FINAL EXAMINATION SET - 1

MODEL ANSWERS TERM – DECEMBER 2023

PAPER – 20C SYLLABUS 2022
ENTREPRENEURSHIP AND STARTUP
Time Allowed: 3 Hours Full Marks: 100
The figures in the margin on the right side indicate full marks.

SECTION – A (Compulsory)

1. Choose the correct option: [15 x 2 = 30]

(i) SAMRIDH scheme was launched on

a. 1st January 2021
b. 25th August 2021
c. 15th August 2021
d. 25th December 2021

(ii) Permanent working capital is alternatively known as –

a. Rigid
b. Fixed
c. Regular
d. All of the above

(iii) Characteristics of an entrepreneur:

a. Assumes all the risk associated with a venture
b. Have the perseverance
c. Positive thinker
d. All of the above

(iv) A good decision maker should not be -

a. Objective and practical
b. Systematic and logical
c. Negative thinker
d. None of the above

(v) Which one of the following is not Angel Investor in India?

a. Angel Network
b. Mumbai Angels
c. Angel Kolkata
d. Hyderabad Angels

(vi) _______________entails analyzing the relationship between dependent variables to determine

how a change in one may affect the change in another.
a. Regression analysis
b. Factor analysis
c. Time Series Analysis
d. Cohort Analysis

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Directorate of Studies, The Institute of Cost Accountants of India
 FINAL EXAMINATION SET - 1
MODEL ANSWER TERM – DECEMBER 2023
PAPER – 20C SYLLABUS 2022
ENTREPRENEURSHIP AND STARTUP

(vii) ___________ takes a large data set and shrinking it to a smaller data set. The goal of this
techniqueis to attempt to discover hidden trends that would otherwise have been more
difficult to see.
a. Regression analysis
b. Factor analysis
c. Time Series Analysis
d. Cohort Analysis

(viii) A lean startup is a strategy used ____________ on behalf of a present entrepreneur.

a. to initiate a new company
b. to launch a new product
c. to initiate a new company or launch a new product
d. none of these

(ix) ________________ is the process of determining new products’ position in the minds of
consumers.
a. Product Positioning
b. Targeting
c. Marketing Traction
d. Marketing innovation

(x) Steps of Elevator Speech consists of

a. Purpose of identifying
b. Explanation of what makes
c. Unique selling proposition of identification
d. All of the above

(xi) Choose the one which is not a type of Risk Monitoring –

a. Voluntary
b. Obligatory
c. Interest rate risk
d. Continual

(xii) Enterprise risk management includes

a. financial risks
b. strategic risks
c. operational risks
d. All of the above

(xiii) Why is it important to have an environmental business objective?

a. To address government targets
b. To reduce staff turnover
c. To keep customer base
d. To be competitive

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Directorate of Studies, The Institute of Cost Accountants of India
 FINAL EXAMINATION SET - 1
MODEL ANSWER TERM – DECEMBER 2023
PAPER – 20C SYLLABUS 2022
ENTREPRENEURSHIP AND STARTUP
(xiv) _____________ views that moral or ethical systems, may vary from culture to culture, but no
one system is better than other.
a. Cross culture
b. Consumerism
c. Cultural relativism
d. Corporate culture

(xv) In a family business _________ share are controlled by the members of family.
a. 40%
b. 20%
c. More than 50%
d. 30%

Answer:

(i) (ii) (iii) (iv) (v) (vi) (vii) (viii) (ix) (x) (xi) (xii) (xiii) (xiv) (xv)
b d d c c a b a a d c d a c c

SECTION-B
(Answer any 5 questions out of 7 questions given. Each question carries 14 marks.)
2. (a) “To give direction to the vision formulated by the entrepreneur, business planning process is
very important.’ Recommend the steps involved in it. [7]

(b) “Marketers are skilled at stimulating demand for their products, but that’s a limited view of
what they do. They also seek to influence the level, timing, and composition of demand to meet
the organization’s objectives.” – discuss the eight demand states involved. [7]

Answer:

