MODEL TEST PAPER 7

INTERMEDIATE GROUP – II
PAPER – 6A : FINANCIAL MANAGEMENT & STRATEGIC MANAGEMENT
PAPER 6A: FINANCIAL MANAGEMENT
Time Allowed – 3 Hours (Total time for 6A and 6B) Maximum Marks – 50
1. The question paper comprises two parts, Part I and Part II.
2. Part I comprises Case Scenario based Multiple Choice Questions (MCQs)
3. Part II comprises questions which require descriptive type answers.
4. Working note should form part of the answer. Wherever necessary, suitable
assumptions may be made by the candidates and disclosed by way of note.
However, in answers to Questions in Division A, working notes are not
required.

PART I – Case Scenario based MCQs (15 Marks)

Write the most appropriate answer to each of the following multiple choice
questions by choosing one of the four options given. All questions are
compulsory.
Case Scenario I:
MNP Ltd. is a multinational company having its operations spread mostly in India
and neighbouring countries of India. The promotors of the company believed that
capital structure of a company must be kept flexible and balanced, where proper
mix should always be maintained between debt and equity. Such mix of debt and
equity should be reviewed from time to time keeping in mind the changing situation
of India and the global scenario.
The capital structure of MNP Ltd. is as under:
9% Debentures Rs. 2,75,000
11% Preference shares Rs. 2,25,000
Equity shares (face value: Rs. 10 per share) Rs. 5,00,000
Total capital of the company Rs. 10,00,000
The following are some of the additional information provided by MNP Ltd. relating
to the above mentioned capital structure.
(i) Rs. 100 per debenture redeemable at par has 2% floatation cost and 10 years
of maturity. The market price per debenture is Rs. 105.
(ii) Rs. 100 per preference share redeemable at par has 3% floatation cost and
10 years of maturity. The market price per preference share is Rs. 106.

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(iii) Equity share has Rs. 4 floatation cost and market price per share of Rs. 24.
The next year expected dividend is Rs. 2 per share with an annual growth of
5%. The firm has a practice of paying all earnings in the form of dividends.
(iv) Corporate Income-tax rate is 35%.
Since the company is a multinational company market value weights are preferred
over book value weights when calculating the Weighted Average Cost of Capital
(WACC) for several reasons. The company believes that market values reflect the
current market perception of a company's financial health and future prospects.
This is more relevant for calculating the cost of capital today, as investors base
their decisions on current market conditions. Book values, based on historical
accounting principles, may not accurately represent the true economic value of the
company's capital components. Market values capture the actual cost that a
company would incur if it were to raise new capital in the current market. Book
values might not reflect the true cost of debt due to factors like changes in interest
rates or creditworthiness. Similarly, book value of equity might not reflect the
current investor expectations for future dividends and growth. Market values are
readily available through stock prices and market interest rates. Obtaining accurate
book values, especially for intangible assets, can be a complex and time-
consuming process.
On the basis of this information provided above you are required to answer the
following MCQs (1 to 5):
1. Calculate the cost of equity and choose the correct answer from the following?
(a) 14%
(b) 15%
(c) 16%
(d) 17%
2. Calculate the cost of debt and choose the correct answer from the following?
(a) 6.11%
(b) 5.48%
(c) 9%
(d) 10.55%
3. Calculate the cost of preference shares and choose the correct answer from
the following?
(a) 10.57 %
(b) 5.11%
(c) 9%
(d) 10%
4. Calculate the WACC using market value weights and choose the correct
answer from the following?
(a) 12.80 %

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 (b) 5.11%
(c) 9%
(d) 10.55%
5. What will be the current market price of MNP Ltd.’s equity shares if Ke = 10%,
expected dividend is Rs. 2 per share and annual growth rate is 5% from the
following options:
(a) 40 per share
(b) 20 per share
(c) 30 per share
(d) 45 per share (5 x 2 = 10 Marks)
6. EBIT = 4,00,000
EBT = 3,00,000
Sales = 16,00,000
Which of the following is / are correct?
1. DFL is 1.33
2. Interest coverage ratio is 3
3. Operating profit margin is 25%
Select the correct answer using the code given below:
(a) 1, 2 and 3
(b) 1 and 2 only
(c) 1 and 3 only
(d) 3 only (2 Marks)
7. If velocity of stock is 3 months, annual sales amount to Rs.6 lakh at 20% gross
profit margin and opening stock is Rs.90,000; what is the closing stock value?
(a) Rs. 90,000
(b) Rs. 70,000
(c) Rs. 1,50,000
(d) Rs. 1,00,000 (2 Marks)
8. Margin of safety is affected if:
1. P/V ratio changes
2. Fixed cost changes
3. Volume of sales changes
(a) 1 only
(b) 1 and 2 only
(c) 2 and 3 only
(d) 1, 2 and 3 (1 Mark)

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 PART II – Descriptive Questions (35 Marks)
Question No. 1 is compulsory.
Attempt any two questions out of the remaining three questions.

1. (a) The financial statement and operating results of Alpha Limited revealed
the following position as on 31st March, 2023:
— Equity share capital (Rs. 10 fully Rs. 20,00,000
paid share)
— Working capital Rs. 6,00,000
— Bank overdraft Rs. 1,00,000
— Current ratio 2.5 : 1
— Liquidity ratio 1.5 : 1
— Proprietary ratio (Net fixed .75 : 1
assets/Proprietary fund)
— Cost of sales Rs. 14,40,000
— Debtors velocity 2 months
— Stock turnover based on cost of 4 times
sales
— Gross profit ratio 20% of sales
— Net profit ratio 15% of sales
Closing stock was 25% higher than the opening stock. There were also
free reserves brought forward from earlier years. Current assets include
stock, debtors and cash only. The current liabilities expect bank overdraft
treated as creditors.
Expenses include depreciation of Rs. 90,000.
The following information was collected from the records for the year
ended 31st March, 2024:

— Total sales for the year were 20% higher as compared to previous
year.
— Balances as on 31st March, 2024 were : Stock Rs. 5,20,000,
Creditors Rs. 4,15,000, Debtors Rs. 4,95,000 and Cash balance
Rs. 3,10,000.
— Percentage of Gross profit on turnover has gone up from 20% to
25% and ratio of net profit to sales from 15% to 16%.
— A portion of Fixed assets was very old (book values Rs. 1,80,000)
disposed for Rs. 90,000. (No depreciations to be provided on this
item).
— Long-term investments were purchased for Rs. 2,96,600.
— Bank overdraft fully discharged.

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 — Percentage of depreciation to Fixed assets to be provided at the
rate in the previous year.
PREPARE Balance Sheet as on 31st March, 2023 and 31st March, 2024.
(5 Marks)
(b) Theta Limited is expecting an annual earning of Rs. 3 Lakhs before
paying any interest and taxes. The company has Rs. 10 lakhs of 10%
debentures in its capital structure. The capitalisation rate is 12.5%. You
are required to calculate the value of Theta Limited as per the NI
approach. Also, COMPUTE the overall cost of capital. (5 Marks)
(c) The following data relates to Beta Limited:
Rs.
Sales 2,00,000
Less: Variable Expenses (30%) 60,000
Contribution 1,40,000
Fixed operating expenses 1,00,000
EBIT 40,000
Less: Interest 5,000
EBT 35,000
(i) CALCULATE by what percentage will EBT increase if sales increases
by 6 percent.
(ii) CALCULATE by what percentage will EBIT increase if there is 10 per
cent increase in sales?
(iii) CALCULATE by what percentage EBT increase if EBIT increases by
6 per cent? (5 Marks)
2. (a) ABC Ltd., a newly formed company has applied to the Private Bank for
the first time for financing it’s Working Capital Requirements. The
following information is available about the projections for the current
year: Estimated Level of Activity Completed Units of Production 31,200.
Raw Material Cost Rs 40 per unit
Direct Wages Cost Rs 25 per Unit
Overhead Rs 40 per Unit (Incl Rs 10 of
Depreciation)
Selling Price Rs 150 per unit
GP Ratio (Cash Cost) 30%
Net Profit Ratio 25% (On Total cost)
Raw Material in Stock Avg of 30 days consumption
Work in Progress Stock at 30% of FG **Valued at Prime Cost
Produced Units Material – 90% into process

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 Relevant Conversion Cost –
60% completed
Finished Goods Stock 2,500 units
Credit Allowed by the supplier 30 Days
Credit Allowed to Purchasers 45 Days
Direct Wages [Lag in payment] 15 Days
Expected Cash Balance 1,25,000
Safety margin is to be kept at 15% of the net working capital required
inclusive of the margin amount. Assume that production is carried on
evenly throughout the year (360 days) and wages and overheads accrue
similarly. All sales are on the credit basis. You are required to
CALCULATE the Net Working Capital Requirement. (6 Marks)
(b) Return on Equity (ROE) is Satva Limited is 15% and the capitalization
rate applicable to the company is at 20%. Satva Limited’s Book Value
per share (BVPS) is Rs 125. Calculate the intrinsic value of the share
today using Gordon’s model and Walter’s model if the company’s policy
is to retain 65% of the earning. (4 Marks)
3. Hemsparsh Private Limited is globally recognized consultancy firm having its
presence in various countries across the globe and is currently headquartered
at Ahmedabad, India.
It plans to commence a new branch in the Australia owing to the untapped
opportunities available there in the outsourcing business. The company hired
a professional for the preparation of the Project report and the fee paid was
Rs 2,00,000. The company also incurred Rs 5,00,000 in the form R&D costs.
As per the project report, the Company will require an initial fund outlay of Rs
25 crores for buying property & setting up the other infrastructure. It will also
require working capital amounting to Rs 5 crore. The company is planning to
operate for a very long period of time, however for the sake of simplicity,
calculations shall end at the end of the 10th year. The Earnings before tax but
after deducting Interest Exp (EBT) estimated would be as follows –
YEAR EBT (Amount in Rs)
1 2,00,00,000
2 2,50,00,000
3 4,00,00,000
4 4,75,00,000
5 6,00,00,000
6 6,40,00,000
7 6,15,00,000
8 5,25,00,000
9 3,80,00,000
10 2,90,00,000

