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Page 1 of 4 Business Management (BM) A2017

Accounting Technicians Ireland

1st Year Examination: August 2017

Paper: BUSINESS MANAGEMENT

Thursday 17 August 2017

09.30 a.m. – 12.30 p.m.

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).

Candidates should allocate their time carefully.

Answers should be illustrated with examples, where appropriate.

Question 1 begins on page 2 overleaf.


SECTION A

Question 1

(a) 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 (4) primary HR functions outlined above.

(16 Marks)

(b) Describe any THREE (3) techniques for managing the resistance to change. (9 Marks)

Total: 25 Marks

Question 2

(a) Explain what you understand the concept of 'Marketing' to mean. (5 Marks)

(b) The “Ansoff growth matrix” assists organizations in mapping their product / market growth strategies.

(i) Draw a diagram to illustrate the Ansoff matrix (4 Marks)

AND

(ii) Explain any TWO (2) of the four strategies available to organisations.

(8 Marks)

(c) Write a short explanatory note on any TWO (2) of the following;

Social media marketing

Search Engine Optimization (SEO):

Search Engine marketing (SEM):

Content marketing

Email marketing

SMS marketing

Video marketing/video infographics (8 Marks)

Total: 25 Marks


SECTION B

Question 3

“An effective leader is critical to every organization.”

(a) What does 'organisational leadership' mean? (5 Marks)

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

AND

(ii) Explain ONE (1) of the approaches identified in (b) (i) in detail. (9 Marks)

(c) Outline TWO (2) advantages and TWO (2) disadvantages of Management by Objectives (MBO).

(6 Marks)

Total: 25 Marks

Question 4

(a) Outline THREE (3) of Fayol's broad functions of management. (9 Marks)

(b) Explain Mintzberg’s views on the roles fulfilled by managers.

(10 Marks)

(c) Discuss any THREE (3) of Fayol’s Principles of Effective Management. (6 Marks)

Total: 25 Marks


SECTION C

Question 5

Professor Geert Hofstede defines culture as “the collective programming of the mind distinguishing the members

of one group or category of people from others”

(a) Explain THREE (3) of Hofstede's Dimensions of National Culture. (12 Marks)

(b) Explain THREE (3) of the different stances companies can take towards Corporate Social Responsibility

(CSR).

(9 Marks)

(c) LIST TWO (2) arguments FOR AND TWO (2) arguments AGAINST companies taking on higher levels of

Corporate Social Responsibility.

(4 Marks)

Total: 25 Marks

Question 6

Chris has been asked to join the Board of a local company. He has never served on a Board before and has asked

for your assistance with some questions that he has in relation to the role of a Board.

(a) Explain the term 'Corporate Governance’ and how it is growing in importance.

(15 Marks)

(b) Explain the role of the Board of a company, detailing what is considered to be good practice for boards today

(10 Marks)

Total: 25 Marks

Business Management

1st Year Examination

August 2017

Solutions, Examiners Comments & Marking Scheme

Business Management August 2017 1st Year Paper

Page 2 of 17

NOTES TO USERS ABOUT THESE SOLUTIONS

The solutions in this document are published by Accounting Technicians Ireland. They are

intended to provide guidance to students and their teachers regarding possible answers to

questions in our examinations.

Although they are published by us, we do not necessarily endorse these solutions or agree with

the views expressed by their authors.

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 ideal

or the one preferred by us. Alternative answers will be marked on their own merits.

This publication is intended to serve as an educational aid. For this reason, the published

solutions will often be significantly longer than would be expected of a candidate in an

examination. This will be particularly the case where discursive answers are involved.

This publication is copyright 2017 and may not be reproduced without permission of

Accounting Technicians Ireland.

© Accounting Technicians Ireland, 2017.


Page 3 of 17 Business Management A2017

1st Year Examination: August 2017

Business Management

Suggested Solutions

and

Examiner’s Comments

Students please note: These are suggested solutions only; alternative answers may also be deemed to

be correct and will be marked on their own merits.

Statistical Analysis – By Question

Question No. 1 2 3 4 5 6

Average Mark (%) 213 199 165 66 89 138

Nos. Attempting 66 59 55 51 56 51

Statistical Analysis - Overall

Pass Rate 74%

Average Mark 55%

Range of Marks

0-39 37

40-49 22

50-64 87

65-79 65

80 and over 17

Total No. Sitting Exam 228

Total Absent 96

Total Approved Absent 17

Total No. Applied for Exam 341

For students who are registered from 2016 onwards the

breakdown of subject level awards can be found below:

Pass 50 - 64%

Subject Merit 65 -79 %

Distinction 80+%

General Comments:

Another well received paper with a very mixed performance across centres.



Examiner Comments on Question One

Human Resource Planning 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

Question one was popular with candidates scoring well. Most students chose Recruitment, Induction or

Performance appraisal and answered them to a high level. Part b was answered generically by some but

majority nailed the required theory.



