IIBM MBA FOURTH SEMESTER EXAM ANSWER SHEETS PROVIDED

Examination Paper of Computer Fundamental
IIBM Institute of Business Management
• This section consists of multiple choices and Short Notes type questions.
• Answer all the questions.
• Part one questions carry 1 mark each & Part two questions carry 5 marks each.
IIBM Institute of Business Management
Subject Code-B112
Examination Paper
Computer Fundamental
MM.100
Section A: Objective Type & Short Questions (30 marks)
Part one:
Multiple choice:
I.A Light Sensitive device that converts drawing, printed text or other image into digital from is (1)
a) Keyboard
b) Plotter
c) Scanner
d) OMR
II. The basic operations performed by a computer are (1)
e) Arithmetic operation
f) Logical operation
g) Storage and relative operation
h) All the above l
III. The two major types of computer chips are (1)
a. External memory chip
b. Primary memory chip
c. Microprocessor chip
d. Both b and c
IV. Microprocessors as switching devices are for which generation computers (1)
a. First Generation
b. Second Generation
c. Third Generation
d. Fourth Generation
Examination Paper of Computer Fundamental
IIBM Institute of Business Management
END OF SECTION A
V.What is the main difference between a mainframe and a super computer?
a. A Super computer is much larger than the mainframe computers.
b. Super computers are smaller than the mainframe computers.
c. Supercomputers are focused to execute few programs as fast as possible while mainframe computers use its power to execute as many programs concurrently.
d. Supercomputers are focused to execute as many programs as possible while mainframe
VI. ASCII and EBCDIC are the popular character coding systems. What does EBCDIC stand for?
a) Extended Binary Coded Decimal Interchange Code
b) Extended Bit Code Decimal Interchange Code
c) Extended Bit Case Decimal Interchange Code
d) Extended Binary Case Decimal Interchange Code
VII. The brain of any computer system is
a) ALU
b) Memory
c) CPU
d) Control unit
VIII. Storage capacity of magnetic disk depends on
a) tracks per inch of surface
b) bits per inch of tracks
c) disk pack in disk surface
d) All of above
IX. The two kinds of main memory are:
a) Primary and secondary
b) Random and sequential
c) ROM and RAM
d) All of above
X. A storage area used to store data to a compensate for the difference in speed at which the different units can handle data is
a) Memory
b) Buffer
c) Accumulator
d) Address
Part Two:
1. What is Windows? (5)
2. What is Windows? (5)
3. What is Computer Virus? (5)
4. What is the meaning of ‘CC’ in case of E-mail? (5)
Examination Paper of Computer Fundamental
IIBM Institute of Business Management
• This section consists of Caselets.
• Answer all the questions.
• Each Caselet carries 20 marks.
• Detailed information should form the part of your answer (Word limit 150 to 200 words).
Section B: Caselets (40 marks)
Caselet 1
Mr. and Mrs. Sharma went to Woodlands Apparel to buy a shirt. Mr. Sharma did not read the price tag on the piece selected by him. At the counter, while making the payment he asked for the price. Rs. 950 was the answer.
Meanwhile, Mrs. Sharma, who was still shopping came back and joined her husband. She was glad that he had selected a nice black shirt for himself. She pointed out that there was a 25% discount on that item. The counter person nodded in agreement.
Mr. Sharma was thrilled to hear that “It means the price of this shirt is just Rs. 712. That‟s fantastic”, said Mr. Sharma. He decided to buy one more shirt in blue color.In no time, he returned with the second shirt and asked them to be packed. When he received the cash memo for payment, he was astonished to find that he had to pay Rs.. 1,900 and Rs.1,424.
Mr. Sharma could hardly reconcile himself to the fact that the counter person had quoted the discounted price which was Rs. 950. The original price printed on the price tag was Rs.1,266.
