English Passage

Kodak decided that traditional film and prints would continue to dominate through the 1980s and that photo finishers, film retailers, and, of course, Kodak itself could expect to continue to occupy their long-held positions until 1990. Kodak was right and wrong. The quality of digital cameras greatly improved. Prices plunged because the cameras generally followed Moore’s Law, the famous prediction by Intel co-founder Gordon Moore in the 1960s that the cost of a unit of computing power would fall by 50 percent every eighteen to twenty-four months. Cameras began to be equipped with what the industry called removable media -those little cards that hold the pictures – so pictures were easier to print or to move to other devices, such as computers. Printers improved. Their costs dropped, too. The Internet caught the popular imagination, and people began e-mailing each other pictures rather than print them. Kodak did little to ready itself for the onslaught of digital technology because it consistently tried to hold on to the profits from its old technology and underestimated the speed with which the new would take hold. Kodak decided it could use digital technology to enhance film, rather than replace it. Instead of preparing for the digital world, Kodak headed off in a direction that cost it dearly. In 1988, Kodak bought Sterling Drug for $5.1 billion. Kodak had decided it was really a chemicals business, not a photography company. So, Kodak reasoned, it should move into adjacent chemical markets, such as drugs. Well, chemically treated photo paper really isn’t that similar to hormonal agents and cardiovascular drugs. The customers are different. The delivery channels are different. Kodak lost its shirt. It sold Sterling in pieces in 1994 for about half the original purchase price. George M. C. Fisher was the new CEO of Kodak in 1993. Fisher’s solution was to hold on to the film business as long as possible, while adding a technological veneer to it. For instance, he introduced the Advantix Preview camera, a hybrid of digital and film technology. Users took pictures the way they always had, and the images were captured on film. Kodak spent more than $500 million developing Advantix, which flopped.

Fisher also tried to move Kodak’s traditional retail photo-processing systems into digital world and in this regard installed tens of thousands of image magic kiosks. These kiosks came just as numerous companies introduced inexpensive, high- quality photo printers that people could use at home, which, in fact, is where customers preferred to view their images and fiddle with them. Fisher also tried to insert Kodak as an intermediary in the process of sharing images electronically. He formed partnerships that let customers receive electronic versions of their photos by e-mail and gave them access to kiosks that let them manipulate and reproduce old photographs. You don’t need Kodak to upload photos to your computer and e-mail them. Fisher also formed a partnership with AOL called “You’ve Got Pictures.” Customers would have their film developed and posted online, where friends and family could view them. Customers would pay AOL $7 for this  privilege, on top of the $9 paid for photo processing. However sites like, Snapfish were allowing pictures to be posted online free. Fisher promised early on, that Kodak’s digital-photography business would be profitable by 1997. It wasn’t. In 1997 Philippe Kahn lead the advent of cell phone camera. With the cell phone camera market growth Kodak didn’t just lose out on more prints. The whole industry lost out on sales of digital cameras, because they became just a feature that was given away free on cell phones. Soon cameras became a free feature on many personal computers, too. What had been so profitable for Kodak for so long-capturing images and displaying them-was going to become essentially free.

In 1999 Fisher resigned and Carp became the new CEO. In 2000, Carp’s first year as CEO, profit was about flat, at $1.41 billion. Carp, too, retired early, at age fifty-seven. Carp had pursued Fisher’s basic strategy of “enhancing” the film business to make it last as long as possible, while trying to figure out some way to get recurring revenue from the filmless, digital world. But the temporizing didn’t work any better for Carp than it had for Fisher. Kodak talked, for instance, about getting customers to digitize and upload to the Internet more of the 300 million rolls of film that Kodak processed annually, as of 2000. Instead, customers increasingly skipped the film part. In 2002, sales of digital cameras in the United States passed those of traditional cameras-even though Kodak in the mid- 1990s had projected that it would take twenty years for digital technology to eclipse film. The move to 100. Match the following digital in the 2000s happened so fast that, in 2004, Kodak introduced a film camera that won a “camera of the year” award, yet was discontinued by the time Kodak collected the award. Kodak staked out a position as one of the major sellers of digital cameras, but being “one of is a lot different from owning 70 percent to 80 percent of a market, as Kodak had with film, chemicals, and processing. In 2002 competition in the digital market was so intense that Kodak lost 75 percent of its stock market value over the past decade, falling to a level about half of what it was when the reporter suggested to Carp that he might sell the company. As of 2005, Kodak employed less than a third of the number who worked for it twenty years earlier. To see what might have been, look at Kodak’s principal competitors in the film and paper markets. Agfa temporized on digital technology, then sold its film and paper business to private-equity investors in 2004. The business went into bankruptcy proceedings the following year, but that wasn’t Agfa’s problem. It had cashed out at a halfway reasonable price.

QUESTION:

Arrange the given statements in the correct sequence as they appear in the passage.

Kodak lost to its competitors a big pie of its market share.

Kodak ventured into chemical business to strengthen its digital technology business.

III. Kodak downsized its workforce drastically.

Kodak tied up with business firms for photo processing.

(a)   I, II, III, IV

(b)   III, IV, II, I

(c)   II, IV, I, III

(d)   I, III, II, IV

Ans: ()

(Source: IIFT-2010)

The first thing I learned at school was that some people are idiots; the second thing I learned was that some are even worse. I was still too young to grasp that people of breeding were meant to affect innocence of this fundamental distinction. and that the same courtesy applied to any disparity that might rise out of religious. racial, sexual class, financial and (latterly) cultural difference. So in my innocence I would raise my hand every time the teacher asked a question, just to make it clear I knew the answer.

After some months of this, the teacher and my classmates must have been vaguely aware I was a good student, but still I felt the compulsion to raise my hand. By now the teacher seldom called on me, preferring to give other children a chance to speak, too. Still my hand shot up without my even willing it, whether or not l knew the answer. If I was putting on airs, like someone who even in ordinary clothes, adds a gaudy piece of jewellery, it’s also true that I admired my teacher and was desperate to cooperate.

Another thing I was happy to discover at school was the teacher’s ‘authority’. At home, in the crowded and disordered Pamuk Apartments, things were never so clear; at our crowded table, everyone talked at the same time. Our domestic routines, our love for one another, our conversations, meals and radio hours; these ‘were never debated — they just happened. My father held little obvious authority at home, and he was often absent. He never scolded my brother or me, never even raised his eyebrows in disapproval. In later years, he would introduce us to his friends as ‘my two younger brothers’, and we felt he had earned the right to say so. My mother was the only authority I recognised at home. But she was hardly a distant or alien tyrant: her power came from my desire to be loved by her. And so – I was fascinated by the power my teacher wielded over her twenty-five pupils.

Perhaps I identified my teacher with my mother, for I had an insatiable desire for her approval. ‘Join your arms together like this and sit down quietly,’ she would say, and I would press my arms against my chest and sit patiently all through the lesson. But gradually the novelty wore off; soon it was no longer exciting to have every answer or solve an arithmetic problem ahead of everyone else or earn the highest mark; time began to flow with painful slowness, or stop flowing altogether.

Turning away from the fat, half-witted girl who was writing on the blackboard, who gave everyone — teachers, school caretakers and her classmates — the same vapid, trusting smile, my eyes would float to the window, to the upper branches of the chestnut tree that I could just see rising up between the apartment buildings. A crow would land on a branch. Because I was viewing it from below, I could see the little cloud floating behind it — as it moved, it kept changing shape: first a fox’s nose, then a head, then a dog. I didn’t want it to stop looking like a dog, but as it continued its journey it changed into one of the fourlegged silver sugar bowls from my grandmother’s always—locked display case, and I’d long to be at home. Once I’d conjured up the reassuring silence of the shadows of home, my father would step out from them, as if from a dream, and off we’d go on a family outing to the Bosphorus. Just then, a window in the apartment building opposite would , open, a maid would shake her duster and gaze absentmindedly at the street that I could not see from where I was sitting. What was going down there? I’d wonder. I’d hear a horse cart rolling over the cobblestones, and a rasping voice would cry out ‘Eskiciiiiiii! The maid would watch the junk dealer make his way down the street before pulling her head back inside and shutting the window behind her, but then, right next to that window, moving as fast as the first cloud but going in the opposite direction, I’d see a second cloud. But now my attention was called back to the classroom, and seeing all the other raised hands, I would eagerly raise my hand too: long before I worked out from my classmates’ responses what the teacher had asked us, I was foggily confident I had the answer.

It was exciting, though sometimes painful, to get to know my classmates as individuals, and to find out how different they were from me. There was that sad boy who, whenever he was asked to read out loud in Turkish class, would skip every other line; the poor boy’s mistake was as involuntary as the  laughter it would elicit from the class. In first grade, there was a girl who kept her red hair in a ponytail, who sat next to me for a time. Although her bag was a slovenly jumble of half-eaten apples, simits, sesame seeds, pencils and hair bands, it always smelled of dried lavender around her, and that attracted me; I was also drawn to her for speaking so openly about the little taboos of daily life, and if I didn’t see her at the weekend, I missed her, though there was another girl so tiny and delicate that I was utterly entranced by her as well. Why did that boy keep on telling lies even knowing no one was going to believe him‘? How could that girl be so indiscreet about the goings-on in her house? And could this other girl be shedding real tears as she read that poem about Ataturk?’

Just as I was in the habit of looking at the fronts of cars and seeing noses, so too did I like to scrutinize my classmates, looking for the creatures they resembled. The boy with the pointed nose was a fox and the big one next to him was, as everyone said, a bear, and the one with the thick hair was a hedgehog… I remember a Jewish girl called Mari telling us all about Passover — there were days when no one in her grandmother’s house was allowed to touch the light switches. Another girl reported that one evening, when she was in her room, she turned around so fast she glimpsed the shadow of an angel — a fearsome story that stayed with me. There was a girl with very long legs who wore very long socks and always looked as if she was about to cry; her father was a government minister and when he died in a plane crash from which Prime Minister Menederes emerged without a scratch, I was sure she’d been crying because she had known in advance what was going to happen. Lots of children had problems with their teeth; a few wore braces. On the top floor of the building that housed the lycée dormitory and the sports hall, just next to the infirmary, there was rumoured to be a dentist, and when teachers got angry they would often threaten to send naughty children there. For lesser infractions pupils were made to stand in the corner between the blackboard and the door with their backs to the class, sometimes one leg, but because we were all so curious to see how long someone could stand on one leg, the lessons suffered, so this particular punishment was rare.

[LDAdvQuiz 1548]

(Source: IIFT-2012)

We now come to the second part of our journey under the sea. The first ended with the moving scene in the coral cemetery which left a deep impression on my mind. I could no longer content myself with the theory which satisfied Conseil. That  worthy fellow persisted in seeing in the Commander of the Nautilus one of those unknown servants who returns mankind contempt for indifference. For him, he was a misunderstood genius who, tired of earth’s deceptions, had taken refuge in this inaccessible medium, where he might follow his instincts freely. To my mind, this explains but one side of Captain Nemo’s character. Indeed, the mystery of that last night during which we had been chained in prison, the sleep, and the precaution so violently taken by the Captain of snatching from my eyes the glass I had raised to sweep the horizon, the mortal wound of the man, due to an unaccountable shock of the Nautilus, all put me on a new track. No; Captain Nemo was not satisfied with shunning man. His formidable apparatus not only suited his instinct of freedom, but perhaps also the design of some terrible retaliation.

That day, at noon, the second officer came to take the altitude of the sun. I mounted the platform, and watched the operation. As he was taking observations with the sextant, one of the sailors of the Nautilus (the strong man who had accompanied us on our first submarine excursion to the Island of Crespo) came to clean the glasses of the lantern. I examined the fittings of the apparatus, the strength of which was increased a hundredfold by lenticular rings, placed similar to those in a lighthouse, and which projected their brilliance in a horizontal plane. The electric lamp was combined in such a way as to give its most powerful light. Indeed, it was produced in vacuo, which insured both its steadiness and its intensity. This vacuum economized the graphite points between which the luminous arc was developed – an important point of economy for Captain Nemo, who could not easily have replaced them; and under these conditions their waste was imperceptible. When the Nautilus was ready to continue its submarine journey, I went down to the saloon. The panel was closed, and the course marked direct west.

We were furrowing the waters of the Indian Ocean, a vast liquid plain, with a surface of 1,200,000,000 of acres, and whose waters are so clear and transparent that any one leaning over them would turn giddy. The Nautilus usually floated between fifty and a hundred fathoms deep. We went on so for some days. To anyone but myself, who had a great love for the sea, the hours would have seemed long and monotonous; but the daily walks on the platform, when I steeped myself in the reviving air of the ocean, the sight of the rich waters through the windows of the saloon, the books in the library, the compiling of my memoirs, took up all my time, and left me not a moment of ennui or weariness.

From the 21st to the 23rd of January the Nautilus went at the rate of two hundred and fifty leagues in twenty four hours, being five hundred and forty miles, or twenty-two miles an hour. If we recognized so many different varieties of fish, it was because, attracted by the electric light, they tried to follow us; the greater part, however, were soon distanced by our speed, though some kept their place in the waters of the Nautilus for a time. The morning of the 24th, we observed Keeling Island, a coral formation, planted with magnificent cocos, and which had been visited by Mr. Darwin and Captain Fitzroy. The Nautilus skirted the shores of this desert island for a little distance. Soon Keeling Island disappeared from the horizon, and our course was directed to the northwest in the direction of the Indian Peninsula.

From Keeling Island our course was slower and more variable, often taking us into great depths. Several times they made use of the inclined planes, which certain internal levers placed obliquely to the waterline. I observed that in the upper regions the water was always colder in the high levels than at the surface of the sea. On the 25th of January the ocean was entirely deserted; the Nautilus passed the day on the surface, beating the waves with its powerful screw and making them rebound to a great height. Three parts of this day I spent on the platform. I watched the sea. Nothing on the horizon till about four o’clock then there was a steamer running west on our counter. Her masts were visible for an instant, but she could not see the Nautilus, being too low in the water. I fancied this steamboat belonged to the P.O. Company, which runs from Ceylon to Sydney, touching at King George’s Point and Melbourne.

At five o’clock in the evening, before that fleeting twilight which binds night to day in tropical zones, Conseil and I were astonished by a curious spectacle. It was a shoal of Argonauts travelling along on the surface of the ocean. We could count several hundreds. These graceful molluscs moved backwards by means of their locomotive tube, through which they propelled the water already drawn in. Of their eight tentacles, six were elongated, and stretched out floating on the water, whilst the other two, rolled up flat, were spread to the wing like a light sail. I saw their spiral-shaped and fluted shells, which Cuvier justly compares to an elegant skiff. For nearly an hour the Nautilus floated in the midst of this shoal of molluscs.

The next day, 26th of January, we cut the equator at the eighty-second meridian and entered the northern hemisphere. During the day a formidable troop of sharks accompanied us. They were “cestracio philippi” sharks, with brown backs and whitish bellies, armed with eleven rows of teeth, their throat being marked with a large black spot surrounded with white like an eye. There were also some Isabella sharks, with rounded snouts marked with dark spots. These powerful creatures often hurled themselves at the windows of the saloon with such violence as to make us feel very insecure. But the Nautilus, accelerating her speed, easily left the most rapid of them behind.

