The Institute of Chartered Accountants of Pakistan

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

Q.1 Fintex Company Limited (FCL) is in the advanced stage of implementing facilities for manufacture
of home textile products such as curtain draperies, sofa cloth, bed linen, towels, table covers, etc.
FCL intends to market its products to customers through 20 company-owned retail outlets to be
established in the major cities. FCL’s Institutional Marketing Division (IMD) would sell the
company’s products, as well as workers uniforms to be procured from external vendors, to
institutional customers such as hotels, hospitals, industrial companies and government
organisations.
FCL’s principal corporate objectives are to create a sustainable competitive advantage and obtain a
firm foothold in the substantial and fast growing target market of middle class customers. These
customers are keen shoppers who want quality products at affordable prices. FCL’s IMD also wants
to aggressively pursue marketing strategies to cater to the requirements of the institutional customers
who are a source of repeat business.

Identify and explain briefly four Critical Success Factors which in your opinion would create
sustainable long-term competitive advantage for FCL. (10 marks)

Q.2 According to the Boston Consulting Group Matrix, business organisations which have multi-
divisions and compete in different industries pursue separate strategies for their various business
divisions. The BCG Matrix describes the characteristics of the markets and the relative competitive
position of the various business divisions as Stars, Cash Cows and Dogs.
Explain the distinctive characteristics of each of these types of business divisions in terms of their
relative market positions. Also mention the types of business strategies which should be pursued by
each of these types of business divisions. (09 marks)

Q.3 (a) Employee Training is an important function of Human Resource Department of Apollo
Engineering Limited, a company which considers workers skills at the factory floor level to be
critical for achieving the overall strategic objectives. The HR Department classifies the factory
employees in 3 categories as follows:
(i) Competent to perform in the present position.
(ii) More than competent to perform in the present position.
(iii) Not yet competent to perform in the present position.*
*Note: These employees are not incompetent

Briefly discuss the Training Needs of employees in each of the above categories and explain
how they would help Apollo Engineering Limited to improve motivation amongst the
employees at all levels. (08 marks)

(b) Appropriate Employee Compensation and Reward Packages are central to a healthy and
enduring relationship between the employer and the employees. These Compensation and
Reward Packages comprise of salaries and fringe benefits, pleasant working environment,
career growth opportunities, challenging work, self-respect and sense of achievement, etc.
What principal objectives should an employer seek to achieve through a well-formulated
Employee Compensation and Reward system for a service-oriented company operating in a
competitive business environment? (06 marks)
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Q.4 (a) What is Wilful Misconduct? State why acts of Wilful Misconduct are considered as serious
offences by employers. Identify four situations in which an employee may be guilty of Wilful
Misconduct. (04 marks)

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

State five measures which the Chief Security Officer should adopt to meet the objectives of
security of employees and physical facilities of Sona Sugar Mills. (05 marks)

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

(i) Convenience Products detergents, packaged milk, newspapers, soft drinks, etc
(ii) Shopping Products readymade clothes, furniture, carpets, shoes, etc
(iii) Speciality Products televisions, refrigerators, branded watches, etc

The marketing mix of each category of Consumer Products comprises of the following ingredients:

Price Customer Buying Behaviour

Distribution Promotion
• distribution in few outlets • advertising and personal selling by
producer/resellers
• widespread distribution at convenient • mass promotion/advertising by producer
locations
• outlets in specialised markets/shopping • carefully targeted promotion by
malls producer/resellers

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

Q.6 All leading global business organisations possess certain distinctive capabilities and competitive
advantages which set them apart from those companies whose operations are confined within their
limited geographical areas.

Describe at least six core capabilities which are observed in leading global organisations regardless
of their special lines of business. (09 marks)

Q.7 (a) Research in a number of organisational settings shows that efforts to introduce major changes
for achieving the objectives of corporate turn-around and improvements invariably meet with
strong resistance from employees at various levels.
Identify the reasons why employees offer strong resistance to major organisational changes and
prefer to continue with the existing status. (05 marks)

(b) Explain the term Business Ethics and discuss its increasing significance in the present business
environment. (05 marks)
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Q.8 (a) In the past two decades a number of Mergers and Acquisitions have been witnessed between
some of the most prestigious and financially strong international corporations in a wide range
of businesses such as pharmaceutical and automobile manufacturing companies, financial
institutions, supermarkets, etc.
Narrate the principal objectives behind the mergers and acquisitions of companies which are
considered to be financially sound and well-established in their own spheres of business.
(05 marks)

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

Q.9 Firms ranking in second and third positions in highly competitive industries demonstrate significant
business strengths and hold a sizeable share of the aggregate market. Often these firms have to make
strategic marketing decisions whether to challenge the Market Leader to achieve the top position or
to continue to hold on to their Market Follower status.
Discuss the concepts of Market Challenger Strategy and Market Follower Strategy and briefly
explain the circumstances in which a firm would prefer to pursue a particular market strategy.
(10 marks)

Q.10 (a) Multinational Corporations (MNCs) which have widely dispersed operations in several
countries often prefer to centralise their cash management functions and conduct all their
major cash operations from pools located in internationally recognised financial centres. This
policy requires each subsidiary to retain minimum cash for its own transaction purposes and
remit all excess funds to a central cash depository.
Explain the advantages which MNCs seek to achieve through centralised cash management
policies and pooling of all excess cash balances at prominent international financial centres.
(06 marks)

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