Merged Past Papers Suggested

PAPER – 7: ENTERPRISE INFORMATION SYSTEMS AND STRATEGIC MANAGEMENT
SECTION – A: ENTERPRISE INFORMATION SYSTEMS

Question No. 1 is compulsory.
Answer any three questions from the rest.
Question 1
(a) Business managers use MIS reports in the decision-making process. MIS reports need to
ensure that it meets certain criteria to make information most useful. Explain any three
such criteria. (3 Marks)
(b) Distinguish between Connection Oriented and Connectionless Networks. (2 Marks)
Answer
(a) MIS Reports need to ensure that it meets the following criteria to make the information
most useful:
• Relevant: MIS reports need to be specific to the business area they address. This is
important because a report that includes unnecessary information might be ignored.
• Timely: Managers need to know what’s happening now or in the recent past to make
decisions about the future. Be careful not to include information that is old. An example
of timely information might be customer phone calls and emails going back 12 months
from the current date.
• Accurate: Managers and others who rely on MIS reports can’t make sound decisions
with information that is wrong. It’s critical that numbers add up and that dates and
times are correct. Financial information is often required to be accurate to the dollar.
In other cases, it may be OK to round off numbers.
• Structured: Information in an MIS report can be complicated. Making that information
easy to follow helps management understand what the report is saying. Try to break
long passages of information into more readable blocks or chunks and give these
chunks meaningful headings.
(b) Difference between Connection Oriented Networks and Connectionless Networks are as
follows:
Connection Oriented Networks Connectionless Networks
It refers to the computer network It refers to the computer network where no prior
wherein a connection is first connection is made before data exchanges.
established between the sender and Data which is being exchanged in fact has a
the receiver and then data is complete contact information of recipient and at
exchanged. each intermediate destination, it is decided how
to proceed further.
For example - telephone networks. For example - postal networks.
© The Institute of Chartered Accountants of India

2 INTERMEDIATE (NEW) EXAMINATION: DECEMBER, 2021
Question 2
(a) Data is a critical resource that must be organized, controlled and managed properly. In
order to achieve the same purpose, XYZ Ltd. decided to transform all its data into digitized
form. As a Database Administrator of the company, you are required to suggest major
advantages of Database Management Systems (DBMS) to the top management. (6 Marks)
(b) Briefly explain the advantages of business policy “Bring Your Own Device ” (BYOD).
(4 Marks)
Answer
(a) Major advantages of Database Management Systems (DBMS) are as follows:
• Permitting Data Sharing: One of the principle advantages of a DBMS is that the
same information can be made available to different users.
• Minimizing Data Redundancy: In a DBMS, duplication of information or redundancy
is, if not eliminated, carefully controlled or reduced i.e. there is no need to re peat the
same data repeatedly. Minimizing redundancy significantly reduce the cost of storing
information on storage devices.
• Integrity can be maintained: Data integrity is maintained by having accurate,
consistent, and up-to-date data. Updates and changes to the data only must be made
in one place in DBMS ensuring Integrity.
• Program and File consistency: Using a DBMS, file formats and programs are
standardized. The level of consistency across files and programs makes it easier to
manage data when multiple programmers are involved as the same rules and
guidelines apply across all types of data.
• User-friendly: DBMS makes the data access and manipulation easier for the user.
DBMS also reduces the reliance of users on computer experts to meet their data
needs.
• Improved security: DBMS allows multiple users to access the same data resources
in a controlled manner by defining the security constraints. Some sources of
information should be protected or secured and only viewed by select individuals.
Using passwords, DBMS can be used to restrict data access to only those who should
see it. Security will only be improved in a database when appropriate access
privileges are allotted to prohibit unauthorized modification of data.
• Achieving program/data independence: In a DBMS, data does not reside in
applications, but databases program and data are independent of each other.
• Faster Application Development: In the case of deployment of DBMS, application
development becomes fast. The data is already therein databases, application
developer must think of only the logic required to retrieve the data in the way a user
needs.

PAPER – 7: ENTERPRISE INFORMATION SYSTEMS & STRATEGIC MANAGEMENT 3
(b) The advantages of Bring Your Own Device (BYOD) are as follows:
• Happy Employees: Employees love to use their own devices when at work. This also
reduces the number of devices an employee has to carry; otherwise, s/he would be
carrying his/her personal as well as organization provided devices.
• Lower IT budgets: Could involve financial savings to the organization since
employees would be using the devices, they already possess thus reducing the outlay
of the organization in providing devices to employees.
• IT reduces support requirement: IT department does not have to provide end user
support and maintenance for all these devices resulting in cost savi ngs.
• Early adoption of new Technologies: Employees are generally proactive in
adoption of new technologies that results in enhanced productivity of employees
leading to overall growth of business.
• Increased employee efficiency: The efficiency of employees is more when an
employee works on his/her own device. In an organization provided devices,
employees have to learn and there is a learning curve involved in it.
Question 3
(a) Human Resource Management (HRM) plays an important role in the effective and efficient
management of the human resources in any enterprise. As an HR Manager of XYZ Ltd.,
which typical stages of HR life cycle will you implement in the company?
(6 Marks)
(b) Categorize the different kinds of business risks that any enterprise faces. (4 Marks)
Answer
(a) The stages of Human Resource (HR) Cycle are as follows:
• Recruiting and On-boarding: Recruiting is the process of hiring a new employee.
The role of the human resources department in this stage is to assist in hiring. This
might include placing the job ads, selecting candidates whose resumes look
promising, conducting employment interviews and administering assessments such
as personality profiles to choose the best applicant for the position. In a small
business where the owner performs these duties personally, the HR person would
assist in a support role. In some organizations, the recruiting stage is referred to as
“hiring support.” On-boarding is the process of getting the successful applicant set up
in the system as a new employee.
• Orientation and Career Planning: Orientation is the process by which an employee
becomes a member of the company’s work force through learning his/her new job
duties, establishing relationships with co-workers and supervisors and developing a
niche. Career planning is the stage at which the employee and his/her supervisors
work out her long-term career goals with the company. The human resource

department may make additional use of personality profile testing at this stage to help
the employee determine his/her best career options with the company.
• Career Development: Career development opportunities are essential to keep an
employee engaged with the company over time. After an employee has established
himself/herself at the company and determined his long-term career objectives, the
human resources department should try to help him/her meet his/her goals, if they
are realistic. This can include professional growth and training to prepare the
employee for more responsible positions with the company. The company also
assesses the employee’s work history and performance at this stage to determine
whether he has been a successful hire.
• Termination or Transition: Some employees will leave a company through
retirement after a long and successful career. Others will choose to move on to other
opportunities or be laid off. Whatever the reason, all employees will even tually leave
the company. The role of HR in this process is to manage the transition by ensuring
that all policies and procedures are followed, carrying out an exit interview if that is
company policy and removing the employee from the system. These stages can be
handled internally or with the help of enterprises that provide services to manage the
employee life cycle.
(b) Different kinds of Business Risks are as follows:
• Strategic Risks: These are the risks that would prevent an organization from
accomplishing its objectives (meeting its goals). Examples include risks related to
strategy, political, economic relationship issues with suppliers and global market
conditions; also could include reputation risk, leadership risk, brand risk, and
changing customer needs.
• Financial Risks: Financial risks are those risks that could result in a negative
financial impact to the organization (waste or loss of assets). Examples include risks
from volatility in foreign currencies, interest rates, and commodities, credit risk,
liquidity risk, and market risk.
• Regulatory (Compliance) Risks: This includes risks that could expose the
organization to fines and penalties from a regulatory agency due to non -compliance
with laws and regulations. The examples include violation of laws or regulations
governing areas such as environmental, employee health and safety, lack of due
diligence, protection of personal data in accordance with global data protection
requirements and local tax or statutory laws. New and emerging regulations can have
a wide-ranging impact on management’s strategic direction, business model and
compliance system. It is, therefore, important to consider regulatory requirements
while evaluating business risks.
• Operational Risks: Operational risks include those risks that could prevent the
organization from operating in the most effective and efficient manner or be disruptive

to other operations due to inefficiencies or breakdown in internal processes, people ,

and systems. Examples include risk of loss resulting from inadequate or failed internal
processes, fraud or any criminal activity by an employee, business continuity, channel
effectiveness, customer satisfaction and product/service failure, efficiency, capacity,
and change integration.
• Hazard Risks: Hazard risks include risks that are insurable such as natural disasters;
various insurable liabilities; impairment of physical assets; terrorism etc.
• Residual Risks: This includes any risk remaining even after the counter measures
are analyzed and implemented. An organization’s management of risk should
consider these two areas: Acceptance of residual risk and Selection of safeguards.
Even when safeguards are applied, there is probably going to be some residual risk.
The risk can be minimized, but it can seldom be eliminated. Residual risk must be
kept at a minimal, acceptable level. As long as it is kept at an acceptable level, (i.e.
the likelihood of the event occurring or the severity of the consequence is sufficiently
reduced) the risk can be managed.
Question 4
(a) Controlling Module is one of the business process modules of the Enterprise Resources
Planning (ERP) systems. It facilitates coordinating, monitoring and optimizing all the
processes in an organization. In the light of these statements, describe any six key features
of Controlling Module of ERP system. (6 Marks)
(b) Briefly explain the Web Server and Proxy Server. (2 + 2 = 4 Marks)
Answer
(a) The key features of Controlling Module of Enterprise Resource Planning (ERP) Systems
are as under:
• Cost Element Accounting: This component provides overview of the costs and
revenues that occur in an organization. The cost elements are the basis for cost
accounting and enable the user the ability to display costs for each of the accounts
that have been assigned to the cost element. Examples of accounts that can be
assigned are Cost Centres, Internal Orders, WBS (Work Breakdown Structures).
• Cost Centre Accounting: This provides information on the costs incurred by the
business. Cost Centres can be created for such functional areas as Marketing,
Purchasing, Human Resources, Finance, Facilities, Information Systems,
Administrative Support, Legal, Shipping/Receiving, or even Quality. Some of the
benefits of Cost Centre Accounting are that the managers can set budget / cost
Centre targets; Planning; Availability of Cost allocation methods; and Assessments /
Distribution of costs to other cost objects.
• Activity-Based-Accounting: This analyses cross-departmental business processes
and allows for a process-oriented and cross-functional view of the cost centres.

• Internal Orders: Internal Orders provide a means of tracking costs of a specific job,
service, or task. These are used as a method to collect those costs and business
transactions related to the task. This level of monitoring can be very detailed but
allows management the ability to review Internal Order activity for better -decision
making purposes.
• Product Cost Controlling: This calculates the costs that occur during the
manufacture of a product or provision of a service and allows the management the
ability to analyse their product costs and to make decisions on the optimal price(s) to
market their products.
• Profitability Analysis: This allows the management to review information with
respect to the company’s profit or contribution margin by individual market segment.
• Profit Centre Accounting: This evaluates the profit or loss of individual, independent
areas within an organization.
(b) Web Server
• The Web Server is used to host all web services and internet related software. All the
online requests and websites are hosted and serviced through the web server.
• A Web server is a program that uses Hypertext Transfer Protocol (HTTP) to serve the
files that form Web pages to users, in response to their requests, which are forwarded
by their computers’ HTTP clients.
• Dedicated computers and appliances may be referred to as Web servers as well. All
computers that host websites must have Web server programs.
Proxy Server
• A Proxy Server is a computer that offers a computer network service to allow clients
to make indirect network connections to other network services.
• A client connects to the proxy server, and then requests a connection, file, or other
resource available on a different server.
• The proxy server provides the resource either by connecting to the specified server
or by serving it from a cache and hence is often used to increase the speed and
managing network bandwidth.
• In some cases, the proxy may alter the client’s request or the server’s response for
various purposes. It serves as an intermediary between the users and the websites
they browse for.
Question 5
(a) Core Banking System/Solution (CBS) has become a mandatory requirement in the banking
system. CBS are usually running 24 x 7 to support Internet banking, Mobile banking, ATM
services, etc. with the help of its various modules. Most of the key modules of CBS are

connected to a Central Server. As an IT expert, discuss any three Back End Applications/
Modules and any three Front End Applications/Modules of CBS. (3 + 3 = 6 Marks)
(b) What is Mobile Computing? Explain the key components of Mobile Computing.
(1 + 3 = 4 Marks)
OR
Describe any four characteristics of Infrastructure as a Service (IaaS). (4 Marks)
Answer
(a) The Back End Applications of Core Banking Systems (CBS) are as follows:
• Back Office: The Back Office is the portion of a company made up of administration
and support personnel, who are not client-facing. Backoffice functions include
settlements, clearances, record maintenance, regulatory compliance, accounting and
IT services. Back Office professionals may also work in areas like monitoring
employees' conversations and making sure they are not trading forbidden securities
on their own accounts.
• Data Warehouse: Banking professionals use data warehouses to simplify and
standardize the way they gather data - and finally get to one clear version of the truth.
Data warehouses take care of the difficult data management - digesting large
quantities of data and ensuring accuracy - and make it easier for professionals to
analyze data.
• Credit-Card System: Credit card system provides customer management, credit
card management, account management, customer information management and
general ledger functions; provides the online transaction authorization and service of
the bank card in each transaction channel of the issuing bank; support in the payment
application; and at the same time, the system has a flexible parameter system,
complex organization support mechanism and product factory based design concept
to speed up product time to market.
• Automated Teller Machines (ATM): An ATM is an electronic banking outlet that
allows customers to complete basic transactions without the aid of a branch
representative or teller. Anyone with a credit card or debit card can access most
ATMs. ATMs are convenient, allowing consumers to perform quick, self-serve
transactions from everyday banking like deposits and withdrawals to more complex
transactions like bill payments and transfers.
The Front-End Applications of Core Banking Systems (CBS) are as follows:
• Internet Banking also known as Online Banking, is an electronic payment system
that enables customers of a bank or other financial institution to conduct a range of
financial transactions through the financial institution's website accessed through any
browser. The online banking system offers over 250+ services and facilities that give

us real-time access to our bank account. We can make and receive payments to our
bank accounts, open Fixed and Recurring Deposits, view account details, request a
cheque book and a lot more, while you are online.
• Mobile Banking is a service provided by a bank or other financial institution that
allows its customers to conduct financial transactions remotely using a mobile device
such as a smartphone or tablet. Unlike the related internet banking, it uses software,
usually called an app, provided by the financial institution for the purpose. The app
needs to be downloaded to utilize this facility. Mobile banking is usually available on
a 24-hour basis.
• Phone Banking is a functionality through which customers can execute many of the
banking transactional services through Contact Centre of a bank over phone, without
the need to visit a bank branch or ATM. Registration of Mobile number in account is
one of the basic perquisites to avail Phone Banking. Account related information,
Cheque Book issue request, stop payment of cheque, Opening of Fixed deposit etc.
are some of the services that can be availed under Phone Banking.
• Branch Banking: CBS are the bank’s centralized systems that are responsible for
ensuring seamless workflow by automating the frontend and backend processes
within a bank. CBS enables single view of customer data across all branches in a
bank and thus facilitate information across the delivery channels. The branch confines
itself to various key functions such as creating manual documents capturing data
required for input into software; internal authorization; initiating Beginning -Of-Day
(BOD) operations; End-Of-Day (EOD) operations; and reviewing reports for control
and error correction.
(b) Mobile Computing refers to the technology that allows transmission of data via a computer
without having to be connected to a fixed physical link. Mobile data communication has
become a very important and rapidly evolving technology as it allows users to transmit
data from remote locations to other remote or fixed locations even when they are on move
i.e. mobility. In general, Mobile Computing is a versatile and strategic technology that
increases information quality and accessibility, enhances operational efficiency, and
improves management effectiveness.
The key components of Mobile Computing are as follows:
• Mobile Communication: The Mobile Communication refers to the infrastructure put
in place to ensure that seamless and reliable communication goes on. This would
include communication properties, protocols, data formats and concrete
technologies.
• Mobile Hardware: Mobile Hardware includes mobile devices or device components
that receive or access the service of mobility. They would range from Portable
laptops, Smart Phones, Tablet PCs, and Personal Digital Assistants (PDA) that use
an existing and established network to operate on. At the back end, there are various