About seven o’clock in the evening, the Nautilus, halfimmersed, was sailing in a sea of milk. At first sight the ocean seemed lactified. Was it the effect of the lunar rays? No; for the moon, scarcely two days old, was still lying hidden under the horizon in the rays of the sun. The whole sky, though lit by the sidereal rays, seemed black by contrast with the whiteness of the waters. Conseil could not believe his eyes, and questioned me as to the cause of this strange phenomenon. Happily I was able to answer him.

“It is called a milk sea,” I explained. “A large extent of white waves is often to be seen on the coasts of Amboyna, and in these parts of the sea.”

“But, sir,” said Conseil, “can you tell me what causes such an effect? For I suppose the water is not really turned into milk.”

“No, my boy; and the whiteness which surprises you is caused only by the presence of myriads of luminous little worm, gelatinous and without colour, of the thickness of a hair, and whose length is not more than seven-thousandths of an inch. These insects adhere to one another sometimes for several leagues.”

“Several leagues!” exclaimed Conseil.

“Yes, my boy; and you need not try to compute the number of these infusoria. You will not be able, for, if I am not mistaken, ships have floated on these milk seas for more than forty miles.”

Towards midnight the sea suddenly resumed its usual colour; but behind us, even to the limits of the horizon, the sky reflected the whitened waves, and for a long time seemed impregnated with the vague glimmerings of an aurora borealis.

QUESTION:

1. Find the TRUE Sentence:

(A) According to the narrator, the abovementioned journey was taking place during full moon period 

(B) According to Conseil, the Captain of the Nautilus in which they were travelling was really a brilliant person, a fact which had been corroborated by many people 

(C) It is implied from the passage that although the author was witnessing many interesting events during their journey, he was not always having his way 

(D) From the chronicle, it is understood that the Nautilus was in the vicinity of the Island of Crespo on the 25 of January 

Show Answer

2. Find the FALSE sentence:

(A) After entering the Northern Hemisphere, the narrator witnessed several sea creatures, including several varieties of sharks, who kept bumping on the windows of the submarine 

(B) On 25th January, the second officer of Nautilus came to the platform for measuring the altitude of the sun and for that purpose took observations with the sextant. 

(C) After January 24th, Nautilus started travelling at a relatively reduced speed, and some of the time it was going further away from the sea surface. 

(D) The course of Nautilus took them near the Keeling Island, which had earlier been visited by Mr. Darwin and Captain Fitzroy 

Show Answer

3.Match the following:

1. Molluscs i. Colourless

2. Sharks ii. Tentacles

3. Infusia iii. Coco

4. Coral iv. Snouts

(A) ii, 2-iv, 3-i, 4-iii 

(B) iii, 2-i, 3- iv, 4-ii 

(C) iv, 2-iii, 3-ii, 4-i 

(D) iii, 2-ii, 3-iv, 4-i. 

Show Answer

4. Find the TRUE statement:

(A)  During 22nd to 24th of January, Nautilus was travelling at the rate of two hundred and fifty leagues in twenty-four hours, which means a speed of twenty-two miles an hour 

(B) On 26th January for approximately an hour the narrator witnessed a shoal of molluscs, and he enjoyed watching their spiral-shaped and fluted shells 

(C)  On the 25th of January the narrator came across a steamboat, which was owned by PO Company, which travels between Ceylon to Sydney 

(D) The electric lamp of the submarine was an example of efficiency and effective fixtures 

Show Answer

(Source: IIFT-2008)

My comrade and I had been quartered in Jamaica, and from there we had been drafting off to the British settlement of Belize, lying away west and north of the Mosquito Coast. At Belize there had been great alarm of one cruel gang of pirates (there were always more pirates than enough in those Caribbean Seas), and as they got the better of our English cruisers by running into out-of-the-way creeks and shallows, and taking the land when they were hotly pressed, the governor of Belize had received orders from home to keep a sharp look-out for them along shore. Now, there was an armed sloop came once a year from Port Royal, Jamaica, to the Island, laden with all manner of necessaries to eat, and to drink, and to wear, and to use in various ways; and it was aboard of that sloop which had touched at Belize, that I was standing, leaning over the bulwarks.

The Island was occupied by a very small English colony. It had been given the name of Silver-Store. The reason of its being so called, was, that the English colony owned and worked a silver-mine over on the mainland, in Honduras, and used this Island as a safe and convenient place to store their silver in, until it was annually fetched away by the sloop. It was brought down from the mine to the coast on the backs of mules, attended by friendly local people and guarded by white men; from thence it was conveyed over to Silver-Store, when the weather was fair, in the canoes of that country; from Silver-Store, it was carried to Jamaica by the armed sloop once a-year, as I have already mentioned; from Jamaica, it  went, of course, all over the world.

How I came to be aboard the armed sloop is easily told. Four-and-twenty marines under command of alieutenant – that officer’s name was Linderwood – had been told off at Belize, to proceed to Silver-Store, in aid of boats and seamen stationed there for the chase of the Pirates. The Island was considered a good post of observation against the pirates, both by land and sea; neither the pirate ship nor yet her boats had been seen by any of us, but they had been so much heard of, that the reinforcement was sent. Of that party, I was one. It included a corporal and a sergeant. Charker was corporal, and the sergeant’s name was Drooce. He was the most tyrannical noncommissioned officer in His Majesty’s service.

The night came on, soon after I had had the foregoing words with Charker. All the wonderful bright colours went out of the sea and sky in a few minutes, and all the stars in the Heavens seemed to shine out together, and to look down at themselves in the sea, over one another’s shoulders, millions deep.

Next morning, we cast anchor off the Island. There was a snug harbour within a little reef; there was a sandy beach; there were cocoa-nut trees with high straight stems, quite bare, and foliage at the top like plumes of magnificent green feathers; there were all the objects that are usually seen in those parts, and I am not going to describe them, having something else to tell about.

Great rejoicings, to be sure, were made on our arrival. All the flags in the place were hoisted, all the guns in the place were fired, and all the people in the place came down to look at us. One of the local people had come off outside the reef, to pilot us in, and remained on board after we had let go our anchor.

My officer, Lieutenant Linderwood, was as ill as the captain of the sloop, and was carried ashore, too. They were both young men of about my age, who had been delicate in the West India climate. I thought I was much fitter for the work than they were, and that if all of us had our deserts, I should be both of them rolled into one. (It may be imagined what sort of an officer of marines I should have made, without the power of reading a written order. And as to any knowledge how to command the sloop—Lord! I should have sunk her in a quarter of an hour!)

However, such were my reflections; and when we men were ashore and dismissed, I strolled about the place along with Charker, making my observations in a similar spirit.

It was a pretty place: in all its arrangements partly South American and partly English, and very agreeable to look at on that account, being like a bit of home that had got chipped off and had floated away to that spot, accommodating itself to circumstances as it drifted along. The huts of the local people, to the number of five- and-twenty, perhaps, were down by the beach to the left of the anchorage. On the right was a sort of barrack, with a South American Flag and the Union Jack, flying from the same staff, where the little English colony could all come together, if they saw occasion. It was a walled square of building, with a sort of pleasure-ground inside, and inside that again a sunken block like a powder magazine, with a little square trench round it, and steps down to the door.

Charker and I were looking in at the gate, which was not guarded; and I had said to Charker, in reference to the bit like a powder magazine, “That’s where they keep the silver you see;” and Charker had said to me, after thinking it over, “And silver ain’t gold. Is it, Gill?”

QUESTION:

1. Find out the TRUE statement:

(A) During the time of the narration, the total number of pirates at Belize was much more than the same in the Caribbean Seas 

(B) From the accounts presented here, when the narrator of the passage made the journey he already happened to be an experienced sailor with considerable navigating experiences 

(C) The author and his friends used to consider Drooce as the most authoritarian noncommissioned officer in Her Majesty’s service 

(D) While walking with Charker, the narrator came across a barrack like structure where all the English settlers could assemble and stay together, if there was any necessity for doing so 

Show Answer

2. Find out the FALSE statement:

(A) According to the passage, the silver that was being stored in the place where the author went to was being mined in Honduras 

(B) The narrator noted that the silver was being transported from the mine to the coast on the backs of mules, after which it was being sent to Jamaica in a sloop, from where it was reaching various destinations. 

(C) Although the sea-voyage near Belize was being threatened by the presence of one notorious pirate fleet, the captain of the patrolling ship was accompanied by less than thirty soldiers. 

(D) The Island the author talks here about was considered to be a good point for surveillance against the pirates both by land and sea. 

Show Answer

3. Find out the TRUE Statement:

(A) The author was initially staying in Jamaica, which is located in the West and North of the Mosquito Coast 

(B) A casual review of the place by the narrator revealed that the store for keeping the silver was heavily guarded, fearing a possible pirate attack anytime 

(C) The narrator and his companion noticed the South American Flag and the Union Jack flying on the port office 

(D) When the ship entered the harbour, both its Captain and Lieutenant Linderwood was unwell as the West Indian climate was not suiting them 

Show Answer

4. Mark the FALSE statement:

(A) It was being difficult to capture the pirates because they either used to hide in uncommon waters whenever the patrolling ships were pursuing them or used to disembark and flee whenever severely chased 

(B) The local canoes were employed by the miners to bring the silver from the coast to the island during favourable climatic condition 

(C) The lifestyle of the island was not exactly British as it had to adjust itself with the local South American culture, but the same seemed quite delightful for the narrator and his company 

(D) When Corporal Charker and Sergeant Gill were walking around the harbour, they noticed that the size of the settlement of the local people was not very large 

Show Answer

(Source: IIFT-2008)

Turning the business involved more than segmenting and pulling out of retail. It also meant maximizing every strength we had in order to boost our profit margins. In re-examining the direct model, we realized that inventory management was not just core strength; it could be an incredible opportunity for us, and one that had not yet been discovered by any of our competitors.

In Version 1.0 the direct model, we eliminated the reseller, thereby eliminating the mark-up and the cost of maintaining a store. In Version 1.1, we went one step further to reduce inventory inefficiencies. Traditionally, a long chain of partners was involved in getting a product to the customer. Let’s say you have a factory building a PC we’ll call model #4000. The system is then sent to the distributor, which sends it to the warehouse, which sends it to the dealer, who eventually pushes it on to the consumer by advertising, “I’ve got model #4000. Come and buy it.” If the consumer says, “But I want model #8000,” the dealer replies, “Sorry, I only have model #4000.” Meanwhile, the factory keeps building model #4000s and pushing the inventory into the channel.

The result is a glut of model #4000s that nobody wants. Inevitably, someone ends up with too much inventory, and you see big price corrections. The retailer can’t sell it at the suggested retail price, so the manufacturer loses money on price protection (a practice common in our industry of compensating dealers for reductions in suggested selling price). Companies with long, multi-step distribution systems will often fill their distribution channels with products in an attempt to clear out older targets. This dangerous and inefficient practice is called “channel stuffing”. Worst of all, the customer ends up paying for it by purchasing systems that are already out of date.

Because we were building directly to fill our customers’ orders, we didn’t have finished goods inventory devaluing on a daily basis. Because we aligned our suppliers to deliver components as we used them, we were able to minimize raw material inventory. Reductions in component costs could be passed on to our customers quickly, which made them happier and improved our competitive advantage. It also allowed us to deliver the latest technology to our customers faster than our competitors.

The direct model turns conventional manufacturing inside out. Conventional manufacturing, because your plant can’t keep going. But if you don’t know what you need to build because of dramatic changes in demand, you run the risk of ending up with terrific amounts of excess and obsolete inventory. That is not the goal. The concept behind the direct model has nothing to do with stockpiling and everything to do with information. The quality of your information is inversely proportional to the amount of assets required, in this case excess inventory. With less information about customer needs, you need massive amounts of inventory. So, if you have great information – that is, you know exactly what people want and how much – you need that much less inventory. Less inventory, of course, corresponds to less inventory depreciation. In the computer industry, component prices are always falling as suppliers introduce faster chips, bigger disk drives and modems with ever-greater bandwidth. Let’s say that Dell has six days of inventory. Compare that to an indirect competitor who has twenty-five days of inventory with another thirty in their distribution channel. That’s a difference of forty-nine days, and in forty-nine days, the cost of materials will decline about 6 percent.

Then there’s the threat of getting stuck with obsolete inventory if you’re caught in a transition to a nextgeneration product, as we were with those memory chip in 1989. As the product approaches the end of its life, the manufacturer has to worry about whether it has too much in the channel and whether a competitor will dump products, destroying profit margins for everyone. This is a perpetual problem in the computer industry, but with the direct model, we have virtually eliminated it. We know when our customers are ready to move on technologically, and we can get out of the market before its most precarious time. We don’t have to subsidize our losses by charging higher prices for other products.

And ultimately, our customer wins. Optimal inventory management really starts with the design process. You want to design the product so that the entire product supply chain, as well as the manufacturing process, is oriented not just for speed but for what we call velocity. Speed means being fast in the first place. Velocity means squeezing time out of every step in the process.

Inventory velocity has become a passion for us. To achieve maximum velocity, you have to design your products in a way that covers the largest part of the market with the fewest number of parts. For example, you don’t need nine different disk drives when you can serve 98 percent of the market with only four. We also learned to take into account the variability of the lost cost and high cost components. Systems were reconfigured to allow for a greater variety of low-cost parts and a limited variety of expensive parts. The goal was to decrease the number of components to manage, which increased the velocity, which decreased the risk of inventory depreciation, which increased the overall health of our business system.

 In effect, we got stronger with each transition and more competitive with each turn of the crank. We were increasing our productivity and improving our cash flow in a broader range of products in larger and larger markets. Unlike that period in 1993, when every day the news got a little worse, now, finally, every day the news was better and better.

We were also able to reduce inventory well below the levels anyone thought possible by constantly challenging and surprising ourselves with the result. We had our internal skeptics when we first started pushing for ever-lower levels of inventory. I remember the head of our procurement group telling me that this was like “flying low to the ground 300 knots.” He was worried that we wouldn’t see the trees.

In 1993, we had $2.9 billion in sales and $220 million in inventory. Four years later, we posted $12.3 billion in sales and had inventory of $33 million. We’re now down to six days of inventory and we’re starting to measure it in hours instead of days. Once you reduce your inventory while maintaining your growth rate, a significant amount of risk comes from the transition from one generation of product to the next. Without traditional stockpiles of inventory, it is critical to precisely time the discontinuance of the older product line with the ramp-up in customer demand for the newer one. Since we were introducing new products all the time, it became imperative to avoid the huge drag effect from mistakes made during transitions. E&O – short for “excess and obsolete” – became taboo at Dell. We would debate about whether our E&O was 30 or 50 cent per PC. Since anything less than $20 per PC is not bad, when you’re down in the cents range, you’re approaching stellar performance.

