Section B

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 200 to 250).

Caselet 1

Export Marketing:

The trade in black pepper is unhappy that exports may not show a sign of revival in prices in the immediate future. World prices have been showing a downward trend for eighteen months and this has resulted in much lower earnings for exporters . The UK, West Germany and the Netherlands have cut their import requirement though the American demand has shown some growth. Brazil has been resorting to aggressive selling at lower prices and the expectations are that its exports will reach an all-time peak of 32,000 tones in the 1981-82 season. The 1981-82 Indian season is only about six weeks away. The Brazilian offensive has forced India to withdraw so to any from the US and West European markets and increase its reliance on communist buyers. As many as 1980-81.the Soviet Union alone accounting for 12,647 tones. But exporters are concerned at the diversion on such a scale of this trade.

1. Had you been the pepper exporter, what would be your short term and medium-term export marketing strategy in the above environment?

Caselet 2

SMART KIDS — SELLING EDUCATIONAL GAMES AND RESOURCES TO THE WORLD

Smart Kids Ltd. An Auckland company that makes educational games and resources to read and understand maths has won a Trade New Zealand Export Award for its success in international markets in 2003.Established eight years ago in the family home basement. Smart Kids is led by husband and wife team. joint chief executives David and Sun Milne and their sons Duncan and Frase. She Milne, an ex-teacher. says from just 30 products when it started, the company produces more than 200 produces catering for student's activities, grammar concepts and numeracy. She says the international appeal of Smart Kids products was highlighted recently, when company's SMART PHONICS was listed amongst the top five products out of almost 100 in the education trade show in the United Kingdom. The key requirement for every new Smart Kids products is that it stimulates student's minds in the classroom, teaches them a specific concept easily, enjoyably and permanently and enables problem solving. David Milne says Smart Kids started selling its educational games and resources to New Zealand schools in 1995, drawings an immediate and strong response. It quickly became apartment that the New Zealand market was not large enough to sustain considerable investment in product development, and secondly, that their products have done so well that they deserved wider exposure."Our export research came down to two options. Find educational distributors in other countries or set-up our own operations. The first option was less risky and easy to manage but it meant that Smart Kids products were lost in a wide range of materials. So we went for

Examination Paper

IIBM Institute of Business Management

the second option and over the next few years established offices in Australia, in UK and Canada". This has successfully branded Smart Kids as a leading supplier of educational resources in these countries. Mr. Milne says the Smart Kids product catalogue is now sent regularly to teachers in more than 50,000 schools across the UK, Ireland, Canada and Australia. "We also sell to schools in the US. In that market we elected to work through a distributor, we didn't have the financial resources to setup an operation that could cover almost 70,000 schools and compete with every established educational publisher". He says annual exports now exceed $2.2 million and account for more than 90% of turnover. In order to grow the business, surplus profits are reinvested back into product development, infrastructure — the company recently moved its Auckland operation into new 20,000 square feet premises in Ellerslie. Mr. Milne says the Smart Kids brand is now well established internationally with the company enjoying many competitive advantages, including its New Zealand origin. New Zealand education is highly regarded overseas and we find that international teachers to get hold of educational products made in this country.

I. What are the major considerations for a firm in order to while deciding its markets entry strategy?

2. To what extent direct control and ownership are critical for Smart kids export distribution strategy?

END OF SECTION B

Section C: Applied Theory (30 marks)

• This section consists of Long Questions.• Answer all the questions.• Each question carries 15 marks.• Detailed information should form the pa rt of your answer (Word limit 150 to 200 words).

1. "India's export markets are still largely limited to the developed countries." Critically examine this statement highlighting the main factors responsible for the present state of affairs and your views about the future prospectus.

2. "A world in which exchange rates fluctuate constantly is a threat to international marketing". Discuss?

