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Examination Paper Semester I: Financial Management

IIBM Institute of Business Management

IIBM Institute of Business Management

Semester-1 Examination Paper MM.100

Financial Management

Section A: Objective Type (30 marks)

· This section consists of multiple choice & Short Notes.

· Answer all the questions.

· Part One carries 1 mark each & Part two carries 5 marks each.

Part one:

Multiple choices:

1. The approach focused mainly on the financial problems of corporate enterprise

a. Ignored non-corporate enterprise

b. Ignored working capital financing

c. External approach

d. Ignored routine problems

2. These are those shares, which can be redeemed or repaid to the holders after a lapse of the

stipulated period

a. Cumulative preference shares

b. Non-cumulative preference shares

c. Redeemable preference shares

d. Perpetual shares

3. This type of risk arise from changes in environmental regulations, zoning requirements, fees,

licenses and most frequently taxes

a. Political risk

b. Domestic risk

c. International risk

d. Industry risk

4. It is the cost of capital that is expected to raise funds to finance a capital budget or investment

proposal

a. Future cost

b. Specific cost

c. Spot cost

d. Book cost

5. This concept is helpful in formulating a sound & economical capital structure for a firm

a. Financial performance appraisal

b. Investment evaluation

c. Designing optimal corporate capital structure

d. None

Examination Paper Semester I: Financial Management

IIBM Institute of Business Management

6. It is the minimum required rate of return needed to justify the use of capital

a. From investors

b. Firms point

c. Capital expenditure point

d. Cost of capital

7. It arises when there is a conflict of interest among owners, debenture holders and the management

a. Seasonal variation

b. Degree of competition

c. Industry life cycle

d. Agency costs

8. Some guidelines on shares & debentures issued by the government that are very important for the

constitution of the capital structure are

a. Legal requirement

b. Purpose of finance

c. Period of finance

d. Requirement of investors

9. It is that portion of an investments total risk that results from change in the financial integrity of

the investment

a. Bull- bear market risk

b. Default risk

c. International risk

d. Liquidity risk

10. _____________ measure the systematic risk of a security that cannot be avoided through

diversification

a. Beta

b. Gamma

c. Probability distribution

d. Alpha

Part Two:

1. What is Annuity kind of cash flow?

2. What do understand by Portfolio risk?

3. What do you understand by ‘Loan Amortization’?

4. What is the Difference between NPV and IRR?

END OF SECTION A

Examination Paper Semester I: Financial Management

IIBM Institute of Business Management

Section B: Case lets (40 marks)

· This section consists of Case lets.

· Answer all the questions.

· Each Case let carries 20 marks.

· Detailed information should form the part of your answer (Word limit 150 to 200 words).

Case let 1

This case provides the opportunity to match financing alternatives with the needs of different companies.

It allows the reader to demonstrate a familiarity with different types of securities. George Thomas was

finishing some weekend reports on a Friday afternoon in the downtown office of Wishart and Associates,

an investment-banking firm. Meenda, a partner in the firm, had not been in the New York office since

Monday. He was on a trip through Pennsylvania, visiting five potential clients, who were considering the

flotation of securities with the assistance of Wishart and Associates. Meenda had called the office on

Wednesday and told George's secretary that he would cable his recommendations on Friday afternoon.

George was waiting for the cable. George knew that Meenda would be recommending different types of

securities for each of the five clients to meet their individual needs. He also knew Meenda wanted him to

call each of the clients to consider the recommendations over the weekend. George was prepared to make

these calls as soon as the cable arrived. At 4:00 p.m. a secretary handed George the following telegram.

George Thomas, Wishart and Associates STOP Taking advantage of offer to go skiing in Poconos STOP

Recommendations as follows: (1) common stock, (2) preferred stock, (3) debt with warrants, (4)

convertible bonds, (5) callable debentures STOP. See you Wednesday STOP Meenda. As George picked

up the phone to make the first call, he suddenly realized that the potential clients were not matched with

the investment alternatives. In Meenda's office, George found folders on each of the five firms seeking

financing. In the front of each folder were some handwritten notes that Meenda had made on Monday

before he left. George read each of the notes in turn. APT, Inc needs $8 million now and $4 million in

four years. Packaging firm with high growth rate in tri-state area. Common stock trades over the counter.

Stock is depressed but should rise in year to 18 months. Willing to accept any type of security. Good

management. Expects moderate growth. New machinery should increase profits substantially. Recently

retired $7 million in debt. Has virtually no debt remaining except short-term obligations.

Sandford Enterprises

Needs $16 million. Crusty management. Stock price depressed but expected to improve. Excellent growth

and profits forecast in the next two year. Low debt-equity ratio, as the firm has record of retiring debt

prior to maturity. Retains bulk of earnings and pays low dividends. Management not interested in

surrendering voting control to outsiders. Money to be used to finance machinery for plumbing supplies.

Sharma Brothers., Inc.

Needs $20 million to expand cabinet and woodworking business. Started as family business but now has

1200 employees, $50 million in sales, and is traded over the counter. Seeks additional shareholder but not

willing to stock at discount. Cannot raise more than $12 million with straight debt. Fair management.

Good growth prospects. Very good earnings. Should spark investor's interest. Banks could be willing to

lend money for long-term needs.

Sacheetee Energy Systems

The firm is well respected by liberal investing community near Boston area. Sound growth company.

Stock selling for $16 per share. Management would like to sell common stock at $21 or more willing to

Examination Paper Semester I: Financial Management

IIBM Institute of Business Management

use debt to raise $ 28 million, but this is second choice. Financing gimmicks and chance to turn quick

profit on investment would appeal to those likely to invest in this company.

Ranbaxy Industry

Needs $25 million. Manufactures boat canvas covers and needs funds to expand operations. Needs longterm

money. Closely held ownership reluctant surrender control. Cannot issue debt without permission of

bondholders and First National Bank of Philadelphia. Relatively low debt-equity ratio. Relatively high

profits. Good prospects for growth Strong management with minor weaknesses in sales and promotion

areas. As George was looking over the folders, Meenda's secretary entered the office. George said, "Did

Meenda leave any other material here on Monday except for these notes?” She responded, "No, that's it,

but I think those notes should be useful. Meenda called early this morning and said that he verified the

facts in the folders. He also said that he learned nothing new on the trip and he sort of indicated that, he

had wasted his week, except of course, that he was invited to go skiing at the company lodge up there".

George pondered over the situation. He could always wait until next week, when he could be sure that he

had the right recommendations and some of the considerations that outlined each client's needs and

situation. If he could determine which firm matched each recommendation, he could still call the firms by

6:00 P.M. and meet the original deadline. George decided to return to his office and match each firm with

the appropriate financing.

Question:

1. Which type of financing is appropriate to each firm?

2. What types of securities must be issued by a firm which is on the growing stage in order to meet

the financial requirements?

Case let 2

This case has been framed in order to test the skills in evaluating a credit request and reaching a correct

decision. Perluence International is large manufacturer of petroleum and rubber-based products used in a

variety of commercial applications in the fields of transportation, electronics, and heavy manufacturing.

In the northwestern United States, many of the Perluence products are marketed by a wholly-owned

subsidiary, Bajaj Electronics Company. Operating from a headquarters and warehouse facility in San

Antonio, Strand Electronics has 950 employees and handles a volume of $85 million in sales annually.

About $6 million of the sales represents items manufactured by Perluence. Gupta is the credit manager at

Bajaj electronics. He supervises five employees who handle credit application and collections on 4,600

accounts. The accounts range in size from $120 to $85,000. The firm sells on varied terms, with 2/10, net

30 mostly. Sales fluctuate seasonally and the average collection period tends to run 40 days. Bad-debt

losses are less than 0.6 per cent of sales. Gupta is evaluating a credit application from Booth Plastics, Inc.,

a wholesale supply dealer serving the oil industry. The company was founded in 1977 by Neck A. Booth

and has grown steadily since that time. Bajaj Electronics is not selling any products to Booth Plastics and

had no previous contact with Neck Booth. Bajaj Electronics purchased goods from Perluence

International under the same terms and conditions as Perluence used when it sold to independent

customers. Although Bajaj Electronics generally followed Perluence in setting its prices, the subsidiary

operated independently and could adjust price levels to meet its own marketing strategies. The Perluence's

cost-accounting department estimated a 24 per cent markup as the average for items sold to Pucca

Electronics. Bajaj Electronics, in turn, resold the items to yield a 17 per cent markup. It appeared that

these percentages would hold on any sales to Booth Plastics. Bajaj Electronics incurred out-of pocket

expenses that were not considered in calculating the 17 per cent markup on its items. For example, the

contact with Booth Plastics had been made by James, the salesman who handled the Glaveston area.

Examination Paper Semester I: Financial Management

IIBM Institute of Business Management

James would receive a 3 per cent commission on all sales made Booth Plastics, a commission that would

be paid whether or not the receivable was collected. James would, of course, be willing to assist in

collecting any accounts that he had sold. In addition to the sales commission, the company would incur

variable costs as a result of handling the merchandise for the new account. As a general guideline,

warehousing and other administrative variable costs would run 3 per cent sales. Gupta Holmstead

approached all credit decisions in basically the same manner. First of all, he considered the potential

profit from the account. James had estimated first-year sales to Booth Plastics of $65,000. Assuming that

Neck Booth took the, 3 per cent discount. Bajaj Electronics would realize a 17 per cent markup on these

sales since the average markup was calculated on the basis of the customer taking the discount. If Neck

Booth did not take the discount, the markup would be slightly higher, as would the cost of financing the

receivable for the additional period of time. In addition to the potential profit from the account, Gupta was

concerned about his company's exposure. He knew that weak customers could become bad debts at any

time and therefore, required a vigorous collection effort whenever their accounts were overdue. His

department probably spent three times as much money and effort managing a marginal account as

compared to a strong account. He also figured that overdue and uncollected funds had to be financed by

Bajaj Electronics at a rate of 18 per cent. All in all, slow -paying or marginal accounts were very costly to

Bajaj Electronics. With these considerations in mind, Gupta began to review the credit application for

Booth Plastics.

Question:

1. How would you judge the potential profit of Bajaj Electronics on the first year of sales to Booth

Plastics and give your views to increase the profit.

2. Suggestion regarding Credit limit. Should it be approved or not, what should be the amount of

credit limit that electronics give to Booth Plastics.

Section C: Applied Theory (30 marks)

· This section consists of applied theory questions.

· Answer all the questions.

· Each question carries 15 marks each.

· Detailed information should form the part of your answer (Word limit 200-250 words).

1. Honey Well Company is contemplating to liberalize its collection effort. Its present sales are Rs.

10 lakh, its average collection period is 30 days, its expected variable cost to sales ratio is 85 per

cent and its bad debt ratio is 5 per cent. The Company’s cost of capital is 10 per cent and tax are

is 40 per cent. He proposed liberalization in collection effort increase sales to Rs. 12 lakh

increases average collection period by 15 days, and increases the bad debt ratio to 7 percent.

Determine the change in net profit.

2. Explain the concept of working capital. What are the factors which influence the working capital?

S-1-91110

END OF SECTION B

END OF SECTION C

Examination Paper Semester I: Human Resource Management

IIBM Institute of Business Management

IIBM Institute of Business Management

Semester-1 Examination Paper MM.100

Human Resource Management

Section A: Objective Type (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. It is a cultural attitude marked by the tendency to regard one’s own culture as superior to others

a. Geocentrism

b. Polycentrism

c. Ethnocentrism

d. Egocentrism

2. It is the systemic study of job requirements & those factors that influence the performance of

those job requirements

a. Job analysis

b. Job rotation

c. Job circulation

d. Job description

3. This Act provides an assistance for minimum statutory wages for scheduled employment

a. Payment of Wages Act, 1936

b. Minimum Wages Act, 1948

c. Factories Act, 1948

d. Payment of Gratuity act, 1972

4. __________ is the actual posting of an employee to a specific job

a. Induction

b. Placement

c. Attrition

d. None

5. Broadening an individual’s knowledge, skills & abilities for future responsibilities is known as

a. Training

b. Development

c. Education

d. Mentoring

Examination Paper Semester I: Human Resource Management

IIBM Institute of Business Management

6. Change that is designed and implemented in an orderly and timely fashion in anticipation of

future events

a. Planned change

b. Technology change

c. Structural change

d. None

7. It is a process for setting goals and monitoring progress towards achieving those goals

a. Performance appraisal

b. Performance gap

c. Performance factor

d. Performance management system

8. A method which requires the rates to provide a subjective performance evaluation along a scale

from low to high

a. Assessment centre

b. Checklist

c. Rating scale

d. Monitoring

9. It is the sum of knowledge, skills, attitudes, commitment, values and the liking of the people in an

organization

a. Human resources

b. Personal management

c. Human resource management

d. Productivity

10. A learning exercise representing a real-life situation where trainees compete with each other to

achieve specific objectives

a. Executive development

b. Management game

c. Programmed learning

d. Understudy

Part Two:

1. Explain the importance of Career Planning in industry.

2. Write the features of HRM.

3. Briefly explain the concept of Performance Appraisal.

4. Explain On-Job and Off Job Training.

END OF SECTION A

Examination Paper Semester I: Human Resource Management

IIBM Institute of Business Management

Section B: Case lets (40 marks)

· This section consists of Case lets.

