Question

Caselet (Questions 101-104): Shekhar, an MBA from Singapore, returned to his hometown of Jamshedpur. Jamshedpur had a population of 10 lacs and one of the highest per capita incomes among Indian cities. Shekhar loved music. While listening to his favourite song on satellite radio one day, he wondered if he could combine his passion with a business. A few weeks later, by coincidence, Music World called for expressions of interest from potential franchisees. Jamshedpur did not have a single good music store where residents could buy quality, variety, and the latest releases.

Music World wanted its franchisees to own at least 1200 square feet of space and invest Rs. 30 lacs. Profits were to be split in the ratio of 3:7 between Music World and the franchisee. Shekhar liked the idea of working with a well-known brand, but he worried whether Rs. 30 lacs was too much money to put in. He did not have the full amount and was thinking of borrowing from a bank. He checked with other Music World franchisees in towns like Patna and Ranchi, expecting similar footfall in Jamshedpur. A franchisee in Patna reported monthly sales revenue of Rs. 1 to 2 lacs, with a profit margin of 25 to 30 percent. Satisfied with this, Shekhar decided to go ahead.

He then began looking for space. Jamshedpur had three main areas: Bistupur, Sakchi, and Sonari, all connected by good roads. Bistupur was a business area with most of the high-end retail stores, shopped at by the upper-middle and higher classes, and was also the city's education hub. Sakchi was a growing lower-middle-class business area, while Sonari was mostly residential.

Shekhar preferred Bistupur, since it was where he did his own shopping. But he ran into problems there: space was hard to find, and rentals had touched Rs. 30 to 40 per square foot per month, compared to Rs. 15 to 20 per square foot per month in Sakchi and Sonari. A friend who lived in Sakchi told him that several branded outlets were opening up there, and that it looked like the fastest-growing market in Jamshedpur with the highest share of teenagers. Still, Shekhar was against Sakchi because of its "downmarket" image. He wanted to target the college-going crowd, and he expected to find them in Bistupur.

The high real-estate cost in Bistupur, set against his low opinion of the Sakchi market, left Shekhar confused. To think the decision through properly, he decided to drive down the Jamshedpur-Ranchi highway in his newly bought car.

Question: What could be the most likely reason for Shekhar's bias in favour of Bistupur?

• A. Presence of the college-going crowd, as he felt they were the customers for the latest music.
• B. The crowded ("hoi polloi") image of Sakchi.
• C. It was difficult for Shekhar to associate non-Bistupur areas with good-quality products.
• D. Higher rentals in Bistupur.

Hint:

The case states Shekhar's own expectation about who his customers would be in Bistupur.

Answer 1

The Correct Option is A

The question asks why Shekhar was biased toward Bistupur even though it cost him more and was harder to find space in. Let's check the options against the text.

1. A. He expected college students to be his customers for the latest music: the case states this directly, Shekhar "expected to target the college going crowd in Bistupur," and Bistupur is also called the city's education hub, so this is his own stated reasoning.
2. B. Sakchi's crowded, downmarket image: this is his reason for disliking Sakchi, related, but it answers a different question than what pulled him toward Bistupur.
3. C. Difficulty linking non-Bistupur areas to good products: this is a vaguer, more general version of the same idea, without the specific detail the case actually gives us.
4. D. Higher rentals in Bistupur: higher rent is what made Shekhar hesitant about Bistupur, the opposite of a reason to favour it.
5. E. Patronage by executives and their families: this detail never appears anywhere in the caselet.

Option A is the one grounded directly in what the case tells us about Shekhar's own expectations.

Let's summarize:

• The case names the college-going crowd explicitly as Shekhar's target customer.
• A location's higher cost cannot be the reason someone favours it; it is a reason for hesitation instead.

So option A is the answer.