(a) To give direction to the vision formulated by the entrepreneur, business planning process is very
important. Following are the steps involved in it:
Step 1 : Generate an idea : Solve a problem for people or create a product or services that fills
a need.
Step 2 : Do some market research : Make a study to look into what others are already doing in
this field. Figure out if demand is strong or not.
Step 3 : Make a plan : Design your product or service. Outline the steps it will take to build your
business and your brand.
Step 4 : Arrange your finances : Does your business need cash to get started? If so, consider
your assets, loans, crowdfunding, and other potential sources.
Step 5 : Do the legal formalities : Select the name of your firm, create a website, and file for any
licenses. Choose your business structure, whether a sole proprietorship, Partnership,
LLP, One Person Company, Private Limited or Public Limited Company.
Step 6 : Marketing of products or services : Start promoting your business online and in social
media. Consider creating an advertising budget so you can increase your reach as your
business grows.

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 FINAL EXAMINATION SET - 1
MODEL ANSWER TERM – DECEMBER 2023
PAPER – 20C SYLLABUS 2022
ENTREPRENEURSHIP AND STARTUP

(b) Marketers are skilled at stimulating demand for their products, but that’s a limited view of what
they do. They also seek to influence the level, timing, and composition of demand to meet the
organization’s objectives. Eight demand states are possible:
1. Negative demand: Consumers dislike the product and may even pay to avoid it.
2. Non-existent demand: Consumers may be unaware of or uninterested in the product.
3. Latent demand: Consumers may share a strong need that cannot be satisfied by an existing
product.
4. Declining demand: Consumers begin to buy the product less frequently or not at all.
5. Irregular demand: Consumer purchases vary on a seasonal, monthly, weekly, daily, or
even hourly basis.
6. Full demand: Consumers are adequately buying all products put into the marketplace.
7. Overfull demand: More consumers would like to buy the product than can be satisfied.
8. Unwholesome demand: Consumers may be attracted to products that have undesirable
social consequences.

3. (a) Discuss how Entrepreneurship is influenced by Macroeconomic conditions? [7]

(b) Demonstrate the factors determining the cash needs of an industry. [7]

Answer:

(a) There is a close and continuous interaction between the business and its environment. This
interaction helps in strengthening the business firm and using its resources more effectively. Proper
understanding of various aspects of business environment such as social, political, legal and
economic helps an entrepreneur in the following ways:
(i) First Mover Advantage: Early identification of opportunities helps an entrepreneur or an
enterprise to be the first to exploit them instead of losing them to competitors. For example,
Maruti Udyog became the leader in the small car market because it was the first to recognize
the need of small cars in India.
(ii) Identification of Threats: Identification of possible threats helps in taking corrective and
improving measures to survive the competition. For instance; if an Indian firm finds that a
foreign multinational is entering the Indian market, it can meet the threat by adopting
measures like, by improving the quality of the product, reducing cost of the production,
engaging in aggressive advertising, and so on.
(iii) Coping with Rapid Changes: All types of enterprises are facing increasingly dynamic
environment. In order to effectively cope with these significant changes, firms must
understand and examine the environment and develop suitable course of action.
(iv) Improving Performance: The enterprises that continuously monitor their environment and
adopt suitable business practices are the ones which not only improve their present
performance but also continue to succeed in the market for a longer period.
(v) Giving Direction for Growth: The interaction with the environment leads to opening up
new frontiers of growth for the business firms. It enables the business to identify the areas
for growth and expansion of their activities.

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 FINAL EXAMINATION SET - 1
MODEL ANSWER TERM – DECEMBER 2023
PAPER – 20C SYLLABUS 2022
ENTREPRENEURSHIP AND STARTUP

(vi) Meeting Competition: It helps the firms to analyse the competitors’ strategies and
formulate their own strategies accordingly in order to cope with the rapidly increasing
competition.
(vii) Image Building: Environmental understanding helps the business organisations in
improving their image by showing their sensitivity to the environment within which they are
working. For example, in view of the shortage of power, many companies have set up
Captive Power Plants (CPP) in their factories to meet their own requirement of power and
saving to loss of energy in transmission.
(viii) Continuous Learning: Environmental analysis makes the task of managers easier in dealing
with business challenges. The managers are motivated to continuously update their
knowledge, understanding and skills to meet the predicted changes in realm of business.

