of subject matter
• Demonstration
• Teaching aids
• Evaluation

However such in-depth training method is not required to train supervisors, managers, and Senior Executives. Therefore, the Demonstration type of training method is used to train workers.

Trait theories are approaches to study the human personality. It is primarily interested in the measurement of traits, which can be defined as habitual patterns of behaviour, thought, and emotion.

Therefore, one trait that dominates a personality so much that it influences nearly everything a person does is known as the cardinal trait.

Personality tests are given to measure a prospective employee's motivation to function in a particular working environment. 

The Bernreuter Personality Inventory:

• The Bernreuter Personality Inventory is a personality test developed by Robert G. Bernreuter in 1931 measuring general personality.
• It is sometimes quoted as the first multi-scale personality questionnaire.
• It consists of 125 yes or no questions which measure one’s self-sufficiency, neurotic tendency, sociability, introversion and extroversion, locus of control, and self-confidence.
• A 1936 survey of the member of the American Psychological Association found that this test was the most well-known psychological test.
• It became widely popular after it was first published but also attracted many critics who questioned its usefulness and theoretical basis.
• The test was sold by Stanford University Press, priced at $1.75 for 25 administrations.
• The test incorporated questions from the Thurstone Personality Schedule and others.

Therefore, The Bernreuter Personality Inventory is the test that measures one’s self-sufficiency, neurotic tendency, sociability, introversion and extroversion, locus of control, and self-confidence.

• The Thematic Apperception Test (TAT) assesses an individual's achievement and motivational levels. In the Thematic Apperception Test, the participant is shown a series of ambiguous pictures and asked to create a story based on each picture. The stories are expected to reveal the individual's unconscious thoughts, motivations, and personal experiences. The narratives constructed by the participant provide insight into their inner conflicts, desires, and perceptions of interpersonal relationships.
• Tests such as The Thurstone Temperament Survey (ITS), Minnesota Multiphasic Personality Test (MMPI), the California Psychological Inventory (CPI), and Guilford-Zimmerman Temperament Survey have been designed to assess *specific personality traits.*The Minnesota Multiphasic Personality Inventory (MMPI) is a psychological assessment tool used to assess personality traits, psychopathology, and mental health disorders. It was originally developed by Drs. Starke R. Hathaway and J.C. McKinley in the late 1930s and has since been revised multiple times$.

Key Points 

Therefore, correct matching code is A - 4, B - 3, C - 1, D - 2

Key PointsThe correct match is given below:

Important Points

A. I am Ok you are OK.:

Competent

• People in this life position are creative, confident in themselves, and competent; they have respect for themselves as well as for others.
• This way of living is seen to be healthy. Others who experience these emotions demonstrate confidence in both themselves and the people around them.
• While rarely elicited by their destructive child or critical parent ego states, their actions frequently stem from their nurturing parent, adult, or happy child ego states.

B. I am OK you are not OK:

Bossing

• A person in this position in life typically adopts a "holier than thou" mentality. An attitude of superiority reflects this.
• These individuals frequently exhibit a critical parent ego state. They frequently have a low opinion of others for at least two reasons.
• First off, they frequently see others as sources of criticism. They believe that if they are not quite right or perfect, people will criticize them harshly.
• Second, they desire to rebel against an authority figure or become more autonomous, but they either don't know how to do it or have had positive results when they've tried it in the past.

C. I am not OK, you are OK:

Diffident

• This style is characterised by a general attitude of self-deprecation. The person might not be assertive since he doesn't have much faith in his own abilities.
• Many times, those in this life situation are still in their child ego states.
• They believe that others are more competent and typically deal with fewer issues than they do.
• They have a propensity to believe that they have always received unfair treatment. For those who have high expectations of authority, this is the most typical life situation.

 D. I am not Ok, you are not OK:

Avoidant

• In this life position, the person has no respect for himself nor for others.
• It seems meaningless for the person to do anything worthwhile.
• People in this situation in life typically give up.
• They lack confidence in both their own worth and that of others, as well as in their ability to trust others.

Important Points

F. W. Taylor - Scientific Management Theory (1909)

• ​ In 1909, Taylor published "The Principles of Scientific Management." In this, he proposed that by optimizing and simplifying jobs, productivity would increase.
• The four principles of Taylor's scientific management are: Science, not rule of thumb. Harmony, not discord. Cooperation, not individualism.
• Frederick Taylor's four principles of Scientific Management can be elaborated as such:
• Develop a science for each element of work.
• Scientifically Select, Train, Teach, and Develop the worker.
• Cooperate with the Worker.
• Divide the Work and Responsibility.

Henri Fayol - Administrative Management Theory (1916):

• ​The Administrative Theory of Management was first generalized by Henri Fayol (1841-1925) with his work and publications,
• Henri Fayol is known as the father of general management. Fayol was the first to identify four functions of management- Planning, Organising, Directing and Controlling.
• Fayol's 14 Principles of Management (1888) and Administration Industrielle et Generale (1916)

Max Weber - Bureaucracy Management Theory (1922):

• The bureaucratic theory of public administration owes its existence to Max Weber and his magnum opus Economy and Society published in 1922
• .It proposes that all business tasks must be divided among the employees. The basis for the division of tasks should be competencies and functional specializations.
• In this way, the workers will be well aware of their role and worth in the organization and what is expected of them.

Elton Mayo - Human Relations Management Theory (1924 and 1932):

• ​The human relations theory of management began development in the early 1920's during the industrial revolution.
• At that time, productivity was the focus of business. Professor Elton Mayo began his experiments (the Hawthorne Studies), to prove the importance of people for productivity – not machines.
• The human relations movement was born from the Hawthorne studies, which were conducted by Elton Mayo and Fritz Roethlisberger from 1924 to 1932.
• The Elton Mayo Human Relations Theory showed that relationships are highly influential for human productivity. Employers and managers need to have a vast array of skills to effectively carry a human relations-focused workplace culture

Bertalanffy's System Theory (1968):

• ​General systems theory (GST) was outlined by Ludwig von Bertalanffy (1968). Its premise is that complex systems share organizing principles that can be discovered and modelled mathematically. The term came to relate to finding a general theory to explain all systems in all fields of science.
• Bertalanffy's contribution to systems theory is best known for his theory of open systems.
• The system theorist argued that traditional closed system models based on classical science and the second law of thermodynamics were inadequate for explaining large classes of phenomena.
• General system theory describes “ how to break whole things into parts and then to learn how the parts work together in systems”.
• General system theory is known by different names - systems theory, theory of open systems, systems model, and family systems theory.There are four basic elements to the systems model: output, process, input, and feedback.
• Process represents the operations that occur to transform the inputs to the desired outputs. Inputs represent the basic materials or resources that will be transformed to the output. Feedback is the element of control.

Therefore, the correct sequence is D - E - C - B - A.

Key Points

 Architectural Content

• It takes into account the vision, the set design and production design, the existing built architecture featured in the film, as well as the urban environment and the city itself either as a commentary on or as a major part of the film and its narrative

Important Points

The following activities to create the architecture of the ideal manufacturing film.

1. Concentrates on core competencies and outsources all other operations

• Core competencies are the resources and capabilities that comprise the strategic advantages of a business

2. Learning organization facilitating cross-fertilization of ideas

• Cross-fertilisation applied to business is all about importing and mixing ideas from different places, markets or people to produce better products and services. Importing a technology from another industry, or hiring people from a different company are examples of this

3. Operates extremely efficient factories and plants

• In this stage it identifies the conditions in which goods can be produced at the lowest possible unit cost. In order to achieve production efficiency, one should utilize resources and minimize waste, which in turn, translates to higher revenues.

4. Seamlessly integrates the physical and virtual resources

• ​Virtual production seamlessly combines physical and virtual elements using a suite of software tools.
• Studios can film on a stage and view virtual graphics together in real-time.
• Changing locations is as simple as swapping out a background. Directors, actors, and other stakeholders can see the final film assets and instantly make changes.​

5. Real-time enterprise to respond instantaneously to changes in its business

• ​ A real-time application requires the ability to ingest, structure, analyse and act on data in real-time.
• The emphasis lies on providing insights and decision-making whenever an event occurs, rather than days or even weeks afterwards.

Therefore, the correct sequence is C, E, B, A, D

The correct answer is C, A, E, D, B

Key Points

Accounting Principles and concepts 

Accounting concepts or principles are the necessary assumptions on which accounting is based. These constructs are basic principles that are universally applicable.

Important points Major accounting principles or constructs are: 

1. Separate entity and Going concern:

• In accounting, the company is always considered a separate legal entity that has distinctive existence from its member.
• Hence, the money invested by the members or owners is considered capital invested and is recorded on the liability side of the Balance Sheet.
• Going-concern concept says that a company will continue its operation for a longer period for achieving its goals irrespective of the existence of members.
• For Example, the company records fixed assets in the company and raises long-term loans to repay them within a specified period, these are taken on this assumption.

2. Conservatism

• According to the Conservatism Principle, Profits should only be documented if they are guaranteed to occur, whereas all prospective losses should be acknowledged.
• It is based on 'do not anticipate profits but always be prepared for losses'.
• For instance, Provision for Bad and Doubtful Debts is made, and Depreciation on Fixed Assets is recorded. 3. Revenue recognition
• According to this principle, revenue should be recognized when it is earned irrespective of whether it is received or not.
• For example- when goods are transferred to the customer, the business is entitled to record the revenue in books of accounts even if the transaction is made on a credit basis.

4. Matching principle

• Based on the accrual method, it states that revenue, and its related expenses should be recorded in the same accounting period.

​5.  Full disclosure

• This concept denotes that a company must disclose all relevant information related to its operation in its financial statements i.e. Statement of Profit and Loss and Balance Sheet that impact the decision-making of external parties.

Hence the correct answer is C, A, E, D, B.