Questions
1. What should Mr. Sharma have done to avoid them is understanding? (10)
2. Discuss the main features involved in this case. (10)
Caselet 2
I don’t want to speak to you. Connect me to your boss in the USA,” hissed the Alfred is a do-it yourself entrepreneur who built up his fortune in trading. He traded in anything and everything and kept close control of every activity. That was now he had grown rich enough to indulge in his own dream-to build a college in his home town. A college that would be at par to the ones in the better cities, the one in which he could not study himself.
Work started a year hack and the buildings were coming along well He himself did not use computers much and became hooked to the Internet and e-mail only recently. He was determined to provide a PC with Internet connectivity to every students and faculty member. He was currently engrossed in plans for the 100 seater computer lab.
What was confusing him was the choice of Internet connectivity. He had about a dozen quotations in front of him, Recommendations ranged from 64 Kbps ISDN all the way to 1 Gbps leased line to Guwahati which was almost 200 kms away. Prices ranged from slightly under a lakh all the way upto 25 lakh and beyond. He did not understand most of the equipment quoted firewall, proxy server, cache appliance, nor was he sure what the hidden cost were. Although it went against his very nature, he would have to identify a trustworthy consultant who would help him make sense of the whole thing.
Examination Paper of Computer Fundamental
IIBM Institute of Business Management
END OF SECTION B
• This section consists of Applied Theory Questions.
• Answer all the questions.
• Each question carries 15marks.
• Detailed information should form the part of your answer (Word limit 200 to 250 words).
END OF SECTION C
Questions
1. In the context of the given case, what managerial issues need to be addressed by Alfred. Why is It Important for managers to be tech savvy? (10)
2. What is the importance of a ‘Systems consultant’ to an organization? What skills should he/she possess? (10)
Section C: Applied Theory (30 marks)
1. What are Web sites & URL(s)? (15)
2. Explain how data is organized on a magnetic tape? (15)
S-2-010619

Examination Paper of Risk Management
IIBM Institute of Business Management 1
IIBM Institute of Business Management
Examination Paper MM. 100
Risk Management
Section A: Objective Type & Short Questions (30 Marks)
Part One:
Multiple Choices:
1. Which of the following is the characteristic of forward contract?
a. Is traded over the counter?
b. Is a customized financial product
c. Is a credit derivative
d. Both a & b
2. Coordinating all the operational risk activities of the bank, working towards achievement of the stated
goals & objective are the task attributed to:
a. Operational risk management committee
b. Operational risk management department
c. Operational risk management officers
d. Chief risk officer
3. This is the risk of adverse deviations of the mark-to-market value of the trading portfolio, due to market
movements; during the period required to liquidate the transactions.
a. Market Risk
b. Liquidation Risk
c. Market liquidity Risk
d. Credit & counterparty Risk
4. A fraud acts by a third party, of a type intended to defraud, misappropriate property or circumvent the
law is called____________
a. Internal fraud
b. External fraud
c. Damage to physical assets
d. Clients, products & business practices
5. In the standardized approach, bank‟s activities are divided into how many business lines?
a. 4
b. 6
c. 8
d. 10
6. Credit risk management committee & credit policy & procedures committee monitors__________
 This section consists of Multiple Choices and Short Notes Type Questions.
 Answer all the questions.
 Part one carries 1 mark each and Part Two carries 5 marks each.
Examination Paper of Risk Management
IIBM Institute of Business Management 2
a. Market risk
b. Credit risk
c. Operational risk
d. All of the above
7. Which of the following is the duty of risk management committee for credit?
a. Implementation of risk management policy for credit strategy
b. Monitor credit risk
c. Regulatory/ Legal compliances
d. All of the above
8. Duration is defined as___________
a. Time to maturity
b. Average time
c. Weighted average time to maturity
d. Remaining maturity
9. ALCO stands for _____________
10. RAROC stands for _____________
Part Two:
1. List the principles of risk management.
2. Discuss the sources of risk.
3. What is „Asset liability management‟? List its objectives in banks.
4. Write a short note on Interest rate risk.
Section B: Caselets (40 Marks)
 This section consists of Caselets.
 Answer all the questions.
 Each caselet carries 20 marks.