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 The above amounts also include an allocated common cost of Rs 12,50,000.
Company will distribute 10% dividends every year on post-tax earnings.
Company intends to borrow funds of 3 crores at a post-tax Interest rate of
6.5% in India. As per the tax treaty between India & Australia (Tax Agreement
between two nations), first 3 years are tax free and from 4th year 75% of
corporate taxes are to be paid in the country where it is headquartered and
balance in the other nation. Total Corporate tax rate applicable to the
company is 30%. However, tax on capital gains is to be paid at 15%, only in
the headquarters. Salvage value for depreciation purpose is estimated at Rs.
90,00,000. The assets would be disposed of in the market at Rs. 3,50,00,000
at the end. Hemsparsh Private Limited desires a premium of 3% to the current
MCLR of 12% (Marginal Cost of Funds based Lending Rate). Assume no
other assets in the block.
CALCULATE NPV for the project and advise only from Indian law perspective.
If the company wishes to recoup its investment within 3.5 years, STATE any
two measures that the company shall take. (10 Marks)
4. (a) EXPLAIN the difference between factoring and forfaiting (4 Marks)
(b) DESCRIBE some of the tasks that demonstrate the importance of good
financial management (4 Marks)
(c) EXPLAIN the concept of Drop – Lock Bond (DL Bonds) (2 Marks)
OR
(c) MENTION any one advantage of stock dividend – to the company as well
as to the investor (2 Marks)

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 MODEL TEST PAPER 8
INTERMEDIATE GROUP – II
PAPER – 6A : FINANCIAL MANAGEMENT & STRATEGIC MANAGEMENT
PAPER 6A: FINANCIAL MANAGEMENT
Time Allowed – 3 Hours (Total time for 6A and 6B) Maximum Marks – 50
1. The question paper comprises two parts, Part I and Part II.
2. Part I comprises Case Scenario based Multiple Choice Questions (MCQs)
3. Part II comprises questions which require descriptive type answers.
4. Working note should form part of the answer. Wherever necessary, suitable
assumptions may be made by the candidates and disclosed by way of note.
However, in answers to Questions in Division A, working notes are not
required.
PART I – Case Scenario based MCQs (15 Marks)
Write the most appropriate answer to each of the following multiple choice
questions by choosing one of the four options given. All questions are
compulsory.
1. KGF Chemicals Ltd., a prominent player in the chemical industry, faces the
challenge of determining its growth trajectory and dividend policy to maximize
shareholder value. With expectations of significant growth in the near term
and stabilization in the long run, the company must strategically manage its
resources to align with investor expectations.
KGF Chemicals Ltd. is a leading manufacturer and supplier of specialty
chemicals catering to diverse industries such as pharmaceuticals, agriculture,
and manufacturing. Established with a commitment to innovation and quality,
the company has garnered a strong market presence over the years.
The company is projected to experience robust growth at a rate of 14% per
annum for the next four years. Subsequently, the growth rate is expected to
stabilize at the national economy's rate of 7% indefinitely. This forecast
reflects both the company's expansion plans and the broader economic
landscape.
KGF Chemicals Ltd. paid a dividend of ₹ 2 per share last year (Do = 2). The
management faces the crucial decision of balancing dividend payouts with
reinvestment opportunities to sustain growth and meet shareholders'
expectations. The dividend policy must strike a delicate balance between
rewarding shareholders and retaining earnings for future investments.
The required rate of return on equity shares is 12%, indicating investors'
expected return given the company's risk profile and market conditions.
Management must carefully assess investment opportunities to ensure they
meet or exceed this threshold, thereby generating value for shareholders over
the long term.
In navigating the dynamic landscape of the chemical industry, KGF Chemicals
Ltd. must adopt a proactive approach to managing growth and dividend policy.

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 By aligning strategic decisions with investor expectations and market
dynamics, the company can position itself for sustainable success while
maximizing shareholder value. Continual evaluation and adaptation will be
essential to capitalize on growth opportunities and maintain competitiveness
in the evolving marketplace.
You are required to answer the following on the basis of above information:
1. What is the expected dividend at the end of 4th Year?
(A) ₹ 2.1097
(B) ₹ 2.1483
(C) ₹ 2.9631
(D) ₹ 3.3779
2. What is the present value of Expected Dividends to be received in next
four years?
(A) ₹ 11.2202
(B) ₹ 8.3655
(C) ₹ 9.8423
(D) ₹ 6.2176
3. Determine the Market Price of shares at the end of 4th Year?
(A) ₹ 72.28
(B) ₹ 67.55
(C) ₹ 50.67
(D) ₹ 77.34
4. Determine the Present Value of Market Price of shares at the end of 4th
Year?
(A) ₹ 49.18
(B) ₹ 32.22
(C) ₹ 45.79
(D) ₹ 42.96
5. Calculate today’s market price of the share.
(A) ₹ 59.03
(B) ₹ 54.33
(C) ₹ 57.01
(D) ₹ 57.54 (5 x 2 = 10 Marks)
2. A company has a cost of equity of 10% and a interest rate of 6%. The
company's debt-to-equity ratio is 1.5, and the corporate tax rate is 40%. What
is the company's weighted average cost of capital?
(A) 7.20%
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 (B) 6.16%
(C) 7.60%
(D) 8.40% (2 Marks)
3. Output (units) = 3,00,000 Fixed cost = ₹ 3,50,000 Unit variable cost = ₹ 1.00
Interest expenses = ₹ 25,000
Unit selling price = ₹ 3.00 Applicable tax rate is 35% Calculate Financial
Leverage.
(A) 1.11
(B) 2.40
(C) 2.67
(D) 1.07 (2 Marks)
4. External Commercial Borrowings can be accessed through _______
(A) only automatic route
(B) only approval route
(C) both automatic and approval route
(D) neither automatic nor approval route (1 Mark)

PART II – Descriptive Questions (35 Marks)

Question No. 1 is compulsory.
Attempt any two questions out of the remaining three questions.
1. (a) Alpha Limited issued 40,000 12% redeemable preference share of ` 100
each at a premium of ` 5 each, redeemable after 10 years at a premium
of ` 10 each. The floatation cost of each share is ` 2. You are required
to CALCULATE cost of preference share capital ignoring dividend tax.
(5 Marks)
(b) Cello Limited is considering buying a new machine which would have a
useful economic life of five years, a cost of ` 1,25,000 and a scrap value
of ` 30,000, with 80 per cent of the cost being payable at the start of the
project and 20 per cent at the end of the first year. The machine would
produce 50,000 units per annum of a new product with an estimated
selling price of ` 3 per unit. Direct costs would be ` 1.75 per unit and
annual fixed costs, including depreciation calculated on a straight- line
basis, would be ` 40,000 per annum.
In the first year and the second year, special sales promotion
expenditure, not included in the above costs, would be incurred,
amounting to ` 10,000 and ` 15,000 respectively.
CALCULATE NPV of the project for investment appraisal, assuming that
the company’s cost of capital is 10 percent. (5 Marks)

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 (c) A firm’s details are as under:
Sales (@100 per unit) ` 24,00,000
Variable Cost 50%
Fixed Cost ` 10,00,000
It has borrowed ` 10,00,000 @ 10% p.a. and its equity share capital is `
10,00,000 (` 100 each).
Consider tax @ 50 %.
CALCULATE:
(a) Operating Leverage
(b) Financial Leverage
(c) Combined Leverage
(d) Return on Investment
(e) If the sales increases by ` 6,00,000; what will the new EBIT?
(5 Marks)
2. Following information is forecasted by the Puja Limited for the year ending
31st March, 2023:
Balance as Balance as at
at 1st April, 31st March,
2022 2023
(`) (`)
Raw Material 45,000 65,356
Work-in-progress 35,000 51,300
Finished goods 60,181 70,175
Debtors 1,12,123 1,35,000
Creditors 50,079 70,469
Annual purchases of raw material (all credit) 4,00,000
Annual cost of production 7,50,000
Annual cost of goods sold 9,15,000
Annual operating cost 9,50,000
Annual sales (all credit) 11,00,000
You may take one year as equal to 365 days.
You are required to CALCULATE:
(i) Net operating cycle period.
(ii) Number of operating cycles in the year.
(iii) Amount of working capital requirement using operating cycles.
(10 Marks)

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3. (a) Shahji Steel Limited requires ` 25,00,000 for a new plant. This plant is
expected to yield earnings before interest and taxes of ` 5,00,000. While
deciding about the financial plan, the company considers the objective
of maximizing earnings per share. It has three alternatives to finance the
project - by raising debt of ` 2,50,000 or ` 10,00,000 or ` 15,00,000 and
the balance, in each case, by issuing equity shares. The company's
share is currently selling at ` 150 but is expected to decline to ` 125 in
case the funds are borrowed in excess of ` 10,00,000. The funds can be
borrowed at the rate of 10 percent upto ` 2,50,000, at 15 percent over
` 2,50,000 and upto ` 10,00,000 and at 20 percent over ` 10,00,000.
The tax rate applicable to the company is 50 percent. ANALYSE which
form of financing should the company choose? (6 Marks)
(b) Following information are available for Navya Ltd. along with various
ratios relevant to the particular industry it belongs to. APPRAISE your
comments on strength and weakness of Navya Ltd. comparing its ratios
with the given industry norms.
Navya Ltd.
Balance Sheet as at 31.3.2023
Liabilities (`) Assets (`)
Equity Share Capital 48,00,000 Fixed Assets 24,20,000
10% Debentures 9,20,000 Cash 8,80,000
Sundry Creditors 6,60,000 Sundry debtors 11,00,000
Bills Payable 8,80,000 Stock 33,00,000
Other current Liabilities 4,40,000 -
Total 77,00,000 Total 77,00,000
Statement of Profitability
For the year ending 31.3.2023
Particulars (`) (`)
Sales 1,10,00,000
Less: Cost of goods sold:
Material 41,80,000
Wages 26,40,000
Factory Overhead 12,98,000 81,18,000
Gross Profit 28,82,000
Less: Selling and Distribution Cost 11,00,000
Administrative Cost 12,28,000 23,28,000
Earnings before Interest and Taxes 5,54,000
Less: Interest Charges 92,000
Earning before Tax 4,62,000
Less: Taxes @ 50% 2,31,000
Net Profit (PAT) 2,31,000
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 Industry Norms
Ratios Norm
Current Ratio 2.5
Receivables Turnover Ratio 8.0
Inventory Turnover Ratio (based on Sales) 9.0
Total Assets Turnover Ratio 2.0
Net Profit Ratio 3.5%
Return on Total Assets (on EBIT) 7.0%
Return on Net worth (Based on Net profit) 10.5%
Total Debt/Total Assets 60.0%

(4 Marks)
4. (a) WRITE short notes on the following:
Inter relationship between investment, financing and dividend decisions.
(4 Marks)
(b) DISCUSS the risk-return considerations in financing of current assets.
(4 Marks)
(c) WHAT is ‘Optimum Capital Structure’? (2 Marks)
OR
(c) DISCUSS the dividend-price approach to estimate cost of equity capital.
(2 Marks)