Key Points

 Single-index model (SIM) 

• It is a simple asset pricing model to measure both the risk and the return of a stock. The model has been developed by William Sharpe in 1963 and is commonly used in the finance industry
• An investor needs to have proper knowledge of security analysis and portfolio theory for making a corrective investment decision. In 1950, Markowitz who was considered the father of modern portfolio theory, mainly because he is the first person who gave a mathematical model for portfolio optimization and diversification.
• Markowitz's theory advises investors to invest in multiple securities rather than pulling all eggs in one basket.
• In order to overcome the Markowitz Model, William Sharpe tried to simplify the process of data inputs and reaching a solution, by developing a simplified variant of the Markowitz model.
• In Sharpe’s model, the desirability of any securities inclusion in the portfolio is directly related to its excess return-to-beta ratio.
• Excess Return = RF + β(MR – RF) – TR
• RF = Risk-free rate.
• β = Beta of the security.
• MR = Expected return of the market.
• TR = Actual or Total Return from the security

Important Points

The steps to be followed for which security and in what proportion it is included in optimal portfolio by applying Single index model are:

• Step 1-Identification of investment opportunities
• Step 2-Ranking of investment opportunities
• Step 3- Determine “excess return to β” ratio for each stock and rank them on that basis from highest to lowest
• Step 4-Determine cut-off rate (C)
• Step 5-Find the optimal cut-off point (the highest of all) and select all securities up to such cut-off point from Rank 1 onwards.
• Step 6-Determine the proportions of each security (w) to be included in the portfolio by using the portfolio variance formula:
• Step 6-Convert the proportions into appropriate weights such that aggregate of weights should be equal to 1.00 or 100%.
• Step 8- Allocation and commitment of financial resources

​Therefore, the correct sequence is C, A, D, B, E

Key Points

Consumer Buying Process and Steps involved:

• The consumer buying process is the steps a consumer takes in making a purchasing decision.
• The consumer decision-making process involves five basic steps.
• This is the process by which consumers evaluate making a purchasing decision.

Important Points

5 steps of the consumer decision making process

1. Problem recognition:

• Recognizes the need for a service or product
• The first step of the consumer decision-making process is recognizing the need for a service or product. Need recognition, whether prompted internally or externally, results in the same response: a want. Once consumers recognize a want, they need to gather information to understand how they can fulfill that want, which leads to step two.

2. Information search:

• Gathers information
• When researching their options, consumers again rely on internal and external factors, as well as past interactions with a product or brand, both positive and negative. In the information stage, they may browse through options at a physical location or consult online resources, such as Google or customer reviews.

3. Alternatives evaluation:

• Weighs choices against comparable alternatives
• At this point in the consumer decision-making process, prospective buyers have developed criteria for what they want in a product. Now they weigh their prospective choices against comparable alternatives. Alternatives may present themselves in the form of lower prices, additional product benefits, product availability, or something as personal as colour or style options.

4. Purchase decision:

• Makes actual purchase
• This is the moment the consumer has been waiting for: the purchase. Once they have gathered all the facts, including feedback from previous customers, consumers should arrive at a logical conclusion on the product or service to purchase.

5. Post-purchase evaluation:

• Reflects on the purchase they made
• This part of the consumer decision-making process involves reflection from both the consumer and the seller.

​Therefore, the correct sequence is D, A, B, E, C.

Key Points

Net Present Value method:

• It is a method used to determine the current value of all future cash flows generated by a project, including the initial capital investment. It is widely used in capital budgeting to establish which projects are likely to turn the greatest profit.
• A project's net present value (hereafter NPV) is defined as the sum of the discounted value of all receipts minus the sum of the discounted value of all expenditures. All discounting is to the beginning of the project.
• The decision rule for NPV is to accept the project if the NPV is positive and reject the project if the NPV is NPV is negative.

Internal rate of return (IRR) Method:

• It is a metric used in financial analysis to estimate the profitability of potential investments. An IRR is a discount rate that makes the net present value (NPV) of all cash flows equal to zero in a discounted cash flow analysis.
• If the IRR of a new project exceeds a company’s required rate of return, that project will most likely be accepted. If IRR falls below the required rate of return, the project should be rejected.

Ranking conflicts between NPV and IRR:

• For single and independent projects with conventional cash flows, there is no conflict between NPV and IRR decision rules. However, for mutually exclusive projects, the two criteria may give conflicting results.
• The NPV is a direct measure of the expected increase in the value of the firm.
• The NPV assumes reinvestment of cash flows at the required rate of return (more realistic), whereas the IRR assumes reinvestment of cash flows at the IRR rate (less realistic).
• IRR is not useful for projects with non-conventional cash flows as such projects can have multiple IRRs, i.e., there are more than one discount rate that will produce an NPV equal to zero.
• Therefore, the reason for conflict is due to differences in cash flow patterns and differences in project scale, i.e., investment size disparity and investment life disparity.

​Hence, the correct answers are A, B and C only.

Important Points

 Statement I: In psychographic segmentation of the market, the science of psychology is used for understanding and segmenting the consumers. 

• Psychographic segmentation has been used in marketing research as a form of market segmentation which divides consumers into sub-groups based on shared psychological characteristics, including subconscious or conscious beliefs, motivations, and priorities to explain and predict consumer behaviour.
• It is the research methodology used for studying consumers and dividing them into groups using psychological characteristics including personality, lifestyle, social status, activities, interests, opinions, and attitudes.

Hence statement I is correct.

Statement II: Segmenting consumers based on psychographics rests on identifying consumers' state of mind, and hence helps in piecing together with a more incisive profile of the target consumers. 

Psychographic segmentation:

• It is the process of creating clusters of customers who share similar characteristics and then grouping them together.
• These clusters will form subsets (or segments) of customers based on their: Social class, Lifestyle, Interests, Values, Personality, Social Status, Religion, Opinions, Attitudes, Hobbies, etc.
• For these Psychographic surveys are used to study and classify people according to psychological criteria like their attitudes, aspirations, values, lifestyle, and personality
• It helps in identifying consumers' state of mind and hence helps in piecing together with a more incisive profile of the target consumers.

Hence statement II is correct.

Therefore, we conclude that the correct answer is Both Statements I and Statement II are true.

Key Points

 Statement I: Quota sampling is the non-random method of selecting a sample from a population. 

Quota sampling

• It is a non-probability sampling method that relies on the non-random selection of a predetermined number or proportion of units. This is called a quota.
• Population is divided into mutually exclusive subgroups (called strata) and then recruit sample units until you reach your quota.
• For example, a cigarette company wants to find out what age group prefers what brand of cigarettes in a particular city. They apply survey quota on the age groups of 21-30, 31-40, 41-50, and 51+. From this information, the researcher gauges the smoking trend among the population of the city.

Hence we conclude that statement I is correct.

Statement II: The standard error of the estimate is inversely proportional to the square root of the sample size. 

Standard error:

• The standard error (SE) of a statistic is the standard deviation of its sampling distribution or an estimate of that standard deviation
• Standard error is inversely proportional to the sample size therefore if the sample size is larger than only standard error will be smaller. Or, it can also be found with by dividing the range of values used as a data in the standard deviation with the square root of the number.

Formula:

$SE = \frac {σ}{\sqrt{n}}$

SE = Standard error of the sample

σ = Sample standard deviation

n = Number of samples

Hence, we conclude that statement II is also correct.

Therefore, we conclude that Both Statement I and Statement II are true

The correct answer is Value delivery process.

Key Points Value-delivery process:

Value-Delivery involves everything necessary to ensure every paying customer is a happy customer: order processing, inventory management, delivery/fulfillment, troubleshooting, customer support and others.

Without Value-Delivery, there cannot be any business.

According to the passage, value is the most important aspect of a business. This "value" is nothing but the satisfaction that the customers receive after purchasing the products.

Additional Information Product-Delivery Process- Product delivery is taking a product or feature from ideation to release. This involves multiple steps, including development, testing, and deployment. The goal of product delivery is to create a successful product that meets the needs of the end-user. 

Corporate Brand Delivery process- The Marketing Delivery System is the organization and the activities required to bring a product to market and support it in the market. The marketing delivery system is the link between the product development and manufacturing functions, the distribution channels, and the customer.

Marketing process- The marketing process consists of four elements: strategic marketing analysis, marketing-mix planning, marketing implementation, and marketing control.

Hence, the Value delivery process involves selecting the value to be offered, creating the value, communicating the value, delivering the value and capturing the value back from the market.

The correct answer is A narrow perception of marketing and a short-sighted view of the business.

Key Points Marketing Myopia:

• Marketing Myopia was first expressed in an article by Theodore Levitt in Harvard Business Review.
• It is a short-sighted and inward-looking approach to marketing that focuses on fulfillment of immediate needs of the company rather than focusing on marketing from consumers’ point of view.
• When a company focuses more on sales than on marketing or consumers’ needs, that’s when marketing myopia strikes in.

Additional Information Value concept of marketing- In marketing, value is relative to the monetary price and there are a number of elements customers may define as being of value. 

Social marketing concept- Societal Marketing emphasizes social responsibilities and suggests that to sustain long-term success. The company should develop a marketing strategy to provide value to the customers to maintain and improve both the customers’ and society’s well-being better than the competitors.

Green Marketing concept- Green marketing is the promotion of environmentally friendly products, services, and initiatives.

Hence, Marketing Myopia is a narrow perception of marketing.

Marketing plays an entrepreneurial and strategic function in the business.

Key Points Marketing is an important part of any business. According to the passage, marketing plays both the roles of entrepreneurial and strategic functions of the business.

Entrepreneurial function implies those functions that are innovative in nature and helps in the creating new things.

Marketing helps in creating new and innovative products and services.

Strategic functions imply those functions that change according to the situation.

Marketing is strategic in nature as it always has to keep up with the pace of the environment.

Hence, the correct answer is Marketing plays an entrepreneurial and strategic function in the business.

The correct answer is Meet customer needs, build relationships with customers and also generate profit.

Key Points There are three main functions of marketing- Generating profits, meeting customers' needs and building relationships with customers.

Marketing helps in selling the products and services manufactured in the organization. It is through these sales that the company is able to generate profits.

Marketing is mostly directed toward fulfilling the customer's needs and wants. The products are manufactured in accordance to the needs of the customers which helps in building strong relationships with them. It helps in both creating new customers and retaining old ones.

hence, the correct answer is Meet customer needs, build relationships with customers and also generate profit.

The correct answer is Marketing concept.

Key Points Marketing Concept:

Marketing is the process of getting the right goods or services or ideas to the right people at the right place, time, and price, using the right promotion techniques and utilizing the appropriate people to provide the customer service associated with those goods, services, or ideas.

The marketing concept is the use of marketing data to focus on the needs and wants of customers in order to develop marketing strategies that not only satisfy the needs of the customers but also the accomplish the goals of the organization.

 Additional InformationExchange Concept- The central idea of the marketing is the exchange of product between the seller and the buyer. Exchange covers the distribution aspect and the price mechanism of the product. The concept resulted in missing out the essence of marketing that includes the concern for the customer, generation of value satisfactions, creative selling and integrated action for serving the customer.