· Answer all the questions.

· Each Case let carries 20 marks.

· Detailed information should form the part of your answer (Word limit 150-200 words).

Case let 1

Trust them with knee-jerk reactions," said Vikram Koshy, CEO, Delta Software India, as he looked at the

quarterly report of Top Line Securities, a well-known equity research firm. The firm had announced a

downgrade of Delta, a company listed both on Indian bourses and the NASDAQ. The reason? "One out

of every six development engineers in the company is likely to be benched during the remaining part of

the year." Three analysts from Top Line had spent some time at Delta three weeks ago. Koshy and his

team had explained how benching was no different from the problems of excess inventory, idle time, and

surplus capacity that firms in the manufacturing sector face on a regular basis, "Delta has witnessed a

scorching pace of 30 per cent growth during the last five years in a row," Koshy had said, "What is

happening is a corrective phase." But, evidently, the analysts were unconvinced.

Why Bench?

Clients suddenly decide to cut back on IT spends Project mix gets skewed, affecting work allocation

Employee productivity is set to fall, creating slack working conditions. High degree of job specialization

leads to redundancy

What are the options?

Quickly cut costs in areas which are non-core look for learning’s from the manufacturing sector Focus on

alternative markets like Europe and Japan Move into products, where margins are better. Of course, the

Top Line report went on to cite several other "signals," as it said: the rate of annual hike in salaries at

Delta would come down to 5 per cent (from between 20 and 30 per cent last year); the entry-level intake

of engineers from campuses in June 2001, would decline to 5 per cent (unlike the traditional 30 per cent

addition to manpower every year); and earnings for the next two years could dip by between 10 and 12

per cent. And the loftiest of them all: "The meltdown at Nasdaq is unlikely to reverse in the near future."

"Some of the signals are no doubt valid. And ominous," said Koshy, addressing his A-Team, which had

assembled for the routine morning meeting. "But, clearly, everyone is reading too much into this business

of benching. In fact, benching is one of the many options that our principals in the US have been pursuing

as part of cutting costs right since September, 2000. They are also expanding the share of off-shore jobs.

Five of our principals have confirmed that they would outsource more from Delta in India-which is likely

to hike their billings by about 30 per cent. At one level, this is an opportunity for us. At another, of

course, I am not sure if we should be jubilant, because they have asked for a 25-30 per cent cut in billing

rates. Our margins will take a hit, unless we cut costs and improve productivity." "Productivity is clearly a

matter of priority now," said Vivek Varadan, Vice-President (Operations). "If you consider benching as a

non-earning mode, we do have large patches of it at Delta. As you are aware, it has not been easy to

secure 70 per cent utilization of our manpower, even in normal times. I think we need to look at why we

have 30 per cent bench before examining how to turn it into an asset." "There are several reasons,"

remarked Achyut Patwardhan, Vice-President (HR). "And a lot of it has to do with the nature of our

business, which is more project-driven than product-driven. When you are managing a number of

overseas and domestic projects simultaneously, as we do at Delta, people tend to go on the bench. They

wait, as they complete one project, and are assigned the next. There are problems of coordination between

projects, related to the logistics of moving people and resources from one customer to another. In fact, I

am fine-tuning our monthly manpower utilization report to provide a breakup of bench costs into

Examination Paper Semester I: Human Resource Management

IIBM Institute of Business Management

specifics-leave period, training programmes, travel time, buffers, acclimatization period et al." "It would

be worthwhile following the business model used by US principal Techno Inc," said Aveek Mohanty,

Director (Finance). "The company has a pipeline of projects, but it does not manage project by project.

What it does is to slice each project into what it calls 'activities'. For example, communication

networking; user interface development; scheduling of processes are activities common to all projects.

People move from one project to another. It is somewhat like the Activity Based Costing. It throws up the

bench time straightaway, which helps us control costs and revenue better." "I also think we should reduce

our dependence on projects and move into products," said Praveen Kumar, Director (Marketing). "That is

where the opportunity for brand building lies. In fact, now is the time to get our technology guys involved

in marketing. Multiskilling helps reduce the bench time." "Benching has an analogy in the manufacturing

sector," said Girish Shahane, Vice-President (Services). "We could look for learning's there. Many firms

have adopted Just-In-Time (JIT) inventory as part of eliminating idle time. It would be worthwhile

exploring the possibility of JIT. But the real learning lies in standardization of work. It is linked to what

Mohanty said about managing by activities." "At a broader level, I see several other opportunities," said

Koshy, "We can fill in the space vacated by US firms and move up the value chain. But before we do so,

Delta should consolidate its position as the premier outsourcing centre. Since there are only two ways in

which we can generate revenue-sell expertise or sell products-we should move towards a mix of both.

Tie-ups with global majors will help. Now is the time to look beyond the US and strike alliances with

firms in Europe- and also Japan-as part of developing new products for global markets."

Questions

1. Should benching be a matter of concern at Delta?

2. What are the risks involved in moving from a project-centric mode to a mix of projects and

products?

Case let 2

The contexts in which human resources are managed in today's organizations are constantly, changing.

No longer do firms utilize one set of manufacturing processes, employ a homogeneous group of loyal

employees for long periods of time or develop one set way of structuring how work is done and

supervisory responsibility is assigned. Continuous changes in who organizations employ and what these

employees do require HR practices and systems that are well conceived and effectively implemented to

ensure high performance and continued success.

1. Automated technologies nowadays require more technically trained employees possessing multifarious

skills to repair, adjust or improve existing processes. The firms can't expect these employees (Gen X

employees, possessing superior technical knowledge and skills, whose attitudes and perceptions toward

work are significantly different from those of their predecessor organizations: like greater self control,

less interest in job security; no expectations of long term employment; greater participation urge in work

activities, demanding opportunities for personal growth and creativity) to stay on without attractive

compensation packages and novel reward schemes.

2. Technology driven companies are led by project teams, possessing diverse skills, experience and

expertise. Flexible and dynamic organizational structures are needed to take care of the expectations of

managers, technicians and analysts who combine their skills, expertise and experience to meet changing

customer needs and competitive pressures.

3. Cost cutting efforts have led to the decimation of unwanted layers in organizational hierarchy in recent

times. This, in turn, has brought in the problem of managing plateau employees whose careers seem to

have been hit by the delivering process. Organizations are, therefore, made to find alternative career paths

for such employees.

Examination Paper Semester I: Human Resource Management

IIBM Institute of Business Management

4. Both young and old workers, these days, have values and attitudes that stress less loyalty to the

company and more loyalty to oneself and one's career than those shown by employees in the past,

Organizations, therefore, have to devise appropriate HR policies and strategies so as to prevent the flight

of talented employees

Question

1. Discuss that technological breakthrough has brought a radical changes in HRM.

Section C: Applied Theory (30 marks)

· This section consists of applied theory Questions.

· Answer all the questions.

· Each question carries 15 marks.

· Detailed information should form the part of your answer (Word limit 150-200 words).

1. Several types of interviews are commonly used depending on the nature & importance of the

position to be filled within an organization. Explain the different types of Interviews.

2. Explain the legal provisions regarding safety of workers.

S-1-191110

END OF SECTION B

END OF SECTION C

Examination Paper Semester I: Managerial Economics

IIBM Institute of Business Management

IIBM Institute of Business Management

Semester-1 Examination Paper MM.100

Managerial Economics

Section A: Objective Type (30 marks)

· This section consists of multiple choices & 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. It is a study of economy as a whole

a. Macroeconomics

b. Microeconomics

c. Recession

d. Inflation

2. A comprehensive formulation which specifies the factors that influence the demand for the

product

a. Market demand

b. Demand schedule

c. Demand function

d. Income effect

3. It is computed when the data is discrete and therefore incremental changes is measurable

a. Substitution effect

b. Arc elasticity

c. Point elasticity

d. Derived demand

4. Goods & services used for final consumption is called

a. Demand

b. Consumer goods

c. Producer goods

d. Perishable goods

5. The curve at which satisfaction is equal at each point

a. Marginal utility

b. Cardinal measure of utility

c. The Indifference Curve

d. Budget line

Examination Paper Semester I: Managerial Economics

IIBM Institute of Business Management

6. Costs that are reasonably expected to be incurred in some future period or periods

a. Future costs

b. Past costs

c. Incremental costs

d. Sunk costs

7. Condition when the firm has no tendency either to increase or to contract its output

a. Monopoly

b. Profit

c. Equilibrium

d. Market

8. Total market value of all finished goods & services produced in a year by a country’s residents is

known as

a. National income

b. Gross national product

c. Gross domestic product

d. Real GDP

9. The sum of net value of goods & services produced at market prices

a. Government expenditure

b. Product approach

c. Income approach

d. Expenditure approach

10. The market value of all the final goods & services made within the borders of a nation in an year

a. Globalization

b. Subsidies

c. GDP

d. GNP

Part Two:

1. Define ‘Arc Elasticity’.

2. Explain the law of ‘Diminishing marginal returns’.

3. What is ‘Prisoner’s Dilemma’, of non cooperative game?

4. What is ‘Third degree Discrimation’?

END OF SECTION A

Examination Paper Semester I: Managerial Economics

IIBM Institute of Business Management

Section B: Case lets (40 marks)

· This section consists of Case lets.

· Answer all the questions.

· Each Case let carries 20 marks.

· Detailed information should form the part of your answer (Word limit 150 to 200 words).

Case let 1

The war on drugs is an expensive battle, as a great deal of resources go into catching those who buy or

sell illegal drugs on the black market, prosecuting them in court, and housing them in jail. These costs

seem particularly exorbitant when dealing with the drug marijuana, as it is widely used, and is likely no

more harmful than currently legal drugs such as tobacco and alcohol. There's another cost to the war on

drugs, however, which is the revenue lost by governments who cannot collect taxes on illegal drugs. In a

recent study for the Fraser Institute, Canada, Economist Stephen T. Easton attempted to calculate how

much tax revenue the government of the country could gain by legalizing marijuana. The study estimates

that the average price of 0.5 grams (a unit) of marijuana sold for $8.60 on the street, while its cost of

production was only $1.70. In a free market, a $6.90 profit for a unit of marijuana would not last for long.

Entrepreneurs noticing the great profits to be made in the marijuana market would start their own grow

operations, increasing the supply of marijuana on the street, which would cause the street price of the

drug to fall to a level much closer to the cost of production. Of course, this doesn't happen because the

product is illegal; the prospect of jail time deters many entrepreneurs and the occasional drug bust ensures

that the supply stays relatively low. We can consider much of this $6.90 per unit of marijuana profit a

risk-premium for participating in the underground economy. Unfortunately, this risk premium is making a

lot of criminals, many of whom have ties to organized crime, very wealthy. Stephen T. Easton argues that

if marijuana was legalized, we could transfer these excess profits caused by the risk premium from these

grow operations to the government: If we substitute a tax on marijuana cigarettes equal to the difference

between the local production cost and the street price people currently pay – that is, transfer the revenue

from the current producers and marketers (many of whom work with organized crime) to the government,

leaving all other marketing and transportation issues aside we would have revenue of (say) $7 per [unit].

If you could collect on every cigarette and ignore the transportation, marketing, and advertising costs, this

comes to over $2 billion on Canadian sales and substantially more from an export tax, and you forego the

costs of enforcement and deploy your policing assets elsewhere. One interesting thing to note from such a

scheme is that the street price of marijuana stays exactly the same, so the quantity demanded should

remain the same as the price is unchanged. However, it's quite likely that the demand for marijuana would

change from legalization. We saw that there was a risk in selling marijuana, but since drug laws often

target both the buyer and the seller, there is also a risk (albeit smaller) to the consumer interested in

buying marijuana. Legalization would eliminate this risk, causing the demand to rise. This is a mixed bag

from a public policy standpoint: Increased marijuana use can have ill effects on the health of the

population but the increased sales bring in more revenue for the government. However, if legalized,

governments can control how much marijuana is consumed by increasing or decreasing the taxes on the

product. There is a limit to this, however, as setting taxes too high will cause marijuana growers to sell on

the black market to avoid excessive taxation. When considering legalizing marijuana, there are many

economic, health, and social issues we must analyze. One economic study will not be the basis of

Canada's public policy decisions, but Easton's research does conclusively show that there are economic

benefits in the legalization of marijuana. With governments scrambling to find new sources of revenue to

pay for important social objectives such as health care and education expect to see the idea raised in

Parliament sooner rather than later.

