Business Management. Sample Paper /2018 Questions and Suggested Solutions

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1 Business Management Sample Paper /2018 Questions and Suggested Solutions

2 NOTES TO USERS ABOUT SAMPLE PAPERS Sample papers are published by Accounting Technicians Ireland. They are intended to provide guidance to students and their teachers regarding the style and type of question, and their suggested solutions, in our examinations. They are not intended to provide an exhaustive list of all possible questions that may be asked and both students and teachers alike are reminded to consult our published syllabus (see for a comprehensive list of examinable topics. There are often many possible approaches to the solution of questions in professional examinations. It should not be assumed that the approach adopted in these solutions is the only correct approach, particularly with discursive answers. Alternative answers will be marked on their own merits. This publication is copyright 2017 and may not be reproduced without permission of Accounting Technicians Ireland. Accounting Technicians Ireland, 2017 Page 2 of 19 Business Management Sample Paper 3

3 Answer FOUR questions in total Answer at least ONE question from Section A Answer at least ONE question from Section B Answer at least ONE question from Section C INSTRUCTIONS TO CANDIDATES Answer ONE additional question from ANY section (A, B or C). If more than the requisite number of questions are answered, then only the requisite number, in the order filed, will be corrected. Candidates should allocate their time carefully. Answers should be illustrated with examples, where appropriate. Page 3 of 19 Business Management Sample Paper 3

4 Section A (Answer at least ONE of the questions in this section) Question 1 (a) Define the term team (b) Describe the FIVE (5) Tuckman s stages of Group development (c) List FIVE (5) team roles as identified by Belbin. (5 marks) (15 marks) (5 marks) Total: 25 marks Question 2 (a) Explain the following marketing terms: Market segmentation Market targeting Market positioning. (9 marks) (b) Human Resource Management (HRM) deals primarily with the following functions: Human Resource Planning Recruitment/Downsizing & Selection Employee Induction, training and development Performance Appraisal Describe, in detail, any two (2) of the four primary functions above. (16 marks) Total: 25 marks Page 4 of 19 Business Management Sample Paper 3

5 Section B (Answer at least ONE of the questions in this section) Question 3 An effective leader is critical to every organization. (a) What does 'organisational leadership' mean? (b) List the FIVE (5) different types of leadership approach. (5 marks) (5 Marks) AND Explain ONE (1) of them in detail (9 marks) (c) Outline THREE (3) advantages and THREE (3) disadvantages of Management by objectives (MBO) (6 marks) Total: 25 Marks Question 4 (a) Examine Irish culture through the lens of THREE (3) of Hofstede s dimensions of National Culture (21 marks) (b) List TWO (2) types of Global organisations that exist today (4 marks) Total: 25 Marks Page 5 of 19 Business Management Sample Paper 3

6 Section C (Answer at least ONE of the questions in this section) Question 5 (a) Describe the FOUR (4) broad categories of social responsibility that many of today's businesses are practicing: (4x5 marks) (b) List 5 (FIVE) Benefits of Corporate Social Responsibility (5 marks) Total: 25 Marks Question 6 Proper governance has become increasingly important in the modern business world. (a) Outline the advantages and disadvantages of two (2) different governance models. (14 marks) (b) Describe, with use of an illustration the governance chain for a large publicly quoted organization. (11 marks) Total: 25 Marks REMINDER TO STUDENTS You are required to answer FOUR questions in total. Make sure that you have completed the required number of questions. Page 6 of 19 Business Management Sample Paper 3

7 Suggested Solutions DRAFT ONLY Question 1 SECTION A (a) Daft (2005) defines a team as a unit of two or more people who interact and coordinate their work to accomplish a specific goal. (5 marks) (b) Describe the FIVE (5) Tuckman s stages of Group development Candidates should describe each of the following 5 stages as per the table on page 27 of text book; Forming Storming Norming Performing Adjourning (5 x 3 marks) (c) List FIVE (5) team roles as identified by Belbin. Candidates should LIST 5 of the nine roles below; Plant Monitor/Evaluator Co-ordinator Resource Investigator Implementer Completer Finisher Team worker Shaper Specialist (5 x 1 mark) Page 7 of 19 Business Management Sample Paper 3