Product Concept- The product concept is based on the philosophy that customers will prefer products that offer quality, performance, or innovation-related features and aims at producing creative and innovative products that are new or improved versions of existing products.

Selling Concept- The selling concept is a part of marketing management and one of several concepts that make up a marketing strategy. A sales concept analyzes buying and selling effects to place the focus primarily on generating sales transactions.

Hence, the marketing concept holds that generating customer satisfaction is the main task of marketing.

Cash flows refer to the operational turnover of a business and its ability to generate revenues. 

Key Points

 Investors prefer current (near) cashflows over the future (distant) cashflows for the following reasons:

• Inflation and value erosion.
• It utilises the concept of the time value of money (TVM) that states a sum of money is worth more now than in the future.
• Inflation is a rise in the average cost of goods and services over time.
• Rising inflation erodes the purchasing power of a bond's future (fixed) coupon income, reducing the present value of its future fixed cash flows.
• Hence, the impact inflation has on the time value of money is that it decreases the value of a money over time, which makes investors to rely on current cash flows rather than future cash flows.
• Risk aversion and avoidance.:
• Risk aversion is a preference for lower returns with known risks rather than higher returns with unknown risks, whereas risk avoidance is an approach that eliminates any exposure to risk that poses a potential loss.
• Risk aversion and risk avoidance impact the psychological behaviour of investors, and hence It is one of the big reasons why current cashflows are preferred by them
• Liquidity preferences:
• Liquidity preference is the demand for money.
• According to Keynes, the demand for liquidity is determined by three motives, which are, transactional motives, precautionary motives, and speculative motives.
• The theory suggests that cash is the most accepted liquid asset, and more liquid investments are easily cashed in for their full value.
• Return generation and value protection:
• A return is a change in the price of an asset, investment, or project over time, which may be represented in terms of a price change or percentage change.
• "Value protection" means the lump sum to protect underlying monetary assets, which will be payable at the maturity date.
• Those investors who seek return generation and value protection mostly try to invest in the assets for a certain time period, which can offer them future cashflows.

Therefore, the current answer is A, B, C and D only.

Additional Information

​​​Risk appetite and tolerance:

• Risk appetite is the amount of risk an organisation is willing to accept to achieve its objectives, whereas risk tolerance is the acceptable deviation from the organization's risk appetite.
• ​​​Risk appetite and tolerance impact the investment decisions of the investor.

Key Points

Pecking order theory:

• It was first suggested by Donaldson in 1961 and it was modified by Stewart C. Myers and Nicolas Majluf in 1984.It postulates that the cost of financing increases with asymmetric information.
• This theory states that businesses should follow a hierarchy for financing sources and prefer internal financing when available, and debt is preferred over equity if external financing is required (equity would mean issuing shares which meant 'bringing external ownership' into the company). Thus, the form of debt a firm chooses can act as a signal of its need for external finance.
• Hence managers display the following preference of sources to fund investment opportunities: first, through the company's retained earnings, followed by debt, and choosing equity financing as a last resort.

Important Points

The correct sequence has to be:

1. Retained earnings and internal sources: Internal financing is the first choice in the pecking order theory because there is no extra cost associated with using it. It includes sale of asset, reduction in working capital or use retained earnings. If a company uses only retained earnings for financing, there is no cost of debt or cost of equity to be accounted for.
2. External debt financing: Now comes the sources of debt. When a company finances an investment opportunity through external financing (debt or equity), a higher return is demanded because creditors and investors possess less information regarding the company, as opposed to managers. The issuance of debt often signals an undervalued stock and confidence that the board believes the investment is profitable
3. Hybrid security and convertible bonds: Hybrid securities, often referred to as "hybrids," generally combine both debt and equity characteristics. The most common example of hybrid security is called a “convertible bond.” This is a bond that comes with an option to convert the instrument into a different type of security at a future date. Ordinarily, the bond will convert into shares of stock in the issuing company
4. New issue of Equity shares: Then comes the equity financing. The issue of new equity shares come under this.

Therefore, the correct answer is A, B, C and D.

Key Points

Marketing Logistics: 

• An effective flow of finished goods, services, and product information to the distributor, retailer, and end user is ensured by marketing logistics in a business process.
• The management of finished items' inventory, packaging, shipping, distribution, waste management, and reverse logistics are all key business parameters.

Physical distribution: 

• Physical distribution (P.D.) is a crucial marketing term that refers to the marketing operations associated with the movement of finished goods from the end of the production line to the final consumer or user, as well as the flow of raw materials from the suppliers to the manufacturer.

Important Points

• The scope of marketing logistics is a bit wider than that of physical distribution.
• It includes physical distribution as well as some of the work involved with marketing channels.
• Marketing logistics includes both a portion of the functions of marketing channels as well as full physical distribution.
• Beyond just distribution or transportation, marketing logistics provide more value to the delivery chain.

Hence, the correct answer is Option 2.

Additional Information

Inventory Management:

• In business, inventory management relates to controlling order processing, production, storage, and sales of both raw materials and finished goods.
• It guarantees that the appropriate goods are delivered in the appropriate quantity, at the appropriate time, and for the appropriate price. As a result, it keeps the goods accessible at distributors, merchants, and warehouses.

Selling management:

• Recruiting, selecting, equipping, assigning, routing, monitoring, paying, and motivating personal sales force members are all included in the definition of selling management, which is the planning, direction, and control of personal selling.

Key Points

Retail Store:

Any establishment, whether for profit or not, that sells goods to customers directly includes "retail stores," as do "restaurants," "pharmacies," "convenience and grocery stores," "liquor stores," and "seasonal and temporary companies."

Important Points

The most significant category of retailers is:

• A convenience shop is located near a residential area. It is fairly compact. Long hours are spent keeping it open. Convenience items are available for purchase in a few different lines. The costs are marginally greater.
• A department store is a sizable retail establishment that carries many different product lines. For the goals of purchasing, promoting, providing services, and maintaining control, it is divided into distinct divisions and offers a large selection in each line. It is sometimes referred to as a department store for mass merchandise, such as military canteens.
• Superstores are large-scale retail establishments with a wide range of product categories. These satisfy all of a customer's regular food and non-food demands. Malls do not contain these retail establishments. Instead, they stand alone as malls.

Thus, the correct answers are A, C and E only.

Additional InformationOther major types of store retailers are:

• Specialty Store
• Drug Store
• Discount Store
• Extreme Value or Hard-discount Store
• Off-Price Retailer
• Catalog showroom

Important PointsAn objective function is a requirement of linear programming.

• The objective function is a means to maximise (or minimise) something.
• A primary objective criterion or objective aim, such as maximising profits or productivity or reducing costs or consumption, is represented by an objective function.
• The system's access to resources, such as people, materials, machines, or time, is practically always constrained.
• The choice variables are used as the inputs to linear equations that represent these limitations.
• Finding actual values for the choice variables that optimise the objective function while taking restrictions into account is the process of solving a linear programming issue.
• An objective function which states the determinants of the quantity to be either maximised or minimised is called a criterion function.
• Criterion functions are those that specify factors that should either be maximised or decreased with respect to quality.

Additional Information

• An approach to issue solving called linear programming was created to assist managers in making decisions.
• When there are multiple uses for resources such as money, personnel, materials, equipment, and other resources, linear programming is a mathematical technique for identifying the best allocation of those resources and achieving a specific goal.

As per Regulation 33 of LODR (listing obligation and disclosure requirements), 2015, a listed company in ordinary course is required to report quarterly results within 45 days of the end of the quarters.

• The company is also required to submit an audit report or limited review report as applicable.
• In the case of an annual financial result, the company is required to report quarterly results within 60 days from the end of the financial year.

1. A listed company is required to submit its report on corporate governance within 15 days from the closure of the quarter. It shall not apply to the entities having their paid-up equity capital not exceeding 10 crore rupees and an entity that has registered its securities on SME exchange.

2.As per Regulation 76 of the SEBI (Depositories and Participants) Regulations, 2018, the listed company is required to deposit the “Reconciliation of the share capital audit report” on a quarterly basis to the stock exchange within 30 days of the end of the quarter.

3. A listed company is a company whose shares are traded on the stock exchange. A listed company is obliged to follow the listing requirements of the stock exchange which includes the total number of shares which are listed and the minimum earning level of the company.

Key Points 

Therefore, the correct matching code is A - 2, B - 4, C - 1, D - 3.

The efficiency ratio measures a company's ability to use its assets and manage its liabilities effectively in the short period or in the current period.

Efficiency Ratio:

• The efficiency ratio measures whether the production output for a period in a production cost center took more or less direct labor time than expected.
• It can be calculated as: (Expected i.e. standard direct labor hours of actual production ÷ Actual labor working hours) * 100.
• A ratio of > 100% indicates greater labor efficiency than budgeted and vice-versa.

Given:

• Budgeted production: 880 units, Actual production: 750 units
• Units Standard hours per unit: 10 hours, Actual working hours: 6000 hours

Solution:

• Efficiency ratio = (Expected direct labor hours of actual production ÷ Actual labor working hours) * 100.
• Where, Expected direct labor hours of actual production = Actual production * Standard hours per unit = 750 * 10 hours = 7500 hours
• Therefore, Efficiency ratio = (7500 ÷ 6000) * 100 = 1.25 * 100 = 125%.

Therefore, from the given information, the efficiency ratio of the firm's operations will be 125%.

Economic Order Quantity (EOQ):

• Economic Order Quantity is a tool used to determine the volume and frequency of orders required to satisfy a given level of demand while at the same time minimizing the cost per order.
• It is a set point designed to help companies minimize the cost of ordering and holding inventory.
• The cost of ordering inventory decreases with the increase in ordering volume due to purchasing on economies of scale.
• As the size of inventory grows, the cost of holding the inventory rises.
• EOQ is the point that minimizes both of these costs.
• It is used in the field of Operations, logistics, and Supply Management.
• EOQ Formula:

where, A = Consumption of units during a year i.e. 20000 units;

O = Cost of placing one order including cost of receiving the goods i.e. 2000;

C = Interest cost per unit per year including other variable costs of storing it i.e. 12 * 25%.

Solution:

• EOQ = √ 2AO/C
• = √ 2200002000 / 12*0.25
• = √ 80000000 / 3
• = √ 26666667
• = 5164 units.

