IIBM Institute of Business
Management
Semester-1 Examination Paper MM.100
Organizational Behavior
Section A: Objective Type (30
marks)
•
This
section consists of Multiple Choice questions & Short Notes.
•
Answer
all the questions.
•
Part
One question carries 1 mark each & Part two carry 4 marks each.
Part one:
Multiple choices:
1)
Friendship groups are
a) Party Groups
b) Formal Group
c) Evolved informally
d)
Social Groups
2)
Effective communication is the foundation
a) Of modern organization
b) Of formal organization
c)
Of Foreign relations
d) Of informal organization
3)
Perception is used in
a)
Selection of candidate for employment
b) Compensation
and reward
c) Enrichment
and motivation
d) None of
the above.
4)
Attitude do not influence by
a) Family
b)
Educational background
c) Policies of organization
d)
Religion
5)
Job enlargement means
a) Adding other task to the job.
b)
Removing job
responsibilities.
c) Job Testing
d)
Job formal examination
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6)
Conflict is a
a) Immoral activity
b)
Rational Behaviouer
c) None of the above
d)
Natural disagreement
7)
Fatigue can be defined as the ________ of the body as a result
of continuous physical activity
a) Tiredness
b) Activeness
c)
Possessiveness
d) Color
8)
Written communication is a
a) Non-Direct Communication
b) Direct Communication
c)
Waste of papers
d) Waste of time
9)
Direct Communication________ are the rules of pattern and
behaviour that are expected from all team members.
a) Norms
b) Regulations
c)
Guidelines
d) Format
10)
The pension plans, gratuity contribution and mandatory provident
fund rules are framed basically to take care of ________ needs.
a) Security
b) Sensitive
c)
Scrutiny
d) Saving
Part Two:
1.
Explain
‘Y’ theory of Mc Gegor.
2.
Explain
Chris Argyris’s immaturity – maturity theory.
3.
Explain
‘Halo effect’.
4.
Write
a note on ‘Reinforcement theory’.
5.
Explain
the terms “attitudes and values.
END OF SECTION A
IIBM Institute of Business Management
Section B: Caselets (40 marks)
•
This
section consists of Caselets.
•
Answer
all the questions.
•
Each
caselet carries 20 marks.
•
Detailed
information should form the part of your answer (Word limit 200 to 250 words).
Caselet 1
Kanchan
and company limited was one of the leading manufacturers of pumps for the
domestic, agriculture, and industrial use. It had its corporate office at
Delhi. One of its plants was located at Faridabad, the industrial town of
Haryana which is only 30 km away from Delhi. The plant at Faridabad
manufactured nearly 200 different types of pumps categories as, the mini
domestic pump, jet pump, four inch submersible pump, single phase monoblock
pump, three phase monoblock pump, end suction pump and pumps for special use.
Target customers for these products were household units, farmers, urbans
(municipal corporation, civil contractors etc.), industrial houses etc.Unit
1995, the company was one of the major players in all the market segments
without having any threat from its counterpart competitors. With the process of
liberalization and globalization, a number of competing companies entered in
the business of manufacturing pumps. Some of the major competitors were Taximo
in the agricultural segment, KSB and Kalama in the submersible segment, Sharp
in the domestic segment and Crompton in almost all the segments. Because of the
stiff competition, the company had lost its market share in al the market
segments. Also the financial performance of the company had deteriorated as
indicated by EBIT and PBT as shown in Annexure-I. To counter the competition
and to get international acceptance for its products, the company pursued to
get ISO 9000 and obtained the ISO 9001 certification in the year 1994. For its
social acceptability, the company obtained ISO 14001 in the year 1997, and to
retain this certification, the company started incorporating continuous
improvements in all the areas of its operations.
Until 1995-96, the focus was on
maximum capacity utilisation of man and machine and the bargain parts were
manufactured continuously without analyzing their actual requirements resulting
in the high inventory level of some parts and stock out in others. This
resulted in the higher cost of manufacturing in two ways i.e., production
stoppages because of the unavailability of parts and higher inventory cost of
parts which were not required. To have maximum utilization of machines, and to
meet the market demand, the unit was working in three shifts. Since machines
were used 24 hours a day, the organization needed hitech machines with low
maintenance requirements resulting in short life span of the machines. The
organization was able to meet seventy percent of the market demand in all
categories of the product. With the increasing competition, the company had to
face declining market share in some product categories. The company formed
inhouse team to identify the areas in which the unit was facing problems. The
team identified that the high inventory in all the areas, high rejection rate
of the parts manufactured inhouse , low worker morale, high absenteeism, high
cost of manufacturing, high level of wastages and scrap, lower customer
satisfaction and unsatisfied demand in some product categories were some of the
major reasons contributing to the poor performance of the unit. The problems
were discussed by the management and the consultancy services of Tata Institute
of Social Sciences were hired to look into problems in the area of human
resources. The other areas were investigated by inhouse teams. On the basis of
the suggestions
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received from the
consulting team from TISS and the inhouse teams, following changes were
introduced.