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 MODEL TEST PAPER 1
PAPER 6B: STRATEGIC MANAGEMENT

1. The question paper comprises two parts, Part I and Part II.
2. Part I comprises case scenario based multiple choice questions (MCQs)
3. Part II comprises questions which require descriptive type answers.
PART I – Case scenario based MCQs (15 Marks)
Question 1.(A) (Compulsory)
1. (A) In the fiercely competitive automotive industry, Zing, a promising
newcomer, set out on a strategic journey with ambitions of making a
substantial impact. Recognizing the significance of a robust distribution
network early on, Zing forged partnerships with established dealerships,
offering them attractive margins. This strategic move significantly
enhanced Zing's reach, with a presence in 80% of the nation's
dealerships by 2022, expanding its coverage significantly.
To differentiate themselves from competitors, Zing adopted two key
strategies. Firstly, they prioritized product design, investing heavily in
aesthetics and incorporating innovative features and environmentally
friendly technologies. This focus on design led to their vehicles receiving
excellent reviews and achieving an impressive 15% year-on-year growth
in sales.
Secondly, Zing implemented switching costs to discourage customers
from switching to other brands. Their vehicles featured branded
software, making it both expensive and cumbersome for customers to
transition to alternative brands. This strategic move effectively protected
Zing's market share.
Zing's overarching goal was to position itself as a premium automotive
brand, blending luxury with sustainability. However, their execution fell
down as they challenged with maintaining consistent quality and service
levels, resulting in mixed customer reviews.
Despite their best efforts, Zing's differentiation strategy fell short due to
issues with inconsistent quality and service. Negative word-of-mouth and
declining customer satisfaction scores tarnished their brand image,
leading to stagnating sales. This failure to deliver on their brand promise
proved to be a significant setback.
As Zing's reputation suffered from execution failures, securing additional
funds for international expansion became challenging. Consequently,
they made the difficult decision to postpone their global ambitions for the
next five years, focusing instead on stabilizing their finances and
rebuilding their brand image.
In summary, Zing's strategic journey illustrates the importance of not
only crafting a compelling differentiation strategy but also executing it

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 flawlessly. In the competitive automotive landscape, maintaining
consistent quality and service is paramount to sustaining brand loyalty
and achieving long-term success.
Based on the above Case Scenario, answer the Multiple Choice
Questions.
(i) What key strategic approach did Zing use to expand its market
presence in the automotive industry?
(a) Product innovation and design
(b) Cost leadership strategy
(c) Entering new international markets
(d) Vertical integration (2 Marks)
(ii) How did Zing protect its market share from potential competitors?
(a) Price-cutting strategy
(b) Branded software and switching costs
(c) Aggressive marketing campaigns
(d) International expansion (2 Marks)
(iii) Why did Zing's differentiation strategy fall short in the market?
(a) Intense price competition
(b) Poor marketing strategy
(c) Inconsistent quality and service
(d) Lack of international expansion (2 Marks)
(iv) Forging partnerships with established dealerships to enhance its
distribution network falls under which level of strategy?
(a) Corporate level strategy
(b) Business level strategy
(c) Functional level strategy
(d) Competitive level strategy (2 Marks)
(v) How did Zing initially expand its market presence across the
nation?
(a) Aggressive marketing campaigns
(b) Developing low-cost vehicles
(c) Partnering with established dealerships
(d) Launching a luxury brand (2 Marks)
(B) Compulsory Application Based Independent MCQs
(i) TechMex Inc., a leading technology company, offers a diverse
portfolio of products ranging from established cash cows to

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 promising question marks. As part of its strategic planning process,
the company aims to assess its product portfolio's performance and
allocate resources effectively. In which quadrant of the BCG Matrix
would TechMex's new innovative product, recently launched in a
rapidly growing market, likely fall into?
(a) Cash Cow
(b) Dog
(c) Question Mark
(d) Star (2 Marks)
(ii) BlueSky Enterprises, a multinational corporation specializing in
renewable energy solutions, is undergoing a strategic
transformation to enhance its competitive position in the market. As
part of this initiative, the company is reevaluating its organizational
structure, processes, and culture. Which aspect of the McKinsey
7S Model is most relevant for BlueSky Enterprises during this
strategic transformation?
(a) Strategy
(b) Structure
(c) Systems
(d) Skills (2 Marks)
(iii) The threat of substitutes is high when:
(a) There are few substitute products available
(b) Switching costs are low
(c) Suppliers have high bargaining power
(d) There is strong brand loyalty (1 Mark)

PART II – Descriptive Questions (35 Marks)

Question No. 1 is compulsory.
Attempt any two questions out of the remaining three questions.
1. (a) Swati is the marketing manager at a software company. She is
responsible for developing and implementing marketing strategies for
the company’s products. Swati leads a team of marketing professionals
and works closely with the product development and sales teams to
ensure that the company's products are effectively promoted in the
market. She also analyzes market trends and customer feedback to
refine the marketing strategies. Which level is she working at, discuss
the roles and responsibilities of this level in organization? (5 Marks)
(b) ABC Corp, a multinational consumer electronics company, is planning to
expand its operations into a new country. The company's senior
management is evaluating the potential risks and opportunities of

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 entering this new market. As part of their analysis, they decide to use
the PESTLE framework to assess the external factors that could impact
their decision. How can the PESTLE framework help ABC Corp assess
the external factors affecting its decision to expand into a new country?
(5 Marks)
(c) Imagine you are a consultant advising a small manufacturing company
embarking on a digital transformation journey. The company's leadership
is concerned about managing the change effectively. Using the best
practices for managing change in small and medium-sized businesses,
outline a strategy to help the company navigate this transformation
successfully. (5 Marks)
2. (a) Imagine you are a strategic consultant advising a retail company that is
facing increasing competition from online retailers. The company is
considering several strategic options to improve its market position.
Using the concept that strategy is partly proactive and partly reactive,
explain how the company can develop a strategic approach to address
this challenge. (5 Marks)
(b) You are a strategic manager for a tech company launching a new
smartphone model. The company wants to target tech-savvy consumers
who value innovation and cutting-edge technology. Using the concept of
customer behavior, develop a marketing strategy to promote the new
smartphone. (5 Marks)
3. (a) A beverage company is launching a new line of energy drinks targeted
at health-conscious consumers. The strategic manager wants to study
the market position of rival companies in the energy drink segment.
Which tool can be used for this analysis, and what is the procedure to
implement it effectively? (5 Marks)
(b) The CEO of a textile mill believes that his company, currently operating
at a loss, can be turned around. Develop an action plan outlining steps
the CEO can take to achieve this turnaround. (5 Marks)
4. (a) Why Strategic Performance Measures are essential for organizations?
(5 Marks)
(b) How can Mendelow's Matrix be used to analyze and manage the
stakeholders effectively?
OR
Distinguish between Concentric Diversification and Conglomerate
Diversification. (5 Marks)

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 MODEL TEST PAPER 2
PAPER 6B: STRATEGIC MANAGEMENT

1. The question paper comprises two parts, Part I and Part II.
2. Part I comprises case scenario based multiple choice questions (MCQs)
3. Part II comprises questions which require descriptive type answers.
PART I – Case scenario based MCQs (15 Marks)

Question 1.(A) (Compulsory)

1. (A) Café Delight, a thriving restaurant chain known for its unique blend of
Australian and Indian culinary experiences, embarked on a remarkable
journey from its humble beginnings as a small café in Australia to
becoming a renowned player in the Indian restaurant industry. This case
study digs into the strategic decisions and market dynamics that fueled
Café Delight's growth, highlighting its transition from a single café in
Powai, Mumbai, to a flourishing chain with a presence in five cities and
over 25 stores. It explores how Café Delight effectively leveraged social
media and adapted its pricing strategy to compete with global brands
while maintaining a healthy profit margin.
In 2005, Café Delight was founded in Melbourne, Australia, by a
passionate entrepreneur with a vision to bring the flavors of Australia
and India together. The first café established in Powai, Mumbai, received
accolades for its unique menu, blending Australian coffee culture with
Indian culinary traditions. Over the course of five years, Café Delight
expanded to three stores in Mumbai, driven by exceptional mouth
publicity, customer loyalty, and consistent quality.
As the social media landscape evolved, Café Delight recognized the
power of online platforms in reaching a wider audience. By effectively
utilizing social media and online marketing, Café Delight expanded its
presence to five cities across India and established over 25 stores.
Customer engagement through social media platforms enabled the
brand to create a strong and vibrant community, driving organic growth.
Café Delight's customer-centric approach involved continuously evolving
its menu to cater to the changing tastes and dietary preferences of its
patrons. By understanding the evolving needs of its customers, Café
Delight could offer personalized menu items, seasonal specials, and
dietary alternatives. This approach created a sense of loyalty and
engagement among customers, strengthening the brand's appeal. Not
just customers but High-power, low-interest stakeholders, including
regulatory authorities, were addressed with careful compliance and

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adherence to industry standards. Low-power, high-interest stakeholders,
like potential customers and local communities, were engaged through
targeted marketing campaigns and community involvement initiatives.
This meticulous stakeholder analysis allowed Café Delight to build and
maintain strong relationships with each group, effectively managing their
influence and impact on the brand.
With its expanding presence and increasing popularity, Café Delight
underwent a shift in its pricing strategy. It transitioned from a pocket -
friendly pricing model to a skimming strategy, capitalizing on its unique
blend of Australian and Indian flavors to position itself as a premium
restaurant. Café Delight faced stiff competition from global brands
entering the Indian market but maintained a profit margin of
approximately 30% through menu engineering and targeted pricing.
In one of its kind, using strategic tools enabled Café Delight to identify
and act on opportunities while mitigating threats, contributing to its long-
term success in the highly competitive restaurant industry.
Based on the above Case Scenario, answer the Multiple-Choice
Questions.
(i) Café Delight effectively leveraged social media and adapted its
pricing strategy as it stepped into which phase of business life cycle
of operations?
(a) Introduction Stage
(b) Growth Stage
(c) Maturity Stage
(d) Decline Stage (2 Marks)
(ii) What stakeholder group did Café Delight engage through targeted
marketing campaigns and community involvement initiatives?
(a) High-power, high-interest stakeholders
(b) Low-power, low-interest stakeholders
(c) Low-power, high-interest stakeholders
(d) High-power, low-interest stakeholders (2 Marks)
(iii) What best describes Café Delight's initial expansion strategy when
it expanded from one café to three in Mumbai?
(a) Aggressive price reduction
(b) Leveraging customer loyalty and word-of-mouth publicity
(c) Extensive online marketing
(d) Embracing global branding strategies (2 Marks)