 Detailed information should form the part of your answer (Word limit 150 to 200 words).
Caselet 1
Everybody Bank was set up with a registered office at Gwalior in 1995-96 by a leading financial
organization, when the government liberalized its policies and allowed private sector banks to operate. The
branch at Gwalior was established on November 13, 1995. Everybody bank was the first private sector bank
to commerce its operations at Gwalior. The bank had the advantage of being the first and got good business.
Subsequently, other private sector banks also opened their branches in Gwalior. Dinesh joined the branch as
branch head in june-1998. His focus was to retain the leadership of the bank with improved profitability. He
adopted a multi-programmed strategy which yielded good results during the three years of working. The
END OF SECTION A
Examination Paper of Risk Management
IIBM Institute of Business Management 3
bank not only continued to be a leader in private sector banks but also established nationalized banks. In
2001, it stood to the State Bank of India. Profitability also improved during these years.
Dinesh had joined Everybody Bank in 1997, after serving more than 20 years in a leading nationalized
bank. After serving for 1.5 years in other branches, he was posted at the Gwalior‟s branch as the Branch
head in June 1998. The new generation of banks was setup with a clear focus on the corporate sector during
its initial phases. The Gwalior branch of everybody bank also had the same focus with 85 percent of total
advances in the corporate sector and a residual 15 percent in the retail sector. Gradual opening up of the
economy, and increasing competition, forced the corporate sector to improve the quality of services and to
reduce the cost. In its search, the interest component gained focus and the corporate started looking for
avenues to mobilize low cost funds. RBI also gradually reduced the bank rate resulting in reduction of the
margin of profit, in the banks.
The deposits of the Gwalior branch consisted of high cost funds, namely, certificate of deposits at the rate
of 13-14 percent. The need of the hour was to collect the resources; therefore, all resources were tapped
irrespective of their costs. Considering the reduction in the margin of corporate sector, the bank changed its
focus from the corporate to the retail segment. It came up with the portfolio of schemes in the housing
loans, car loans, educational loans, loan against demat shares and personal loans. It resulted in the increases
of the share of retail segment from 15 percent to 50 percent and corresponding reduction in the corporate
segment from 85 percent to 15 percent. The strategy resulted in the improvement of the margin of the bank
to a level of 3-4 per cent.
Another strategy adopted by the bank, with a view to reduce the cost of resources, was to concentrate on
saving bank account and current account. With a view to tap the low cost funds, the strategy adopted was to
setup a network of branches in various cities. In 1998, there was only one branch in the city and by the end
of 2001 the number of ATMs across the city. The number of ATMs increased from one to five by 2001.
They also came up with services like mobile banking, internet banking etc.
Another important step taken by Dinesh in this direction was established high service standards. The
complaints from the customers were taken up seriously. Also, schemes of performance-linked
increment/bonus were adopted. The performance expectations of the management were high. The bank also
focused on all the areas of administrative cost very reduction. In this direction the staff requirement was
reviewed and the class four positions were reduced. The arrangements with taxi operators: courier service
companies were renegotiated for reducing the cost. For example, the courier cost per package was reduced
from Rs. 30 to Rs. 15. The executives voluntarily decided to travel in the economy class and do not during
the night, so as to avoid overnight stay charges. Although the not, the overtime allowances was permissible,
but in order to reduce the cost, the practice of payment of overtime was stopped. These strategies resulted in
saving of the bank, from Rs. 4.2 crores in 1998, to cover Rs 20 crores in 2001. total deposits increased
during these three years from Rs. 112 crores to 200 crores.
The assets of the bank had increased from 100 crore in 1998 to 267 crore in 2001. in addition to this, 65
crores were sanctioned in a non-fund limit. Dinesh also concentrated on improving the quality of assets.
The proactive approach of Dinesh resulted in the leading position of the branch during his tenure of three
years as the bank, i.e. , business per employee was the highest amongst all the 65 branches of the bank and
on the basis of profit per employee, the branch was ranked third. Achievements of Dinesh were appreciated
by the management in the meeting. After returning to his headquarters, sitting in his chamber he has
wondering as to what should be his future plan of action for further growth.