(b) Maintenance of optimum level of cash is the main problem of cash management. The level of cash
holding differs from industry to industry, organisation to organisation. The factors determining the
cash needs of the industry is explained as follows:
(i) Matching of cash flows: The first and very important factor determining the level of cash
requirement is matching cash inflows with cash outflows. If the receipts and payments are
perfectly coincided or balance each other, there would be no need for cash balances. The
need for cash management therefore, due to the non-synchronisation of cash receipts and
disbursements.
(ii) Short costs: Short costs are defined as the expenses incurred as a result of shortfall of cash.
The short costs include, transaction costs associated with raising cash to overcome the
shortage, borrowing costs associated with borrowing to cover the shortage i.e., interest on
loan, loss of trade-discount, penalty rates by banks to meet a shortfall in cash balances and
costs associated with deterioration of the firm’s credit rating etc. which is reflected in higher
bank charges on loans, decline in sales and profits.
(iii) Cost of excess cash balances: One of the important factors determining the cash needs is
the cost of maintaining cash balances i.e., excess or idle cash balances. The cost of
maintaining excess cash balance is called excess cash balance cost.
(iv) Uncertainty in business: The first requirement of cash management is a precautionary
cushion to cope with irregularities in cash flows, unexpected delays in collections and
disbursements and defaults. The uncertainty can be overcome through accurate forecasting
of tax payments, dividends, capital expenditure etc. and ability of the firm to borrow funds
through over draft facility.
(v) Cost of procurement and management of cash: The costs associated with establishing and
operating cash management staff and activities determining the cash needs of a business
firm. These costs are generally fixed and are accounted for by salary, storage and handling
of securities etc. The above factors are considered to determine the cash needs of a business
firm.

4. (a) Suggest the Advantages of Crowdfunding. [7]

(b) Recommend the features and the benefits of a business plan. [7]

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Directorate of Studies, The Institute of Cost Accountants of India
 FINAL EXAMINATION SET - 1
MODEL ANSWER TERM – DECEMBER 2023
PAPER – 20C SYLLABUS 2022
ENTREPRENEURSHIP AND STARTUP
Answer:

(a) Advantages of Crowdfunding: Crowdfunding is a great alternative way to fund a venture, and it
can be done without giving up equity or accumulating debt. However, here are some advantages
that Crowdfunding offers an entrepreneur. These are –
(i) Marketing Technique: In spite of being an investment tool, Crowdfunding also works as a
marketing tool. As mass people are involved in Crowdfunding, you can reach them with
your startup’s whereabouts. Raising of funds and reaching the probable customers as well as
advertisement both are possible in case Crowdfunding.
(ii) Indication of proof of business concept: Showing investors and convincing yourself that
your venture has received sufficient market validation at an early stage is hard. However,
Crowdfunding makes this possible. A successful Crowdfunding campaign maybe the
indication of proof of business concept. This shows trust and integrity towards a venture and
will allow verification throughout the journey that one is on the right track.
(iii) Less Risky: In addition to finding enough funding, there will always be unpredictable fees,
market validation challenges, and others looking to get your business off the ground.
Launching a Crowdfunding campaign prevents these risks. Crowdfunding today enables
entrepreneurs to gain market acceptance and avoid giving up equity before committing to
bringing a product concept to market.
(iv) Brainstorming: One of the biggest challenges for small businesses and entrepreneurs is to
collect feedback about business’s performance at an early stage. Through crowdfunding
campaigns, entrepreneurs have the opportunity to interact with the crowd and get comments,
feedback, and ideas.
(v) Information about prospective loyal customers: Crowdfunding campaigns not only allow
entrepreneurs to showcase their companies and products, but also give them the opportunity
to share the information and purpose behind them. People who see an entrepreneur’s
campaign and decide to contribute believe in the long-term success of the company.
Essentially, these people are early adopters. Early adopters are very important to any
business because they help spread the word in the first place without asking for anything in
return. These people care about the company’s brand and message and are likely to be loyal
customers throughout its lifespan.
(vi) Easier than traditional applications: Applying for a loan or pursuing other capital
investments are two of the most painful processes that every entrepreneur has to go through,
especially during the early stages of the startup. But the application process for
Crowdfunding is more-easier compared to these traditional methods.
(vii) Opportunity of pre-selling: Launching a Crowdfunding campaign gives an entrepreneur
the ability to pre-sell a product or concept that they haven’t yet taken to market. This is a
good way to gauge user reaction and analyze the market in order to decide whether to pursue
or pivot on a given concept.
(viii) No Penalty: On all or nothing Crowdfunding platforms (meaning that you only get the funds
raised if you reach 100% or more of your funding goal) there are so many benefits, and no
fee to participate. If an entrepreneur sets a goal and doesn’t reach it, there is no penalty.
In essence, Crowdfunding is an excellent way for entrepreneurs to receive the financing and
exposure they need in order to verify, execute, and help their ventures grow.

