XAT 2020 Question 31


Read the situation below and answer the 3 associated questions:
A Multinational Company (MNC) sources pristine natural spring water from Bori, a village in Satpura mountains. The unprocessed natural spring water is directly bottled by the MNC. The company brands it as “Natural Spring Water” and sells at 50% premium vis-a-vis other brands that sell processed water.

The local panchayat, under the Panchayati Raj Act, 1992 controls the spring water usage. Hence, the company signed a 30-year contract with the panchayat for exclusive access to the spring water for business purposes. This contract contributes 50% to the panchayat’s revenues besides providing 250 jobs in the panchayat. The spring also meets domestic and agricultural needs of the people of Bori and the surrounding villages.

Question 31

The MNC has spotted traces of chemicals in their fortnightly water quality analysis. The MNC realizes that this is due to the contaminated agricultural runoff, flowing into the spring from the nearby fields where farmers use pesticides and fertilizers.
This requires an immediate solution. Which of the following options will BEST resolve the situation for the MNC?


Option A would be unethical and thus can be rejected.

Option B will also be wrong as after removing the contaminants, the water won't be natural spring water. So marketing it as such will be cheating the customers.

The unique selling point of the brand was that they were selling natural spring water and were also charging a premium for it. If they rebrand it as purified water, then it would lose it's uniqueness.

Option D will lead to massive losses for the MNC and can be rejected.

Option E is the best choice for the company as it will help them stay in business while they solve the problem.

Hence, the answer is option E.

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