QUESTION:

1. Find out the TRUE statement:

(A) According to the passage, the working of the direct model was being heavily exploited by all players in the software business 

(B) Analysis of the supply chain of the product reveals that the product is sent to the warehouse by the dealer, and any delay at that stage leads to an obvious increase in cost 

(C) The nature of the computer industry is such that the production decision at factory level is usually undertaken after getting the customer demand feedback from the distributors 

(D) Whenever the production of some old fashioned model of a product by a company exceeds the existing demand, the market forces create a downward pressure on its prices 

Show Answer

2.Find out the FALSE statement:

(A) The company mentioned in the passage could attain efficiency on raw material inventory management because they were procuring components only in line with their timely requirement 

(B) Generally the more the amount of quality information about the consumer needs and the market a firm possess, the less is its inventory requirement 

(C) In order to serve the market more efficiently, the firm mentioned here reconfigured their computers with increased proportion of low cost parts and a fewer types of high-priced parts 

(D) The conventional manufacturing system always ensured that no competitor can lower prices to reduce profit margins for everybody 

Show Answer

3. Choose the option which best matches the following sets:

(A) 1 – iv, 2 – ii, 3 – i, 4 – iii 

(B) 1 – iii, 2 – i, 3 – iv, 4 – ii 

(C) 1 – iv, 2 – iii, 3 – ii, 4 – i 

(D) 1 – iii, 2 – ii, 3 – iv, 4 – i 

Show Answer

4. Find out the FALSE Statement:

(A) Having less amount of inventory is better in the computer industry as with time better quality components with enhanced capacity reach the market with lower price 

(B) Before improving the inventory management system under the direct model, the firm first removed the reseller from its marketing model, which contributed in its cost-cutting attempt 

(C) The efficient inventory management allowed the firm to enhance productivity as well as the flexibility to enter or exit a market 

(D) The companies with long distribution network incorporate information-gathering process within their systems which enable them to market products with latest available technologies 

Show Answer

(Source: IIFT-2008)

“All raw sugar comes to us this way. You see, it is about the color of maple or brown sugar, but it is not nearly so pure, for it has a great deal of dirt mixed with it when we first get it.”

“Where does it come from?” inquired Bob.

“Largely from the plantations of Cuba and Porto Rico. Toward the end of the year we also get raw sugar from Java, and by the time this is refined and ready for the market the new crop from the West Indies comes along. In addition to this we get consignments from the Philippine Islands, the Hawaiian Islands, South America, Formosa, and Egypt. I suppose it is quite unnecessary to tell you young men anything of how the cane is grown; of course you know all that.”

“I don’t believe we do, except in a general way,” Bob admitted honestly. “I am ashamed to be so green about a thing at which Dad has been working for years. I don’t know why I never asked about it before. I guess I never was interested. I simply took it for granted.”

“That’s the way with most of us,” was the superintendent’s kindly answer. “We accept many things in the world without actually knowing much about them, and it is not until something brings our ignorance before us that we take the pains to focus our attention and learn about them. So do not be ashamed that you do not know about sugar raising; I didn’twhen I was your age. Suppose, then, I give you a little idea of what happens before this raw sugar can come to us.”

“I wish you would,” exclaimed both boys in a breath.

“Probably in your school geographies you have seen pictures of sugar-cane and know that it is a tall perennial not unlike our Indian corn in appearance; it has broad, flat leaves that sometimes measure as many as three feet in length, and often the stalk itself is twenty feet high. This stalk is jointed like a bamboo pole, the joints being about three inches apart near the roots and increasing in distance the higher one gets from the ground.”

“How do they plant it?” Bob asked.

“It can be planted from seed, but this method takes much time and patience; the usual way is to plant it from cuttings, or slips. The first growth from these cuttings is called plant cane; after these are taken off the roots send out ratoons or shoots from which the crop of one or two years, and sometimes longer, is taken. If the soil is not rich and moist replanting is more frequently necessary and in places like Louisiana, where there is annual frost, planting must be done each year. When the cane is ripe it is cut and brought from the field to a central sugar mill, where heavy iron rollers crush from it all the juice. This liquid drips through into troughs from which it is carried to evaporators where the water portion of the sap is eliminated and the juice left; you would be surprised if you were to see this liquid. It looks like nothing so much as the soapy, bluish-gray dish-water that is left in the pan after the dishes have been washed.”

“A tempting picture!” Van exclaimed.

“I know it. Sugar isn’t very attractive during its process of preparation,” agreed Mr. Hennessey. “The sweet liquid left after the water has been extracted is then poured into vacuum pans to be boiled until the crystals form in it, after which it is put into whirling machines, called centrifugal machines that separate the dry sugar from the syrup with which it is mixed. This syrup is later boiled into molasses. The sugar is then dried and packed in these burlap sacks such as you see here, or in hogsheads, and shipped to refineries to be cleansed and whitened.”

“Isn’t any of the sugar refined in the places where it grows?”

queried Bob.

“Practically none. Large refining plants are too expensive to be erected everywhere; it therefore seems better that they should be built in our large cities, where the shipping facilities are good not only for receiving sugar in its raw state but for distributing it after it has been refined and is ready for sale. Here, too, machinery can more easily be bought and the business handled with less difficulty.”

QUESTION:

1. Which one of the following is not a essential condition for setting up sugar refining plants?

(A) Facilities for transportation of machinery 

(B) Facilities for import of raw material 

(C) Facilities for transportation of finished products 

(D) Proximity to the raw material sources 

Show Answer

2. Which of the following is the correct sequence of sugar preparation process?

(A) Cutting → Crushing → Evaporation → Boiling → Whirling. 

(B) Boiling → Crushing → Evaporation → Whirling → Cutting 

(C) Cutting → Boiling → Evaporation → Crushing → Whirling 

(D) Whirling → Crushing → Boiling → Evaporation → Cutting 

Show Answer

3. Which of the following statements, as per the paragraph, is incorrect?

(A) Sugar in its raw from is brownish in colour due to the presence of dirt 

(B) After evaporation, cane juice looks bluish – gray in colour 

(C) Molasses is obtained as a bye-product from the process of sugar production 

(D) Cane plantation and sugar production process is widely and equally spread across the countries 

Show Answer

(Source: IIFT-2009)

The broad scientific understanding today is that our planet is experiencing a warming trend over and above natural and normal variations that is almost certainly due to human activities associated with large-scale manufacturing. The process began in the late 1700s with the Industrial Revolution, when manual labor, horsepower, and water power began to be replaced by or enhanced by machines. This revolution, over time, shifted Britain, Europe, and eventually North America from largely agricultural and trading societies to manufacturing ones, relying on machinery and engines rather than tools and animals.

The Industrial Revolution was at heart a revolution in the use of energy and power. Its beginning is usually dated to the advent of the steam engine, which was based on the conversion of chemical energy in wood or coal to thermal energy and then to mechanical work primarily the powering of industrial machinery and steam locomotives. Coal eventually supplanted wood because, pound for pound, coal contains twice as much energy as wood (measured in BTUs, or British thermal units, per pound) and because its use helped to save what was left of the world’s temperate forests. Coal was used to produce heat that went directly into industrial processes, including metallurgy, and to warm buildings, as well as to power steam engines. When crude oil came along in the mid- 1800s, still a couple of decades before electricity, it was burned, in the form of kerosene, in lamps to make light replacing whale oil. It was also used to provide heat for buildings and in manufacturing processes, and as a fuel for engines used in industry and propulsion.

In short, one can say that the main forms in which humans need and use energy are for light, heat, mechanical work and motive power, and electricity which can be used to provide any of the other three, as well as to do things that none of those three can do, such as electronic communications and information processing. Since the Industrial Revolution, all these energy functions have been powered primarily, but not exclusively, by fossil fuels that emit carbon dioxide (CO₂), To put it another way, the Industrial Revolution gave a whole new prominence to what Rochelle Lefkowitz, president of Pro-Media Communications and an energy buff, calls “fuels from hell” – coal, oil, and natural gas. All these fuels from hell come from underground, are exhaustible, and emit CO₂ and other pollutants when they are burned for transportation, heating, and industrial use. These fuels are in contrast to what Lefkowitz calls “fuels from heaven” -wind, hydroelectric, tidal, biomass, and solar power. These all come from above ground, are endlessly renewable, and produce no harmful emissions.

Meanwhile, industrialization promoted urbanization, and urbanization eventually gave birth to suburbanization. This trend, which was repeated across America, nurtured the development of the American car culture, the building of a national highway system, and a mushrooming of suburbs around American cities, which rewove the fabric of American life. Many other developed and developing countries followed the American model, with all its upsides and downsides. The result is that today we have suburbs and ribbons of highways that run in, out, and around not only America s major cities, but China’s, India’s, and South America’s as well. And as these urban areas attract more people, the sprawl extends in every direction.

All the coal, oil, and natural gas inputs for this new economic model seemed relatively cheap, relatively inexhaustible, and relatively harmless-or at least relatively easy to clean up afterward. So there wasn’t much to stop the juggernaut of more people and more development and more concrete and more buildings and more cars and more coal, oil, and gas needed to build and power them. Summing it all up, Andy Karsner, the Department of Energy’s assistant secretary for energy efficiency and renewable energy, once said to me: “We built a really inefficient environment with the greatest efficiency ever known to man.”

Beginning in the second half of the twentieth century, a scientific understanding began to emerge that an excessive accumulation of largely invisible pollutants-called greenhouse gases – was affecting the climate. The buildup of these greenhouse gases had been under way since the start of the Industrial Revolution in a place we could not see and in a form we could not touch or smell. These greenhouse gases, primarily carbon dioxide emitted from human industrial, residential, and transportation sources, were not piling up along roadsides or in rivers, in cans or empty bottles, but, rather, above our heads, in the earth’s atmosphere. If the earth’s atmosphere was like a blanket that helped to regulate the planet’s temperature, the CO2 buildup was having the effect of thickening that blanket and making the globe warmer.

Those bags of CO₂ from our cars float up and stay in the atmosphere, along with bags of CO₂ from power plants burning coal, oil, and gas, and bags of CO₂ released from the burning and clearing of forests, which releases all the carbon stored in trees, plants, and soil. In fact, many people don’t realize that deforestation in places like Indonesia and Brazil is responsible for more CO₂ than all the world’s cars, trucks, planes, ships, and trains combined – that is, about 20 percent of all global emissions. And when we’re not tossing bags of carbon dioxide into the atmosphere, we’re throwing up other greenhouse gases, like methane (CH₄) released from rice farming, petroleum drilling, coal mining, animal defecation, solid waste landfill sites, and yes, even from cattle belching. Cattle belching? That’s right-the striking thing about greenhouse gases is the diversity of sources that emit them. A herd of cattle belching can be worse than a highway full of Hummers. Livestock gas is very high in methane, which, like CO₂, is colorless and odorless. And like CO₂, methane is one of those greenhouse gases that, once released into the atmosphere, also absorb heat radiating from the earth’s surface. “Molecule for molecule, methane’s heat-trapping power in the atmosphere is twenty-one times stronger than carbon dioxide, the most abundant greenhouse gas..” reported Science World (January 21, 2002). “With 1.3 billion cows belching almost constantly around the world (100million in the United States alone), it’s no surprise that methane released by livestock is one of the chief global sources of the gas, according to the U.S. Environmental Protection Agency … ‘It’s part of their normal digestion process,’ says Tom Wirth of the EPA. ‘When they chew their cud, they regurgitate [spit up] some food to rechew it, and all this gas comes out.’ The average cow expels 600 liters of methane a day, climate researchers report.”

What is the precise scientific relationship between these expanded greenhouse gas emissions and global warming? Experts at the Pew Center on Climate Change offer a handy summary in their report “Climate Change 101. ” Global average temperatures, notes the Pew study, “have experienced natural shifts throughout human history. For example; the climate of the Northern Hemisphere varied from a relatively warm period between the eleventh and fifteenth centuries to a period of cooler temperatures between the seventeenth century and the middle of the nineteenth century. However, scientists studying the rapid rise in global temperatures during the late twentieth century say that natural variability cannot account for what is happening now.” The new factor is the human factor-our vastly increased emissions of carbon dioxide and other greenhouse gases from the burning of fossil fuels such as coal and oil as well as from deforestation, large-scale cattle-grazing, agriculture, and industrialization.

“Scientists refer to what has been happening in the earth’s atmosphere over the past century as the ‘enhanced greenhouse effect’”, notes the Pew study. By pumping manmade greenhouse gases into the atmosphere, humans are altering the process by which naturally occurring greenhouse gases, because of their unique molecular structure, trap the sun’s heat near the earth’s surface before that heat radiates back into space.

“The greenhouse effect keeps the earth warm and habitable; without it, the earth’s surface would be about 60 degrees Fahrenheit colder on average. Since the average temperature of the earth is about 45 degrees Fahrenheit, the natural greenhouse effect is clearly a good thing. But the enhanced greenhouse effect means even more of the sun’s heat is trapped, causing global temperatures to rise. Among the many scientific studies providing clear evidence that an enhanced greenhouse effect is under way was a 2005 report from NASA’s Goddard Institute for Space Studies. Using satellites, data from buoys, and computer models to study the earth’s oceans, scientists concluded that more energy is being absorbed from the sun than is emitted back to space, throwing the earth’s energy out of balance and warming the globe.”

QUESTION:

1. Which of the following statements is correct?

(I) Greenhouse gases are responsible for global warming. They should be eliminated to save the planet

(II) CO2 is the most dangerous of the greenhouse gases. Reduction in the release of CO2 would surely bring down the temperature

(III) The greenhouse effect could be traced back to the industrial revolution. But the current development and the patterns of life have enhanced their emissions

(IV) Deforestation has been one of the biggest factors contributing to the emission of greenhouse gases

Choose the correct option:

(A) I and III 

(B) II and III 

(C) II, III, and IV 

(D) III and IV 

Show Answer

2. Which of the following statements is incorrect?

(A) Natural and controlled greenhouse effect is good for earth 

(B) As a measure to check global warming, prevention of destruction of forests needs to be given priority over reduction in fuel emission 

(C) Greenhouse gases trap the sun’s heat from radiating back into the space making the earth surface warmer 

(D) It is for the first time in human evolution that the global temperatures have started to witness a shift 

Show Answer

3. Increasing warming of earth has been due to:

(I) Increased manual intervention in the manufacturing process

(II) The fallout of mechanization of production

(III) Industrial revolution

(IV) Over reliance on non- replenishible energy sources

Choose the correct option:

(A) I, II, and IV 

(B) I, III and IV 

(C) I, II, III, and IV 

(D) II, III, and IV 

Show Answer

4. Which of the following according to the passage are the features of “fuels from heaven”?

(I) Replenishability

(II) Storability

(III) Cost-effectiveness

(IV) Harmlessness

(A)  I and II 

(B) II and III 

(C) III, and IV 

(D) I and IV 

Show Answer

(Source: IIFT-2009)

I suggest that the essential character of the Trade Cycle and, especially, the regularity of time-sequence and of duration which justifies us in calling it a cycle, is mainly due to the way in which the marginal efficiency of capital fluctuates. The Trade Cycle is best regarded, I think, as being occasioned by a cyclical change in the marginal efficiency of capital, though complicated and often aggravated by associated changes in the other significant short period variables of the economic system.