servers like Application Servers, Database Servers and Servers with wireless
support, WAP gateway, a Communications Server and/or MCSS (Mobile
Communications Server Switch) or a wireless gateway embedded in wireless carrier’s
network. The characteristics of mobile computing hardware are defined by the size
and form factor, weight, microprocessor, primary storage, secondary storage, screen
size and type, means of input, means of output, battery life, communications
capabilities, expandability and durability of the device.
• Mobile Software: Mobile Software is the actual program that runs on the mobile
hardware and deals with the characteristics and requirements of mobile applications.
It is the operating system of that appliance and is the essential component that makes
the mobile device operates. Mobile applications popularly called Apps are being
developed by organizations for use by customers, but these apps could represent
risks, in terms of flow of data as well as personal identification risks, introduction of
malware and access to personal information of mobile owner.
OR
Characteristics of Infrastructure as a Service (IaaS) are as follows:
• Web access to the resources: The IaaS model enables the IT users to access
infrastructure resources over the Internet. When accessing a huge computing power,
the IT user need not get physical access to the servers.
• Centralized Management: The resources distributed across different parts are
controlled from any management console that ensures effective resource
management and effective resource utilization.
• Elasticity and Dynamic Scaling: Depending on the load, IaaS services can provide
the resources and elastic services where the usage of resources can be increased or
decreased according to the requirements.
• Shared infrastructure: IaaS follows a one-to-many delivery model and allows
multiple IT users to share the same physical infrastructure and thus ensures high
resource utilization.
• Metered Services: IaaS allows the IT users to rent the computing resources instead
of buying it. The services consumed by the IT user will be measured, and the users
will be charged by the IaaS providers based on the amount of usage.

SECTION –B: STRATEGIC MANAGEMENT

Question No. 6 is compulsory
Question 6
Inspite of high commodity inflation, shortage of components and the threat of third wave of
COVID-19 pandemic in India, manufacturers of packaged goods, home appliances and
consumer electronics are expecting the business to grow by 12 to 25 percent in the coming
months. After one-and-a-half years of disruption, manufacturers are now confident about
managing their inventories better, keeping their supply channels well-stocked and preparing
themselves to minimalize the impact of any COVID related restrictions even as they gear up for
the festive season, which usually accounts for 25 to 35 percent of their yearly sales.
The home appliances sector could be an example. After a dismal April-June quarter in the year
221; producers of air conditioners, refrigerators and washing machines are expecting their
business to grow by 15-20 percent in the months to come. All the companies operating in the
sector have geared up to grab the opportunities available in the market.
A leading company in the home appliances domain, XXP India, is planning to launch various
innovative product designs and offer loyalty programmes to lure consumers.
With reference to Michael Porter’s generic strategies, identify which strategy XXP India has
planner for? Explain how this strategy will be advantageous to the company to remain
profitable? (5 Marks)
Answer
According to Michael Porter, strategies allow organizations to gain competitive advantage from
three different bases: cost leadership, differentiation, and focus. Porter called these base
generic strategies.
XXP India Ltd. has planned for Differentiation Strategy. The company is planning to launch
various innovative product designs and offer loyalty programmes to lure customers.
Differentiation strategy should be pursued only after a careful study of buyers’ needs and
preferences to determine the feasibility of incorporating one or more differentiating features into
a unique product that features the desired attributes. A successful differentiation strategy allows
a firm to charge a higher price for its product and to gain customer loyalty, because consumers
may become strongly attached to the differentiated features.
Advantages of Differentiation Strategy
A differentiation strategy may help an organisation to remain prof itable even with rivalry, new
entrants, suppliers’ power, substitute products, and buyers’ power.
1. Rivalry - Brand loyalty acts as a safeguard against competitors. It means that customers
will be less sensitive to price increases, as long as the firm can satisfy the needs of its
customers.

2. Buyers – They do not negotiate for price as they get special features, and they have fewer
options in the market.
3. Suppliers – Because differentiators charge a premium price, they can afford to absorb
higher costs of supplies as the customers are willing to pay extra too.
4. Entrants – Innovative features are an expensive offer. So, new entrants generally avoid
these features because it is tough for them to provide the same product with special
features at a comparable price.
5. Substitutes – Substitute products can’t replace differentiated products which have high
brand value and enjoy customer loyalty.
Question 7
(a) A Chennai based fast moving consumer goods (FMCG) major CDE Ltd. recently
announced restructuring its business. The company indicated that the business would be
split into mainly four different streams-FMCG, E-commerce, Retail, and Research &
Development. The company management has decided that these four units will operate as
separate businesses. The top corporate officer shall delegate responsibility for day -to-day
operations and business unit strategy to the concerned managers.
Identify the organization structure that CDE Ltd. has planned to implement. Discuss any
four attributes and the benefits the firm may derive by using this organization structure.
(5 Marks)
(b) What are the important aspects of the process of implementation of strategy? (5 Marks)
Answer
(a) CDE Ltd. has planned to implement Strategic Business Unit (SBU) structure. Very
large organisations, particularly those running into several products, or operating at distant
geographical locations that are extremely diverse in terms of environmental facto rs, can
be better managed by creating strategic business units. SBU structure becomes imperative
in an organisation with increase in number, size and diversity.
The attributes of an SBU and the benefits a firm may derive by using the SBU Structure
are as follows:
 A scientific method of grouping the businesses of a multi – business corporation which
helps the firm in strategic planning.
 An improvement over the territorial grouping of businesses and strategic planning
based on territorial units.
 Strategic planning for SBU is distinct from rest of businesses. Products/ businesses
within an SBU receive same strategic planning treatment and priorities.
 Each SBU will have its own distinct set of competitors and its own distinct strategy.

 The CEO of SBU will be responsible for strategic planning for SBU and its profit
performance.
 Products/businesses that are related from the stand point of function are assembled
together as a distinct SBU.
 Unrelated products/ businesses in any group are separated into separate SBU s.
 Grouping the businesses on SBU lines helps in strategic planning by removing the
vagueness and confusion.
 Each SBU is a separate business and will be distinct from one another on the basis
of mission, objectives etc.
(b) Implementation and execution are an operations-oriented activity aimed at shaping the
performance of core business activities in a strategy-supportive manner. To convert
strategic plans into actions and results, a manager must be able to direct organizatio nal
change, motivate people, build and strengthen company’s competencies and competitive
capabilities, create a strategy-supportive work culture, and meet or beat performance
targets. Good strategy execution involves creating strong “fits” between strategy and
organizational capabilities, structure, climate & culture.
In most situations, strategy-execution process includes the following principal
aspects:
1. Developing budgets that steer ample resources into those activities critical to
strategic success.
2. Staffing the organization with the needed skills and expertise, consciously
building and strengthening strategy-supportive competencies and competitive
capabilities and organizing the work effort.
3. Ensuring that policies and operating procedures facilitate rather than impede
effective execution.
4. Using the best-known practices to perform core business activities and pushing for
continuous improvement.
5. Installing information and operating systems that enable company personnel to
better carry out their strategic roles day in and day out.
6. Motivating people to pursue the target objectives energetically.
7. Creating a company culture and work climate conducive to successful strategy
implementation and execution.

Exerting the internal leadership needed to drive implementation forward and keep
improving strategy execution. When the organization encounters stumbling blocks or
weaknesses, management has to see that they are addressed and rec tified quickly.
Question 8
(a) STU’s association with India goes back to 1967, when it played a key role in constructing
a very long highway in India spreading over multiple states. Since then, it is contributing
in many ways to the country’s growth story. Now it is looking at playing an active role in
the key projects taken up by the central government. Suggest few Opportunities and
Threats that the company should consider. (5 Marks)
(b) “There are certain conditions or indicators which point out that a turnaround is needed if
the company has to survive”. Discuss. (5 Marks)
Answer
(a) Faced with a constantly changing environment, each business unit needs to develop a
marketing information system to track trends and developments, which can be cate gorized
as an opportunity or a threat. The company has to review its strength and weakness in the
background of environment’s opportunities and threat, i.e., an organization’s SWOT
analysis.
STU is looking at playing an active role in the key projects taken up by the central
government. Following are the potential opportunities and threats to STU:
Potential STU’s Opportunities:
 Alliances or joint ventures with central government that expand the STU’s market
coverage or boost its competitive capability.
 Possibilities of working on the future projects of central government.
 Serving additional customer groups or expanding into new geographic markets.
 Utilizing existing company skills or technological know-how to enter new projects.
 Openings to take market share away from rivals.
 Openings to exploit emerging new technologies.
 Integrating forward or backward.
Potential STU’s Threats:
 Due to COVID-19 pandemic, companies can have face the lockdown situation.
 Economic factors such as recession etc.
 Likely entry of potent new competitors.

 Technological changes/innovations in construction equipment.

 Costly new regulatory requirements.
 Growing bargaining power of suppliers.
 Vulnerability to industry driving forces.
(b) Rising competition, business cycles and economic volatility have created a climate where
no business can take viability for granted. Turnaround strategy is a highly targeted effort
to return an organization to profitability and increase positive cash flows to a sufficient
level. Organizations that have faced a significant crisis that has negatively affected
operations requires turnaround strategy. Turnaround strategy is used when both threats
and weaknesses adversely affect the health of an organization so much that its basic
survival is a question. When organization is facing both internal and external pressures
making things difficult then it has to find something which is entirely new, innovative and
different. Being organization’s first objective is to survive and then grow in the market;
turnaround strategy is used when organization’s survival is under threat. Once turnaround
is successful the organization may turn to focus on growth.
Conditions for turnaround strategies: When firms are losing their grips over market,
profits due to several internal and external factors, and if they have to survive under the
competitive environment, they have to identify danger signals as early as possible and
undertake rectification steps immediately. These are certain conditions or indicators whi ch
point out that a turnaround is needed if the company has to survive. These danger signals
are:
 Persistent negative cash flow from business.
 Uncompetitive products or services.
 Declining market share.
 Deterioration in physical facilities.
 Over-staffing, high turnover of employees, and low morale.
 Mismanagement.
Question 9
(a) “Business organizations face countless marketing challenges that affect the success or
failure of strategy implementation”. In light of this statement, discuss some marketing
decisions that require special attention. (5 Marks)
(b) GWA, a leading Japan based automobile company decides to make India a hub for the
company’s 250 cc motorcycle to be manufactured in collaboration with the TPR Group, a
leading Indian motorcycle manufacturer. The production is to be exported to the
company’s home market as well as to other African countries.

What is this growth strategy called? Point out the most important advantages both the
companies expect from such strategy/collaboration. (5 Marks)
Answer
(a) A business organization faces countless marketing challenges that affect the success or
failure of strategy implementation. Some examples of marketing decisions that may require
special attention are as follows:
1. The amount and the extent of advertising to be done. Whether to use heavy or light
advertising. What should be the amount of advertising in print media, television or
internet?
2. Decisions regarding distribution network to be used. Whether to use exclusive
dealerships or multiple channels of distribution.
3. Whether to be a price leader or a price follower?
4. Whether to offer a complete or limited warranty?
5. Whether to limit or enhance the share of business done with a single or a few
customers?
6. Whether to reward sales people based on straight salary, straight commission, or on
a combination of salary and commission?
(b) GWA of Japan and TRP group of India opted for strategic alliance as their growth
strategy. A strategic alliance is a relationship between two or more businesses that
enables each to achieve certain strategic objectives which neither would be able to achieve
on its own. Strategic alliances are often formed in the global marketplace between
businesses that are based in different regions of the world.
Advantages of Strategic Alliance
Strategic alliance usually is only formed if they provide an advantage to all the parties in
the alliance. These advantages can be broadly categorised as follows:
1. Organizational: Strategic alliance helps to learn necessary skills and obtain certain
capabilities from strategic partners. Strategic partners may also help to enhance
productive capacity, provide a distribution system, or extend supply chain. Having a
strategic partner who is well-known and respected also helps add legitimacy and
creditability to a new venture.
2. Economic: There can be reduction in costs and risks by distributing them across the
members of the alliance. Greater economies of scale can be obtained in an alliance,
as production volume can increase, causing the cost per unit to decline. Finally,
partners can take advantage of co-specialization, creating additional value, such as
when a leading computer manufacturer bundles its desktop with a leading monitor
manufacturer’s monitor.

3. Strategic: Rivals can join together to cooperate instead of competing with each other.
Vertical integration can be created where partners are part of supply chain. Strategic
alliances may also be useful to create a competitive advantage by the pooling of
resources and skills. This may also help with future business opportunities and the
development of new products and technologies. Strategic alliances may also be used
to get access to new technologies or to pursue joint research and development.
4. Political: Sometimes strategic alliances are formed with a local foreign business to
gain entry into a foreign market either because of local prejudices or legal barriers to
entry. Forming strategic alliances with politically influential partners may also help
improve your own influence and position.
Question 10
(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) Why is strategy evaluation more difficult? Give reasons. (5 Marks)
OR
What are the factors which determine the nature of rivalry in an industry? (5 Marks)
Answer
(a) Each organization has to build its competitive advantage over the competitors in the
business warfare in order to win. This can be done only by following the process of
strategic management. Strategic Management is very important for the survival and growth
of business organizations in dynamic business environment. Other major benefits of
strategic management are as follows:
 Strategic management helps organizations to be more proactive rather than reactive
in dealing with its future. It facilitates to work within vagaries of envi ronment and
remains adaptable with the turbulence or uncertain future. Therefore, they are able
to control their own destiny in a better way.
 It provides better guidance to entire organization on the crucial point – what it is trying
to do. Also provides frameworks for all major business decisions of an enterprise such
as on businesses, products, markets, organizational structures, etc.
 It facilitates to prepare the organization to face the future and act as pathfinder to
various business opportunities. Organizations are able to identify the available
opportunities and identify ways and means as how to reach them.
 It serves as a corporate defence mechanism against mistakes and pitfalls. It helps
organizations to avoid costly mistakes in product market choices or investments.

 Over a period of time strategic management helps organization to evolve certain core
competencies and competitive advantages that assist in the fight for survival and
growth.
(b) Strategic evaluation involves measuring and evaluating performance. The goals achieved
are compared with the desired goals to identify deviations and make necessary
adjustments in strategies or in the efforts being put to achieve those strategies.
Reasons why strategy evaluation is more difficult today include the following trends:
 A dramatic increase in the environment’s complexity.
 The increasing difficulty of predicting the future with accuracy.
 The increasing number of variables in the environment.
 The rapid rate of obsolescence of even the best plans.
 The increase in the number of both domestic and world events affecting
organizations.
 The decreasing time span for which planning can be done with any degree of
certainty.
OR
The intensity of rivalry in an industry is a significant determinant of an industry’s
attractiveness and profitability. The intensity of rivalry can influence the costs of suppliers,
distribution, and of attracting customers and thus, can directly affect the profitability. “The
more intensive the rivalry, the less attractive is the industry”. Rivalry among competitors
tends to be cutthroat and an industry’s profitability is low when;
(i) An industry has no clear leader. Therefore, continuous war for leadership.
(ii) Competitors in the industry are numerous.
(iii) Competitors operate with high fixed costs. Thus, aiming for better Return on
Investment with more fierce tactics.
(iv) Competitors face high exit barriers, and therefore, continue to fight for market share.
(v) Competitors have little opportunity to differentiate their offerings.
(vi) The industry faces slow or diminished growth.