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 FINAL EXAMINATION SET - 1
MODEL ANSWER TERM – DECEMBER 2023
PAPER – 20C SYLLABUS 2022
ENTREPRENEURSHIP AND STARTUP

(b) Features of a Business Plan

Following are the features of a business plan:
(i) Written document
(ii) Explain the vision of the venture
(iii) All aspects of the business are covered
(iv) Road map for the business

Benefits of Developing a Business Plan

The important benefits of business plan are mentioned below:
(i) Enhances business growth
(ii) Gives clarity to the stakeholders
(iii) Helps in hiring the right people
(iv) Helps in the valuation of the business
(v) Helps in getting funds
(vi) Helps to develop business partnerships

5. (a) Demonstrate the five stages of a successful innovation. [7]

(b) Recommend the benefits of Product Positioning. [7]

Answer:

(a) Stages of Successful Innovation

Defining an innovation process increases companies’ future value.

Stage 1 : Idea Generation and Mobilization

The generation stage is the starting line for new ideas. Successful idea generation should be fuelled
both by the pressure to compete and by the freedom to explore. IDEO, the product development and
branding company based in Palo Alto, California, is a good example of an organization that
encourages successful idea generation by finding a balance between playfulness and need.
Once a new idea is generated, it passes on to the mobilization stage, wherein the idea travels to a
different physical or logical location. Since most inventors aren’t also marketers, a new idea often
needs someone other than its originator to move it along. This stage is vitally important to the
progression of a new idea and skipping it can delay or even sabotage the innovation process.

Step 2 : Advocacy and Screening

Advocacy and screening help to evaluate the feasibility of a business idea with its potential
problems and benefits.
Hence, a decision can be made about an idea’s future. Companies looking to develop a culture can
establish a few best practices.
For instance, employees should have plenty of avenues to receive advocacy and feedback. Also,
organizations must understand the difficulties involved in evaluating truly innovative ideas. Also,
organizations need to build transparent evaluation and screening protocols.

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MODEL ANSWER TERM – DECEMBER 2023
PAPER – 20C SYLLABUS 2022
ENTREPRENEURSHIP AND STARTUP
Step 3 : Experimentation
The experimentation stage tests the sustainability of ideas for an organization at a specific time.
Experimentation generates new ideas with the information that is gathered on the results and
feasibility of the original idea. For instance, when Amazon tested its grocery delivery service in
certain Seattle suburbs. After this, Amazon Fresh expanded to Los Angeles, San Diego, and New
York City.

Step 4 : Commercialization
Commercialization develops market value for an idea by focusing on its impact. An important part
is establishing the specifications of any given idea. Commercialization is the stage that involves the
change of focus developments to persuasion. After the idea is clarified and a business plan is
developed, it will be ready for diffusion and implementation.

Step 5 : Diffusion and Implementation

Diffusion is the company-wide acceptance of an innovative idea, and implementation sets up
everything needed to develop the innovation. Diffusion and implementation allow the organization
to determine the next set of needs for customers. Receiving feedback, indicators for success metrics,
and other benchmarks enable the organization to stimulate the innovation process.

(b) Benefits of Product Positioning

The benefits of product positioning are:
(i) Identifying key benefits of a product and matching them with customers’ needs.
(ii) Finding a competitive advantage even when the market changes.
(iii) Meeting customers’ expectations.
(iv) Reinforcing brand’s name and its products.
(v) Winning customer loyalty.
(vi) Creating an effective promotional strategy.
(vii) Attracting different customers.
(viii) Improving competitive strength.
(ix) Launching new products.
(x) Presenting new features of existing products.