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 (iv) At which level of strategic management does Café Delight's
transition from a pocket-friendly pricing model to a skimming
strategy fit?
(a) Corporate level
(b) Business level
(c) Functional level
(d) Operational level (2 Marks)
(v) What type of strategy did Café Delight use to differentiate itself from
competitors in the Indian restaurant industry?
(a) Cost leadership strategy
(b) Focused differentiation strategy
(c) Cost focus strategy
(d) Hybrid strategy (2 Marks)
(B) Compulsory Application Based Independent MCQs
(i) Shamita joined GlobalX Consulting firm as an Analyst in financial
fraud mitigation. In her very first assignment she faced an integrity
dilemma where her subordinates had missed calling out a potential
financial risk which could impact the overall fraud rating of the
organisation. She quickly reached out to her seniors who
appreciated her diligence and immediately reported the same to
senior management. In this scenario which element, soft or hard,
is acting in favor of GlobalX?
(a) Strategy
(b) Systems
(c) Shared Value
(d) Staff (2 Marks)
(ii) Chocopo, an ice cream company run by Shri Shyam Kumar since
1985, now had its management change to his two daughters, who
came in and wanted to experiment with a lot of flavors. They
introduced 21 new flavors in a span of 6 months while not losing
out of 2 legendary flavors of their dad i.e. Stick Kulfi and Mango
Bar. After year 1 of operations, 9 out of the 21 flavors had to be
stopped, while 10 flavors were still kept, extending the
experimentation. The early sense from market was that they would
have to be stopped too, but the sisters decided to extend their
timelines. What category as per BCG Matrix would the 10 flavors
fall into?
(a) Cash Cow

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 (b) Dog
(c) Question Mark
(d) Star (2 Marks)
(iii) A company negotiating the best prices and quality from its suppliers
to add to customer’s delight is an example of?
(a) Value Creation by improving primary activity
(b) Value Creation by improving support activity
(c) Competitive Advantage Creation
(d) Stakeholder Management (1 Mark)

PART II – Descriptive Questions (35 Marks)

Question No. 1 is compulsory.
Attempt any two questions out of the remaining three questions.
1. (a) ABC retail chain regularly monitors consumer trends and supply chain
flexibility. The retail chain tracks consumer trends to adjust its offerings,
ensuring they meet customer needs. Simultaneously, it maintains a
flexible supply chain to respond swiftly to demand fluctuations. This
strategy enables ABC retail chain to anticipate market shifts and adapt
to them effectively, ensuring its competitiveness and customer
satisfaction. Which type of strategy is the retail chain employing?
(5 Marks)
(b) A Mumbai-based conglomerate, PQR Ltd., has announced a major
restructuring of its business operations. The company has decided to
split its business into four separate units: Manufacturing, Retail,
Services, and Technology. Each unit will operate as a separate
business, with delegated responsibility for day-to-day operations and
strategy to the respective unit managers. Identify the organization
structure that PQR Ltd. has planned to implement. Discuss any four
attributes and the benefits the firm may derive by using this organization
structure. (5 Marks)
(c) GreenThrift Inc., a sustainable clothing retailer, is experiencing a surge
in popularity due to the growing awareness of environmental issues
among consumers. The company specializes in selling second-hand
clothing and upcycled garments, offering an eco-friendly alternative to
traditional fast fashion.
A major concern for GreenThrift Inc. is the emergence of new
sustainable fashion brands in the market. These brands focus on using
organic and recycled materials, as well as ethical manufacturing
practices, which align with the values of environmentally conscious
consumers.

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 Identify and explain that competition from new sustainable fashion
brands falls under which category of Porter’s Five Forces Model for
Competitive Analysis? (5 Marks)
2. (a) “Each organization must build its competitive advantage keeping in mind
the business warfare. This can be done by following the process of
strategic management.” Considering this statement, explain major
benefits of strategic management. (5 Marks)
(b) Reshuffle Corp is a company that manufactures and sells office furniture.
They offer a range of products, from desks and chairs to cabinets and
shelves. Recently, the company has been facing increased competition
from online retailers offering similar products at lower prices.
Analyzing the characteristics of products in the furniture industry,
discuss how Reshuffle Corp can differentiate its products to maintain a
competitive edge in the market. (5 Marks)
3. (a) EasyLife Corporation, a leading manufacturer of consumer electronics,
is considering launching a new line of smart home devices. As a strategic
manager, conduct a SWOT analysis for EasyLife Corporation to assess
the feasibility and potential success of this new venture. Consider both
internal and external factors that could impact the success of the new
product line. (5 Marks)
(b) Explain the concept of forward and backward linkages between strategy
formulation and implementation in strategic management, using relevant
examples. How do these linkages impact the overall strategic decision -
making process of an organization? (5 Marks)
4. (a) Define Strategic Performance Measures (SPM). Explain various types of
strategic performance measures. (5 Marks)
(b) StarTech Solutions, an aerospace technology firm, operates in a highly
competitive industry. Despite the fierce competition in the aerospace
sector, StarTech has carved out a niche for itself by focusing on serving
unique, high-end clients. Unlike its competitors, StarTech has chosen
not to diversify its target market and instead specializes in providing
cutting-edge solutions to this niche market.
Identify and explain the strategy adopted by StarTech Solutions. Discuss
the advantages and disadvantages of this strategy.
OR
Strategic alliances are formed if they provide an advantage to all the
parties in the alliance. Do you agree? Explain in brief the advantages of
a strategic alliance. (5 Marks)

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 MODEL TEST PAPER 3
PAPER 6B: STRATEGIC MANAGEMENT

1. The question paper comprises two parts, Part I and Part II.
2. Part I comprises case scenario based multiple choice questions (MCQs)
3. Part II comprises questions which require descriptive type answers.
PART I – Case scenario based MCQs (15 Marks)
Question 1.(A) (Compulsory)
1. (A) Dr. Mikesh Gupta, Agriculture Management Guru at a leading
management school in Patna, has been driving the business of E-
Bandhu with seven of his students since 2017. This business has two
core objectives: first, sustainable farming awareness and second,
seasonal availability of agricultural inputs. It is a technology driven
business wherein they have a one stop shop for all agricultural products
available to farmers at competitive prices. Business is quite challenging,
given the fact that farmers in the region are not well aware of the use of
technology.
In the summer of 2019, the team decided to redefine their business
strategy to succeed in the agricultural sector. They formulated a new
definition and made strategic decisions to leverage their core
competencies.
Firstly, they shifted their target market from directly serving farmers to
onboarding wholesalers and retailers into the system and selling
products to them. This strategic move was based on the
understanding that wholesalers and retailers could influence
technology adoption among farmers.
Secondly, they outsourced logistics to MaalGaadi, a rural supply chain
management company. This decision helped E-Bandhu reduce asset
procurement costs and corresponding debt, thus strengthening their
position in the market.
Thirdly, they introduced a new service-based product, ChaaraVidya,
in their application. ChaaraVidya aims to educate farmers about the
latest sustainable farming practices being implemented around the
world. This addition could potentially be a game-changer for E-Bandhu
in the agro startup circle, further enhancing their core competency in
promoting sustainable farming practices and technology adoption.
The team is enthusiastic about the strategic changes brought in by
Dr. Mikesh and anticipates a more sustainable future for their idea.

245
Based on the above case scenario, answer the multiple-choice
questions.
(i) Switching from direct selling to marketing through wholesalers
and retailers was a strategic decision taken by the management.
Such decisions help an organization to be more of which of the
following?
(a) Authoritative
(b) Futuristic
(c) Proactive
(d) Regularised (2 Marks)
(ii) ChaaraVidya was brought into the market to increase farmer
awareness of soil quality and the latest sustainable farm
practices from around the world? What kind of growth strategy
will it fall under?
(a) Market penetration
(b) Market development
(c) Product development
(d) Diversification of business (2 Marks)
(iii) One of the most strategically advantageous decisions for E-
Bandhu was to get into a contract with MaalGaadi. Which of the
following could not be an advantage for E-Bandhu from this
alliance?
(a) Cost savings
(b) Reduced delivery time
(c) Improved customer satisfaction
(d) Increased inventory of products (2 Marks)
(iv) How does E-Bandhu utilize Michael Porter's Five Forces model
in its strategic decision-making process?
(a) By focusing on industry rivalry and competitive pricing
(b) By analyzing the bargaining power of suppliers and buyers
(c) By assessing the threat of new entrants and substitutes
(d) All of the above (2 Marks)
(v) What are the core objectives of E-Bandhu, as mentioned in the
case study?
(a) Sustainable farming awareness and seasonal availability of
agricultural inputs
(b) Technology-driven solutions and competitive pricing
(c) Onboarding wholesalers and retailers into the system

246
 (d) All of the above (2 Marks)
(B) Compulsory Application Based Independent MCQs
(i) Swabhaav, a social media marketing firm introduced an AI based
management tool that has the capabilities of managing teams
across functions all while being creative. What is the most likely
organisational structure post this implementation?
(a) Divisional Structure
(b) Matrix Structure
(c) Hourglass Structure
(d) Network Structure (2 Marks)
(ii) A tea farm owners plan to open tea cafes in tourist spots and to sell
their own premium tea to build a brand. Which of the following can
this be termed as?
(a) Backward Integration
(b) Forward Integration
(c) Diversification
(d) Horizontal Integration (2 Marks)
(iii) The process of creating, maintaining, and enhancing strong, value-
laden relationships with customers and other stakeholder is:
(a) Social marketing
(b) Augmented marketing
(c) Direct marketing
(d) Relationship marketing (1 Mark)

PART II – Descriptive Questions (35 Marks)

Question No. 1 is compulsory.
Attempt any two questions out of the remaining three questions.
1. (a) In his pursuit to expand the family business to Dubai, Dharam Veer
Singh, the successor of the renowned architect Late Shri Lala Ram Pal
Singh, faced a dilemma. Despite receiving positive feedback from
various potential investors, a common trend emerged where the
emphasis was primarily on swift construction, neglecting the importance
of structural longevity. Dharam finds himself at a crossroads. What
strategic approach could assist him in formulating a robust and coherent
business roadmap that aligns with his vision for sustainable growth?
(5 Marks)
(b) Ravi and Arjun are two friends who are partners in their business of
manufacturing premium coffee. Ravi believes in making profits through
selling higher volumes of products, hence he advocates for charging