Question 1
(a) Presently, the flow of information is at an unimaginable high speed for doing any business
and need of information is perceived at various levels of hierarchy. With these objectives
in focus, define:
(i) Enterprise Information System
(ii) Categories of Business Processes (1 + 2 Marks)
(b) What is an operating system? List any four activities performed by an operating system.
(1 + 1 Marks)
Answer
(a) (i) An Enterprise Information System (EIS) may be defined as any kind of information
system which improves the functions of an enterprise business processes by
integration.
Or
An Enterprise Information System (EIS) provides a technology platform that
enables organizations to integrate and coordinate their business processes on a
robust foundation.
Or
An Enterprise Information System (EIS) provides a single system that is central to
the organization that ensures information can be shared across all functional levels
and management hierarchies. It may be used to amalgamate existing applications.
(ii) Depending on the organization, industry, and nature of work; business processes are
often broken up into different categories as below:
• Operational/Primary Processes: Operational or Primary Processes deal with
the core business and value chain. These processes deliver value to the
customer by helping to produce a product or service. Operational processes
represent essential business activities that accomplish business objectives. For
example - Order to Cash (O2C) and Purchase to Pay (P2P) cycles are
associated with revenue generation.
• Supporting/Secondary Processes: Supporting Processes back core
processes and functions within an organization. For example - Accounting,

2 INTERMEDIATE EXAMINATION: MAY, 2022
workplace safety and Human Resource (HR) Management that includes

activities like recruitment and staffing, training and development, career
development etc.
• Management Processes: Management Processes measure, monitor and
control the activities related to business procedures and systems. Examples of
management processes include internal communications, governance, strategic
planning, budgeting, and infrastructure or capacity management.
(b) An Operating System (OS) is defined as a set of computer programs that manages
computer hardware resources and acts as an interface with computer application
programs.
Or
An Operating System (OS) is a vital component of the system software that makes the
hardware usable and manage them by creating an interface between the hardware and the
user.
The variety of activities that are executed by an Operating System are as follows:
• Performing hardware functions
• Provide User Interfaces
• Support Hardware Independence
• Memory Management
• Task Management
• Networking Capability
• Logical Access Security
• File management
Question 2
(a) The main business of banks is lending money to the customers. There are certain inherent
risks in lending, and they cannot take more than the calculated risks whenever they lend
money to their customers. List down the various risks involved and their associated
controls in Loans and Advances Process in the banking system. (6 Marks)
(b) The ERP system is like a human body where there are different units and each unit relates
to other units. All the units must work in harmony with other units to generate the desired
result. What are the important points for integration of modules with Financial and
Accounting System? (4 Marks)

Answer
(a) Various risks and their associated controls in Loan and Advance process in a Banking
system are as follows:
Risks Key Controls
Credit Line setup is The credit committee checks that the financial
unauthorized and not in line with ratios, the net-worth, the risk factors and its
the bank’s policy. corresponding mitigating factors, the credit line
offered and the credit amount etc. are in line with
Credit Risk Policy and that the client can be given
the Credit Line.
Credit Line setup is Access rights to authorize the credit limit in Loan
unauthorized and not in line with Booking system/Core Banking System should be
the bank’s policy. restricted to authorized personnel.
Masters defined for the Access rights to authorize the customer master in
customer are not in accordance Loan Booking system/Core Banking System (CBS)
with the re- Disbursement should be restricted to authorized personnel.
Certificate. Segregation of Duties (SoD) exists in Loan
Disbursement system. The system restricts the
maker having checker rights to approve the
loan/facilities booked by self in Loan Disbursal
System.
Credit Line setup can be Loan Disbursement System/CBS restricts booking
breached in Loan disbursement of loans/ facilities if the limit assigned to the
system/CBS. customer is breached in Loan Disbursement
System/CBS.
Lower rate of interest/ Loan Disbursement System/CBS restricts booking
Commission may be charged to of loans/ facilities if the rate charged to the
customer. customer are not as per defined masters in system.
Facilities/Loan’s granted may Segregation of Duties (SoD) exists in Loan
be unauthorized/inappropriate. Disbursement system. The system restricts the
maker having checker rights to approve the
loan/facilities booked by self in loan disbursal
system.
Inaccurate interest/charge Interest on fund-based loans and charges for non-
being calculated in the Loan fund-based loans are automatically calculated in
disbursal system. the Loan disbursal system as per the defined
masters.

(b) Following points are important for integration of Enterprise Resource Planning (ERP)
modules with Financial and Accounting System:
• Master data across all the modules must be same and must be shared with other
modules where-ever required.
• Common transaction data must be shared with other modules where-ever required.
• Separate voucher types to be used for each module for easy identification of
department recording it.
• Figures and transaction may flow across the department. For example - Closing stock
value is taken to Trading Account as well as Balance Sheet and closing stock quantity
is required by Purchase Department, Stores Department, Accounts Department, and
Production Department, Similarly, salary figures are used by Human Resource
Department and Accounts Department simultaneously. Hence, it is necessary to
design the system accordingly.
Question 3
(a) For doing business, logical access controls play a critical role ensuring the access to
system, data and programs to safeguard against unauthorized access. Towards this,
explain 'Logical Access Control’ and ‘User Access Management Controls’ for Technical
Exposures’. (2 + 4 Marks)
(b) In Accounting language, voucher is an evidence for a transaction. How do you interpret
'voucher' when referred to a computer? Also explain any three types of vouchers pertaining
to accounting. (1 + 3 Marks)
Answer
(a) Logical Access Controls
• These are the controls relating to logical access to information resources such as
operating systems controls, application software boundary controls, networking
controls, access to database objects, encryption controls etc.
• Logical access controls are the system-based mechanisms used to designate who or
what is to have access to a specific system resource and the type of transactions and
functions that are permitted.
• These controls are implemented to ensure that access to systems, data and programs
is restricted to authorized users to safeguard information against unauthorized use,
disclosure or modification, damage, or loss.
• The key factors considered in designing logical access controls include confidentiality
and privacy requirements, authorization, authentication, and incident handling,
reporting and follow-up, virus prevention and detection, firewalls, centralized security

administration, user training and tools for monitoring compliance, intrusion testing and
reporting.
Controls for technical exposure related to User Access Management are as follows:
• User Registration: Information about every user is documented. Some questions
like why and who is the user granted the access; has the data owner approved the
access, and has the user accepted the responsibility? etc. are answered. The de-
registration process is also equally important.
• Privilege management: Access privileges are to be aligned with job requirements
and responsibilities are to be minimal w.r.t their job functions. For example, an
operator at the order counter shall have direct access to order processing activity of
the application system. Similarly, a business analyst could be granted the access to
view the report but not modify which would be done by the developer.
• User password management: Passwords are usually the default screening point for
access to systems. Allocations, storage, revocation, and reissue of password are
password management functions. Educating users is a critical component about
passwords and making them responsible for their password.
• Review of user access rights: A user’s need for accessing information changes with
time and requires a periodic review of access rights to check anomalies in the user’s
current job profile, and the privileges granted earlier.
(b) In computer language, the word Voucher is a place where transactions are recorded. It is
a data input form for inputting transaction data.
The vouchers pertaining to Accounting module are as follows:
Voucher Type Uses
Contra For recording of four types of transactions as under.
a. Cash deposit in bank.
b. Cash withdrawal from bank.
c. Cash transfer from one location to another.
d. Fund transfers from our one bank account to our own another
bank account.
Payment For recording of all types of payments. Whenever the money is
going out of business by any mode (cash/bank). E.g. Payment of
salary and rent.
Receipt For recording of all types of receipts. Whenever the money is being
received into business from outside by any mode (cash/bank). For
example - Interest received from bank.

Journal For recording of all non-cash/bank transactions. For example -

Depreciation, Provision, Write-off, Write-back, Discount
given/received, Purchase/Sale of fixed assets on credit, etc.
Sales For recording all types of trading sales by any mode
(cash/bank/credit).
Purchase For recording all types of trading purchase by any mode
(cash/bank/credit).
Credit Note For making changes/corrections in already recorded
sales/purchase transactions.
Debit Note For making changes/corrections in already recorded
sales/purchase transactions.
Memorandum For recording of transaction which will be in the system but will not
affect the trial balance. In other words, memorandum vouchers are
used to record suspense payments, receipt, sales, purchase etc.
conveyance expenses.
Question 4
(a) Enterprise Risk Management (ERM) framework consists of various interrelated
components that are derived from the way the management runs a business and are
integrated with the management process. Explain any six components of ERM framework.
(6 Marks)
(b) E-Commerce runs through network-connected systems which can have two types of
architecture, namely, two-tier and three-tier architecture. In this context, define three-tier
architecture and write its advantages. (1 + 3 Marks)
Answer
(a) Enterprise Risk Management (ERM) framework consists of eight interrelated components
that are as follows:
(i) Internal Environment: The internal environment encompasses the tone of an
organization and sets the basis for how risk is viewed and addressed by an entity’s
people, including risk management philosophy and risk appetite, integrity and ethical
values, and the environment in which they operate. Management sets a philosophy
regarding risk and establishes a risk appetite. The internal environment sets the
foundation for how risk and control are viewed and addressed by an entity’s people.
The core of any business is its people, their individual attributes including integrity,
ethical values, and competence and the environment in which they operate. They are
the engine that drives the entity and the foundation on which everything rests.
(ii) Objective Setting: Objectives should be set before management can identify events
potentially affecting their achievement. ERM ensures that management has a process

in place to set objectives and that the chosen objectives support and align with the
entity’s mission/vision and are consistent with the entity’s risk appetite.
(iii) Event Identification: Potential events that might have an impact on the entity should
be identified. Event identification includes identifying factors – internal and external,
that influence how potential events may affect strategy implementation and
achievement of objectives. It includes distinguishing between potential events that
represent risks, those representing opportunities and those that may be both.
Opportunities are channeled back to management’s strategy or objective-setting
processes. Management identifies inter-relationships between potential events and
may categorize events to create and reinforce a common risk language across the
entity and form a basis for considering events from a portfolio perspective.
(iv) Risk Assessment: Identified risks are analysed to form a basis for determining how
they should be managed. Risks are assessed on both an inherent and a residual
basis, and the assessment considers both risk likelihood and impact. A range of
possible results may be associated with a potential event, and management needs to
consider them together.
(v) Risk Response: Management selects an approach or set of actions to align assessed
risks with the entity’s risk tolerance and risk appetite, in the context of the strategy
and objectives. Personnel identify and evaluate possible responses to risks, including
avoiding, accepting, reducing and sharing risk.
(vi) Control Activities: Policies and procedures are established and executed to help
ensure that the risk responses that management selected are effectively carried out.
(vii) Information and Communication: Relevant information is identified, captured, and
communicated in a form and time frame that enables people to carry out their
responsibilities. Information is needed at all levels of an entity for identifying,
assessing and responding to risk. Effective communication also should occur in a
broader sense, flowing down, across and up the entity. Personnel need to receive
clear communications regarding their role and responsibilities.
(viii) Monitoring: The entire ERM process should be monitored, and modifications made
as necessary. In this way, the system can react dynamically, changing as conditions
warrant. Monitoring is accomplished through ongoing management activities,
separate evaluations of the ERM processes or a combination of both.
(b) Three - Tier architecture is a software design pattern and well-established software
architecture having three tiers - Presentation Tier, Application Tier, and Database Tier.
The Three-tier architecture is a client server architecture in which the functional process
logic; data access and computer data storage; and user interface are maintained as
independent modules on separate platforms - Application tier; Database tier; and
Presentation Tier respectively.
The advantages of Three-Tier Architecture are as follows:

• Clear separation of user-interface-control and data presentation from

application-logic: Through this separation, more clients can have access to a wide
variety of server applications. The two main advantages for client-applications are
quicker development through the reuse of pre-built business-logic components and a
shorter test phase.
• Dynamic load balancing: If bottlenecks in terms of performance occur, the server
process can be moved to other servers at runtime.
• Change management: It is easy and faster to exchange a component on the server
than to furnish numerous Personal Computers (PCs) with new program versions.
Question 5
(a) Banking is a backbone of a country's economy which keeps the wheels of economy
running. The changes in the banking scenario due to moving over to Core Banking System
(CBS) and IT-based operations have enabled banks to reach customers and facilitate
seamless transactions with lesser dependence on physical infrastructure. In this context,
write down the characteristics of Core Banking System. (6 Marks)
(b) Mobile Apps are commonly used by all for doing electronic transactions. A mobile website
works for all mobile devices and usually costs about same as creating a Mobile App. In
this context, explain any four modules in mobile websites. (4 Marks)
OR
What are the applications of Internet of Things (IOT) in the area of
(i) Smart City
(ii) Health Care
Answer
(a) The characteristics of Core Banking Systems (CBS) are as follows:
• CBS is a centralized Banking Application software that has several components which
have been designed to meet the demands of the banking industry.
• CBS is supported by advanced technology infrastructure and has high standards of
business functionality.
• There is a common database in a central server located at a Data Center which gives
a consolidated view of the bank’s operations.
• Core Banking Solution brings significant benefits such as a customer is a customer
of the bank and not only of the branch.
• CBS is modular in structure and is capable of being implemented in stages as per
requirements of the bank.
• All branches of bank function as delivery channels providing services to its customers.

• A CBS software also enables integration of all third-party applications including in-
house banking software to facilitate simple and complex business processes.
(b) The modules that are included in the Mobile App/Mobile websites are as follows:
• Mobile Store Front Module is an integral part of m-commerce apps, where all
commodities and services are categorized and compiled in catalogues for customers
to easily browse through the items on sale and get essential information about the
products.
• Mobile Ticketing Module is an m-commerce app component that is closely linked to
promotional side of commercial business and enables vendors to attract customers
by distributing vouchers, coupons, and tickets.
• Mobile Advertising and Marketing Module empowers merchants to leverage m-
commerce channels to manage its direct marketing campaigns, which are reported to
be very effective especially when targeted at younger representatives of digital
information consumers.
• Mobile Customer Support and Information Module is a point of reference for
information about a particular retailer, its offerings, and deals. The news about the
company, current discounts, shop locations and other information is either pushed to
users’ m-commerce apps or can be found in m-commerce app itself.
• Mobile Banking is inextricably linked to selling process via m-commerce apps,
because no purchase can be finalized without a payment. There are various options
for executing mobile payments, among which are direct mobile billing, payments via
SMS, credit card payments through a familiar mobile web interface, and payments at
physical Point of Sale (POS) terminals with Near Field Communication (NFC)
technology.
OR
(i) Smart City: Smart city is a big innovation and spans a wide variety of use cases,
from water distribution and traffic management to waste management and
environmental monitoring. For example, many times we wait for a red traffic light in a
totally absurd way, because there is no car or any person around us. With Internet of
Things (IoT), these traffic lights can be connected to a circuit of cameras distributed
throughout the city that identifies the level of traffic and mass movement, thus
avoiding those absurd waits in areas of limited movement.
(ii) Health Care: Internet of Things (IoT) has various applications in healthcare which
are from remote monitoring equipment to advance and smart sensors to equipment
integration. It has the potential to improve how physicians deliver care and keep
patients safe and healthy.