6. (a) Discuss the tools for scaling up. [7]

(b) Suggest the requirements for audit of a startup. [7]

Answer:

(a) Tools for Scaling up

Tools for scaling up of any organisation may be summarized in the following manner:
1. Set Realistic Goals: Any department of any company has certain goals, but the goals will
make the scale efficiently. By setting certain goals for each team and department in the
company, the entrepreneur should prepare growth possible. However, it is important that
these goals actually prepare the company for answering demands as well. So, it is important
that the goals are realistic to get everyone working towards a steady and easy to handle
growth.

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MODEL ANSWER TERM – DECEMBER 2023
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ENTREPRENEURSHIP AND STARTUP
2. Adopt Strategies and Technologies: Without a solid sales or marketing strategy, growth is
a mere dream.
However, it is important to adopt the right strategies as well.
To scale efficiently, the decided strategies must be fitting to the size and the industry of the
business. This is also true for the technologies that can use to optimize workflow.
3. Monitor Growth: All businesses monitor growth but monitoring it in terms of scalability is
the goal here.
By evaluating the data, analyze whether the business is scalable, which is the most important
factor for the company to decide the next step.
4. Defined Work for Everyone: Ambiguous titles and job definitions make everything harder
on the part of the employee and the employer likewise. What every company needs to do, is
to define specialized jobs. So, it is important that companies have “specialists” for the
necessary posts. It is better to pay the employees slightly more than to have all the money
flow into the expenses of ineffective scaling.
5. Get Digital wherever one can: Technology is the lifeblood of scalability. Thus, it is
important not only to get certain tech into the company but also to use it wherever you can.
But the “get digital” strategy is not just about business tools. It means that you actually do
turn physical things into digital. What you need to do is create a mental picture of things that
cost you the most money and find solutions to turn them into less costly things, keeping in
mind to “get digital”.
6. Focus on Strengths and Weaknesses: It is important that a business shows effort to better
its core strengths, however, turning a blind eye on the weaknesses is one big misstep. The
best thing to do here is to focus on the strengths and the weaknesses of the company likewise.
7. Choose the Path: At this very first base, one must choose wisely, and decide your strategies
accordingly because one may end up growing too much all of a sudden and this means
efficient scaling is harder. Instead, what you need to do is lay a foundation that will steadily
lead the company to grow while also making sure scaling is possible.
(b) Requirement of Audit for Startups: Every business does not necessarily require an Audit. There
are some parameters which necessitate a financial audit for an organization, which are different
depending on the nature of the business and type of company. For a Startup, an Audit may be
required in several situations, some of which are listed below:
(i) Lenders/Investors: In respect to Lenders and Investors, there can be two main
circumstances when a financial audit may be required, which are explained as follows:
(ii) For Existing Lenders and Investors: A financial audit provides a comprehensive view of
company’s business and current state of affairs. Entities investing in a business may call for
its Audit to receive an overview of company’s financial records. An audit provides additional
assurance to management’s assertions regarding the financial situation of the business.
(iii) For interested Lenders and Investors: When an organization is properly audited, Lenders
and Investors who are interested in investing in the business get an overview. Additionally,
they may call for an Audit to know the company’s pre-revenue circumstances and to
accumulate possibilities of Gains and Losses.
(iv) Pre IPO (Initial Public Offering): When an organization desires to list its small business
as a public company to sell company’s shares to the public in general, in such situation an
Audit may be required. As before public offering it is important to list company’s financial
state with verified records.

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MODEL ANSWER TERM – DECEMBER 2023
PAPER – 20C SYLLABUS 2022
ENTREPRENEURSHIP AND STARTUP
(v) Selling-off: There may be circumstances in which an organization may want to sell of their
business. In such situation, having properly audited records will help the buyers in analysing
the risk factors, is any, in acquiring the business.
(vi) Compulsory Audit: In case of a Limited liability Partnership, if the turnover exceeds
₹40,00,000/- or the contribution exceeds ₹25,00,000/- in any year, an Audit is compulsory.
While on the other hand, for a Private Company, the accounts have to be compulsorily
audited every financial year.
A Private Limited Company has to appoint an Auditor within 30 days of its incorporation.
The shareholders need to be informed if an Auditor is not appointed within 30 days of its
incorporation. They require to appoint an Auditor within 90 days of its incorporation.

