UPSC Management 2026 — Paper I

(a) 'Critically comment' means take a position on whether the classical managerial roles still hold in digital/remote work, and support BOTH sides — what endures and what has been displaced — with concrete examples. The answer must engage explicitly with the traditional role framework (Fayol's functions and/or Mintzberg's ten roles) rather than talk about remote work generically. (b) Three distinct sub-parts must all be answered: (i) what organisational readiness from an HRM perspective AI adoption in HR functions needs, (ii) identification of the ethical challenges AI in HR raises, and (iii) how efficiency and ethics can be balanced. Omitting any one sub-part caps the score. (c) Two linked sub-parts: (i) why cultural diversity matters to organisations — benefits and the costs/risks — and (ii) the specific strategies a GLOBAL CONSULTING FIRM can adopt to manage it. The answer must be set in the consulting-firm context (client-facing, project-based, globally staffed), not in the abstract. (d) A short applied case: employees resist a change driven by global competitive pressure. 'Suggest suitable strategies' requires a diagnosis of the causes of resistance followed by specific, named change-management strategies the management should adopt — a change model must anchor the answer. (e) 'Critically evaluate' a normative claim: examine the evidence and arguments FOR ethical management driving long-term success, present the counter-arguments (unethical firms that prospered, ethics as cost, short-term trade-offs), and arrive at a reasoned verdict — all supported by named examples.

• Henri Fayol — five functions of management
• Henry Mintzberg (1973) — ten managerial roles: interpersonal / informational / decisional
• outcome-based or OKR-based control replacing presence-based supervision
• at least two real organisational examples of hybrid/remote work
• algorithmic bias / discrimination in AI-based shortlisting
• explainability and human-in-the-loop oversight
• employee data privacy and consent (Digital Personal Data Protection Act, 2023)
• HR analytics capability and data quality as readiness pre-conditions
• Geert Hofstede's cultural dimensions (power distance, individualism-collectivism, uncertainty avoidance, masculinity-femininity, long-term orientation, indulgence)
• inclusion as the necessary complement to diversity
• cross-cultural training / cultural intelligence (CQ)
• at least one global consulting example (McKinsey, BCG, Deloitte, Accenture, EY) or comparable MNC
• diagnosis of the causes of resistance (e.g., Lewin's force-field analysis)
• at least one correctly attributed change model — Kurt Lewin's unfreeze–change (move)–refreeze or John P. Kotter's eight-step model
• Kotter and Schlesinger (1979) — methods of overcoming resistance to change (education/communication, participation, facilitation, negotiation, manipulation/co-optation, coercion)
• employee participation and two-way communication as the primary strategies
• at least two named corporate ethics failures with correct year (Enron 2001, Satyam 2009, Volkswagen 2015, PNB-Nirav Modi 2018, IL&FS 2018)
• R. Edward Freeman's stakeholder theory or Archie Carroll's pyramid of CSR
• a positive exemplar (Tata group, Infosys, Johnson and Johnson's Tylenol recall)
• verdict that ethics is necessary but not sufficient for long-term success

(a) Two linked demands: (i) show how the core management processes (planning, organising, staffing, leading/directing, controlling, plus decision-making and coordination) act on EACH stage of Porter's value chain, and (ii) show how misalignment between these processes degrades overall organisational effectiveness — with illustrative examples throughout. (b) Two parts: (i) the competencies an expatriate manager needs for effective performance on an international assignment, and (ii) given several technically competent candidates, the BEHAVIOURAL parameters you would use to select the right one. The second part is the discriminating half and must go beyond technical skill. (c) Two parts: (i) the key impacts of automation and AI on the recruitment and selection process, stage by stage, and (ii) a balanced discussion of the advantages AND the complexities/limitations the quoted statement points to. Both halves must be developed; a one-sided answer fails the 'discuss' directive.