,ND OF SECTION C

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a. If something can go wrong, it can be corrected.

b. If something can go wrong, it willc. If something can no go wrong, it willd. None

9. Project that use Six Sigma principles for quality control normally follows a 5 phase improvement process called DMAIC, here A stands fora. Artb. Analyzec. Alliesd. None

10. Fishhone diagram is also calleda. Gantt diagramb. Murphy diagramc. Parkinson diagramd. Ishikawa diagram

Part Two:

1. What are 'Phase exits or Kill points'?

2. Write a note on `weighted scoring model'.

3. Elaborate 'Parkinson's law', related with critical chain scheduling.

4. Write a note on `Arrow diagramming method'.

=ND OF SECTION A


• 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 200 to 250 words).

Caselet I

A preliminary estimate of costs for the entire project is $140,000. This estimate is based on the project manager working about 20 hours per week for six months and other internal staff working a total of about 60 hours per week for six months. The customer representatives would not be paid for their assistance. A staff project manager would earn $50 per hour. The hourly rate for the other project team member would be $70 per hour, since some hours normally billed to clients may be

Examination Paper


needed for this project. The initial cost estimate also includes $10,000 for purchasing software & services from suppliers. After the project is completed. maintenance costs of $40,000 are included for each year, primarily to update the information and coordinate the "Ask the Expert" feature and online articles. Projected benefits are based on a reduction in hours consultants spend researching project management information, appropriate tools and templates, and so on. Projected benefits are also based on a small increase in profits due to new business generated by this project. If each of more than 400 consultants saved just 40 hours each year (less than one hour per week) and could bill that time to other projects that generate a conservative estimate of $10 per hour in profits, then the projected benefit would be $160.000 per year. If the new intranet increased business by just I percent, using past profit information, increased profits due to new business would be at least $40,000 each year. Total projected benefits, therefore, are about $200,000 per year.Exhibit A summarizes the projected costs and benefits and shows the estimated net percent value (NPV), return on investment (ROI), and year in which payback occurs. It also lists assumptions made in performing this preliminary financial analysis. All of the financial estimates are very encouraging. The estimate payback is within one year, as requested by the sponsor. The NPV is $272,800, and the discounted ROI based on a three-year system life is excellent at 112 percent.

Discount 8%Assume theproject is donein about is

Year

0 1 2 3 TotalCosts 140,000 40,000 40.000 40,000Discountfactor

I 0.93 0.86 0.79

Discountedcosts

140,000 37,037 34.294 .31,753

243,084

Benefits 0 200,000 200,000 200.000Discountfactor

1 0.93 0.86 0.79

Discountedbenefits

0 186,185 171,468 158,766 515.419

Discountedbenefitscosts

(140,000) 148.148 137,174 127,013

Cumulativebenefits-

(140,000) 8.148 145,322 272,336 NVP

Payback inyear l

Discountedlife

112%

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AssumptioCosts #hoursPM (500hours.

25,000

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VISemester II Examination Papers

Section B: Caselet (40 marks)


• Each caselet carries 20 marks.• Detailed information should form the part of your answer (Word limit 200 to 250 words).

Caselet I

Akash Engineering Ltd. (AEL) had achieved sales of Rs, 3440 lakhs during the year 2004-05 against sales of Rs. 1209 lakhs previous year. The sales this year were highest ever achieved in the history of the company. Profit before interest, depreciation and taxes were Rs. 642 lakhs as against Rs. 81 lakhs during the year 2003-04, which showed a tremendous increase (8 times) in profitability of the company. Economic indicators were still positive in the coming year for the company.

COMPANY SNAPSHOT

AEL was established in the year 1963 at Dediyasan GIDC, Mehsana. Gujarat, India. The Golden Mills Limited — a flagship company of the prominent Indian Business Group had acquired the controlling interest of AEL since 1993. AEL, a mid-sized company, was one of the leading in manufacturing companies process equipments for Chemicals, Petrochemicals, Pharmaceuticals, Fertilizers, Drugs and