247
 lower prices to customers. Arjun, however, believes that higher prices
should be charged to create an image of exclusivity and proposes that
the product undergo some changes to justify this pricing.
Analyze the nature of the generic strategy used by Ravi and Arjun.
(5 Marks)
(c) Due to the reoccurrence of various variants of the coronavirus, XYZ
Corporation is facing an unstable environment and has begun
unbundling and disintegrating its activities. It has also started relying on
outside vendors to perform these activities. Identify the organizational
structure XYZ Corporation is shifting to. Under what circumstances does
this structure become useful? (5 Marks)
2. (a) There are four specific criteria of sustainable competitive advantage that
firms can use to determine those capabilities that are known as core
competencies. Explain. (5 Marks)
(b) XYZ Electronics has discovered that its products have reached their
maturity stage, and the company is experiencing overcapacity.
Consequently, it focuses on maintaining the operational efficiency of its
manufacturing facilities. Identify the strategy implemented by XYZ
Electronics and provide the reasons for this strategy. (5 Marks)
3. (a) Yummy Foods and Tasty Foods are successfully competing in the
business of ready to eat snacks in Patna. Yummy has been pioneer in
introducing innovative products. These products will give them good
sale. However, Tasty Foods will introduce similar products in reaction to
the products introduced by the Yummy Foods taking away the advantage
gained by the former.
Discuss the strategic approach of two companies. Which is superior?
(5 Marks)
(b) Why is change management crucial during digital transformation, and
what are some key strategies for navigating change effectively?
(5 Marks)
4. (a) Write a short note on the Product Life Cycle (PLC) and its significance
in portfolio diagnosis. (5 Marks)
(b) Distinguish between Micro Environment and Macro Environment.
OR
Distinguish between Operational Control and Management Control.
(5 Marks)

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 MODEL TEST PAPER 4
PAPER 6B: STRATEGIC MANAGEMENT
1. The question paper comprises two parts, Part I and Part II.
2. Part I comprises case scenario based multiple choice questions (MCQs)
3. Part II comprises questions which require descriptive type answers.
PART I – Case scenario based MCQs (15 Marks)
Question 1. (A) (Compulsory)
1. (A) Kriti Pvt. Ltd. has been importing French gourmet cheeses under the
brand name of 'Fromage' since 2017. The company was amongst the
first in India to introduce innovative unbreakable cheese packaging.
Their affiliate, a French company owning Fromage, had entered into a
progressive deal, wherein products would be sourced to India via their
logistics, and all marketing expenditures would be covered by them.
However, customer management and nationwide distribution would be
taken care of by Kriti Pvt. Ltd. This required an English-speaking skilled
workforce, which has been a constant challenge for the company in
India.
The owners of Kriti Pvt. Ltd. have been regular attendees at industry-
relevant conclaves, both national and international. Leaders of the
company are passionate readers of business magazines. Following that,
it was observed that the recent sentiment of the country towards ‘Vocal
for Local’ could disrupt their French brand’s marketability. An
extraordinary meeting was set up, and the steps ahead were planned.
The outcome of the meeting was to partner with local producers of
traditional Indian cheeses in phase one of the change strategy. For this,
seven state governments were approached. The team was successful in
taking contracts from all the government departments of these seven
states and could position themselves fairly in the market. To fund this
new investment, they have planned to slowly sell off their French
business assets as well as the brand, to probable buyers.
This timely shift is proving to be a game-changer for the company, and
the leadership is quite happy with better than before earnings and a
much greater response from the customers. They find it easier to operate
with domestic producers and vendors, and a sense of patriotism is
instilled in the consumers’ minds.
Based on the above Case Scenario, answer the Multiple-Choice
Questions.
(i) Which of the following actions taken by Kriti Pvt. Ltd. is an example
of a proactive strategy?
(a) Selling off their French business assets.

249
 (b) Responding to the 'Vocal for Local' sentiment by partnering
with local cheese producers.
(c) Managing customer relations and nationwide distribution.
(d) Covering all marketing expenditures for 'Fromage' in India.
(2 Marks)
(ii) Which of the following types of strategic control did the owners and
leadership of Kriti Pvt. Ltd. deploy that eventually turned out to be
one of the most effective strategic decisions for the company?
(a) Premise control
(b) Special alert control
(c) Implementation control
(d) Strategic surveillance (2 Marks)
(iii) ‘Vocal for Local’ is a market sentiment that changed customers’
preferences for the majority of products across all industries. Based
on that, Kriti Pvt. Ltd. gauged the competition it might face in the
coming months and agreed to change its own product. Which of the
following forces, as per Michael Porter’s five forces of competitive
analysis, is most relevant in this case?
(a) Threat of new entrants
(b) Nature of rivalry in the industry
(c) Threat of substitutes
(d) Bargaining power of the buyer (2 Marks)
(iv) Which of the following aspects of value chain analysis was the most
challenging for Kriti Pvt. Ltd. at the time of selling the Fromage
brand?
(a) Manufacturing
(b) Outsourcing
(c) Customer service
(d) Procurement (2 Marks)
(v) To strategically revamp their business, partnerships were done with
Indian local producers from seven states, and to fund it, the existing
arm of the business was to be sold off. Which of the following
strategies has Kriti Pvt. Ltd. opted for?
(a) Turnaround strategy
(b) Divestment strategy
(c) Liquidation strategy

250
 (d) Intensification strategy (2 Marks)
(B) Compulsory Application Based Independent MCQs
(i) TechWave, a software development firm, aims to gain a
competitive edge in the rapidly evolving tech industry. To achieve
this, they focus on building their strength in artificial intelligence (AI)
and machine learning (ML). TechWave invests heavily in R&D,
hires top talent with specialized skills, and forms partnerships with
leading AI research institutions. They also provide continuous
training for their employees to keep them updated with the latest
advancements. By developing these, TechWave can create
innovative AI-driven solutions that differentiate them from
competitors and attract a growing number of clients seeking
cutting-edge technology. What strategy is TechWave using to gain
a competitive edge in the tech industry?
(a) Market segmentation
(b) Diversification
(c) Core competency building
(d) Cost leadership (2 Marks)
(ii) StreamlineCo is examining its internal capabilities to ensure that
employees possess advanced knowledge of emerging
technologies crucial for the company's future success. This
involves investing in specialized training programs and updating job
roles to match the latest industry standards. Which aspect of
StreamlineCo is being enhanced through specialized training and
updated job roles?
(a) Structure
(b) Systems
(c) Skills
(d) Style (2 Marks)
(iii) XYZ Corporation has launched AlphaTech to enter the consumer
electronics industry with a focus on offering high-performance
devices and innovative features at competitive prices. Which
competitive strategy is AlphaTech employing?
(a) Differentiation strategy
(b) Cost leadership strategy
(c) Best-cost provider strategy
(d) Focus strategy (1 Mark)

251
 PART II – Descriptive Questions (35 Marks)
Question No. 1 is compulsory.
Attempt any two questions out of the remaining three questions.
1. (a) Mr. Arun has been hired as the CEO by ABC Ltd, a pharmaceutical
company that has diversified into affordable wellness supplements. The
company intends to launch the HealthPlus brand of supplements. ABC
wishes to enhance the well-being of people with its products that are
beneficial for health and are produced in an environmentally sustainable
manner using natural ingredients. Draft a vision and mission statement
that may be formulated by Arun. (5 Marks)
(b) GreenGardens, a small but growing organic farm, is assessing its
business environment to strategically plan for future growth. The farm
boasts high-quality, pesticide-free crops, but faces challenges with its
limited distribution channels. As the demand for organic products
continues to rise, GreenGardens recognizes the potential to broaden its
market reach. However, unpredictable weather conditions and
competition from larger farms present significant obstacles. To
effectively navigate these challenges and opportunities, GreenGardens
needs to conduct a comprehensive evaluation. Identify the type of
analysis GreenGardens should conduct to strategically plan for its future
growth and outline the grid. (5 Marks)
(c) FreshDelight, renowned for its organic fruit juices, aims to expand its
market presence by identifying emerging markets in countries where
organic products are gaining popularity. To achieve this, FreshDelight
launches targeted marketing campaigns and partners with local
distributors to introduce its juices to these new regions. This strategy
involves adapting product packaging and marketing messages to align
with local preferences and regulations. By entering these new markets,
FreshDelight hopes to increase its customer base and drive sales
growth. What strategy is FreshDelight using to expand its market
presence? (5 Marks)
2. (a) The CEO of a textile mill is convinced that his loss-making company can
be turned around. Suggest an action plan for a turnaround to the CEO.
(5 Marks)
(b) Write a short note on Matrix Structure. (5 Marks)
3. (a) "Understanding the competitive landscape is important to build upon a
competitive advantage". Explain. (5 Marks)

252
 (b) XYZ Corporation operates in a diverse range of industries, including
fashion, lifestyle products, furniture, real estate, and electrical goods.
The company is seeking to hire a suitable Chief Executive Officer. As
the HR consultant for XYZ Corporation, you have been tasked with
outlining the activities involved in the role of the Chief Executive Officer.
Identify the strategic level associated with this role and list the activities
it encompasses. (5 Marks)
4. (a) Buyers can exert considerable pressure on business. Do you agree?
Discuss. (5 Marks)
(b) Major core competencies are identified in three areas - competitor
differentiation, customer value and application to other markets.
Discuss.
OR
What factors should organizations consider when choosing strategic
performance measures, and why are these factors important?
(5 Marks)

253
 MODEL TEST PAPER 5
PAPER 6B: STRATEGIC MANAGEMENT
1. The question paper comprises two parts, Part I and Part II.
2. Part I comprises case scenario based multiple choice questions (MCQs)
3. Part II comprises questions which require descriptive type answers.
PART I – Case scenario based MCQs (15 Marks)
Question 1. (Compulsory)
1. (A) Sneha Rao, founder and CEO of DEF Technologies, is renowned for her
technological insight and visionary leadership style. She cultivates a
culture of collaboration, continuous learning, and innovative problem-
solving, encouraging her employees to think outside the box and
embrace new challenges. Her exceptional ability to foresee
technological trends and navigate complex market dynamics has
propelled DEF Technologies to impressive growth over the past decade.
Sneha started DEF Technologies in 2010 as a small software
development firm. With a vision to transform DEF Technologies into a
leading tech company, she initially focused on developing custom
software solutions for local businesses. However, intense competition
and limited market demand led to financial difficulties. Undeterred,
Sneha pivoted the business towards developing cloud-based solutions,
leveraging the growing trend of digital transformation. This strategic shift,
along with aggressive marketing, helped DEF Technologies capture a
significant market share and become a leader in cloud services, setting
new industry standards.
In 2015, Sneha's brother, Raj, joined the company, and together they
crafted an ambitious expansion strategy. DEF Technologies entered the
global market, partnering with international tech firms to launch a new
line of AI-driven cybersecurity solutions. This venture was highly
successful, establishing DEF Technologies as a global brand and a key
player in the cybersecurity industry.
Raj then led the company’s diversification into the healthcare sector with
a new brand, MedTech Solutions. Recognizing the potential for
technology to revolutionize healthcare, Sneha and Raj focused on
developing affordable telemedicine platforms and AI-driven diagnostic
tools. Their approach disrupted the market, providing high-quality
healthcare solutions at lower costs and gaining widespread trust from
healthcare providers and patients alike. MedTech Solutions experienced
rapid growth, especially during the COVID-19 pandemic, as demand for
remote healthcare services surged.
At the beginning of 2023, DEF Technologies launched another new
business, GreenTech Innovations, to address environmental challenges
through technology. DEF Technologies continues to explore new
opportunities and ventures to stay at the forefront of the tech industry.