Questions:
1. Critically analyze the strategies adopted by Dinesh to retain the leading position.
2. What additional steps Dinesh could have taken to improve the profitability?
Caselet 2
Examination Paper of Risk Management
IIBM Institute of Business Management 4
Established in 1950 Ramakrishna Motors Ltd.is one of the India‟s pioneers in vehicle Manufacturing with a
total investment of Rs.500 crore and currently has a gross capital Employed of Rs 906 crores (Annexure
I).Over the years, Ramakrishna Motors Ltd, has Established a reputation as a quality-conscious company
with a unique corporate culture. The company had collaboration with Tshi Mishu, Japan Ramakrishna
Motors Ltd. Was Recognized internationally for its expertise in design and manufacture of a wide range of
Products from general purpose engines to specialty, technology and processes. Ramakrishna Motors had a
single product in the car segment named Amanda. Ramakrishna Motors Ltd. Is a part of Ramakrishna
group, which besides automobile manufacturing also had an Export company? The company had enjoyed a
monopoly in the passenger car segment for 50 years. However it had failed to diversify into other related
products or introduce cars; in different segments. It had started its operations throughout the country and
had plants located at Rajkot, Nagpur, Bangalore and Agra.
AGRA PLANT
The Agra plant was established in April, 1989 with an investment of Rs 150 crores. The project was an
ambitious venture started with the intention of converting Agra into the Detroit of India. The required
investment of Rs.150 crores was funded by the promoter as Well as various financial institutions such as
International Financial Corporation (IFC), Asian Development Bank, IDBI, IFCI and ICICI. The
institutions provided the funds on The basis of the future projections of the Agra plant. The plant was able
to acquire funds at The rate of 6.25% from foreign financial institution namely, IFCI and Asian
Development Back whereas, the loan from the Indian financial institutions namely, IDBI, ICICI and IFCI
was obtained at 16%. The plant was set up on 40 acres of land which was leased from the Uttar Pradesh
State Government for 99 years at the low rate of 0.05 paisa per square metre. The plant employed a total of
1,000 persons consisting of both skilled and unskilled personnel to man the unit. The Agra plant had two
units namely, the gear box unit and engine unit. The machinery installed in the plant was state-of-the-art
technology and imported mainly from Japan. The total investment in plant and machinery was Rs. 120
crores which was depreciated under Schedule 14 of the Companies Act, 1956 at the rate of 4.75% for single
shift and at the rate of 8.25% for the double shift for the purpose of Income Tax Act. The plant was initially
hoping to come out with a car in the small car segment called Libra. The car was expected to capture a large
market segment due to its high quality, cost competitiveness and few players in the market. However, the
company failed to obtain the license for the manufacture of the vehicle due to the government requirement
of foreign currency which resulted in the license going to Maruti Udyog Limited which was a foreign
collaboration of Government of Government of India with Suzuki, Japan. It was therefore, decided that the
Agra plant would act as a feeder plant for the Bangalore plant, which manufactured the model Amanda. The
Agra plant hoped to supply 30,000 units and thereby, achieve 100% installed capacity utilization.
In the early nineties the process of liberalization and globalization was ushered into Indian economy. This
process of liberalization saw the end of the license raj and a number of new players in the car manufacturing
segment entered the market. Due to this, the company‟s product faced stiff competition and there was a
steady decline in the sales of Amanda. This resulted in a decline in demand of the parent plant for the
products manufactured at Agra. The parent company which had a total workforce of 16,000 began
downsizing and retrenched 10,000 of its employees. The Agra plant which had 1,000 employee strength
downsized itself to a total of 500 employees. This plant which was set up anticipating 100% capacity
utilization saw itself facing a problem of under utilization of production capacity as only 40% of the
capacity could be utilized. The Agra plant being a feeder plant found itself in a loss making situation where
it became difficult to recover its fixed overheads. At around this time, the Indian economy too was hit by a
recessionary phase and there was an overall decline in demand in the passenger car segment. The Agra
plant started considering ways to get itself out of the loss making situation.