allied industries. Attainment of the highest standard of quality and 4 enhancement of customer satisfaction had been the corporate philosophy of the company. In line with corporate philosophy, the management reaffirmed its commitment for providing reliable quality products and services through understanding and fulfilling customer's requirements, use of prime quality raw materials, defined process control at each stage of manufacturing, meeting national and international standards defined by customers, training and motivating employees, professional approach and implementation of international quality management system standards.AEL had been 7 producing Columns, Heat Echangers-Coolers-Chillers-Condensers, Pressure Vessels, Reactors, Deaerators, Economizers. Oxygen / Nitrogen Storage Tanks, Dished Ends, Centrifuges, Chlorine and other allied Gas Cylinders and Expansion Bellows. The product was highly of a technical nature and AEL was well-known in the market for its prompt response and good quality products. They had developed import substitute products like rocket buster and spherical pressure vessels. AEL was into direct marketing and customized services. It had served various industrial sectors and prominent buyers l ike ISRO, BARC, IOCL, Kochi Refineries, HPCL, BPCL, Brit ish Oxygen, Inox India, Kirloskar Pneumatic, Reliance Petro, IPCL, Ranbaxy, NTPC, HILL, Godrej, BHEL and J.K. Industries.

Issues

Till 1993, the top management had 20% stake in AEL and they never took active interest in its management. In comparison with other companies of Indian Business Group, it was very small. Since inception, its products were highly technical in nature and AEL was well known in the market for its prompt response and good quality products. They had also developed import substitute products like rocket buster and spherical pressure vessels. For initial years, AEL made profits. Then also, from 1985 to the year 2002, AEL was in trouble because sales declined continuously. During those years, the company was making losses. It had been, therefore, registered as a sick unit by BIFR (Board of Industrial and Financial Reconstruction) in the year 2001 under the provisions of the Sick Industrial Companies (Special Provisions) Act, 1965. Other major issues were related to Human


Staff 105,000hours,$70/hour)Outsourced 10,000software &servicesTotal 140,000costs (allapplied in year0)Benefits# 400 Hours saved 40$/hour profit 10Benefitsfrom 160,000saving timeBenefits 40,0001% increase rofits

Total 200,000projectedbenefits

1. What according to you are the factors that can hamper the profit growth

related with the project?

2. Mention some strategies to further improve the project's turnover.-

Caselet 2Many organizations spend a great deal of time and money on training efforts for general project management skills, but after the training, project managers may still not know how to tailor their project management skills to the organization's particular needs. Because of this problem. some organizations develop their own internal information technology project management methodologies. The PA,IBOKR Guide is a standard that describes best practices for what should be done to manage a project. A methodology describes how things should be done, and different organizations often have different ways of doing things. For example, after implementing a systems development life cycle (SDLC) at Blue Cross Shield of Michigan, the Methods department became aware that developers and project managers were often working on different information technology project in different ways. Deliverables were often missing or looked different from project to project. They may have all had a project charter, status report, technical documents (i.e., database design documents. user interface requirements, and so on), but how they were producing and delivering these deliverables was different. There was a general lack of consistency and a need for standards to guide both new and experienced project managers. Top management decides to authorize funds to develop a methodology for project managers that could also become the basis for information technology project management training within the organization. It was also part of an

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overall effort to help raise the company's Software Capability Maturity Model level.BlueCross BlueShield of Michigan launched a three-month project to develop its own project management methodology. Some of the project team members had already received PMP certification, so they decided to base their methodology on the PMBOK Guide 2000, making adjustment as needed to best describe how their organization managed information technology projects. See a complete article on this project on the companion Web site for this text. Also see the Suggested Reading to review the State of Michigan

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Project Management Methodology, which provides another good example of an information technology project management methodology. Many organizations include project management in their methodologies for managing Six Sigma projects. Other organizations include project management in their software development methodologies, such as the Rational Unified Process (RUP) framework. RUP is an interactive software development process that focuses on team productivity and delivers software best practices to all team members. According to RUP expert Bill Cottrell, "RUP embodies industry-standard management and technical methods and techniques to provide a software engineering process particularly suited to creating and maintaining component-based software system solutions," Cottrell explains that you can tailor RUP to include the PMBOK process groups. Specifically, IBM Rational, the creators of RUP, found that it could adjust RUP input artifacts with PMBOK process inputs, RUP steps with PMBOK process tools and techniques, and RUP resulting artifacts with PMBOK process outputs.

1. According to you what the skills needed for the project management of organization?

2. How could have been the six sigma project became a helpful tool in very sophisticated kind of

project management?