By a cyclical movement we mean that as the system progresses in, e.g. the upward direction, the forces propelling it upwards at first gather force and have a cumulative effect on one another but gradually lose their strength until at a certain point they tend to be replaced by forces operating in the opposite direction; which in turn gather force for a time and accentuate one another, until they too, having reached their maximum development, wane and give place to their opposite. We do not, however, merely mean by a cyclical movement that upward and downward tendencies, once started, do not persist for ever in the same direction but are ultimately reversed. We mean also that there is some recognizable degree of regularity in the time-sequence and duration of the upward and downward movements. There is, however, another characteristic of what we call the Trade Cycle which our explanation must cover if it is to bead equate; namely, the phenomenon of the ‘crisis’ the fact that the substitution of a downward for an upward tendency often takes place suddenly and violently, whereas there is, as a rule, no such sharp turning-point when an upward is substituted for a downward tendency. Any fluctuation in investment not offset by a corresponding change in the propensity to consume will, of course, result in a fluctuation in employment. Since, therefore, the volume of investment is subject to highly complex influences, it is highly improbable that all fluctuations either in investment itself or in the marginal efficiency of capital will be of a cyclical character.

We have seen above that the marginal efficiency of capital depends, not only on the existing abundance or scarcity of capital-goods and the current cost of production of capital goods, but also on current expectations as to the future yield of capital-goods. In the case of durable assets it is, therefore, natural and reasonable that expectations of the future should play a dominant part in determining the scale on which new investment is deemed advisable. But, as we have seen, the basis for such expectations is very precarious. Being based on shifting and unreliable evidence, they are subject to sudden and violent changes. Now, we have been accustomed in explaining the ‘crisis’ to lay stress on the rising tendency of the rate of interest under the influence of the increased demand for money both for trade and speculative purposes. At times this factor may certainly play an aggravating and, occasionally perhaps, an initiating part. But I suggest that a more typical, and often the predominant, explanation of the crisis is, not primarily a rise in the rate of interest, but a sudden collapse in the marginal efficiency of capital. The later stages of the boom are characterized by optimistic expectations as to the future yield of capital goods sufficiently strong to offset their growing abundance and their rising costs of production and, probably, a rise in the rate of interest also. It is of the nature of organized investment markets, under the influence of purchasers largely ignorant of what they are buying and of speculators who are more concerned with forecasting the next shift of market sentiment than with a reasonable estimate of the future yield of capital-assets, that, when disillusion falls upon an over-optimistic and overbought market, it should fall with sudden and even catastrophic force. Moreover, the dismay and uncertainty as to the future which accompanies a collapse in the marginal efficiency of capital naturally precipitates a sharp increase in liquidity-preference and hence a rise in the rate of interest. Thus the fact that a collapse in the marginal efficiency of capital tends to be associated with a rise in the rate of interest may seriously aggravate the decline in investment. But the essence of the situation is to be found, nevertheless, in the collapse in the marginal efficiency of capital, particularly in the case of those types of capital which have been contributing most to the previous phase of heavy new investment. Liquidity preference, except those manifestations of it which are associated with increasing trade and speculation, does not increase until after the collapse in the marginal efficiency of capital. It is this, indeed, which renders the slump so intractable.

QUESTION:

1. Which of the following does not describe the features of cyclical movement?

(A) There is a cyclical change in the marginal efficiency of capital 

(B) The movement once starts in upward or downward direction does not get reversed 

(C) The time pattern and the duration of economic movements are recognizable 

(D) It is caused by the economic force working in opposite direction 

Show Answer

2. Marginal efficiency of the capital does not depend on which of following factors?

(A) Demand and supply of capital goods 

(B) Cost of production of capital goods 

(C) Expectations regarding future return from capital goods 

(D) Availability of capital 

Show Answer

3. Which of the following explains the phenomenon of crisis?

I. A sudden collapse in the marginal efficiency of capital

II. Increase in the rate of interest causing the decline in investments

III. A sudden and violent substitution of upward movement by a downward tendency

IV. Decline in the liquidity preference of the investors

(A) I & II 

(B) I, II, and III 

(C) I, II, and IV 

(D) II, III, and IV 

Show Answer

(Source: IIFT-2009)

The most important task is revitalizing the institution of independent directors. The independent directors of a company should be faithful fiduciaries protecting, the long term interests of shareholders while ensuring fairness to employees, investor, customer, regulators, the government of the land and society. Unfortunately, very often, directors are chosen based of friendship and, sadly, pliability. Today, unfortunately, in the majority of cases, independence is only true on paper.

The need of the hour is to strengthen the independence of the board. We have to put in place stringent standards for the independence of directors. The board should adopt global standards for director-independence, and should disclose how each independent director meets these standards. It is desirable to have a comprehensive report showing the names of the company employees of fellow board members who are related to each director on the board. This report should accompany the annual report of all listed companies. Another important step is to regularly assess the board members for performance. The assessment should focus on issues like competence, preparation, participation and contribution. Ideally, this evaluation should be performed by a third party. Underperforming directors should be allowed to leave at the end of their term in a gentle manner so that they do not lose face. Rather than being the rubber stamp of a company’s management policies, the board should become a true active partner of the management. For this, independent directors should be trained in their in their in roles and responsibilities. Independent directors should be trained on the business model and risk model of the company, on the governance practices, and the responsibilities of various committees of the board of the company. The board members should interact frequently with executives to understand operational issues. As part of the board meeting agenda, the independent directors should have a meeting among themselves without the management being present. The independent board members should periodically review the performance of the company’s CEO, the internal directors and the senior management. This has to be based on clearly defined objective criteria, and these criteria should be known to the CEO and other executive directors well before the start of the evolution period. Moreover, there should be a clearly laid down procedure for communicating the board’s review to the CEO and his/her team of executive directors. Managerial remuneration should be based on such reviews. Additionally, senior management compensation should be determined by the board in a manner that is fair to all stakeholders. We have to look at three important criteria in deciding managerial remuneration-fairness accountability and transparency. Fairness of compensation is determined by how employees and investors react to the compensation of the CEO. Accountability is enhanced by splitting the total compensation into a small fixed component and a large variable component. In other words, the CEO, other executive directors and the senior management should rise or fall with the fortunes of the company. The variable component should be linked to achieving the long-term objectives of the firm. Senior management compensation should be reviewed by the compensation committee of the board consisting of only the independent directors. This should be approved by the shareholders. It is important that no member of the internal management has a say in the compensation of the CEO, the internal board members or the senior management.

The SEBI regulations and the CII code of conduct have been very helpful in enhancing the level of accountability of independent directors. The independent directors should decide voluntarily how they want to contribute to the company. Their performance should decide voluntarily how they want to contribute to the company. Their performance should be appraised through a peer evaluation process. Ideally, the compensation committee should decide on the compensation of each independent director based on such a performance appraisal.

Auditing is another major area that needs reforms for effective corporate governance. An audit is the Independent examination of financial transactions of any entity to provide assurance to shareholder and other stakeholders that the financial statements are free of material misstatement. Auditors are qualified professionals appointed by the shareholders to report on the reliability of financial statements prepared by the management. Financial markets look to the auditor’s report for an independent opinion on the financial and risk situation of a company. We have to separate such auditing form other services. For a truly independent opinion, the auditing firm should not provide services that are perceived to be materially in conflict with the role of the auditor. These include investigations, consulting advice, sub contraction of operational activities normally undertaken by the management, due diligence on potential acquisitions or investments, advice on deal structuring, designing/implementing IT systems, bookkeeping, valuations and executive recruitment. Any departure from this practice should be approved by the audit committee in advance. Further, information on any such exceptions must be disclosed in the company’s quarterly and annual reports. To ensure the integrity of the audit team, it is desirable to rotate auditor partners. The lead audit partner and the audit partner responsible for reviewing a company’s audit must be rotated at least once every three to five years. This eliminates the possibility of the lead auditor and the company management getting into the kind of close, cozy relationship that results in lower objectivity in audit opinions. Further, a registered auditor should not audit a chief accounting office was associated with the auditing firm. It is best that members of the audit teams are prohibited from taking up  employment in the audited corporations for at least a year after they have stopped being members of the audit team.

A competent audit committee is essential to effectively oversee the financial accounting and reporting process. Hence, each member of the audit committee must be ‘financially literate’, further, at least one member of the audit committee, preferably the chairman, should be a financial expert-a person who has an understanding of financial statements and accounting rules, and has experience in auditing. The audit committee should establish procedures for the treatment of complaints received through anonymous submission by employees and whistleblowers. These complaints may be regarding questionable accounting or auditing issues, any harassment to an employee or any unethical practice in the company. The whistleblowers must be protected.

Any related-party transaction should require prior approval by the audit committee, the full board and the shareholders if it is material. Related parties are those that are able to control or exercise significant influence. These include;  parent subsidiary relationships; entities under common control; individuals who, through ownership, have significant influence over the enterprise and close members of their families; and dey management personnel.

Accounting standards provide a framework for preparation and presentation of financial statements and assist auditors in forming an opinion on the financial statements. However, today, accounting standards are issued by bodies comprising primarily of accountants. Therefore, accounting standards do not always keep pace with changes in the business environment. Hence, the accounting standards-setting body should include members drawn from the industry, the profession and regulatory bodies. This body should be independently funded.

Currently, an independent oversight of the accounting profession does not exist. Hence, an independent body should be constituted to oversee the functioning of auditors for Independence, the quality of audit and professional competence. This body should comprise a “majority of non practicing accountants to ensure independent oversight. To avoid any bias, the chairman of this body should not have practiced as an accountant during the preceding five years. Auditors of all public companies must register with this body. It should enforce compliance with the laws by auditors and should mandate that auditors must maintain audit working papers for at least seven years.

To ensure the materiality of information, the CEO and CFO of the company should certify annual and quarterly reports. They should certify that the information in the reports fairly presents the financial condition and results of operations of the company, and that all material facts have been disclosed. Further, CEOs and CFOs should certify that they have established internal controls to ensure that all information relating to the operations of the company is freely available to the auditors and the audit committee. They should also certify that they have evaluated the effectiveness of these controls within ninety days prior to the report. False certifications by the CEO and CFO should be subject to significant criminal penalties (fines and imprisonment, if willful and knowing). If a company is required to restate its reports due to material non-compliance with the laws, the CEO and CFO must face severe punishment including loss of job and forfeiting bonuses or equity-based compensation received during the twelve months following the filing.

QUESTION:

1.

The problem with the independent directors has been that:

I. Their selection has been based upon their compatibility with the company management

II. There has been lack of proper training and development to improve their skill set

III. Their independent views have often come in conflict with the views of company management. This has hindered the company’s decision-making process

IV. Stringent standards for independent directors have been lacking

(A) I and II only 

(B) I, II, and III only 

(C) II, II, and IV only 

(D) I, II and IV only 

Show Answer

2. Which of the following, according to author, does not have an impact on effective corporate governance?

(A)  Increased role and importance of independent directors 

(B) Increased compensation to independent directors 

(C) Not hiring audit firms for other services 

(D) Stringent monitoring and control of related party transactions 

Show Answer

3. To improve the quality and reliability of the information reported in the financial statements:

I. Accounting standards should keep pace with the dynamic business environment

II. There should be a body of internal auditors to oversee the functioning of external auditors

III. Reports should be certified by key company officials

IV. Accounting standards should be set by a body comprising of practicing accountants only and this body should be funded from a corpus built up from the contributions made by the companies

(A) I, and II 

(B) II, and III 

(C) I, and III 

(D) I, III, and IV 

Show Answer

4. Which of the following may not help in improving in the accountability of management to the shareholders?

(A) A third party assessment of the performance of independent directors 

(B) Rotation of audit partner 

(C) Increasing the fixed component in the salary structure of the management 

(D) Laying down a proper procedure for handling complaints regarding unethical practices 

Show Answer

5. The author of the passage does not advocate:

(A) Increased activism of independent directors 

(B) Measures to improve the independence of auditors 

(C) Framing the accounting standards in the light of changing business conditions 

(D) Active intervention by the regulators in the day-today functioning of the company 

Show Answer

(Source: IIFT-2009)

In the annals of investing, Warren Buffett stands alone. Starting from scratch, simply by picking stocks and companies for investment, Buffett amassed one of the epochal fortunes of the twentieth century. Over a period of four decades more than enough to iron out the effects of fortuitous rolls of the dice, Buffett outperformed the stock market, by a stunning margin and without taking undue risks or suffering a single losing year. Buffett did this in markets bullish and bearish and through economies fat and lean, from the Eisenhower years to Bill Clinton, from the 1950s to the 1990s, from saddle shoes and Vietnam to junk bonds and the information age. Over the broad sweep of postwar America, as the major stock averages advanced by 11 percent or so a year, Buffett racked up a compounded annual gain of 29.2 percent. The uniqueness of this achievement is more significant in that it was the fruit of old-fashioned, long-term investing. Wall Street’s modern financiers got rich by exploiting their control of the public’s money: their essential trick was to take in and sell out the public at opportune moments. Buffett shunned this game, as well as the more venal excesses for which Wall Street is deservedly famous. In effect, he rediscovered the art of pure capitalism, a coldblooded sport, but a fair one. Buffett began his career, working out his study in Omaha in 1956. His grasp of simple verities gave rise to a drama that would recur throughout his life. Long before those pilgrimages to Omaha, long before Buffett had a record, he would stand in a corner at college parties, baby-faced and bright-eyed, holding forth on the universe as a dozen or two of his older, drunken fraternity brothers crowded around. A few years later, when these friends had metamorphosed into young associates starting out on Wall Street, the ritual was the same. Buffett, the youngest of the group, would plop himself in a big, broad club chair and expound on finance while the others sat at his feet. On Wall Street, his homespun manner made him a cult figure. Where finance was so forbiddingly complex, Buffett could explain it like a general-store clerk discussing the weather. He never forgot that underneath each stock and bond, no matter how arcane, there lay a tangible, ordinary business. Beneath the jargon of Wall Street, he seemed to unearth a street from small-town America. In such a complex age, what was stunning about Buffett was his applicability. Most of what Buffett did was imitable by the average person (this is why the multitudes flocked to Omaha). It is curious irony that as more Americans acquired an interest in investing, Wall Street became more complex and more forbidding than ever. Buffett was born in the midst of depression. The depression cast a long shadow on Americans, but the post war prosperity eclipsed it. Unlike the modern portfolio manager, whose mind-set is that of a trader, Buffett risked his capital on the long term growth of a few select businesses. In this, he resembled the magnates of a previous age, such as J P Morgan Sr. As Jack Newfield wrote of Robert Kennedy, Buffett was not a hero, only a hope; not a myth; only a man. Despite his broad wit, he was strangely stunted. When he went to Paris, his only reaction was that he had no interest in sight-seeing and that the food was better in Omaha. His talent sprang from his unrivaled independence of mind and ability to focus on his work and shut out the world, yet those same qualities exacted a toll. Once, when Buffett was visiting the publisher Katharine Graham on Martha’s Vineyard, a friend remarked on the beauty of the sunset. Buffett replied that he hadn’t focused on it, as though it were necessary for him to exert a deliberate act of concentration to “focus” on a sunset. Even at his California beachfront vacation home, Buffett would work every day for weeks and not go near the water. Like other prodigies, he paid a price. Having been raised in a home with more than its share of demons, he lived within an emotional fortress. The few people who shared his office had no knowledge of the inner man, even after decades. Even his children could scarcely recalra time when he broke through his surface calm and showed some feeling. Though part of him is a showman or preacher, he is essentially a private person. Peter Lynch, the mutual-fund wizard, visited Buffett in the 1980s and was struck by the tranquility in his inner sanctum. His archives, neatly alphabetized in metal filing cabinets, looked as files had in another era. He had no armies of traders, no rows of electronic screens, as Lynch did. Buffett had no price charts, no computer-only a newspaper clipping from 1929 and an antique ticker under a glass dome. The two of them paced the floor, recounting their storied histories, what they had bought, what they had sold. Where Lynch had kicked out his losers every few weeks. Buffett had owned mostly the same few stocks for years and years. Lynch felt a pang, as though he had traveled back in time. Buffett’s one concession to modernity is a private jet. Otherwise, he derives little pleasure from spending his fabulous wealth. He has no art collection or snazzy car, and he has never lost his taste for hamburgers. He lives in a commonplace house on a tree-lined block, on the same street where he works. His consuming passion—and pleasure—is his work, or, as he calls it, his canvas. It is there that he revealed the secrets of his trade, and left a self-portrait.