Examination Paper Semester I: Managerial Economics

IIBM Institute of Business Management

Questions

1. Plot the demand schedule and draw the demand curve for the data given for Marijuana in the case

above.

2. On the basis of the analysis of the case above, what is your opinion about legalizing marijuana in

Canada?

Case let 2

Companies that attend to productivity and growth simultaneously manage cost reductions very differently

from companies that focus on cost cutting alone and they drive growth very differently from companies

that are obsessed with growth alone. It is the ability to cook sweet and sour that under grids the

remarkable performance of companies likes Intel, GE, ABB and Canon. In the slow growth electrotechnical

business, ABB has doubled its revenues from $17 billion to $35 billion, largely by exploiting

new opportunities in emerging markets. For example, it has built up a 46,000 employee organization in

the Asia Pacific region, almost from scratch. But it has also reduced employment in North America and

Western Europe by 54,000 people. It is the hard squeeze in the north and the west that generated the

resources to support ABB's massive investments in the east and the south. Everyone knows about the

staggering ambition of the Ambanis, which has fuelled Reliance's evolution into the largest private

company in India. Reliance has built its spectacular rise on a similar ability to cook sweet and sour. What

people may not be equally familiar with is the relentless focus on cost reduction and productivity growth

that pervades the company. Reliance's employee cost is 4 per cent of revenues, against 15-20 per cent of

its competitors. Its sales and distribution cost, at 3 per cent of revenues, is about a third of global

standards. It has continuously pushed down its cost for energy and utilities to 3 per cent of revenues,

largely through 100 per cent captive power generation that costs the company 4.5 cents per kilowatt-hour;

well below Indian utility costs, and about 30 per cent lower than the global average. Similarly, its capital

cost is 25-30 per cent lower than its international peers due to its legendary speed in plant commissioning

and its relentless focus on reducing the weighted average cost of capital (WACC) that, at 13 per cent, is

the lowest of any major Indian firm.

A Bias for Growth

Comparing major Indian companies in key industries with their global competitors shows that Indian

companies are running a major risk. They suffer from a profound bias for growth. There is nothing wrong

with this bias, as Reliance has shown. The problem is most look more like Essar than Reliance. While

they love the sweet of growth, they are unwilling to face the sour of productivity improvement.

Nowhere is this more amply borne out than in the consumer goods industry where the Indian giant

Hindustan Lever has consolidated to grow at over 50 per cent while its labour productivity declined by

around 6 per cent per annum in the same period. Its strongest competitor, Nirma, also grew at over 25 per

cent per annum in revenues but maintained its labour productivity relatively stable. Unfortunately,

however, its return on capital employed (ROCE) suffered by over 17 per cent. In contrast, Coca Cola,

worldwide, grew at around 7 per cent, improved its labour productivity by 20 per cent and its return on

capital employed by 6.7 per cent. The story is very similar in the information technology sector where

Infosys, NIIT and HCL achieve rates of growth of over 50 per cent which compares favorably with the

world's best companies that grew at around 30 per cent between 1994-95. NIIT, for example, strongly

believes that growth is an impetus in itself. Its focus on growth has helped it double revenues every two

years. Sustaining profitability in the face of such expansion is an extremely challenging task. For now,

this is a challenge Indian InfoTech companies seem to be losing. The ROCE for three Indian majors fell

by 7 per cent annually over 1994-96. At the same time IBM Microsoft and SAP managed to improve this

ratio by 17 per cent. There are some exceptions, however. The cement industry, which has focused on

productivity rather than on growth, has done very well in this dimension when compared to their global

Examination Paper Semester I: Managerial Economics

IIBM Institute of Business Management

counterparts. While Mexico's Cemex has grown about three times fast as India's ACC, Indian cement

companies have consistently delivered better results, not only on absolute profitability ratios, but also on

absolute profitability growth. They show a growth of 24 per cent in return on capital employed while

international players show only 8.4 per cent. Labour productivity, which actually fell for most industries

over 1994-96, has improved at 2.5 per cent per annum for cement.

The engineering industry also matches up to the performance standards of the best in the world.

Companies like Cummins India have always pushed for growth as is evidenced by its 27 per cent rate of

growth, but not at the cost of present and future profitability. The company shows a healthy excess of

almost 30 per cent over WACC, displaying great future promise. BHEL, the public sector giant, has seen

similar success and the share price rose by 25 per cent despite an indecisive sensex. The only note of

caution: Indian engineering companies have not been able to improve labour productivity over time,

while international engineering companies like ABB, Siemens and Cummins Engines have achieved

about 13.5 per cent growth in labour productivity, on an average, in the same period. The pharmaceuticals

industry is where the problems seem to be the worst, with growth emphasized at the cost of all other

performance. They have been growing at over 22 per cent, while their ROCE fell at 15.9 per cent per

annum and labour productivity at 7 per cent. Compare this with some of the best pharmaceutical

companies of the world – Glaxo Wellcome, SmithKline Beecham and Pfizer –who have consistently

achieved growth of 15-20 per cent, while improving returns on capital employed at about

25 per cent and labour productivity at 8 per cent. Ranbaxy is not an exception; the bias for growth at the

cost of labour and capital productivity is also manifest in the performance of other Indian Pharma

companies. What makes this even worse is the Indian companies barely manage to cover their cost of

capital, while their competitors worldwide such as Glaxo and Pfizer earn an average ROCE of 65 per

cent. In the Indian textile industry, Arvind Mills was once the shining star. Like Reliance, it had learnt to

cook sweet and sour. Between 1994 and 1996, it grew at an average of 30 per cent per annum to become

the world's largest denim producer. At the same time, it also operated a tight ship, improving labour

productivity by 20 per cent. Despite the excellent performance in the past, there are warning signals for

Arvind's future. The excess over the WACC is only 1.5 per cent, implying it barely manages to satisfy its

investor’s expectations of return and does not really have a surplus to re-invest in the business.

Apparently, investors also think so, for Arvind's stock price has been falling since Q4 1994 despite such

excellent results and, at the end of the first quarter of 1998, is less than Rs 70 compared to Rs 170 at the

end of 1994. Unfortunately, Arvind's deteriorating financial returns over the last few years is also typical

of the Indian textile industry. The top three Indian companies actually showed a decline in their return

ratios in contrast to the international majors. Nike, VF Corp and Coats Viyella showed a growth in their

returns on capital employed of 6.2 per cent, while the ROCE of Grasim and Coats Viyella (India) fell by

almost 2 per cent per annum. Even in absolute returns on assets or on capital employed, Indian companies

fare a lot worse. While Indian textile companies just about cover their WACC, their international rivals

earn about 8 per cent in excess of their cost of capital.

Questions

1. Is Indian companies running a risk by not giving attention to cost cutting?

2. Discuss whether Indian Consumer goods industry is growing at the cost of future profitability.

3. Discuss capital and labour productivity in engineering context and pharmaceutical industries in

India.

4. Is textile industry in India performing better than its global competitors?

END OF SECTION B

Examination Paper Semester I: Managerial Economics

IIBM Institute of Business Management

Section C: Applied Theory (30 marks)

· This section consists of Applied Theory Questions.

· Answer all the questions.

· Each question carries 15 marks.

· Detailed information should form the part of your answer (Word limit 200 to 250 words).

1. Free trade promotes a mutually profitable regional division of labour, greatly enhances the

potential real national product of all nations and makes possible higher standards of living all

over the globe.” Critically explain and examine the statement.

2. What role does a decision tree play in business decision-making? Illustrate the choice between

two investment projects with the help of a decision tree assuming hypothetical conditions about

the states of nature, probability distribution, and corresponding pay-offs.

S-1-91110

END OF SECTION C

Examination Paper Semester I: Marketing Management

IIBM Institute of Business Management

IIBM Institute of Business Management

Semester-1 Examination Paper MM.100

Marketing Management

Section A: Objective Type (30 marks)

· This section consists of Multiple Choices & Short Notes type Questions.

· Answer all the Questions.

· Part one carries 1 mark each & Part Two carries 4 marks each.

Part one:

Multiple choices:

1. It is a concept where goods are produced without taking into consideration the choices or tastes of

customers

a. Marketing mix

b. Production concept

c. Marketing concept

d. Relationship marketing

2. It involves individuals who buys products or services for personal use and not for manufacture or

resale

a. Environment analysis

b. Macro environment

c. Micro environment

d. Consumer

3. It is the groups of people who interact formally or informally influencing each other’s attitudes&

behavior

a. Consumer behavior

b. Culture

c. Reference groups

d. Primary groups

4. The concept of the product that passes through various changes in its total life known as

a. Product life cycle

b. Line stretching

c. Consumer adoption

d. Product

5. It refers to unique set of brand associations that brand strategist aspires to create or maintain

a. Branding

b. Packaging

c. Brand identity

d. Brand image

Examination Paper Semester I: Marketing Management

IIBM Institute of Business Management

6. It involves a pricing strategy that charges customers different prices for the same product or

service

a. Promotional pricing

b. Price discrimination

c. Non price competition

d. None

7. It refers to an arrangement where another company through its own marketing channel sells the

products of one producers

a. End customer

b. Wholesaler

c. Retailing

d. Strategic channel alliance

8. It involves facility consisting of the means & equipments necessary for the movement of

passengers of goods

a. Logistics

b. Warehousing

c. Transportation

d. None

9. The advertising which is used to inform consumers about a new product or feature & to build

primary demands is known as

a. Advertising

b. Informative advertising

c. Persuasive advertising

d. Advertising strategy

10. An art that predicts the likelihood of economic activity on the basis of certain assumptions

a. Compensation

b. Sales forecasting

c. Sales budgeting

d. Selling policy

Part Two:

1. Write a note on importance of consumer behavior for a business firm?

2. Define the term ‘Price’.

3. Distinguish between Marketing Concept and Selling Concept?

4. What are the new trends in advertisement?

5. Briefly explain the following :

a) Socio –culture environment

b) Marketing environment interface.

END OF SECTION A

Examination Paper Semester I: Marketing Management

IIBM Institute of Business Management

Section B: Case lets (40 marks)

· This section consists of Case lets.

· Answer all the questions.

· Each Case let carries 20 marks.

· Detailed information should form the part of your answer (Word limit 150 to 200 words).

Case let 1

Ask the company top brass what ‘almost there’ means. The answer: a premier Indian retail company that

has come to be known as a specialty chain of apparel and accessories. With 52 product categories under

one roof, Shoppers’ Stop has a line-up of 350 brands. Set up and headed by former Corona employee, B.

S. Nagesh, Shoppers’ Stop is India’s answer to Selfridges and Printemps. As it proudly announces, ‘We

don’t sell, we help you buy.’ Back in 1991, there was the question of what to retail. Should it be a

supermarket or a departmental store? Even an electronics store was considered. Finally, common sense

and understanding won out. The safest bet, for the all-male team was to retail men’s wear. They knew the

male psyche and felt that they had discerning taste in men’s clothing. The concept would be that of a

lifestyle store in a luxurious space, which would make for a great shopping experience. The first

Shoppers’ Stop store took shape in Andheri, Mumbai, in October 1991, with an investment of nearly Rs.

20 lakh. The original concept that formed the basis of a successful marketing campaign for seven years is

here to stay. And the result is an annual turnover of Rs. 160 crores and five stores, nine years later.

Everything went right from the beginning, except for one strange happening. More than 60 per cent of the

customers who walked into Shoppers’ Stop in Mumbai were women. This gave rise to ideas. Soon, the

store set up its women’s section. Later, it expanded to include children’s wear and then, household

accessories. The second store in Bangalore came in 1995. The store at Hyderabad followed in 1998 with

the largest area of 60,000 sq. ft. The New Delhi and Jaipur stores were inaugurated in 1999. All this

while, the product range kept increasing to suit customer needs. The most recent experiment was home

furnishings. Secure in the knowledge that organised retailing in global brands was still in its infancy in

India, Shoppers’ Stop laid the ground rules which the competition followed. The biggest advantage for

Shoppers’ Stop is that it knows how the Indian consumer thinks and feels while shopping. Yes, feeling –

for in India, shopping remains an outing. And how does it compare itself to foreign stores? While it is not

modeled on any one foreign retailer, the ‘basic construct’ is taken from the experience of a number of

successfully managed retail companies. It has leveraged expertise for a critical component like technology

from all over the world, going as far as hiring expatriates from Littlewoods and using state-of-the-art ERP

models. Shoppers’ Stop went a step further by even integrating its financial system with the ERP model.