ND OF SECTION B


• This section consists of Long Questions.

• Answer all the questions.• Each question carries 15 marks.• Detailed information should form the part of your answer (Word limit 150 to 200 words).

1. Why do you need a good WBS to use project management software? What other types of

software can you use to assist in project scope management?

2. Why is it important to determine activity sequencing on projects? Discuss diagrams you have

seen that are similar to network diagrams. Describe their similarities and differences.

END OF SECTION C

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Examination Paper


Examination Paper Semester I: Organizational Bahaviour



• Each Caselet carries 20 marks.

• Detailed information should form the pa rt of your answer (Word limit 200 to 250

words).

Caselet 1

M/s. ABC Ltd is a medium-sized engineering company producing a large-range of product lines according to customer requirements. It has earned a good reputation as a quick and reliable supplier to its customers because of which its volume of business kept on Increasing. However, over the past one year, the Managing Director of the company has been receiving customer complaints due to delays in dispatch of products and at times the company has to pay substantial penalty for not meeting the schedule in time. The Managing Director convened an urgent meeting of various functional managers to discuss the issue. The marketing manager questioned the arbitrary manner of giving priority to products in manufacturing line, causing delays in wanted products and over-stocking of products which are not required immediately. Production Control Manager complained that he does not have adequate staff to plan and control the production function; and whatever little planning he does, is generally overlooked by shop floor manager. Shop floor managers complained of unrealistic planning, excessive machine breakdowns, power failure, and shortage of materials for scheduled products because of which it is impossible to stick to the schedule. Maintenance manager says that he. does not get important spares required for equipment-maintenance because of which he cannot repair machines at a faster rate. Inventory control manager says that on one hand the company often accuses him of carrying too much stock and on other hand people are grumbling over shortages. Fed up by mutual mud-slinging, the Managing Director decided to appoint you, a bright management consultant with training in business management to suggest ways and means to put his "house in order".

Questions

1. How would you examine if there is any merit in the remarks of various functional

managers?

2. What, in your opinion, could be the reasons for different Managerial thinking in

this case?

3. How would you design a system of getting correct information about job status to identify delays quickly?

4. What would you suggest to promote co-ordinate interaction of various people to meet the scheduled dates?


Examination Paper Semester I: Principles and Practice of Management


Semester-1 Examination Paper MM.100

P r i n c i p l e s a n d P r a c t i c e o f M a n a g e m e n t

Section A: Objective Type (30 marks)

• This section consists of Objective questions & Short Notes type questions •

Answer all the questions.

• Part one questions carry 1 mark each & Part Two questions carry 5 marks each.

Part one:

Mult iple

choices:

1. A plan is a trap laid to capture thea. Future

b. Past

c. Policyd. Procedure

2. It is the function of employing suitable person for the enterprisea. Organizing

b. Staffing

c. Directingd. Controll ing

3. means " group of activit ies & employees into depar tments"a. Orientation

b. Standardization

c. Processd. Departmentation

4. This theory s ta tes that authority is the power that is accepted by othersa. Acceptance theory

b. Competence theory

c. Formal authority theoryd. Informal authority theory

5. It means dispersal of decision-making power to the lower levels of the organizationa. Decentralization

b. Centralization

c. Dispersiond. Delegation

6. This chart is the basic document of the organisational structure


; ter II Examination Papers

:sources. Conventionally, many workers joined through relations in the organization. There was no

!rformance measurement system for workers and managerial staff in the organization, which hadade them dull and lethargic. Moreover, there was no training program for labors to improve their

ficiency. The company needed to sharpen the skills of the workers. The competition had intensified with big companies like laser and Toubro Ltd., ISAAC, Vadodara, GMM (Gujarat Machinery Manufacturer), Vadodara. making their presence felt through their focused approach by importing the manufacturing machineries from the developed countries. This made machineries of AEL outdated. Moreover, many small fabricators also had ventured into this area. The research and development in the company was always lop-sided. The company had never focused on reinvesting in this area. its capital investment in R & D was almost nil and recurring expenditure was only Rs.6 lakhs during the Year 2004-05. The profitable customers like, ISRO, BARC had already withdrawn. Increase in prices of steel and other major raw materials, rise in other input costs, had squeezed margins. Under tough competition and working capital shortage, the company had become almost non-performing. The economic downfall, continued recession in the country and the world over had further added fuel to the fire, making it difficult for the company to survive.