•
Overall
manufacturing system was reoriented from the push system to the pull system,
i.e., the different products were manufactured according to the market demand.
Machining centre of the manufacturing facility and part of the foundary section
was converted to a synchronous manufacturing system.
•
The
plant layout was changed from the process based layout to group technology
(Cellular Layout) resulting in a muti-skilled workers requirement instead of a
single skilled worker requirement. The organization provided training to the
existing workers to acquire the skills in the additional areas. This also
resulted in the team approach towards the same objective.
•
A
system of the Joint Development Council (JDC) consisting of three tier organization,
viz. functional council, cross functional council and the apex council, having
equal representatives from the management and the union was evolved. There were
three functional councils for the three functional areas, the foundary
department, the service department and manufacturing department. The functional
councils were responsible and accountable for absorbing the latest
organizational methods and processes for the day to day operations to achieve
the company goals of growth and profitability. The cross-functional council was
responsible and accountable for making recommendations for the
development/improvement, which would help to achieve the annual operating plans
through the quarterly/monthly plans. This council was also responsible for
resolving issues pertaining to the operations and maintenance of the
manufacturing standards, quality standards, capacity utilization and resources
mobilisation. It also helped the apex council in taking final decisions in
these matters. The apex council was responsible and accountable for resolving
the issues that would arise in the operationalisation of the various
development/improvement schemes and also looked after the overall well being of
the workmen besides addressing itself to achieving the company goals. Meetings
of all the three councils of the joint development council system were
conducted every fortnight, every month and on each quarter.
•
The
company introduced various programs for the development of its workforce like,
a)
A
cadre system by which the company offered grades to the employees purely on the
basis of their merit and work experience. In order to assess the knowledge,
skills and behaviour inventory of the workers, the system of conducting theory
and practical examination followed by an interview was evolved. In earlier
system, the workers carried out simple functions based on the skills and the
scales were also fixed based on the type of work carried by the workers,
resulting in the disparity in the scales of workers on the same product and
having similar experience.
b)
Continous
Performance Improvement Scheme (CPIS) : this scheme was developed to focus on
ensuring the meeting of customer needs, zeroed rejections at the various
operations, zeroed breakdown of the machines, maximize the capacity utilization
and developing the workers’ pride in the ownership. For these objects, the
selected parameters of the CPIS were, the quality of operations, up keeping of
the machines etc., availability of workmen and the capacity utilization. And
therefore, the daily earning of the direct workmen under and CPIS were computed
based on reducing the internal and the external rejections, increasing the
availability of manpower and machines and improving the capacity utilization.
In order to calculate the daily earnings of the direct workers under CPIS,
following formula was developed.
ED = { ( EQ1 + EQ2 + EA1 + EA2 +
EC) * N/n} * {Aa/An}
Efforts for system Improvement
•
Broad
production norms were developed.
•
Cell
owners oncept was introduced.
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•
Integrated
quality control system was introduced.
•
Integrated
productive maintenance system was introduced.
•
Single
digit minute die-exchange time was achieved in seventy percent of the cases.
•
Rapid
exchange of tool/ dies was achieved in twenty to thirty percent of the cases.
•
First
out time was introduced to reduce inventory at the casting and finish stores.
•
Focus
was shifted from machines to shops.
•
Shift
from component manufacturing to end-product manufacturing.
•
A
number of mangers and workers were removed/withdrawn from the number of
activities.
• Shift from the individual incentive scheme to
the group incentive scheme.
Despite al these efforts, the
organization was still facing teething problems in a number of areas
1.
The
organization had reduced the raw material and the finished goods inventories
but still it was on the higher side.
2.
Process
improvements had been carried out only in parts because of high investment
requirements.
3.
The
workers were apprehensive and suspicious about the way the CPIS was introduced.
4.
The
organization had not done the cost benefit analysis of the changes they had
made.
5.
Tools
and die replacement time had been considerably reduced but still needed
improvement.
6.
Synchronized
manufacturing system had been introduced only in a few parts of the
manufacturing unit.
7.
To
cater to the changing demand, the organization had assigned higher man power
than require, leading to some idle man hours during normal demand periods.
8.
Power
supply constraints forced the company to use the age old method of
manufacturing instead
of the technology.