PAPER 7 - SECTION – B: STRATEGIC MANAGEMENT

Question paper comprises of 5 questions, Answer Question No. 6 which is compulsory and any 3
out of the remaining 4 questions.
Question 6
Paramount group of companies is having a strong foot print in the areas of Aviation,
Healthcare, Fast moving consumer goods, Home appliances and Electronic goods. Processes,
Technology and Marketing capabilities are different for each business. However, each
business operates among a group of rivals that produce competing products. In order to get
ahead of competition and to contribute for sustained competitive advantages, company
intends to improve customer services and in turn increase its market share. T o achieve this,
company is desirous to analyze its products, processes and service levels for each of its
segments.
Company is studying various trade publications, understanding the taste and preferences of
customers, meeting with suppliers and also using other relevant information available in public
domain for each of its business operations. After studying as above, company wants to
compare diverse range of practices and processes being followed by acknowledged leaders in
the industry, measures its own productivity and identify the gaps. Instead of following bricks-
and-mortar practices, company will be setting goals to be achieved for improvement in its
product, processes and services, based on best practices being followed by the companies on
a regular basis.
Identify the strategic tool to be used by Paramount group of companies. Also explain in brief
the common elements involved in using this tool. (1 + 4 = 5 Marks)
Answer
Paramount group of companies have used Benchmarking as a strategic tool. Benchmarking
is an approach of setting goals and measuring productivity of firms based on best industry
practices or against the products, services and practices of its competitors or other
acknowledged leaders in the industry. Thus, benchmarking is a process of continuous
improvement in search for competitive advantage. Firms can use benchmarking practices to
achieve improvements in diverse range of management functions like product development,
customer services, human resources management, etc.
Some of the common elements of benchmarking process are as under:
• Identifying the need for benchmarking: This step will define the objectives of the
benchmarking exercise. It will also involve selecting the type of benchmarking.
Organizations identify realistic opportunities for improvements.
• Clearly understanding existing decisions processes: The step will involve compiling
information and data on performance. This will include mapping processes.
• Identify best processes: Within the selected framework best processes are identified.
These may be within the same organization or external to it.

• Comparison of own process and performance with that of others: Benchmarking

process also involves comparison of performance of the organization with performance of
other organization. Any deviation between the two is analysed to make further
improvements.
• Prepare a report and implement the steps necessary to close the performance gap:
A report on benchmarking initiatives containing recommendations is prepared. Such a
report also contains the action plans for implementation.
• Evaluation: Business organizations evaluate the results of the benchmarking process in
terms of improvements vis-à-vis objectives and other criteria set for the purpose. It also
periodically evaluates and reset the benchmarks in the light of changes in the conditions
that impact the performance.
Question 7
(a) Good Health is an Association of Persons (AOP), providing awareness to downtrodden
on immunization, vaccination, sanitation and other health and hygiene issues. It is a not-
for-profit organization, working in coordination with hospitals, medical support centers
and local administration.
You are asked to take over the organization and manage it in a better way. Identify
whether the concept of strategic management is relevant in this connection? And if so,
what basic activities you would perform in order to manage it efficiently?
(1 + 4 = 5 Marks)
(b) "Is it imperative to segregate top level strategies into viable functional plans and
policies?" Do you agree with this statement? Support your answer with reason.
(1 + 4 = 5 Marks)
Answer
(a) The concept of strategic management process is effectively being used by a number of
not-for-profit or charitable organizations. While ‘Good Health’ may have social and
charitable existence, still it has to generate resources and use them wisely to achieve
organisational objectives. Organisation needs to be managed strategically, irrespective
whether they have profit motive. The strategic management at ‘Good Health’ should
essentially cover:
 Analyzing and interpreting the strategic intent in terms of vision, mission and
objectives.
 Generating required resources in terms of finance and manpower (volunteers, paid
employees).
 Undertaking SWOT analysis from time to time.

 Setting goals in the area of downtrodden. It can be in terms of geographical

coverage and number of downtrodden.
 Analyzing the desired future position with the past and present situation.
(b) Yes, it is imperative to segregate the top-level strategies into viable functional plans and
policies that are compatible with each other. Major strategies must be translated to lower
levels to give holistic strategic direction to an organisation. Functional strategies provide
details to business strategy & govern as to how key activities of the business will be
managed. The reasons why functional strategies are needed can be enumerated as
follows:
 Functional strategies lay down clearly what is to be done at the functional level.
They provide a sense of direction to the functional staff.
 They are aimed at facilitating the implementation of corporate strategies and the
business strategies formulation at the business level.
 They act as basis for controlling activities in the different functional areas of
business.
 They help in bringing harmony and coordination as they are formulated to achieve
major strategies.
 These strategies help the functional managers in handling similar situations
occurring in different functional areas in a consistent manner.
Question 8
(a) XYZ Ltd. is an automobile company that offers diversified products for all customer
segments. Due to COVID-19, the changes took place in the economy forced the
company to change its strategy. Being the CEO of the company, what stages will you
follow for developing and executing the new strategy? (5 Marks)
(b) Due to reoccurrence of various variants of Corona virus, LMN Ltd. is facing unstable
environment and it has started unbundling and disintegrating its activities. It also started
relying on outside vendors for performing these activities. Identify the organisation
structure LMN Ltd. is shifting to. Under what circumstances this structure becomes
useful? (1 + 4 = 5 Marks)
Answer
(a) Today, India has become the outsourcing hub for many of the global automobile
manufacturers. The auto industry comprises of four segments which are passenger
vehicles, commercial vehicles, three wheelers and two wheelers. XYZ Ltd. is an
automobile company that offers diversified products for all customer segments. The
company has already in existence, so it has its own vision, mission and a strategy to
execute for achieving its vision. While developing and executing the strategy, XYZ Ltd.
might have followed the five-stage managerial process as given below:

1. Developing a strategic vision.

2. Environmental and organisational analysis.
3. Formulation of strategy.
4. Implementing and executing the strategy.
5. Strategic evaluation and control.
But due to COVID-19, the automobile industry has faced the lockdown situation.
Changes in the economy forced the XYZ Ltd. to change its existing strategy and prepare
the new strategy. The changes in the environmental forces due to COVID-19 requires
XYZ Ltd. to make modifications in their existing strategies and bring out new strategies.
For initiating strategic change, three steps can be followed by the CEO of the company
which are as under:
(i) Recognize the need for change: This is the first step to diagnose facets of the
corporate culture that are strategy supportive or not. This has already identified by
the XYZ Ltd.
(ii) Create a shared vision to manage change: Objectives and vision of both
individuals and organization should coincide. The CEO of XYZ Ltd. need to
constantly and consistently communicate the vision not only to inform but also to
overcome resistance.
(iii) Institutionalize the change: Creating and sustaining a different attitude towards
change is essential to ensure that the XYZ Ltd. does not slip back into old ways of
thinking or doing things. All these changes should be set up as a practice to be
followed by the company and be able to transfer from one level to another as a well
settled practice.
(b) LMN Ltd. is shifting into network structure. It is a newer and somewhat more radical
organisational design. The network structure could be termed a "non-structure" as it
virtually eliminates in-house business functions and outsource many of them. An
organization organized in this manner is often called a virtual organization because it is
composed of a series of project groups or collaborations linked by constantly changing
non-hierarchical, cobweb-like networks.
The network structure becomes most useful when the environment of a firm is unstable
and is expected to remain so. Under such conditions, there is usually a strong need for
innovation and quick response. Instead of having salaried employees, it may contract
with people for a specific project or length of time. Long-term contracts with suppliers and
distributors replace services that the company could provide for itself through vertical
integration. The network structure provides organization with increased flexibility and
adaptability to cope with rapid technological change and shifting pattern of international
trade and competition.

Question 9
(a) "Strategy formulation and strategy implementation are intertwined and linked with each
other." Elucidate this statement with suitable arguments. (5 Marks)
(b) 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)
Answer
(a) The strategy formulation and strategy implementation are intertwined and linked with
each other. Two types of linkages exist between these two phases of strategic
management. The forward linkages deal with the impact of strategy formulation on
strategy implementation while the backward linkages are concerned with the impact in
the opposite direction.
Forward Linkages: The different elements in strategy formulation starting with objective
setting through environmental and organizational appraisal, strategic alternatives and
choice to the strategic plan determine the course that an organization adopts for itself.
With the formulation of new strategies, or reformulation of existing strategies, many
changes have to be affected within the organization. For instance, the organizational
structure has to undergo a change in the light of the requirements of the modified or new
strategy. The style of leadership has to be adapted to the needs of the modified or new
strategies. In this way, the formulation of strategies has forward linkages with their
implementation.
Backward Linkages: Just as implementation is determined by the formulation of
strategies, the formulation process is also affected by factors related with
implementation. While dealing with strategic choice, remember that past strategic actions
also determine the choice of strategy. Organizations tend to adopt those strategies which
can be implemented with the help of the present structure of resources combined with
some additional efforts. Such incremental changes, over a period of time, take the
organization from where it is to where it wishes to be.
lt is to be noted that while strategy formulation is primarily an entrepreneurial activity,
based on strategic decision-making, the implementation of strategy is mainly an
administrative task based on strategic as well as operational decision-making.
(b) Four specific criteria of sustainable competitive advantage that firms can use to
determine those capabilities that are core competencies. Capabilities that are valuable,
rare, costly to imitate, and non-substitutable are core competencies.
i. Valuable: Valuable capabilities are the ones that allow the firm to exploit
opportunities or avert the threats in its external environment. A firm created value
for customers by effectively using capabilities to exploit opportunities. Finance
companies build a valuable competence in financial services. In addition, to make

such competencies as financial services highly successful require placing the right
people in the right jobs. Human capital is important in creating value for customers.
ii. Rare: Core competencies are very rare capabilities and very few of the competitors
possess this. Capabilities possessed by many rivals are unlikely to be sources of
competitive advantage for any one of them. Competitive advantage results only
when firms develop and exploit valuable capabilities that differ from those shared
with competitors.
iii. Costly to imitate: Costly to imitate means such capabilities that competing firms
are unable to develop easily.
iv. Non-substitutable: Capabilities that do not have strategic equivalents are called
non-substitutable capabilities. This final criterion for a capability to be a source of
competitive advantage is that there must be no strategically equivalent valuable
resources that are themselves either not rare or imitable.
Question 10
(a) ABC Steel Industries finds out that its products have reached at maturity stage and
already has overcapacity. Therefore, it concentrates on maintaining operational efficiency
of its plants. Identity the strategy implemented by ABC Steel Industries along with
reasons. (1 + 4 = 5 Marks)
(b) What do you understand by diversification? Distinguish between concentric and
conglomerate diversification. (2 + 3 = 5 Marks)
OR
"The bargaining power of suppliers determines an industry's attractiveness and
profitability." Discuss.
Answer
(a) ABC Steel Industries has opted to implement Stability strategy. Stability strategies are
intended to safeguard the existing interests and strengths of business. It involves
organisations to pursue established and tested objectives, continue on the chosen path,
maintain operational efficiency and so on. A stability strategy is pursued when a firm
continues to serve in the same or similar markets and deals in same products and
services. In stability strategy, few functional changes are made in the products or
markets, however, it is not a ‘do nothing’ strategy. This strategy is typical for mature
business organizations. Some small organizations also frequently use stability as a
strategic focus to maintain comfortable market or profit position.
Major reasons for Stability strategy are:
 A product has reached the maturity stage of the product life cycle.
 The staff feels comfortable with the status quo as it involves less changes and less
risks.

 It is opted when the environment in which an organisation is operating is relatively

stable.
 Where it is not advisable to expand as it may be perceived as threatening.
 After rapid expansion, a firm might want to stabilize and consolidate itself.
(b) Diversification is defined as entry into new products or product lines, new services or new
markets, involving substantially different skills, technology and knowledge. Diversification
endeavours can be related or unrelated to existing businesses of the firm.
Following are the differences between the concentric diversification and conglomerate
diversifications:
Concentric Diversification Conglomerate Diversification
Meaning: It occurs when a firm adds Meaning: It occurs when a firm diversifies
related products or markets. into areas that are unrelated to its current
line of business.
Linkage: The new business is linked Linkage: Here no such linkages exist; the
to the existing businesses through new business/product is disjointed from the
process, technology or marketing. existing businesses/products.
Reasons for pursuing: The most Reasons for pursuing: The common
common reason for pursuing a reason for pursuing a conglomerate growth
concentric diversification is that strategy is that opportunities in a firm's
opportunities in a firm’s existing line of current line of business are limited or
business are available. opportunities outside are highly lucrative.
or
Quite often, suppliers too, exercise considerable bargaining power over purchasing
companies. The more specialised the offering from the supplier, greater may be its clout.
Further, when the suppliers are limited in number, they may openly exhibit their
bargaining power. The bargaining power of suppliers determines the cost of raw
materials and other inputs of the industry, and therefore, an industry’s attractiveness and
profitability. Suppliers can influence the profitability of an industry in a number of ways.
Suppliers can command bargaining power over a firm when;
(i) Their products are crucial to the buyer and substitutes are not available.
(ii) They can erect/ensure high switching costs.
(iii) They are more concentrated than their buyers. Less suppliers, more buyers.