Therefore, Economic Order Quality (EOQ) for procurement of 20000 units annually at a price of Rs. 12 per unit for consumption in production, when the cost per order is Rs. 2000 and the inventory carrying cost is 25 percent of inventory value will be 5164 units.

Tobin's Q-ratio:

• Tobin's Q-ratio, also known as the Q Ratio was developed by James Tobin, a Nobel laureate in economics.

• He suggested a hypothesis that the market value of all the companies combined on the stock market should be about equal to their replacement costs.

• The ratio at times can be used for valuing a single company and even the whole stock market.

• In other words, Tobin's Q-ratio describes the relationship between the market value of a firm's securities and the replacement cost of its physical assets.

• The formula of the Q Ratio:

• However, it is quite difficult to estimate the replacement costs of total assets.

• Thus, there was a modification in the original formula.

• The simplified Q ratio is the equity market value divided by equity book value.

• When the ratio is greater than 1, it means that the market value of the company is exceeding the book value of its assets.

• A ratio greater than 1 indicates that a company's earnings higher than the asset's replacement model.

• When the ratio is lower than 1, it means that the company's booked assets exceed the market value.

• A ratio lower than 1 indicates that the market undervalues the company.

• The ideal scenario is when the Q ratio is 1; it states that the market is fairly valuing the company assets.

Additional Information Residual analysis, retention ratio, and book-to-price ratio are concepts commonly used in financial analysis and valuation. Here's a brief explanation of each term:

Residual Analysis: Residual analysis is a technique used to assess the accuracy of a statistical or econometric model by examining the differences between the observed values and the predicted values (residuals). It helps identify any patterns or systematic deviations in the model's predictions. In financial analysis, residual analysis is often used in regression models to evaluate the quality of the model fit and identify any outliers or unusual observations.

Retention Ratio: The retention ratio is a financial ratio that measures the proportion of earnings retained by a company rather than being distributed as dividends to shareholders. It is calculated by dividing the retained earnings by the net income of the company. The retention ratio indicates the percentage of profits that a company reinvests back into the business for growth and expansion instead of distributing them to shareholders. A higher retention ratio suggests that the company is retaining a larger portion of its earnings, which can be used for investments or debt reduction.

Book-to-Price Ratio: The book-to-price ratio (B/P ratio) is a financial ratio that compares the book value of a company's equity to its market price per share. It is calculated by dividing the book value per share by the market price per share. The book value represents the net asset value of a company, while the market price is the current trading price of the company's stock in the market. The book-to-price ratio is used as an indicator of the relative value of a company's shares. A higher B/P ratio suggests that the company's stock may be undervalued compared to its book value, while a lower B/P ratio may indicate overvaluation.

Therefore, Tobin's Q-ratio describes the relationship between the market value of a firm's securities and the replacement cost of its physical assets.

Porter's Generic Strategies Model:

• Generic strategies can be applied to all products and services in all industries, and to organizations of all sizes.
• It was first set out by Micheal Porter in 1985 in his book, "Competitive Advantage: Creating and Sustaining Superior Performance".
• He called the generic strategies "Cost Leadership" (no frills), "Differentiation" (creating unique products and services), "Focus" (offering to a specific niche market).
• He then further subdivided the Focus strategy into two parts: "Cost Focus" and "Differentiation Focus".

The Focus Strategy:

• This strategy concentrates on a particular niche market by understanding the dynamics of that market and the unique needs of the customers within it.
• The focus strategy involves selling to a narrow customer segment and they tend to build strong loyalty with these customers.
• This makes this particular market segment less attractive for competitors.
• It is essential to decide whether the company will pursue Cost Leadership or Differentiation once the Focus strategy is selected.
• Whether a company uses Cost Focus or Differentiation Focus, the key to making this generic strategy a success is to ensure that the company is adding something extra as a result of only serving that niche market.
• This "something extra" can help in reducing costs or increasing differentiation.

Therefore, a focus strategy involves selling to a narrow customer segment.

Brand Extension:

• A Brand extension is a strategy when the company uses well-established brand names either for a new product category or a new product.
• Brand extension is also called brand stretching.
• The idea behind the brand extension is to use pre-existing brand equity of the company for its new product.
• The company depends upon the current customer’s brand loyalty and hopes that the customers will be interested in the new offerings made by the same brand.
• Brand extension can help a company to expand its customer base, reach new areas, increase sales and increase the profit margin.

The different types of brand extension are:

1. Line extension: Line extension, an existing product is introduced in the market in a new way. , a company launches exact same shampoo like the previous one but with different shapes, colors, or sizes.
2. Product Extension: A company launching a new product is an example of brand extension. The new product introduced should be related to the brand. For example, Colgate started making toothpaste and moved to mouthwash and toothbrushes.
3. Market Extension: A market extension takes place when the company starts to explore a new niche sector or market. For example, Tigi company launched shampoo and gained a strong position in the market. Later, the company introduced a wide range of dog shampoos.
4. Category Extension: In this extension, the parent brand is used by the company to enter a different product category from the ones which are currently being served by the brand.

Note that Brand extension does not refer to a new form of an existing product or coming up with a new brand. It simply refers to extending an existing brand name to a new or modified product in a new category.

Additional Information

• Brand extension strategy is a marketing approach in which a company uses an existing brand name to launch new products or expand into new product categories.
• It involves leveraging the established brand equity, reputation, and customer loyalty of an existing brand to introduce new offerings to the market.
• The purpose of brand extension is to capitalize on the positive associations and customer recognition associated with the existing brand to drive acceptance and adoption of the new products.
• This strategy can help companies save on marketing costs, as they can leverage the existing brand's awareness and customer base to introduce and promote new offerings.

Customer Relationship Management or CRM is a business approach that uses information about the customers to create a long-lasting customer relationship. CRM takes technology, data, marketing, and all the communication process into consideration across all customer interaction points. CRM is an effective business strategy for any business organization.

• The frequency marketing program is a long-term sales program for the customers. It helps in repeated purchasing by developing commitment and loyalty from the customer base.
• Frequency marketing is also known as a loyalty program.
• These programs are popular in grocery stores as they offer discounts to their customers, it attracts the customers by giving them a chance to accumulate the points and later redeem those points with some rewards.
• Loyalty programs are also used by departmental stores, bookstores, home centers, and other local shops.
• CRM strategy adopted by Big Bazar is all about Frequency Marketing Program.

Experiential Relationship Program

• It is also known as XRM is a method of managing the personalized experiences that a company delivers to its customers.
• The four main pillars of an experiential relationship program are:
• Providing unique experiences
• Offering person to person connection
• Creating a personalized relationship
• Managing experiences at scale

Six Sigma level of Quality management results in 3.4 defects per million.

• Six sigma is a business strategy that aims to provide a quality process that minimizes and removes the error.
• The concept of six sigma was started by Motorola in the year 1986 and was promoted by Jack Welch. The methodology of six sigma was formulated by Bill Smith in the year 1986.
• Quality plays a very important role in the failure and success of the organization.
• Six sigma ensures the quality of products and aims to remove the defects in the process.
• Six sigma performance indicates 3.4 defects per million. A six sigma strategy expects 99.99966% of the opportunities to have some features that are expected to be defect-free.

Six sigma declares that

• Continuous efforts to achieve predictable and stable process results.
• Business and manufacturing process have some characteristics which can be measured, defined, improved, analyzed and controlled.
• It aims to achieve sustainable quality improvement.

The two different methods of six sigma are:

1. DMAIC: DMAIC has five phases: Defining the problem, measuring and finding the key points of the current process, analyzing the data, improving the current process, control the process.
2. DMADV: DMADV has five phases i.e., Design, measure, analyze, design, and verify.

Leontief paradox:

• Leontief paradox model was given by Wassily W Leontief in the year 1953. He suggested that the United States had an abundance of capital and the country should export more capital-intensive goods.
• Although**, he noticed** that the data showed that the United States was importing capital-intensive goods.
• Keeping in mind Heckscher-Ohlin's theory US should have imported labor-intensive goods instead of capital-intensive goods. His analysis was called Leontief paradox as his theory was the opposite of Heckscher-Ohlin's theory.

Additional Information

The international trade theory of the Leontief paradox pertains to Heckscher-Ohlin's theory.

1. Heckscher-Ohlin theory:

• Heckscher-Ohlin's theory states that if a country has an abundance in labor, then the country should specialize in labor-intensive goods which would form a part of the export basket.
• In the same way, the country should import capital-intensive goods from those countries which have an abundance of capital.
• According to the H-O model trade takes place in a manner that is gainful to both the countries with important effects upon wages, rent and prices (factor prices).
• It is a 2-2-2 Model, which takes two factors, two countries, and two commodities into account.

Important Points

Comparative Advantage theory:

• Comparative advantage theory states a country/firm can produce a service or a good at a lower opportunity cost than any other country.
• This theory was given by David Ricardo in the year 1817.
• It is a 2-2-1 model which takes two commodities, two countries, and one factor into account.
• Comparative advantage can occur when a country specializes and exports commodities that have minimum disadvantage and maximum cost advantage. The country should specialize in doing what it can do relatively better when compared to other countries.

Absolute advantage theory:

• The theory states the ability of a country to produce more of a good or a service than its competitors using the same number of resources. The absolute advantage theory was given by Adam Smith in the year 1776, in the international trade considering labor as the only input.
• The theory focuses on the ability of an individual/ country to produce more of a good/ service at a cost that is lower than any other nation.
• For example, country X can produce a good faster or at a lower cost than country Z, then country X has an advantage in producing the good and the country can specialize in the production of the good.

Product life cycle theory:

• This theory is developed by Raymond Vernon in the year 1960.
• The theory suggested that the life cycle of a product has three main stages:

1. New product (introduction)
2. Maturity of the product
3. Standardized product

• **The theory assumed that the **new product’s production will take place in the home country of its innovation.

One of the biggest contributors to the economy in revenue generation is the retail sector. It provides the 2^nd highest rate of employment and contributes about 10 % at a compounded annual rate of 15%. GDP. Retail sales are growing in India

• According to the latest policy by DIPP (Department of Industrial Policy and Promotion), 100% FDI is allowed in the case of single-brand retailing through the automatic route with few strings attached are given below:
• Only such products which are branded during the process of manufacturing and are sold under a similar brand in other countries will be covered under this.
• Though FDI is greater than 51%, at least 30% of the number of goods should be sourced from India. This was done to promote the domestic sectors of our country i.e., small, micro, and medium enterprises, the cottage and village industries.
• FDI in multi-brand retailing in India is capped at 51% but under Automatic Route with few strings attached.

