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

Step 1: Understanding the Question:
We need the most likely reason Shekhar leaned toward Bistupur despite its high rent and difficulty finding space.

Step 2: Key Approach:
Look for the reason stated directly in the case as Shekhar's own thinking, rather than a fact merely about Bistupur or Sakchi in general.

Step 3: Detailed Explanation:
The case tells us plainly that Shekhar "expected to target the college going crowd in Bistupur," and Bistupur is also described as the city's education hub. Since Shekhar sees young, urban, education-hub customers as the natural buyers of "quality, variety and the latest" in music, this expectation is the direct cause of his preference. Option B, Sakchi's crowded, downmarket image, explains why he disliked Sakchi, but the question asks specifically what drew him toward Bistupur, not what pushed him away from Sakchi. Option C is a broader, vaguer claim about associating quality with location in general, less specific than the stated reason about the college crowd. Option D, higher rentals, is a fact that worked against his confidence in Bistupur, not a reason he favoured it.

Step 4: Final Answer:
Shekhar's bias for Bistupur came from expecting the college-going crowd there to be his customers for the latest music.
\[ \boxed{\text{A}} \]