8 Question 2 (a) Market segmentation is the grouping of consumers by some criteria, such that those within a group will respond similarly to a marketing action and those in a different group will respond differently. Market positioning is based around how customers view the firm and its product and changing the position, to get better reaction. It is a marketing strategy that emphasises serving a specific market segment by achieving a certain position in buyers minds. Market targeting is identifying a specific segment of consumers most likely to purchase a particular product, evaluating the segments and deciding how many to serve best. (3 x 3 marks) (b) Human Resource Planning (2 x 8 marks) Robbins et al (2013) define Employment planning as the process by which management ensures that it has the right number and kinds of people in the right places at the right times, who are capable of effectively and efficiently completing those tasks that will help the organisation achieve its overall objectives. Employment planning translates the organisational mission and objectives into a personnel plan. (a) Assessing current and future human resources needs. (b) Developing a plan to meet those plans. Dessler (2008) defines human resource (HR) planning simply as the process of deciding what positions the firm will have to fill, and how to fill them. It is the process therefore that determines the current and future HR needs of the organisation. The advantage of HR planning is that it minimises the costs of employee turnover and ideally achieves better utilisation of staff. Page 8 of 19 Business Management Sample Paper 3

9 HR planning has four stages; demand analysis, supply analysis, estimating deficits and surpluses, and developing an action plan. Recruitment and Downsizing Examples of techniques that firms use to recruit include trade fairs, traditional advertising and recruitment from third level institutions. Once managers know their current staffing levels whether they are understaffed or overstaffed they can begin to do something about it. To fill vacancies, they use recruitment the process of locating, identifying, and attracting capable applicants. If employment planning indicates a surplus, management will want to reduce the labour supply and initiate downsizing or layoff activities. Recruitment is the process of attracting people to apply for positions in an organisation. There are essentially three stages to the recruitment process: Job Analysis Job Description Job or Person Specification Downsizing has become a relevant means of meeting the demands of a dynamic environment. There are a number of downsizing options; See Exhibit 6.4. Regardless of the method chosen, employees may suffer. The objective of the selection process is to pick the best person (or who is perceived to be the best person) for the job. This is a very difficult and time-consuming activity that is occasionally very speculative. Moreover, the costs of making a mistake are high. The initial phase is to complete a short-listing process; this is done with a review of the application forms and CVs. Generally speaking, the decision to select should be based on the person specification; as noted, the person specification identifies the knowledge, skills and abilities to perform the job. The selection process is a prediction exercise it seeks to predict which applicants will be successful if hired. Successful in this case means performing well on the criteria the organisation uses to evaluate its employees. Any selection decision can result in four possible Page 9 of 19 Business Management Sample Paper 3

10 outcomes. The next phase is to use tools to help select the candidate from the short-list. The best-known devices include interviews and written and performance-simulation tests. Employee Induction, training and development Once selected, the job candidate needs to be introduced to the job and organisation Induction. The major objectives of orientation/induction is to Reduce the initial anxiety; Familiarize new employees with the job, the work unit, and the organisation and to Facilitate the outsider-insider transition. Job induction expands on the information the employee obtained during recruitment and selection. A Work-unit induction familiarises the employee with the goals of the work unit. It makes clear how his/ her job contributes to the unit s goals and provides an introduction to his/her coworkers. Organisation orientation/induction informs the new employee about the organisation s objectives, history, philosophy, procedures, and rules. It should also include relevant personnel policies such as work hours, pay procedures, overtime requirements, and benefits, as well as a tour of the organisation s physical facilities. Management has an obligation to make the integration of the new employee into the organisation as smooth and as free of anxiety as possible. Training refers to a planned effort to modify or develop knowledge, skills and attitudes through learning experiences. It is a critical component of the HR management programme. Employees need to be more highly skilled, and this includes both technical and soft (or interpersonal) skills. Employee training is a learning experience in that it seeks a relatively permanent change in employees such that their ability to perform on the job improves. It involves changing skills, knowledge, attitudes, or behavior. Training has benefitted as e-learning techniques are utilized to develop employees skills, knowledge and abilities. IT is applied to help company s productivity and the way they conduct business. For training to be successful, employees must be involved in the training process and they must have the necessary motivation and willingness to learn. Also the material must be relevant and meaningful. Page 10 of 19 Business Management Sample Paper 3

11 HRM advocates the adoption of a Systematic Training approach. Managers need to ensure that training is working. They can do so by Measuring results evaluate the training program. Employee Development; Gunnigle et al (2011) define employee development as any attempt to improve managerial effectiveness through a planned and deliberate learning process. Essentially employee development deals with the following: The improvement of individual manager s performance The improvement of management performance as a whole The improvement of organisational effectiveness. Employee development deals thus with the design and delivery of learning to improve performance, skills or knowledge within a company. Performance Appraisal Gunnigle et al (2011) define performance appraisal as a systematic approach to evaluating employee performance, characteristics and/or potential, with a view to assisting decisions in a wide range of areas such as pay, promotion, employee development and motivation. Partly accounting for the popularity of adoption is the many advantages associated with performance appraisal. From an employer s perspective, it facilitates the assessment of an individual, facilitates objectives setting, and can be used with good effect in promotional and training decisions. From the employee s perspective, performance appraisal has many advantages including providing an opportunity for an employee to have real input into a job, as well as offering the potential to clarify important issues relating to the job. In summary performance appraisal systems help to develop commitment in an organisation. The different methods of performance appraisal are listed in the following table. Methods of Performance Appraisal Graphic rating scales Scales containing a list of qualities against which all employees are measured. They are easy to fill out but if characteristics are not clearly defined, it can cause significant drawbacks. 360 degree feedback This is feedback collected Page 11 of 19 Business Management Sample Paper 3