Steps taken by Management

As a measure towards labor problems, the management decided to give the option of Voluntary Retirement Scheme (VRS) to all its employees. As a result, 278 labors and 34 staff members opted for voluntary retirement under the VRS facilitating the company to decrease overheads to a large extent. To fulfill the skilled workers were called back on a contractual basis. Since there was not any performance measurement and incentive plan, AEL had to lose 3 to 4 good people to its competitors. The company had now started the performance link bonus scheme wherein monetary benefit of 25 percent hike in the wages and salaries was given. It also started a training program. for its contractual labors and appointed full time CEO from Arvind Mills. The company also hired a consultant (who was an employee for more than 20 years at a senior level in Larsen & Toubro Ltd.) for textile machinery and air handling system. It also made strategic alliances with few of the renowned consultants, like, Engineers India Limited, Jacob H&G limited, UHDE India Limited. Toyo Engineering Limited, Linde — West Germany, Monsanto — U.S.A., Kvaerner Powergas India Limited, Tecnmont ICB India, Dalal Mott McDonald, Project Development India Limited, Chemtex Engineering Ltd., Tata Consultant Engineers.AEL also developed in house R&D Laboratory - approved by the Govt. of India and authorized to issue Certificate of Testing carries out. For this, it imported technology for the manufacture of Industrial Centrifuges from West Germany and through continuous interaction with R&D. company was able to fully absorb and adopt this technology. The boost exports in developed countries like US. UK ad other European countries. With this quality certification, the company felt that they had reaped the result in that very year by getting good orders from HINDALCO and BHEL,. As a result, the profitability in 2004-05 reached an all time high.

PRESENT SCENARIO AND FUTURE PLAN

AEL's turnover had reached the level of Rs. 34.4 crores, which helped them to recover all the debts. The organizational structure was flat and there were no second line managers. Even the existing managers were reluctant to pass the information and share their experiences with the new recruiters. The image of AEL regarding the quality had to be reregistered in the minds of customers.AEL's short-term goal was to increase the turnover from current Rs. 34.3 crores to Rs. 1 50crores. The new target was set Rs. 500 crores. And for this the management had identified new business divisions like Textile Machineries, Air Handling System, Duplex Stainless Steel and Super Duplex Stainless Steel. Aluminium and its alloys, Consulting Division Specialized in Power Plant and Waste water Treatment and Non-conventional Energy System. Of which, textile machineries, power plan and air-handling system would work as backward linkage to other companies of Indian business group. The


?ster II Examination Papers

management planned to convert the design department as an individual responsible profit centre, to ,evelop the designs for own business as well as providing consultancy to other businesses. Although le CEO had a great pleasure in announcing that the company had reached a turnover of Rs. 34.4 rores but was a little bit apprehensive about the bumpy roads towards the Rs. 150 crores target.


If you were appointed as a CEO of AEL, Would you like to go for a separate design division?

