Management Aptitude Test Dec 2019 Paper

PASSAGE-4 If proof were needed that the organised sector of the Indian economy is globalised, look no further than the reaction of firms to the economic slowdown. What began as a knee-jerk reaction of Jet Airways, which issued marching orders to 800 employees and then retracted following an adverse reaction, has now morphed into a strategic plan by companies to keep their heads above the rising waters. This strategy is predicted on the need to cut costs and protect profit margins as far as possible rather than look to increasing revenue in what is turning out to be a slowing market. Auto majors such as Tata Motors, Ashok Leyland and Mahindra \& Mahindra have begun to cut back production and reduce man-hours at their plants across India in a bid to prevent inventory pile-up and tailor output to falling demand. It will not be long before auto component vendors follow suit, followed by firms across the product spectrum. Organized industry is learning to cope with the downside of a business cycle that first manifested itself last year in the wake of rising raw material and energy prices and in the lagged effects of high interest rates on consumer demand. In the last quarter of 2007−08, industry and manufacturing growth rates both slipped to around 5 per cent against 8.6 per cent and 9.6 per cent respectively in the previous quarter, which performance itself represented a decline from the high of 10 and 12 per cent in 2006−07. Growth had been falling, therefore, all of 2007−08 with the decline accelerating since January this year. Fiscal 2007−08 closed with a real GDP growth of 9 per cent mainly due to a double-digit growth in services such as real estate, transport, hotel services and construction. With high albeit falling interest rates and worse, a risk aversion among lenders impacting these sectors as much as they had manufacturing earlier, the overall growth momentum may slip even more than officially estimated. Against this backdrop, the best bet for policymakers and producers would be to turn the downturn into an opportunity for fresh strategising. Manufacturing firms have begun the task of cutting costs in right earnest. The real estate sector is supposedly asking for relief and so will the shipping and transport sectors.
The government has to exercise discretion the way it did with the airline industry so as to encourage internal overhauling. The Government will inevitably have to boost confidence and private investments at some future date through counter-cyclical spending. That future should start right away.