Business Judgment for XAT / JMET : Satyadhar Joshi
shivgan3@yahoo.com Business Judgment for XAT / JMET
Introduction : Introduction This class will focus on solving question pertaining to Business Judgment. These questions are often seen in MBA entrance exams of India where one has to read a long paragraph and answer a various questions like:
Major Objective
Major Factor
Minor Factor
Major Assumption
Unimportant issue
I will be solving some of the questions with you and explaining on how to read big cases in relatively short amount of time.
Business Judgment questions : Business Judgment questions This is the most important form of problems posed under the BJ section. You will be
given different conclusions / statements / assumptions / items and would be required
to classify each of these under one of the following categories viz.
1. MAJOR OBJECTIVE: An objective is a final result desired by someone. Hence a
major objective is the most important result desired. It is the aim or the major
purpose of some action.
2. MAJOR FACTOR: A factor is used to determine the decision. Thus a major factor
is a basic factor influencing a decision. It might affect the basic reason for some
action.
3. MINOR FACTOR: It is a secondary/less important factor affecting the decision
taking process.
4. MAJOR ASSUMPTION: It is the basic/primary assumption made by the decision
maker in order to make the decision.
5. UNIMPORTANT ISSUE: It is not significantly related to the decision making
process.
Introduction : Introduction Decision making
Targets or payoff
Example game theory dating case (from the movie “A beautiful mind”.
Major Objective : Major Objective It is the final goal of the person or the passage
Hence it is the most important decision
Examples are increasing profit, increasing sales, solving the main challenge, improving efficiency, etc
Objective in itself means that is the main target or purpose of writing or working on the subject
Major Factor : Major Factor Factor influences the decision
Decision making process depends on many factors
In most of the cases the major factor is major problem / major opportunity that can be exploited for better results
Examples are: political risks, increasing cost, opportunity of new contract/project
In real world the major factors in a business are: Companies declining sales, increasing cash flow problems, company’s liquidity position, consumer behavior
Most of them are related to strong financial aspects
Minor Factor : Minor Factor It is the secondary or less important factor in the decision making
At times it may be a part of major factor so we have to view it very carefully
In general cost of trivial issues, sometimes cause / effect or step toward achieving our goals is a minor factor
Sometimes in business there is a change in government policy, change in competition, increase is customs, moral issues, environmental issues, etc
Very carefully separate the major factor from minor factor, a company considers minor factor not so seriously as compared to major factors
Major Assumption : Major Assumption Assumptions are taken to make a decision, where there may be primary or secondary
They are not supported by hard factors in the passage, they are not backed by strong research
Also they can be characterized with words which may be unclear or vague at times
Word’s like felt, though, estimated, guessed, assumed, suspected, believed indicates that decision maker has made an assumption
Unimportant issue : Unimportant issue They are out of scope and insignificant for the process of decisions
Conclusion : Conclusion These are very interesting area and is like critical reasoning where you have a premise and assumption
Examples can also be seen in real life
Use same concepts from the RC class to increase spped and track changes
Questions : Questions We will now solve some questions
References : References PT notes
Chandresh Agrawal, CAT Priyanka Prakshan pp bj1-10