Comprehension
Read the following caselet and answer questions that follow:
Divya grew up in a business family in Hyderabad. As a Systems engineer she travelled extensively on business deals and later settled in her in-law’s place in Warangal. Once during her visit to Thailand she got to taste some roll over ice cream. Interestingly, a few weeks later, she came across an advertisement from a reputed Bangalore based Rollover Handcrafted Ice Cream Company calling for expression of interest from potential franchises.
Warangal did not have any quality ice cream parlour. The company wanted the potential franchisees to invest Rs. 20 lacs and 700 square feet space. Profits were to be shared in 3:7 ratio between the company and the franchisee. Divya was excited, but was wondering if Rs. 20 lacs was too much to invest. Further, she did not have the entire amount and was thinking of taking a loan. She enquired with the Rollover franchisees and found that a franchisee in Hyderabad had sales revenue varying between 5 and 6 lacs rupees per month with a profit margin between 25-30%. Divya decided to go ahead.
Warangal had three main areas -Kazipet, Jangaon and Warangal. All areas were linked by good roads. Kazipet was a business area where most high end retail formats were located. It was also the education hub of the city. Jangaon, on the other hand, was a growing lower middle class business area and Warangal was mostly residential.
Divya favoured Kazipet. However, she soon encountered problems. Not only was it difficult to obtain space in Kazipet but property rentals touched 30-40 rupees per square feet per month as against Jangaon and Warangal where it was 15-20 rupees per square feet per month. Divya’s friend, who lived in Jangaon, told her that a few branded outlets were opening in Jangaon and it appeared to be the fastest growing market in Warangal with the highest percentage of teenagers. But, Divya was not in favour of Jangaon. She hoped to target college going crowd of Kazipet. High real estate prices in Kazipet and lower profitability estimate in Jangaon market confused Divya.
Divya grew up in a business family in Hyderabad. As a Systems engineer she travelled extensively on business deals and later settled in her in-law’s place in Warangal. Once during her visit to Thailand she got to taste some roll over ice cream. Interestingly, a few weeks later, she came across an advertisement from a reputed Bangalore based Rollover Handcrafted Ice Cream Company calling for expression of interest from potential franchises.
Warangal did not have any quality ice cream parlour. The company wanted the potential franchisees to invest Rs. 20 lacs and 700 square feet space. Profits were to be shared in 3:7 ratio between the company and the franchisee. Divya was excited, but was wondering if Rs. 20 lacs was too much to invest. Further, she did not have the entire amount and was thinking of taking a loan. She enquired with the Rollover franchisees and found that a franchisee in Hyderabad had sales revenue varying between 5 and 6 lacs rupees per month with a profit margin between 25-30%. Divya decided to go ahead.
Warangal had three main areas -Kazipet, Jangaon and Warangal. All areas were linked by good roads. Kazipet was a business area where most high end retail formats were located. It was also the education hub of the city. Jangaon, on the other hand, was a growing lower middle class business area and Warangal was mostly residential.
Divya favoured Kazipet. However, she soon encountered problems. Not only was it difficult to obtain space in Kazipet but property rentals touched 30-40 rupees per square feet per month as against Jangaon and Warangal where it was 15-20 rupees per square feet per month. Divya’s friend, who lived in Jangaon, told her that a few branded outlets were opening in Jangaon and it appeared to be the fastest growing market in Warangal with the highest percentage of teenagers. But, Divya was not in favour of Jangaon. She hoped to target college going crowd of Kazipet. High real estate prices in Kazipet and lower profitability estimate in Jangaon market confused Divya.
Question: 1
Which of the following options, if true, would most likely interest Divya to start a franchise?
Which of the following options, if true, would most likely interest Divya to start a franchise?
Updated On: Aug 9, 2024
- Doctors of the area do not consider Ice cream to be a major cause of obesity.
- A bank is ready to give her a quick loan.
- She can charge high prices for her ice creams without losing customers.
- Her friend who runs a restaurant recently in Kazipet is doing good business.
- In recent times, a couple of franchisees shut down within months of starting.
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The Correct Option is C
Solution and Explanation
The correct option is (C) :She can charge high prices for her ice creams without losing customers..
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Question: 2
Which of the following is least likely to demotivate Divya?
Which of the following is least likely to demotivate Divya?
Updated On: Aug 9, 2024
- Investing a huge amount may not bring expected returns.
- The bank would insist on loan repayment on a monthly basis.
- The property rentals would soon go up in Kazipet.
- Unlike Hyderabad, people in Kazipet don’t seem to like Rollover ice cream.
- Rollover franchise in Hyderabad is making huge profits.
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The Correct Option is
Solution and Explanation
The correct option is (E) :Rollover franchise in Hyderabad is making huge profits..
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Question: 3
What could be the most likely reason for Divya opting for Kazipet?
What could be the most likely reason for Divya opting for Kazipet?
Updated On: Aug 9, 2024
- Spiralling real-estate prices in Kazipet.
- No branded outlets is likely to come up in Jangaon in the near future.
- High percentage of teenagers in Kazipet attracted to Rollover ice cream.
- High density of population in both Warangal and Jangaon.
- She felt, college going crowd is excited about the latest in ice creams.
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The Correct Option is
Solution and Explanation
The correct option is (E) :She felt, college going crowd is excited about the latest in ice creams..
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Question: 4
Which is the most important decision criterion for Divya to consider in such a business situation?
Which is the most important decision criterion for Divya to consider in such a business situation?
Updated On: Aug 9, 2024
- Attracting customers through big discounts in the initial phase of business.
- Consistent increase in the number of customers in the future.
- Range and variety of ice-cream flavours.
- Availability of space in premium locality.
- Availability of loan at low interest rate.
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The Correct Option is B
Solution and Explanation
The correct option is (B) :Consistent increase in the number of customers in the future..
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