254
Based on the above Case Scenario, answer the Multiple-Choice
Questions.
(i) Sneha Rao's vision to transform DEF Technologies into a leading
tech company illustrates which type of strategic intent?
(a) Goal
(b) Mission
(c) Vision
(d) Objective (2 Marks)
(ii) Sneha’s leadership style, which promotes collaboration, continuous
learning, and innovative problem-solving, can best be described as:
(a) Transactional leadership
(b) Transformational leadership
(c) Autocratic leadership
(d) Laissez-faire leadership (2 Marks)
(iii) When DEF Technologies expanded into the global market with AI-
driven cybersecurity solutions, which of Porter's Five Forces was
most likely mitigated by forming partnerships with international tech
firms?
(a) Threat of Substitute Products or Services
(b) Bargaining Power of Suppliers
(c) Threat of New Entrants
(d) Intense Rivalry Among Existing Competitors (2 Marks)
(iv) By entering the global market and launching AI-driven
cybersecurity solutions, DEF Technologies pursued which
expansion strategy from Ansoff’s Product-Market Growth Matrix?
(a) Diversification
(b) Market Penetration
(c) Product Development
(d) Market Development (2 Marks)
(v) MedTech Solutions’ focus on developing affordable telemedicine
platforms and AI-driven diagnostic tools reflects which of the
following competitive strategies?
(a) Differentiation strategy
(b) Cost leadership strategy
(c) Best-cost provider strategy
(d) Focus Strategy (2 Marks)

255
 (B) Compulsory Application Based Independent MCQs
(i) A traditional desi ghee company modernized its production and
introduced pro-biotic desi ghee, facing initial market doubts.
Aggressive marketing campaigns highlighted its benefits, gaining
acceptance. During which stage of the product life cycle did the
desi ghee company face doubts but gained acceptance through
aggressive marketing campaigns?
(a) Introduction stage
(b) Growth stage
(c) Maturity stage
(d) Decline stage (2 Marks)
(ii) ValueMart is a discount retail chain that targets budget-conscious
consumers by offering a wide range of products at the lowest
possible prices. The company achieves this by sourcing goods in
bulk, negotiating lower prices with suppliers, and maintaining lean
operations. ValueMart's goal is to dominate the market by attracting
price-sensitive customers from competitors. Which of Michael
Porter’s Generic Strategies is ValueMart primarily employing?
(a) Differentiation
(b) Focused Cost Leadership
(c) Cost Leadership
(d) Focused Differentiation (2 Marks)
(iii) A women’s clothing brand recognized new opportunities and
researched emerging trends and consumer preferences. They
introduced a new clothing line, received positive feedback from
initial trials, and grew through strategic partnerships and targeted
advertising. What strategic choice best describes this approach?
(a) Product Development
(b) Market Development
(c) Market Penetration
(d) Diversification (1 Mark)

PART II – Descriptive Questions (35 Marks)

Question No. 1 is compulsory.
Attempt any two questions out of the remaining three questions.
1. (a) TechNova, a leading software development firm known for its cutting-
edge operating systems, is developing a groundbreaking new platform.
ElectroWave, an emerging player in the electronics and hardware
industry, specializes in manufacturing advanced devices. TechNova and
ElectroWave have decided to join forces to design innovative laptops

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 and smartphones, aiming to tap into new markets and broaden their
business horizons. What kind of external growth strategy is being
considered by TechNova and ElectroWave? (5 Marks)
(b) Vikram Patel owns a chain of ten bookstores across the Mumbai region.
Three of these stores were launched in the past two years. He has
always believed in strategic management and enjoyed robust sales of
books, magazines, and educational materials until about five years ago.
However, with the increasing preference for online shopping, the sales
at his physical stores have declined by approximately sixty percent over
the last five years. Analyze Vikram Patel's current position in light of the
limitations of strategic management. (5 Marks)
(c) Orion Tech Solutions Pvt. Ltd. is renowned for its ability to launch
groundbreaking software products. Despite the relaxed and casual work
environment at Orion, there is a strong commitment to meeting
deadlines. Employees at Orion believe in the "work hard, play hard"
ethic. The company has shifted from a formal, hierarchical structure to a
more results-oriented approach. Employees are deeply committed to the
company’s strategies and work diligently to achieve them. They
safeguard innovations and maintain strict confidentiality and secrecy in
their operations. Their work culture is closely aligned with the
organization's values, practices, and norms. What aspects of an
organization are being discussed? Explain. (5 Marks)
2. (a) Analyze the role of Key Success Factors (KSFs) in determining
competitive success within an industry. (5 Marks)
(b) What are distribution channels, and why is analyzing them crucial for
business expansion? Describe the three main types of channels
explaining their roles in ensuring products reach customers efficiently
and with the necessary support. (5 Marks)
3. (a) What is a strategic vision, and what are the essential components that
make it an effective tool for guiding an organization's future? (5 Marks)
(b) Which strategy is implemented by redefining the business, by enlarging
its scope of business and substantially increasing investment in the
business? Explain the major reasons for adopting this strategy.(5 Marks)
4. (a) Describe the principal aspects of strategy-execution process, which are
included in most situations. (5 Marks)
(b) How does the PESTLE framework assist in analyzing the macro-
environment?
OR
A manufacturing company is in direct competition with fifteen companies
at the national level. The head of marketing department of this company
wishes to study the market position of rival companies by grouping them
into like positions. Name the tool that may be used by him/her. Explain
the procedure that may be used to implement the techniques. (5 Marks)

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 MODEL TEST PAPER 6
PAPER 6B: STRATEGIC MANAGEMENT
1. The question paper comprises two parts, Part I and Part II.
2. Part I comprises case scenario based multiple choice questions (MCQs)
3. Part II comprises questions which require descriptive type answers.
PART I – Case scenario based MCQs (15 Marks)
Question 1. (A) (Compulsory)
1. (A) EcoForge, a startup specializing in eco-friendly building materials crafted
from agricultural waste, entered the highly competitive manufacturing
industry with a vision of promoting sustainability. Despite its innovative
approach, the company faced significant challenges as a new entrant,
including high production costs, limited market visibility, regulatory
hurdles, and fierce competition from established players. However,
through strategic planning and effective execution, EcoForge
successfully navigated these obstacles and positioned itself for
sustainable growth.
The company’s leadership recognized the importance of understanding
its internal strengths and weaknesses, along with external opportunities
and threats. This analysis revealed EcoForge’s core advantage in
sustainability and innovation, contrasted with scalability issues and
market pressure from cheaper alternatives. Additionally, market analysis
uncovered the potential of urban housing projects as an opportunity,
while intense competition posed a significant threat.
EcoForge’s leadership focused on creating unique value propositions by
emphasizing its eco-friendly materials. This differentiation helped the
company appeal to environmentally conscious builders and developers.
To expand its market reach, EcoForge adopted strategies to deepen its
presence in existing markets and explore new ones. Concurrently, it
analyzed the industry landscape and identified the critical influence of
regulatory policies and socio-cultural factors shaping consumer
preferences.
Internally, EcoForge implemented structural and cultural changes to
enhance its operational efficiency and responsiveness. By adopting a
Strategic Business Unit (SBU) model, the company streamlined its
decision-making process, allowing each product line to adapt quickly to
market demands.
Recognizing the need for collaborative leadership, EcoForge’s CEO,
Ms. Aarti Mehra, invested in leadership training programs for senior
managers. This shifted the company’s culture from hierarchical to team-
driven, encouraging innovation and cross-functional collaboration.
To enhance its competitiveness, EcoForge optimized its production and
supply chain processes by addressing inefficiencies and partnering with
technology providers. These efforts significantly reduced costs and

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improved product quality. Simultaneously, the company pursued green
certifications and localized marketing efforts to build brand recognition,
attracting environmentally conscious clients. Over three years, these
initiatives enabled EcoForge to expand into new markets, secure
partnerships with leading developers, and increase its revenue by 40%.
By integrating market analysis, operational improvements, and a focus
on cost efficiency, EcoForge transitioned from a struggling startup to a
leader in sustainable building materials, setting a benchmark for
innovation and environmental stewardship in the industry.
Based on the above Case Scenario, answer the Multiple-Choice
Questions.
(i) The SBU model adopted by EcoForge is an example of strategic
decision-making at which level?
(a) Corporate Level
(b) Business Level
(c) Functional Level
(d) Operational Level (2 Marks)
(ii) EcoForge’s strategy of appealing to environmentally conscious
builders and developers by emphasizing its eco-friendly materials
is an example of which type of generic strategy by Michael Porter?
(a) Cost Leadership
(b) Differentiation
(c) Focussed Cost Leadership
(d) Focussed Differentiation (2 Marks)
(iii) The case mentions EcoForge identifying “critical influence of
regulatory policies and socio-cultural factors shaping consumer
preferences.” Which strategic analysis framework is most relevant
here?
(a) SWOT Analysis
(b) Value Chain Analysis
(c) PESTLE Analysis
(d) Ansoff’s Matrix (2 Marks)
(iv) EcoForge’s strategy to deepen its presence in existing markets and
explore new ones corresponds to which growth strategy in Ansoff’s
Matrix?
(a) Market Penetration
(b) Market Development
(c) Product Development
(d) Diversification (2 Marks)

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 (v) Which key industry force, as per Porter’s Five Forces, is reflected
in EcoForge’s challenges from cheaper alternatives and intense
competition?
(a) Threat of New Entrants
(b) Bargaining Power of Suppliers
(c) Bargaining Power of Buyers
(d) Threat of Substitutes (2 Marks)
(B) Compulsory Application Based Independent MCQs
(i) The CEO of GoFlyHigh Airlines has built a high-performance team
over five years by closely monitoring performance metrics, setting
clear expectations, and motivating employees through rewards and
structured improvement plans. Her disciplined and results-focused
approach has driven organizational success by fostering
accountability and maintaining high standards. This leadership
style emphasizes achieving defined goals through a structured
framework, balancing performance recognition with corrective
measures for sustained excellence. What strategic leadership style
does the CEO exhibit?
(a) Entrepreneur Leadership
(b) Transformational Leadership
(c) Transactional Leadership
(d) Intrapreneur Leadership (2 Marks)
(ii) UN&T reached out to Mukesh S, an entrepreneur from India to get
his team to work on a mega solar energy project and enter India’s
deccan plateau which enjoys an abundance of sunshine. What
strategy is UN&T trying to implement?
(a) Market Penetration
(b) Market Development
(c) Strategic Alliance
(d) Diversification (2 Marks)
(iii) Urbankey has a unique capability in rapid prototyping, allowing
them to bring new products to market faster than the competitors.
Such an advantage can be termed as?
(a) Market Expansion Strategy
(b) Core Competency
(c) Cost Leadership Strategy
(d) Appropriate SWOT Analysis (1 Mark)