Hence, option 4 is correct.

Additional Information

The FDI policy of India has allowed e-commerce activities under an automatic route and has allowed 100% equity subject to the below-mentioned conditions:

• E-commerce will engage only in B2B activities and not in B2C e-commerce activities.
• India has allowed 100% FDI in the e-commerce model, which defines as a facilitator that connects sellers and buyers.
• India has not allowed FDI in inventory-driven models of E-commerce.

Disruptive Innovation:

• Disruptive innovation refers to offering a valuable product, service, or concept that either disrupts an existing market or creates a new market segment, displacing established market-leading firms, products, and alliances.
• In practice, disruption occurs when traditional value drivers in an existing market are significantly changed.
• In disruptive innovation, a new player enters an existing market with a new technology or new business model, providing a new kind of value that differs from the incumbent's offerings.
• This term was first analyzed and defined by the American scholar Clayton M. Christensen and his collaborators beginning in 1995 and has been known as the most influential idea of the early 21^st century.
• Disruptive innovation refers to the innovation that transforms expensive or sophisticated products or services which were previously accessible to high-end or more skilled segment of customers to those that are more affordable and accessible to a broader population.
• This transformation itself disrupts the market by displacing long-standing, established competitors.
• Disruptive innovation refers to the use of technology that upsets a structure as opposed to "disruptive technology", which refers to the technology itself.
• Disruptive innovation requires enabling the technology, an innovative business model along a coherent value network.
• Example of disruptive innovation: Amazon - launched as an online bookstore in the mid-1990s.

Therefore, Disruptive innovations in business are those that create a new market by offering value products, involve often, new technology or a new business model to offer value to the market, and displace established market-leading firms, products and alliances i.e. All of the above.

Marketing Support/Assistance to MSMEs for Bar Code:

• Under this scheme, the Ministry of Micro, Small, and Medium Enterprises conducts seminars and reimburses registration fees for barcoding in order to encourage MSEs to use bar codes.
• The basic objective of this scheme is to enhance the Marketing competitiveness of Micro & Small Enterprises by way of:

1. Providing 75% off one-time registration fee and annual recurring fee (for first three years) paid by MSEs to GS1 India.
2. Popularising the option of bar codes on large scale amongst MSEs.
3. Motivating and encouraging MSEs for use of bar codes through conducting seminars on Bar codes, etc.

• Barcoding can have a vital impact on the success of any enterprise and organization.
• Accurate and timely capture of product information and its communication electronically across the supply chain ahead of physical product flow is critical to lowering inventory costs, accurate sales forecasting and dynamic product scheduling, and product track and trace.
• Ministry of MSME provides the financial assistance for reimbursement of 75% of the one-time registration fee (Under SSI-MDA Scheme) w.e.f. 1^st January 2002 and 75% of the annual recurring fee for the first three years (Under NMCP Scheme) w.e.f. 1^st June 2007 paid by MSMEs to GS1 India for barcoding.
• Those MSEs who have Entrepreneurial Memorandum Part-II acknowledgment number from Directorate of Industries/District Industries Centres and also have registration with GS1 India for use of Bar Codes are eligible for 75% reimbursement of one-time registration fee and annual recurring fee (for first three years) paid by them to GS1 India.
• Financial Assistance towards 75% reimbursement for one-time registration fee/annual recurring fee is valid up to XIth Plan (2007-2012).

Therefore, Marketing Support/Assistance to MSMEs for Bar Code allows reimbursement of 75% of the one-time registration fee and 75% of the annual recurring fee for the first three years paid by MSMEs to GS1 India for barcoding.

NOTE: GS1 India - an autonomous body under the Ministry of Commerce and Industry, Government of India is a solution provider for registration for use of Bar Coding.

Positive income elasticity of demand is a situation when the demand for products increases with the increase in consumer income and vice-versa.

The positive income elasticity can be of three types:

• Unitary income elasticity of demand (ey = 1).
• Low / Less than unitary income elasticity of demand (ey < 1).
• High / More than unitary income elasticity of demand (ey > 1).

Low / Less than Unitary Income Elasticity of Demand:

• Low-income elasticity of demand of a product refers to a situation when an increase in income is accompanied by a less than proportionate increase in quantity demanded.
• It implies that positive income elasticity would be less than unitary when the proportionate change in the quantity demanded is less than the proportionate change in the income.
• For instance, if the income increases by 50% and the quantity demanded increases by 25%.
• In such cases, the numerical value of income elasticity of demand would be less than one (ey < 1).
• If the income elasticity of demand is less than one, it is a necessity good.
• The decision of choices of firms having very low-income elasticity for their products would be Product innovation and Product line extension.
• Product innovation refers to the development of new products or the creation and subsequent introduction of a good or service that is either new or an improved version of previous goods or services.
• Product line extension refers to a business strategy where a business decides to expand its established product brand name with a new range of items in the product category and it can be in the form of a new size, shape, colour, packaging, and ingredients.

Therefore, in a rising income scenario, the obvious decision choices of firms having very low-income elasticity for their products would be Product innovation and Product line extension.

Best practices of an interview:

• Every interviewer, recruiter, a hiring manager should realize that asking inappropriate questions or making inappropriate inquires can lead to discrimination or wrongful discharge lawsuits, hiring the wrong employee, or both.
• It is sometimes important to incorporate risk management into the interview process to maximize the ability to assess candidates and minimize the firm's exposure to employment practices liability.
• The interviewer can manage the risk in interviews by performing a job analysis audit, developing open-ended behavioral interview questions, and avoiding some questions.
• Following are some of the measures that should be avoided by interviewers:
• Interviewers should avoid making excessive assurance about job security.
• Interviewers should avoid asking leading questions as it results in biased and false answers, as respondents are simply prone to mimic the words of an interviewer.
• Interviewers should avoid asking irrelevant personal questions like is interviewee planning to have a family or does he have children, etc.
• Interviewers should avoid plunging too quickly into demanding questions.
• Interviewers should avoid making statements that could be alleged to create a contract of employment like using terms "permanent", "career opportunity", or "long-term".
• Things that can help in uncovering core competencies while taking an interview are as follows:
• Establishing an easy and informal relationship so that the respondents feel free to communicate and it can help in reducing their stress.
• Encouraging the candidates to talk so that the interviewer could understand their capabilities.
• Asking work-related goals that the respondents want to achieve.
• Analyzing career and interests to reveal strengths, weaknesses, patterns of behavior.
• Asking candidates the standard they have set for themselves and how can they achieve it in the future.

Therefore, asking leading questions, plunging too quickly into demanding questions i.e. C, D only should be avoided by interviewers.

Strategic Human Resouce Management (SHRM):

• SHRM is a concept that ensures that the traditional HR management practices blend well with the firm's overall strategic planning and implementation program.
• SHRM enhances the productivity and efficiency of an organization.
• SHRM refers to managing people in a manner that helps in achieving goals by effectively supporting and servicing business strategies.
• SHRM involves a set of internally consistent policies and practices designed and implemented to make sure that a firm's human capital contributes to the achievement of business objectives.
• Human Resources architecture is composed of the systems, practices, competencies, and employee performance behaviours that reflect the development and management of the firm's human resources.
• Schuler has developed a more comprehensive academic definition of SHRM, "Strategic Human Resource Management is largely about integration and adaptation. Its concern is to ensure that - (1) human resources (HR) management is fully integrated with the strategy and the strategic needs of the firm; (2) HR policies cohere both across policy areas and across hierarchies; and (3) HR practices are adjusted, accepted and used by line managers and employees as part of their everyday work".
• Strategic Human Resource Management has four implications:
• Use of planning,
• Clear and comprehensive approach of design and management of employees based on HR strategy and driven by philosophy,
• Congruence between the HR activities, policies and business strategy
• Treating employees as a strategic resource of the organization helps latter in achieving competitive advantage over others.

Therefore, statements A, B, C and D are the involvements of the Strategic Human Resource Management in Corporate Strategy.

Key Points

​Financial Statements

• These are the end products of accounting process and are prepared at the end of the accounting period to reveal the financial position of the enterprise at a particular date and the result of its business operations during the accounting period.
• There are four main financial statements. They are (1) balance sheet; (2) income statement; (3) cash flow statement; and (4) statements of shareholders' equity.

1. The balance sheet provides an overview of assets, liabilities, and shareholders' equity as a snapshot in time.
2. The income statement primarily focuses on a company’s revenues and expenses during a particular period. Once expenses are subtracted from revenues, the statement produces a company's profit figure called net income.
3. The cash flow statement (CFS) measures how well a company generates cash to pay its debt obligations, fund its operating expenses, and fund investments.
4. The statement of changes in equity records how profits are retained within a company for future growth or distributed to external parties.

Additional Information

 Fund flow statement

• It reveals the reasons for changes or anomalies in the financial position of a company between two balance sheets. Fund flow statements portray the inflow and outflow of funds—or the sources and applications of funds over a particular period.
• It is prepared to show changes in the assets, liabilities, and equity between two balance sheet dates. It is also called a statement of sources and uses of funds.
• The fund's flow statement only rearranges the data that is already there in the books of account, so it lacks originality. In simple words, it presents the data in the financial statements in a systematic way, and therefore, many companies tend to avoid preparing funds to flow statements.
• The funds flow statement is basically historic in nature, that is it indicates what happened in the past and it does not communicate anything about the future, only estimates can be made based on the past data and therefore it cannot be used the management for taking decisions-related to future

​Therefore, the correct answers are ​A, C, D and E only.

Key Points

A business plan is a document that defines in detail a company's objectives and how it plans to achieve its goals. A business plan lays out a written road map for the firm from marketing, financial, and operational standpoints

Important Points

 Sequence of Steps involved in a business plan are as follows:

1. Executive summary:

• This section outlines the company and includes the mission statement along with any information about the company's leadership, employees, operations, and location.

2. Company description:

• A company description is an overview of the company's plan, vision, and relationships.
• These documents typically include the company's name, business structure, mission statement, and an overview of the target market
• It also states the Details about the Entrepreneur

3. Market analysis and opportunity:

• A market analysis is a thorough assessment of a market within a specific industry.
• It is followed by a study that analyses the dynamics of the target market, such as volume and value, potential customer segments, buying patterns, competition, and other important factors.