12 from an employee s manager, peers and subordinates. It is an appraisal from various viewpoints (hence 360 degrees) and offers a holistic view. They are time-consuming. Self-assessment This is where employees analyse their own performance as the basis for discussion and action. The factors that affect the success of performance appraisal include: The context in which it is introduced The values and attitudes of employees The ease or difficulty with which performance can be measured Perceptions as to fairness in assessments Question 3 a) Leadership is the process of motivating other people to act in particular ways in order to achieve specific goals. An organisational leader is interpreted as someone who sets direction in an organisation and influences people to follow that direction. How they set that direction and influence people depends on a variety of factors. There are also numerous theories about leadership, or about carrying out the role of leader. Leaders carry out their roles in a wide variety of styles depending on the situation. (5 marks) b) The five of leadership approach types are (note: just a list is sufficient): Trait approach The behavioural approach The Contingency Approach The charismatic approach The Situational Leadership Approach (1 x 5 marks) Candidates should then explain in detail one of the above as per text. (9 marks) c) Candidates should outline 3 of the advantages and 3 of the disadvantages outlined in the table on page 125 of the text. (6 x 1 mark) Page 12 of 19 Business Management Sample Paper 3

13 Question 4 If we explore the Irish culture through the lens of Hofstede s dimensions we can get a good overview of the deep drivers of Irish culture relative to other world cultures. Power Distance This dimension deals with the fact that all individuals in societies are not equal it expresses the attitude of the culture towards these inequalities amongst us. Power Distance is defined as the extent to which the less powerful members of institutions and organisations within a country expect and accept that power is distributed unequally. At 28 Ireland sits in the much lower rankings of PDI i.e. a society that believes that inequalities amongst people should be minimized. Within Irish organisations, hierarchy is established for convenience, superiors are always accessible and managers rely on individual employees and teams for their expertise. Both managers and employees expect to be consulted and information is shared frequently. At the same time, communication is informal, direct and participative. Individualism The fundamental issue addressed by this dimension is the degree of interdependence a society maintains among its members. It has to do with whether people s self-image is defined in terms of I or We. In Individualist societies people are supposed to look after themselves and their direct family only. In Collectivist societies people belong to in groups that take care of them in exchange for loyalty. At a score of 70 Ireland is an Individualist culture. In the business world, employees are expected to be self-reliant and display initiative. Also, within the exchange-based world of work, hiring and promotion decisions are based on merit or evidence of what one has done or can do. Page 13 of 19 Business Management Sample Paper 3

14 Masculinity A high score (Masculine) on this dimension indicates that the society will be driven by competition, achievement and success, with success being defined by the winner / best in field a value system that starts in school and continues throughout organisational life. A low score (Feminine) on the dimension means that the dominant values in society are caring for others and quality of life. A Feminine society is one where quality of life is the sign of success and standing out from the crowd is not admirable. The fundamental issue here is what motivates people, wanting to be the best (Masculine) or liking what you do (Feminine). At 68 Ireland is a Masculine society highly success oriented and driven. Behaviour in school, work, and play are based on the shared values that people should strive to be the best they can be and that the winner takes all. The Irish are proud of their successes and achievements in life, and it offers a basis for hiring and promotion decisions in the workplace. Conflicts are resolved at the individual level and the goal is to win. Uncertainty Avoidance The dimension Uncertainty Avoidance has to do with the way that a society deals with the fact that the future can never be known: should we try to control the future or just let it happen? This ambiguity brings with it anxiety and different cultures have learnt to deal with this anxiety in different ways. The extent to which the members of a culture feel threatened by ambiguous or unknown situations and have created beliefs and institutions that try to avoid these is reflected in the score on Uncertainty Avoidance. At 35 Ireland has a low score on Uncertainty Avoidance. Ideas are important, being imaginative is appreciated. Irish businesses embrace creativity and are always looking for new ways to approach problems. Making a point with practical facts is more appreciated than the use of too much technical language. Page 14 of 19 Business Management Sample Paper 3