2. Critically evaluate the future plans of AEL.

3. Do you think the target set by AEL was realistic? Comment.

2. Comment on the management strategies adopted by AEL.

Caselet 2

Alloys and Metals Pvt. Ltd., Indore was established by Kartik Jain in the year 2000, with the vision to cater to the needs of the booming Steel Industry. The company started with the manufacturing of Ingots — a steel product, which served as an input for production process in Hot Rolling Mills. The manufacturing unit was situated at Pithampur, an industrial zone where the government offered several incentives, rebates and subsidized electricity. Over 20 years of experience in steel trading business prompted Kartik and his brother to invest their own capital to set up this unit. Later on, they took financial assistance from Indian Overseas Bank. His brother supervised production at the manufacturing unit whereas he concentrated on acquiring suppliers, marketing and distribution of the product. Initially, when they entered into the business, the demand far exceeded the supply, and this attracted those to enter the market. The manufacturing unit employed 150 workers; out of which 80 percent were on contract basis while the rest were wage holders. They worked in two shifts of nine hours each, and the plant was shut down for six hours daily. The company had introduced a number of innovative HR policies to keep motivation and morale of its workers high. They paid overtime for extra hours put in by the employees. This considerably reduced employee absenteeism and turnover. The company provided group insurance under the Employee State Insurance Scheme (EST) and all other safety measures for their benefits. The production capacity was 80 tones per day. The company manufactured Ingots of various sizes (3"- 4", 3.25" — 4.25", 3.50" — 4.50") as per the requirement of the customers. The manufacturing unit was prone to accidents as the Ingots were manufactured at temperatures as high as 1700°c. Maintenance of such high temperature required heavy power consumption and the expenditure on power was only approx. rs.50-60 Lakhs per months. The company had also ser up a waste recycling plant at Pithampur as on an average 10 percent of the material was wasted. The recycled product was then further used as raw material.

Steel scrap, used to produce Ingots was purchased locally from Shree Gears Pvt. Ltd., Dewas Steel India Ltd., Dewas, and T-Tee Industries Pvt. Ltd. Dewas. They also imported the same from various countries like South Africa, Britain and Thailand. The firm had big cost disadvantage when it came to procurement of raw materials. Due to the quality nature of the supplier base, the firm funds it extremely difficult to maintain the quality and consistency of raw material. The finished product was supplied to companies like Gowardhan Saria, Richa Steel;s Pvt. Ltd. and Shivam Ispact Pvt. Ltd.. Indian Metal Industries (IMI), Indian Rolling Mills, Saathi Steels Pvt. Ltd., Central Steels Pvt. Ltd. and Shivam Ispact Pvt. Ltd. and to other steel units in Rajasthan, Gujarat and Punjab. The distribution channel of the company was not very complex. It was primarily through direct selling or intermediate brokers in certain cases. The firm did not have a very well-developed marketing department because of the fixed clientele. Ingot being a commodity product was quoted on the


Semester II Examination Papers

NCDX (National Commodities Exchange) and its rates varied between Rs. 1000-2000 per Ton. Selling price was also dependent on the rates prevailing in Ghaziabad, Mandi Govindgarh, Raipur and Calcutta as well as upon the various competitors' rates prevailing in the market. Competition was faced from Mayura Steels, Anand Steels, Sarkar (spat, Shivani Estates Re-rolling Mills and Sliver Ingots and other national manufacturers. The company used to purchase raw materials in cash and kept at least 10 days of inventory. On the other hand, the company's sale was mostly on credit, with a time limit of 15-30 days. The company had a long list of defaulters — both buyers and sellers. An incident involving a vendor who had defaulted with the supply of raw material was a matter of growing concern for Kartik. A consignment due from Anna Enterprises, Thailand never reached Alloys & Metals Pvt. Ltd., even though an advanced payment of $40,000 had been made at the time of placing the order. The material was supposed to have arrived within 10 days, but in spite of repeated reminders — telephone calls, fax and a-mails — delivery was not received even after a period of two months. He then began to contact the person who had referred the particular supplier, but did not get any satisfactory response from his end. He also contacted the Reserve Bank of India for further course of action but he received no reply from them also. Being a member of the National Steel Association, Mumbai he tried to seek their assistance for dealing with the matter but here also he faced dejection. Neither the defaulters not the increasing competition deterred him from visualizing a better future for the company. Disparity in demand and supply, increase in competition and competitors' diversification strategies, technological advances and the continuing boom in the steel industry further motivated him to expand and diversify. In a period of two years, the company's turnover had reached over Rs. 45 crores. Encouraged by such a tremendous growth, Kartik was planning to install a new Blast furnace to double its production capacity. As an initiative for future development and expansion, they were also looking into the avenues of diversification into manufacturing products like Channels, Angels and Rounds with plans to enter the retailing sector. Now, he was at crossroads thinking whether and how to go about this diversification process.