4. Marketing strategy: 

• This section describes how the company will attract and keep its customer base and how it intends to reach the consumer. A clear distribution channel must be outlined.
• The section also spells out advertising and marketing campaign plans and the types of media those campaigns will use.
• It includes the Marketing and Economic Details of the company.
• The marketing portion of a business plan addresses four main topics: product, price, promotion, and place

5. Financial planning: 

• This section should include a company's financial planning and projections.
• Financial statements, balance sheets, and other financial information may be included for established businesses.
• New businesses will include targets and estimates for the first few years plus a description of potential investors.
• It provides the date about Financial Details of firm.

6. Budget:

• Every company needs to have a budget in place.
• This section should include costs related to staffing, development, manufacturing, marketing, and any other expenses related to the business.
• There are four key steps to the HRP process.
• They include analyzing present labor supply, forecasting labor demand, balancing projected labor demand with supply, and supporting organizational goals. HRP is an important investment for any business as it allows companies to remain both productive and profitable.

Therefore the correct order is A → B → C → D → E

Key Points

 Six Sigma

• It is a data-driven methodology that provides tools and techniques to define and evaluate each step of a process.
• The Six Sigma methodology calls for bringing operations to a “six sigma” level, which essentially means 3.4 defects for every one million opportunities.
• The goal is to use continuous process improvement and refine processes until they produce stable and predictable results..
• The Six Sigma Methodology comprises five data-driven stages — Define, Measure, Analyze, Improve and Control (DMAIC)
• The DMAIC method is used primarily for improving existing business processes.

Important Points

The letters stand for:

1. D) Define the problem and the project goals
2. M) Measure in detail the various aspects of the current process
3. A) Analyze data to, among other things, find the root defects in a process
4. I) Improve the process
5. C) Control and establish how the process is done in the future

Therefore, we conclude that the correct answer is A → B → E → D → C

Key Points

Statement I: Power of the employee to remove dissatisfaction is low when his position in the organization is extremely important.

Job dissatisfaction

• Job dissatisfaction is when employees’ expectations for their job are not met.
• This leaves them with negative perception and lack of motivation and commitment to their work and the organization Discontent can arise from many factors, including a negative work environment, poor management, lack of recognition, and low wages.
• When employees are not engaged in their work, they are less likely to have the motivation to be productive and carry out quality services. The employee job dissatisfaction can be decreased when his position in the organization is extremely important and feel they have responsibility

Hence statement I is incorrect..

Statement II: The more the employees believe that a union can obtain positive work aspects, the more instrumental the union is for the employees.

How unions help employee job satisfaction:

• A labor union is an organization that engages in collective bargaining with an employer to protect workers' economic status and working conditions.
• The aim is to ensure fair wages, benefits, and working conditions for union members. Union contracts specify workers' pay, hours, benefits, and job health and safety policies.
• Unions play a pivotal role both in securing legislated labor protections and rights such as safety and health, overtime, and family/medical leave and in enforcing those rights on the job. Because unionized workers are more informed, they are more likely to benefit from social insurance programs such as unemployment insurance and workers compensation.
• Unions are thus an intermediary institution that provides a necessary complement to legislated benefits and protections. The more the employees believe that a union can obtain positive work aspects, the more instrumental the union is for the employees.

Hence statement I is correct.

Therefore we can conclude that Statement I incorrect but Statement II is true

The correct answer is s Club Membership.

Key Points The company XYZ is a garment shop in Delhi that has been solely working for the corporates. there can be many different kinds of perquisites that can be availed by the employees. These perquisites are the additional benefits that the employees of the organization enjoy. There can be different kinds of perquisites like medical facilities, accommodation, insurance, and many others. Since according to the passage the shop is a garments shop which the corporates would like to avail more. Getting a club membership would make it more convenient for people. Hence, an important perquisite that can be availed is club membership.

Hence, the correct answer is Club Membership.

The correct answer is Salary.

Key Points Salary:

• Salary is defined as the decided monetary amount that an employer offers an employee in lieu of the services offered by the employee.
• This amount of money is revised on periodic intervals on the basis of the employee’s performance.
• Salaries are generally defined as a fixed package that is offered to employees as annual compensation.

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Wages- Wages are the amount of compensation that is paid by the employer on the basis of certain criteria. It can be on the basis of performance, or on hourly basis, weekly or even monthly basis. It is a variable component and is not fixed.

Rewards- Rewards are monetary or non monetary compensation apart from their salary which is given to the employees on account of their performance to motivate the employees. It is not fixed and depends on the happening of certain events.

Incentives- An employee incentive is a reward that an employer gives to employees for results achieved by the company as a whole. It is usually monetary compensation and can be in addition to salary or wages. An employee incentive can be in the form of a gift, free products, paid time off, or additional shares of stock.

Hence, the correct answer is Salary.

The correct answer is Reinforcement and Expectancy Theory.

Key Points Reinforcement and expectancy theory:

• Reinforcement Expectancy Theory (RET), is based on the central premise that human behavior is driven by the need to gain rewarding stimuli and eliminate aversive ones.
• The theory proposes that inspiration is a product of the association between a reaction and its reward. The response is an elicited action, and tthe areward is an object of value awarded for a behavior.
• It believes in the concept that  'A behavior which has a rewarding experience is likely to be repeated'.

Behavioral Theory- Behavioral theory seeks to explain human behavior by analyzing the antecedents and consequences present in the individual's environment and the learned associations he or she has acquired through previous experience.

Agency Theory- Agency theory is a principle that is used to explain and resolve issues in the relationship between business principals and their agents. Most commonly, that relationship is the one between shareholders, as principals, and company executives, as agents.

Contingency Theory- The contingency theory, also known as the situational approach to management theory, states that situational factors can affect the relationships between dependent and independent variables in the work environment, which in turn will affect employee behavior, motivation, and effectiveness. Success in analyzing organizational data and improving employee motivation is contingent, or dependent, on the unique contingency variables of the particular organization. The contingency theory recognizes that an individualized approach is necessary to successfully use organizational behavior data to benefit employees and create a productive work environment.

Hence, the correct answer is Reinforcement and Expectancy Theory.

The correct answer is Job Analysis.

Job Analysis:

• Job analysis refers to a systematic process of collecting all information about a specific job, including skill requirements, roles, responsibilities and processes in order to create a valid job description.
• Job analysis also gives an overview of the physical, emotional & related human qualities required to execute the job successfully.
• Job analysis is an important step in ensuring that the right candidate is selected.
• Job analysis helps the employer in recruitment and selection, performance management, choosing compensation and benefits, etc. It helps the employees to have a clear picture of what is actually required of them.

Hence, Mr. Mohan has to explain Job Analysis to the management of the XYZ company.

The correct answer is Understandable, Workable, and Acceptable.

Key Points Compensation Plan:

• Compensation planning is the responsibility of Human Resources and/or a dedicated Compensation & Benefits department.
• It includes a strategic approach to balancing your company’s financial interests and operating goals while attracting, retaining, growing, and rewarding its employees.
• A compensation plan also includes how you pay your workers, the company’s bonus structure, and when your team is eligible for raises, among other things.
• In desgining the compensation planning, the manager must look at the different factors like market research, the job role, the business objective for which it has been set up and others.
• A compensation plan has to be understandable implying it should be understood clearly by the employees. There are numerous components in the salary structure, some are fixed some are variable. These components should be understood and implied clearly by the compensation plans.
• Another important feature of compensation plan is Being workable. Every employee should find the compensation package competitive enough for the sector that they are working. Compensation plans should be workable implying the employees should feel that they are not being underpaid for the job role they have been hired,
• The next feature is being acceptable. This feature implies that the compensation package is accepted by the employees that they have been offered. Only when the employees accept the compensation package will they be implemented in the organization.

Hence, the correct answer is Understandable, Workable and Acceptable.

Key Points

Ansoff product-market Expansion Grid:

• The Ansoff Matrix, often called the Product/Market Expansion Grid, is a two-by-two framework used by management teams and the analyst community to help plan and evaluate growth initiatives.
• It gives Matrix of four quadrants which is used to evaluate the relative attractiveness of growth strategies that leverage both existing products and markets vs. new ones, as well as the level of risk associated with each.
• It provides The Product Market Expansion Grid that offers four main suggested strategies: Market Penetration, Market Development, Product Development, and Diversification.

Each box of the Matrix corresponds to a specific growth strategy. They are:

• Market Penetration – The concept of increasing sales of existing products into an existing market
• Market Development – Focuses on selling existing products into new markets
• Product Development – Focuses on introducing new products to an existing market
• Diversification – The concept of entering a new market with altogether new products

Therefore, the correct answer is B, C and D only.

Key Points

Customer relationship management:

• The technique of meticulously managing specific data about each customer and all customer touch points in order to maximise loyalty is known as customer relationship management.
• Customer relationship management is the practice of managing the relationship between a business and its clients, both current and potential.

Important Points

Customer Relationship Management accomplishes several duties and offers many advantages:

• Customer relationship management always results in happy customers and ultimately more business, i.e., it provides a long-lasting competitive advantage.
• Customer relationship management is quite effective at keeping current clients, i.e., it helps turn potential clients into lucrative clients, cultivates long-lasting relationships with them, and keeps them as lifelong clients.
• Customer relationship management ensures that customers go home happy and oversees client service and contact.
• It helps convert buyers into profitable customers, build enduring relations with them, and retain them as customers for life.
• Customer relationship management strengthens the relationship between the company and its clients. These interactions improve the relationship between sales personnel and clients and support up-selling and cross-selling to current clients.

*Thus, the correct answers are ***A, B, C, and D.

Additional Information

• Cross Selling: Cross-selling is the practise of offering customers additional, related goods and services in response to their interest in or purchase of one of company's goods.
• Up-selling: Upselling is a sales technique that entails persuading customers to purchase a more expensive model of a product than what they had initially intended.

Industrial dispute means the difference between the employer and employee/ workmen or between employee/workmen or any dispute which is related to the employment of any person. An industrial dispute is covered under the industrial dispute act 1947

• Adjudication is also known as compulsory arbitration is the final legal option for the settlement of any industrial dispute.
• It consists of dispute settlement by the intervention of a 3^rd party which is appointed by the government.
• The 3^rd party makes a settlement that is binding to both the parties and is without their consent.
• The Industrial dispute act 1947, provides a 3-tier adjudication mechanism i.e., labour courts, industrial tribunals, and national tribunals

Hence, Adjudication is the mandatory settlement of an industrial dispute by a tribunal or labour court.