• Michael E. Porter — value chain, Competitive Advantage (1985)
• the five primary and four support activities by name
• Fayol's management functions: planning, organising, commanding/directing, coordinating, controlling (staffing added later by Koontz and O'Donnell)
• linkages within the value chain and the extended value system
• at least one named example of misalignment and its consequence
• cultural intelligence (CQ) — Earley and Ang
• Mendenhall and Oddou's dimensions of expatriate acculturation (self-orientation, others-orientation, perceptual dimension, cultural toughness)
• spouse/family adjustment as a major determinant of expatriate success or failure
• behavioural-event interviewing and assessment centres as selection tools
• repatriation planning
• applicant tracking system (ATS) resume parsing and ranking
• algorithmic bias from historical training data (Amazon's abandoned experimental recruiting tool)
• time-to-hire and cost-per-hire as the efficiency metrics affected
• human-in-the-loop / augmentation rather than full automation of the selection decision

(a) 'Analyze how' an MNC can DESIGN its global management structures so that continuous innovation is supported in developed AND emerging markets simultaneously. The answer must deal with organisational structure and design choices, and must address both market types distinctly — including reverse innovation and frugal innovation for emerging markets. (b) Two printed sub-parts, both compulsory: (i) which leadership styles are more effective in an innovation-driven organisation, with reasons; and (ii) whether you agree that leaders frequently switch between styles — requiring engagement with contingency/situational leadership theory. (c) Establish the relationship — in both directions — between organisational culture and successful implementation of a performance management system (PMS): how culture enables or defeats a PMS, and how a PMS in turn shapes culture. 'Discuss with suitable examples' makes named organisational illustrations compulsory.

• Christopher Bartlett and Sumantra Ghoshal — transnational organisation/integrated network
• C. K. Prahalad and Yves Doz — integration-responsiveness framework
• Vijay Govindarajan and Chris Trimble — reverse innovation (GE Healthcare example)
• organisational ambidexterity (exploration vs exploitation)
• centres of excellence and subsidiary innovation mandates
• transformational leadership — James MacGregor Burns; Bernard Bass and Bruce Avolio; the four I's
• Hersey and Blanchard situational leadership (telling, selling, participating, delegating)
• Robert House — path-goal theory (directive, supportive, participative, achievement-oriented)
• Fred Fiedler's contingency model and its LPC premise that style is relatively fixed
• psychological safety — Amy Edmondson
• Edgar Schein — three levels of organisational culture
• Cameron and Quinn Competing Values Framework, or Charles Handy's four culture types, or Hofstede's power distance
• forced ranking / bell curve / stack ranking and the shift to continuous feedback
• Steven Kerr — 'On the folly of rewarding A, while hoping for B'
• at least two named company examples

(a) A judgement question: decide whether modern management approaches are a genuine evolution or merely a modification of classical theory, and JUSTIFY with examples. The answer must actually specify the classical theories and the modern approaches, identify points of continuity and points of genuine break, and reach a defended verdict. (b) Trace how the growth of India's service sector, especially IT/ITeS, has affected trade unions, and discuss it in the light of the wider challenges unions face today. Requires knowledge of Indian industrial relations institutions, the legal framework including the new Labour Codes, and the specific unionisation experience of IT workers. (c) An applied organisation-design question: for an IT company moving from a traditional to a virtual organisation, specify WHAT design changes are needed and WHY each is needed, supported by examples. Both the 'what' and the 'why' must be present for each change.