The plant has been recording a loss and although it has paid back the IFC loan, it has been unable to pay
back the Indian financial institutions as a result of which it was unable to get any further funding from
them. In 1999, one of its competitors Ford Company Ltd. Approach the plant with a proposal for using the
Examination Paper of Risk Management
IIBM Institute of Business Management 5
unutilized capacity. The proposal was that the five C‟s namely, cylinder block, cylinder head, crank shaft,
cam shaft and connecting rod which the plant was making for its parent company, would be modified and
homolocated for the Ford company cars. This would involve an expense of approximately Rs. 2 crores in
terms of general equipment. However, specific equipment and tools would be invested by the Ford
Company. In case the arrangement was discontinued at a later date, the Ford Company would take away its
equipment. The arrangement would increase capacity utilization of the Agra plant to the extent of 5%. The
finance manager was seriously considering this proposal and was analyzing the investment decision on the
basis of Accounting Rate of Return.
Questions:
1. Evaluate the company‟s investment decision with specific reference to the Agra plant.
2. Had you been the finance manager, would you accept Ford Motors proposal? Why?
3. Do you think the finance manager needs to be concerned about the low depreciation provision?
Why?
4. What according to you is the source of finance available to Ramakrishna Motors Ltd in case it is
required to finance the Ford proposal for the Agra plant?
Section C: Applied Theory (30 Marks)
 This section consists of Long Questions.
 Answer all the questions.
 Each question carry 15 marks each.
 Detailed information should from the part of your Answer (Word limit 200 to 250 words)
1. Define “Risk”, Explain types of risk faced by a bank or financial institutions?
2. What is “Credit risk management”? Explain its objectives?
END OF SECTION B
END OF SECTION C
Examination Paper of Risk Management
IIBM Institute of Business Management 6
IIBM Institute of Business Management
Examination Paper MM.100
Risk Management and Financial Institutions
Section A: Objective Type & Short Questions (30 Marks)
 This section consists of Multiple Choice & Short Notes type questions.
 Answer all the questions.
 Part one carries 1 mark each & Part Two carries 5 Marks each.
Part One:
Multiple Choices:
1. The options where the strike price is close to the price of underlying asset is:
a. At-the-money options
b. In-the-money options
c. Out-of-the money Options
d. All of these
2. Which of the following are the non-traditional derivatives?
a. Weather derivatives
b. Oil derivatives
c. Natural gas derivatives
d. All of the above
3. An option gives the holder the right to sell the underlying asset by a certain price is termed
as_____________
a. Call option
b. Put option
c. American option
d. European option
4. A product where value at any given time is linearly dependent on the value of an underlying market
variable is:
a. Linear product
b. Non-Linear product
c. Both a & b
d. None of these
5. The agreement between two companies to exchange cash flows in the future known as____________
a. Future
b. Forward
c. Swap
Examination Paper of Risk Management
IIBM Institute of Business Management 7
d. Options
6. The life insurance lasts for a specified period & pays a lump sum either when the policy holder dies or
at the end of the period, which ever, is known as____________
a. Variable life insurance
b. Group life insurance
c. Whole life insurance
d. Endowment life insurance
7. When an company wishing to issue is not publicly traded, the share issue known as____________
a. Equity share
b. Initial public offer(IPO)
c. Debenture
d. None of these
8. VAR stands for______________
9. The volatility of this model is changes with the passage of time
a. EMWA Model
b. GAMMA Model
c. VEGA Model
d. GARCH Model
10. LIBOR is stands for ______________
Part Two:
1. What is difference between open-ended and close-ended mutual fund?
2. Write short note on „option contract‟?
3. What are the main sources of liquidity for financial institution?
4. Explain the Concept of „Exchange-Traded Markets‟?
Section B: Practical Problems (40 Marks)
 This section consists of Practical Questions.