9. Bilateral settlement had been signed with the
recognized union however, there were more than one union having their
representation amongst the workers.
10. Rejection level of the
casing had come down from 12.5% to 12.2%.
11. With the measures
taken by the company, the financial position had improved as indicated by the
EBIT and the PBT
The
apex body during its last meeting appointed a committee to review the progress
made by the different departments under the continuous improvement program .
Ramchandran was appointed the chairman of the committee. Ramchandran after
completing his preliminary investigation, forwarded the preliminary report to
the management . The General Manager of the unit, Harish Narayan, noted that
the unit had made a lot of progress through continuous improvement program but
still the unit was not in a comfortable position in relation to its
competitors. He was worried as to what the organization should do to speed up
the process of continuous improvement.
1.
Did
kanchan and Company Limited adopt the right strategy in improving the overall
performance of the organization?
2.
Was
it right to use a complex system for determining the workers incentives?
3.
If
you were the head of the unit, what steps would you have taken to remove the
problems which were still persisting.
4.
What
should the company do to maintain and improve its market position?
IIBM Institute of Business Management
Caselet 2
Gagan
International Limited was established in the year 1978 at Nasik. It was an
international business unit of Gagan group which had an annual turnover of Rs
5,000 crores and an employees strength of 1,50,000. The group enjoyed a good
reputation for its technology and quality. Gagan International Limited had an
annual turnover of Rs. 1500 crores and its activities ranged from trading in
the engineering and consumer products, to the manufacture of high quality
finished leather, leather bags, leather purses and wallets and leather outfits
and the execution of the turnkey projects and the project related management
services overseas. The company maintained the network of international offices
located at commercial centers in the developed countries and also in several
developing countries. The company had a total strength of around 1100 employees
with 51 managers, 120 officers, 175 staff and 674 workers. Most of the workers
were literate and in their early 40s. There were 18 women workers in the
workforce. Workers belonged to the same community and would absent themselves
from the workplace, enmass particularly during summers which is the season of
marriages and harvesting. They were high on social orientation and did not mind
being absent from the workplace even for the marriage or may similar event of a
distant relation. With the result enmass absenteeism would hinder the
production of the company. The workers would also absent themselves on account
of alcoholism, non payment of loan, and sickness in the family. As a measure to
deal with the problem, the asked the ESI doctors not to issue sickness
certificates to the workers. The company had a practice of making visits to the
family of the worker and even hospitalizes the sick child of the worker to
facilitate the worker and reduce the absenteeism. In 1990, the company
introduced a special attendance bonus as an incentive to discourage
absenteeism. A worker who had the full attendance for a month would get Rs 80
in addition to one casual leave, and if he would earn it for three months then
he would get cash reward of Rs 500. This advantage was not availed by the
chronic cases. The company felt that they had a social commitment and
therefore, even recruited two social workers, Maitre Gupta and Anuradha Pandey,
who would make frequent visits to the families of the workers who frequently
absented themselves from the workplace. The social workers visited 2-3 families
per day to keep the morale of the families high and to show the concerns of the
company for its workers. As it was typical of the workers community, these
workers kept their families in dark about the incentives that they would get in
the organization. For generating awareness about the company and to educate the
family of the workers, the company often organized lectures for them by the
Teachers of Central Board of social welfare, a nodal center of social welfare
established by the Government of India.
In October 1999, it was
discovered in one of the sections that a good skilled worker, Madan Lal, aged
35, used to absent himself frequently. He used to be absent for fifteen days at
a stretch every month. On collecting the information from his family and
coworkers, it was found that they he had been taking brown sugar and his drug
dependence had been the reason for his recurrent absence. Maitre Gupta visited
his family and found his wife Bhagwanti quite dejected and helpless on account
of her husband’s behavior. Madan Lal would not even spare the household
utensils to get the brown sugar if he did not have the money. Madan Lal had
stupid upto eight standards and his wife Bhagwanti was fourth standard school
drop our, they had two small school going children. Madan lal had separated
from his parents though they lived nearby.
Maitre Gupta after several
visits, convinced Bhagwanti and parents of Madan lal that de-addition of Madan
Lal was important and it was possible only if they extended full cooperation to
her. They were instructed not to allow Madan Lal to go out of home alone and he
was to be accompanied to the bus stop where the staff bus (a special facility
extended to him) was to pick him to the factory with Maitre Gupta accompanying
him. On his way back, Maitre Gupta would be with him upto the bus stop where
his family members would be waiting to accompany him to home. This arrangement
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continued
for a few days and Madan Lal did not taste brown sugar inspite of his suffering
on account of withdrawal symptoms. In between Maitre Gupta discontinued
accompanying him in the bus and it was soon discovered that his drug addiction
was relapsed. He would leave the served show cause notice, but it was of no
avail. Maitre Gupta felt that Madan Lal should be sent to the rehabilitation
center and was sent to the Ashirwad De-addiction and Rehabilitation center at
Nasik. Here Madan lal was treated for the de-addition and was discharged after
15 days.
