XAT 2020 — Decision Making Question 9
Read the following paragraph carefully and answer the question that follows:
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
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?
Answer & solution
- A
Since the customers trust the MNC to do what is good for them, remove the contaminants and continue to brand as “Natural Spring Water”.
- B
Continue bottling the natural spring water without processing since the villagers drink it as it is.
Source water from an uncontaminated natural spring 150 kms away at an addition of 50% to the total cost.
- D
Close down the bottling plant until the problem is resolved and inform the media that customer interests override profit concerns.
- E
Rebrand “Natural Spring Water” as “Purified Spring Water” after removing the contaminants through charcoal filtering.
Options 1 and 2 are ethically incorrect. Option 4 is incorrect as well since the company will be at a loss till the bottling plant remains closed. Also, there is no fixed time as to when the problem will be resolved. Option 5 is incorrect as the company sells this water sells at 50% premium which they will not be able to charge if they rebrand this water. Only option 3 is the immediate solution to this problem.
Hence, option (c).