business management - accounting technicians · pdf filepage 3 of 19 business management...

Business Management

Sample Paper 3

2017/2018 Questions and Suggested Solutions

of 19 Business Management Sample Paper 3

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

www.AccountingTechniciansIreland.ie) 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

http://www.accountingtechniciansireland.ie/


INSTRUCTIONS TO CANDIDATES

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

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.


Section A (Answer at least ONE of the questions in this section)

Question 1

(a) Define the term ‘team’ (5 marks)

(b) Describe the FIVE (5) Tuckman’s stages of Group development (15 marks)

(c) List FIVE (5) team roles as identified by Belbin. (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


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?

(5 marks)

(b) List the FIVE (5) different types of leadership approach. (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


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.


Suggested Solutions

DRAFT ONLY

SECTION A

Question 1

(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)


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.


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


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 co-

workers.

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.


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


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)


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.


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.


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


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.


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


• 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


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

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