Past Papers Deck - All From Winter 2012 Flashcards
Question Background: Winter 2012, Q # 1. Syllabus Topic:
A sound system of Environment Scanning is of critical importance in the formulation of Strategic Plans of any progressive company operating in a fast-changing and competitive business environment. Hawk Engineering Limited (HEL) is engaged in the business of manufacturing of small motors which are installed in printers. HEL has made substantial investments in manufacturing facilities and R&D and has developed its own in-house technology and manufacturing processes. This gives HEL competitive advantage over its rivals in terms of meeting the stringent requirements of its quality conscious customers. Important customers of HEL are the original equipment manufacturers of precision laser printers. Although motors account for a nominal proportion of the cost of the laser printers, their efficient and reliable performance are of crucial importance for HEL‟s customers who provide performance guarantees for their products. HEL is one of the few firms who manufacture these types of small motors. It is able to achieve high profit margins and returns on its investments because of the superior quality of its products for which its customers are willing to pay premium prices. Required: Identify and explain briefly four factors which HEL should monitor closely to anticipate the emerging business environment in which it operates and its impact in the formulation of its Strategic Plans. (10 Marks)
Suggested Answer:-
HEL should closely monitor the following factors in the emerging business environment in which it operates and its impact in the formulation of its strategic plans:
(i) Projection of future demand for laser printers in the international market – The demand for motors by the original equipment manufacturers of laser printers is a derived demand and changes in the demand for these printers can have considerable impact on the business prospects of HEL. HEL would have to expand its manufacturing capacity if it anticipates increase in the demand for laser printers or alternatively explore new markets for its products if it foresees decline in demand for these printers in its existing markets.
(ii) Technological changes – Changes in models and designs of laser printers due to variations in customer‟s requirements can have considerable impact on HEL‟s business prospects. HEL would have to keep abreast of these changes, continuously enhance its R&D capabilities and introduce necessary modifications in its manufacturing processes, designs and tooling. This would involve substantial R&D expenditures and investments in additional equipment which would have to be incorporated in its strategic planning process.
(iii) Threat of entry of new competitors – HEL is presently earning high profit margins and realizing attractive returns on investments. Therefore, the threat of new entrants who may pose competitive challenges to HEL is always present. HEL should be prepared to meet the threat of new entrants and adopt appropriate measures to maintain its competitive advantages and face threats posed by potential competitors by interacting closely with its important customers and creating barriers of high switching costs. This would involve continuous upgrading of technology and improvement of manufacturing process to retain its competitive advantage.
(iv) Competitive rivalry and prices of Competing Products – Although HEL has significant competitive advantages in terms of quality of its products over its competitors, it should take cognizance of the strategies of its rivals who would want to improve the quality of their products and may offer competitive prices to attract HEL‟s customers. HEL should adopt appropriate strategies to monitor these threats and counter them effectively.
(v) Diversification – HEL‟s present customer base and product range is considered to be quite narrow. It may like to explore the prospects of marketing its products to other original equipment manufacturers such as manufacturers of photocopiers, computers, etc. and also introduce related products (other than small motors).
Question Background: Winter 2012, Q # 2 (a). Syllabus Topic:
Sitara Limited is a well-known manufacturer of a wide range of chromium plated sanitary fittings in Pakistan. The company has recently negotiated several long-term contracts for export of various items of sanitary fittings. Consequently, the work force would have to be increased significantly in a short period to expand the production. Prior to recruiting the new workers, Adnan Khan, the Human Resources Manager, intends to prepare a HR Skills Information Database of the existing employees. Required: Briefly discuss the purpose, usefulness and relevance of compilation of HR Skills Information Database in the areas of recruitment, training and development and succession planning of Sitara Limited (06 Marks)
Suggested Answer:-
The compilation of Human Resource Skills Information Database has relevance and usefulness in the recruitment, training and development and succession planning in Sitara Limited in the following areas: (i) Recruitment – Compilation of HR Skills Information Database in a systematic manner would help Sitara Limited to identify the pool of skills and experiences of the employees currently available within the organization and fill in the skill gaps by induction of new employees for the expansion of the facilities and efficient functioning of the organization to meet its corporate objectives. This is necessary to ensure recruitment of only such skilled employees who can contribute to the company‟s requirements for expansion of its manufacturing capabilities. (ii) Training and Development – HR Skills Information Database would help to identify the deficiencies and weaknesses among the existing workers and adopt appropriate training and skills development programsto enable them to perform their work more effectively and strengthen the HR capabilities of Sitara Limited. (iii) Succession Planning – HR Skills Information Database would help to identify employees who are most suitable for promotion to higher levels in the organization hierarchy due to the creation of new openings in the firm and also in the event of retirement or death of an employee. A proper HR Skills Information Database would help to match these individuals with the HR requirements at various levels and fill in the vacant position promptly without causing any disruptions or delays.