Expertise was imported wherever it felt that expertise available in-house was inadequate. But the store felt

there was one acute problem. A shortage of the most important resource of them all was trained humans.

Since Indian business institutes did not have professional courses in retail management, people were hired

from different walks of life and the training programme was internalized. By 1994, the senior executives

at Shoppers’ Stop were taking lectures at management institutes in Mumbai. The Narsee Monjee Institute

of Management Studies (NMIMS) even restructured its course to include retail management as a subject.

Getting the company access to the latest global retail trends and exchange of information with business

greats was an exclusive membership to the Intercontinental Group of Department Stores (IGDS). It allows

membership by invitation to one company from a country and Shoppers’ Stop rubs shoulders with 29 of

the hottest names in retailing – Selfridges from the UK, C.K. Tang from Singapore, Lamcy Plaza from

Dubai and the like. With logistics I in place, the accent moved to the customer. Shoppers’ Stop conducted

surveys with ORG-MARG and Indian Market Research Bureau (IMRB) and undertook in-house

wardrobe audits. The studies confirmed what it already knew. The Indian customer is still evolving and is

very different from, say, a European customer, who knows exactly what he wants to purchase, walks up

to a shelf, picks up the merchandise, pays and walks out. In India, customers like to touch and feel the

Examination Paper Semester I: Marketing Management

IIBM Institute of Business Management

merchandise, and scout for options. Also, the majority of Indian shoppers still prefer to pay in cash. So,

transactions must be in cash as against plastic money used the world over. Additionally, the Indian

customer likes being served – whether it is food, or otherwise. The company’s customer profile includes

people who want the same salesperson each time they came to the store to walk them through the shop

floors and assist in the purchase. Others came with families, kids and maids in tow and expected to be

suitably attended to. Still others wanted someone to carry the bags. So, the shops have self-help counters,

with an assistant at hand for queries or help. The in-house wardrobe audit also helped with another facet

of the business. It enabled Shoppers’ Stop to work out which brands to stock, based on customer

preferences. In fact, the USP of Shoppers’ Stop lies in judiciously selected global brands, displayed

alongside an in-house range of affordable designer wear. The line-up includes Levi’s, Louis Philippe,

Allen Solly, Walt Disney, Ray Ban and Reebok, besides in-house labels STOP and I. Brand selection is

the same across the five locations, though the product mix may be somewhat city-based to accommodate

cuts and styles in women’s wear, as well as allowing for seasonal variations (winter in Delhi, for instance,

is a case in point). Stocking of brands is based on popular demand – recently, Provogue, MTV Style, and

Benetton have been added. In-house labels are available at competitive prices and target the value-formoney

customer and make up around 12 per cent of Shoppers’ Stop’s business. Sometimes in-house

brands plug the price gap in certain product categories. To cash in on this, the company has big plans for

its in-house brands: from re-branding to repositioning, to homing in on product categories where existing

brands are not strong. Competition between brands is not an issue, because being a trading house, all

brands get equal emphasis. The in-house brand shopper is one who places immense trust in the company

and the quality of its goods and returns for repeat buys. And the company reposed its faith in regular

customers by including them in a concept called the First Citizen’s Club (FCC). With 60,000 odd

members, FCC customers account for 10 per cent of entries and for 34 per cent of the turnover. It was the

sheer appeal of the experience that kept pulling these people back. Not one to let such an opportunity

pass, the company ran a successful ad campaign (that talks about just this factor) in print for more than

eight years. The theme is still the same. In 1999, a TV spot, which liked the shopping experience to the

slowing down of one’s internal clock and the beauty of the whole experience, was aired. More recently,

ads that spell out the store’s benefits (in a highly oblique manner) are being aired.

The campaign is based on entries entered in the Visitors’ Book. None of the ads has a visual or text – or

any heavy handedly direct reference to the store or the merchandise. The ads only show shoppers having

the time of their lives in calm and serene locales, or elements that make shopping at the store a pleasure –

quite the perfect getaway for a cosmopolitan shopper aged between 25 and 45. The brief to the agency,

Contract, ensured that brand recall came in terms of the shopping experience, not the product. And it has

worked wonders. Value-addition at each store also comes in the form of special care with car parks,

power backup, customer paging, alteration service and gift-wrapping. To top it all, cafes and coffee bars

make sure that the customer does not step out of the store. In Hyderabad, it has even created a Food

Court. Although the food counter was not planned, it came about as there was extra space of 67,000 sq. ft.

Carrying the perfect experience to the shop floor is an attempt to stack goods in vast open spaces neatly.

Every store has a generic structure, though regional customer variances are accounted for. Each store is

on lease, and this is clearly Shoppers’ Stop’s most expensive resource proposition – renting huge spaces

in prime properties across metros, so far totaling 210,000 sq. ft of retail space. Getting that space was easy

enough for Shoppers’ Stop, since its promoter is the Mumbai-based Raheja Group, which also owns 62

per cent of the share capital.

Questions

1. What are the significant factors that have led to the success of Shoppers’ Stop?

2. Draw the typical profile(s) of Shoppers’ Stop customer segments.

Examination Paper Semester I: Marketing Management

IIBM Institute of Business Management

3. How are Indian customers visiting Shoppers’ Stop any different from customers of developed

western countries?

4. How should Shoppers’ Stop develop its demand forecasts?

Case let 2

The rise of personal computers in the mid 1980s spurred interest in computer games. This caused a crash

in home Video game market. Interest in Video games was rekindled when a number of different

companies developed hardware consoles that provided graphics superior to the capabilities of computer

games. By 1990, the Nintendo Entertainment System dominated the product category. Sega surpassed

Nintendo when it introduced its Genesis System. By 1993, Sega commanded almost 60 per cent of Video

game market and was one of the most recognized brand names among the children. Sega’s success was

short lived. In 1995, Saturn (a division of General Motors) launched a new 32-bit system. The product

was a miserable failure for a number of reasons. Sega was the primary software developer for Saturn and

it did not support efforts by outside game developers to design compatible games. In addition, Sega’s

games were often delivered quite late to retailers. Finally, the price of the Saturn system was greater than

other comparable game consoles. This situation of Saturn’s misstep benefited Nintendo and Sony greatly.

Sony’s Play Station was unveiled in 1994 and was available in 70 million homes worldwide by the end of

1999. Its “Open design” encouraged the efforts of outside developers, resulting in almost 3,000 different

games that were compatible with the PlayStation. It too featured 32-bit graphics that appealed to older

audience. As a result, at one time, more than 30 per cent of PlayStation owners were over 30 years old.

Nintendo 64 was introduced in 1996 and had eye-popping 64-bit graphics and entered in more than 28

million homes by 1999. Its primary users were between the age of 6 and 13 as a result of Nintendo’s

efforts to limit the amount of violent and adult-oriented material featured on games that can be played on

its systems. Because the company exercised considerable control over software development, Nintendo

64 had only one-tenth the number of compatible games as Sony’s PlayStation did. By 1999, Sony had

captured 56 per cent of the video game market, followed by Nintendo with 42 per cent. Sega’s share had

fallen to a low of 1%. Hence, Sega had two options, either to concede defeat or introduce an innovative

video machine that would bring in huge sales. And Sega had to do so before either Nintendo or Sony

could bring their next-generation console to market. The Sega Dreamcast arrived in stores in September

1999 with an initial price tag of $199. Anxious gamers placed 300,000 advance orders, and initial sales

were quite encouraging. A total of 1.5 million Dreamcast machines were bought within the first four

months, and initial reviews were positive. The 128-bit system was capable of generating 3-D visuals, and

40 different games were available within three months of Dream cast’s introduction. By the end of the

year, Sega had captured a market share to 15 per cent. But the Dreamcast could not sustain its

momentum. Although its game capabilities were impressive, the system did not deliver all the

functionality Sega had promised. A 56K modem (which used a home phone line) and a Web browser

were meant to allow access to the Internet so that gamers could play each other online, surf the Web, and

visit the Dreamcast Network for product information and playing tips. Unfortunately, these features either

were not immediately available or were disappointing in their execution. Sega was not the only one in

having the strategy of adding functionality beyond games. Sony and Nintendo followed the same

approach for their machines introduced in 1999. Both Nintendo’s Neptune and Sony’s PlayStation 2

(PS2) were built on a DVD platform and featured a 128-bit processor. Analysts applauded the move to

DVD because it is less expensive to produce and allows more storage than CDs. It also gives buyers the

ability to use the machine as CD music player and DVD movie player. As Sony marketing director

commented, “The full entertainment offering from Play Station 2 definitely appeals to a much broader

audience. I have friends in their 30s who bought it not only because it’s a gaming system for their kids,

but also a DVD for them.” In addition, PlayStation 2 is able to play games developed for its earlier model

that was CD-based. This gives the PS2 an enormous advantage in the number of compatible game titles

Examination Paper Semester I: Marketing Management

IIBM Institute of Business Management

that were immediately available to gamers. Further enhancing the PS2’s appeal is its high-speed modem

and allows the user’s easy access to the Internet through digital cable as well as over telephone lines. This

gives Sony the ability to distribute movies, music, and games directly to PS2 consoles. “We are

positioning this as an all-round entertainment player,” commented Ken Kutaragi, the head of Sony

Computer Entertainment. However, some prospective customers were put off by the console’s initial

price of $360. Shortly after the introduction of Neptune, Nintendo changed its strategies and announced

the impending release of its newest game console, The GameCube. However, unlike the Neptune, the

GameCube would not run on a DVD platform and also would not initially offer any online capabilities. It

would be more attractively priced at $199. A marketing vice president for Nintendo explained the

company’s change in direction, “We are the only competitor whose business is video games. We want to

create the best gaming system.” Nintendo also made the GameCube friendly for outside developers and

started adding games that included sports titles to attract an older audience. Best known for its extra

ordinary successes with games aimed at the younger set, such as Donkey Kong, Super Mario Bros, and

Pokemon, Nintendo sought to attract older users, especially because the average video game player is 28.

Youthful Nintendo users were particularly pleased to hear that they could use their handheld Game Boy

Advance systems as controllers for the GameCube. Nintendo scrambled to ensure there would be an

adequate supply of Game Cubes on the date in November 2001, when they were scheduled to be available

to customers. It also budgeted $450 million to market its new product, as it anticipated stiff competition

during the holiday shopping season. With more than 20 million PlayStation 2 sold worldwide, the

GameCube as a new entry in the video game market would make the battle for market share even more

intense. For almost a decade, the video game industry had only Sega, Nintendo, and Sony; just three

players. Because of strong brand loyalty and high product development costs, newcomers faced a

daunting task in entering this race and being competitive. In November 2001, Microsoft began selling its

new Xbox, just three days before the GameCube made its debut. Some observers felt the Xbox was aimed

to rival PlayStation 2, which has similar functions that rival Microsoft’s Web TV system and even some

lower level PCs. Like the Sony’s PlayStation 2, Xbox was also built using a DVD platform, but it used an

Intel processor in its construction. This open design allowed Microsoft to develop the Xbox in just two

years, and gave developers the option of using standard PC tool for creating compatible games. In

addition, Microsoft also sought the advice of successful game developers and even incorporated some of

their feedback into the design of the console and its controllers. As a result of developers’ efforts,

Microsoft had about 20 games ready when the Xbox became available. By contrast, the GameCube had

only eight games available. Microsoft online strategy was another feature that differentiated of the Xbox

from the GameCube. Whereas Nintendo had no immediate plans for Web-based play, the Xbox came

equipped with an Ethernet port for broadband access to Internet. Microsoft also announced its own Webbased

network on which gamers can come together for online head-to head play and for organised online

matches and tournaments. Subscribers to this service were to pay a small monthly fee and must have

high-speed access to the Internet. This is a potential drawback considering that a very low percentage of

households world over currently have broadband connections. By contrast Sony promoted an open

network, which allows software developers to manage their own games, including associated fees charged

to users. However, interested players must purchase a network adapter for an additional $39.99. Although

game companies are not keen on the prospect of submitting to the control of a Microsoft-controlled

network, it would require a significant investment for them to manage their own service on the Sonybased

network. Initially the price of Microsoft’s Xbox was $299. Prior to the introduction of Xbox, in a

competitive move Sony dropped the price of the PlayStation 2 to $299. Nintendo’s GameCube already

enjoyed a significant price advantage, as it was selling for $100 less than either Microsoft or Sony

products. Gamers eagerly snapped up the new consoles and made 2001 the best year ever for video game

sales. For the first time, consumers spent $9.4 billion on video game equipment, which was more than

they did at the box office. By the end of 2001 holiday season, 6.6 million PlayStation 2 consoles had been

sold in North America alone, followed by 1.5 million Xbox units and 1.2 million Game Cubes. What

ensued was an all out price war. This started when Sony decided to put even more pressure on the

Microsoft’s Xbox by cutting the PlayStation 2 price to $199. Microsoft quickly matched that price.