• F. W. Taylor — The Principles of Scientific Management (1911)
• Henri Fayol — 14 principles / five functions; Max Weber — bureaucracy
• Elton Mayo — Hawthorne studies (1924-32)
• contingency theory — Burns and Stalker (mechanistic vs organic), Lawrence and Lorsch, Joan Woodward
• Douglas McGregor — Theory X and Theory Y; Peter Drucker — the knowledge worker
• Trade Unions Act, 1926 and Industrial Disputes Act, 1947 — repealed and subsumed in the Industrial Relations Code, 2020 (in force 21 November 2025)
• Industrial Relations Code, 2020 — negotiating union / negotiating council, 51 per cent threshold, 300-worker threshold, 14-day strike notice
• Code on Social Security, 2020 — gig and platform workers defined and brought into social security
• Forum for IT Employees (FITE) and Karnataka State IT/ITeS Employees Union (KITU)
• declining union density, contractualisation and multiplicity of politically affiliated central trade unions
• virtual/network organisation — dispersed, ICT-linked, permeable boundaries, small strategic core
• shift from behaviour/attendance control to outcome-based control (OKRs, SLAs)
• flatter hierarchy, wider span of control, cross-functional project teams
• trust, psychological safety and empowering leadership as substitutes for direct supervision
• information security, data-loss prevention and IP protection across a distributed workforce
• at least one named example (GitLab, Automattic, TCS Secure Borderless Workspaces)

(a) Analyse the trade-off between historical cost and fair value measurement on the two qualitative characteristics named in the question — RELIABILITY (faithful representation) and RELEVANCE — with specific attention to periods of market volatility and economic uncertainty. Both bases and both characteristics must be addressed. (b) Four demands in one note: causes of corporate distress, its consequences, how distress is managed, and an evaluation of restructuring strategies for recovery and sustainability. All four must appear; the evaluative element on restructuring is the differentiator. (c) Three specified roles of AI and data analytics inside MANAGEMENT ACCOUNTING must each be discussed: strengthening managerial decision-making, improving performance evaluation, and enhancing strategic control. The answer must stay within the management-accounting domain, not drift into general business analytics. (d) A diagnostic mini-case: despite good quality and competitive prices a bakery brand has low customer retention. The answer must (i) diagnose plausible causes beyond product and price, and (ii) propose specific, implementable retention solutions for a LOCAL bakery, not a generic marketing lecture. (e) Three demands: (i) analyse DIFFERENCES and SIMILARITIES between Customer Relationship Marketing (CRM) and Holistic Marketing, (ii) do so using a named company operating in the RETAIL sector, and (iii) explain through examples how CRM works together with holistic marketing to improve customer experience and long-term business success.

• Ind AS 113 / IFRS 13 fair value definition — exit price, orderly transaction, measurement date
• fair-value hierarchy: Level 1 / Level 2 / Level 3
• reliability (faithful representation) versus relevance trade-off
• pro-cyclicality of fair-value accounting and the 2008 financial-crisis debate
• mixed measurement model (Ind AS 109: amortised cost, FVOCI, FVTPL)
• Edward Altman's Z-score and its distress cut-offs
• Insolvency and Bankruptcy Code, 2016 — CIRP, moratorium, committee of creditors, resolution professional
• RBI Prudential Framework for Resolution of Stressed Assets, 7 June 2019
• distinction between financial restructuring and operational/business restructuring
• at least one Indian distress example (IL&FS 2018, DHFL, Jet Airways, Bhushan Steel resolution)
• predictive analytics for forecasting and budgeting; rolling forecasts replacing static budgets
• automated variance analysis
• Kaplan and Norton's balanced scorecard (four perspectives)
• descriptive - diagnostic - predictive - prescriptive analytics progression
• data quality, explainability and auditability as limitations
• loyalty programme / CRM database for a small local retailer
• SERVQUAL dimensions or an equivalent service-quality framework
• customer lifetime value (CLV) and retention versus acquisition cost
• service recovery for complaint handling
• delivery aggregator / digital ordering channel presence
• Philip Kotler and Kevin Lane Keller — holistic marketing and its four components
• the four components named: relationship, integrated, internal and performance marketing
• customer lifetime value (CLV) / retention as the CRM metric
• a named retail company with its actual loyalty or CRM programme

(a) A marginal-costing shut-down decision. Compute contribution per unit and P/V ratio, break-even point, the loss on continuing at expected sales, compare it with the loss on shutting down, locate the shut-down point in units, and then recommend with financial and non-financial justification. (b) Two demands: (i) describe the regulatory framework governing capital markets (in India, with global reference as relevant), and (ii) EVALUATE its role against three stated objectives — transparency, investor protection and market efficiency — which requires both achievements and shortcomings. (c) A two-part applied case on a sports shoe company losing market share: (i) analyse the possible reasons for the loss, diagnosing across product, brand, channel, pricing, competition and internal capability, and (ii) suggest suitable strategies to regain position. Both halves carry marks; the strategies must follow from the diagnosis.