Question Background: Winter 2012, Q # 2 (b). Syllabus Topic:
A number of firms prefer to conduct Performance Appraisal of their skilled workers on a quarterly basis rather than as an annual exercise. Identify three advantages of pursuing this policy of quarterly Performance Appraisal of skilled workers. (03 Marks)
Suggested Answer:-
The advantages of a policy of Quarterly Performance Appraisal of skilled workers by such firms are: (i) Employees efforts and capabilities are recognized promptly and they are suitably rewarded for their performance resulting in enhanced performance level of the individual employees in terms of productivity and low material losses due to defects in workmanship. (ii) The employer can ensure that the quality specifications of its products are strictly adhered to.
(iii) The employer is able to identify and retain the highly skilled workers and promptly replace those workers who are unable to meet the quality standards (iv) Employees make sustained efforts throughout the year, rather than strive to achieve high levels of performance close to the year end to earn good appraisal rating.
Question Background: Winter 2012, Q # 2 (c). Syllabus Topic:
Although companies experiencing high rate of employee turnover are in a position to recruit new workers quickly to replace the outgoing employees, most of them are not aware of the real costs of the high rate of turnover of their employees. Briefly describe the different types of costs which are associated with high rate of turnover of employees.
Suggested Answer:-
The costs associated with a high rate of turnover of employees include: (i) Hiring Costs – comprising of recruiting and advertising expenses, salaries of interviewers, employee testing costs, verification and reference checking time and expenses. (ii) Training Costs – including cost of orientation time of new workers, staff time and salaries of trainers, cost of training materials, supervisors‟ and co-workers “coaching” time and salaries. (iii) Productivity Costs – including lost productivity due to “break-in time” of new employees and lack of awareness of the company‟s products and services. (iv) Separation Costs – such as HR staff and time of supervisors and salaries to process separation formalities and exit interview time and costs. (v) Disclosure of Confidential Information – former employees may pass on expert knowledge or disclose important confidential information to competitors.
Question Background: Winter 2012, Q # 3 (a). Syllabus Topic:
What is meant by the term Customer Database? (02 Marks)
Suggested Answer:-
A Customer Database is an organized and updated collection of comprehensive information of existing and prospective customers names and addresses, telephone numbers, demographic information of age, income, number of family members, business activities, interests, purchases and other useful information.
Question Background: Winter 2012, Q # 3 (b). Syllabus Topic:
Why, in your opinion, it is useful for a commercial bank planning to launch its credit card marketing scheme to create, maintain and update the database of its existing and prospective customers? (07 Marks)
Suggested Answer:-
(i) Identify prospective customers – The customer database would help the bank to identify prospective customers and contact them by telephone calls, personal visits and promotion letters to convince them of the advantages of acquiring the bank‟s credit card facilities. (ii) Formulation of marketing policies – Credit Cards have different features e.g. platinum cards, gold cards, etc. with varying credit limits, bonus points, payment or waiver of initial and annual fees, etc. Information obtained from the customer database can help the bank to formulate policies for the different needs of customers and offerings of types of credit cards which best serve their needs. (iii) Provide vital information of high-value customers – Information from the customer database can enable the bank to create a profile of privileged customers and cater to the special needs of these customers. (iv) Negotiate Terms with suppliers to benefit high-value customers – Information from the customer database can be used by the bank to seek concessional special terms for its customers from relevant institutions such as hotels, travels agents, selected retail outlets, etc. (v) Adopt proactive competitive strategies – The bank can use the information from the customer database to upgrade the cards and enhance the credit limits of customers who have shown good performance in terms of customer profitability and timely payments of their dues to compete effectively with the products offered by the competitors.
Question Background: Winter 2012, Q # 5 (a). Syllabus Topic:
HR Managers often deal with delinquent employees and encourage them to change their attitude and behaviour and adopt a positive approach towards their responsibilities to the organisation. Consequently, HR Managers have to exercise considerable discretion and provide proper guidance to the employees, rather than resort to immediate extreme punitive measures. Required: Identify and explain briefly the various stages of dealing in a fair and equitable manner with employees involved in wrongful behavior/actions. (08 Marks)
Suggested Answer:-
A competent HR Manager should pursue the following stages in handling employees who have been involved in behavior/actions which are contrary to the rules of company discipline:
(i) Investigation – A thorough investigation should be undertaken of the nature of the delinquent behavior of the employee and the factors which have led the employee to behave and conduct himself in a manner which is contrary to the accepted norms of the firm‟s rules and discipline.