1. “Saddle shoes and Vietnam”, as expressed in the passage, refers to:

1. Dernier cri and Vietnam war
2. Growth of leather footwear industry and Vietnam shoe controversy
3. Modern U.S. population and traditional expatriates
4. Industrial revolution and Vietnam Olympics
5. Fashion and Politics

(a)   I & V

(b)   II & IV

(c)   III & V

(d)   II & III

Ans: ()

2. Identify the correct sequence:

1. Depression -> Eisenhower -> Microsoft
2. California -> New York -> Omaha
3. III. J.P.Morgan -> Buffett -> Bill Gates
4. Mutual funds -> Hedge funds -> Brokers

(a)   I & II

(b)   I & III

(c)   II & IV

(d)   III & IV

Ans: ()

3. Choose the most appropriate answer: according to the author, Warren Buffett was

1. Simple and outmoded
2. Against planned economy and technology
3. Deadpan
4. Spiritually raw

(a)   I & IV

(b)   II & IV

(c)   III & IV

(d)   I & III

Ans: ()

(Source: IIFT-2010)

When people react to their experiences with particular authorities, those authorities and the organizations or institutions that they represent often benefit if the people involved begin with high levels of commitment to the organization or institution represented by the authorities. First, in his studies of people’s attitudes toward political and legal institutions, Tyler found that attitudes after an experience with the institution were strongly affected by prior attitudes. Single experiences influence post-experience loyalty but certainly do not overwhelm the relationship between pre-experience and post-experience loyalty. Thus, the best predictor of loyalty after an experience is usually loyalty before that experience. Second, people with prior loyalty to the organization or institution judge their dealings with the organization’s or institution’s authorities to be fairer than do those with less prior loyalty, either because they are more fairly treated or because they interpret equivalent treatment as fairer.

Although high levels of prior organizational or institutional commitment are generally beneficial to the organization or institution, under certain conditions high levels of prior commitment may actually sow the seeds of reduced commitment. When previously committed individuals feel that they were treated unfavorably or unfairly during some experience with the organization or institution, they may show an especially sharp decline in commitment. Two studies were designed to test this hypothesis, which, if confirmed, would suggest that organizational or institutional commitment hasrisks, as well as benefits. At least three psychological models offer predictions of how individuals’ reactions may vary as a function of (1) their prior level of commitment and (2) the favorability of the encounter with the organization or institution. Favorability of the encounter is determined by the outcome of the encounter and the fairness or appropriateness of the procedures used to allocate outcomes during the encounter. First, the instrumental prediction is that because people are mainly concerned with receiving desired outcomes from their encounters with organizations, changes in their level of commitment will depend primarily on the favorability of the encounter. Second, the assimilation prediction is that individuals’ prior attitudes predispose them to react in a way that is consistent with their prior attitudes.

The third prediction, derived from the group-value model of justice, pertains to how people with high prior commitment will react when they feel that they have been treated unfavorably or unfairly during some encounter with the organization or institution. Fair treatment by the other party symbolizes to people that they are being dealt with in a dignified and respectful way, thereby bolstering their sense of self-identity and self-worth. However, people will become quite distressed and react quite negatively if they feel that they have been treated unfairly by the other party to the relationship. The group-value model suggests that people value the information they receive that helps them to define themselves and to view themselves favorably. According to the instrumental viewpoint, people are primarily concerned with the more material or tangible resources received from the relationship. Empirical support for the group-value model has implications for a variety of important issues, including the determinants of commitment, satisfaction, organizational citizenship, and rule following. Determinants of procedural fairness include structural or interpersonal factors. For example, structural determinants refer to such things as whether decisions were made by neutral, fact-finding authorities who used legitimate decisionmaking criteria. The primary purpose of the study was to examine the interactive effect of individuals (1) commitment to an organization or institution prior to some encounter and (2) perceptions of how fairly they were treated during the encounter, on the change in their level of commitment. A basic assumption of the group-value model is that people generally value their relationships with people, groups, organizations, and institutions and therefore value fair treatment from the other party to the relationship. Specifically, highly committed members should have especially negative reactions to feeling that they were treated unfairly, more so than (1) less-committed group members or (2) highly committed members who felt that they were fairly treated.

The prediction that people will react especially negatively when they previously felt highly committed but felt that they were treated unfairly also is consistent with the literature on psychological contracts. Rousseau suggested that, over time, the members of work organizations develop feelings of entitlement, i.e., perceived obligations that their employers have toward them. Those who are highly committed to the organization believe that they are fulfilling their contract obligations. However, if the organization acted unfairly, then highly committed individuals are likely to believe that the organization did not live up to its end of the bargain.

1. The hypothesis mentioned in passage tests atleast one of the following ideas.

(a)   People continue to show loyalty only if they were initially committed to the organization.

(b)   Our experiences influence post-experience loyalty but certainly underwhelm the relationship between pre-experience and post-experience loyalty.

(c)   Pre-experience commitment always has inverse relationship with the post- experience commitment.

(d)   None of these ideas are being tested by the hypothesis.

Ans: ()

2. There is only one term in the left column which matches with the options given in the second column. Identify the correct pair from the following table:

1. Instrumental
2. Assimilation
3. Group-value
4. Institutional

1. Better outcome leads to more commitment.
2. Prior belief is instrumental in deciding about the post encounter commitment.
3. Sense of value gets jeopardized that leads to negative attitude.
4. Deals mainly with tangible outcomes.

(a)   a-1 and 4

(b)   b-3 and 4

(c)   c-2 and 4

(d)   d-1 only

Ans: ()

3. For summarizing the passage, which of the following is most appropriate:

(a)   The study explored how citizens* commitment to legal authorities changed as a function of their initial level of commitment and their perceptions of how fairly they were treated in their recent encounters with legal authorities.

(b)   The influence of individuals’ prior commitment to an institution on their reactions to the perceived fairness of decisions rendered by the institution was examine(4)

(c)   Given the generally positive consequences to organizations of having committed employees, it may be that unfair managerial practices would begin to alienate the very employees that the organization would least wish to alienate.

(d)   The passage aims at understanding how people define happiness and these definitions include instrumental view-points.

Ans: ()

(Source: IIFT-2010)

People are continually enticed by such “hot” performance, even if it lasts for brief periods. Because of this susceptibility, brokers or analysts who have had one or two stocks move up sharply, or technicians who call one turn correctly, are believed to have established a credible record and can readily find market followings. Likewise, an advisory service that is right for a brief time can beat its drums loudly. Elaine Garzarelli gained near immortality when she purportedly “called” the 1987 crash. Although, as the market strategist for Shearson Lehman, her forecast was never published in a research report, nor indeed communicated to its clients, she still received widespread recognition and publicity for this call, which was made in a short TV interview on CNBC. Still, her remark on CNBC that the Dow could drop sharply from its then 5300 level rocked an already  nervous market on July 23, 1996. What had been a 40-point gain for the Dow turned into a 40-point loss, a good deal of which was attributed to her comments.

The truth is, market-letter writers have been wrong in their judgments far more often than they would like to remember. However, advisors understand that the public considers short-term results meaningful when they are, more often than not, simply chance. Those in the public eye usually gain large numbers of new subscribers for being right by random luck. Which brings us to another important probability error that falls under the broad rubric of representativeness. Amos Tversky and Daniel Kahneman call this one the “law of small numbers.”‘. The statistically valid “law of large numbers” states that large samples will usually be highly representative of the population from which they are drawn; for example, public opinion polls are fairly accurate because they draw on large and representative groups. The smaller the sample used, however (or the shorter the record), the more likely the findings are chance rather than meaningful. Yet the Tversky and Kahneman study showed that typical psychological or educational experimenters gamble their research theories on samples so small that the results have a very high probability of being chance. This is the same as gambling on the single good call of an advisor. The psychologists and educators are far too  confident in the significance of results based on a few observations or a short period of time, even though they are trained in statistical techniques and are aware of the dangers.

Note how readily people over generalize the meaning of a small number of supporting facts. Limited statistical evidence seems to satisfy our intuition no matter how inadequate the depiction of reality. Sometimes the evidence we accept runs to the absurd. A good example of the major overemphasis on small numbers is the almost blind faith investors place in governmental economic releases on employment, industrial production, the consumer price index, the money supply, the leading economic indicators, etc. These statistics frequently trigger major stock- and bond-market reactions, particularly if the news is bad. Flash statistics, more times than not, are near worthless. Initial economic and Fed figures are revised significantly for weeks or months after their release, as new and “better” information flows in. Thus, an increase in the money supply can turn into a decrease, or a large drop in the leading indicators can change to a moderate increase. These revisions occur with such regularity you would think that investors, particularly pros, would treat them with the skepticism they deserve. Alas, the real world refuses to follow the textbooks. Experience notwithstanding, investors treat as gospel all authoritative-sounding releases that they think pinpoint the development of important trends. An example of how instant news threw investors into a tailspin occurred in July of 1996. Preliminary statistics indicated the economy was beginning to gain steam.

The flash figures showed that GDP (gross domestic product) would rise at a 3% rate in the next several quarters, a rate higher than expected. Many people, convinced by these statistics that rising interest rates were imminent, bailed out of the stock market that month. To the end of that year, the GDP growth figures had been revised down significantly (unofficially, a minimum of a dozen times, and officially at least twice). The market rocketed ahead to new highs to August 1997, but a lot of investors had retreated to the sidelines on the preliminary bad news. The advice of a world champion chess player when asked how to avoid making a bad move. His answer: “Sit on your hands”. But professional investors don’t sit on their hands; they dance on tiptoe, ready to flit after the least particle of information as if it were a strongly documented trend. The law of small numbers, in such cases, results in decisions sometimes bordering on the inane. Tversky and Kahneman’s findings, which have been repeatedly confirmed, are particularly important to our understanding of some stock market errors and lead to another rule that investors should follow.

1. Which statement does not reflect the true essence of the passage

1. Tversky and Kahneman understood that small representative groups bias the research theories to generalize results that can be categorized as meaningful result and people simplify the real impact of passable portray of reality by small number of supporting facts.
2. Governmental economic releases on macroeconomic indicators fetch blind faith from investors who appropriately discount these announcements which are ideally reflected in the stock and bond market prices.
3. III. Investors take into consideration myopic gain and make it meaningful investment choice and fail to see it as a chance of occurrence.
4. Irrational overreaction to key regulators expressions is same as intuitive statistician stumbling disastrously when unable to sustain spectacular performance.

(a)   Only I

(b)   Only IV

(c)   II & III

(d)   Only III

Ans: ()

2. The author of the passage suggests the anomaly that leads to systematic errors in predicting future. Which of the following statement does not best describe the anomaly as suggested in the passage above.

1. The psychological pressures account for the anomalies just like soothsayers warning about the doomsday and natural disasters and market crashes.
2. Contrary to several economic and financial theories investors are not good intuitive statistician, especially under difficult conditions and are unable to calculate the odds properly when making investments choices.
3. III. Investors are swamped with information and they react to this avalanche of data by adopting shortcuts or rules of thumb rather than formally calculating odds of a given outcome.
4. The distortions produced by subjectively calculated probabilities are large, systematic and difficult to eliminate even when investors are fully aware of them.

(a)   Only I

(b)   Only IV

(c)   I & III

(d)   II & IV

Ans: ()

3. “Tversky and Kahneman’s findings… lead to another rule that investors should follow”. Which rule is the author talking about?

1. Not to be influenced by short term and occasional record of a money manager, broker, analysts, or advisor, no matter how impressive.
2. To accept cursory economic or investment news without significant substantiation but supported by statistical evidence even if limited in data sufficiency.
3. III. In making decisions we become overly immersed in the details of a particular situation and consider all the outcomes of similar experience in our past.
4. None of the above.

(a)   Only IV

(b)   Only I

(c)   Only III

(d)   I, II, & III

Ans: ()

4. According to the passage which statement written below is farthest in explaining the meaning of the passage above?

1. Market letter writers have been wrong in their judgments many a times but they continue to express their opinion as dramatic predictions and well time call results in huge rewards to analysts, journalist and popular writers.
2. II, Public opinion polls are fairly accurate because they are based on randomly selected diminutive representative groups and hence are more meaningful than intuitive statistics of an outcome.
3. III. People generally limit the need for hefty statistical evidence as it satisfies their intuition without reflecting the reality.
4. None of the above.

(a)   Only IV

(b)   Only II

(c)   II & III

(d)   Only I

Ans: ()

(Source: IIFT-2010)

Kodak decided that traditional film and prints would continue to dominate through the 1980s and that photo finishers, film retailers, and, of course, Kodak itself could expect to continue to occupy their long-held positions until 1990. Kodak was right and wrong. The quality of digital cameras greatly improved. Prices plunged because the cameras generally followed Moore’s Law, the famous prediction by Intel co-founder Gordon Moore in the 1960s that the cost of a unit of computing power would fall by 50 percent every eighteen to twenty-four months. Cameras began to be equipped with what the industry called removable media -those little cards that hold the pictures – so pictures were easier to print or to move to other devices, such as computers. Printers improved. Their costs dropped, too. The Internet caught the popular imagination, and people began e-mailing each other pictures rather than print them. Kodak did little to ready itself for the onslaught of digital technology because it consistently tried to hold on to the profits from its old technology and underestimated the speed with which the new would take hold. Kodak decided it could use digital technology to enhance film, rather than replace it. Instead of preparing for the digital world, Kodak headed off in a direction that cost it dearly. In 1988, Kodak bought Sterling Drug for $5.1 billion. Kodak had decided it was really a chemicals business, not a photography company. So, Kodak reasoned, it should move into adjacent chemical markets, such as drugs. Well, chemically treated photo paper really isn’t that similar to hormonal agents and cardiovascular drugs. The customers are different. The delivery channels are different. Kodak lost its shirt. It sold Sterling in pieces in 1994 for about half the original purchase price. George M. C. Fisher was the new CEO of Kodak in 1993. Fisher’s solution was to hold on to the film business as long as possible, while adding a technological veneer to it. For instance, he introduced the Advantix Preview camera, a hybrid of digital and film technology. Users took pictures the way they always had, and the images were captured on film. Kodak spent more than $500 million developing Advantix, which flopped.