• Contribution per unit = Rs 10; P/V ratio = 16.67 per cent
• Break-even point = 10,000 units = Rs 6,00,000
• Loss on continuing = Rs 20,000; loss on shutting down = Rs 20,000
• Shut-down point = (Fixed cost minus Shut-down cost) / Contribution per unit = 8,000 units
• FINAL ANSWER: the two alternatives are financially indifferent (Rs 20,000 loss each); recommend CONTINUE operations on non-financial grounds and for the upside above 8,000 units
• SEBI Act, 1992 (SEBI constituted 1988, statutory from 1992)
• Securities Contracts (Regulation) Act, 1956 and Depositories Act, 1996
• SEBI LODR Regulations 2015 and ICDR Regulations 2018; Prohibition of Insider Trading Regulations 2015
• shift from merit-based (Controller of Capital Issues) to disclosure-based regulation after 1992
• Securities Appellate Tribunal; SCORES investor grievance redressal; T+1 settlement
• Porter's five forces or an equivalent structured competitive diagnosis
• segmentation-targeting-positioning / repositioning as the core strategic response
• omnichannel and D2C channel strategy with first-party data
• named competitors in the athletic footwear market (Nike, Adidas, Puma, Skechers, Campus Activewear, Bata, Relaxo)
• measurable recovery indicators — market share, share of search, NPS, repeat-purchase rate

(a) Four specific symptoms are named — declining profits, rising costs, excess inventory and cash-flow problems. The answer must show, symptom by symptom, how COSTING, BUDGETING and CONTROL techniques identify each problem and then generate solutions. All three technique families must be covered. (b(i)) Compute the NPV of the modernisation project at a 10 per cent cost of capital, treating the working capital of Rs 1,00,000 as an outflow at time zero and as a terminal recovery in year 4, along with the Rs 50,000 scrap value, and discounting the Rs 3,00,000 annual inflows over 4 years. (b(ii)) Using the NPV computed in part (i), state whether the project is financially feasible and justify the recommendation using the NPV decision rule and, ideally, a supporting indicator such as the profitability index. (b(iii)) Two demands: (i) explain WHY working-capital requirements and terminal cash inflows must be incorporated in capital budgeting, and (ii) explain HOW omitting them distorts project appraisal — ideally quantified against the figures in this very case. (c) Two demands: (i) list and explain the components of a marketing plan, and (ii) apply EACH component to a specific case — a social-sector company launching a digital product for adult learners — showing how it contributes to a successful launch. Generic listing without application will not suffice.