(ii) Counseling – The objective in this phase is to create awareness among the employees of organizational policies and rules. Often, creating awareness of rules and knowledge of disciplinary actions may prevent violations by the employees. Counseling by the immediate supervisor can have positive effects.
(iii) Written documentation – If change in behavior is not achieved, then a second session of meeting with the concerned employee would become necessary. Whereas, the first phase took place as a conversation between the supervisor and employee, the proceedings of this meeting are documented in written form in which the employee and the supervisor prepare written solutions to prevent further continuation of the problem. (iv) Final warning – When the employee does not follow the written solutions noted in the second step, a final warning meeting is held. In this session, the HR official emphasizes to the employee the importance of rectifying the inappropriate behavior/actions. Employers may also demote employees or temporarily suspend their services for a limited period with pay. The demotion/suspension period is used to demonstrate the seriousness of the problem and the organisation‟s determination to bring a change in the behavior of the employee.
(v) Discharge – If the employee fails to follow the action plan that was developed and the problem continues to persist, then the services of the employee is terminated after giving notice and keeping all the legal implications of the action in perspective.
Question Background: Winter 2012, Q # 5 (b). Syllabus Topic:
The trend of outsourcing of certain activities by business firms to external entities has gained considerable momentum in the past few years. Identify four advantages which, in your opinion, these firms expect to derive from outsourcing of selected business activities to external entities. (04 Marks)
Suggested Answer:-
Business firms expect to derive the following advantages by outsourcing of selected business activities to external entities: (i) Reduce requirements of capital investment and human resources as the facilities and services are provided by the external entities to which these activities have been outsourced.
(ii) Place greater focus on core value-added activities of the business as the ancillary activities are outsourced to external suppliers. (iii) Achieve cost economies as the suppliers of the outsourced activities are able to obtain the advantages of economies of scale. (iv) Derive benefits of the particular expertise and innovations of the external entities who provide these services.
) Question Background: Winter 2012, Q # 6 (a). Syllabus Topic:
Explain briefly the factors which have contributed to the creation and significant expansion of Global Markets during the preceding 20-25 years. (06 Marks)
Suggested Answer:-
The factors which have contributed to the creation and significant expansion of the Global Markets are: (i) Specialization of Products – Certain countries have achieved high degrees of specialization in the manufacturing of specific types of goods which have worldwide demand. These products are promoted on a worldwide scale through aggressive advertising campaigns to create and expand their global markets. (ii) Reduction in tariff barriers and relaxation of direct foreign investment regulations – MNCs have been able to increase their exports significantly and expand global markets as policies of liberalization of trade restrictions and relaxation of foreign investment regulations have received worldwide acceptance. (iii) Economies of Scale – Access to global markets allow MNCs to obtain benefits of economies of scale which are achieved by manufacturing large quantities that can be sold in several markets in different countries. (iv) High R&D expenditures on Products – A number of knowledge-based products involve exceptionally large R&D costs which can be incurred only in countries with substantial financial resources and technical human resource base. Worldwide demand for such R&D-intensive products is responsible for creation of global markets for these types of products. (v) Reduction in Communication and Transportation Costs – Efficient and fast means of communications and reduction in transportation costs have provided considerable impetus to the growth of global markets for a large number of products
Question Background: Winter 2012, Q # 6 (b). Syllabus Topic:
Briefly explain the salient features of the terms which are usually incorporated in a typical Franchising Agreement. Give one example of a Franchise Relationship between an international company and a Pakistani enterprise. (05 Marks)
Suggested Answer:-
The terms which are incorporated in a typical Franchise Agreement are:
(i)The franchisor authorizes the franchisee to use the franchisor‟s complete brand concept, goodwill and business operating systems and methods to conduct business as defined in the franchise agreement.
(ii)The franchisee undertakes to make investment of a specified amount in the business and operate within a defined territory.
(iii)The franchisee undertakes to achieve predetermined sales targets. (iv)The franchisee is entitled to benefit from the promotion and advertising campaigns of the franchisor to facilitate the franchisee to achieve the sales targets in the defined territory.
(v)The franchisee makes an initial payment of the stated amount and further commission or royalties on the amount of sales. (vi)The franchisee undertakes to purchase selected material inputs from the franchisor or a specified supplier. Examples: McDonald, Burger King, Dunkin Doughnut, Marriot Hotel, etc.