Question 1
(a) In most software, there are three layers which together form the application and the same
is called Three Tier Architecture. Explain the three layers forming part of the Three Tier
Architecture of an application software. (3 Marks)
(b) Write a short note on Automated Teller Machines (ATM) Channel Server. (2 Marks)
Answer
(a) The layers which together form part of Three tier architecture of an application software
are as follows:
• The Application Layer receives the inputs from the users and performs certain
validations like if the user is authorized to request the transaction.
• The Operating System Layer carries the instructions and processes them using the
data stored in the database and returns the results to the Application Layer.
• The Database Layer stores the data in a certain form. For a transaction to be
completed, all the three layers need to be invoked. Most application software is built
on this model these days.
(b) Automated Teller Machines (ATM) Channel Server: This server contains the details of
ATM account holders. Soon after the facility of using the ATM is created by the bank, the
details of such customers are loaded onto the ATM server. When the Central Database is
busy with central end-of-day activities or for any other reason, the file called Positive
Balance File (PBF) that contains the account balance of the customer is sent to the ATM
Switch. This ensures not only continuity of ATM operations but also confi rms that the
Central database is always up-to-date. The above process is applicable to stand alone
ATMs at the Branch level. As most of the ATMs are attached to the central network, the
only control is through the ATM Switch.
Question 2
(a) Operations management is responsible for the daily running of hardware and software
facilities so that production application systems can accomplish their work and
development staff can design, implement and maintain application systems. Operations
management typically performs controls over many functions. Explain any six of such
functions. (6 Marks)

(b) Flowcharts are used in designing and documenting simple processes or programs . Explain
any four limitations of Flowcharts. (4 Marks)
Answer
(a) Operations management performs controls over various functions that are discussed
below:
• Computer Operations: The controls over computer operations govern the activities
that directly support the day-to-day execution of either test or production systems on
the hardware/software platform available.
• Network Operations: Data may be lost or corrupted through component failure. To
avoid such situation; the proper functioning of network operations, monitoring the
performance of network communication channels, network devices, and network
programs and files are required.
• Data Preparation and Entry: Irrespective of whether the data is obtained indirectly
from source documents or directly from say customers, keyboard environments and
facilities should be designed to promote speed and accuracy and to maintain the
wellbeing of keyboard operators.
• Production Control: This includes the major functions like receipt and dispatch of
input and output; job scheduling; management of Service-Level Agreements with
users; transfer pricing/charge-out control; and acquisition of computer consumables.
• File Library: This includes the management of not only machine-readable storage
media like magnetic tapes, cartridges, and optical disks of an organization but also
its fixed storage media.
• Documentation and Program Library: This involves that librarians ensure that
documentation is stored securely; that only authorized personnel gain access to
documentation; that documentation is kept up-to-date and that adequate backup
exists for documentation. There should also be adequate versioning of documents
depending on the updates. The documentation may include reporting of responsibility
and authority of each function; definition of responsibilities and objectives of each
function; reporting responsibility and authority of each function; policies and
procedures; job descriptions and Segregation of Duties.
• Help Desk/Technical support: This assists end-user to employ end-user hardware
and software such as micro-computers, spreadsheet packages, database
management packages etc. and provides the technical support for production
systems by assisting with problem resolution.
• Capacity Planning and Performance Monitoring: Regular performance monitoring

facilitates the capacity planning wherein the resource deficiencies must be identified
well in time so that they can be made available when they are needed.
• Management of Outsourced Operations: This has the responsibility for carrying out
day-to-day monitoring of the outsourcing contract.
(b) Limitations of Flowcharts are as follows:
• Complex logic: Flowchart becomes complex and clumsy where the problem logic is
complex. The essentials of what is done can be easily lost in the technical details of
how it is done.
• Modification: If modifications to a flowchart are required, it may require complete re-
drawing.
• Reproduction: Reproduction of flowcharts is often a problem because the symbols
used in flowcharts cannot be typed.
• Link between conditions and actions: Sometimes it becomes difficult to establish
the linkage between various conditions and the actions to be taken thereupon for a
condition.
• Standardization: Program flowcharts, although easy to follow, are neither a natural
way of expressing procedures as writing in English, nor are they easily translated into
Programming language.
Question 3
(a) Financial Accounting Module is the most important module of the overall ERP System and
it connects all the modules to each other. Every module is somehow connected with this
module. Explain any six key features of this module. (6 Marks)
(b) Government regulation, however well-intentioned, is only part of an overall green
computing philosophy. The work habits of computer users and businesses can be modified
to minimize the adverse impact on the global environment. There are several steps for
Green IT. What are the Green Computing Best Practices for the Green IT Recycle Step?
(4 Marks)
Answer
(a) The key features of Financial Accounting Module of an overall ERP system are as under:
• Tracking of flow of financial data across the organization in a controlled manner and
integrating all the information for effective strategic decision making.
• Creation of Organizational Structure that encompasses defining company, company
codes, business areas, functional areas, credit control, assignment of company codes
to credit controls etc.

• Financial Accounting Global Settings that incorporate maintenance of Fiscal Year,

Posting Periods, Defining Document types, Posting keys, Number ranges for
documents etc.
• General Ledger Accounting that includes creation of Chart of accounts, Account
groups, defining data transfer rules, creation of General Ledger Account etc.
• Tax Configuration & Creation and Maintenance of House of Banks.
• Account Payables, accounts receivable, fixed assets, general ledger and cash
management, etc. For example - creation of vendor master data and vendor-related
finance attributes like account groups and payment terms etc.
• Account Receivables that include creation of customer master data and customer -
related finance attributes like account groups and payment terms etc.
• Asset Accounting.
• Integration with Sales and Distribution and Materials Management.
(b) The Green Computing Best Practices for the Green IT Recycle step include the following:
• Dispose e-waste according to central, state, and local regulations.
• Discard used or unwanted electronic equipment in a convenient and environmentally
responsible manner as computers emit harmful emissions.
• Manufacturers must offer safe end-of-life management and recycling options when
products become unusable.
• Recycle computers through manufacturer’s recycling services.
Question 4
(a) A private bank is planning to migrate all of its existing operations to a Core Banking System
(CBS). During their discussions, the IT consultant is asked to expl ain about the common
IT risks involved in CBS. Explain any six of the common IT risks related to CBS. (6 Marks)
(b) The public cloud is the cloud infrastructure that is provisioned for open use by the general
public. Explain any four characteristics of public cloud. (4 Marks)
Answer
(a) Some of the common IT risks related to Core Banking Systems (CBS) are as follows:
• Ownership of Data/ process: Data resides at the Data Centre. Establish clear
ownership so that accountability can be fixed and unwanted changes to the data can
be prevented.

• Authorization process: What is the authorization process, if anybody with access to

the CBS, including the customer himself, can enter data directly. If the process is not
robust, it can lead to unauthorized access to the customer information.
• Authentication procedures: Usernames and Passwords, Personal Identification
Number (PIN), One Time Password (OTP) are some of the most commonly used
authentication methods. However, these may be inadequate and hence the user
entering the transaction may not be determinable or traceable.
• Several software interfaces across diverse networks: A Data Centre can have as
many as 75-100 different interfaces and application software. A data center must also
contain adequate infrastructure such as power distribution and supplemental power
subsystems including electrical switching; uninterruptable power supplies; backup
generators and so on. Lapse in any of these may lead to real-time data loss.
• Maintaining response time: Maintaining the interfacing software and ensuring
optimum response time and up time can be challenging.
• User Identity Management: This could be a serious issue. Some banks may have
more than 5000 users interacting with the CBS at once and therefore every user's
identity and his/her level of access to a particular system need to be verified.
• Access Controls: Designing and monitoring access control is an extremely
challenging task. Bank environments are subject to all types of attacks; thus, a strong
access control system is a crucial part of a bank’s overall security plan. Access
control, however, does vary between branch networks and head office locations.
• Incident handling procedures: Incident handling procedures are used to address
and manage the aftermath of a security breach or cyberattack. However, these at
times may not be adequate considering the need for real-time risk management.
• Change Management: Though change management reduces the risk that a new
system or other change will be rejected by the users; however, at the same time, it
requires changes at application level and data level of the database - Master files,
transaction files and reporting software.
(b) The characteristics of Public Cloud in the cloud infrastructure are as follows:
• Highly Scalable: The resources in the public cloud are large in number and the
service providers make sure that all requests are granted. Hence public clouds are
scalable.
• Affordable: The cloud is offered to the public on a pay-as-you-go basis; hence the
user has to pay only for what s/he is using (using on a per-hour basis) and this does
not involve any cost related to the deployment.

• Less Secure: Since it is offered by a third party and they have full control over the
cloud, the public cloud is less secure out of all the other deployment models.
• Highly Available: It is highly available because anybody from any part of the world
can access the public cloud with proper permission, and this is not possible in other
models as geographical or other access restrictions might be there.
• Stringent Service-Level Agreements (SLAs): As the service provider’s business
reputation and customer strength are totally dependent on the cloud servi ces, they
follow the SLAs strictly and violations are avoided.
Question 5
(a) The IT Act 2000 attempts to change outdated laws and provides ways to deal with cyber -
crimes. We need such laws so that people can perform purchase transactions over the
Internet without fear of misuse. In this context, explain any six advantages of Cyber Laws.
(6 Marks)
(b) Audit of environmental controls requires the IS auditor to conduct physical inspections and
observe practices. As an IS auditor, you are engaged to conduct an audit of environmental
controls for an organization. Discuss any four factors and activities which require your
attention in the audit of environmental controls. (4 Marks)
OR
In today's high-speed world, we cannot imagine an information system without an effective
and efficient communication system, which is a valuable resource that helps in good
management. You are appointed as an IT consultant to design a model computer network
for a newly started company. What are the basic issues to be addressed by your network
model?
Answer
(a) Some advantages of Cyber laws encompassed under the IT Act 2000 are as under:
• The IT Act 2000 offers the crucial legal framework so that any information which is in
the form of electronic records shall not be denied legal effect, validity, or
enforceability. This legal framework allows for the authentication and origin of
electronic records/communications through digital signature.
• Considering the growth in electronic transactions and communications, the Act seeks
to empower government departments to encourage digital data format in terms of
accepting filing, creating and retention of official documents.
• The Act allows the emails to be a valid and legal form of communication in India that
can be duly produced and approved in a court of law; thus, providing boon to e -
businesses in India.

• As the Act sanctions and gives legal validity to Digital signatures, many corporate
companies have entered the business of being Certifying Authorities for issuing
Digital Signatures Certificates.
• The Government can issue notification on the web thus heralding e-governance under
the Act.
• The Act enables the companies to approach any office, authority, body, or agency
owned or controlled by the appropriate Government to file any form, application or
any other document in electronic form as prescribed by them.
• The corporates get statutory remedy in case their computer systems, data or network
get damaged by intruders. The Act allows remedy in the form of monetary damages
not exceeding ` 1 crore.
(b) As an Information Systems (IS) Auditor, the factors and activities that will be considered
while auditing environmental controls are as follows:
• Power conditioning Equipment: The IS auditor should determine how frequently
power conditioning equipment, such as Uninterrupted Power Supply (UPS), line
conditioners, surge protectors, or motor generators are used, inspected, and
maintained and if this is performed by qualified personnel.
• Backup power: The IS auditor should determine if backup power is available via
electric generators or UPS and how frequently they are tested. S/he should examine
maintenance records to see how frequently these components are maintained and if
this is done by qualified personnel.
• Heating, Ventilation, and Air Conditioning (HVAC) Systems: The IS auditor should
determine if HVAC systems are providing adequate temperature and humidity levels,
and if they are monitored. Also, the auditor should determine if HVAC systems are
properly maintained and if qualified persons do this.
• Water Detectors: The IS auditor should determine if any water detectors are used in
rooms where computers are used. S/he should determine how frequently these are
tested and if these are monitored.
• Fire Detection and Suppression Equipment: The IS auditor should determine if fire
detection equipment is adequate, if staff members understand their function, and if
these are tested. S/he should determine how frequently fire suppression systems are
inspected and tested, and if the organization has emergency evacuation plans and
conducts fire drills.
• Cleanliness: The IS auditor should examine data centers to see how clean they are.
IT equipment air filters and the inside of some IT components should be examined to
see if there is an accumulation of dust and dirt.

OR
The basic issues that are addressed by a newly designed Network Model are as follows:
• Routing: It refers to the process of deciding on how to communicate the data from
source to destination in a network. In this, data is transferred in the form of data
packets using an Internet Protocol or IP address.
• Bandwidth: It refers to the amount of data which can be sent across a network in
given time. The lesser the bandwidth, lesser is the data transferred and slower the
website loads.
• Contention: It refers to the situation that arises when there is a conflict for some
common resource in a network. For example, network contention could arise when
two or more computer systems try to communicate at the same time.
• Resilience: It refers to the ability of a network to recover from any kind of error like
connection failure, loss of data etc.


Question paper comprises of 5 questions, Answer Question No. 6 which is compulsory and
any 3 out of the remaining 4 questions.
Question 6
Ramesh and Suresh own software development firms ACS Ltd. and BDS Ltd. Ramesh and
Suresh pitch their business in international markets and win international contracts . Ramesh
has fifty software engineers in his team. Suresh, on the other hand, leads a team of forty
software engineers. Every project has a specific and fixed timeline. Individual projects are
assigned to project heads by Ramesh and Suresh. Ramesh adheres to strict rules and
procedures. He met with the project heads to get an update but exchanged ideas occasionally.
He set a weekly target of forty hours to complete the assigned goal or task. The group that
met the deadline and completed the task received a 10% bonus. The group that was unable to
meet the deadline was penalized. The group that did not meet the deadline was penalized with
unpaid extra working hours to complete the task. Suresh, unlike Ramesh, did not priorities a
structured approach to work. Suresh inspired the project managers by making them feel like
leaders rather than just participants. Suresh's empowering attitude helped to alig n individual
goals with group goals. Ramesh established routines to maximize his team efficiency. Suresh,
on the other hand, used positive reinforcement to maximize his team efficiency.
(a) Identify the leadership style employed by Ramesh and Suresh.
(b) What are the conditions/situations that make such leadership styles more appropriate?
(c) Discuss the characteristics of the leadership styles.
Answer
(i) Ramesh adopted transactional leadership style, while Suresh adopted
transformational leadership style.
(ii) Transactional leadership style can be appropriate in settled and static environment,
in growing or mature industries and in organizations that are performing well.
Transformational leadership style may be appropriate in turbulent environment, in
industries at the very start or end of their life cycles, in poorly performing
organizations when there is a need to inspire a company to embrace major changes.
(iii) Transactional leadership style uses the authority of its office to exchange rewards
such as pay, status symbols etc. Transactional leaders prefer a more formalized
approach to motivation, setting clear goals with explicit rewards or penalties for
achievement and non-achievement. Transactional leaders focus mainly to build on
existing culture and enhance current practices.

Transformational leadership style uses charisma and enthusiasm to inspire people

to exert them for the good of organization. Transformational leaders inspire
employees by offering excitement, vision, intellectual stimulation and personal
satisfaction.
Question 7
(a) “Management at all levels develop strategies”. Explain the different strategies formulated
at different levels of management.
(b) "The sustainability of competitive advantage and a firm's ability to earn profits from its
competitive advantage depends on characteristics of resources and capabilities". Explain
this statement.
Answer
(a) At different levels of management, various strategies are formulated to align with
organizational goals and objectives which are as follows:
Corporate-Level Strategies: At the highest level of management, corporate-level
strategies are developed. These strategies focus on the overall direction and scope
of the entire organization. Major corporate-level strategies include Stability strategies,
Growth strategies, Retrenchment strategies and Combination strategies.
Business-Level Strategies: Business-level strategies are developed by middle-level
management and focus on individual business units or divisions within the organization.
These strategies aim to achieve competitive advantage within specific markets.
Common business-level strategies include Cost Leadership, Differentiation and Focus
strategies.
Functional-Level Strategies: Functional-level strategies are formulated by lower-level
management or department heads responsible for specific functional areas, such as
marketing, finance, operations, or human resources. These strategies align with
business-level strategies and focus on achieving functional objectives. These
strategies include Marketing strategies, Financial strategies, Operations strategies,
Research & Development strategy and Human Resource strategies.
In conclusion, management at all levels develops strategies that align with the
organization's goals. Corporate-level strategies determine the overall direction,
business-level strategies focus on competitive advantage within specific markets,
and functional-level strategies aim to achieve functional objectives in support of
the broader strategies.