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

behaviour. 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 • (2 x 8 marks)



(b)

Education and communication help employees see the logic of the change effort. It assumes

that much of the resistance lies in misinformation or poor communication.

Participation involves bringing those individuals directly affected by the proposed change into

the decision-making process. It allows for expression of feelings, increases the quality of the

process, and increases employee commitment to the final decision.

Facilitation and support involve helping employees deal with the fear and anxiety associated

with the change effort. It may include employee counselling, therapy, new skills training, or a

short paid leave of absence.

Negotiation involves a bargain: exchanging something of value for an agreement to lessen the

resistance to the change effort. This technique may be quite useful when the resistance comes

from a powerful source.

Manipulation and co-optation refers to covert attempts to influence others about the change. It

may involve twisting or distorting facts to make the change appear more attractive.

Coercion involves the use of direct threats or force against the resisters.

(3 x 3 marks)

Examiner Comments on Question Two

(a) Kotler defines marketing as; ‘the science and art of exploring, creating, and delivering value to

satisfy the needs of a target market at a profit. Marketing identifies unfulfilled needs and desires. It

defines, measures and quantifies the size of the identified market and the profit potential. It pinpoints

which segments the company is capable of serving best and it designs and promotes the appropriate

products and services. (http://www.kotlermarketing.com/phil_ questions.shtml#answer3)

(5 marks)

(b)

A very popular question, definition was handled well,

If the candidate knew Ansoff they scored very well; with the 4 marks for the illustration really boosting

their performance. Again, the choice of open topics in part c was beneficial to candidates.



The Ansoff Matrix has four alternatives of marketing strategies; Market Penetration, product

development, market development and diversification. (4 marks)

(An explanation of any TWO of these is required; examples below)

Market Penetration When we look at market penetration, it usually covers products that are existent in an existing

market. In this strategy, there can be further exploitation of the products without necessarily

changing the product or the outlook of the product. This will be possible through the use of

promotional methods, putting various pricing policies that may attract more clientele, or one can

make the distribution more extensive.

In Market Penetration, the risk involved in its marketing strategies is usually the least since the

products are already familiar to the consumers and so is the established market. Another way in

which market penetration can be increased is by coming up with various initiatives that will

encourage increased usage of the product. A good example is the usage of toothpaste. Research

has shown that the toothbrush head influences the amount of toothpaste that one will use. Thus if

the head of the toothbrush is bigger it will mean that more toothpaste will be used thus promoting

the usage of the toothpaste and eventually leading to more purchase of the toothpaste.

Product Development In product development growth strategy, new products are introduced into existing markets.

Product development can differ from the introduction of a new product in an existing market or it

can involve the modification of an existing product. By modifying the product one would probably

change its outlook or presentation, increase the products performance or quality. By doing so, it

can appeal more to the already existing market. A good example is car manufacturers who offer a

range of car parts so as to target the car owners in purchasing a replica of the models, clothing and

pens.

Market Development The third marketing strategy is Market Development. It may also be known as Market Extension.

In this strategy, the business sells its existing products to new markets. This can be made possible

through further market segmentation to aid in identifying a new clientele base. This strategy

assumes that the existing markets have been fully exploited thus the need to venture into new

markets. There are various approaches to this strategy, which include: New geographical markets,

new distribution channels, new product packaging, and different pricing policies. In New

geographical markets, the business can expound by exporting their products to other new

countries. It would also mean setting up other branches of the business in other areas that the

business had not ventured yet. Various businesses have adopted the franchise method as a way of

setting up other branches in new markets.

A good example is Guinness. This beer had originally been made to be sold in countries that have

a colder climate, but now it is also being sold in African countries. The other method is via new

distribution channels. This would entail selling the products via e-commerce or mail order. Selling

through e-commerce will capture a larger clientele base since we are in a digital era where most

people access the internet often. In New Product packaging, it means repacking the product in

another method or dimension. That way it may attract a different customer base. In Different

pricing policies, the business could change its prices so as to attract a different customer base or so

create a new market segment. Market Development is a far much risky strategy as compared to

Market Penetration. This is so as it is targeting a new market and one may not quit tell how the

outcome may be.

Diversification The last strategy is Diversification. This growth strategy involves an organization marketing or

selling new products to new markets at the same time. It is the most risky strategy among the

others as it involves two unknowns, new products being created and the business does not know

http://www.ansoffmatrix.com/market-penetration.html

http://www.ansoffmatrix.com/product-development.html

http://www.ansoffmatrix.com/market-development.html

http://www.ansoffmatrix.com/diversification.html



the development problems that may occur in the process. There is also the fact that there is a new

market being targeted, which will bring the problem of having unknown characteristics. For a

business to take a step into diversification, they need to have their facts right regarding what it

expects to gain from the strategy and have a clear assessment of the risks involved.

There are two types of diversification. There is related diversification and unrelated

diversification. In related diversification, this means that the business remains in the same industry

in which it is familiar with. For example, a cake manufacturer diversifies into a fresh juice

manufacturer. This diversification is in the same industry which is the food industry. In unrelated

diversification, there are usually no previous industry relations or market experiences. One can

diversify from a food industry to a mechanical industry for instance.