Examination Paper Semester I: Marketing Management

IIBM Institute of Business Management

Wanting to maintain its low-price status, Nintendo in turn responded by reducing the price of its the

GameCube by $50, to $149. By mid 2002, Microsoft Xbox had sold between 3.5 and 4 million units

worldwide. However, Nintendo had surpassed Xbox sales by selling 4.5 million Game Cubes. Sony had

the benefit of healthy head start, and had shipped 32 million PlayStation 2s. However, seven years after

the introduction of original PlayStation, it was being sold in retail outlets for

a mere $49. It had a significant lead in terms of numbers of units in homes around the world with a 43 per

cent share. Nintendo 64 was second with 30 per cent, followed by Sony PlayStation 2 with 14 per cent.

The Xbox and GameCube each claimed about 3 per cent of the market, with Sega Dreamcast comprising

the last and least market share of 4.7 per cent. Sega, once an industry leader, announced in 2001 that it

had decided to stop producing the Dreamcast and other video game hardware components. The company

said it would develop games for its competitors’ consoles. Thus Sega slashed the price of the Dreamcast

to just $99 in an effort to liquidate its piled up inventory of more than 2 million units and immediately

began developing 11 new games for the Xbox, four for PlayStation 2, and three for Nintendo’s Game Boy

Advance. As the prices of video game consoles have dropped, consoles and games have become the

equivalent of razors and blades. This means the consoles generate little if any profit, but the games are a

highly profitable proposition. The profit margins on games are highly attractive, affected to some degree

by whether the content is developed by the console maker (such as Sony) or by an independent game

publisher (such as Electronic Arts). Thus, the competition to develop appealing, or perhaps even

addictive, games may be even more intense than the battle among players to produce the best console. In

particular, Nintendo, Sony, and Microsoft want games that are exclusive to their own systems. With that

in mind, they not only rely on large in-house staffs that design games but they also pay added fees to

independent publishers for exclusive rights to new games. The sales of video games in 2001 rose to 43

per cent, compared to just 4 per cent increase for computer-based games. But computer game players are

believed to be a loyal bunch, as they see many advantages in playing games on their computers rather

than consoles. For one thing, they have a big advantage of having access to a mouse and a keyboard that

allow them to play far more sophisticated games. In addition, they have been utilizing the Internet for

years to receive game updates and modifications and to play each other over the Web. Sony and

Microsoft are intent on capturing a portion of the online gaming opportunity. Even Nintendo has decided

to make available a modem that will allow GameCube users to play online. As prices continue to fall and

technology becomes increasingly more sophisticated, it remains to be seen whether these three companies

can keep their names on the industry’s list of “high scorers”.

Questions

1. Considering the concept of product life cycle, where would you put video games in their life

cycle?

2. Should video game companies continue to alter their products to include other functions, such as

e-mail?

END OF SECTION B

Examination Paper Semester I: Marketing Management

IIBM Institute of Business Management

Section C: Applied Theory (30 marks)

· This section consists of Applied Theory Questions.

· Answer all the questions.

· Each question carries 15 marks.

· Detailed information should form the part of your answer (Word limit 200-250 words).

1. What is meant by sales promotion? Describe briefly the various methods of sales promotional

tools used by business organizations to boost the sales. Explain any four methods of sales

promotion?

2. Write notes on the fowling :

a) Explain right to safety.

b) What is right to consumer protection?

S-1-91110

END OF SECTION C

Examination Paper Semester I: Organizational Behaviour

IIBM Institute of Business Management

IIBM Institute of Business Management

Semester-1 Examination Paper MM.100

Organizational Behaviour

Section A: Objective Type (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. It is the degree to which a person identifies with a particular organization and its goals, & wishes

to maintain membership in the organization

a. Job involvement

b. Terminal value

c. Attitude

d. Value

2. _________ means moving information from the hidden area to the open area

a. blind area

b. unknown area

c. public area

d. self disclosure

3. An approach in which the goals of one party are in direct conflict with the goals of the other party

a. Negotiation

b. Distributive bargaining

c. Stress

d. None

4. The measure of a person’s ability to operate within business organizations through social

communication & interactions

a. Transactional analysis

b. Interpersonal skill

c. Life position

d. Johari window

5. Where the source of power is in person’s control over rewarding outcomes, that power is called

a. Coercive power

b. Referent power

c. Legitimate power

d. Reward power

Examination Paper Semester I: Organizational Behaviour

IIBM Institute of Business Management

6. It means melting resistance to change; the people who will be affected by the change come to

accept the need for it

a. Organization

b. Unfreezing

c. Changing

d. Refreezing

7. This training is also known as laboratory training, encounter groups & T-groups

a. Sensitivity

b. Survey

c. Process

d. Team building

8. They are the things that come together to define a culture & reveal that the culture is about to

those who pay attention to them

a. Culture

b. Espoused value

c. Artifacts

d. Organizational culture

9. This stage encompasses all the learning that occurs before a new member joins the organizations

a. Socialization

b. The Pre-arrival stage

c. Encounter stage

d. Metamorphosis stage

10. It refers to the behavior pattern adopted by a leader to influence the behavior of his subordinate

for attaining the organizational goal

a. Leadership

b. Traits of leadership

c. Leadership grid

d. Leadership style

Part Two:

1. Define Informal groups.

2. What do you understand by the term ‘Emotion’?

3. Write a note on ‘Reinforcement theory’.

4. Explain the terms ‘Attitudes and Values’.

END OF SECTION A

Examination Paper Semester I: Organizational Behaviour

IIBM Institute of Business Management

Section B: Case lets (40 marks)

· This section consists of Case lets.

· Answer all the questions.

· Each Case let carries 20 marks.

· Detailed information should form the part of your answer (Word limit 150 to 200 words).

Case let 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 equipmentmaintenance

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: Organizational Behaviour

IIBM Institute of Business Management

Case let 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?

END OF SECTION B

Examination Paper Semester I: Organizational Behaviour

IIBM Institute of Business Management

Section C: Applied Theory (30 marks)

· This section consists of Applied Theory Questions.

· Answer all the questions.

· Each question carries 15 marks.

· Detailed information should form the part of your answer (Word limit 200 to 250 words).

1. A large unit manufacturing electrical goods which has been known for its liberal personnel

policies and fringe benefits is facing the problem of low productivity and high absenteeism. How

should the management improve the organizational climate?

2. The leader is expected to play many roles & therefore he must be qualified to guide others to

organizational achievement. On the basis of this explain the leadership skills & leadership traits.

S-1-91110

END OF SECTION C

Examination Paper Semester I: Principles and Practice of Management

IIBM Institute of Business Management

IIBM Institute of Business Management

Semester-1 Examination Paper MM.100

Principles and Practice of Management

Section A: Objective Type (30 marks)

· This section consists of Multiple Choices & 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. A plan is a trap laid to capture the ________.

a. Future

b. Past

c. Policy

d. Procedure

2. It is the function of employing suitable person for the enterprise

a. Organizing

b. Staffing

c. Directing

d. Controlling

3. ___________ means “ group of activities & employees into departments”

a. Orientation

b. Standardization

c. Process

d. Departmentation

4. This theory states that authority is the power that is accepted by others

a. Acceptance theory

b. Competence theory

c. Formal authority theory

d. Informal authority theory

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

a. Decentralization

b. Centralization

c. Dispersion

d. Delegation

Examination Paper Semester I: Principles and Practice of Management

IIBM Institute of Business Management

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

a. Functional chart

b. Posts chart

c. Master chart

d. Departmental chart

7. Communication which flow from the superiors to subordinates with the help of scalar

chain is known as

a. Informal communication

b. Downward communication

c. Upward communication

d. Oral communication

8. Needs for belongingness, friendship, love, affection, attention & social acceptance are

a. Physiological needs

b. Safety needs

c. Ego needs

d. Social needs

9. A management function which ensures “jobs to be filled with the right people, with the

right knowledge, skill & attitude”

a. Staffing defined

b. Job analysis

c. Manpower planning

d. Recruitment

10. It is a process that enables a person to sort out issues and reach to a decisions affecting

their life

a. Selection

b. Raining

c. Reward

d. Counseling

Part Two:

1. Differentiate between ‘Administration’ and ‘Management’.

2. What were the common drawbacks in classical and Neo classical theories of management?

3. Write a short note on “Line Organization.”

4. Write a short note on ‘Acceptance theory’.

END OF SECTION A

Examination Paper Semester I: Principles and Practice of Management

IIBM Institute of Business Management

Section B: Case lets (40 marks)

· This section consists of Case lets.

· Answer all the questions.

· Each Case let carries 20 marks.

· Detailed information should form the part of your answer (Word limit 150-200 words).

Case let 1

Mr. Vincent, the Manager of a large supermarket, was taking a management course in the

evening programme at the local college. The Professor had given an interesting but disturbing

lecture the previous night on the various approaches to management. Vincent had always thought

that management involved just planning, organizing and controlling. Now this Professor was

saying that management could also be thought of as quantitative models, systems theory and

analysis, and even something called contingency relationships. Vincent had always considered

himself a good manager, and his record with the supermarket chain had proved it. He thought of

himself, “I have never used operations research models, thought of my store as an open system,

or developed or utilized any contingency relationship. By doing a little planning ahead,

organizing the store, and making some things got done, I have been a successful manager. That

other stuff just does not make sense. All the professor was trying to do was complicate things. I

guess I will have to know it for the test, but I am sticking with my old plan, organize and control

approach to managing my store.”

Questions

1. Critically analyze Mr. Vincent’s reasoning.

2. If you were the professor and you knew what was going through Vincent’s mind, what would you

say to Vincent?

Case let 2

The Regional Administration Office of a company was hastily set up. Victor D’Cuhna a young executive

was directly recruited to take charge of Data Processing Cell of this office. The data processing was to

help the administrative office in planning and monitoring. The officer cadre of the administrative office

was a mix of directly recruited officers and promotee officers (promotion from within the organization).

Females dominated the junior clerical cadre. This cadre was not formally trained. The administrative

office had decided to give these fresh recruits on-the-job training because when results were not upto the

expectations blame was brought on the Data Processing Cell. Victor D’Cuhna realized that the

administrative office was heading for trouble. He knew that his task would not be easy and that he had

been selected because of his experience, background and abilities. He also realized that certain functional

aspects of the administrative office were not clearly understood by various functionaries, and systems and

procedures were blindly and randomly followed. Feedback was random, scanty and controversial, and

Data Processing Cell had to verify every item of feedback. Delays were inevitable. D’Cuhna sought the

permission of senior management to conduct a seminar on communication and feedback of which he was

an expert. The permission was grudgingly given by the senior management. Everyone appreciated the

seminar. Following the first seminar, D’Cuhna conducted a one week training course for the clerical

Examination Paper Semester I: Principles and Practice of Management

IIBM Institute of Business Management

cadre, especially for the junior, freshly recruited clerks. Amongst other topics, D’Cuhna laid emphasis on

filing system, information tracking, communication, and feedback. This helped reorient attitudes to some

extent. But the female clerks preferred to ignore the theme and widely circulated the belief that D’Cuhna

was an upstart and a show off. Within a short time, considerable friction had been generated in the

administrative office While directly recruited officers supported D’Cuhna’s initiative and the specialist

officers admired him, senior management became cautious and uncomfortable. The junior promotee

officers were prejudiced against him. The grand finale followed swiftly. D’Cuhna happened to get

annoyed with a female clerk. During the absence of her officer, who was on sick leave and had not been

substituted by another officer, she began submitting nil returns. D’Cuhna took pains to explain to her that

for certain topics a nil feedback was not tenable. The current status had to be reported— the stage at

which the matter was pending, what had been done, and what would be done about it? The lady reported

that it was none of his business to tell her this. He should talk to her officer when the officer reports back

from leave. D’Cuhna said he would, but in the meanwhile she should present the correct picture. When

D’Cuhna called for the files, she refused to part with them. D’Cuhna fired her and reported the situation

to the Chief Regional Manager. The other ladies were up in the arms against D’Cuhna. The lady also

complained to higher management that D’Cuhna had made passes at her. Other ladies supported her

complaint. She also complained that D’Cuhna had no business to scold her. D’Cuhna countered that had

there been a male clerk in her place he would have scolded him too. When females enjoyed equal rights

with males, D’Cuhna felt he must remain impartial. Nevertheless, D’Cuhna was transferred to another

place. The transfer to another place, rather than to another department in same place, was particularly

humiliating to him. A shocked and disillusioned D’Cuhna quit the enterprise.