1. Arbitration

• Arbitration (Sec.10 A) is a method where a third party (the arbitrator) hears the disputes between the two parties and gathers information about the dispute.
• The third-party reaches a conclusion and makes a decision that is binding to both parties.
• In this method, the same number of arbitrators are appointed by both parties.

2. Conciliation

• Conciliation is a process where the representatives of the employer and employees come together to a third party (known as the facilitator) with an aim to discuss their dispute and settle their differences.
• The aim of conciliation is to make a conclusion and an agreement by mutual consent.
• The industrial dispute act gives power to the state and central government to appoint a board for conciliation and an officer known as a conciliation officer whenever the circumstance requires.

3. Collective Bargaining

• Collective bargaining is a method of negotiation between a group of employees and the employer which aims at an agreement to decide their working conditions, salaries, benefits, and other compensations and rights for the workers.

Key Points

Therefore, the correct matching code is A - 3, B - 1, C - 4, D - 2

Key Points Marketing Mix:

• The marketing mix is the set of controllable, tactical marketing tools that a company uses to produce a desired response from its target market.
• An effective marketing strategy combines the 4 Ps of the marketing mix**. It is designed to meet the company’s marketing objectives by providing its customers with value.**
• It historically centred around product, price, place, and promotion.
• The marketing mix has been defined as the "set of marketing tools that the firm uses to pursue its marketing objectives in the target market".

Key Points 

The correct matching code is A - 4, B - 3, C - 2, D - 1.

Vertical Marketing System (VMS):

• Vertical marketing system (VMS) of distribution channel consists of producers, wholesalers, and retailers acting as a unified system.
• One channel member owns the others, has contracts with them, or wields so much power that they must cooperate.
• The VMS can be dominated by the producer, wholesaler, or retailer.
• The VMS is further divided into three parts given below:

1. Corporate VMS:

• In Corporate VMS, one member of the distribution channel i.e producer, a wholesaler, or a retailer owns all the other members of the channel.
• Thereby having all the elements of production and distribution channel under single ownership.

2. Contractual VMS:

• In Contractual VMS, every member in the distribution channel works independently.
• They integrate their activities on a contractual basis to earn more profits than are earned when working in isolation.
• The most common form of Contractual VMS is Franchising.

3. Administered VMS:

• In Administered VMS, there is no contract between the production and distribution channel but their activities do get influenced by the size and power of any one of the members.
• In other words, any powerful and influential member of the channel dominate the activities of other channel members.

Therefore, a system of distribution channels consists of producers, wholesalers, and retailers acting as a unified system. One channel member owns the others, has contracts with them, or wields so much power that they must cooperate. This system of channel distribution is known as Vertical Marketing System (VMS).

Complex Buying Behavior:

• Complex buying behavior occurs when there is high involvement of consumers with the purchase and when there are highly significant differences among the brands.
• Consumer behaves differently when purchasing an expensive product or a product that is unfamiliar to him.
• In complex buying behavior, the buyer will pass through a learning process.
• A consumer will first develop beliefs about the product, then attitude, and then making a thoughtful purchase choice.
• This type of behavior is mostly associated with the purchase of a new home or a personal computer.
• Such tasks are complex as the risk involved in them is high and the highly significant differences between brands or products require gathering a substantial amount of information before purchase.
• Marketers who wish to influence this buying task must help the consumer process the information as readily as possible.
• This may include informing the consumer about the product category and also its important attributes, providing detailed information on product benefits, and motivating sales personnel to influence the final brand choice.
• For example, realtors’ Web sites typically ofmakefer extensive photographs and videos and full descriptions of each available home.
• And a computer sales representative is likely to spend time providing information to customers who have questions.

Therefore, Complex Buying Behaviour is characterized by the level of Involvement being the high and significant differences among brands is high.

In the manufacturing process, plant layout is an arrangement of work areas, machines, and service areas in a factory. This layout method includes the development of physical relation between equipments, buildings, and other production operations that helps the manufacturing process to be completed efficiently.

• The product-focused layout is also known as line layout. In this layout method, all the processing equipment is arranged as per the sequence of operations.
• In this layout, only one product of one type is produced in an operating area.
• In this layout, the product produced must be according to the standards and should be produced in large quantities so that the product layout is justified.
• The product layout is either U-shaped or linear in design.
• The raw material is supplied to one corner of the line and it goes from one operation to another with very little work in storage, process, and material handling.
• Manufacturing or automobile assembly follows the process layout method.

The advantage of product layout is:

1. Less work in the process.
2. It helps in lowering the total handling cost of the materials.
3. Total production is minimized.

1. Process layout / Functional Layout:

• It is a method used when a low volume of production is required. The process layout is less desirable when the products are not standardized.
• In this method, machines are not arranged as per the sequence of the operation rather they are arranged as per their type or nature or operation.
• Process layout helps in less duplication. It offers more efficient and better supervision through specialization at different levels.

2. Fixed-Position Layout.

• Fixed-position layout is the least important method in a manufacturing industry. In this layout method, most of the components remain as it is in their position, other materials tools, parts are brought in the location.
• The components remain fixed as the machinery is too big to bring necessary equipment and tools to the workplace.

3. Cellular Layout

• The cellular layout is a method where machines are grouped as per the requirements for similar items which require similar processing. A cellular layout helps in supporting cellular manufacturing.

Regression line:

• The regression line is a straight line that describes the behavior of a set of data or the trend of a given set of data.
• It is useful in forecasting the procedures.
• The purpose of the regression line is to explain the interrelation of a dependent variable i.e., Y variable with an independent variable i.e., X variable.
• By using the regression line, the future behavior of the dependent variable can be analyzed by using different independent variables.

The regression line can be calculated by using the formula:

Y = a + bx + u

Where,

• Y represents the dependent variable
• X represents the independent variable
• a represents the interception point
• b represents the slope
• u represents the residual regression

The regression line helps in estimating the change in y for a one-unit change in x.

Hence, Option 4 is the correct answer.

An information system is a method of gathering, storing, processing data, and providing information. Organizations and business firms rely on information systems to manage their business operations and interact with customers. Most of the companies are built entirely on the information system for example eBay, Amazon, and Alibaba.

Key Points

Transaction Processing System:

• Transaction processing systems are used to record and capture the fundamental business events of the organization.
• The system is used by the users at the operational management level. The main objective of this system is to answer the questions such as the number of products sold on a particular day, inventory in hand, and outstanding dues for a particular creditor.
• Examples of TPS are:     
• Payroll system: It helps to process the salaries of employees.
• Point of sale system: It helps in recording the daily sales.

Important Points

Executive Information System:

• An executive information system is also called an executive support system. It is a type of management support system that supports and facilitates senior executive information and helps in the decision-making process.
• This system helps the top management to compare, analyze, and highlight the important variables so that the opportunities, problems, and performance can be monitored

Decision support systems

• It is used by the top management to make non-routine decisions. This system uses input from the internal systems such as management information systems and transaction processing systems and external systems.
• The objective of this system is to provide solutions to the problems which change frequently and are unique for the business.
• It uses statistical techniques and mathematical models to provide solutions to the problems. For example, bank loan management system and financial planning system.

Expert System:

• An expert system is a computer system that matches the ability of a human expert to make decisions. This system is designed to solve a number of complex reasoning problems through bodies of knowledge.
• The expert system helps in centralizing the decision-making process.

Approaches to Management:

Scientific Management:

• Scientific management analyzes and synthesizes workflows and its objective is to improve economic efficiency, especially labor productivity.
• In 1909, F. W. Taylor published "The Principles of Scientific Management" and in it, he proposed that by optimizing and simplifying jobs, productivity would increase.

General administrative:

• General administrative theory is a set of 14 principles set forth by Henry Fayol in his 1916 book, Industrial and General Administration.
• Fayol's administrative theories were developed after observing a work stoppage that he judged to be management failure.
• The majority of these 14 management principles still hold true today.

Quantitative approach:

• This approach involves the application of modern quantitative or mathematical techniques for solving managerial problems.
• The quantitative approach was developed after World War II, during the first half of the 20^th century when analytical methods developed by the military during the war effort began to be used in business decision making.

Contingency approach:

• The contingency approach suggests the most appropriate style of management that is dependent on the context of the situation and that adopting a single rigid style would be inefficient in the long run.
• This approach of leadership was proposed by Fred Edward Fiedler in his 1964 article, "A Contingency Model of Leadership Effectiveness".

Organizational behavior:

• Organizational behavior includes areas of research dedicated to improving job performance, increasing job satisfaction, promoting innovation, and encouraging leadership.
• The study of organizational behavior has its roots in the late 1920s when the Western Electric Company launched famous series of studies of the behavior of workers.

Globalization:

• Globalization is the process of interaction and integration of people, companies, and governments worldwide.
• The increase in global interactions has caused a growth in international trade and the exchange of ideas, beliefs, and culture.
• Globalization began in the 1820s, and in the late 19^th century drove a rapid expansion in the connectivity of the world's economies and cultures.

Systems approach:

• A systems approach is based on the generalization that everything is interrelated and interdependent.
• A system is composed of a related and dependent element which when in interaction, forms a unitary whole.
• The systems approach was first proposed formally in 1968 with the publication of Ludwig von Bertalanffy's "General System Theory: Foundations, Development, Applications".

Therefore, the approaches to management thinking which were developed during the first half of the 20^th century are Scientific management, general administrative, quantitative, and organizational behavior.

Analytics is defined as the interpretation of data patterns that help in decision-making and improvement of performance. 

HR Analytics is defined as the process of measuring the impact of HR metrics, such as time to hire and retention rate, on business performance.

HR Analytics:

• HR analytic is the process of collecting and analyzing Human Resource (HR) data in order to improve performance.
• This method of data analysis takes data that is collected by HR and correlates it to HR and organizational objectives.
• By doing so, it provides measured evidence of how HR initiatives are contributing to organizational goals and strategies.
• HR analytics provides data-backed insight on what is working as planned and what is not so that organizations can make improvements and plan more effectively and efficiently for the future.
• HR analytics helps in influencing HR decisions like HR planning, Succession planning, Hiring, Performance measurement, Compensation, and Rewards, etc.
• It helps answer questions like:
• How long does it take to hire employees?
• What patterns can be revealed in employee turnover?
• How much investment is needed to get employees up to a fully productive speed?
• Who is the most competent to be the next successor?
• How much compensation and reward must be given?
• Are learning initiatives having an impact on the performance of employees?
• The process of HR analytics is as follows:
• Data must be first collected to gain the problem-solving insights that HR analytics provides.
• The data then needs to be measured and monitored against other data, such as historical information, norms, or averages.
• This helps in identifying patterns and trends and that the data can be analyzed.
• The last step is to apply insights to organizational decisions.