Fisher also tried to move Kodak’s traditional retail photo-processing systems into digital world and in this regard installed tens of thousands of image magic kiosks. These kiosks came just as numerous companies introduced inexpensive, high- quality photo printers that people could use at home, which, in fact, is where customers preferred to view their images and fiddle with them. Fisher also tried to insert Kodak as an intermediary in the process of sharing images electronically. He formed partnerships that let customers receive electronic versions of their photos by e-mail and gave them access to kiosks that let them manipulate and reproduce old photographs. You don’t need Kodak to upload photos to your computer and e-mail them. Fisher also formed a partnership with AOL called “You’ve Got Pictures.” Customers would have their film developed and posted online, where friends and family could view them. Customers would pay AOL $7 for this  privilege, on top of the $9 paid for photo processing. However sites like, Snapfish were allowing pictures to be posted online free. Fisher promised early on, that Kodak’s digital-photography business would be profitable by 1997. It wasn’t. In 1997 Philippe Kahn lead the advent of cell phone camera. With the cell phone camera market growth Kodak didn’t just lose out on more prints. The whole industry lost out on sales of digital cameras, because they became just a feature that was given away free on cell phones. Soon cameras became a free feature on many personal computers, too. What had been so profitable for Kodak for so long-capturing images and displaying them-was going to become essentially free.

In 1999 Fisher resigned and Carp became the new CEO. In 2000, Carp’s first year as CEO, profit was about flat, at $1.41 billion. Carp, too, retired early, at age fifty-seven. Carp had pursued Fisher’s basic strategy of “enhancing” the film business to make it last as long as possible, while trying to figure out some way to get recurring revenue from the filmless, digital world. But the temporizing didn’t work any better for Carp than it had for Fisher. Kodak talked, for instance, about getting customers to digitize and upload to the Internet more of the 300 million rolls of film that Kodak processed annually, as of 2000. Instead, customers increasingly skipped the film part. In 2002, sales of digital cameras in the United States passed those of traditional cameras-even though Kodak in the mid- 1990s had projected that it would take twenty years for digital technology to eclipse film. The move to 100. Match the following digital in the 2000s happened so fast that, in 2004, Kodak introduced a film camera that won a “camera of the year” award, yet was discontinued by the time Kodak collected the award. Kodak staked out a position as one of the major sellers of digital cameras, but being “one of is a lot different from owning 70 percent to 80 percent of a market, as Kodak had with film, chemicals, and processing. In 2002 competition in the digital market was so intense that Kodak lost 75 percent of its stock market value over the past decade, falling to a level about half of what it was when the reporter suggested to Carp that he might sell the company. As of 2005, Kodak employed less than a third of the number who worked for it twenty years earlier. To see what might have been, look at Kodak’s principal competitors in the film and paper markets. Agfa temporized on digital technology, then sold its film and paper business to private-equity investors in 2004. The business went into bankruptcy proceedings the following year, but that wasn’t Agfa’s problem. It had cashed out at a halfway reasonable price.

1. As per the passage which of the following statement truly reflects the real theme of the passage?

(a)   Moore’s law predicted that cost per unit of computing power would exhibit a standard deviation of 25% per annum.

(b)   Popularity of removable media and internet lead to high demand for computers.

(c)   Kodak managers were able to predict the flow of digital technology and their critical value drivers.

(d)   Kodak did not have a vision to plough back the profits from old technology to research and development in new technology.

Ans: ()

2. Which of the following statements is not true

Kodak bought sterling drug as a strategic choice for a chemical business as it was already in the business of chemically treated photo paper

The chemical business was in sync with the existing business of Kodak running across the customer segment, delivery channels and the regulatory environment

III. Kodak committed a mistake by selling sterling in pieces at a loss of 50%.

Kodak’s diversification attempt with purchase of sterling to strengthen its core business and shift to digital world was a shift from its strategic focus.

(a)   Only I & II

(b)   Only II & III

(c)   Only III & IV

(d)   Only I, II, III

Ans: ()

3. Kodak lost a big piece of its market share to its competitors because of the following best explained reason.

When Carp became the CEO the digital Technology eclipsed film technology business and further Carp had been with the company for twenty nine years and had no background in technology.

Carp in 2004 introduced a film camera that won camera of the year award, yet it was discontinued by the time Kodak collected the awar(4)

III. Kodak moved from traditional retail photo processing systems into digital world installing several thousands of image magic kiosks that failed to deliver real benefits to the customers.

Phillipe Kahn led the advent of cell phone camera and Kodak lost out on the print business and ability to share images became a free feature with no additional charge.

(a)   I & II

(b)   II & III

(c)   I & IV

(d)   III & IV

Ans: ()

4. Match the following

Intel

Fisher

AOL

Agfa

(a) Preview cameras that helped users to immediately see the pictures taken

(b) Photo processing, developing and posting online photos

(c) Lead to insolvency of digital technology business

(d) Price of technology product reduces to half every year or two.

(a)   1-d,2-a,3-b,4-c

(b)   1-a,2-d,3-c,4-b

(c)   1-c,2-b,3-a,4-d

(d)   1-d, 2-c, 3-a, 4-b

Ans: ()

(Source: IIFT-2010)

The second issue I want to address is one that comes up frequently – that Indian banks should aim to become global. Most people who put forward this view have not thought through the costs and benefits analytically; they only see this as an aspiration consistent with India’s growing international profile.

In its 1998 report, the Narasimham (II) Committee envisaged a three tier structure for the Indian banking sector: 3 or 4 large banks having an international presence on the top, 8-10 mid-sized banks, with a network of branches throughout the country and engaged in universal banking, in the middle, and local banks and regional rural banks operating in smaller regions forming the bottom layer. However, the Indian banking system has not consolidated in the manner envisioned by the Narasimham Committee. The current structure is that India has 81 scheduled commercial banks of which 26 are public sector banks, 21 are private sector banks and 34 are foreign banks. Even a quick review would reveal that there is no segmentation in the banking structure along the lines of Narasimham II.

A natural sequel to this issue of the envisaged structure of the Indian banking system is the Reserve Bank’s position on bank consolidation. Our view on bank consolidation is that the process should be market-driven, based on profitability considerations and brought about through a process of mergers & amalgamations (M&As). The initiative for this has to come from the boards of the banks concerned which have to make a decision based on a judgment of the synergies involved in the business models and the compatibility of the business cultures. The Reserve Bank’s role in the reorganisation of the banking system will normally be only that of a facilitator.

It should be noted though that bank consolidation through mergers is not always a totally benign option. On the positive side are a higher exposure threshold, international acceptance and recognition, improved risk management and improvement in financials due to economies of scale and scope. This can be achieved both through organic and inorganic growth. On the negative side, experience shows that consolidation would fail if there are no synergies in the business models and there is no compatibility in the business cultures and technology platforms of the merging banks.

Having given that broad brush position on bank consolidation let me address two specific questions: (i) can Indian banks aspire to global size?; and (ii) should Indian banks aspire to global size? On the first question, as per the current global league tables based on the size of assets, our largest bank, the State Bank of India (SBI), together with its subsidiaries, comes in at No.74 followed by ICICI Bank at No. I45 and Bank of Baroda at 188. It is, therefore, unlikely that any of our banks will jump into the top ten of the global league even after reasonable consolidation.

Then comes the next question of whether Indian banks should become global. Opinion on this is divided. Those who argue that we must go global contend that the issue is not so much the size of our banks in global rankings but of Indian banks having a strong enough, global presence. The main argument is that the increasing global size and influence of Indian corporates warrant a corresponding increase in the global footprint of Indian banks. The opposing view is that Indian banks should look inwards rather than outwards, focus their efforts on financial deepening at home rather than aspiring to global size.

It is possible to take a middle path and argue that looking outwards towards increased global presence and looking inwards towards deeper financial penetration are not mutually exclusive; it should be possible to aim for both. With the onset of the global financial crisis, there has definitely been a pause to the rapid expansion overseas of our banks. Nevertheless, notwithstanding the risks involved, it will be opportune for some of our larger banks to be looking out for opportunities for consolidation both organically and inorganically. They should look out more actively in regions which hold out a promise of attractive acquisitions.

The surmise, therefore, is that Indian banks should increase their global footprint opportunistically even if they do not get to the top of the league table.

1. Identify the correct statement from the following:

(a)   Large banks having an international presence should not be engaged in universal banking.

(b)   Some people expect all banks to become global in coming years, in line with globalization.

(c)   Indian banking system has not consolidated as was foreseen by the Narasimham Committee.

(d)   Reserve Bank of India envisages the role of a facilitator for itself in the direction of bank consolidation.

Ans: ()

2. Identify the correct statement from the following:

(a)   Indian banks should not go for global inorganic expansion as there is no compatibility in business cultures.

(b)   Indian banks do not aspire to be global.

(c)   Indian banks cannot be global even after reasonable consolidation.

(d)   After the onset of the global financial crisis, some regions hold out a promise of attractive acquisitions for banks.

Ans: ()

3. Identify the wrong statement from the following:

(a)   Bank consolidation through mergers increases the merged entity’s ability to take higher exposures.

(b)   There is still scope for Indian banks to expand internally.

(c)   None of the Indian banks presently are global.

(d)   Global financial crisis has increased the risks of overseas expansion.

Ans: ()

(Source: IIFT-2011)

When Ratan Tata moved the Supreme Court, claiming his right to privacy had been violated, he called Harish Salve. The choice was not surprising. The former solicitor general had been topping the legal charts ever since he scripted a surprising win for Mukesh Ambani against his brother Anil. That dispute set the gold standard for legal fees. On Mukesh’s side were Salve, Rohinton Nariman, and Abhishek Manu Singhvi. The younger brother had an equally formidable line-up led by Ram Jethmalani and Mukul Rohatgi.

The dispute dated back three-and-a-half years to when Anil filed case against his brother for reneging on an agreement to supply 28 million cubic metres of gas per day from its Krishna-Godavari basin fields at a rate of $ 2.34 for 17 years. The average legal fee was Rs. 25 lakh for a full day’s appearance, not to mention the overnight stays at Mumbai’s five-star suites, business class travel, and on occasion, use of the private jet. Little wonder though that Salve agreed to take on Tata’s case pro bono. He could afford philanthropy with one of India’s wealthiest tycoons.

The lawyers’ fees alone, at a conservative estimate, must have cost the Ambanis at least Rs. 15 crore each. Both the brothers had booked their legal teams in the same hotel, first the Oberoi and, after the 26/ ll Mumbai attacks, the Trident. lt’s not the essentials as much as the frills that raise eyebrows. The veteran Jethmalani is surprisingly the most modest in his fees since he does not charge rates according to the strength of the client’s purse. But as the crises have multiplied, lawyers‘fees have exploded.

The 50 court hearings in the Haldia Petrochemicals vs. the West Bengal Government cost the former a total of Rs. 25 crore in lawyer fees and the 20 hearings in the Bombay Mill Case, which dragged on for three years, cost the mill owners almost Rs. 10 crore. Large corporate firms, which engage star counsels on behalf of the client, also need to know their quirks. For instance, Salve will only accept the first brief. He will never be the second counsel in a case. Some lawyers prefer to be paid partly in cash but the best are content with cheques. Some expect the client not to blink while picking up a dinner tab of Rs. 1.75 lakh at a Chennai five star. A lawyer is known to carry his home linen and curtains with him while travelling on work. A firm may even have to pick up a hot Vertu phone of the moment or a Jaeger-LeCoutre watch of the hour to keep a lawyer in good humour.

Some are even paid to not appear at all for the other side – Aryama Sundaram was retained by Anil Ambani in the gas feud but he did not fight the case. Or take Raytheon when it was fighting the Jindals. Raytheon had paid seven top lawyers a retainer fee of Rs. 2.5 lakh each just to ensure that the Jindals would not be able to make a proper case on a taxation issue. They miscalculated when a star lawyer fought the case at the last minute. “I don’t take negative retainers”, shrugs Rohatgi, former additional solicitor general. “A Lawyer’s job is to appear for any client that comes to him. lt’s not for the lawyers to judge if a client is good or bad but the court”. Indeed. He is, after all, the lawyer who argued so famously in court that B. Ramalinga Raju did not ‘fudge any account in the Satyam Case. All he did was “window dressing”.

Some high profile cases have continued for years, providing a steady source of income, from the Scindia succession battle which dates to 1989, to the Jet Lite Sahara battle now in taxation arbitration to the BCCI which is currently in litigation with Lalit Modi, Rajasthan Royals and Kings XI Punjab.

Think of the large law firms as the big Hollywood studios and the senior counsel as the superstar. There are a few familiar faces to be found in most of the big ticket cases, whether it is the Ambani gas case, Vodafone taxation or Bombay Mills case. Explains Salve, “There is a reason why we have more than one senior advocate on a case. When you’re arguing, he’s reading the court. He picks up a point or a vibe that you may have missed.” Says Rajan Karanjawala, whose firm has prepared the briefs for cases ranging from the Tata’s recent right to privacy case to Karisma Kapoor’s divorce, “The four jewels in the crown today are Salve, Rohatgi, Rohinton Nariman and Singhvi. They have replaced the old guard of Fali Nariman, Soli Sorabjee, Ashok Desai and K.K. Venugopal.” He adds, “The one person who defies the generational gap is Jethmalani who was India’s leading criminal lawyer in the 1960s and is so today.”

The demand for superstar lawyers has far outstripped the supply. So a one-man show by, say, Rohatgi can run up billings of Rs. 40 crore, the same as a mid-sized corporate law firm like Titus and Co that employs 28 juniors. The big law filik such as AZB or Amarchand & Mangaldas or Luthra & Luthra have to do all the groundwork for the counsel, from humouring the clerk to ensure the A-lister turns up on the hearing day to sourcing appropriate foreign judgments in emerging areas such as environmental and patent laws. “We are partners in this. There are so few lawyers and so many matters,” points out Diljeet Titus.

As the trust between individuals has broken down, governments have questioned corporates and corporates are questioning each other, and an array of new issues has come up. The courts have become stronger. “The lawyer,” says Sundaram, with the flourish that has seen him pick up many  hurandhares and Senakas at pricey art auctions, “has emerged as the modern day purohit.” Each purohit is head priest of a particular style. Says Karanjawala, “Harish is the closest example in today’s bar to Fali Nariman; Rohinton has the best law library in his brain; Mukul is easily India’s busiest lawyer while Manu Singhvi is the greatest multi-tasker.” Salve has managed a fine balancing act where he has represented Mulayam Singh Yadav and Mayawati, Parkash Singh Badal and Amarinder Singh, Lalit Modi and Subhash Chandra and even the Ambani brothers, of course in different cases. Jethmalani is the man to call for anyone in trouble. In judicial circles he is known as the first resort for the last resort.  Even Jethmalani’s junior Satish Maneshinde, who came to Mumbai in I993 as a penniless law graduate from Karnataka, shot to fame (and wealth) after he got bailfor Sanjay Dutt in 1996. Now he owns a plush office in Worli and has become a one-stop shop for celebrities in trouble.