Questions

1. Diagnose the problem and enumerate the reasons for the failure of D’Cuhna?

2. What could D’Cuhna have done to avoid the situation in which he found himself?

Section C: Applied Theory (30 marks)

· This section consists of Applied Theory Questions.

· Answer all the questions.

· Each question carries 15 marks.

· Detailed information should form the part of your answer (Word limit 200-250 words).

1. What is Training? Explain the different methods of training?

2. Explain Decision-Making process of an organization?

S-1-91110

END OF SECTION B

END OF SECTION C

Examination Paper – Project Management

1

IIBM Institute of Business Management

IIBM Institute of Business Management

Examination Paper MM.100

Project Management

Guidelines for paper

• Total No. of Questions is 100.

• The minimum passing marks is 50%.

• Each Question carries 1 mark.

• Answer all the Questions.

Multiple Choices: Total Marks: 100

1. A ________________ is a temporary endeavor undertaken to create a unique product, service, or

result.

a) Program

b) Process

c) Project

d) Portfolio

2. Which of the following is not a potential advantage of using good project management?

a) Shorter development times

b) Higher worker morale

c) Lower cost of capital

d) Higher profit margins

3. Which of the following is not an attribute of a project?

a) Projects are unique

b) Projects are developed using progressive elaboration

c) Projects have a primary customer or sponsor

d) Projects involve little uncertainty

4. Which of the following is not part of the triple constraint of project management?

a) Meeting scope goals

b) Meeting time goals

c) Meeting communications goals

d) Meeting cost goals

5. The first stage of any project is

a) Proposal

b) Conceptualization

c) Implementation

d) Management

Examination Paper – Project Management

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IIBM Institute of Business Management

6. __________________ is the application of knowledge, skills, tools and techniques to project

activities to meet project requirements.

a) Project management

b) Program management

c) Project portfolio management

d) Requirements management

7. Project portfolio management addresses ____________________ goals of an organization, while

project management addresses _________________ goals.

a) Strategic, tactical

b) Tactical, strategic

c) Internal, external

d) External, internal

8. Several application development projects done for the same functional group might best be

managed as part of a

a) Portfolio

b) Program

c) Investment

d) Collaborative

9. Which of the following is not one of the top ten skills or competencies of an effective project

manager?

a) People skills

b) Leadership

c) Integrity

d) Technical skills

10. What is the certification program called that the Project Management Institute provides?

a) Microsoft Certified Project Manager (MCPM)

b) Project Manager Professional (PMP)

c) Project Management Expert (PME)

d) Project Management Mentor (PMM)

11. A _________________ is a series of actions directed towards a particular result.

a) Goal

b) Process

c) Plan

d) Project

Examination Paper – Project Management

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IIBM Institute of Business Management

12. ____________________ Processes include coordinating people and other resource to carry out

the project plans and produce the products, service, or results of the project or phase.

a) Initiating

b) Planning

c) Executing

d) Monitoring & controlling

13. Which process group normally requires the most resources and time?

a) Initiating

b) Planning

c) Executing

d) Monitoring and controlling

14. A work breakdown structure, project schedule, and cost estimates are outputs of the process.

a) Initiating

b) Planning

c) Executing

d) Monitoring and controlling

15. Which process group includes activities from each of the nine knowledge areas?

a) Initiating

b) Planning

c) Executing

d) Monitoring and controlling

16. Project management as a profession is almost unique in having institutions concerned with its

development who promote what they term their

a) Body of language

b) Body of knowledge

c) Strategy

d) Work

17. Initiating involves developing a project charter and preliminary project scope statement, which

are part of the project _____________________ management knowledge.

a) Integration

b) Scope

c) Communications

d) Risk

18. A ________________ describes how things should be done, and different organizations often

have different ways of doing things.

a) Regulation

b) Process

c) Standard

d) Methodology

Examination Paper – Project Management

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IIBM Institute of Business Management

19. ___________________ involves measuring progress toward project objectives and talking

corrective actions.

a) Initiating

b) Planning

c) Executing

d) Monitoring and controlling

20. What type of report do project teams create to reflect on what went right with the project?

a) Lessons – learned report

b) Status report

c) Final project report

d) Business case

21. Project manager is responsible for

a) Overseeing change

b) Cross functional activities

c) Ever changing set of tasks

d) All above

22. Many people use ________________ to have a standard format for preparing various project

management documents.

a) Methodologies

b) Templates

c) Project management software

d) Standards

23. What is the last step in the four – stage planning process for selecting information technology

projects?

a) Information technology strategy planning

b) Business area analysis

c) Project planning

d) Resource allocation

24. A new government law requires an organization to report data in anew way. Under which

category would a new information system project to provide this data fall?

a) Problem

b) Opportunity

c) Directive

d) Regulation

25. A __________________ is a document that formally recognizes the existence of a project and

provides direction on the project’s objectives and management.

a) Project charter

b) Preliminary scope statement

c) Business case

d) Project management plan

Examination Paper – Project Management

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IIBM Institute of Business Management

26. ICOM model, which is one of the major roles of project manager, stand for

a) Integrated Constraint of Mechanism

b) Inputs, Outputs, Constraints & Mechanism

c) Inputs, Outputs, Constraints & Money

d) None

27. A _______________ often includes sensitive information, so it should not be part of the overall

project plan for anyone to see.

a) Business case

b) Project charter

c) Personnel chart

d) Stakeholder analysis

28. Which of the following is not a suggestion for performing integrated change control?

a) Use good configuration management

b) Minimize change

c) Establish a formal change control system

d) View project management as a process of constant communication and negotiation

29. _______________ refer(s) to all the work involved in creating the products of the projects and

processes used to create them.

a) Deliverables

b) Milestones

c) Scope

d) Product development

30. Assume you have a project with major categories called planning, analysis, design, and testing.

What level of the WBS would these items fall under?

a) 0

b) 1

c) 2

d) 3

31. Which of the following is not a best practice that can help in avoiding scope problems on

information technology projects?

a) Keep the scope realistic

b) Use off-the-shelf hardware and software whenever possible

c) Follow good project management processes

d) Don’t involve too many users in scope management

32. Having ascertains the portfolio of projects obtained objectives for each of them, we have to move

to the next stage of the strategy process to balance the objectives

a) Policy deployment

b) Strategy matrix

c) Project performance measurement

d) None

Examination Paper – Project Management

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IIBM Institute of Business Management

33. What major restaurant chain terminated a large project after spending $170 million on it,

primarily because they realized the project scope was too much to handle?

a) Burger King

b) Pizza Hut

c) McDonalds

d) Taco Bell

34. Scope ____________________ is often achieved by a customer inspection and then sign – off on

key deliverables.

a) Verification

b) Validation

c) Completion

d) Close – out

35. Project management software helps you develop a _________________, which serves as a basis

for creating Gantt charts, assigning resources, and allocating costs.

a) Project plan

b) Schedule

c) WBS

d) Deliverable

36. WBS (Work Breakdown Structure) is also known as

a) Chunking

b) Unbundling

c) Both (a) & (b)

d) None

37. What is the first process in planning a project schedule?

a) Milestone definition

b) Activity definition

c) Activity resource estimation

d) Activity sequencing

38. Predecessors, successes, logical relationships, leads and lags, resource requirements, constraints,

imposed dates, and assumptions are all examples of ___________________.

a) Items in an activity list

b) Items on a Gantt chart

c) Milestone attributes

d) Activity attributes

Examination Paper – Project Management

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IIBM Institute of Business Management

39. As the project manager for a software development project, you are helping to develop its

schedule. You decide that writing code for a system cannot start until sign off on the analysis

work. What type of dependency is this?

a) Technical

b) Mandatory

c) Discretionary

d) External

40. You cannot start editing a technical report until someone else completes the first draft. What type

of dependency does this represent?

a) Finish – to – start

b) Start – to – start

c) Finish – to – finish

d) Start – to – finish

41. …………………. Involves going through the cycle several times to test the effects of the changes

make on the outcomes.

a) Planning

b) Strategy

c) Iterative

d) None

42.

Above figure shows two activities A & B; B cannot start until A finished and the times for A &

B are 5 and 7 days respectively. This logic is known as

a) Dependency

b) Precedence

c) Freedom

d) None

43.

In the above figure calculate the EET (earliest event time) at 20.

a) 10

b) 20

c) 5

d) 25

10

0

20

0

A

5Days

1 2

3

A B

5Days 7Days

Examination Paper – Project Management

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IIBM Institute of Business Management

44. What symbol on a Gantt chart represents a slipped milestone?

a) A black arrow

b) A white arrow

c) A black diamond

d) A white diamond

45. What type of diagram shows planned and actual project schedule information?

a) A network

b) A Gantt chart

c) A Tracking

d) A milestone chart

46. ____________________ is a network diagramming technique used to predict total project

duration.

a) PERT

b) A Gantt chart

c) Critical path method

d) Crashing

47. Which of the following statement is false?

a) “Growing grass” was on the critical path for a large theme park project.

b) The critical path is the series of activities that determine the earliest time by which a

project can be completed.

c) A forward pass through a project network diagram determines the early start and

early finish dates for each activity.

d) Fast tracking is a technique for marking cost and schedule trade-offs to obtain the

obtain the greatest amount of schedule comparison for the least incremental cost.

48. _____________________ is a method of scheduling that considers limited resources when

creating a project schedule and includes buffers to protect the project completion date.

a) Parkinson’s Law

b) Murphy’s Law

c) Critical path analysis

d) Critical chain scheduling

49. _______________ is a resource scarified or foregone to achieve a specific objective or something

given up in exchange.

a) Money

b) Liability

c) Trade

d) Cost

Examination Paper – Project Management

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IIBM Institute of Business Management

50. What is main goal of project cost management?

a) To complete a project for as little cost as possible

b) To complete a project within an approved budget

c) To provide truthful and accurate cost information on projects

d) To ensure that an organization’s money is used widely

51. A fundamental of ‘Theory of Constraints’ (TOC) is to manage systems by focusing on the

constraints, termed as

a) Watermark

b) Bottleneck

c) Tick-sheet

d) None

52. “An activity will expand to fill the time available”; it is

a) Newton’s Law

b) Parkinson’s Law

c) Einstein’s Law

d) None

53. Which of the following is not a key output of project cost management?

a) A cost estimate

b) A cost management plan

c) Updates to the cost management plan

d) A cost baseline

54. If a company loses $5 for every $100 in revenue for a certain product, what is profit margin for

that product?

a) -5 percent

b) 5 percent

c) -$5

d) $5

55. __________________ reserves allow for future situations that are unpredictable.

a) Contingency

b) Financial

c) Management

d) Baseline

56. You are preparing a cost estimate for a building based on its location, purpose, number of square

feet, and other characteristics. What cost estimating technique are you using?

a) Parametric

b) Analogous

c) Bottom – up

d) Top – down

Examination Paper – Project Management

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IIBM Institute of Business Management

57. ______________ involves allocating the project cost estimate to individual work items over time.

a) Reserve analysis

b) Life cycle costing

c) Project cost budgeting

d) Earned value analysis

58. _________________ is a project performance measurement technique that integrates scope time,

and cost data.

a) Reserve analysis

b) Life cycle costing

c) Project cost budgeting

d) Earned value analysis

59. If the actual cost for a WBS item is $1500 and its earned value was $2000, what is its cost

variance, and is it under or over budget?

a) The cost variance is -$500, which is over budget

b) The cost variance is -$500, which is under budget

c) The cost variance is $500, which is over budget

d) The cost variance is $500, which is under budget

60. If a project is halfway completed and its schedule performance index is 110% and its cost

performance index is 95%, how is it progressing?