After his discharged, Madan lal
resumed his duty. Maitre Gupta, in consultation with Sudhakar Bhatt (DGM, Human
Resource and Industrial Ralations ), worked out a new system for Madan Lal. His
monthly salary was directly handed over to Bhagwanti. Lunch coupons were
stopped for him because he would sell them for money to buy the brown sugar. If
he would absent himself from the job, he was forced to meet Maitre Gupta and
Sudhakar Bahtt who would counsel him and ask for his confession in writing. In
between, he was also charged sheeted and suspended for four days. He was even
served a show cause notice three times. The four days suspension costed him
four days salary as a punishment, his family was kept informed by Maitre Gupta
all through. However, by the end if six moths, Madan lal showed signs of
complete recovery. He started coming to work regularly with an improved
performance. The organization fulfilled its social commitment by transforming
and retaining a good worker, even when he had undergone a dark period of two to
three years of drug addition.
1.
The
company faced the problem of mass absenteeism. Is it desirable to recruit
workers from the same community?
2.
Were
the efforts put by the organization worth in transforming Madan lal from a drug
addict to a performing worker? Justify your answer.
3.
Was
suspension of Madan lal justified? Comment.
4.
Was
the organization socially committed in a real sense or all the efforts were
focused at profit making?
END
OF SECTION B
Section C: Applied Theory (30
marks)
•
This
section consists of Long Questions.
•
Answer
all the questions.
•
Each
question carries 15 marks.
•
Detailed
information should form the part of your answer (Word limit 150 to 200 words).
1. A large unit
manufacturing electrical goods which has been known for its liberal personnel
policies and fringe benefits is facing the problem of low productivity and high
absenteeism. How should the management improve the organizational climate?
2.Discuss the nature
and significance of morale ? Describe the relationship between morale and
productivity?
IIBM Institute of Business
Management
Semester-1 Examination Paper MM.100
Principles and Practice of
Management
Section A: Objective Type (30
marks)
•
This
section consists of Multiple Choices & Short Notes type questions
•
Answer
all the questions.
•
Part
one questions carry 1 mark each & Part Two questions carry 5 marks each.
Part one:
Multiple choices:
1) ________
Decisions relate to the day to day operations of the enterprise generally taken
by middle and lower level management.
a)
Productive
b) Qualitative
c)
Non- productive
d) Operative
2) Organizational
MBO was invented by ________.
a)
Go slaws
b) Peter Drucker
c)
W . Taylor
d) J G Melon
3) Barriers
to delegation of authority would be:
a) Fear of
loosing status by managers
b) Over-confidence
among managers
c) Lack of trust in subordinates
d) All of
the Above
4)
'Span of control' is also referred to as span of _______
a)
Management
b)
Delegation
c) Life
d)
Practice
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5) Learning
from mistakes is often more powerful than learning from________.
a)
Mentoring
b)
Success
c) Failure
d)
Process
6) ________
provides all types of help required to make the business more efficient and
profitable.
a)
Mediators
b)
Consultants
c) Help Department
d)
Government
7) Management is said to be the
combination of three factors, arts, science and the third is
a)
Retrenchment
b) Projection
c)
Economics
d) profession
8) Motivating
a worker is to create a need and what else on the part of a worker to better
his present performance.
a)
Professionalism
b)
Motivation
c)
Desire
d)
Delegation
9) One of
the external factors that influence management is
a)
Technology
b)
Globalization
c) Economic
d)
Legal
10) What
does decoding mean?
a)
Message Downloading
b) Message Exploring
c)
Message interpretation
d) Message Decoding
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Part Two:
1.
Differentiate
between ‘Administration’ and ‘Management’.
2.
What
were the common drawbacks in classical and Neo classical theories of
management?
3.
Write
a short on ‘Retrenchment corporate strategy’.
4.
Write
a short note on ‘Acceptance theory’.
END OF SECTION A
Section B: Caselets (40 marks)
•
This
section consists of Caselets.
•
Answer
all the questions.
•
Each
caselet carries 20 marks.
•
Detailed
information should form the part of your answer (Word limit 200-250 words).