1. Which of the following is not true about Ram Jethmalani?

(a)   In judicial circles, he is known as the first resort for the last resort

(b)   He is the most modest in his fees

(c)   He has been India’s leading criminal lawyer since 1960s

(d)   None of his juniors have done well in their careers

Ans: ()

2. Match the following:

Lawyer                                      Distinguishing Quality

Harish Salve i. India’s busiest lawyer

Rohinton ii. Today’s Fali Nariman

Mukul Rohatgi iii. Greatest multi – tasker

Abhishek Manu Singhvi iv. Best Law library in his brain

(a)   a-ii; b-iii; c-iv; d-i

(b)   a-ii; b-iv; c-i; d-iii

(c)   a-iii; b-iv; c-i; d-ii

(d)   a-iii; b-ii; c-iv; d-i

Ans: ()

3. What does a ‘negative retainer’ refer to?

(a)   Giving a lawyer only his fees and not the frills

(b)   Paying a lawyer to not fight a case for the other side

(c)   Having more than one senior advocate on a case

(d)   Reimbursing law firms for doing groundwork for the counsel

Ans: ()

4. What does the phrase ‘pro bono’ mean?

(a)   Charged according to the client’s purse

(b)   Done without compensation for the public good

(c)   Carried out in the prescribed form

(d)   Taken up from the beginning

Ans: ()

(Source: IIFT-2011)

I have tried to introduce into the discussion a number of attributes of consumer behaviour and motivations, which I believe are important inputs into devising a strategy for commercially viable financial inclusion. These related broadly to the (i) the sources of livelihood of the potential consumer segment for financial inclusion (ii) how they spend their money, particularly on non-regular items (iii) their choices and motivations with respect to saving and (iv) their motivations for borrowing and their ability to access institutional sources of finance for their basic requirements. In discussing each of these sets of issues, I spent some time drawing implications for business strategies by financial service providers. In this section, I will briefly highlight, at the risk of some repetition, what I consider to be the key messages of the lecture.

The first message emerges from the preliminary discussion on the current scenario on financial inclusion, both at the aggregate level and across income categories. The data suggest that even savings accounts, the most basic financial service, have low penetration amongst the lowest income households. I want to emphasize that we are not talking about Below Poverty Line households only; Rs. 50,000 per year in 2007, while perhaps not quite middle class, was certainly quite far above the official poverty line. The same concerns about lack of penetration amongst the lowest income group for loans also arise. To reiterate the question that arises from these data patterns: is this because people can’t access banks or other service providers or because they don’t see value in doing so? This question needs to be addressed if an effective inclusion strategy is to be developed.

The second message is that the process of financial inclusion is going to be incomplete and inadequate if it is measured only in terms of new accounts being opened and operated. From the employment and earning patterns, there emerged a sense that better access to various kinds of financial services would help to increase the livelihood potential of a number of occupational categories, which in turn would help reduce the income differentials between these and more regular, salaried jobs. The fact that a huge proportion of the Indian workforce is either selfemployed and in the casual labour segment suggests the need for products that will make access to credit easier to the former, while offering opportunities for risk mitigation and consumption smoothing to the latter.

The third message emerges from the analysis of expenditure patterns is the significance of infrequent, but quantitatively significant expenditures like ceremonies and medical costs. Essentially, dealing with these kinds of expenditures requires either low cost insurance options, supported by a correspondingly low-cost health care system or a low level systematic investment plan, which allows even poor households to create enough of a buffer to deal with these demands as and when they arise. As has already been pointed out, it is not as though such products are not being offered by domestic financial service providers. It is really a matter of extending them to make them accessible to a very large number of lower income households, with a low and possibly uncertain ability to maintain regular contributions.

The fourth message comes strongly from the motivations to both save and borrow, which, as one might reasonably expect, significantly overlap with each other. It is striking that the need to deal with emergencies, both financial and medical, plays such an important role in both sets of motivations. The latter is, as has been said, amenable to a low-cost, mass insurance scheme, with the attendant service provision. However, the former, which is a theme that recurs through the entire discussion on consumer characteristics, certainly suggests that the need for some kind of income and consumption smoothing product is a significant one in an effective financial inclusion agenda. This, of course, raises broader questions about the role of social safety nets, which offer at least some minimum income security and consumption smoothing. How extensive these mechanisms should be, how much security they should offer and for how long and how they should be financed are fundamental policy questions that go beyond the realm of the financial sector. However, to the extent that risk mitigation is a significant financial need, it must receive the attention of any meaningful financial inclusion strategy, in a way which provides practical answers to all these three questions.

The fifth and final message is actually the point I began the lecture with. It is the critical importance of the principle of commercial viability. Every aspect of a financial inclusion strategy — whether it is the design of products and services or the delivery mechanism — needs to be viewed in terms of the business opportunity that it offers and not as a deliverable that has been imposed on the service provider. However, it is also important to emphasize that commercial viability need not necessarily be viewed in terms of  immediate cost and profitability calculations. Like in many other products, financial services also offer the prospect of a life-cycle model of marketing.

Establishing a relationship with first-time consumers of financial products and services offers the opportunity to leverage this relationship into a wider set of financial transactions as at least some of these consumers move steadily up the income ladder. In fact, in a high growth scenario, a high proportion of such households are likely to move quite quickly from very basic financial services to more and more sophisticated ones. In other words, the commercial viability and profitability of a financial inclusion strategy need not be viewed only from the perspective of immediacy. There is a viable investment dimension to it as well.

1. Which of the following statements is incorrect?

(a)   In order to succeed, financial inclusion has to be commercially viable.

(b)   Savings account is one of the basic vehicles for financial inclusion.

(c)   Savings accounts have low penetration amongst “Below Poverty Line” households only.

(d)   There is lack of penetration for loans amongst the lowest income group.

Ans: ()

2. Which of the following statements is correct?

(a)   Financial inclusion is exclusively measured in terms of new accounts being opened and operated.

(b)   There is a felt need for better access to credit products for the self-employed.

(c)   It is felt that financial inclusion could be profitable from day one if a commercially viable strategy is devised.

(d)   Financial Institutions must deliver social service through financial inclusion.

Ans: ()

3. Identify the correct statement from the following:

(a)   Casual labour segment may not require risk mitigation products like insurance as their expenditures on consumption are high relative to their incomes.

(b)   Income of upto Rs. 60,000 per year is the benchmark for official Poverty Line.

(c)   Financial sector should also look into their role of broadening social safety nets.

(d)   Risk mitigation of casual labour must receive attention in any meaningful financial inclusion strategy.

Ans: ()

4. Identify the wrong statement from the following:

(a)   High expenditures on ceremonies and medical costs can be met through a low – level Systematic Investment Plan.

(b)   Given the high growth scenario of the country, only few of the consumers are expected to move up the income ladder.

(c)   Financial and medical emergencies motivate one to save and borrow.

(d)   There is an opportunity for banks to crosssell their products to the bottom of the pyramid.

Ans: ()

(Source: IIFT-2011)

Before the internet, one of the most rapid changes to the global economy and trade was wrought by something so blatantly useful that it is hard to imagine a struggle to get it adopted: the shipping container. In the early 1960s, before the standard container became ubiquitous, freight costs were I0 per cent of the value of US imports, about the same barrier to trade as the average official government import tariff. Yet in a journey that went halfway round the world, half of those costs could be incurred in two ten-mile movements through the ports at either end. The predominant ‘break-bulk’ method, where each shipment was individually split up into loads that could be handled by a team of dockers, was vastly complex and labour-intensive. Ships could take weeks or months to load, as a huge variety of cargoes of different weights, shapes and sizes had to be stacked together by hand. Indeed, one of the most unreliable aspects of such a labour-intensive process was the labour. Ports, like mines, were frequently seething pits of industrial unrest. Irregular work on one side combined with what was often a tight-knit, well – organized labour community on the other.

In 1956, loading break-bulk cargo cost $5.83 per ton. The entrepreneurial genius who saw the possibilities for standardized container shipping, Malcolm McLean, floated his first containerized ship in that year and claimed to be able to shift cargo for 15.8 cents a ton. Boxes of the same size that could be loaded by crane and neatly stacked were much faster to load. Moreover, carrying cargo in a standard container would allow it to be shifted between truck, train and ship without having to be repacked each time.

But between McLean’s container and the standardization of the global market were an array of formidable obstacles. They began at home in the US with the official Interstate Commerce Commission, which could prevent price competition by setting rates for freight haulage by route and commodity, and the powerful International Longshoremen’s Association (ILA) labour union. More broadly, the biggest hurdle was achieving what economists call ‘network effects’: the benefit of a standard technology rises exponentially as more people use it. To dominate world trade, containers had to be easily interchangeable between different shipping lines, ports, trucks and railcars. And to maximize efficiency, they all needed to be the same size. The adoption of a network technology often involves overcoming the resistance of those who are heavily invested in the old system. And while the efficiency gains are clear to see, there are very obvious losers as well as winners. For containerization, perhaps the most spectacular example was the demise of New York City as a port.

In the early I950s, New York handled a third of US seaborne trade in manufactured goods. But it was woefully inefficient, even with existing break-bulk technology: 283 piers, 98 of which were able to handle ocean-going ships, jutted out into the river from Brooklyn and Manhattan. Trucks bound‘ for the docks had to fiive through the crowded, narrow streets of Manhattan, wait for an hour or two before even entering a pier, and then undergo a laborious two-stage process in which the goods foot were fithr unloaded into a transit shed and then loaded onto a ship. ‘Public loader’ work gangs held exclusive rights to load and unload on a particular pier, a power in effect granted by the ILA, which enforced its monopoly with sabotage and violence against than competitors. The ILA fought ferociously against containerization, correctly foreseeing that it would destroy their privileged position as bandits controlling the mountain pass. On this occasion, bypassing them simply involved going across the river. A container port was built in New Jersey, where a 1500-foot wharf allowed ships to dock parallel to shore and containers to be lified on and off by crane. Between 1963 – 4 and 1975 – 6, the number of days worked by longshoremen in Manhattan went from 1.4 million to 127,041.

Containers rapidly captured the transatlantic market, and then the growing trade with Asia. The effect of containerization is hard to see immediately in freight rates, since the oil price hikes of the 1970s kept them high, but the speed with which shippers adopted; containerization made it clear it brought big benefits of efficiency and cost. The extraordinary growth of the Asian tiger economies of Singapore, Taiwan, Korea and Hong Kong, which based their development strategy on exports, was greatly helped by the container trade that quickly built up between the US and east Asia. Ocean-borne exports from South Korea were 2.9 million tons in 1969 and 6 million in 1973, and its exports to the US tripled.

But the new technology did not get adopted all on its own. It needed a couple of pushes from government – both, as it happens, largely to do with the military. As far as the ships were concerned, the same link between the merchant and military navy that had inspired the Navigation Acts in seventeenth-century England endured into twentieth-century America. The government’s first helping hand was to give a spur to the system by adopting it to transport military cargo. The US armed forces, seeing the efficiency of the system, started contracting McLean’s company Pan-Atlantic, later renamed Sea-land, to carry equipment to the quarter of a million American soldiers stationed in Western Europe. One of the few benefits of America’s misadventure in Vietnam was a rapid expansion of containerization. Because war involves massive movements of men and material, it is often armies that pioneer new techniques in supply chains.

The government’s other role was in banging heads together sufficiently to get all companies to accept the same size container. Standard sizes were essential to deliver the economies of scale that came from interchangeability – which, as far as the military was concerned, was vital if the ships had to be commandeered in case war broke out. This was a significant problem to overcome, not least because all the companies that had started using the container had settled on different sizes. Pan- Atlantic used 35-foot containers, because that was the maximum size allowed on the highways in its home base in New Jersey. Another of the big shipping companies, Matson Navigation, used a 24-foot container since its biggest trade was in canned pineapple from Hawaii, and a container bigger than that would have been too heavy for a crane to lift. Grace Line, which largely traded with Latin America, used a foot container that was easier to truck around winding mountain roads.

Establishing a US standard and then getting it adopted internationally took more than a decade. Indeed, not only did the US Maritime Administration have to mediate in these rivalries but also to fight its own turf battles with the American Standards Association, an agency set up by the private sector. The matter was settled by using the power of federal money: the Federal Maritime Board (FMB), which handed out to public subsidies for shipbuilding, decreed that only the 8 x 8-foot containers in the lengths of l0, 20, 30 or 40 feet would be eligible for handouts.

1. Identify the correct statement:

(a)   The freight costs accounted for around I0 per cent of the value of imports in general during early l960s, given the labour-intensive ‘break-bulk’ cargo handling.

(b)   As a result of growing adoption of containerized trade during 1969-73, while the ocean-borne exports from South Korea in general more than doubled, the same to the US tripled.

(c)   The outbreak of the Vietnam war functioned as a major positive force towards rapid expansion of containerization, as American imports from the country increased heavily.

(d)   In the early days of container trade development, a major shipping firm Matson Navigation used a 24-foot container since a bigger container was not suitable for its trucks.

Ans: ()

2. Identify the false statement:

(a)   In the pre-containerization days, trucks bound for the New York docks had to pass through the narrow streets, wait for an hour or two before even entering a pier, and then  undergo a laborious three-stage process for loading onto a ship.

(b)   Once satisfied with the effectiveness of containerized trade, the US military engaged the company of Malcolm McLean to transport equipments for their soldiers stationed in Western Europe.

(c)   Cargo loading during 1960s usually took a long period, as it involved manual handling of huge variety of cargoes of different weights, shapes and sizes.

(d)   The issue of standardization of the containers created led to a debate .between the US government and American Standards Association, but the question was finally sorted through public subsidy programme by Federal Maritime Board.

Ans: ()

3. The emergence of containerization technology in early seventies resulted in:

(a)   Immediate adoption of the containerized export route by private companies, in their own accord.

(b)   An instant sharp reduction in freight costs expressed as a percentage of imports across countries.

(c)   Spectacular growth in exports from the East Asian tiger economies, which were reliant on an export-oriented growth strategy.

(d)   All of the above

Ans: ()

4. Match the following

Set A                      Set B

ILA i. New Jersey

FMB ii. Mountain roads

Grace Line iii. Dockers

McLean iv. Standardization

(a)   a – i; b – iv, c – ii; d – iii

(b)   a – iii; b – i, c – iv; d – ii

(c)   a – iv; b – i, c – ii; d – iii

(d)   a – iii; b – iv, c – ii; d – i

Ans: ()

(Source: IIFT-2011)

Babur’s head was throbbing with the persistent ache that dogged him during the monsoon. The warm rain had been falling for three days now but the still.

heavy air held no promise of relief. The rains would go on for weeks, even months. Lying back against silken bolsters in his bedchamber in the Agra fort, he tried to imagine the chill, thin rains of Ferghana blowing in over the jagged summit of Mount Beshtor and failed. The punkah above his head hardly disturbed the air. It was hard even to remember what it was like not to feel hot. There was little pleasure just now even in visiting his garden the sodden flowers, soggy ground and overflowing water channels only depressed him.

Babur got up and tried to concentrate on writing an entry in his diary but the words wouldn’t come and he pushed his jewel-studded inkwell impatiently aside. Maybe he would go to the women’s apartments. He would ask Maham to sing. Sometimes she accompanied herself on the round-bellied, slendernecked lute that had once belonged to Esan Dawlat. Maham lacked her grandmother’s but the lute still made a sweet sound in her hands.