 Answer all the questions.
 Each Question carries 10 marks.
 Detailed information should from the part of your answer.
1. In the 1980s, Bankers Trust developed index currency option notes (ICONs). These are bonds in which
the amount received by the holder at maturity varies with a foreign exchange rate. One example was its
trade at maturity varies with a foreign exchange rate. One example was its trade with the Long Term
END OF SECTION A
Examination Paper of Risk Management
IIBM Institute of Business Management 8
Credit Bank of Japan. The ICON specified that if the yen/US dollar exchange rate, ST , is greater than
169 yen per dollar at maturity (in 1995), the holder of the bond receives $1,000. If it is less than 169
yen per dollar, the amount received by the holder of the bond is
1,000- max[0, 1,000 (169 – 1)
ST
When the exchange rate is below 84.5, nothing is received by the holder at maturity. Show that this
ICON is a combination of a regular bond and two options.
2. Suppose that the risk-free zero curves is flat at 7% per annum with continuous compounding and that
defaults can occur halfway through each year in a new 5- year credit default swap. Suppose that the
recovery rate is 30% and the default probabilities each year conditional on no earlier default are 3%.
Estimate the credit default swap spread. Assume payments are made annually.
3. Suppose that 6- month, 12-month, 18-month, 24-month, and 30-month zero rates are 4%, 4.2%, 4.4%,
4.6%, and 4.8% per annum, respectively, with continuous compounding. Estimate the cash price of a
bond with a face value of 100 that will mature in 30 months and pays a coupon of 4% per annum
semiannually.
4. Suppose that the economic capital estimates for two business units are as follows:
Business Unit
1 2
Market risk 10 50
Credit risk 30 30
Operational risk 50 10
The correlation between market risk and credit risk in the same business unit is 0.3. the correlation
between credit risk in one business unit and credit risk in another is 0.7. the correlation between
market risk in one business unit and market risk in the other is 0.2.
All other correlations are zero. Calculate the total economic capital. How much should be allocated
to each business unit?
Section C: Applied Theory (30 marks)
 This section consists of Long Questions.
 Answer all the questions.
 Each question carries 15 marks.
 Detailed information should from the part of your answer (Word limit 200 to 250 words).
END OF SECTION B
SECTION B
Examination Paper of Risk Management
IIBM Institute of Business Management 9
1. Define “Derivative market”. Explain the types of derivative market?
2. What is “Operational Risk”. Explain the categories of operational risk?
S-2-300813
END OF SECTION C
SECTION C

Examination Paper of Managerial Economics
IIBM Institute of Business Management
IIBM Institute of Business Management
Subject Code-B106
Examination Paper
Managerial Economics
MM.100
Section A: Objective Type & Short Questions (30 marks)
Part one:
Multiple choice:
I.Demand is determined by
(1)
a) Price of the product
b) Relative prices of other goods
c) Tastes and habits
d) All of the above
II. When a firm’s average revenue is equal to its average cost, it gets (1)
a) Super profit
b) Normal profit
c) Sub normal profit
d) None of the above
III. Managerial economics generally refers to the integration of economic theory with business
(1)
a) Ethics
b) Management
c) Practice
d) All of the above
IV. Which of the following was not immediate cause of 1991 economic crisis (1)
a) Rapid growth of population
b) Severe inflation
c) Expanding Fiscal deficit
d) Rising current account deficit
V.Money functions refers to : (1)
a) Store of value
b) Medium of Exchange
c) Standard of deferred payments
d) All of the above VI. Given the price, if the cost of production increases because of higher price of raw materials, the supply (1) a) Decreases b) Increases c) Remains same d) Any of the above
 This section consists of multiple choices and Short Notes type questions.
 Answer all the questions.
 Part one questions carry 1 mark each & Part two questions carry 5 marks each.
