Decision Making – A Multinational Company (MNC) sources pristine


XAT 2020 Exam Paper – Decision Making – A Multinational Company (MNC) sources pristine

Read the situation below and answer the 3 associated questions:
A Multinational Company (MNC) sources pristine natural spring water from Bori, a village in Satpura mountains. The unprocessed natural spring water is directly bottled by the MNC. The company brands it as “Natural Spring Water” and sells at 50% premium vis-a-vis other brands that sell processed water.
The local panchayat, under the Panchayati Raj Act, 1992 controls the spring water usage. Hence, the company signed a 30-year contract with the panchayat for exclusive access to the spring water for business purposes. This contract contributes 50% to the panchayat’s revenues besides providing 250 jobs in the panchayat. The spring also meets domestic and agricultural needs of the people of Bori and the surrounding villages.

Question 1
Chanchala owns a small parcel of farming land in Bori. She grows cannabis in some part of her land and earns a significant amount of money from it. Soon after the bottling plant was commissioned, Chanchala, instigated by a landlord with a vested interest, starts accusing the MNC of robbing her of water and impacting her livelihood. She threatens to take the MNC to court.
Which of the following options will BEST solve the MNC’s problem?

  1. Promise to employ Chanchala’s 17-year-old son as he turns 18
  2. Request the panchayat to excommunicate Chanchala for cultivating cannabis
  3. Buy Chanchala’s produce at a premium of 30% to the market price
  4. Get the villagers employed by the MNC to persuade Chanchala not to sue
  5. Compensate the monetary loss as perceived by Chanchala

Answer: D

Question 2
The MNC has spotted traces of chemicals in their fortnightly water quality analysis. The MNC realizes that this is due to the contaminated agricultural runoff, flowing into the spring from the nearby fields where farmers use pesticides and fertilizers. This requires an immediate solution. Which of the following options will BEST resolve the situation for the MNC?

  1. Continue bottling the natural spring water without processing since the villagers drink it as it is
  2. Since the customers trust the MNC to do what is good for them, remove the contaminants and continue to brand as “Natural Spring Water”
  3. Rebrand “Natural Spring Water” as “Purified Spring Water” after removing the contaminants through charcoal filtering
  4. Close down the bottling plant until the problem is resolved and inform the media that customer interests override profit concerns
  5. Source water from an uncontaminated natural spring 150 kms away at an addition of 50% to the total cost

Answer: E

Question 3
The MNC is concerned about chemical contamination of the natural spring water due to the agricultural runoff with pesticides and fertilizers. The MNC is looking for a sustainable solution to this contamination. Which of the following courses of action will BEST solve the issue?

  1. Negotiate with the Panchayat to gain control of the entire spring and provide alternate sources of irrigation for farming
  2. Change branding from “Natural Spring Water” to “Processed Drinking Water”
  3. Move to another state with unexploited natural springs
  4. Coax the farmers in the natural spring’s catchment to move to organic farming
  5. Acquire all agricultural land in the natural spring’s catchment and afforest them
Answer: D



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