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 PART II – Descriptive Questions (35 Marks)
Question No. 1 is compulsory.
Attempt any two questions out of the remaining three questions.
1. (a) Chic Threads, a boutique fashion brand renowned for its commitment to
sustainability and ethical practices, has recently launched a new line of
eco-friendly clothing made from recycled materials. The brand
recognizes the growing influence of environmentally conscious
consumers who actively shape industry standards through their
advocacy and purchasing decisions. These consumers align with Chic
Threads' values and have a significant impact on its market position and
reputation. How should Chic Threads effectively manage its relationship
with environmentally conscious consumers, considering their high power
and high interest in shaping the brand's success? (5 Marks)
(b) You are a strategic manager for a tech company launching a new
smartphone model. The company wants to target tech-savvy consumers
who value innovation and cutting-edge technology. Using the concept of
customer behavior, develop a marketing strategy to promote the new
smartphone. (5 Marks)
(c) GreenEdge Solutions, a mid-sized technology company, has
implemented a new strategic plan focused on achieving sustainable
growth and strengthening its market presence. The leadership team is
determined to monitor the effectiveness of their strategies to ensure they
align with the organization’s overall goals and objectives. They seek a
systematic approach to assess key performance areas critical to their
success. What are Strategic Performance Measures (SPM), and how
can GreenEdge Solutions effectively use them to evaluate and enhance
the success of their strategic plan? (5 Marks)
2. (a) Connect Group was one of the leading makers of the mobile handsets
till a few years ago and which went at the bottom of the heap. Connect
Group didn't adapt to the current market trends, which eventually led to
its downfall. Which would have helped Connect Group to change, adapt
and survive? Explain the steps to initiate the change. (5 Marks)
(b) Define strategic management. Also discuss the limitations of strategic
management. (5 Marks)
3. (a) Easy Access is a marketing services company providing consultancy to
a range of business clients. Easy Access and its rivals have managed to
persuade the Government to require all marketing services companies
to complete a time-consuming and bureaucratic registration process and
to comply with an industry code of conduct. Do you think that by doing
this Easy Access and its rivals has an advantage in some ways to fight
off competitors? Explain. (5 Marks)
(b) Explain in brief the various basis of differentiation strategies. (5 Marks)

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4. (a) Leatherite Ltd. was started as a leather company to manufacture
footwear. Currently, they are in the manufacturing of footwears for males
and females. The top management desires to expand the business in
leather manufacturing goods. To expand they decided to purchase more
machines to manufacture leather bags for males and females. Identify
and explain the strategy opted by the top management of Leatherite Ltd.
(5 Marks)
(b) Major core competencies are identified in three areas - competitor
differentiation, customer value and application to other markets.
Discuss.
OR
Differentiation between Strategic Planning and Operational Planning.
(5 Marks)

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 MODEL TEST PAPER 7
PAPER 6B: STRATEGIC MANAGEMENT
1. The question paper comprises two parts, Part I and Part II.
2. Part I comprises case scenario based multiple choice questions (MCQs)
3. Part II comprises questions which require descriptive type answers.

PART I – Case scenario based MCQs (15 Marks)

Question 1. (A) (Compulsory)

1. (A) Galaxy Enterprises Limited (GEL) operates as a diversified

conglomerate with a significant presence in various industries, including
electronics, packaged foods, textiles, heavy machinery, and renewable
energy. Leveraging its substantial free reserves of ₹85,000 crores, GEL
has built a strong brand reputation, largely driven by its market
leadership across multiple sectors.
In the renewable energy sector, GEL has been the industry leader for
over 15 years. The division’s recent performance has been exceptional.
A significant market development occurred when two competitors, Nova
Green Energy Limited and Zenith Solar Limited – previously ranked
second and third in market share, respectively – merged to create a new
entity, Synergy Renewables Ltd (SRL). Following the merger, SRL has
claimed the top spot in market share, intensifying competition.
Against this backdrop, the Chairman of GEL convened a strategic
meeting with the Board of Directors, divisional heads, marketing
executives, and the Group CFO. The meeting focused on formulating
growth strategies for the renewable energy division, identifying
opportunities for diversification, and announcing an interim dividend in
honour of GEL’s platinum jubilee celebrations.
Mr. Arvind Malhotra, CEO of the renewable energy division, emphasized
the industry's slow pace of modernization compared to global standards.
He highlighted the potential in emerging product categories, such as
next-generation solar panels, energy storage systems, and advanced
wind turbines. He proposed a modernization initiative requiring an
investment of ₹7,000 crores. This transformation is projected to reduce
operational costs by 20% and minimize wastage by 12%.
The CFO presented an analysis revealing that competitors are unlikely
to invest in significant upgrades or expansions for the next 6–8 years
due to financial constraints. In response, the Board approved the
modernization initiative and allocated an additional ₹1,500 crores to
strengthen the division's supply chain.
Another proposal discussed was GEL’s entry into the electric vehicle
(EV) segment. The Board approved this diversification strategy,
allocating ₹8,000 crores to establish a foothold in this rapidly growing

263
 market. Additionally, the Board authorized the distribution of an interim
dividend of ₹75 per share to commemorate GEL’s platinum jubilee.
In preparing for these strategic initiatives, the Board also evaluated key
stakeholders to determine their influence and interest. Shareholders and
the Board of Directors emerged as primary stakeholders with both high
influence and interest, necessitating active engagement to secure their
support. Regulatory authorities were recognized as influential but less
interested in the immediate plans, requiring regular updates to ensure
compliance. Customers and employees, while not as powerful, were
identified as highly interested stakeholders, particularly concerning the
renewable energy division’s modernization and the entry into the EV
market.
Based on the above Case Scenario, answer the Multiple-Choice Questions.
(i) GEL has approved significant investments in modernizing its renewable
energy division and entering the electric vehicle segment. Analyze the level
of strategy these decisions represent and identify the correct justification for
your answer.
(a) Functional level, as these are related to operational improvements within
the renewable energy division.
(b) Business level, as these initiatives align with the goals of a single division
to gain a competitive edge.
(c) Corporate level, as they involve decisions impacting the overall portfolio
and diversification of GEL.
(d) Operational level, as these focus on day-to-day activities within the
divisions. (2 Marks)
(ii) With the merger of Nova Green Energy Limited and Zenith Solar Limited into
Synergy Renewables Ltd (SRL), how does this development influence GEL’s
strategic priorities in the renewable energy sector under Porter’s Five Forces
framework?
(a) The merger reduces the threat of substitutes by consolidating competing
technologies.
(b) It increases the bargaining power of buyers by providing them with a
stronger alternative supplier.
(c) It heightens the intensity of industry rivalry by creating a stronger
competitor with greater market share.
(d) The merger strengthens the bargaining power of suppliers due to greater
reliance on key inputs. (2 Marks)
(iii) GEL’s decision to enter the EV market represents a diversification strategy.
Evaluate which type of diversification strategy is being pursued and the
reasoning behind this classification.
(a) Concentric diversification, as the EV market shares synergies with
renewable energy technologies.

264
 (b) Vertical integration, as GEL seeks to integrate upstream or downstream
activities in the automotive value chain.
(c) Horizontal diversification, as GEL expands into a market unrelated to its
existing renewable energy operations.
(d) Conglomerate diversification, as GEL enters an entirely unrelated and
independent business segment. (2 Marks)
(iv) GEL identified shareholders and the Board of Directors as key stakeholders.
Analyze the rationale for classifying them as both high influence and high
interest and how this influences strategic communication.
(a) They directly impact compliance with regulatory standards, necessitating
regular updates.
(b) Their vested interest in dividends and long-term value creation makes
their engagement essential for approval of key initiatives.
(c) They represent the end consumers whose perceptions directly influence
GEL’s market reputation.
(d) Their role in operational execution requires constant communication and
support for strategy implementation. (2 Marks)
(v) By approving modernization in renewable energy and diversification into EVs,
what corporate strategy is GEL pursuing, and how does it position the
company as per Ansoff’s product market growth matrix?
(a) Cost leadership, to lower operational expenses and offer competitive
pricing.
(b) Product differentiation, by leveraging innovation in both existing and new
markets.
(c) Market penetration, through deeper investments in existing product
lines.
(d) Market expansion and diversification, to capture growth opportunities
across unrelated industries. (2 Marks)
(B) Compulsory Application Based Independent MCQs
(i) Harish, a middle manager, is confused about the difference between flexibility
and resilience while working around an uncertain situation in the organization.
Can you help find the right difference between the two?
(a) Flexibility is about adapting to new things quickly, while resilience is
about holding on to the current position of the things for the short-term
as the organisation is confident of its efficiencies.
(b) Flexibility is a subset of resilience, and to be flexible means to be
resilient.
(c) Flexibility is the opposite of resilience, where, if the organisation is
flexible, it changes and if it is resilient it doesn’t change at all.
(d) Both are the same. (2 Marks)

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(ii) Suman, the marketing head of Jalwa Music Co., was doing research on the
online music streaming business in India for her new age music for
youngsters. She analyzed that though the players in the market were
innovating rapidly, it was difficult to maintain a sustainable competitive
advantage. Which aspect of strategic management best reflects this
challenge?
(a) The need for continuous innovation.
(b) The importance of understanding the competitive landscape.
(c) The dynamic and unpredictable nature of the industry.
(d) The difficulty in estimating competitors' responses. (2 Marks)
(iii) During which stage of the Product Life Cycle would you typically expect the
highest marketing expenditure per unit sold as companies aggressively
promote their product?
(a) Maturity
(b) Introduction
(c) Growth
(d) Decline (1 Mark)

PART II – Descriptive Questions (35 Marks)

Question No. 1 is compulsory.
Attempt any two questions out of the remaining three questions.
1. (a) Jupiter Electronics Ltd. is known for its ability to come out with path-
breaking products. Though the work environment at Jupiters is relaxed
and casual, there is a very strong commitment to deadlines. The
employees believe in a “work hard play hard" ethic. The organisation has
moved away from formal and hierarchical set up to a more results-driven
approach. Employees are committed to strategies and work towards
achieving them. They guard innovations, maintain confidentiality and
secrecy in their work. They are closely related to values, practices, and
norms of organisations. What aspects of an organization are being
discussed? Explain. (5 Marks)
(b) Reshuffle Corp is a company that manufactures and sells office furniture.
They offer a range of products, from desks and chairs to cabinets and
shelves. Recently, the company has been facing increased competition
from online retailers offering similar products at lower prices.
Analyzing the characteristics of products in the furniture industry,
discuss how Reshuffle Corp can differentiate its products to maintain a
competitive edge in the market. (5 Marks)
(c) A business consultancy firm focuses on providing specialized services
in environmental management consultancy. It assists client companies
in establishing robust environmental management accounting systems

