University of Delhi 2008 M.B.A Faculty of Management Studies (FMS) - Question Paper

rife, various considerations apply. Counterfeiters are able to
tap a vast pool of low cost labor, which has no access to the
sort of welfare benefits available in well developed
industrialized countries. In addition, taxes are minimal or
nonexistent, and counterfeiters can masquerade as Robin
Hood figures providing a valuable service for the community at
the expense of ‘wealthy” rights owners ... the message is that
(while counterfeiting does destroy the jobs of victim
companies and their suppliers...it does create jobs for those in
the counterfeiting industry. This of course may well be one
cause why countries that have become well known as havens
of counterfeiting have been reluctant to clamp down on this
industry too hard.”
—Peter Lowe, Counterfeiting Intelligence Bureau
In those economies where counterfeiting is an industry
itself, jobs are created when counterfeiters employ people to
make fake products. In 1 startling example defined by the
Counterfeiting Intelligence Bureau, an investigator in China
visiting the city of Wenzhou, about 400 kilometres south of
Shanghai, uncovered a vast industrial zone, with perhaps as
many as a thousand companies engaged in the business of
producing counterfeit low-voltage electrical switchgear. The
investigator estimated that somewhere ranging from 2,00,000 to
3,00,000 people were employed in these businesses.
Although this kind of employment may appear as a
benefit to those being employed, it often has other issues
associated with it. The identical investigator who defined the
switchgear counterfeiting industry in Wenzhou also defined
seeing child labor in the different establishments producing
fake products. He defined unsafe working conditions, with
the assembly of finished goods often taking place on the
street. Workers are paid by the piece, and unprotected by any
insurance, benefits, union representation, or holidays.
Poor working conditions are endemic throughout much of
the developing world—where much counterfeiting takes place.
But 1 key difference ranging from being employed by a
counterfeiter and being employed by a legitimate industry is
obvious : Counterfeiters have little long-term incentive to
improve working conditions, and any legislation or change in
government policy would not likely affect counterfeiters. When
government interference or regulation becomes too onerous—
or makes counterfeiting too risky an occupation in a certain
location—the counterfeiters simply move to a more conducive
locale.
It may not come as a surprise, though, to realize that
support in local communities for counterfeiters can be quite
high—these establishments, while illegal, create employment.
Often this support can overwhelm government attempts to
enforce crack downs :
A violent conflict erupted in Xintang Town, Zengchen City
when 5,000 people who were involved in the manufacture of
fake jeans and other imitation products confronted a team of
government officials who had been sent to crack down on the
trade in counterfeits. In what must have been a chilling
experience for the enforcers, the local people surrounded the
motorcade of more than 60 government officials, reporters and
public security officers from Guangzhou who had come to
maintain order. The situation turned critical when a few of the
local people threatened to disarm the public security officials. A
“stand off” of more than 3 hours ensued after which
negotiations were started which finally diffused the situation.
The costs of hosting counterfeiting to a community are
not simply those normally associated with low wages and child
labor in unsafe conditions. More far-reaching consequences are
being uncovered as the scope of counterfeiting throughout the
globe has become more apparent. In the McKinsey Quarterly in
the spring of 2000, a group of McKinsey consultants looked at
the Russian economy’s inability to generate growth throughout
the 1990s. Among the factors cited as contributing to the poor
labor productivity and the disincentive to invest in research
and development was counterfeiting:
The software industry, 1 of the prime creators of jobs
and value in healthy modern economies, employs a mere 8,000
workers in Russia, compared with 6,40,000 in the United States.
Why is this important industry so small? For starters, 89% of all
packaged software in Russia is produced illegally. Russian
packaged-software firms, therefore, can’t produce sufficient
returns to justify investing in new products, or in research and
development to improve existing ones. In addition, the softwareconsuming
sectors, whose demand drives the emergence and
growth of software firms, are both smaller and less interested in
productivity-enhancing software tools than are their Western
counterparts. In modern economies, for example, supermarkets
—with their complex inventory management systems—are big
consumers of software, but Russia has few of them. Similarly,
modern banks use software to keep costs low and customer
service high, but in Russia, where success in banking depends
on relationships with the authorities, the demand for banking
software is nearly nonexistent relative to demand in the United
States.
This conclusion was echoed in the Counterfeiting
Intelligence Bureau’s book Countering Counterfeiting, which
also concluded that “another national consequence resulting
from the costs incurred by ‘victim’ companies is a general
decline in R&D, since a company cannot expect the full return
from its investment.
In addition, the Organization for Economic Cooperation
and Development (OECD) has highlighted the loss of direct
foreign investment that can arise as a outcome of a country
becoming known as a haven for counterfeiting. In the OECD’s
own report on the Economic Impact of Counterfeiting (1998),
the organization writes that “such countries suffer both
tangible and intangible losses... foreign producers of reputable
products become reluctant to manufacture their products in
countries where counterfeiting is rife as they cannot rely on
the enforcement of their intellectual property rights. Hence,
such countries not only lose direct foreign investment but also
miss out on foreign know-how.”
While counterfeiting can create jobs, it can also create a
series of other issues that ultimately could lead to an
economy being less competitive, less integrated into the
stream of international commerce, and less productive than
economies where governments select to crack down on
counterfeiters.