Therefore, HR analytics helps in influencing HR decisions like HR planning, Succession planning, Hiring, Performance measurement, Compensation, and Rewards i.e. A, B, C, D, and E.

Key Points

Various Trade Agreements:

• Economic cooperation
• It is a component of international cooperation that seeks to. generate the conditions needed to facilitate the processes of trade and financial. integration in the international arena by implementing actions with the purpose of. obtaining indirect economic benefits in the medium and long term.
• Free trade area
• It is a region in which a number of countries have signed a free trade agreement and maintain little or no barriers to trade in the form of tariffs or quotas among one another. Free trade area.
• This is the most basic form of economic cooperation. Member countries remove all barriers to trade between themselves but are free to independently determine trade policies with non-member nations.
• There are no import tariffs or quotas on products from one country entering another.
• Examples of free trade areas include EFTA: European Free Trade Association consists of Norway, Iceland, Switzerland and Liechtenstein. NAFTA: United States, Mexico and Canada (being renegotiated)
• Customs union
• It is generally defined as a type of trade bloc which is composed of a free trade area with a common external tariff.
• Customs unions are established through trade pacts where the participant countries set up common external trade policy.
• The most famous example of a customs union is the European Union (EU)
• Goods move between EU member countries without tariffs (duty-free).
• In addition, all EU members charge non-member countries the same tariffs for imported goods.
• Common market
• This is a formal agreement where a group is formed amongst several countries that adopt a common external tariff.
• In a common market, countries also allow free trade and free movement of labour and capital among the members of the group. The trade arrangement is aimed at providing improved economic benefits to all the members of the common market.
• The European community is an example of a common market organized for countries or members of the European Union.
• Economic union
• It is a type of trade bloc which is composed of a common market with a customs union.
• The participant countries have both common policies on product regulation, freedom of movement of goods, services and the factors of production and a common external trade policy.
• Purposes for establishing an economic union normally include increasing economic efficiency and establishing closer political and cultural ties between the member countries.
• The economic union is established through trade pact.
• The gulf economic council is one such example.

Hence if we see the sphere of influence the above trade agreement cover these can be arranged in a descending order in the following order C → A → B → E → D

Key Points 

Assertion A: Investors around the world are demanding socially and environmentally conscious options in equities, bonds, ETF or hedge funds. 

Socially and environmentally responsible investing:

• Socially responsible investing (SRI), social investment, sustainable socially conscious, "green" or ethical investing, is any investment strategy that seeks to consider both financial return and social/environmental good to bring about social change regarded as positive by proponents.
• Socially responsible investing provides a mechanism for investors to align personal values with investment objectives.
• Environmental, social, and governance (ESG) factors can be a key way to assess the sustainability and social impact of an investment in a company or business.
• Investors around the world are demanding socially and environmentally conscious options in equities, bonds, ETF or hedge funds.

Hence Assertion A is correct.

Reason R: Climate change and the environment have become 'defining factors' in companies' long-term prospects with a significant reallocation of capital as the shortage of clean water and air have become existential questions. 

Impact of climate change on business firms:

• The impacts of climate change, air pollution, biodiversity loss and poor ocean health has caused immense suffering globally and harbour further systemic vulnerabilities for the global economy that could ultimately eclipse the current crisis prevailing due to covid 19.
• Declines in local environmental quality, including air and water pollution, can influence the vulnerability of societies both to disease and to the effects of a less stable climate, with impacts likely to affect poorer communities.
• Climate change and the environment have become 'defining factors' in companies' long-term prospects with a significant reallocation of capital as the shortage of clean water and air has become existential question.
• Even recently as January 2020, climate change and biodiversity loss topped the World Economic Forum’s list of global risks (World Economic Forum, 2020
• Even at the global level, there is still an emphasis on prevention, as the investments and behavioural changes made will pay dividends in the future through reduced exposure and increased resilience to costly future disruptions – whether due to climate change, disease, or a confluence of these or other factors.

Hence Reason R is correct.

Therefore, we conclude that Both A and R are true and R is the correct explanation of A

Key Points

Integral dimensions of a firm's credit policy:

• Each company should establish its own credit policy depending upon the ground situation and the environment in which it is operating. The main objective of the credit policy is to stimulate sales as well as control expenses and bad debts associated with granting credit.

Important Points

The following are the main components of a credit policy:

• Credit Standards
• This variable deals with the granting of credit. On one extreme all the customers are granted credit and on the other extreme none of them are granted credit irrespective of their credit rating, but in today’s competitive environment this is not possible. In general, liberal credit standards lead to increased sales accompanied by higher incidence of bad debts, tying of funds in accounts receivable and increased cost of credit collection.
• Credit Period:
• Credit period refers to the length of time provided to the buyer to pay for their purchases. During this period no interest is charged on the outstanding amount. The credit period generally varies from 30 to 90 days and in some businesses even a period of 180 days is allowed.
• Cash Discount:
• Cash discount is offered to buyers to induce them to make prompt payment. The credit terms specify the percentage discount and the period during which it is available. Liberal cash discount policy implies that either the discount percentage is increased, or the discount period is increased
• Collection Effort:
• The collection policy of a firm is aimed at timely collection of overdue amounts.
• An efficient and rigorous collection program tends to decrease sales, shorten average collection period, reduce bad debts percentage and increase the collection expenses, whereas a lax collection program will have just the opposite effect.

Therefore, the correct answer is A, C, D and E only

Additional Information

Credit Appraisal:

• It is the process by which a lender/banker appraises the technical feasibility, economic viability and bankability including creditworthiness of the prospective borrower.

Key Points

Social Enterprise:

In simple words, a social enterprise can be defined as a business with social objectives whose surpluses are reinvested in society or used for the welfare of society in any manner.

The main elements of the definition of social enterprise are: 

1. "Social enterprises" run their own businesses with the intention of making money.
2. They clearly and explicitly state that their goal is to have a beneficial social influence.
3. Base of Pyramid (BOP) Focus: Enterprise operations directly improve the lives and livelihoods of those residing at the BOP by:

• enhancing BOP consumers' ability to obtain essential products and services; or
• strengthening BOP producers' production quality, productivity, or market connections

Important Points

Social enterprise is concerned with:

• "Social enterprise" focuses on the quality of life.
• Social enterprise is involved in the conservation of natural resources.
• Social enterprises make market-based decisions with societal controls.
• Social enterprise derives a balance between economic and social return, i.e., to maximize gains in social, economic, and environmental well-being.
• Social enterprises work for business as well as societal interests, i.e., using corporate operations to advance society.

Thus, the correct answer is D and E only.

Therefore, Career Plateau is a position from which someone is unlikely to move to a higher level of work responsibility.

Key Points

Indian Accounting Standards, also known as IND AS, are converged standards for International Financial Reporting standards. To put it simply, Indian accounting standards were created to comply with International Financial Reporting standards.

The correct match is given below:

Important Points

 A. Ind AS 8:

• The accounting policies, changes in accounting estimates and errors are covered by Ind AS 8.
• This standard's goal is to specify the standards for choosing and altering accounting policies, as well as the accounting treatment and disclosure of such modifications as adjustments to accounting estimates and error corrections. The Standard aims to improve the financial statements of an entity's relevance, dependability, and comparability through time and with the financial statements of other businesses.

B. Ind AS 110: 

• Consolidated Financial Statements are addressed in Indian Accounting Standard 110.
• Establishing guidelines for the compilation and presentation of consolidated financial statements when an entity controls one or more other entities is the goal of this Indian Accounting Standard (Ind AS).

C. Ind AS 7:

• The Statement of cash flows is a component of Ind AS 7. Users of financial statements can analyse an entity's capacity to produce cash and cash equivalents and its requirements for utilizing those cash flows using information about the entity's cash flows. The ability of an entity to generate cash and cash equivalents, as well as the timing and certainty of their generation, must be assessed in order for users to make economic decisions.
• By using a statement of cash flows that divides cash flows over the period into operating, investing, and financing activities, this standard seeks to compel the supply of information on the historical changes in cash and financial equivalents of a company.

 D. Ind AS 24:

• Related Party Disclosure is related to Ind AS 24.
• This standard aims to ensure that an entity's financial statements include the disclosures required to highlight the possibility that the existence of related parties, as well as transactions and outstanding balances, including commitments with such parties, may have had an impact on the entity's financial position and profit or loss.

The Correct answer is Option 1.

 Key Points

 Coefficient of Range:

• The range is the difference between the highest and the lowest value of frequency for a given frequency distribution.
• The coefficient of range on the other hand is the ratio of the difference between the highest and lowest value of frequency to the sum of the highest and lowest value of frequency.
• The coefficient of Range shows how much of the data is spread. It shows the relative measure of the dispersion of the range.
• In order to calculate, the formula used is- (Highest Value of frequency - The lowest value of frequency)/ (Highest Value of frequency + Lowest value of frequency)

 Coefficient of Quartile Deviation (QD):

• Quartiles are the values that divide a group of observations into four equal parts.
• The coefficient of quartile deviation is a measure of dispersion used to describe the spread or distribution of data.
• It is calculated as - Coefficient of quartile deviation = (Q3 – Q1) / (Q3 + Q1)

Coefficient of Mean Deviation (MAD):

• Mean deviation or average deviation is the average difference between the items in a series from the mean, median, or mode.
• The coefficient of mean deviation is calculated by dividing the mean deviation by the average. If deviations are taken from the mean, we divide it by the mean.
• It is calculated as Mean Deviation/ x or Me.

Coefficient of Variation (CV): 

• The coefficient of variation (CV) is the ratio of the standard deviation to the mean and shows the extent of variability in relation to the mean of the population. The higher the Coefficient of Variation, the greater the dispersion.
• It is calculated as - $\frac{\sigma }{{\overline x }} \times 100$

Hence, the correct answer is Option 1.

Key Points 

Therefore, the correct matching code is A - 2, B - 3, C - 4, D - 1

The correct answer is - It is open-ended with no fixed end date

Key Points