XAT 2025 DM Question 3 · Decision Making

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

Sundaram Stores operated in a gated community, situated about 30 Kilometers away from the main town. The store owner Mr. Sundareswaran Pichaimuthu, or Sundaram as he was called by everyone, secured a space in the gated society through a competitive bidding process. The residents’ association, led by Mr. Thangamoorthy Selvaganapathy, selected Sundaram over three other bidders, based on his willingness to pay the highest rent. Desperate to augment his post-retirement income, Sundaram agreed to pay a very high rent, banking on the prospect of generating exceptional revenue from the gated community.
Sundaram was awarded the contract to establish the store, with provisions for a review every three years. Feeling elated during the meeting with the residents’ association to finalize the contract, he enthusiastically committed to offering a 15% discount on all groceries and stationary, cementing goodwill and reinforcing the partnership established through the contract. The association was delightedly taken aback by his generous assurance. Sundaram hoped to make up the difference through volume.
Although his sales were strong during the initial months, he soon realized that the SUV-owning residents of the gated community primarily made their purchases at large, branded retail chains in the main town. These stores offered deeper discounts, which he could not afford to compete with. However, gradually, Sundaram store became their go-to store for daily essentials and occasional urgent big purchases such as replacing a broken mixer-grinder.