Decision Making Questions for XAT

Dear readers,

This quiz consists of questions from past
actual XAT papers. Leave your answers/ responses in the comments section below
and soon we’ll let you know the correct answers!

Answer question nos. 1 -3 on the basis of the information given in the
following case.

Due to increased competition, Ginger Automobiles, the Indian subsidiary of
Pepper Automobile Company (PAC) reported lower sales and profits. PAC expects
its new model Limo, developed especially for value conscious customers of India
and China, would revive its fortunes. In order to prevent customers from buying
competing products, PAC announced the launch of Limo six months before
schedule. Due to unrest in its Indian supplier’s plant, deliveries of essential
components for its main plant was hampered, and hence it decided to launch Limo
in China only as per the original plan. Within a short span of time, Limo
captured 30% market share in China, which was 200% higher than expected. Indian
customers who had looked forward to purchasing Limo were becoming increasingly
unhappy to the non-availability of Limo in the India. Ginger’s dealers were
worried about loss of business from the customers who might switch to other

1. Statement I: In the Chinese market, Baft, and Hebe, are competing models
in Limo’ s target market. Due to increase in sales of Limo by 200%, Baft and
Hebe saw their market share decline by 10%.

Statement II: Baft and Hebe were not desired by the customers due to their
new features. Which of the following conclusions can be most justifiably made?

A. I alone

B. II alone

C. Either I or II

D. Neither I nor II

E. I and II together

2. Unhappy customers will not only leave the company, but also spread negative
publicity about the company. The best way, among the options below, to deal
with customers is:          

A. suggest to customers to wait.

B. suggest to customers to consider purchasing any of the other PAC’s
models available in showrooms, with a substantial discount along with gifts.

C. suggest to PAC to treat Indian and Chinese markets equally.

D. promise the top management of PAC higher sales/profit from Indian market
compared to Chinese market.

E. suggest to the top management of PAC to manufacture essential components
in either India or China.

3. Mr. Murugan from Chennai experienced the comfort of Limo during his
visit to China. He was willing to deposit an approximate price of Limo to buy
the first available unit from Mr. Ahmed, a dealer in Chennai, known for fair
dealing. Ginger Automobile is yet to announce the actual price, and the process
for allocation of the vehicles. In order to maximise his cash flow, Mr. Ahmed

A. collect the amount from Mr. Murugan. Later when the delivery is delayed,
blame it on PAC’s problems.

B. collect 50% as advance and the remaining 50% after the confirmation of
launch date by Ginger Automobiles.

C. collect the amount Mr. Murugan is willing to deposit after clarifying
that delivery is subject to the company policy.

D. not collect the amount, but suggest to Mr. Murugan to write to Ginger

E. collect the amount and transfer it to the account of Ginger Automobiles,
instead of keeping it in his personal account.     

Answer the questions from 4 to 6 based on the case given below.

Ethical – a person is called unethical, when he deviates from principles.
The principles and their use is often guided by two definitions:

Morals: society’s code for individual survival

Ethics: An individual’s code for society survival

Naresh was a small time civil contractor in a small city. His major clients
were the residents who wanted ad-hoc work like painting, building repairs,
building extensions to be done. His just prices had made him a preferred
contractor for most of the clients who preferred him over other civil
contractors. Always he followed the principle that client had to be kept happy
– only by doing so it would be a win-win situation for both. However due to the
unpredictability of such orders from residents, Naresh used to be idle for
substantial part of the year. As a consequence, he could not expand his

His two children were growing up and his existing business could not
support their expenses. The medical expense of his elderly parents was another
drain on his resources. The constant rise of prices in medical care and
medicines was another issue. For Naresh, family’s concern was predominant.
Naresh was, therefore, under pressure to expand his business. He was the sole earning
member of his family, and he had to ensure their well being. He thought that by
expanding his business, not only he would be able care for his family in a
better way, as well as offer employment to more number of masons and labourers.
That would benefit their families as well. Naresh drew the boundary of his
society to include himself, his family members, his employees and their family

For expansion, the only option in the city was to enlist as a contractor
for government work. Before deciding, he sought advice from another contractor,
Srikumar, who had been working on government projects for a long period of
time. Srikumar followed the principle of always helping others, because he
believed that he would be helped back in return some day. Srikumar had just one
advice “The work is given to those who will win the bidding process and at
the same time will give the maximum bribe. Prices quoted for work have to
include bribes, else the bills will not get cleared and the supervisors will
find multiple faults with the execution of work. This ensures survival and
prosperity for contractors”.