a) It is ahead of schedule and under budget

b) It is ahead of schedule and over budget

c) It is behind schedule and under budget

d) It is behind schedule and over budget

61. To determine the cost of particular element in advance of the project, which technique can be

employed?

a) Parametric estimating

b) As…………but…………s

c) Forecasts

d) All above

62. _______________ is the degree to which a set of inherent characteristics fulfills requirements.

a) Quality

b) Conformance to requirements

c) Fitness for use

d) Reliability

63. What is the purpose of project quality management?

a) To produce the highest quality products and services possible

b) To ensure that appropriate quality standards are met

c) To ensure that the project will satisfy the needs for which it was undertaken

d) All of the above

Examination Paper – Project Management

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IIBM Institute of Business Management

64. _______________ generates ideas for quality improvements by comparing specific project

practices or product characteristics to those of other projects or products within or outside the

performing organization.

a) Quality audits

b) Design of experiments

c) Six Sigma

d) Benchmarking

65. What tool could you use to determine whether a process is in control or out of control?

a) A cause – and – effect diagram

b) A control chart

c) A run chart

d) A scatter chart

66. Complication to the critical path represents the formation of compound series of activities often

involving different paths which has been termed

a) The critical chain

b) The critical path

c) TOC

d) Resource path

67. Six Sigma’s target for perfection is the achievement of no more than ________________ defects,

errors, or mistakes per million opportunities.

a) 6

b) 9

c) 3.4

d) 1

68. The seven run rule states that if seven data points in a row on a control chart are all below the

mean, above the means, or all increasing or decreasing, then the process needs to be examined for

_________________ problems.

a) Random

b) Non – random

c) Six Sigma

d) Quality

69. What is the preferred order for performing testing on information technology projects?

a) Unit testing, integration testing, system testing, user acceptance testing

b) Unit testing, system testing, integration testing, user acceptance testing

c) Unit testing, system testing, user acceptance testing, integration testing

d) Unit testing, integration testing, user acceptance testing, system testing

Examination Paper – Project Management

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IIBM Institute of Business Management

70. ___________________ is known for his work on quality control in Japan and developed the 14

points for Management in his text Out of the Crisis.

a) Juran

b) Deming

c) Crosby

d) Ishikawa

71. The theory of constraints (TOC) is successfully applied in

a) Planning

b) Checking

c) Manufacturing

d) Controlling

72. PMI’s OPM3 is an example of a ____________________ model or framework for helping

organization improve their processes and systems.

a) Benchmarking

b) Six Sigma

c) Maturity

d) Quality

73. Which of the following is not part of project human resource management?

a) Resource estimating

b) Acquiring the project team

c) Developing the project team

d) Managing the project team

74. _________________ causes people to participate in an activity for their own enjoyment.

a) Intrinsic motivation

b) Extrinsic motivation

c) Self motivation

d) Social motivation

75. At the bottom of Maslow’s pyramid or hierarchy of needs are _____________ needs.

a) Self – actualization

b) Esteem

c) Safety

d) Physiological

76. ________________ power is based on a person’s individual charisma.

a) Affiliation

b) Referent

c) Personality

d) Legitimate

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77. What technique can you use to resolve resource conflicts by delaying tasks?

a) Resource loading

b) Resource leveling

c) Critical path analysis

d) Over allocation

78. Which of the following is not a tool or technique for managing project team?

a) Observation and conversation

b) Project performance appraisals

c) Issue logs

d) Social Styles Profile

79. What do many experts agree is the greatest threat to the success of any project?

a) Lack of proper funding

b) A failure to communicate

c) Poor listening skills

d) Inadequate staffing

80. Which communication skill is most important for information technology professionals for career

advancement?

a) Writing

b) Listening

c) Speaking

d) Using communication technologies

81. Which of the following is not a process in project communication management?

a) Information planning

b) Information distribution

c) Performance reporting

d) Managing stakeholders

82. A building may not be constructed unless the planning permission for it has been obtained, this is

the

a) Legal constraint

b) Quality constraint

c) Cost constraint

d) Logic constraint

83. A ________________ report describes where the project stands at a specific point in time.

a) Status

b) Performance

c) Forecast

d) Earned value

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84. __________________ is an uncertainly that can have a negative or positive effect on meeting

project objectives.

a) Risk utility

b) Risk tolerance

c) Risk management

d) Risk

85. A person who is a risk - ______________ receives greater satisfaction when more payoffs is at

stake and is willing to pay a penalty to take risks.

a) Averse

b) Seeking

c) Neutral

d) Aware

86. Which risk management process involves prioritizing based on their probability and impact of

occurrence?

a) Risk management planning

b) Risk identification

c) Qualitative risk analysis

d) Quantitative risk analysis

87. The 7-S framework of project management issues was promoted by

a) McJonald and Co.

b) McKinsly and Co.

c) J & K Co.

d) None

88. Your project involves using a new release of a software application, but if that release is not

available, your team has ______________ plans to use the current release.

a) Contingency

b) Fallback

c) Reserve

d) Mitigation

89. A risk _________________ is a document that contains results of various risk management

processes, often displayed in a table or spreadsheet format.

a) Management plan

b) Register

c) Breakdown structure

d) Probability / impact matrix

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90. Your project team has decided not to use an upcoming release of software because it might cause

your schedule to slip. Which negative risk response strategy are you using?

a) Avoidance

b) Acceptance

c) Transference

d) Mitigation

91. For non critical activities, network diagrams build in …………………………. at the start of

activities.

a) Temporary

b) Buffer

c) Slack

d) Anywhere

92. If a project being undertaken by a particular project team, then these are referred as

a) Resource capability

b) Resource capacity

c) Resource calendar

d) Resource pool

93. The term ‘hedgehog syndrome’ means

a) Management problem

b) Solving problem

c) Repetition of problem

d) Find out a problem

94. What is the first procurement process?

a) Planning contracting

b) Planning purchasing and acquisitions

c) Requesting seller responses

d) Procurement management planning

95. The _____________ is the point at which the contractor assumes total responsibility for each

additional dollar of contract cost.

a) A breakeven point

b) Share ratio point

c) Point of reconciliation

d) Point of total assumption

96. We’re standing on this hill here. We want to be on that hill over there, this is

a) View

b) Vision

c) Mission

d) Aim

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97. A ______________________ is a document prepared by a seller when there are different

approaches for meeting buyer needs.

a) RFP

b) RFQ

c) Proposal

d) Quote

98. Buyers often prepare a ______________________ list when selecting a seller to make this

process more manageable.

a) Preferred

b) Short

c) Qualified suppliers

d) BAFO

99. A proposal evaluation sheet is an example of a(n) ______________________.

a) RFP

b) NPV analysis

c) Earned value analysis

d) Weighted scoring model

100. __________________ is a term used to describe various procurement functions that are

now done electronically.

a) E – procurement

b) eBay

c) E – commerce

d) EMV

Examination Paper of Six Sigma Green Belt

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CERTIFIED SIX SIGMA GREEN BELT

EXAMINATION PAPER

Guideline for paper

• Total No. of Question is 100.

• The minimum passing marks is 40%

• Each question carries 1 mark.

• Answer all the questions.

Total: 100 Marks

1. The Following is a sample data set.

10 8 8 6 5

What is the variance of this data set?

a. 3.0

b. 3.8

c. 7.3

d. 7.4

2. An auditor should use a histogram in a quality audit to do which of the following?

a. Provide objective evidence that the audited uses statistical process control (SPC)

b. Expose patterns that are normally difficult to detect

c. Interpret data for a trend chart

d. create a stratified tally diagram

3. Comparing how a process is actually performed against the documented work instruction for that

process is an example of which of the following techniques?

a. Quantitative

b. Qualitative

c. Statistical

d. Random sampling

4. Attribute sampling should be used when

a. The data are measurements in metric units.

b. Ayes-or-no decision is to be made.

c. The population has variability.

d. A multi-stage sampling plan is needed.

5. Scatter diagrams are best described as

a. Histograms.

b. Correlation analysis.

c. Pareto analysis.

d. Ishikawa diagrams.

6. If data are plotted over time, the resulting chart will be a

a. Run chart

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b. Histogram

c. Pareto chart

d. Poisson distribution

7. To determine who are or might be customers for a specific process, it would be most useful to create a

a. Pareto chart

b. Flow diagram

c. Cause and effect diagram

d. Scatter diagram

8. A production line uses signs at specific points on the line to indicate when components or raw materials

need to be replenished. The practice is an example of

a. Kanban

b. Poka-yake

c. Checkpoints

d. Hoshin

9. Which of the following is a good tool for planning cycle time reduction and concurrent operations?

a. A timeline

b. A Pareto diagram

c. An X and R chart

d. A PERT chart

10. Attribute and variable data are best described as which of the following? Attribute variable

a. Counted values measured values

b. Counted values visual features

c. Measured values counted values

d. Visual features counted values

11. All of the following are common ways for people to react to conflict EXCEPT

a. Competing

b. Collaborating

c. Avoiding

d. Sabotaging

12. A quality manager has chosen to survey customer satisfaction by talking samples based on the

categories of frequency of use, categories of use, and demographic. This technique is known as

a. Random sampling

b. Data collection

c. Stratification

d. Customer classification

13. Which of the following actions is Not used to reduce process cycle time?

a. Analyzing current processes

b. Reducing queue times

c. Setting priorities

d. Implementing activity-based costing

14. A company’s accounts payable department is trying to reduce the time between receipt and payment

of invoices and has recently completed a flowchart. Which of the following tools would be the for them to

use next?

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a. Fishbone diagram

b. Scatter diagram

c. Box and whisker plat

d. Histogram

15. In a manufacturing company, the machine shop is what kind of customer in relation to the human

resource department?

a. Intermediate

b. Hidden

c. External

d. Internal

16. The primary purpose of a project charter is to

a. Subdivide the project into smaller, more manageable components

b. Provide management with a tool for selecting a project that addresses business needs

c. Provide management with a tool to ensure that project deadlines are met

d. Provide the project manager with authority to apply organizational resources to project activities

17. Sample selection of parts for inspection must be selected at random to ensure

a. A minimum sample size.

b. The probability of not rejecting the lot

c. The probability of accepting the lot

d. Finding typical characteristics of the lot.

18. Which of the following are bases for establishing calibration intervals?

I. Stability

II.Purpose

III.Degree of usage

a. I and II only

b. I and III only

c. II and III only

d. I, II, and III

19. Specification limits are derived from which of the following?

a. Process capability studies

b. Process control charts

c. Customer requirements

d. Historical data

20. The primary purpose of a control chart is to

a. Set Specifications and tolerances

b. compare operations.

c. Determine the stability of a process.

d. Accept or reject a lot of material

21. When a control chart is used on a new process, capability can be assessed at which of the following

times?

a. Before the chart is first started

b. After the first ten points are plotted

c. When the plotted points hug the centerline

d. After the process is shown to be in control

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22. Precision is best described as

a. A comparison to a known standard

b. The achievement of expected outgoing quality

c. The repeated consistency of results

d. The difference between an average measurement and the actual value

23. The overall ability of two or more operators to obtain Consistent results repeatedly when measuring

the same set of parts and using the same measuring equipment is the definition of

a. Repeatability

b. Precision

c. Reproducibility

d. Accuracy

24. Which of the following conditions must be met for a process to be in a state of statistical control?

a. Most of the product out by the process is in specification.

b. All subgroup averages and rang are within control limits.

c. All variation has been completely removed

d. Previously optimal process settings are used.

