XAT 2018 — Decision Making Question 12
Answer the following question based on the information given below.
Ava is the CEO of Ratan Brothers, a bicycle manufacturing company. The organization is doing well financially, with a steadily increasing share price. Recently, Ava promoted Bhushan, her nephew, to the position of head of procurement after he completed five years in the organization. After the promotion, he was automatically inducted into the quality council headed by Ava. Dev and Sons is a supplier to Ratan Brothers. It supplies “ball bearings”, an important part of any bicycle. After Bhushan took over, he switched to a new supplier citing quality deficiencies in Dev and Sons’ product. Dev and Sons responded by publicly declaring that quality was not compromised. Further, it alleged that its competitor bribed Bhushan to get the contract. Post this public allegation, the share price of Ratan Brothers started falling.
A few months after the issue of Dev and Sons, a vigilance committee discovered some financial irregularities attributable to Bhushan in his earlier stint as a senior manager in marketing. The board of directors was concerned about this and demanded a response from the CEO. Ava contemplated following responses:
- Offer to resign from the post of CEO, since as the CEO she is ultimately responsible for everything in the organization.
- Sack Bhushan immediately and make the reason public.
- Have a town hall meeting with all the employees and deny any financial irregularities in the organization.
- Communicate to the board that as the CEO, the organization's financial health is her top priority, on which she has delivered stellar performance in the last five years.
- Inform the board that Bhushan was promoted because his initiatives helped the company immensely.
Which of the following sequence of actions is the most appropriate for Ava?
Answer & solution
5,2,1
- B
5,4,3
- C
1,2,3
- D
2,1,4
- E
3,4,1
Since a vigilance committee has discovered some financial irregularities attributable to Bhushan, people would start questioning the reasons behind his promotion in the company. There can also be negative speculations that Bhushan was promoted because he was Ava’s nephew. This may harm the company’s reputation. Thus, it would help the company to clarify that Bhushan was promoted because his initiatives helped the company immensely. Hence, [5] would be an appropriate starter. After this, the company would have to terminate his services as he was found guilty of being party to some financial irregularities. Thus, [2] would follow next. Finally, to claim the moral high ground, Ava would have to offer her resignation as she was ultimately responsible as a CEO. Thus, [1] would be the last step. [3] cannot be followed as denying the occurrence of financial regularities is not an option since they have been proven by the vigilance committee. Also, [4] is not relevant in the context as the
organization's financial health has not been called into question.
Hence, the correct answer is option 1.