Caselet 1
Dairy
Crest is one of the UK’s leading chilled Dairy foods company. It provides dairy
spreads and butters, cheese, milk and milkshakes products for the retail
grocery trade and major food manufacturers. Founded in 1981, it employs around
7,000 people and has a turnover of £ 1.3 billion. Following a period of
substantial growth and capital investment-which included the strategic
acquisitions of Unigate in 2000 and the St Ivel spread brands in 2002-Dairy
Crest turned its attention to the development of its key personnel.’ We went
through a huge amount of change,’ said Gareth Hopkins, Group HR Director.
‘People’s roles expanded and became more complex. We felt we needed to provide
more support to managers in the individual businesses and functional areas, so we
decided to commission a management and leadership skills development program’.
Initially the company planned to develop a program that would be appropriate
for all managers but research revealed that there were different needs at
different levels. ‘It was clear that a single program wouldn’t suffice, ‘said
Judith Bufton, the company’s Management Development Manager. We decided instead
to develop two programmes: a leaders’ program for senior managers and a
managers’ program for middle managers.
Roffey Park was appointed after
Dairy Crest had discussed the two potential programmes with five development
providers. ‘We chose Roffey Park because we felt that they would be best not
only at providing the underlying learning but also in helping individuals to
transfer the learning to the workplace’, said Judith Bufton. They have
excellent facilities at their residential centre and their tutors are very
professional and committed. They worked with us to develop the content and
structure of the program. Aimed at senior managers across the company, the
Leaders’ Program aims to raise leadership capability and to encourage
participants to take a long-term view of the business. Twelve senior managers
are now undertaking the ten-day program, which is delivered in four modules, at
Roffey Park, over a period of 15 months. ‘In the fresh food industry, there’s
precious little time to sit back and think about where the business is going,
‘said Gareth Hopkins. ‘We wanted to make time to provide strategic leadership
skills training for our senior managers. ‘Dairy Crest has around 60 senior
managers.
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The participants are selected for
each cohort of the program by the company’s Trading Board, which comprises the
managing directors of the various business units. Before the programming
begins, Roffery Park runs a mentoring workshop for the participants and for
members of the Trading Board, who act as their personal mentors. The participants
themselves then provide one-to-one mentoring and coaching for those on the
managers’ program. The Leaders’ Program starts with a two-day Development
Centre, which involves exercises based on Dairy Crest’s management competency
framework, 360 degree feedback and a personality questionnaire. Each
participant uses this information to review their own leadership style and
behavior and to create their Personal Development Plan.’ We were very keen to
start the program with a Development Centre because this enables the
participants to think through their strengths and development needs at the
outset, ‘said Judith Bufton. ‘This information provides a base which they can
use to guide their learning throughout the program.’
The four modules, each lasting
two days, are then delivered approximately three months apart. The modules,
designed specifically for Dairy Crest, cover leadership, strategy, managing
change and business finance. Some of the sessions are presented by Dairy Crest’s
senior executives, which not only focuses the learning on the practical
business needs but also demonstrates the company’s commitment to the program.
The senior managers meet periodically in two Learning Sets-small groups in
which the individuals challenge and support each other-to share their learning
and to work on a business project. Facilitated by Roffey Park tutors, these
meetings help to reinforce the more formal learning on the modules. The program
ends with a closing event where the learning Set groups present their project
recommendations-and their learning from the program- to senior executives. ‘We
were very keen to provide skills development for our line managers because we
see them as a vital link for unlocking people’s potential across the business,’
said Judith Bufton. Dairy Crest has around 400 managers at the target level.
Its Managers’ Program aims to raise management capability by improving core
management and coaching skills. The first group of 16 middle managers is now
undertaking the six-day program. These participants were nominated by their
managing directors but for future cohorts, the managers will be able to
nominate themselves. Delivered at Roffey Park, the program is based on Dairy
Crest’s management competency framework, which covers ten competencies in four
clusters; thinking skills, working with people, providing direction and
delivering results. It begins with a three-day Development Centre where
participants assess their development needs and review their preferred management
style and behaviors. They then compile their own Personal Development Plan. A
few months later, the participants meet again for three days of management
skills training and group work on a business project. The sessions on this
workshop are tailored according to the development needs identified on the
first workshop. Gareth Hopkins says that one of the key benefits is that the
two program bring people together from across the organization. ‘Our one-to-one
mentoring process has had a very positive impact as it encourages people
actively to pursue their personal development plans,’ she said. It has also
helped to further develop and strengthen relationships between managers at
different levels.
1.
Explain
the two program developed by Dairy Crest with the help of Roffey Park to train
their managers at different levels.
2.
Designing a training
session involves the analysis of training needs and plan a training program.
Explain the aspects such as the content of training sessions, the training
methods, the trainer and trainee aspect in designing of a training session.