(b) The sustainability of competitive advantage and a firm’s ability to earn profits from it
depends, to a great extent, upon four major characteristics of resources and capabilities
which are as follows:
1. Durability: The period over which a competitive advantage is sustained depends in
part on the rate at which a firm’s resources and capabilities deteriorate. In industries
where the rate of product innovation is fast, product patents are quite likely to
become obsolete. Similarly, capabilities which are the result of the management
expertise of the CEO are also vulnerable to his or her retirement or departure. On
the other hand, many consumer brand names have a highly durable appeal.
2. Transferability: Even if the resources and capabilities on which a competitive
advantage is based are durable, it is likely to be eroded by competition from rivals.
The ability of rivals to attack position of competitive advantage re lies on their
gaining access to the necessary resources and capabilities. The easier it is to
transfer resources and capabilities between companies, the less sustainable will be
the competitive advantage which is based on them.
3. Imitability: If resources and capabilities cannot be purchased by a would-be
imitator, then they must be built from scratch. How easily and quickly can the
competitors build the resources and capabilities on which a firm’s competitive
advantage is based? This is the true test of imitability. Where capabilities require
networks of organizational routines, whose effectiveness depends on the corporate
culture, imitation is difficult.
4. Appropriability: Appropriability refers to the ability of the firm’s owners to
appropriate the returns on its resource base. Even where resources and capabilities
are capable of offering sustainable advantage, there is an issue as to who receives
the returns on these resources.
Question 8
(a) Health Pharma Pvt. Ltd. (HPPL) a one person company with limited liability is
manufacturing generic and medicinal drugs in India.
Hygiene Laboratories Plc. (HLP) a multinational company with its strong financial position
is one of the major players in pharmaceutical sector.
Individually, each company has its own core competencies. However, additional focus by
the state on generic medicine with renewed regulatory requirements are posing
challenges in fierce competitive environment.

Considering benefits of synergies, both the companies are considering to join hands for
better growth opportunities. Earlier, they tried to go for joint venture or strategic alliance
but the arrangement could not materialize.
In view of the facts given above:
(i) If HPPL and HLP join hands and make new entity named Health N Hygiene Pharma
Ltd., what type of growth strategy will this strategic development be?
(ii) In case, HLP is sold out to HPPL and HLP ceased to exist, what type of growth
strategy will this strategic deal be?
(iii) What are the differences between the above two identified growth strategies?
(b) Buyers of an industry's products or services can sometimes exert considerable pressure
on the company. In the light of the five forces as propagated by Michael Porter explain
this force. Also state as to when this leverage is evident.
Answer
(a) (i) If HPPL and HLP join hands and form a new entity named Health N Hygiene
Pharma Ltd., this strategic development would be considered a Merger growth
strategy. A merger is a combination of two or more companies to form a new entity
with shared ownership and control.
(ii) If HLP is sold out to HPPL and HLP ceases to exist, this strategic deal would be
categorized as an Acquisition growth strategy. An acquisition occurs when one
company purchases another, resulting in the acquiring company gaining control
over the acquired company's assets, operations, and intellectual property.
(iii) Many organizations in order to achieve quick growth, expand or diversify with the
use of mergers and acquisitions strategies. Merger and acquisition in simple words
are defined as a process of combining two or more organizations together. There is
a thin line of difference between the two terms, but the impact of combination is
completely different in both the cases.
Merger is considered to be a process when two or more organizations join together to
expand their business operations. In such a case the deal gets finalized on friendly
terms. Owners of pre-merged entities have right over the profits of new entity. In a
merger two organizations combine to increase their strength and financial gains.
While, when one organization takes over the other organization and controls all its
business operations, it is known as acquisition. In the process of acquisition, one
financially strong organization overpowers the weaker one. Acquisitions often
happen during economic recession or during declining profit margins. In this process,

one that is financially stronger and bigger establishes it power. The combined
operations then run under the name of the powerful entity. A deal in case of an
acquisition is often done in an unfriendly manner; it is more or less a forced
association.
(b) Bargaining Power of Buyers: This is another force that influences the competitive
condition of an industry. This force becomes heavier depending on the possibility of
buyers forming groups or cartels. Mostly, this is a phenomenon seen in industrial
products. Quite often, users of industrial products come together formally or even
informally and exert pressure on the producer. The bargaining power of the buyers
influences not only the prices that the producer can charge but also influences
costs and investments of the producer. This is because powerful buyers usually
bargain for better services which involves more investment on the part of the producer.
Buyers of an industry’s products or services can sometimes exert considerable pressure
on existing firms to secure lower prices or better services. This leverage is particularly
evident when;
(i) Buyers have full knowledge of the source(s) of products and their substitutes. Thus,
challenging the price being charged by producers.
(ii) They spend a lot of money on the industry’s products i.e. they are big buyers. Thus,
in a position to demand favourable terms of contract.
(iii) The industry’s product is not perceived as critical to the buyer’s needs and buyers
are more concentrated than firms supplying the product. They can easily switch to
the substitutes available.
Question 9
(a) Strategic planning is an important constituent of strategic management . In the light of the
same explain the meaning of strategic planning. Also outline the characteristics of
strategic planning.
(b) "Strategic control focuses on implementation and results produced by the strategy".
Explain strategic control along with its different types.
Answer
(a) Yes, strategic planning is an important constituent of strategic management. It is a
process of determining organizational strategy. It gives directions to the organization
and involves making decisions and allocating resources to pursue the strategy. It
is the formal blueprint of future course of an organization.

Strategic plans are made by the senior management for the entire organization after
taking into account the organization strength and weaknesses in the light of
opportunities and threats in the external environment. They involve acquisition and
allocation of resources for the attainment of organizational objectives.
Strategic planning deals with one or more of three key questions:
• What are we doing?
• For whom do we do it?
• How to improve and excel?
Following are the characteristics of strategic planning:
• Strategic planning shapes the organisation and its resources.
• Strategic planning assesses the impact of environmental variables.
• Strategic planning takes a holistic view of the organisation.
• Strategic planning develops overall objectives and strategies.
• Strategic planning is concerned with the long-term success of the organisation.
• Strategic planning is a senior management responsibility.
(b) Strategic control focuses on implementation and results produced by the strategy.
It focuses on the dual questions of whether: (1) the strategy is being implemented as
planned; and (2) the results produced by the strategy are those intended.
There are four types of strategic control:
 Premise control: A strategy is formed on the basis of certain assumptions or
premises about the environment. Premise control is a tool for systematic and
continuous monitoring of the environment to verify the validity and accuracy of the
premises on which the strategy has been built.
 Strategic surveillance: Strategic surveillance is unfocussed. It involves general
monitoring of various sources of information to uncover unanticipated information
having a bearing on the organizational strategy.
 Special alert control: At times unexpected events may force organizations to
reconsider their strategy. Sudden changes in government, natural calamities,
unexpected merger/acquisition by competitors, industrial disasters and other such
events may trigger an immediate and intense review of strategy.
 Implementation control: Managers implement strategy by converting major plans
into concrete, sequential actions that form incremental steps. Implementation
control is directed towards assessing the need for changes in the overall strategy in
light of unfolding events and results.

Question 10
(a) Changes in environmental forces often require businesses to make modifications in their
existing strategies. In view of the same explain the areas to be focused while considering
concept of strategic change. Also explain the steps to initiate strategic change process.
(b) Ratu has been as CEO of PRO Ltd. He is given the responsibility of developing new
products and improving old products. He is facing a conflict whether the firm should
develop research and development expertise internally or outsource it to external
agency. What guidelines will help Ratu to make this decision?
OR
You have been appointed as head of the Strategic Business Unit (SBU) of a large
multiproduct company. Explain the leadership roles, you have to play as a Manager in
pushing for good strategy execution.
Answer
(a) The changes in the environmental forces often require businesses to make modific ations
in their existing strategies and bring out new strategies. Strategic change is a complex
process that involves a corporate strategy focused on new markets, products,
services and new ways of doing business.
For initiating strategic change, three steps can be identified as under:
(i) Recognize the need for change: The first step is to diagnose facets of the
corporate culture that are strategy supportive or not. The idea is to determine where
the lacuna lies and scope for change exists.
(ii) Create a shared vision to manage change: Objectives and vision of both
individuals and organization should coincide. Senior managers need to constantly
and consistently communicate the vision not only to inform but also to overcome
resistance.
(iii) Institutionalize the change: Creating and sustaining a different attitude towards
change is essential to ensure that the firm does not slip back into old ways of
thinking or doing things. All these changes should be set up as a practice to be
followed by the organization and be able to transfer from one level to another as a
well settled practice.
(b) A critical question is whether PRO Ltd. should develop research and development
expertise internally or outside to external agencies. The answer to this critical
question mainly depends on rate of technology progress and rate of market

growth. The following guidelines can be used by Ratu, the CEO of PRO Ltd. to help
make this decision:
 If the rate of technical progress is slow, the rate of market growth is moderat e,
and there are significant barriers to possible new entrants, then in-house R&D is
the preferred solution. The reason is that R&D, if successful, will result in a
temporary product or process monopoly that the company can exploit.
 If technology is changing rapidly and the market is growing slowly, then a
major effort in R&D may be very risky, because it may lead to the development of
an ultimately obsolete technology or one for which there is no market.
 If technology is changing slowly but the market is growing quickly, there
generally is not enough time for in-house development. The prescribed approach is
to obtain R&D expertise on an exclusive or non-exclusive basis from an
outside firm.
 If both technical progress and market growth are fast, R&D expertise should be
obtained through acquisition of a well-established firm in the industry.
Or
A head of the strategic business unit (SBU) has many different leadership roles to play:
visionary, chief entrepreneur and strategist, chief administrator, culture builder, resource
acquirer and allocator, capabilities builder, process integrator, crisis solver,
spokesperson, negotiator, motivator, arbitrator, policy maker, policy enforcer, and head
cheerleader. Managers have five leadership roles to play in pushing for good strategy
execution:
1. Staying on top of what is happening, closely monitoring progress, working through
issues and obstacles.
2. Promoting a culture that mobilizes and energizes organizational members to
execute strategy and perform at a high level.
3. Keeping the organization responsive to changing conditions, alert for new
opportunities and remain ahead of rivals in developing competitively valuable
competencies and capabilities.
4. Ethical leadership and insisting that the organization conduct its affairs like a model
corporate citizen.
5. Pushing corrective actions to improve strategy execution and overall strategic
performance.

Question 1
(a) In a conventional sense, 'data’ is a raw entity whereas 'information' is a processed entity.
An Information System (IS) model converts data into information, so that it is meaningful
to the end user. What are those steps involved in accomplishing this in an IS model?
(3 Marks)
(b) Information Systems Audit is the process of attesting objectives that focus on asset
safeguarding, data integrity and management objectives that include effectiveness and
efficiency. List the objectives of Information Systems audit. (2 Marks)
Answer
(a) The steps involved in an Information System model are as follows:
• Input: Data is collected from an organization or from external environments and
converted into suitable format required for processing.
• Processing: A process is a series of steps undertaken to achieve desired outcome
or goal. Information Systems are becoming more and more integrated with
organizational processes, bringing more productivity and better control to those
processes.
• Output: The system processes the data by applying the appropriate procedure on it
and the information thus produced is stored for future use or communicated to user.
• Storage: The storage of data shall be done at the most detailed level possible.
Regular backups should be stored in a geographically different locations to avoid
impact on both the original data storage and the backup data storage due to any
major disasters such as flooding or fires etc.
• Feedback: Apart from these activities, information system also needs feedback that
is returned to appropriate members of the enterprises to help them to evaluate at the
input stage.
(b) The objectives of Information Systems Audit are as follows:
• Improved Safeguarding of Assets
• Improved Data Integrity

2 INTERMEDIATE EXAMINATION: NOVEMBER, 2022
• Improved System Effectiveness

• Improved System Efficiency
Question 2
(a) In the modern era, the business gets well developed by using the aut omation technique
with a greater customer satisfaction of services and products, where customer -oriented
supply chain is playing a vital role. In this context, explain the benefits of automating
business processes. (6 Marks)
(b) Many organizations are moving towards cloud based technology for storage and thus
providing many benefits to the users. Explain any four reasons for cloud based applications
comparing to installed applications. (4 Marks)
Answer
(a) The benefits of automating business processes are as follows:
• Quality and Consistency: The automation ensures that every action is performed
identically resulting in high quality and reliable results and stakeholders will
consistently experience the same level of service.
• Time Saving: Automation reduces the number of tasks the employees would
otherwise need to do, manually. It frees up time to work on items that add genuine
value to the business, allowing innovation and increasing employees’ levels of
motivation.
• Visibility: The automated processes are controlled, and they consistently operate
accurately within the defined timeline. It gives visibility of the process status to the
organization.
• Improved Operational Efficiency: The automation reduces the time it takes to
achieve a task, the effort required to undertake it and the cost of completing it
successfully. Automation not only ensures that systems run smoothly and efficiently,
but also that errors are eliminated and that best practices are constantly leveraged.
• Governance and Reliability: The consistency of automated processes means
stakeholders can rely on business processes to operate and offer reliable services to
customers, thus, maintaining a competitive advantage.
• Reduced Turnaround Time: The automation eliminates unnecessary tasks and
realigns process steps to optimize the flow of information throughout production,
service, billing, and collection. This adjustment of processes distils operational
performance and reduces the turnaround time for both staff and external c ustomers.
• Reduced Costs: The manual tasks, given that they are performed one-at-a-time and

at a slower rate than an automated task, will cost more. The automation allows to
accomplish more by utilizing fewer resources.
(b) The reasons for Cloud based applications compared to Installed applications are as
follows:
Particulars Cloud Based Application Installed Application
Installation and Installation on user computer is As software is installed on hard
Maintenance not required. Update and disc of the user’s computer, it
maintenance are defined needs to be installed on every
responsibility of service computer one by one. This may
provider. take lot of time. Also,
maintenance and updating of
software may take lot of time
and efforts.
Accessibility As software is available As software is installed on the
through online access, to use hard disc of the user’s
the software a browser and an computer, user needs to go to
internet connection are the computer in which the
needed. It can be used from software is installed to use the
any computer in the world. software. It cannot be used from
Access to the software any other computer.
becomes very easy. Also, it
can be used 24 x 7.
Mobile Application Mobile application becomes Using the software through
very easy as data is available mobile application is difficult in
24x7. As technology evolves, this case.
mobile technology is becoming
an industry norm that makes
cloud-based application future
oriented.
Data Storage Data is not stored in the user’s Data is physically stored in the
server computer. It is stored premises of the user, i.e. on the
on a web server. Ownership of hard disc of the user’s server
data is defined in Service Level computer. Hence user will
Agreement (SLA). SLA defines have full control over the data.
the rights, responsibilities and
authority of both service
provider and service user.
Data Security Data security is a challenge in As the data is in physical control
case of cloud based of the user, user shall have the
application as the data is not in full physical control over the

control of the user or owner of data and he/she can ensure that
data. As time evolves; SLAs it is not accessed without proper
provide for details of back-up, access.
disaster recovery alternatives
being used by service provider.
Performance Access is dependent on speed A well written installed
of internet. Slow internet slows application shall always be
access to information and may faster than web application,
slow operations. reason being data is picked from
local server without internet.
Flexibility The success of cloud-based It shall have more flexibility and
applications is that they allow controls as compared to web
flexibility against both Capital application. It is very easy to
Expenditure (CAPEX) and write desktop applications that
Operating Expense (OPEX) to take advantage of the user’s
the user. User can scale up hardware (such as: scanners,
operations as per need. cameras, Wi-Fi, serial ports,
network ports, etc.). Installed
applications have the dis-
advantage of higher Capital
Expenditure (CAPEX) in
comparison to cloud-based
application.
Question 3
(a) We have been using Emails and Google Drive's applications for our personal use, which
are free versions of cloud computing. However, it makes a major impact in business
organizations. Nowadays, why companies are migrating their business operations to cloud
computing environment? Give reasons by highlighting its advantages. (6 Marks)
(b) Fixed assets process is used to ensure that the immovable assets of an enterprise are
traced for financial accounting related purposes. In order to accomplish those tasks, what
are the typical steps of fixed assets process to follow? (4 Marks)
Answer
(a) The advantages of Cloud Computing are as follows:
• Achieve economies of scale: In cloud computing; computational resources, storage,
and services are shared between multiple customers. This results in achieving
efficient utilization of resources and that too at reduced cost. Volume output or
productivity can be increased even with fewer systems and thereby reduce the cost
per unit of a project or product.