• marginal costing / contribution and P/V ratio; activity-based costing (Cooper and Kaplan)
• standard costing and variance analysis; management by exception
• cash budget and the cash conversion cycle (DIO + DSO - DPO)
• inventory control: ABC/VED analysis, economic order quantity, JIT, inventory turnover ratio
• zero-base budgeting (Peter Pyhrr) and flexible budgeting
• responsibility accounting / responsibility centres
• Initial outlay Rs 9,00,000 (fixed assets Rs 8,00,000 + working capital Rs 1,00,000)
• PVAF (10 per cent, 4 years) = 3.1699; PV factor year 4 = 0.6830
• Terminal inflow Rs 1,50,000 = scrap Rs 50,000 + working capital recovery Rs 1,00,000
• PV of total inflows = Rs 10,53,420 with four-decimal table factors (Rs 10,53,412 unrounded)
• FINAL ANSWER: NPV = Rs 1,53,420 with table factors 3.1699 and 0.6830 (Rs 1,53,412 unrounded), positive
• NPV greater than zero implies accept
• NPV = approximately Rs 1,53,400 (positive)
• the project earns above the 10 per cent cost of capital and increases shareholder wealth
• supporting indicator: Profitability Index 1.17 (or IRR of roughly 17 per cent)
• working capital as an incremental cash outflow at time zero and a recovery at the end of the project
• terminal cash inflows = salvage/scrap value plus working-capital release
• omission overstates NPV in one direction and understates it in the other
• risk of an incorrect accept-reject decision or distorted project ranking
• the standard marketing-plan components (Kotler and Keller): situation analysis, objectives, STP, strategy, action programmes, budget, implementation and controls
• segmentation-targeting-positioning applied to adult learners
• the 7Ps of services marketing (product, price, place, promotion, people, process, physical evidence)
• control metrics beyond downloads — activation, completion rate, cost per completed learner, learning outcome
• a social-sector funding/pricing model (freemium, CSR, grant, government or employer-sponsored)

(a) A three-part process-costing numerical under the weighted average method: (i) compute cost per equivalent unit for materials, labour and overheads; (ii) prepare the Process-I Account for May 2026 showing cost allocation; and (iii) value normal loss, abnormal loss or abnormal gain, and closing work-in-progress. The reconciliation of units reveals an ABNORMAL GAIN, which is the crux of the problem. (b) 'Critically discuss' both the CHALLENGES and the OPPORTUNITIES arising from financial-sector reforms, organised around three specified forces: globalization, technological innovation and the evolving regulatory landscape. All three forces and both sides of the ledger must appear. (c(i)) Evaluate the CHALLENGES and LIMITATIONS of applying STP in a digital, highly dynamic market. The answer must first show correct command of segmentation, targeting and positioning, then critique each stage under digital-market conditions — not simply describe STP. (c(ii)) Three sub-demands, all compulsory: (i) explain the 'one message, one voice' concept in Integrated Marketing Communication, (ii) explain how inconsistency in IMC damages brand perception, and (iii) suggest measures to ensure a unified message across all channels.

• ABNORMAL GAIN of 700 units (not an abnormal loss)
• Equivalent units: materials 9,000; labour and overheads 8,640
• Cost per equivalent unit: materials Rs 10.56, labour Rs 6.94, overheads Rs 4.63, total Rs 22.13
• Transfer to next process 8,800 units = Rs 1,94,740.74
• Closing WIP = Rs 15,750 (materials Rs 9,500 + labour Rs 3,750 + overheads Rs 2,500)
• Normal loss valued at scrap only = Rs 5,000; abnormal gain valued at Rs 15,490.74; Process-I Account totals Rs 2,15,490.74 on both sides
• Narasimham Committee reports of 1991 and 1998
• Basel III norms — capital conservation buffer, leverage ratio, liquidity coverage ratio, net stable funding ratio
• UPI and the India Stack (Aadhaar e-KYC, Account Aggregator, OCEN)
• Insolvency and Bankruptcy Code, 2016 and the Prompt Corrective Action framework
• Digital Personal Data Protection Act, 2023 and cybersecurity risk
• at least one supervisory failure case — IL&FS 2018, PMC Bank 2019 or Yes Bank 2020
• the three stages named and correctly understood: segmentation, targeting, positioning
• privacy and data regulation constraining segmentation data (DPDP Act 2023, GDPR consent, browser restrictions on third-party cookies)
• segment instability / segment-of-one personalisation as the core structural challenge
• loss of brand message control to user-generated content, reviews and social media
• Integrated Marketing Communication — coordination of the full communication mix for a single consistent voice (Don E. Schultz)
• synergy: the combined effect of coordinated messages exceeds the sum of uncoordinated ones
• consequences of inconsistency — blurred positioning, loss of trust, diluted brand equity
• brand guidelines / message architecture and a single owner of brand communication
• internal marketing: employees and frontline staff as communication channels