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Caselet 2
Risks
are enormous in the petroleum business. The price of raw materials can swing
from $4 to $40 per unit, dictators can affect the business climate at will, and
human error resulting in an oil spill can cost $3 billion or more. Royal Dutch/
Shell, an Anglo-Dutch multinational corporation, has a reputation for handling
such risks well. Despite soft prices in the oil industry, mounting costs for
development of new fields, and greater environmental requirements, Royal
Dutch/Shell has adopted a growth strategy.
At Royal Dutch/Shell, pursuing
growth amid uncertainty has led to significant rewards. In 1990, the company
passed Exxon to become the world’s largest oil company. The company has annual
revenues exceeding $100 billion and is able to handle most of its capital
spending through cash flow. Still, weak oil and gas prices have made Shell’s
operating profits somewhat flat over the past decade. Because the company has
continued to invest in exploration and new facilities that cannot yield large
immediate returns, Shell has been under pressure to cut costs in order to boost
profit levels and return on equity. Recently oil prices have improved somewhat,
and the cost-cutting efforts are beginning to have a positive effect on profit
levels. Royal Dutch/Shell has developed several approaches to help handle the
uncertainties of the industry. Within a culture that encourages individual
initiative, until recently, approximately 260 operating units were generally
free to make their own decisions; with the help of service units that offer
research and technical support. The relative autonomy allowed managers of
operating units, such as Shell Oil Company, a U.S. subsidiary, to consider
local conditions, monitor regularity requirements, and shift quickly to handle
customer needs or crisis. Both, to help with the cost cutting and to achieve
better coordination, Shell has recently instituted a more centralized approach
whereby teams of senior executives oversee global divisions such as exploration
and production.
Strategic directions for Royal
Dutch/Shell are determined by the committee of managing directors. The six
members are chosen from the top ranks of Royal Ditch Petroleum and Shell
Transport and Trading, the Dutch and the British holding companies that own
Royal Dutch/Shell. The committee operates on the basis of consensus; key
strategic and personnel decisions must be unanimous, and the focus is
long-term. Shell uses three major mechanisms to deal with uncertainty:
geographic diversification, concentric product diversification, and speedy
adaptation to change. For example, Shell explores for oil and gas in about 50
countries, has refineries in 34, and sells its products in 100. As a result,
political or economic upheaval in a particular country cannot severely damage
the company. Shell expects particularly high returns in high-risk countries;
otherwise it does not do business there. In the area of product
diversification, Shell stays close to the energy and chemical businesses that
it knows best(i.e., a concentric product diversification). Speed is also a key
factor. When Spain discontinued the state monopoly over service stations, Shell
quickly began developing a network of stations there.
Shell’s managing directors try to
identify changes in the industry by studying and debating scenarios prepared by
their planning department. The scenarios attempt to depict reasonable, but
alternative pictures of conditions in the world 10 years in the future. Each of
the geographic regions and operating companies then uses the scenarios to
formulate its own strategies within the overall strategic plan. Supplementing
the scenario process, war gaming helps Shell handle the unexpected. For
example, local operating companies are expected to stimulate supply disruptions
and prepare alternatives. As a result, when the Gulf war disrupted supplies
from the Middle East, Shell was able to quickly redirect alternative supplies.
Shell is currently being severely criticized by some shareholders and activists
for polluting the environment around the Niger delta in Nigeria and for
supporting Nigeria’s military dictatorship by continuing to work in some parts
of the country. Shell has admitted that its environment standards in the
country were not as high as elsewhere and has offered to clean up the area, but
does not want to abandon all of its operations in Nigeria. Cor
5
IIBM Institute of Business Management
Herkstroker,
Shell’s Dutch President, says: “We want a constructive solution. Leaving
Nigeria doesn’t get you that. It is much more constructive to stay there and do
the right things, such as reconciliation.
1.
What
evidence exists that Shell uses an effective decision-making process in making
various decisions? What were the various problems with decision-making?
2.
Explain
how scenarios help Shell’s managing directors engage in divergent thinking?
Discuss the limitations of such an approach?
END OF SECTION B
Section C: Applied Theory (30
marks)
•
This
section consists of Long Questions.
•
Answer
all the questions.
•
Each
question carries 15 marks.
•
Detailed
information should form the part of your answer (Word limit 150-200 words).
1)
General
Electric was composed of one hundred businesses, before Jack Welch became the
CEO. When he became the CEO he streamlined the organization by selling
businesses and acquired new ones. He recreated the organization and made it a
profitable firm in the world. Thus Jack Welch became the greatest
Transformational leader in the world. What makes a Transformational leader so?