266
 for the measurement, recording, and analysis of environmental costs. A
significant portion of the firm’s operations involve conducting
environmental audits to verify compliance with international assurance
standards in environmental management—an exclusive service not
offered by its competitors. While the firm also undertakes other
management consultancy projects, these constitute only a minor share
of its total annual revenue. Identify the strategy categories by Michael
Porter which best describes the strategy of this firm. (5 Marks)
2. (a) Analyze the role of Key Success Factors (KSFs) in determining
competitive success within an industry. (5 Marks)
(b) How the 'Strategic Business Unit’ (SBU), structure becomes imperative
in an organization with increase in number, size and diversity of
divisions? (5 Marks)
3. (a) Rohit Patel has a small chemist shop in the central part of Ahmedabad.
What kind of competencies Rohit can build to gain competitive
advantage over online medicine sellers? (5 Marks)
(b) Distinguish between Vision and Mission. (5 Marks)
4. (a) Vikram Patel owns a chain of ten bookstores across the Mumbai region.
Three of these stores were launched in the past two years. He has
always believed in strategic management and enjoyed robust sales of
books, magazines, and educational materials until about five years ago.
However, with the increasing preference for online shopping, the sales
at his physical stores have declined by approximately sixty percent over
the last five years. Analyze Vikram Patel's current position in light of the
limitations of strategic management. (5 Marks)
(b) Explain the strategic implications of each of the following types of
business in a corporate portfolio:
(a) Stars (b) Question Marks (c) Cash Cows (d) Dogs
OR
Strategic alliances are formed if they provide an advantage to all the
parties in the alliance. Do you agree? Explain in brief the advantages of
a strategic alliance. (5 Marks)

267
 MODEL TEST PAPER 8
PAPER 6B: STRATEGIC MANAGEMENT
1. The question paper comprises two parts, Part I and Part II.
2. Part I comprises case scenario based multiple choice questions (MCQs)
3. Part II comprises questions which require descriptive type answers.
PART I – Case scenario based MCQs (15 Marks)
Question 1. (A) (Compulsory)
1. (A) Once upon a time in the land of sun, sand, and vibrant cultures, there
existed a company named "MuseoGoa" - a company that managed
museums in the beautiful state of Goa. MuseoGoa had a vision to
celebrate the rich history and culture of Goa, but their journey was not
without its fair share of challenges.
MuseoGoa had chosen a picturesque location in a quaint village to build
their first museum. However, this initial enthusiasm was met with an
uproar from the local communities. The villagers were concerned about
the impact on their way of life and traditions. They worried that the influx
of tourists might disrupt their peaceful existence.
To address this challenge, MuseoGoa applied Mendelow's matrix,
identifying the local communities as key stakeholders. They decided to
engage in open dialogues, understanding and respecting the villagers'
concerns. MuseoGoa initiated community-building activities, such as
involving locals in museum operations, supporting local artisans, and
organizing cultural events that showcased the village's heritage. Slowly
but steadily, the company transformed from being perceived as a threat
to a valued partner within the community.
While MuseoGoa had successfully resolved their initial issues with the
local community, they faced another challenge. Their location, although
idyllic, was a bit off the beaten path. Tourists typically preferred the
bustling beaches closer to the city, and this posed a real challenge.
MuseoGoa decided to employ a pricing strategy. They priced their tickets
affordably, significantly cheaper than the city's attractions. This strategy
attracted budget-conscious tourists who were looking for unique
experiences in Goa without burning a hole in their pockets. As word
spread about the cultural gem tucked away in the village, visitors started
flocking in, drawn not just by the museum's charm but also the
economical ticket prices.
In the age of social media, MuseoGoa knew that word-of-mouth was no
longer limited to whispers. They tapped into the power of social media
to promote their unique museum experience. MuseoGoa ran interactive
campaigns, encouraging visitors to share their experiences on various
platforms. One particular Instagram post featuring a vibrant Goan mural
in the museum went viral. This was the turning point. The picture-perfect
aesthetics of the museum attracted influencers, bloggers, and travel
enthusiasts, making MuseoGoa a social media sensation. Visitors came
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pouring in, not just from India but from across the globe, eager to capture
their own moments at the "Instagrammable Museum of Goa."
With success came ambition. MuseoGoa decided to expand its footprint
beyond Goa. To guide this expansion, they conducted a strategy audit
and trend analysis. They identified emerging cultural and tourism trends
and found potential markets in Pune and Trivandrum.
In Pune, MuseoGoa curated a special exhibition that celebrated the
fusion of Goan and Maharashtrian cultures. They strategically partnered
with local influencers and travel agencies to market the new experience.
The expansion into Pune was met with resounding success.
For Trivandrum, MuseoGoa recognized the importance of local traditions
and the distinct flavor of Kerala. They tailored their offerings to
harmonize with the regional culture. MuseoGoa became the gateway for
tourists to explore Kerala's rich heritage, with the museum acting as a
bridge between Goa and Kerala's cultural tapestry.
MuseoGoa's journey from initial uproar to expansion was a testament to
their commitment to community building, strategic pricing, social media
savvy, and a keen eye for trends. The company continued to flourish,
celebrating the diverse cultural tapestry of India and making history
come alive in every location they touched.
Based on the above Case Scenario, answer the Multiple Choice
Questions.
(i) Which strategic management concept did MuseoGoa use to
address the initial concerns of the local community?
(a) SWOT analysis
(b) Mendelow's matrix
(c) Cost leadership strategy
(d) Porter's Five Forces model (2 Marks)
(ii) MuseoGoa's idyllic location in a quaint village posed a challenge as
tourists preferred beaches closer to the city. To attract visitors,
MuseoGoa priced their tickets affordably, cheaper than city
attractions, drawing budget-conscious tourists looking for unique
experiences. What business strategy did MuseoGoa employ to
attract more tourists?
(a) Cost leadership strategy
(b) Differentiation strategy
(c) Focus strategy
(d) Diversification strategy (2 Marks)
(iii) How did MuseoGoa approach its expansion into new markets such
as Pune and Trivandrum?
(a) Outsourcing strategy
(b) Franchising strategy
269
 (c) Product diversification strategy
(d) Market development strategy (2 Marks)
(iv) Which element of the 7S McKinsey model is demonstrated by
MuseoGoa's strategic use of social media and pricing strategies to
attract visitors?
(a) Style
(b) Strategy
(c) Shared Values
(d) Skills (2 Marks)
(v) What played a crucial role in MuseoGoa's success in Pune and
Trivandrum?
(a) Strategic partnerships
(b) Aggressive advertising
(c) Product differentiation
(d) Vertical integration (2 Marks)
(B) Compulsory Application Based Independent MCQs
(i) Jaago Lights, a successful brand from Jalandhar, aimed to enter
the Middle East market by teaming up with major industry players.
They needed to reorganize internal operations and refine product
designs, facing pressure to expand quickly and turbulence in
existing operations. What is the primary limitation of strategic
management highlighted in the business case?
(a) Lack of senior management support
(b) Time-consuming and complex nature
(c) Inability to adapt to market changes
(d) Excessive focus on short-term goals (2 Marks)
(ii) A traditional desi ghee company modernized its production and
introduced pro-biotic desi ghee, facing initial market doubts.
Aggressive marketing campaigns highlighted its benefits, gaining
acceptance. During which stage of the product life cycle did the
desi ghee company face doubts but gained acceptance through
aggressive marketing campaigns?
(a) Introduction stage
(b) Growth stage
(c) Maturity stage
(d) Decline stage (2 Marks)
(iii) Alpha Corp is undergoing a shift to foster a culture that encourages
innovative thinking and team collaboration. To achieve this, the
company is focusing on how leaders interact with their teams and

270
 set examples for behavior, aiming to align leadership practices with
desired cultural outcomes. Which aspect of AlphaCorp is being
adjusted to foster a culture of innovation and collaboration?
(a) Structure
(b) Systems
(c) Skills
(d) Style (1 Mark)

PART II – Descriptive Questions (35 Marks)

Question No. 1 is compulsory.
Attempt any two questions out of the remaining three questions.
1. (a) Tech Innovators Inc., a rapidly expanding technology company, aims to
lead in artificial intelligence (AI) and machine learning (ML). With recent
growth, the company is evaluating which organizational structure will
best support its vision for innovation and leadership in AI technologies.
They are considering three options: the Functional and Divisional
Relationship for specialization, the Horizontal Relationship for flat,
collaborative management, and the Matrix Relationship for cross-
functional teams. Which of these relationships—Functional and
Divisional, Horizontal, or Matrix—will most effectively achieve Tech
Innovators Inc.’s strategic goals, and why? (5 Marks)
(b) Rajiv Arya owns an electrical appliance company specializing in the
manufacture of domestic vacuum cleaners. The market is competitive,
with four other manufacturers offering similar products and achieving
comparable sales volumes. Additionally, these rival firms hold several
patents related to the vacuum cleaner technology. The supplier base for
raw materials is extensive, with multiple suppliers available. Identify and
explain the significant forces from Porter’s Five Forces framework that
are relevant to Rajiv Arya’s company. (5 Marks)
(c) A Mumbai-based conglomerate, PQR Ltd., has announced a major
restructuring of its business operations. The company has decided to
split its business into four separate units: Manufacturing, Retail,
Services, and Technology. Each unit will operate as a separate
business, with delegated responsibility for day-to-day operations and
strategy to the respective unit managers. Identify the organization
structure that PQR Ltd. has planned to implement. Discuss any four
attributes and the benefits the firm may derive by using this organization
structure. (5 Marks)
2. (a) Strategic management helps an organization to work through changes
in the environment to gain competitive advantage. In light of statement
discuss its benefits. (5 Marks)

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 (b) A company has recently launched a new product in the market. Initially,
it faced slow sales growth, limited markets, and high prices. However,
over time, the demand for the product expanded rapidly, prices fell, and
competition increased. Identify the stages of the product life cycle (PLC)
that the company went through. (5 Marks)
3. (a) What do you understand by Strategic Alliance? Discuss its advantages.
(5 Marks)
(b) Why Strategic Performance Measures are essential for organizations?
(5 Marks)
4. (a) Distinguish between Concentric Diversification and Conglomerate
Diversification. (5 Marks)
(b) What are channels? Why is channel analysis important? Explain the
different types of channels?
OR
How can Mendelow's Matrix be used to analyze and manage the
stakeholders effectively? (5 Marks)

272