Instructions

Read the following scenario and answer the THREE questions that follow.

Kasta, a small industrial town hosted a steel plant and its associated ancillary companies. Most of its residents were steel plant employees from different states of the country. While the town offered employment opportunities, it lacked an airport. For those wanting to fly, the nearest airport was in Michaelganj, 100 kms from Kasta. To reach the airport, people rented taxi services available at Kasta, and Prabhu was one such taxi-service provider.

Prabhu’s rates were reasonable — a trip to airport cost Rs. 2200, but for a round trip, the fare was Rs. 3000. Yet, it was not just the affordability that made him popular, his reputation for punctuality and reliability was unmatched. When it came to ensuring the safety of women travelling alone, he would always be the first choice. Such was his trustworthiness that even the steel plant would solicit his services when expecting solo female visitors. Moreover, whenever residents encountered issues with their personal cars, they would turn to Prabhu for help.

However, the world shifted when the COVID-19 pandemic struck. Travel restrictions and safety concerns limited Prabhu’s trips to Michaelganj for over a year and a half. Financial strain followed, with accumulating interest on his home loan. He was weighed down by debt, but things improved once COVID-19 travel restrictions were lifted. Having faced financial hardships during COVID-19, he sought to offset his losses by raising the fare. Yet, he was aware of the stiff competition in town, where many others offered services at a similar fare as his.

Question 40

Saroj, the new Chief Financial Officer (CFO) at the steel plant, used the services of Manoj when he first travelled from the Michaelganj airport to the plant. Manoj was a rival of Prabhu in the taxi service business at Kasta. Manoj, upon learning that Saroj would be responsible for hiring taxi services for the steel plant, charged Saroj only Rs. 1500 for that trip. Further, he assured Saroj to charge the same for a one way-trip and additional Rs. 500 for a round trip to the airport.

Upon realizing that the plant utilized Prabhu’s services for all official trips to the airport, Saroj contacted Prabhu to discuss the rates offered by Manoj and inquired why the plant should continue using his service when Manoj provided the same at a lower price. Prabhu realized that Manoj charged an extremely low price just to push Prabhu out of his business in the Steel Plant.

Which of the following reasons given by Prabhu will BEST help his cause?

Solution

The key thing to understand here is that Saroj is a new person in town. He is not familiar with the reliability of Prabhu's service. The reason given by Prabhu should be enough to convince him to trust Prabhu over Manoj, both of whom are equal in his eyes at the moment.

Let's look at the options individually.

Option A: Talking about the economic side of things might help Saroj, being a CFO, understand that the model offered by Manoj would actually not be sustainable and the prices would go up sometime down the line. But this does not mean that they cannot use the service until it's available at a lower price. As soon as Manoj increases his prices, someone (the market) would come again with lower prices to make Manoj go out of business, and they can avail the lower prices again. So this reasoning does not help Prabhu in convincing Saroj; the steel plant can always keep choosing the lowest prices available.

Option C: Although Ms. Nidhi Tawde might vouch for Prabhu's services' safety and reliability, she is as much a stranger to Saroj as Prabhu. Although her statement might add one perspective in favour of Prabhu, this would not be enough to convince Saroj of the positive aspects of Prabhu's services.

Option D: Although this might convince Saroj to choose Prabhu, this would not be a sustainable option. Not only would it hurt Prabhu, but as soon as Prabhu would want to increase his prices, Saroj would go back to other service providers who would be charging less.

Option E: Talking negatively about Manoj would not convince Saroj, as again, from Saroj's perspective, both Manoj and Prabhu are offering their services and would claim to be more reliable than the other.

The only way Saroj would be convinced would be if someone whom Saroj would find reliable vouched for Prabhu's reliability. With his reputation and his time working for the official trips for the steel plant, there would be a lot of employees who would have travelled with Prabhu and would be familiar with his reputation. If Prabhu asks Saroj to discuss with his colleagues, as suggested in option B, who would vouch for Prabhu over Manoj, Saroj would be convinced to keep using Prabhu's services even at a higher price.

Therefore, Option B is the correct answer.


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