• Reduce spending on technology infrastructure: Data and information can be

accessed with minimal upfront spending in a pay-as-you-go approach, which is based
on demand. With the increased dependency of business organizations on IT, huge
investment is required for acquiring IT resources. By using cloud computing, the
organization can avoid purchasing hardware, software, and licensing fees. Moreover,
cloud service providers are paid based on actual usage of resources, which is based
on demand.
• Globalize the workforce: Cloud computing allows users to globalize their workforce
and improve accessibility while shortening training time and new employee learning
curves.
• Streamline business processes: Cloud Service Providers (CSPs) manage
underlying infrastructure to enable organizations to focus on application development
in less time with less resources.
• Reduce capital costs: Cloud computing users worldwide can access the cloud with
Internet connection that subsequently does not require them to spend on technology
infrastructure, hardware, software, or licensing fees.
• Easy access to information/applications: One can access information and
applications as utilities anytime and anywhere, over the internet using any smart
computing device.
• Pervasive accessibility: Data and applications can be accessed anytime, anywhere,
using any smart computing device, making our life so much easier.
• Backup and Recovery: It is relatively much easier to backup and restore data stored
in cloud. Even if one hard disk fails, data will be safe and will continue to be available
automatically on another one.
• Monitor projects more effectively: It is feasible to confine within budgetary
allocations and can be ahead of completion cycle times.
• Less personnel training is needed: It takes fewer people to do more work on a
cloud with a minimal learning curve on hardware and software issues.
• Minimize maintenance and licensing software: As there is not much of non-
premise computing resources, maintenance becomes simple, and updates and
renewals of software systems rely on the cloud vendor or provider.
• Load balancing: Load balancing is defined as the process of distributing workloads
across multiple servers to prevent any single server from getting overloaded and
possibly breaking down. It plays an important role in maintaining the availability of

cloud-based applications to customers, business partners, and end users, thus

making it more reliable.
• Improved flexibility: Cloud users can make fast changes in their work environment
without serious issues at stake to scale services to fit their needs.
(b) Typical steps of Fixed Assets process are as follows:
i. Procuring an asset: An asset is most often entered into the accounting system when
the invoice for the asset is entered into the accounts payable or purchasing module
of the system.
ii. Registering or adding an asset: Most of the information needed to set up the asset
for depreciation is available at the time, the invoice is entered. Information entered at
this stage could include acquisition date, placed-in-service date, description, asset
type, cost basis, depreciable basis etc.
iii. Adjusting the Assets: Adjustments to existing asset information is often needed to
be made. Events may occur that can change the depreciable basis of an asset.
Further, there may be improvements or repairs made to asset that either adds value
to the asset or extend its economic life.
iv. Transferring the Assets: A fixed asset may be sold or transferred to another
subsidiary, reporting entity, or department within the company. These inter -company
and intra-company transfers may result in changes that impact the asset’s
depreciable basis, depreciation, or other asset data. This needs to be reflected
accurately in the fixed assets management system.
v. Depreciating the Assets: The decline in an asset’s economic and physical value is
called Depreciation. Depreciation is an expense which should be periodically
accounted on a company’s books, and allocated to the accounting periods, to match
income and expenses. Sometimes, the revaluation of an asset, may also result in
appreciation of its value.
vi. Disposing the Assets: When a fixed asset is no longer in use, becomes obsolete,
or is beyond repair; the asset is typically disposed. When an asset is taken out of
service, depreciation cannot be charged on it. There are multiple types of disposals
such as abandonments, sales, and trade-ins. Any difference between the book value
and realized value is reported as a gain or loss.
Question 4
(a) ABC Bank, one of the largest public sector banks, is planning to deploy and implement
Core Banking System (CBS) to all its branches. As an IT consultant, suggest the
deployment and implementation of CBS at various stages to ensure that bank's automation
objectives are achieved. (6 Marks)

(b) In recent times, new modes of money transfer have replaced the traditional methods of
funds transfer. Most of the banks have now introduced digital mode of remittance, called
Electronic Fund Transfer (EFT) which facilitates almost instantaneous transfer of funds.
Define EFT and explain its types. (4 Marks)
Answer
(a) The deployment and implementation of Core Banking System (CBS) should be controlled
at various stages to ensure that banks automation objectives are achieved, are as follows:
• Planning: Planning for implementing the CBS should be done as per strategic and
business objectives of bank.
• Approval: The decision to implement CBS requires high investment and recurring
costs and will impact how banking services are provided by the bank. Hence, the
decision must be approved by the Board of Directors.
• Selection: Although there are multiple vendors of CBS, each solution has key
differentiators. Hence, bank should select the right solution which is scalable and
where different interfaces are readily available considering various parameters as
defined by the bank, to meet their specific requirements and business objectives.
• Design and develop or procured: CBS solutions used to be earlier developed in-
house by the bank. Currently, most of the CBS deployments are procured. There
should be appropriate controls covering the design or development or procurement
of CBS for the bank.
• Testing: Extensive testing must be done before the CBS is live. The testing is to
be done at different phases at procurement stage to test suitability to data migration
to ensure all existing data is correctly migrated and testing to confirm processing of
various types of transactions of all modules produces the correct results.
• Implementation: CBS must be implemented as per pre-defined and agreed plan
with specific project milestones to ensure successful implementation.
• Maintenance: CBS must be maintained as required. For example - program bugs
fixed, version changes implemented, etc.
• Support: CBS must be supported to ensure that it is working effectively.
• Updation: CBS modules must be updated based on requirements of business
processes, technology updates and regulatory requirements.
• Audit: Audit of CBS must be done internally and externally as required to ensure
that controls are working as envisaged.

(b) Electronic Funds Transfer (EFT) is another mode of remittance which facilitates almost
instantaneous transfer of funds between two centres electronically. Most of the banks have
introduced digital mode of remittance which makes remittance possible online and on
mobile devices directly by the customer in a few clicks.
New modes of money transfer include the following:
• Real Time Gross Settlement (RTGS) is an electronic form of funds transfer where
the transmission takes place on a real-time basis. In India, transfer of funds with
RTGS is done for high value transactions, the minimum amount being Rs. 2 lakh. The
beneficiary account receives the funds transferred, on a real- time basis.
• National Electronic Funds Transfer (NEFT) is a nation-wide payment system
facilitating one-to-one funds transfer. Under this scheme, individuals can
electronically transfer funds from any bank branch to any individual having an account
with any other bank branch in the country participating in the scheme.
• Immediate Payment Service (IMPS) is an instant payment inter-bank electronic
funds transfer system in India. IMPS offers an inter-bank electronic fund transfer
service through mobile phones. Unlike NEFT and RTGS, the service is available 24x7
throughout the year including bank holidays.
Question 5
(a) Computers are used extensively to process data and to provide Information for decision
making. However, uncontrolled use of computers can have a widespread impact on a
society. Explain the factors influencing the need for control and audit of information
systems. (6 Marks)
(b) Today's ERP systems can cover a wide range of functions such as Human Resources,
Supply Chain Management, Customer Relationship Management, Financials, etc. and
integrating them into one unified database. As an IT consultant of a company, how will you
influence the Management to migrate their activities to ERP system by explaining its
benefits. (4 Marks)
OR
One of the major problems of doing online business is the question of security. Then, how
do you protect your e-commerce business from intrusion?
Answer
(a) The factors influencing the need for control and audit of Information Systems are as
follows:
• Organizational costs of data loss: Data is a critical resource of an organization for
its present and future processes. If the data is accurate, its ability to adapt and survive
in a changing environment increases significantly. If such data is lost, an organization
can incur substantial losses.

• Cost of incorrect decision making: Making high-quality decisions are dependent

on both – the quality of the data and quality of the decision rules that exist within
computer-based information systems. While making strategic decisions, some errors
may be allowed by management considering the long-run nature of strategic planning
decisions whereas highly accurate data would be required while making operational
control decisions by the managers. These operational controls taken by managers
involve detection, investigations, and correction of the processes. Incorrect data can
also have adverse impact on the other stakeholders having an interest in the
organization.
• Costs of computer abuse: Computer abuse is defined as any incident associated
with computer technology in which the user suffered or could have suffered loss and
a perpetrator by intention made or could have made gain. Unauthorized access to
computer systems, malwares, unauthorized physical access to computer facilities,
unauthorized copies of sensitive data, viruses, and hacking can lead to destruction of
assets like hardware, software, data, information etc.
• Value of computer hardware, software, and personnel: These are critical
resources of an organization, which has a credible impact on its infrastructure and
business competitiveness. The intentional or unintentional loss of hardware, the
destructions or corruption of software, and non-availability of skilled computer
professionals in some countries; an organization might be unable to continu e their
operations seamlessly.
• High costs of computer error: In a computerized enterprise environment where
many critical business processes are performed, a data error during entry or process
would cause great damage. For example - small data error during an operational flight
can lead to loss of human lives; an error in any financial system can make an
organization liable for penalty etc.
• Maintenance of privacy: Nowadays, data collected in a business process contains
private information about an individual too. These data were also collected before
computers but now, there are many instances in which privacy of individuals has been
eroded beyond acceptable levels.
• Controlled evolution of computers’ use: Use of Technology and reliability of
complex computer systems cannot be guaranteed and the consequences of using
unreliable systems can be destructive. Governments, professional bodies, pressure
groups, organizations, and individual persons all must be concerned with evaluating
and monitoring how we deploy computer technology.
(b) The benefits of an Enterprise Resource Planning (ERP) System are as follows:
• Information integration: The reason ERP systems are called integrated is because
they possess the ability to automatically update data between related business
functions and components. For example - one needs to only update the status of an

order at one place in the order-processing system and all the other components will
automatically get updated.
• Reduction of Lead-time: The elapsed time between placing an order and receiving
it is known as the Lead-time. The ERP Systems by virtue of their integrated nature
with many modules like Finance, Manufacturing, Material Management Module etc.;
the use of the latest technologies like EFT (Electronic Fund Transfer), EDI (Electronic
Data Interchange) reduce the lead times and make it possible for the organizations
to have the items at the time they are required.
• On-time shipment: Since the different functions involved in the timely delivery of the
finished goods to the customers - purchasing, material management production,
production planning, plant maintenance, sales and distribution are integrated, and the
procedures are automated; the chances of errors are minimal, and the production
efficiency is high. Thus, by integrating the various business functions and automating
the procedures and tasks, the ERP system ensures on-time delivery of goods to the
customers.
• Reduction in Cycle Time: The Cycle time is the time between placement of the order
and delivery of the product. In an ERP System, all the data updated to the minute, is
available in the centralized database and all the procedures are automated. Almost
all these activities are done without human intervention. This efficiency of the ERP
systems helps in reducing the cycle time.
• Improved resource utilization: The efficient functioning of different modules in the
ERP system like manufacturing, material management, plant maintenance, sales and
distribution ensures that the inventory is kept to a minimum level, the machine down
time is minimum, the goods are produced only as per the demand and the finished
goods are delivered to the customer in the most efficient way. Thus, the ERP systems
help an organization in drastically improving the capacity and resource utilization.
• Better customer satisfaction: Customer satisfaction means meeting or exceeding
customers’ requirement for a product or service. With the help of web-enabled ERP
systems, customers can place an order, track the status of the order, and make the
payment while sitting at home. Since all the details of the product and the customer
are available to the person at the technical support department also, the company
can better support the customer.
• Improved supplier performance: ERP systems provide vendor management and
procurement support tools designed to coordinate all aspect of the procurement
process. They support an organization in its efforts to effectively negotiate, monitor
and control procurement costs and schedules while assuring superior product quality.
The supplier management and control processes are comprised of features that will
help the organization in managing supplier relations, monitoring vendor activities, and
managing supplier quality.

• Increased flexibility: ERP Systems help the companies to remain flexible by making
the company’s information available across the departmental barriers and automating
most of the processes and procedures, thus enabling the company to react quickly to
the changing market conditions.
• Reduced quality costs: Quality is defined in many different ways - excellence,
conformance to specifications, fitness for use, value for the price and so on. An ERP
System’s central database eliminates redundant specifications and ensures that a
single change to standard procedures takes effect immediately throughout the
organization. It also provides tools for implementing total quality management
programs within an organization.
• Better analysis and planning capabilities: Another advantage provided by ERP
Systems is the boost to the planning functions. By enabling the compre hensive and
unified management of related business functions such as production, finance,
inventory management etc. and their data; it becomes possible to utilize fully many
types of Decision Support Systems (DSS) and simulation functions, what -if analysis
and so on; thus, enabling the decision-makers to make better and informed decisions.
• Improved information accuracy and decision-making capability: The three
fundamental characteristics of information are Accuracy, Relevancy and Timeliness.
The information needs to be accurate, relevant for the decision-maker and available
to the decision-makers when she/he requires it. The strength of ERP Systems-
integration and automation help in improving the information accuracy and help in
better decision-making.
• Use of latest technology: ERP packages are adapted to utilize the latest
developments in Information Technology such as open systems, client/server
technology, Cloud computing, Mobile computing etc. It is this adaptation of ERP
packages to the latest changes in IT that makes the flexible adaptation to changes in
future development environments possible.
OR
The ways to protect any e-Commerce business from intrusion are as follows:
• Viruses: The business website should be checked daily for viruses, the presence of
which can result in the loss of valuable data. Virus protection gains greater
significance in e-commerce operations primarily because most of the users of e-
commerce infrastructure are either unknown or are not under the control of business
enterprise. These users have their own virus protection environment that may not be
secure.
• Hackers: Software packages to carry out regular assessments of how vulnerable
their website is to hackers.

• Passwords: Employees should ensure that they change their passwords regularly
and that passwords set by former employees of an organization are defunct.
• Regular software updates: A business website should always be up to date with the
newest versions of security software. If it is not done regularly, the website m ay
become vulnerable to attack.
• Sensitive data: Financial information and other confidential data should be encrypted
using encryption software. Hackers or third parties will not be able to access
encrypted data without a key. This is particularly relevant for any e-commerce sites
that use a shopping cart system.
• Know the details of your payment service providers’ contract.