1. As Kartik, what would have been your strategies to deal with the defaulters?

2. What steps should Kartik adopt before expansion and diversification? Would it be a wise decision to diversify at this stage?

'ND OF SECTION B


• This section consists of Long Questions. • Answer all the questions.• Each question carries 15 marks.

1. Strategic planning involves both, the development of organizational objectives and the

laying down of specifications about how they will he accomplished. In this context,

outline the major steps in the strategic planning process.

2. Implementing strategies effectively is of great importance. The success of a strategy depends on how effectively it is implemented. Elucidate.

ND OF SECTION C


Examination Paper

7. If profit after tax is 'A' ,depreciation be 'B' and interest be `I' then Interest cover ratio is givenby . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. .

8. E-V rule is also calleda. Mean co variance ruleb. Mean variance rulec. Mean deviation ruled. None

9. In case of internally generated funds the opportunity cost to the firm is

a. Zerob. The lending ratec. The borrowing rated. None

10. 'PERT' stands for . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Part Two:

1. Write a note on 'Sinking Fund Payment'.

2. What is 'Earning Theory'?

3. What is 'Capital Asset Pricing Model (CAPM)'?

4. Why `S' curves are essential for estimating the growth over a period?

1. Explain 'Boumol-Quandt Solutions' for capital rationing.

END OF SECTION Al.


• 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 200 to

250 words).

Caselet I

Project partnering at British Airports Authority (BAA)

The construction sector in recent times has not been noted for its high levels of performance. Firms like BAA, who own and operate airports including Heathrow and Gatwick — London's two major airports — rely heavily on their suppliers, including their construction suppliers, for their own performance. Where construction projects are delayed. the financial consequences can be


Examination Paper

disastrous. Furthermore, the disciplines of working on airport premises, including the security issues, play a significant part in the daily working lives of project staff. New firms bringing new staff onto the


Examination Paper

airport sites invariably require time to bring them up to speed with the appropriate ways of working. Particular problems include:

• Security — all personnel with access to airside parts of the airport (i.e. past passport control) must be security vetted and trained. The vetting process takes six weeks, so firms must prepare project staff in advance;

• Deliveries — getting materials into the airport is problematic, due to significant congestion and lack of availability of areas for storage;

• Constant use of terminal buildings by passengers — the closing of areas causes problems with passenger capacity. The firms are required to work with the constraints of passengers using the areas around where the work is being carried out and physical and noise intrusion must be kept to a minimum;

• The commercial activities (shops and restaurants) are the economic lifeblood of the business, with large ground-rents. The objective of projects involving these areas is not simply to complete works on time but as early as possible, so that the areas can start to generate rental incomes.

The traditional approach to managing fit-out projects (changing internal layouts to accommodate different facilities and in particular new retail facilities) was that every contract was different, and would be negotiated with different contractors. These would then employ their own sub-contractors to carry out parts of the work. The approach that has worked far better for all concerned has been through the appointment of lead contractors, with long-term contracts — in most cases 10 years — to be the prime supplier of fit-out services to B.A.A. This particular contract was awarded to MACE. As part of the agreement. BAA has paid for MACE staff to attend training programmes. This has extended further, with help being offered to their suppliers — of both materials and labour — for development. Where particular problems are identified, the supplier can be asked to take part in an improvement programme. Satisfactory completion can result in similar long-term deals (tied to continual improvement) being offered to those suppliers. In some cases the problems — particularly with designs for areas — have been the responsibility of BAA. The mechanisms are now in place to identify these problems and to introduce new practices to avoid them in future.

1) Summarise the arguments for such a policy of partnering with a major supplier such as BAA and MACE have done here.

2) Carry out further research to identify further examples of partnering in projects. How well do they appear to be working?