Examination Paper of Managerial Economics
IIBM Institute of Business Management
VII. Total Utility is maximum when (1)
a. Marginal Utility is maximum
b. Marginal Utility is Zero
c. Both of the above
d. None Of The Above
VIII. Cardinal approach is related to (1)
a. Equimarginal Curve
b. Law of diminishing returns
c. Indifference Curve
d. All of the above
IX. Marginal Utility curve of a consumer is also his (1)
a) Supply Curve
b) Demand Curve
c) Both of above
d) None of above
X. Government of India has replaced FERA by (1)
a) The competition Act
b) FRBMA
c) MRTP Act
d) FEMA
Part Two:
1. What is Managerial Economics? What is its relevance to Engineers/Managers? (5)
2. “Managerial Economics is economics that is applied in decision making” Explain? (5)
3. Differentiate b/w, Micro economics vs. macroeconomics? (5)
4. Factors Affecting Price Elasticity of Demand? (5)
Section B: Caselets (40 marks)
END OF SECTION A
 This section consists of Caselets.
 Answer all the questions.
 Each Caselet carries 20marks.
 Detailed information should form the part of your answer (Word limit 150 to 200 words).
IIBM Institute of Business Management
Examination Paper of Managerial Economics
Caselet1
Dabur is among the top five FMCG companies in India and is positioned successfully on the specialist herbal platform. Dabur has proven its expertise in the fields of health care, personal care, home care and foods. The company was founded by Dr. S. K. Burman in 1884 as small pharmacy in Calcutta (now Kolkata), India. And is now led by his great grandson Vivek C. Burman, who is the Chairman of Dabur India Limited and the senior most representative of the Burman family in the company. The company headquarter is in Ghaziabad, India, near the Indian capital New Delhi, where it is registered. The company has over 12 manufacturing units in India and abroad. The international facilities are located in Nepal, Dubai, Bangladesh, Egypt and Nigeria. S.K. Burman, the founder of Dabur, was trained as a physician. His mission was to provide effective and affordable cure for ordinary people in far-flung villages. Soon, he started preparing natural remedies based on Ayurveda for diseases such as Cholera, Plague and Malaria. Due to his cheap and effective remedies, he became to be known as ‘Daktar’ (Indian izedversion of ‘doctor’). And that is how his venture Dabur got its name—derived from Daktar Burman. The company faces stiff competition from many multinational and domestic companies. In the Branded and Packaged Food and Beverages segment major companies that are active include Hindustan Lever, Nestle, Cadbury and Dabur. In case of Ayurvedic medicines and products, the major competitors are Baidyanath, Vicco, Jhandu, Himani and other pharmaceutical companies.
Vision statement of Dabur says that the company is “dedicated to the health and wellbeing of every household”. The objective is to “significantly accelerate profitable growth by providing comfort to others”. For achieving this objective Dabur aims to:
 Focus on growing core brands across categories, reaching out to new geographies, within and outside India, and improve operational efficiencies by leveraging technology.
 Be the preferred company to meet the health and personal grooming needs of target consumers with safe, efficacious, natural solutions by synthesizing deep knowledge of Ayurveda and herbs with modern science.
 Be a professionally managed employer of choice, attracting, developing and retaining quality personnel.
 Be responsible citizen with a commitment to environmental protection.
 Provide superior returns, relative to our peer group, to our shareholders.
Chairman of the company
Vivek C. Burman joined Dabur in 1954 after completing his graduation in Business Administration from the USA. In 1986 he was appointed as the Managing Director of Dabur and in 1998 he took over as Chairman of the Company.
IIBM Institute of Business Management
Examination Paper of Managerial Economics
Under Vivek Burman’s leadership, Dabur has grown and evolved as a multi-crore business house with a diverse product portfolio and a marketing network that traverses the whole of India and more than 50 countries across the world. As a strong and positive leader, Vivek C. Burman had motivated employees of Dabur to “do better than their best”—a credo that gives Dabur its status as India’s most trusted nature-based products company.
Leading brands
More than 300 diverse products in the FMCG, Healthcare and Ayurveda segments are in the product line of Dabur. List of products of the company include very successful brands like Vatika, Anmol, Hajmola, Dabur Amla Chyawanprash, Dabur Honey and Lal Dant Manjan with turnover of Rs.100 crores each.