25. Which of the following measures of dispersion is equal to the sum of deviations from the mean

squared divided by the sample size?

a. Range

b. Standard deviation

c. Variance

d. Mode

26. An X and R chart is used to

a. Indicate process variation

b. Specify design Limits

c. Interpret costs

d. Identify customer expectations

27. Which of the following is the most useful graphical tool for promoting an understanding of process

capability?

a. A flowchart

b. a histogram

c. An affinity diagram

d. An Ishikawa diagram

28. The type of chart that presents the value of items in descending order is a

a. Histogram

b. Pareto chart

c. U chart

d. Cusum chart

29. Measures of which of the following provide attributes data?

a. Temperature in degrees

b. Attendance at meetings

c. Weight in pounds

d. Length in metric units

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30. The fraction of nonconforming products is plotted on which of the following types of control chart?

a. P chart

b. U chart

c. Np chart

d. C chart

31. A cause and effect diagram is a useful tool for doing which of the following?

a. Determining the flow of a process

b. Detecting shifts in a process

c. Developing theories based on symptoms

d. Arranging theories by defect count

32. Which of the following statistics would best describe the central tendency of a sample of data?

a. Mode

b. Mean

c. Standard deviation

d. Range

33. Which of the following types of tools or techniques is considered qualitative?

a. Histogram

b. Frequency distributions

c. Pareto chart

d. Process observations

34. Which of the following techniques is most useful in narrowing issues and limiting discussion?

a. Brainstorming

b. Quality function deployment

c. Cause and effect analysis

d. Mutilating

35. In statistics, an estimation error that is persistent or systematic is called

a. Bias

b. Sensitivity

c. Random

d. Shift

36. A customer satisfaction survey used the following rating scale:

1= very satisfied

2= Satisfied

3= Neutral

4= dissatisfied

5= very dissatisfied

This is an example of which of the following measurement scales?

a. Nominal

b. Ordinal

c. Ratio

d. Interval

37. Which of the following techniques is used in identifying underlying problems?

a. Cause and effect analysis

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b. Prioritization matrix

c. Force field analysis

d. Pareto analysis

38. For a normal distribution, two standard deviation on each side of the mean would include what

percentage of the total population

a. 47%

b. 68%

c. 95%

d. 99%

39. In measurement system analysis, which of the following pairs of data measures is used to determine

total variance?

a. Process variance and reproducibility

b. Noise system and repeatability

c. Measurement variance and process variance

d. System variance and bias

40. Process data being used in the initial set-up of a process are assumed have a normal distribution. If the

nominal (target) is at the center of the distribution, and the specification limits are set at = 3 from the

center the Cpk is equal to

a. -0.25

b. 1.00

c. 1.33

d. 1.67

41. A green belt is going to monitor the number of defects on different size samples. Which of the

following control chart would be most appropriate?

a. u

b. np

c. c

d. p

42. Correction, over-production, inventory, and motion are all examples of

a. waste

b. 5S target areas

c. Noise

d. Value-added activities

43. The primary factor in the successful implementation of six sigma is to have

a. The necessary resources

b. The support/leadership of top management

c. Explicit customer requirements

d. A comprehensive training program

44. Which of the following types of variation is LEAST likely to occur in sequential repetitions of a

process over a short period of time?

a. Cyclical

b. Positional

c. Temporal

d. Seasonal

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45. The primary reason that most companies implement six sigma is to

a. Reduce defects

b. Improve Processes

c. Improve profit

d. Increase customer satisfaction

46. The term used to describe the risk of a type I error in a test of hypotheses is

a. Power

b. Confidence level

c. Level of significance

d. Beta risk

47. One characteristic of attributes data is that it is always

a. continuous

b. Discrete

c. Expensive to collect

d. Read from a scale of measurement

48. Which of the following tests may be used to determine whether a sample comes from a population

with an exponential distribution?

a. T

b. F

c. Chi-square

d. ANOVA

49. Which of the following tools are appropriate for a quality engineer to use in qualifying a process that

has variable data?

I. An and R control chat

II. A his to gram

III. A cc hart

IV. A p chart

a. I and II only

b. II and III only

c. III and IV only

d. I, II, and IV only

50. The correlation coefficient for the length and weight of units made by a process is determined to be

0.27. if the process were adjusted to reduce the weight of each unit by 0.5 ounce, the correlation

coefficient of the length and weight of the units made by the new process would be equal to

a. 0.50

b. 0.27

c. 0.23

d. -0.23

51. A form, in either diagram or table format, that is prepared in advance for recording data is known as a

a. Cause-and-effect diagram

b. Pareto chart

c. Flowchart

d. Check sheet

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52. A major drawback of using histogram in process control is that they

a. do not readily account for the factor of time

b. Are relatively difficult to construct and interpret

c. Require too many data points

d. Require too many intervals

53. Which of the following tools would be of the greatest use for finding the most efficient path and

realistic schedule for the completion of a project?

a. Interrelationship diagram

b. Activity network diagram

c. Tree diagram

d. Affinity diagram

54. A control plan is designed to do which of the following?

a. Supplement information contained in operator instructions

b. Support the production scheduling system

c. Provide a documented system for controlling processes

d. Provide a method for tracking the design review process

55. To determine the average number of nonconforming parts over time, which of the following attribute

control chart would be most appropriate?

a. A chat

b. Np chart

c. P chart

d. U chat

56. Which of the following techniques is most appropriate for generating continuous improvement ideas?

a. Tree diagram

b. Brainstorming

c. Prioritization matrix

d. Interrelationship diagraph

57. Which of the following tools is used extensively quality function deployment (QFD)?

a. Affinity diagram

b. Matrix diagram

c. Cause and effect diagram

d. Activity network diagram

58. Which of the following tools is most likely to be organizing a list of ideas generated during a

brainstorming session?

a. Activity network diagram

b. Affinity diagram

c. Histogram

d. Process control chart

59. Which of the following tools would be most appropriate for collecting data to study the symptoms of

a problem?

a. A check sheet

b. A flow diagram

c. A force field analysis

d. An activity network diagram

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60. Kaizen is defined as

a. Re-engineering

b. Lean manufacturing

c. Continuous improvement

d. Error –proofing

61. The LEAST informative of the four measurement scales is the

a. Ratio

b. Nominal

c. Ordinal

d. Interval

62. Which of the following can used to determine the goodness of fit of a distribution to a data set?

a. T test

b. ANOVA

c. F rest

d. Chi square test

63. A fair coin is tossed 10 times. What are the expected mean and variance of the number of heads?

Mean variance

a. 0.5 0.025

b. 5.0 2.500

c. 5.0 5.000

d. 10.0 5.000

64. A process capability analysis is NOT used to

a. Determine the ability of a process to meet specifications

b. Maintain a process in a state of statistical control

c. Establish new specifications

d. Prioritize competing processes

65. A type of line graph used to assess the stability of a process is called a

a. Control chart

b. Pareto chart

c. Check sheet

d. cause and effect diagram

66. A process produces nonconformities according to a distribution. If the mean of the nonconformities is

25, what is the standard deviation?

a. 2.5

b. 5.0

c. 12.5

d. 25.0

67. Five six-sided dice are rolled together 100 times. Two histograms are constructed: one for the 500

individual results and one for the 100 averages of five results. In this situation, the individual results

follow a uniform distribution, while the averages follow which of the following distributions?

a. Normal

b. Student’s t

c. Binomial

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d. Uniform

68. A calibrated micrometer was used to take 10 replicated measures of a reference standard. If X

m=0.073, and the true value of the reference standard is 0.075, what is the bias of the micrometer?

a. 0.001

b. 0.002

c. 0.073

d. 0.075

69. The power of a test for the difference between means is measured by

a. A

b. 1-a

c. B

d. 1-b

70. A process is stable and its output is normally distributed. The process has a specification of

16.73=0.01. What is the maximum process standard deviation if the Cp must be=1.5?

a. 0.0011

b.0.0022

c. 0.0041

d. 0.0133

71. Which of the following is the most effective technique for prioritizing critical factors foe problemsolving?

a. Venn diagram

b. Scatter diagram

c. Pareto diagram

d. Cause and effect diagram

72. The main advantage of a matrix diagram is that it

a. Displays all the possible causes related to a problem

b. Displays the strength of relationship between each paired combination of variables

c. Identifies, analyzes, and classifies the cause and effect relationship that among all critical issues

d. Identifies a sequence of actions and materials entering a process

73. Poka-yake is best defined as

a. Improving machine efficiency

b. Reducing field failures to virtually zero

c. Capturing the voice of the customer

d. Preventing controllable defects

74. Which of the following describes the 95% confidence interval of a 20% absentee rate in a department

with 30 people?

a. 6% to 34%

b. 8% to 32%

c. 13% to 27%

d. 17% to 23%

75. Which of the following are needed to calculate the process capability index,Cp?

a. The specification limits and the mean

b. The specification limits and s^ (Sigma Cap)

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c. The process mean and s^(Sigma Cap)

d. The upper and lower specification limits

76. Repeatability and reproducibility are terms that operationally define

a. Bias

b. Accuracy

c. Discrimination

d. Precision’

77. A method that classifies data without significantly reducing accuracy or precision is known as

a. Bias adjustment

b. Statistical efficiency

c. Blocking

d. Coding

78. If a process has a variance of 4 units and a specification of 96+4, what is the process performance

index (Pp)?

a. 0.33

b. 0.66

c. 1.00

d. 1.50

79. If a histogram has a distribution that is bimodal this indicates that the

a. Process is in control

b. Distribution is abnormal

c. Data collected is accurate

d. data has two points

80. Which of the following best describes how an affinity diagram is used?

a. Grasping organizational performance relative to contrasting data

b. Prioritizing data from most signification to least significant

c. Grouping ideas that are created during brainstorming

d. Identifying when a process is in control

81. Warranty claims are classified in which of the following cost of quality groups?

a. Internal failure

b. External failure

c. Appraisal

d. Prevention

82. At what stage of the problem-solving process would a team most likely use a cause-effect diagram?

a. Description of the process associated with the problem

b. Definition of the problem and its scope

c. Organization of possible problem causes

d. Collection of data to identify actual causes

83. Steel bars are cut to cylindrical shafts by means of a lathe. The diameter and allowable tolerance of

the shaft is 2.00=.001 inch. A control chart is used to monitor the quality level of the process. Which of

the following plots on the control chart might indicate a problem of wear on the lathe?

a. The diameter of a single shaft above 2.001 inch

b. the diameter of a single shaft below 1.999 inch

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c. An Apparent increasing trend in the shaft diameters

d. Erratic in-tolerance or out-of-tolerance diameter measurements

84. A sample consists of one or more units of product drawn from a lot or batch on the basis of

a. Defect of the product

b. Random selection

c. Size of the product

d. When the inspection process was completed

85. What is the percent yield for a normally distributed process in which the item length specification is

5.750=0.004, X is 5.752, and the standard deviation is 0.002?

a. 15.73%

b. 19.15%

c. 47.72%

d. 83.99%

86. In preparation for construction of a cause and effect diagram, it is important to

a. Plot separate chart for each source

b. Focus only on what makes thing go wrong

c. Record everything people suggest

d. Validate possible root cause

87. Which of the following tools should be used a team is generating and prioritizing a list of options that

include highly controversial issues?

a. Brainstorming

b. Affinity diagram

c. Nominal group technique

d. 5 whys

88. If a distribution is normal, u=50 s=15, what percentage of data will be less than 30?

a. 59.18%

b. 40.82%

c. 9.18%

d. 1.33%

89. A company is receiving an unusually high number of returns from various customers. The first step in

investigating the problem would be to

a. Check the inspection records

b. Establish the correlation of the returns to shipments

c. Brainstorm the potential causes

d. Classify the returns by type and degree of serious

90. Which of the following is the best definition of a flow chart?

a. A diagram used to structure ideas into useful categories

b. An illustration used to analyze variation in a process

c. A picture used to separate steps of a process in sequential order

d. An analytical tool used to clarify opposing aspects of a desired change

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91. Which of the following activities would NOT contribute to the effective functioning of a team?

a. Eliminating unnecessary activities

b. Development team performance measures

c. Defining process in detail

d. Monitoring each member’s performance

92. What is the standard deviation of the population below?

10, 4, 16, 12, 8

a. 4.00

b. 4.47

c. 16.00

d. 20.00

93. Which of the following tools would be most appropriate for collecting data to study the symptoms of

a problem?

a. Check sheet

b. Flow diagram

c. Force-field analysis

d. Activity network diagram

94. Which of the following measures is a sufficient statistic for the parameter u?

a. Median

b. Mid-range

c. Mean

d. Mode

95. Positional, cyclical, and temporal variations are most commonly analyzed in

a. SPC charts

b. Multi-vari charts

c. Cause and effect diagram

d. Run charts

96. Which of the following describes the deming method for continuous improvement?

a. Cost of quality analysis

b. Process map

c. Tree Diagram

d. Plan-do-check-act cycle

97. in analysis of variance, Which of the following distributions is the basis for determining whether the

variance estimates are all from the same population?

a. Chi square

b. Student’s

c. Normal

d. F

98. Which of the following statement best describes the set all value of a random variable?

a. It is finite.

b. It is an interval

c. It can be discrete or continuous.

d. It can be tracked by using control charts or scatter plots.

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99. Which of the following is the best description of randomization?

a. A technique used to increase the precision of an experiment

b. A means of assuring representative sampling

c. The repetition of an observation or measurement

d. The relationship between two or more variables

100. When the order of items is not important, which of the following is the method to use to determine

the number of sets and subsets of items?

a. Combination

b. Permutation

c. Factorization

d. Simulation