7. (a) Enumerate the factors affecting Business Ethics. [7]

(b) Recommend the advantages of Family Run Businesses. [7]

Answer:

(a) Factors affecting Business Ethics

Many factors can significantly influence business ethics. Some of the factors are stated below:
(i) Personal Code of Ethics: Defining your individual views and values is crucial to your
personal ethical statement. Integrity, selflessness, honesty, loyalty, equality, justice,
empathy, respect, and self-respect are a few codes of ethics examples. A code of ethics is a
collection of values and guidelines that people and organisations use to guide their decision-
making and to discern between right and wrong. They give a basic understanding of a
company’s or organizations’ ethical standards. People can, however, also have their own
unique set of moral principles. For a more complete description of a code of ethics and
various code of ethics examples, continue reading. Several professions have a code of ethics
that exists independent of any particular employment. For instance, a doctor or lawyer is
always bound by the code of ethics for their profession, regardless of whether they work for
a large organization or are in private practice. These codes constitute the basic expectations
of these jobs and guide them when making decisions.
(ii) Rules and Regulation of the Government: Insuring justice and order in society depends
on the government’s ethical and moral duty. Therefore, it is the responsibility of government
officials to make sure that their deeds and activities support cultivating peace among the
populace. Government officials, who hold elected or appointed positions as well as the
procedures, conduct, and policies of governments are all subject to ethical standards. The
purpose of government and its representatives is to advance the common good via moral
understanding and moral behaviour. The government has a responsibility to create and
enforce laws that forbid unethical business activities. Employers and workers are guided by
the regulations to follow generally accepted ethical standards. The governments also keep
an eye on groups to make sure they’re not practicing unethical practices.
(iii) Ethical Code of the Organization: Organizational ethics relates to how a company should
act in the outside world. Organizational ethics refers to a variety of rules and concepts that
determine how people should conduct themselves at work. It also refers to the behaviour
expectations of those who work for a specific organisation. A type of applied or professional

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MODEL ANSWER TERM – DECEMBER 2023
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ENTREPRENEURSHIP AND STARTUP
ethics known as organisational ethics examines the morals, values, and principles that
emerge in the workplace. It is important to the behaviour of both management and employees
and pertains to every facet of corporate conduct. The promotion of noneconomic social
values is the responsibility of organisational ethics. The idea revolves around what is right
or wrong in an organization’s relationship with stakeholders and how services or goods
affect customers. Organizational ethics is a philosophy of moral principles and the
application of moral rules that govern how a business conducts itself.
(iv) Social Pressure: The influence of external societal pressure on company ethics has grown
significantly. In smaller areas, this is especially true for small companies. Social expectations
need to be strongly taken into account by businesses when it comes to general community
participation and environmental responsibility. The internet era has substantially contributed
to the rising relevance of social pressure because when businesses disregard societal
standards, word spreads swiftly. Three social factors, that is, cultural norms, the Internet,
and relationships with friends and family can have an impact on moral conduct. In the
corporate sector, different cultures have different conventions from place to place.

(b) Advantages of Family Run Businesses

Family businesses are still thriving in today’s competitive economy. The following are some of the
advantages of family run business:
1. Stability
Family businesses are ideal in nature as they are loyal to the principles of the founder and
top leadership, which results in overall stability within the organization. Leaders usually stay
in the position for many years, until a life event such as illness, retirement, or death results
in change.
2. Commitment
There is a greater sense of commitment and accountability by all family members due to
involvement of reputation stake of the entire family. This level of commitment is almost
impossible in non-family businesses.
It is natural that all family members demonstrate and share a level of commitment to the firm
since the core of any family business is a shared business vision and identity.
3. Leadership
In family run business, most of the time leadership is centred to the senior most people in
the family. So, each family members show faith and loyalty in the top leadership.
4. Trust
Since all family members know each other and related by blood relations, there is feeling of
trust in each other.
5. Flexibility
In family run business, all family members can take any role which the business needs. You
won’t hear, “Sorry, this is not my job” in a family business. They can take several different
tasks outside of their formal role in order to ensure the success of the company.
6. Decreased Cost
All family members contributing land, labour, capital and entrepreneurship means there will
less cost of running and managing business. In hard times just like COVID-19, family
members even can take a pay cut or work without any pay.