2)
What
are the different precautions should be taken by a job seeker while attaining
interviews?
Insurance Management
Examination Paper MM.100
Risk Management and Insurance
Section A: Objective Type (30 marks)
Part One:
Multiple Choices:
1. HMOs charge employers a monthly fee called:
a. A coverage fee
b. The pro rata plan fee
c. The subrogation payment
d. The capitation payment
2. Which of the following alternatives is not a typical dividend option?
a. Cash
b. A lifetime income annuity
c. Reduction of the next premium
d. Accumulation of the next premium
3. Choose the True statement about industrial life insurance.
a. It is less expensive than ordinary life insurance
b. It is more expensive than ordinary life insurance
c. It is also called discount life insurance
d. It is widely used in estate plans
4. Replacement cost at the time of loss less depreciation is the definition of:
a. Actual cash value
b. Fair market value
c. The maximum covered loss
d. The maximum replacement of loss
5. Assets that are readily available to pay claims are called:
a. Admitted assets
b. Accepted assets
c. Real assets
d. Standard operating assets
6. Stare demises means:
a. All things considered
b. Innocent parties prevail
c. It is impolite to stare
d. To stand by decisions
7. In most states the insurance commission is:
a. Impeached
b. Elected
c. Appointed by the government
d. Appointed by the governor
8. The federal law that promotes a safe working environment for workers is:
a. OSHA
b. CERCLA
c. Equal Opportunities Act
d. Superfund
9. The organization that collects data on insurance applicants is the:
a. CBS
b. MIB
c. CIA
d. FCAS
10. The percent of uninsured Americans in 2001 was about:
a. 14 percent
b. 2 percent
c. 4 percent
d. 10 percent
Examination Paper MM.100
Risk Management and Insurance
Section A: Objective Type (30 marks)
Part One:
Multiple Choices:
1. HMOs charge employers a monthly fee called:
a. A coverage fee
b. The pro rata plan fee
c. The subrogation payment
d. The capitation payment
2. Which of the following alternatives is not a typical dividend option?
a. Cash
b. A lifetime income annuity
c. Reduction of the next premium
d. Accumulation of the next premium
3. Choose the True statement about industrial life insurance.
a. It is less expensive than ordinary life insurance
b. It is more expensive than ordinary life insurance
c. It is also called discount life insurance
d. It is widely used in estate plans
4. Replacement cost at the time of loss less depreciation is the definition of:
a. Actual cash value
b. Fair market value
c. The maximum covered loss
d. The maximum replacement of loss
5. Assets that are readily available to pay claims are called:
a. Admitted assets
b. Accepted assets
c. Real assets
d. Standard operating assets
6. Stare demises means:
a. All things considered
b. Innocent parties prevail
c. It is impolite to stare
d. To stand by decisions
7. In most states the insurance commission is:
a. Impeached
b. Elected
c. Appointed by the government
d. Appointed by the governor
8. The federal law that promotes a safe working environment for workers is:
a. OSHA
b. CERCLA
c. Equal Opportunities Act
d. Superfund
9. The organization that collects data on insurance applicants is the:
a. CBS
b. MIB
c. CIA
d. FCAS
10. The percent of uninsured Americans in 2001 was about:
a. 14 percent
b. 2 percent
c. 4 percent
d. 10 percent
Part Two:
1. What are Moral and Morale hazards?
ANS
:
Morale hazard:
An attitude that increases
the probability of loss from a peril. In insurance context, the attitude of
insured; Attitude of insured to think “Its insured so why should I worry about
safety of my house/property/own health. If anything goes wrong, insurer is
there to indemnify me. So, Why should I worry about safety?” is an example of a
morale hazard. Insured with this kind of attitude tend to act carelessly.
Insurance companies often try to stem the problem of morale hazard by risk
reduction measures, such as insisting on the ownership of fire extinguishers
(in the case of fire insurance), or offering price reductions (for example, if
a burglar alarm is installed in a home). Refers to individual’s Carelessness –
Ex ample – Rash driving after getting auto insurance or keeping doors open
after purchasing a insurance for house.
Moral hazard:
A condition of morals
or habits that increase the probability of a loss from a peril. This hazard to
an insurance company resulting from uncertainty about the honesty of the
insured. Ex ample – Insured giving false information to insurer to get or to
purpose an insurance policy in favour of Insured or raising a claim with
exaggerated loss.
2. What do you understand by ‘Subsidization’?
ANS
:
Having partial financial support from public funds.
3. What are ‘Waiver’ & ‘Estoppel’?
ANS
:
Waiver And Estoppel are Insurance companies.