Caselet 2

The Big Dig

Any project that involves tunnelling is risky. Any project that involved tunneling under a city whilst trying to keep that city fully operational, is very risky. When that city is bottom in the USA, it is in a risk category all of its own. This does not, how — ever, excuse the financial performance of this project, the results of which are exceptional and even make the performance of previous `stars of disaster ' such as the Channel Tunnel, look good. During the 1950s. the Commonwealth of Massachusetts commissioned new roads as part of a national road-building frenzy that took place at that time. The result was a partly elevated freeway that cut the city off from its old harbour and over time coped increasingly less well with the volumes of traffic that were trying to use it. For many years, the project had been the subject of much politicking and had been rejected by a number of national administrations. In 1993, it was given the go-ahead. At this time the budget was $US2.6


Examination Paper

billion, an enormous sum of money for an 8-mile tunnel, but given the technical complexity of the task, this was considered acceptable. Gradually the costs rose, until in 1998. the estimated final cost was 410.4 billion. By mid-2000 this had risen to $13 billion and by mid-2001 to over $15 billion. It was still considered a technical success, but both politically and economically, it was a disaster. In project management terms it is also a disaster — a 500 per cent-plus overrun on budget can only be described as 'talented'. How did such a financial disaster occur? The first is a feature of many large 'political' projects — that the `real cost' would not be politically acceptable. The original budget was deliberately deflated to make the project happen. The second is technical risk — that of the tunnelling process. The ground through which the tunnelling is being carried out is reclaimed land that was originally under the sea. The tunnelling process being used was also new, presenting a degree of technical novelty.

1) How might the project be considered a technical success but an economic, political and project

management disaster?

2) Suggest how the 500 per cent-plus overrun might have come about.

ND OF SECTION B


• This section consists of Long Questions.

• Answer all the questions.• Each question carries 15 marks.• Detailed information should form the part of your answer (Word limit 150 to 200 words).

1. If the project should not get into trouble with the environmental authorities, the local people etc. it is necessary to undertake a detailed environmental impact assessment before hand. Explain how environmental impact assessment is carried out.

2. The funds and personnel requirements of the project change significantly with the stage of its life cycle. What are the stages in the life cycle of project? Describe them.

END OF SECTION C

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Examination Paper Semester I: Organizational Bahaviour

Caselet 2

Rajender Kumar was a production worker at competent Motors Limited (CML) which made components and accessories for the automotive industry. He had worked at CML for almost seven years as a welder, along with fifteen other men in the plant. All had received training in welding both on the job and through company sponsored external programmes. They had friendly relations and got along very well with one another. They played Volleyball in the playground regularly before retiring to the quarters allotted by the company. They work together in the company canteen, cutting Jokes on each other and making fun of everyone who dared to step into their privacy during lunch hour. Most of the fellows had been there for some length of time, except for two men who had joined the ranks only two months back. Rajender was generally considered to be the leader of the group, so it was no surprise that when the foreman of the new was transferred and his job was posted, Rajender applied for the job and got it.There were only four other applicants for the job, two from mechanical section and two from outside, when there was a formal announcement of the appointment on a Friday afternoon, everyone in the group congratulated Rajender. They literally carried him on their shoulders, and bought him snacks and celebrated. On Monday morning, Rajender joined duty as Foreman. It was company practice for all foremen to wear blue jacket and a white shirt. Each man's coat had his name badge sewn onto the left side pocket. The company had given two pairs to Rajender. He was proud to wear the coat to work on Monday. People who saw him from a distance went up to him and admired the new blue coat. There was a lot of kidding around calling Rajender as 'Hero', 'Raja Babu' and 'Officer' etc. One of the guys went back to his locker and returned with a long brush and acted as though he were removing dust particles on the new coat. After about five minutes of horseplay, all the men went back to work. Rajender went to his office to familiarize himself with the new job and environment. At noon, all the men broke for Lunch and went to the canteen to eat and take a break as usual. Rajender was 'busy when they left but followed after them a few minutes later. He bought the food coupon, took the snacks and tea and turned to face the open canteen. On the left-side corner of the room was his old work group; on the right-hand side of the canteen sat the other entire foreman in the plant—all in their smart blue coats.

At that point of time, silence descended on the canteen. Both groups looked at Rajender anxiously, waiting to see which group he would choose to eat with.

Questions

1. Whom do you think Rajender will eat with? Why?

2. If you were one of the other foremen, what could you do to make Rajinder's transition easier?


I END OF SECTION B 1


Section B

Documents

Transcript of Section B