Question paper comprises of 5 questions, Answer Question No. 6 which is compulsory and
any 3 out of the remaining 4 questions.
Question 6
Quick N Sturdy Inc., a multinational company, is undergoing feasibility study to introduce new
luxury and sports car for specific group of customers. The product is meant for customers with
distinctive preferences and special requirements. The product is not a standard one and as
such the target market is also narrow. Company knows that demand for the product is large
enough to be profitable for the company, but small enough to be ignored by other major
industry players. The company wants to position itself in the niche market with the prime
consideration to offer unique features in the product for the target market.
In the given situation, identify the generic strategy as suggested by Michael Porter. Also state
the advantages and disadvantages of such strategy. (1 + 2 + 2 = 5 Marks)
Answer
Quick N Sturdy Inc. has adopted Focused Differentiation Strategy which is one of the
Michael Porter’s Generic strategies. A focused differentiation strategy requires offering unique
features that fulfil the demands of a narrow market. Some firms using a focused differen tiation
strategy concentrate their efforts on a particular sales channel, such as selling over the
internet only. Others target particular demographic groups. Firms that compete based on
uniqueness and target a narrow market are following a focused differe ntiation strategy.
Advantages of Focused Strategy
1. Premium prices can be charged by the organisations for their focused product/services.
2. Due to the tremendous expertise in the goods and services that the organisations
following focus strategy offer, rivals and new entrants may find it difficult to compete.
Disadvantages of Focused Strategy
1. The firms lacking in distinctive competencies may not be able to pursue focus strategy.
2. Due to the limited demand of product/services, costs are high, which can cause
problems.
3. In the long run, the niche could disappear or be taken over by larger competitors by
acquiring the same distinctive competencies.
Question 7
(a) "The strategic management cannot counter all hindrances and always achieve success
for an organization." Do you agree with this statement? Give arguments in support of
your answer. (1+ 4 = 5 Marks)

(b) You have been appointed as a Chief Executive Officer (CEO) in a company which is
facing many difficulties in proper execution of its strategy. Explain the leadership roles
which you should play in pushing for good strategy execution. (5 Marks)
Answer
(a) Yes, it is true that the presence of strategic management cannot counter all hindrances
and always achieve success for an organization. This is on account of complex multiple
forces acting on business organization and limiting its success.
These limitations are on account of following factors:
 Environment is highly complex and turbulent. It is difficult to understand the
complex environment and exactly pinpoint how it will shape-up in future. The
organisational estimate about its future shape may awfully go wrong and jeopardis e
all strategic plans.
 Strategic management is a time-consuming process. Organisations spend a lot
of time in preparing, communicating the strategies that may impede daily operations
and negatively impact the routine business.
 Strategic management is a costly process. Strategic management adds a lot of
expenses to an organization – particularly to small and medium organisations.
Expert strategic planners need to be engaged, efforts are made for analysis of
external and internal environments devise strategies and properly implement.
 Competition is unpredictable. In a competitive scenario, where all organisations
are trying to move strategically, it is difficult to clearly estimate the competitive
responses to the strategies.
(b) A Chief Executive Officer (CEO) has many different leadership roles to play: visionary,
chief entrepreneur and strategist, chief administrator, culture builder, resource acquirer
and allocator, capabilities builder, process integrator, crisis solver, spokesperson,
negotiator, motivator, arbitrator, policy maker, policy enforcer, and head cheerleader.
Managers have five leadership roles to play in pushing for good strategy execution:
1. Staying on top of what is happening, closely monitoring progress, working through
issues and obstacles.
2. Promoting a culture that mobilizes and energizes organizational members to
execute strategy and perform at a high level.
3. Keeping the organization responsive to changing conditions, alert for new
opportunities and remain ahead of rivals in developing competitively valuable
competencies and capabilities.
4. Ethical leadership and insisting that the organization conduct its affairs like a model
corporate citizen.

5. Pushing corrective actions to improve strategy execution and overall strategic

performance.
Question 8
(a) A company started its operation in 2015 with Product Alpha. In early 2021, with intent to
have its better presence in the market, the company diversifies by acquiring a company
with product Beta. After sometime, it was observed that product Beta is not faring well.
Aggressive competition was therein market for the product. It was also revealed that
though customers are not price sensitive, but product was not keeping pace with the
fast changing unique features as expected by its customers.
Company has tried one of the retrenchment strategies by putting efforts to improve its
internal efficiency, but could not get desired results. In the situation, company is of a
considered view to remain and grow in product alpha and to decouple with product Beta
from its portfolio.
As a strategist, suggest the retrenchment strategy to be adopted by the company. Al so
delineate reasons why a company should adopt such strategy? (1+ 4 = 5 Marks)
(b) What is cost leadership strategy? Under what circumstances an organization can gain
competitive advantages from cost leadership strategy? Is there any risk in pursuing co st
leadership strategy? (1+ 3 + 1 = 5 Marks)
Answer
(a) As per the facts of the case, company had tried to improve its internal efficiency. In other
words, had tried turnaround strategy but could not get the desired results.
Company does not want to go for complete close down of business. Rather it wants to
continue and grow in its original business i.e. product Alpha.
As a strategist, it is advisable that the company should adopt divestment strategy. In
the given situation where the business of product Beta is not faring well and became
unprofitable and unviable due to aggressive competition in the market, the best option for
the company is to divest the product Beta which is loss-making business.
Retrenchment may be done either internally or externally. Turnaround strategy is
adopted in case of internal retrenchment where emphasis is laid on improving internal
efficiency of the organization, while divestment strategy is adopted when a business
turns unprofitable and unviable due to some external factors. In view of the above, the
company should go for divestment strategy.
A divestment strategy may be adopted due to various reasons:
1. A business that had been acquired proves to be a mismatch and cannot be
integrated within the company.
2. Persistent negative cash flows from a particular business create financial problems
for the whole company, creating the need for divestment of that business.

3. Severity of competition and the inability of a firm to cope with it may cause it to
divest.
4. It is not possible for the business to do Technological up-gradation that is required
for the business to survive, a preferable option would be to divest.
5. A better alternative may be available for investment, causing a firm to divest a part
of its unprofitable business.
(b) Cost leadership strategy emphasizes producing standardized products at a very low
per-unit cost for consumers who are price-sensitive. It frequently results from productivity
increases and aggressive pursuit of cost reduction throughout the development,
production, marketing, and distribution processes. It allows a firm to earn higher profits
than its competitors.
The circumstances in which an organization can gain competitive advantages from cost
leadership strategy are:
 when the market is composed of many price-sensitive buyers.
 when there are few ways to achieve product differentiation.
 when buyers do not care much about differences from brand to brand.
 when there are a large number of buyers with significant bargaining power.
The basic idea is to underprice competitors and thereby gain market share driving some
of the competitors out of the market.
Some risks of pursuing cost leadership are:
 that competitors may imitate the strategy, therefore driving overall industry profits
down
 that technological breakthroughs in the industry may make the strategy ineffective;
or that buyer interests may swing to other differentiating features besides price.
Question 9
(a) "The TOWS Marix is a tool for generating strategic options/choices." Do you agree with
this statement? How it can help a strategist in decision making? (1 + 4 = 5 Marks)
(b) "Strategic intent provides the framework within which the firm would adopt a
predetermined direction and would operate to achieve strategic objectives." In the light
of this statement, discuss the elements of strategic intent. (5 Marks)
Answer
(a) Yes, TOWS Matrix is a relatively simple tool for generating strategic options. Through
TOWS matrix four distinct alternative kinds of strategic choices can be identified.

SO (Maxi-Maxi): Aggressive strategy - SO is a position that any firm would like to

achieve. The strengths can be used to capitalize or build upon existing or emerging
opportunities.
ST (Maxi-Mini): Conservative strategy - ST is a position in which a firm strives to
minimize existing or emerging threats through its strengths.
WO (Mini-Maxi): Competitive strategy - The strategies developed need to overcome
organizational weaknesses if existing or emerging opportunities are to be exploited to
maximum.
WT (Mini-Mini): Defensive strategy - WT is a position that any firm will try to avoid. An
organization facing external threats and internal weaknesses may have to struggle for its
survival.
The matrix is outlined below:
Internal Strengths – S Weaknesses – W
External List Strengths List Weaknesses
Opportunities – O SO Strategies Use strengths WO Strategies
List Opportunities to take advantage of Overcoming weaknesses by
opportunities taking advantage of
opportunities
Threats – T ST Strategies WT Strategies
List Threats Use strengths to avoid Minimize weaknesses and
threats avoid threats
Figure: The TOWS Matrix
By using TOWS Matrix, a strategist can look intelligently at how he can best take
advantage of the opportunities open to him, at the same time that he can minimize the
impact of weaknesses and protect himself against threats. Used after detailed analysis o f
threats, opportunities, strength and weaknesses, it helps the strategist to consider how to
use the external environment to his strategic advantage, and so he can identify some of
the strategic options available to him.
(b) Strategic intent can be understood as the philosophical base of strategic management. It
implies the purposes, which an organization endeavours to achieve. It is a statement that
provides a perspective. Strategic intent gives an idea of what the organization desires to
attain in future. Strategic intent provides the framework within which the firm would adopt
a predetermined direction and would operate to achieve strategic objectives.
Elements of strategic management are as follows:
(i) Vision: Vision implies the blueprint of the company’s future position. It describes
where the organisation wants to land. It depicts the organisation’s aspirations and

provides a glimpse of what the organization would like to become in future. Every
sub system of the organization is required to follow its vision.
(ii) Mission: Mission delineates the firm’s business, its goals and ways to reach the
goals. It explains the reason for the existence of the firm in the society. A mission
statement helps to identify, ‘what business the company undertakes.’ It defines the
present capabilities, activities, customer focus and role in society.
(iii) Business Definition: It seeks to explain the business undertaken by the firm, with
respect to the customer needs, target markets, and alternative technologies. With
the help of business definition, one can ascertain the strategic business choices.
(iv) Business Model: Business model, as the name implies is a strategy for the
effective operation of the business, ascertaining sources of income, desired
customer base, and financial details. Rival firms, operating in the same industry rely
on the different business model due to their strategic choice.
(v) Goals and Objectives: These are the base of measurement. Goals are the end
results, that the organization attempts to achieve. On the other hand, objectives are
time-based measurable targets, which help in the accomplishment of goals. These
are the end results which are to be attained with the help of an overall plan.
However, in practice, no distinction is made between goals and objectives and both
the terms are used interchangeably.
Question 10
(a) The growth rate of A & B Ltd. growth rate was around 10% per annum during the last
decade. But thereafter its growth rate started falling and presently the growth rate of the
company is very low around 1%. The company is facing twin problems, one the strategy
is not implemented as planned; and two the results produced by the strategy are not in
conformity with intended goals.
You being a strategy consultant, advise the tool for audit of management performance.
Also explain the need of such tool and its basic activities. (1 + 2 + 2 = 5 Marks)
(b) "A well designed strategic management system can fail if insufficient attention is given to
the human resource dimension." ·Elucidate this statement. (5 Marks)
OR
Write short note on Strategic Business Unit (SBU).
Answer
(a) A & B Ltd. reviews its business plans and strategies on regular basis to identify
weaknesses and shortcomings to enable a successful development plan. A strategy audit
is an examination and evaluation of areas affected by the operation of a strategic
management process within an organization. The audit of management performance with

regard to its strategies helps an organization identify problem areas and correct the
strategic approaches that have not been effective.
Strategy audit is needed under the following conditions:
 When the performance indicators reflect that a strategy is not working properly or is
not producing desired outcomes.
 When the goals and objectives of the strategy are not being accomplished.
 When a major change takes place in the external environment of the organization.
 When the top management plans:
(a) To fine-tune the existing strategies and introduce new strategies; and
(b) To ensure that a strategy that has worked in the past continues to be in-tune
with subtle internal and external changes that may have occurred since the
formulation of strategies.
Adequate and timely feedback is the cornerstone of effective strategy audit.
Strategy audit can be no better than the information on which it is based.
Strategy Audit includes three basic activities:
1. Examining the underlying bases of a firm’s strategy,
2. Comparing expected results with actual results, and
3. Taking corrective actions to ensure that performance conforms to plans.
(b) A well-designed strategic-management system can fail if insufficient attention is given to
the human resource dimension. Human resource problems that arise when a business
implements strategies can usually be traced to one of three causes: (1) disruption of
social and political structures, (2) failure to match individuals’ aptitudes with
implementation tasks, and (3) inadequate top management support for implementation
activities.
i. Disruption of social and political structures: Strategy implementation poses a
threat to many managers and employees in an organization. New power and status
relationships are anticipated and realized. New formal and informal groups’ values,
beliefs, and priorities may be largely unknown. Managers and employees may
become engaged in resistance behaviour as their roles, prerogatives, and power in
the firm change. Disruption of social and political structures that accompany
strategy execution must be anticipated and considered during strategy formulation
and managed during strategy implementation.
ii. Failure to match individuals’ aptitudes with implementation tasks: A concern in
matching managers with strategy is that jobs have specific and relatively static
responsibilities, although people are dynamic in their personal development.
Commonly used methods that match managers with strategies to be implemented

include transferring managers, developing leadership workshops, offering career

development activities, promotions, job enlargement, and job enrichment.
It is surprising that so often during strategy formulation; individual values, skills, and
abilities needed for successful strategy implementation are not considered. It is rare
that a firm selecting new strategies or significantly altering existing strategies
possesses the right line and staff personnel in the tight positions for successful
strategy implementation. The need to match individual aptitudes with strategy -
implementation tasks should be considered in strategy choice.
iii. Inadequate top management support for implementation activities: Inadequate
support from strategists for implementation activities often undermines
organizational success. Chief executive officers, small business owners, and
government agency heads must be personally committed to strategy
implementation and express this commitment in highly visible ways. Strategists’
formal statements about the importance of strategic management must be
consistent with actual support and rewards given for activities completed and
objectives reached. Otherwise, stress created by inconsistency can cause
uncertainty among managers and employees at all levels.
OR
SBU is a part of a large business organization that is treated separately for strategic
management purposes. It is separate part of large business serving product markets wi th
readily identifiable competitors. It is created by adding another level of management in a
divisional structure after the divisions have been grouped under a divisional top
management authority based on the common strategic interests.
Very large organizations, particularly those running into several products, or operating at
distant geographical locations that are extremely diverse in terms of environmental
factors, can be better managed by creating strategic business units. SBU structure
becomes imperative in an organization with increase in number, size and diversity.
The three most important characteristics of a SBU are:
• It is a single business or a collection of related businesses which offer scope for
independent planning and which might feasibly standalone from the rest of the
organization.
• It has its own set of competitors.
• It has a manager who has responsibility for strategic planning and profit
performance, and who has control of profit-influencing factors.
Benefits of SBUs:
1. Establishing coordination between divisions having common strategic interest.
2. Facilitate strategic management and control.

3. Determine accountability at the level of distinct business units.

4. Allow strategic planning to be done at the most relevant level within the total
enterprise.
5. Make the task of strategic review by top executives more objective and more
effective.
6. Help to allocate resources to areas with better opportunities.
Thus, an SBU structure with its set of advantages would be most suitable for the
company with the given diverse businesses having separate identifiable competitors, but
a common organizational goal.

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PAPER – 7: ENTERPRISE INFORMATION SYSTEMS AND STRATEGIC MANAGEMENT

SECTION – A: ENTERPRISE INFORMATION SYSTEMS

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to other operations due to inefficiencies or breakdown in internal processes, people ,

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SECTION –B: STRATEGIC MANAGEMENT

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 Technological changes/innovations in construction equipment.

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workplace safety and Human Resource (HR) Management that includes

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Journal For recording of all non-cash/bank transactions. For example -

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• Clear separation of user-interface-control and data presentation from

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PAPER 7 - SECTION – B: STRATEGIC MANAGEMENT

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• Comparison of own process and performance with that of others: Benchmarking

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 Setting goals in the area of downtrodden. It can be in terms of geographical

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1. Developing a strategic vision.

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 It is opted when the environment in which an organisation is operating is relatively

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• Financial Accounting Global Settings that incorporate maintenance of Fiscal Year,

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• Authorization process: What is the authorization process, if anybody with access to

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PAPER 7 - SECTION – B: STRATEGIC MANAGEMENT

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Transformational leadership style uses charisma and enthusiasm to inspire people

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