15 Long Term Orientation This dimension describes how every society has to maintain some links with its own past while dealing with the challenges of the present and future, and societies prioritise these two existential goals differently. Normative societies. which score low on this dimension, for example, prefer to maintain time-honoured traditions and norms while viewing societal change with suspicion. Those with a culture which scores high, on the other hand, take a more pragmatic approach: they encourage thrift and efforts in modern education as a way to prepare for the future. With a low score of 24, Ireland has a culture classified as normative. People in such societies have a strong concern with establishing the absolute Truth; they are normative in their thinking. They exhibit great respect for traditions, a relatively small propensity to save for the future, and a focus on achieving quick results. Indulgence One challenge that confronts humanity, now and in the past, is the degree to which small children are socialized. Without socialization we do not become human. This dimension is defined as the extent to which people try to control their desires and impulses, based on the way they were raised. Relatively weak control is called Indulgence and relatively strong control is called Restraint. Cultures can, therefore, be described as Indulgent or Restrained. With a high score of 65, it is clear that Irish culture is one of Indulgence. People in societies classified by a high score in Indulgence generally exhibit a willingness to realise their impulses and desires with regard to enjoying life and having fun. They possess a positive attitude and have a tendency towards optimism. In addition, they place a higher degree of importance on leisure time, act as they please and spend money as they wish. b) Candidates should LIST two of the following types of MNCs Page 15 of 19 Business Management Sample Paper 3

16 A multi domestic corporation Transnational or borderless organisation Global corporation (2 x 2 marks) Question 5 (a) Describe the FOUR (4) broad categories of social responsibility that many of today's businesses are practicing: (4x5 marks) Broad categories of CSR that business are practicing today Corporate social responsibility (CSR) refers to business practices involving initiatives that benefit society. A business's CSR can encompass a wide variety of tactics, from giving away a portion of a company's proceeds to charity, to implementing "greener" business operations. There are a few broad categories of social responsibility that many of today's businesses are practicing: 1. Environmental efforts: One primary focus of corporate social responsibility is the environment. Businesses regardless of size have a large carbon footprint. Any steps they can take to reduce those footprints are considered both good for the company and society as a whole. 2. Philanthropy: Businesses also practice social responsibility by donating to national and local charities. Businesses have a lot of resources that can benefit charities and local community programs. 3. Ethical labor practices: By treating employees fairly and ethically, companies can also demonstrate their corporate social responsibility. This is especially true of businesses that operate in international locations with labor laws that differ from those in the United States. Page 16 of 19 Business Management Sample Paper 3

17 4. Volunteering: Attending volunteer events says a lot about a company's sincerity. By doing good deeds without expecting anything in return, companies are able to express their concern for specific issues and support for certain organizations. (b) List 5 (FIVE) Benefits of Corporate Social Responsibility (5 marks) Benefits of CSR There can be many benefits of a strategic and effective CSR programme: Positive perception of your brand to customers and public Reputation driver for your organisation s values and commitment Motivating activity for your team Talent acquisition - high calibre staff attracted by engaging CSR activities Brand awareness in community and public Public relations - vehicle for positive publicity in the media Positioning commercial benefits through alliances, sponsorship and contribution Networking and lobbying opportunities Awards opportunity for your organisation Question 6 (a) Different Governance models ; Shareholder model Stakeholder model Advantages Higher rates of return Reduced risk Increased innovation and entrepreneurship Page 17 of 19 Business Management Sample Paper 3

18 Better decision making Long term horizons Less reckless risk-taking Better management Disadvantages Diluted monitoring Vulnerable minority shareholders Short termism Weaker decision-making Uneconomic investments Reduced innovation and entrepreneurship (Johnson et al, 2010) 14 marks (b) (Students see illustration in core text; a similar diagram could be included with your answer as this will help you explain your answer). THE GOVERNANCE CHAIN The governance chain shows the roles and relationships of different groups involved in the corporate governance of an organisation. In large business, influence on governance can be complex. The diagram shows a governance chain for a typical large, publicly quoted organisation. Individual investors (the ultimate beneficiaries) often invest in public companies through investment funds, for example unit trusts or pension funds, which they invest in a range of companies on their behalf. Such funds are of growing importance. The relationships in such governance chains can be understood in terms of the principal-agent model. (Johnson et al, 2011) In the diagram the beneficiaries are the ultimate principals. Principal agent theory assumes that agents will not work diligently for principals unless incentives are carefully and appropriately aligned. The result may be that decisions are taken that are not in the best interests of the final beneficiary. In this context the governance chain helps to highlight important issues that affect the management of strategy. The principal agent model, Governance can be seen in Page 18 of 19 Business Management Sample Paper 3

19 terms of the principal agent model. Principals pay agents to act on their behalf (e.g. beneficiaries/trustees pay investment managers to manage funds, boards of directors pay executives to run a company). Without appropriate rules, sanctions (and incentives). Agents may act in their own self-interest. The key challenges are Knowledge imbalances: agents typically know more about what can and should be done. Monitoring limits: it is very difficult for the principal to closely monitor the agent s performance especially if they have diverse interests. Misaligned incentives: without appropriate incentives agents may pursue their own objectives. 11 marks Page 19 of 19 Business Management Sample Paper 3