4. Write a short note on ‘Patient’s bill of rights.
ANS :
·
provide health professionals with full
and accurate information relating to their health and the public health services
they have received;
·
cooperate with health professionals and
to either follow their advice or indicate when they have not done so; and
·
exercise due economy in using health
services.
The rights
pertaining to the public health care system found in clause 3 of the bill
provide that all Canadians would have the right to “national collaboration
between governments” to assure:
(a)
a good-quality, dependable and accessible national system of health care;
(b)
a system of health care that is transferable and generally uniform across
Canada;
(c)
the minimum amount of overlap and duplication in public health services between
different governments;
(d)
consistency in development of public health services between different
governments resulting in consistency in the timing of development of services
and innovation; and
(e)
regular consultation with the public about public health services in a forum
that is public, open and gives a reasonable opportunity to present views to
representatives of government, the House of Commons or a legislative assembly,
and the medical profession.
Clause 4 of the
bill outlines a substantial list of personal (individual) rights for users of
the public health care system, including:
(a)
the right to be fully informed about one’s medical condition;
(b)
the right to be advised of the available treatment options;
(c)
the right to be involved in treatment decisions;
(d)
the right to information on the qualifications and experience of the health
professionals from whom services are received;
(e)
the right to receive considerate, compassionate and respectful public health
services;
(f)
the right to confidential communications with health professionals;
(g)
the right to have access to and copies of personal health records and to have
them corrected, if necessary;
(h)
the right to have health records kept confidential and not used for any purpose
other than public health services without written consent;
(i)
the right to designate a person to exercise rights on the patient’s behalf if
the patient is not able to do so because of a physical or mental incapacity;
and
(j)
the right to be informed of all rights and responsibilities under the bill and
under other laws of Canada or a province with respect to public health
services.
END OF SECTION A
Section B: Caselets (40 marks)
Caselet 1
Vacancy Clause
The Roberts family owned a house in Alabama. It was insured with a fire insurance policy issued by the Sparkler Mutual Insurance Company. On April 1, the Roberts moved to Tennessee. Their son, Bob, remained in the Alabama home for an additional month. Thereafter, the home was rented to a tenant who lived in the home for the month of May. Mr. Roberts returned to the home irregularly, remaining overnight on July 4 and on a few other occasions. A few pieces of furniture remained in the home until August. On or about August 4, the home and its contents were destroyed by fire.
Questions:
1. Do you think that Sparkler Mutual should pay for the loss? Explain your reasons.
2. Did the family’s absence affect the chance of loss in this case?
Caselet 2
Case for Discussion
Ed “Bonzo” Jones was a college student. He played outfielder on his fraternity’s softball team. A home run was hit, and the ball went into an area of electrical transformers operated by the local utility, Total Power and Light Company. The electrical transformers were surrounded by a 5-foot wire fence that Jones claimed to retrieve the ball. Warnings signs were posted by the utility indicating the area was dangerous. It was later determined the gate to the area was left unlocked, although Jones did not use it to gain access. In retrieving the ball, Jones made contact with some equipment and was severely burned by the electrically. He was hospitalized for three months and suffered permanent disfigurement. His medical bills amounted to $300,000.
Questions:
1. What arguments would you make if you were planning the legal defense of Total Power and Light Company?
2. If you were on the jury in this case, would you award a judgment for damages to Jones? Explain your reasons.
Case for Discussion
Ed “Bonzo” Jones was a college student. He played outfielder on his fraternity’s softball team. A home run was hit, and the ball went into an area of electrical transformers operated by the local utility, Total Power and Light Company. The electrical transformers were surrounded by a 5-foot wire fence that Jones claimed to retrieve the ball. Warnings signs were posted by the utility indicating the area was dangerous. It was later determined the gate to the area was left unlocked, although Jones did not use it to gain access. In retrieving the ball, Jones made contact with some equipment and was severely burned by the electrically. He was hospitalized for three months and suffered permanent disfigurement. His medical bills amounted to $300,000.
Questions:
1. What arguments would you make if you were planning the legal defense of Total Power and Light Company?
2. If you were on the jury in this case, would you award a judgment for damages to Jones? Explain your reasons.
END OF SECTION B
Section C: Applied Theory (30 marks)
1. If you were a large business with $ 10 million of property, would you want your primary insurer to purchase reinsurance? Explain your reasons. Would you prefer to deal with a small primary insurer who reinsured your risk or a large primary unsure who did not purchase reinsurance?
2. Do you think a college education is necessary to perform the following occupations
effectively?
a. Life insurance agent
b. Loss adjuster
c. Property insurance underwriter
d. Actuary
END OF SECTION C
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