When asked about other contractors, Srikumar said “The government
contractors are like a microsociety in themselves, almost like a brotherhood.
Within that, they are highly competitive; however towards any external threat
they are united to ensure no harm happens to any of their members”.

4. Naresh decided to work as a government contractor. Following Srikumar’s
advice, he inflated the prices so that he could pay the bribes out the bills

A. Naresh is now totally unethical.

B. Naresh cannot be called totally ethical.

C. Naresh can be called ethical when it suits him.

D. Naresh is ethical to some extent.

E. Naresh is being totally ethical.

5. A new supervisor had joined a government department where both Naresh
and Srikumar were bidding for work. During the bidding process for a particular
project, in an open meeting with all contractors and officers from the
department, he produced a document which had the rates at which Naresh had
worked for private clients for similar building related work. He accused Naresh
and Srikumar of over-pricing for government work and threatened to disqualify
them from the bidding process, if the rates are not brought down. Faced with
that situation, Naresh gave a written reply that “I use materials of
inferior quality for private work, and that is the reason for price
difference”: Srikumar supported Naresh in the meeting by saying that he
had seen Naresh’s work and he agreed. In this situation, it can be concluded

A. both Naresh and Srikumar are unethical.

B. Naresh is unethical while Srikumar is not.

C. both Naresh and Srikumar are ethical.

D. Naresh is ethical to a large extent, but no conclusion can be made about

E. Srikumar is unethical, but no conclusion can be made about Naresh.                  

6. Lankawala, another contractor, when faced with the new supervisor’s
demand to reduce prices for government work, asked him to guarantee that no
bribes would be taken, and only then prices would be reduced. This was said in
front of everyone. At this the supervisor forced Lankawala out of the meeting
and threatened to black-list him. Lankawala did not say anything and walked
away. Blacklisting of a contractor by one government department implied that
Lankawala would not be able to participate in any government departments’

In late evening, the city was abuzz with the news that the supervisor’s
dead body was seen on the railway tracks. In the investigations that followed,
no one who attended the meeting recounted the happenings in the meeting to the
police. Getting involved in murder cases could lead to unpredictable outcomes
such as becoming the potential suspect, or an accessory to the crime.
Furthermore, cases could drag on for years, and one would have to appear in
court as witnesses in response to court’s summons. This, for a contractor, was
a serious threat to his business due to the disruptions created. However,
Naresh wanted to speak out but was pressurised by Srikumar and other
contractors not to, and as a result he did not. Due to this, the case was
closed unresolved with no one found guilty.

In this situation, it can be concluded that:

A. Srikumar is immoral, but ethical, while Naresh is not unethical.

B. Naresh is ethical and moral, while other contractors are immoral and

C. Naresh, Srikumar and other contractors are both immoral and unethical.

D. Other contractors are moral, and they prevented Naresh from being

E. Other contractors are unethical, but no conclusion can be made about

Read the following case and choose the best alternative (Questions 7 -10):

Chetan Textile Mills (CTM) had initiated various employee welfare schemes
for its employees since the day the mill began its operations. Due to its
various welfare initiatives and socially responsible business practices, the
organization had developed an impeccable reputation. Majority of the regular
workers in Chetan Mills had membership of Chetan Mills Mazdoor Sangh (CMMS), a
non-political trade union. CMMS had the welfare of its members as its guiding
principle. Both CTM and CMMS addressed various worker related issues on a
proactive basis. As a result no industrial dispute had been reported from the
organization in the recent past.