83. Which 1 of the subsequent would be a suitable title
for the passage?
(1) Economic and social consequences of counterfeiting
(2) The irony of counterfeiting as a creater of employment
(3) Social consequences of counterfeiting
(4) Advantages and disadvantages of counterfeiting

84. Based on the arguments presented in the passage
which concrete inference can be made regarding
counterfeiting:
(1) counterfeiting exists because there is a market for it
(2) all of the above
(3) counterfeiting is a necessary evil in developing
countries as it generates employment
(4) counterfeiting hurts the economy of developed
nations

85. In Russia the software industry is small because:
(1) almost 90% packaged software is illegal and therefore
its market also is limited
(2) all of the above
(3) very little money is invested in R&D needed for
developing new softwares that can help the industry
grow
(4) Russian banks and supermarkets do not need complex
software solutions, and so there is no market for
software development in this area

86. elaborate a few of the consequences of counterfeiting
in developing countries?
(1) It perpetuates poor global work ethics
(2) (3) and (4)
(3) It encourages exploitation of labour
(4) It discourages investments in research and
development

87. Which statement is true?
(1) The confrontation ranging from the crackdown team
against counterfeiting and thousands of people
involved in manufacture of counterfeit goods turned
violent in Xintang Town, Zengchen city
(2) All the statements are actual
(3) 5,000 people from Wenzhou confronted 60
government officials from Guangzhao
(4) People of Zengchen city were exploited by their
employers and worked in poor conditions

88. In the final analysis who benefits from counterfeiting?
(1) Counterfeiting organization and its employees
(2) No one
(3) Developing countries and its people
(4) The counterfeiting organization

89. What recommendations would you like to make to
developing countries which engage in producing counterfeit
goods?
(1) The passage does not give info for making
recommendations
(2) Allow global regulatory agencies to independently
handle the counterfeit economy
(3) Clamp down on organizations which produce
counterfeit goods
(4) Allow employment through counterfeit but force, such
organizations, to give better work conditions to
the employees

90. Which cluster according to you is the best solution for
handling the issue of counterfeiting?
(1) Play of market forces; sanctions; allow counterfeiting
(2) None of the above
(3) Allow counterfeiting; regulate work conditions; invest
in R&D
(4) MOU ranging from original and counterfeiting
organization; government regulation; activism


SECTION—III

91. A managing committee of seven members is to be
constituted from a group comprising eight gentlemen and five ladies.
What is the probability that the committee would comprise 2
ladies?

92. 1 junior learner is asked to divide half a number
by six and the other half by four and then add the volumes.
Instead of doing so, the learner divides the provided number by
5. If the ans is four short of the accurate answer, then the true
number is:
(1) 320 (2) 360 (3) 480 (4) 400

93. If ‘p’ and ‘q’ are the roots of x2 + x + one = 0, then the
value of p3 + q3 becomes:
(1) four (2) –4 (3) two (4) –2

94. The value of ‘x’ for the formula x2 + 9x + 18 = six – 4x
are:
(1) (–1, –12) (2) (1, 12)
(3) (–1, 12) (4) (1, –12)

95. The market value of a 10.5% stock, in which an
income of Rs 756 is realised by investing Rs 9,000, the
brokerage being 0.25%, is:
(1) Rs 124.75 (2) Rs 112.20
(3) Rs 125.25 (4) Rs 108.25

96. Distributor of a canned apple juice has 5,000 cans in
the store that it intends to distribute in a provided quarter.
Experience indicates that the demand, D in number of cans can be
expressed as follows:
D = –2000 p2 + 2000 p + 17,000
The price per can that would outcome in zero inventory
(stock) would be:
(1) Rs 2
(2) Cannot be determined on the basis of the data provided
(3) Rs 3
(4) Rs 5

97. A manufacturer produces 80 television (TV) sets at a
cost of Rs 2,20,000 and 125 TV sets at a cost of Rs 2,87,500.
Assuming cost curve to be linear (straight line), the cost of 95
sets would be:
(1) Rs 2,42,500
(2) Cannot be determined on the basis of the data provided
(3) Rs 26,12,500
(4) Rs 2,18,500

98. The formula of the straight line passing through
the points (–5, 2) and (6, –4) is:
(1) 6x + 11y + eight = 0 (2) x + y – four = 0
(3) 11x + 6y + eight = 0 (4) x + y + four = 0
99. The point of intersection ranging from the straight lines
3x + 2y = six and 3x – y = 12 should lie in:
(1) third quadrant (2) fourth quadrant
(3) first quadrant (4) second quadrant

100. A right angled triangle is formed by the straight
line 4x + 3y = 12 with the axes. The length of the perpendicular
from the origin to the hypotenuse would be:
(1) 3.5 units (2) four units
(3) 4.2 units (4) 2.4 units

Earning:   Approval pending.