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Directorate of Studies, The Institute of Cost Accountants of India
 FINAL EXAMINATION SET - 1
MODEL ANSWER TERM – DECEMBER 2023
PAPER – 20C SYLLABUS 2022
ENTREPRENEURSHIP AND STARTUP
8. The Government has planned the strategic disinvestment of State Road Transportation Corporation
in a phased manner by allowing some private companies to ferry buses on marked routes. The
outraged workers have called for a strike against the move. You are the head of the workers union
of the transport corporation. In a meeting with State officials, they have informed you about the
circumstances of inefficiency, corruption and deteriorating quality of service to commuters. You
have also presented the worker’s viewpoint and their complaints of low pay scale and non-payment
of salaries from the past few months. A deadlock has occurred between the two parties where no-
side is willing to lose. To break the deadlock, the officials offer you a bribe and other perks to comply
with the decision of privatisation in a phased manner. State transport services are in a state of peril
and there is a huge outcry among the common masses.
a. Identify the moral dilemma faced.
b. Analyse your role and duties, also suggest the course of action. [14]

Answer:

The given case highlights a common problem with state-run public services and the on-going privatization
of public services.
Facts of the case Stakeholders involved Ethical values
Strike by workers against Workers Leadership
privatization move. Transport department officials Courage
Structural problems in the state Commuters or the general Fortitude
transport corporation. public Empathy
Workers not getting a timely salary. Self (as head of worker union) Efficiency
Commuters facing hardship a Political leaders Spirit of service
transport services in peril.
Bribe offered to negotiate.

The moral dilemma faced:

Personal v/s professional ethics: As an employee of the State transport corporation, one should
adhere to the orders of superiors. On the other hand, as a leader of worker union, one should support
the demands of fellow workers and even motivate them to continue the strike.
Personal interest v/s Community interest: One may accept the bribe for monetary and personal
gains or show conviction towards the duty to uphold the rights of fellow workers.

Role and duties of the head of the worker union:

Upholding the interest of workers: As a leader of worker union, one must show courage and
fortitude to fight for the rights of workers and negotiate with the transport officials. It is the
opportune moment to put pressure on the management to address the grievances of the workers.
Showing moral righteousness: Deontological approach of Immanuel Kant suggests that it is
immoral to take the bribe and one must adhere to his duty towards the interest of the fellow workers.
The worker’s faith and trust must not be broken for petty material gains.
Showing administrative leadership: One should be accommodative enough and should even make
the workers realize the problems faced by commuters due to the strike. Hence, they must look for
early resolution of the problem.

12
Directorate of Studies, The Institute of Cost Accountants of India
 FINAL EXAMINATION SET - 1
MODEL ANSWER TERM – DECEMBER 2023
PAPER – 20C SYLLABUS 2022
ENTREPRENEURSHIP AND STARTUP
The course of action:
Negotiating with the transport officials: Good governance can be ensured only by
accommodative nature of negotiations without viewing it as a loss of personal prestige. All leaders
should engage fora faster and meaningful resolution of the dispute.
Ensuring peaceful and legitimate protest: Everyone has a right to protest in a democracy.
However, leaders must ensure that protests are done in a peaceful manner without any unethical
means.
Attitudinal change by moral suasion: Workers should be persuaded to call off the strike so that
public services can be restored at the earliest.

Long term measures:

Welfare of workers: The political leaders should empathize with the employees. All legitimate
needs of the workers should be accepted like timely payment of wages, providing basic insurance
facilities, etc.
Resolving state budget constraints: Arrangements must be made to augment the transport
department budget through alternate means considering its importance for the general public.
Regulation of services: Privatization is needed to increase efficiency. However, privatisation of
transport services, unless well regulated, can lead to unhappy outcomes such as a rise in accidents,
and unruly driving and behaviour. Hence, if the sector is privatized, it must be duly regulated.

13
Directorate of Studies, The Institute of Cost Accountants of India