Or he might play a game of chess with Humayun. His son had a shrewd, subtle mind — but so, he prided himself, did he and he could usually beat him. It amused him to see Humayun’s startled look as he claimed victory with the traditional cry shah mat — ‘check-mate’, ‘the king is at a loss’. Later, they would discuss Babur’s plans to launch a campaign when the rains eased against the rulers of Bengal. In their steamy jungles in the Ganges delta, they thought they could defy Moghul authority and deny Babur’s overlordship.

‘Send for my son Humayun and fetch my chessmen,’ Babur ordered a servant. Trying to shake off his lethargy he got up and went to a casement projecting over the riverbank to watch the swollen, muddy waters of the Jumna rushing by. A farmer was leading his bony bullocks along the oozing bank.

Hearing footsteps Babur turned, expecting to see his son, but it was only the white-tunicked servant.

‘Majesty, your son begs your forgiveness but he is unwell and cannot leave his chamber.’

What is the matter with him?’

‘I do not know, Majesty.’

Humayun was never ill. Perhaps he, too, was suffering from the torpor that came with the monsoon, sapping the energy and spirit of even the most vigorous. ‘I will go to him.’ Babur wrapped a yellow silk robe around himself and thrust his feet into pointed kidskin slippers. Then he hurried from his apartments to Humayun’s on the opposite side of a galleried courtyard, where water was not shooting as it should, in sparkling arcs from the lotus-shaped marble basins of the fountains but pouring over the inundated rims.

Humayun was lying on his bed, arms thrown back, eyes closed, forehead beaded with sweat, shivering. When he heard his father’s voice he opened his eyes but they were bloodshot, the pupils dilated. Babur could hear his heavy wheezing breathing. Every scratchy intake of air seemed an effort which hurt him.

‘When did this illness begin?’

‘Early this morning, Father.’

‘Why wasn’t I told?’ Babur looked angrily at his son’s attendants. ‘Send for my hakim immediately!’ Then he dipped his own silk handkerchief into some water and wiped Humayun’s brow. The sweat returned at once — in fact, it was almost running down his face and he seemed to be shivering even more violently now and his teeth had begun to chatter.

‘Majesty, the hakim is here.’

Abdul-Malik went immediately to Humayun’s bedside, laid a hand on his forehead, pulled back his eyelids and felt his pulse. Then, with increasing concern, he pulled open Humayun’s robe and, bending, turned his neatly turbaned head to listen to Humayun’s heart.

‘What is wrong with him?’

Abdul-Malik paused. ‘It is hard to say, Majesty. I need to examine him further.’ ‘

Whatever you require you only have to say…’

‘I will send for my assistants. If I may be frank, it would be best if you were to leave the chamber, Majesty. I will report to you when l have examined the prince thoroughly – but it looks serious, perhaps even grave. His pulse and heartbeat are weak and rapid.’ Without waiting for Babur’s reply, Abdul-Malik turned back to his patient. Babur hesitated and, after a glance at his son’s waxen trembling face, the room. As attendants closed the doors behind him he found that he, too, was trembling.

A chill closed round his heart. So many times he had feared for Humayun. At Panipat he could have fallen beneath the feet of one of Sultan Ibrahim’s war elephants. At Khanua he might have been felled by the slash of a Rajput sword. But he had never thought that Humayun — so healthy and strong — might succumb to sickness. How could he face life without his beloved eldest son? Hindustan and all its riches would be worthless if Humayun died. He would never have come to this sweltering, festering land with its endless hot rains and whining, bloodsucking mosquitoes if he had known this would be the price.

QUESTION:

1. Babur was feeling depressed because…

(A) the rulers of Bengal were defying Moghul authority 

(B) he could not usually beat Humayun at chess 

(C) he did not like the warm rains and the heaviness of monsoon air 

(D) Maham could not play the lute as well as her grandmother 

Show Answer

2. Which among the following things did Babur not consider doing to relieve himself of depression?

(A) Go to the women’s apartments 

(B) Visit his garden 

(C) Play a game of chess with Humayun 

(D) Listen to Maham sing 

Show Answer

3. What was it that Babur currently feared for Humayun?

(A) Humayun could fall beneath the feet of war elephants 

(B) Humayun could be felled by the slash of a sword 

(C) Humayun may not be treated properly by the Hakim 

(D) Humayun might succumb to sickness 

Show Answer

4. According to this passage, which of the following has not been used to describe Humayun?

(A) Shrewd and subtle minded 

(B) Healthy and strong bodied 

(C) Neatly turbaned head 

(D) Father’s beloved 

Show Answer

(Source: IIFT-2012)

Not many people saw it coming. It had seemed that the time for Kaun Banega Crorepati had come and gone. This column argued as much a few years ago, when Shah Rukh Khan took over the reigns of the show. He did well enough, but it still seemed that the time for the genteel game of knowledge had passed.

There was too much blood in reality television, and KBC simply did not have enough platelets for it. It had no backbiting intrigue, it lacked a cast of almostlosers and missed the low-life loquaciousness of other reality shows, and nothing ever needed to be beeped out on it, a sure touch that it was out of touch with the times.

And yet, not only is KBC back, but it is back in a very real sense not just as a TV show that gets good ratings, but as an idea that connects with something deep and real in our lives. What makes this particularly interesting is that not very much has changed in the show. Its focus has shifted to smaller towns and an ‘aadmi’ more ‘aam’, and the prize money has gone up over the years, but these are minor adjustments, not major departures. The format is pretty much the same and the return of Amitabh Bachchan restores to the show both the gravitas and the empathy that has been its hallmark.

Perhaps KBC works because it reconciles many competing ideas for us. For a show that bestows undreamt of wealth on people who win. and does so with reasonable regularity, KBC manages somehow to rise above the money it throws around. By locating money squarely in the context of small dreams, family and community, KBC shows us a face of money that is ennobling. The money of KBC is treated not as a jackpot but as a ‘vardaan’, a gift from divinity that comes for one’s persistent effort, a prize for the penance called ordinary life. The images that surround the winners are not big cars and fancy brands. but houses made ‘pukka’ and IAS dreams pursued. The winners have been remarkable ambassadors for the show, focusing not what the money buys them but what it enables them to work at in the future. Money speaks in the language of responsibility, not indulgence and steeps a larger collective in its pleasing warmth.

The format of the show ensures that we see people as they are, rather than the usual sight of raw innocents losing their transparent naiveté in a haze of hair dye and exfoliation. On other reality shows, fame and money are insistent in transforming those that they favour and what they tell us is that success must put distance between destination and sources. between who we are and what we must become. On it iw the innocence that is spoken to and as an audience it is this quahty we respond to. When a Sushi] Kumar descnbes hfe and  attributes his success to his_wife, who in turn is quick to shyly shrug off the credit, we see, for once, something that smacks of the real on a reality show.

As the reality show evolved, it found reality too boring and vapid. It was so much for fun to manufacture it by making people act in unpleasant ways. and say unsavoury things to each other. Now, no reality show can really bring us reality; any act of representation and framing creates its own version of reality in many different ways I by aestheticizing it. emotionalising moments, dramatising revelations, withholding information selectively, or by imbuing some moments with significance, while ignoring others and even KBC uses these techniques. The difference is that it uses these to drive us towards the central premise of the show rather than see those as individual ‘masala’ elements. In a world where television is racked by anxiety about itself, and where every new season is an exercise in renewed desperation, KBC stands apart by continuing to tell a human story about dreams and their fulfilment and doing so without trying too hard.

There is no question that KBC rests on the persona of Amitabh Bachchan for he reconciles for us the idea of fame and humility, of achievement and empathy in the way he treats the participants. He has a special ability to look into the ordinary and find something special and the humility to be awed by it. He is simultaneously. The Amitabh Bachchan, the wax God who we touch and squeal when we find out that it is real and a fellow sympathizer and co-traveller on the journey called life. As a carrier of life-altering destiny, he underplays his role to perfection, acknowledging the enormity of that winning means for the participant while revealing the wisdom that knows that it is only money. Under his steerage money is no longer cold acquisitive urgency but warm with unfolding possibility KBC shows us, close-up and in slow motion, the act of a miracle colliding with a dream. In doing so, it tells us that money can change things for the better, when it finds the right home. By applying good fortune to good intention, It keeps the miracle alive, well after the movement of impact. As the winners no doubt find out, one can never have enough money, and that relative scale makes everyone a relative pauper. In the final analysis, Kaun Banega Crorepati reveals both the nobility and the eventual poverty of money, no matter if it comes in eight figures.

QUESTION:

1. According to the author’s opinion a few years before writing this article, which of the following appeared to be in store for KBC?

(A) i only 

(B) i and ii only 

(C) ii and iii 

(D) i and iv 

Show Answer

2. Unlike most reality shows, KBC has gained viewership on television by

(A) Using glamorous participants on the show 

(B) Getting participants to say unpleasant things about the truth of life 

(C) Making major adjustments to its format time and again 

(D) Connecting with the depth and reality of lives of people 

Show Answer

3. According to the author, KBC presents the prize money as

(A) a means for indulgence 

(B) a jackpot 

(C) a reward for relentless work 

(D) a reason for changing the real person 

Show Answer

(Source: IIFT-2012)

The first thing I learned at school was that some people are idiots; the second thing I learned was that some are even worse. I was still too young to grasp that people of breeding were meant to affect innocence of this fundamental distinction. and that the same courtesy applied to any disparity that might rise out of religious. racial, sexual class, financial and (latterly) cultural difference. So in my innocence I would raise my hand every time the teacher asked a question, just to make it clear I knew the answer.

After some months of this, the teacher and my classmates must have been vaguely aware I was a good student, but still I felt the compulsion to raise my hand. By now the teacher seldom called on me, preferring to give other children a chance to speak, too. Still my hand shot up without my even willing it, whether or not l knew the answer. If I was putting on airs, like someone who even in ordinary clothes, adds a gaudy piece of jewellery, it’s also true that I admired my teacher and was desperate to cooperate.

Another thing I was happy to discover at school was the teacher’s ‘authority’. At home, in the crowded and disordered Pamuk Apartments, things were never so clear; at our crowded table, everyone talked at the same time. Our domestic routines, our love for one another, our conversations, meals and radio hours; these ‘were never debated — they just happened. My father held little obvious authority at home, and he was often absent. He never scolded my brother or me, never even raised his eyebrows in disapproval. In later years, he would introduce us to his friends as ‘my two younger brothers’, and we felt he had earned the right to say so. My mother was the only authority I recognised at home. But she was hardly a distant or alien tyrant: her power came from my desire to be loved by her. And so – I was fascinated by the power my teacher wielded over her twenty-five pupils.

Perhaps I identified my teacher with my mother, for I had an insatiable desire for her approval. ‘Join your arms together like this and sit down quietly,’ she would say, and I would press my arms against my chest and sit patiently all through the lesson. But gradually the novelty wore off; soon it was no longer exciting to have every answer or solve an arithmetic problem ahead of everyone else or earn the highest mark; time began to flow with painful slowness, or stop flowing altogether.

Turning away from the fat, half-witted girl who was writing on the blackboard, who gave everyone — teachers, school caretakers and her classmates — the same vapid, trusting smile, my eyes would float to the window, to the upper branches of the chestnut tree that I could just see rising up between the apartment buildings. A crow would land on a branch. Because I was viewing it from below, I could see the little cloud floating behind it — as it moved, it kept changing shape: first a fox’s nose, then a head, then a dog. I didn’t want it to stop looking like a dog, but as it continued its journey it changed into one of the fourlegged silver sugar bowls from my grandmother’s always—locked display case, and I’d long to be at home. Once I’d conjured up the reassuring silence of the shadows of home, my father would step out from them, as if from a dream, and off we’d go on a family outing to the Bosphorus. Just then, a window in the apartment building opposite would , open, a maid would shake her duster and gaze absentmindedly at the street that I could not see from where I was sitting. What was going down there? I’d wonder. I’d hear a horse cart rolling over the cobblestones, and a rasping voice would cry out ‘Eskiciiiiiii! The maid would watch the junk dealer make his way down the street before pulling her head back inside and shutting the window behind her, but then, right next to that window, moving as fast as the first cloud but going in the opposite direction, I’d see a second cloud. But now my attention was called back to the classroom, and seeing all the other raised hands, I would eagerly raise my hand too: long before I worked out from my classmates’ responses what the teacher had asked us, I was foggily confident I had the answer.

It was exciting, though sometimes painful, to get to know my classmates as individuals, and to find out how different they were from me. There was that sad boy who, whenever he was asked to read out loud in Turkish class, would skip every other line; the poor boy’s mistake was as involuntary as the  laughter it would elicit from the class. In first grade, there was a girl who kept her red hair in a ponytail, who sat next to me for a time. Although her bag was a slovenly jumble of half-eaten apples, simits, sesame seeds, pencils and hair bands, it always smelled of dried lavender around her, and that attracted me; I was also drawn to her for speaking so openly about the little taboos of daily life, and if I didn’t see her at the weekend, I missed her, though there was another girl so tiny and delicate that I was utterly entranced by her as well. Why did that boy keep on telling lies even knowing no one was going to believe him‘? How could that girl be so indiscreet about the goings-on in her house? And could this other girl be shedding real tears as she read that poem about Ataturk?’

Just as I was in the habit of looking at the fronts of cars and seeing noses, so too did I like to scrutinize my classmates, looking for the creatures they resembled. The boy with the pointed nose was a fox and the big one next to him was, as everyone said, a bear, and the one with the thick hair was a hedgehog… I remember a Jewish girl called Mari telling us all about Passover — there were days when no one in her grandmother’s house was allowed to touch the light switches. Another girl reported that one evening, when she was in her room, she turned around so fast she glimpsed the shadow of an angel — a fearsome story that stayed with me. There was a girl with very long legs who wore very long socks and always looked as if she was about to cry; her father was a government minister and when he died in a plane crash from which Prime Minister Menederes emerged without a scratch, I was sure she’d been crying because she had known in advance what was going to happen. Lots of children had problems with their teeth; a few wore braces. On the top floor of the building that housed the lycée dormitory and the sports hall, just next to the infirmary, there was rumoured to be a dentist, and when teachers got angry they would often threaten to send naughty children there. For lesser infractions pupils were made to stand in the corner between the blackboard and the door with their backs to the class, sometimes one leg, but because we were all so curious to see how long someone could stand on one leg, the lessons suffered, so this particular punishment was rare.

QUESTION:

1. Who is the least talked about character in this passage?

(A) Mother

(B) Classmates

(C) Grandmother

(D) Teacher

Show Answer

2. Which among the following cannot be concluded from this passage?

(A)  The author was a good student but sometimes felt bored in class 

(B)  The author got along fairly well with his classmates 

(C)  The author came from a very authoritarian home environment 

(D)  The author had an imaginative mind 

Show Answer

3. What did the teachers do when they get angry?

(A) Sent the students to the infirmary 

(B) Denied them a chance to answer questions 

(C) Made them join their hands together and sit quietly 

(D) Threatened to send them to the dentist 

Show Answer

(Source: IIFT-2012)