Strategic positioning of Dabur Honey as food product, lead to market leadership with over 40% market share in branded honey market; Dabur Chyawanprash is the largest selling Ayurvedic medicine with over 65% market share. Dabur is a leader in herbal digestives with 90% market share. Hajmola tablets are in command with 75% market share of digestive tablets category. Dabur Lal Tail tops baby massage oil market with 35% of total share.
CHD (Consumer Health Division), dealing with classical Ayurvedic medicines, has more than 250 products sold through prescription as well as over the counter. Proprietary Ayurvedic medicines developed by Dabur include Nature Care Isabgol, Madhuvaani and Trifgol.
However, some of the subsidiary units of Dabur have proved to be low margin business; like Dabur Finance Limited. The international units are also operating on low profit margin. The company also produces several “me – too” products. At the same time the company is very popular in the rural segment.
Questions
1. What is the objective of Dabur? Is it profit maximisation of growth maximisation? (10)
2. Do you think the growth of Dabur from a small pharmacy to a large multinational company is an indicator of the advantages of joint stock company against the proprietorship form? Elaborate. (10)
Caselet2
The Regina Company„ one of the largest inakets of vacuum cleaners recent’) had scv cfc ptollkins with the quality of its products. The market responsc to this 1ak of quality caused financial problems for Ow company. in late 1995. Regina began having return rates as high as 30 to 50 percent on some of its Housekeeper and Housekeeper Plus models. These models were sold primarily through discount stores. Further, Regina’s Spectrum vacuum cleaner, an upgraded version sold in specialty stores, was introduced in 1995 with many quality problems. ef The specific problems identified for the Housekeeper and Housekeeper Plus models were associated with faulty belts and weak suction. In the Spectrum model, the agitator was melting; and making a loud noise, the foot pedals were breaking, and the steel-encased motor (which had been advertised as the
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power source for the vacuum cleaner) had been replaced with a less desirable. less reliable motor.
As a result of these problems, Target stores discontinued Regina’s Housekeeper Plus model after reporting that “at least half of those sold were returned.” At Starmart, which accounts for about a quarter of the Housekeeper sales, I. out of every 5 machines sold was returned. To help service customer complaints, Regina set up an 800 telephone number for customers to contact the firm. directly. The sales returns caused Regina’s shareholders to question the 1995 fiscal earnings report. Furthermore, both inventories and accounts receivable doubled during the 1995 fiscal year. At the end of that period, Regina’s chairman and 40 percent stockholders
Resigned. The chairman’s resignation was closely followed by a company announcement stating that the financial results reported for the 1995 fiscal year were materially incorrect and had been withdrawn. This announcement brought a suit from shareholders who had bought Reoina stock on the basis of the 1995 camings report. It also prompted an audit of the 1995 results and a request to another accounting organization to work on Regina’s business and accounting controls. A few months later, Regina ‘agreed to be acquired by a unit of Magnum, a vacuum cleaner and Water-purification Company. Under Magnum, Regina shut down production while engineers worked to solve the problems inherent in the Housekeeper and Housekeeper Plus vacuums, particularly the suction difficulties. In September 1998, Magnum and Regina decided to separate the two companies again. Since then, Regina has been regaining market share with its Housekeeper models. The ‘vacuums are popular because they carry on-board tools.
Questions:
1. What type of controls would you have established to preclude the major returns experienced by Regina? (10)
2. How would you have controlled the finished-goods -inventory to avoid its growing to twice the size that it was in the previous year. (10)
Section C: Applied Theory (30 marks)
1. What is the importance of demand analysis in business decision? (15)
2. Explain individual demand function and market demand function. (15)
S-2-010619
 This section consists of Applied Theory Questions.
 Answer all the questions.
 Each question carries 15marks.
 Detailed information should form the part of your answer (Word limit 200 to 250 words).
END OF SECTION C
END OF SECTION B