These days majority of the employers deploy large number of contract
labourers in their production processes. In an open economy survival of an
organization depends on its competitiveness. In order to become competitive, an
organization must be able to reduce cost and have flexibility in employment of
resources. Engaging workers through contractors (contract labourer) reduces the
overall labour cost by almost 50%. Indian labour legislations make reduction of
regular workers almost impossible, but organizations can overcome this
limitation by employing contract labourers. Contract labourers neither get the
same benefits as regular employees nor do they have any job security. According
to various recent surveys, government owned public sector units and other departments
are the biggest employers of contract labourers in the country. Contractors, as
middle-men, often exploit the contract labourers, and these government
organizations have failed to stop the exploitation.

Over time CTM started engaging a large number of contract labourers. At
present, more than 35% of CM’s workers (total 5,000 in number) are contract
labourers. CMMS leadership was wary about the slow erosion of its support base
as regular workers slowly got replaced by contract workers and feared the day
when regular workers would become a minority in the mill. So far, CMMS has
refused to take contract labourers as members.

Recently, based on rumours, CTM management started to investigate the
alleged exploitation of contract labourers by certain contractors. Some
contractors felt that such investigations may expose them and reduce their
profit margin. They instigated contract labourers to demand for better wages.
Some of the contract labourers sought the support of various political parties
in order to increase their negotiation power. Contract labourers engaged in
material handling and cleaning work started provoking CTM management by
adopting violent tactics.

Today’s news-paper reports that police and CTM security guards fired two or
three rounds in air to quell the mob. The trouble started while a security
guard allegedly slapped one of the contract labourers following a heated
argument. Angry labourers set fire to several vehicles parked inside the
premises, and to two police jeeps.

7. In the wake of recent happenings, what decision is expected from CTM
management? From the combinations given below, choose the best sequence of

I. Stop the current investigations against the contractors to ensure
industrial peace; after all allegations were based on rumours.

II. Continue investigations to expose exploitation and take strong actions
against trouble makers.

III. Get in direct touch with all contract labourers through all possible
means, communicate the need for current investigation to stop their
exploitation, and convince them regarding CTM’s situation due to competition.
Also expose those contractors who are creating problems.

IV. Promise strong action against the security guards who are guilty. V.
Increase the wages of contract labourers.

A. I, V              B. I, II               C. II, V             D. III, IV           E.
IlI, V

8. In the current context, which among the following represent the most
suitable reaction from CMMS leadership?

A. Distance CMMS from the episode and explain that CMMS is not involved in
the fiasco through a press conference.

B. Offer membership to contract labourers, which would put the contract
workers at par with the regular workers in CMMS.

C. Do not offer membership to contract labourers, but represent their
interests during negotiation in order to prevent the formation of another union
in CTM.

D. Start another union exclusively for contract labourers of CTM.

E. Adopt a neutral stand in public, and pass on information related to
problem creators to the CTM management.   

9. Out of the options given below, which one would be the best policy
decision by government at the national level?   

A. Asking CM management to pay same wages to both regular and contract

B. Income tax raids in offices of contractors under investigation.

C. Setting up a new labour welfare office within CM premises.

D. Setting up a new committee to make recommendations for changes in labour
legislations with an objective to reduce exploitation of contract labourers.

E. Use entire government machinery to support CTM, which has an impeccable
track record.

10. The criminals in the surrounding area often took their cue from the
situation in the mill, creating law and order problems outside the mill which
would later make it difficult for workers to come to mill safely. Given the
circumstances, identify the stakeholder that should be the immediate priority
of CTM management.   

A. Contract labourers who were allegedly beaten by the security guards of
the company.

B. District administration that is concerned about the spread of violence.

C. CMMS that prefers an immediate settlement of the issue.

D. Customers who are
concerned about prices and regular supplies.

E. Contract labourers who are
demanding job security and same wages as regular employees.

To get fresh updates about MBA exams on your Facebook & Twitter
timelines, subscribe to our pages created specifically for them. We will post
only exam specific links on these pages:





1(d)    2(b)    
3(c)    4(e)     5(b)   
 6(d)   7(d)   
8(c)     9(d)    10(a)