A good example of the unrelated diversification is Richard Branson. He took advantage of the

virgin brand and diversified into various fields such as entertainment, air and rail travel foods etc.

Another example is the easy jet which has diversified into car rentals, gyms, fast foods and hotels.

Though diversification may be risky, with an equal balance between risk and reward, then the

strategy can be highly rewarding. Another advantage of diversification is that in case one business

suffers from adverse circumstances the other line of businesses may not be affected.

(2 x 4 marks)

(c) Write a short explanatory note on any two (2) of the following;

Social media marketing: this has risen hugely in popularity and there are now countless dedicated

agencies scattered around the web which promise to help with it. Facebook, Twitter, Pinterest and

LinkedIn are all examples of social networks which can be used as a part of your marketing efforts,

although they are far from the only ones.

Social media marketing allows two-way communication between a company and consumer in a way

that wasn’t previously seen and it’s safe to say that it has changed business approach to marketing as

now, the consumer holds the power.

It’s also based on one of the most effective forms of advertising; word of mouth.

Social media means that communication can be a lot more targeted and personalized than other forms

of marketing, as companies get the chance to receive feedback from customers daily.

It’s also useful for making content ‘go viral’, something which can help to strengthen a brand very

quickly. It’s brand personality that makes social work so well, as if this is done correctly, across the

board, then it can boost engagement considerably.

Search Engine Optimisation: is a means of optimizing the content of a website in order to gain better

placement on the Search Engine Results Page (SERPS). A variety of techniques are employed to

achieve this and it’s not a job for amateurs really as there are many pitfalls that could have Google

frowning on your site.

SEO includes:

Keyword research and usage, on-page and off (within HTML)

Link building /outreach blogging

Content delivery

Site structure

Analytics

This is not an exhaustive list, but it does give an indication of how much work is necessary in order to

optimize a site.

Search Engine Marketing: is similar to, but incorporates, SEO and uses many of the same techniques

as a part of that. The main difference between the two terms is that SEM also includes paid online

advertising models, such as pay-per-click (PPC).

PPC advertising models are those such as Google Adwords and Bing, which only require payment

when the ad is clicked through to the target website. SEM also requires keyword analysis as the words

and phrases used in the ad and site and these need to be monitored carefully to reflect the market and

current search engine rules.

http://www.wikihow.com/Improve-Your-Chances-of-Going-Viral



Whilst it can be said that SEM encompasses all kinds of digital marketing, it’s more commonly thought

of in a narrower niche, to describe paid models.

Content Marketing: is a technique where content is produced and distributed with the intention of

providing relevant, interesting content to attract and engage a particular audience that a business is

targeting. The creation of useful content is a way of developing communication with the customer in

order to drive engagement and customer action. Content can mean anything from blogs to videos and

whitepapers tend to work well using content marketing techniques too. The goal is to win customer

loyalty and retain it.

Email Marketing: a very effective tool, despite claims that it isn’t as important as social these days.

Modern email marketing is just beginning to evolve so that it can be linked to a database in order to

personalise it, so that individual groups of customers can be sent mail based on previous purchases and

interests.

SMS marketing: is also highly effective and rising in popularity, due to the fact that many of us no

longer go anywhere without our cell phones. This ‘always-on’ aspect means that when SMS marketing

is used, it’s highly likely that the customer will at least read the text.

Video marketing/video infographics: is again becoming hugely popular and it’s likely that we’ll see

an even bigger move in its direction this year as more and more businesses begin to recognise the

potential it has. People take in more information when watching video and are more likely to engage,

so it’s certainly worth looking at.

Whilst image-based infographics are already hugely popular, making these in the form of a series of

frames for video is beginning to really take off in the digital marketing space too. (2x4 marks)

Examiner Comments on Question Three

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

(9 marks)

Part a was well answered.

Part b was strong by most; the 5 marks for listing only, really assisted in boosting the marks obtained.



The Trait Approach

Trait theories of leadership mark the earliest approaches to leadership, arguing that leaders are born,

not made. In other words, people are born with certain attributes or traits that make them leaders. This

focus on individual qualities dates back to the Greek philosophers’ curiosity as to what made people

leaders. The simple conclusion reached was that leadership is an inherited skill. This approach became

known as the ‘great man’ theory. This was because great leaders were usually men with particular

qualities such as physical size, intelligence and assertiveness.

More modern studies, conducted in the 1930s, 1940s, and 1950s gave further support to the notion that

leadership is rooted in characteristics of the leader. The key assumption underlying this approach is that

it is possible to identify a unifying set of characteristics that make all leaders great. This research

examined the physical, mental and social characteristics of individuals and examined strong

associations between individual traits and measurements of leadership effectiveness.

Traits include the ability to adapt to new situations, assertiveness, passion, self-confidence and social

intelligence. However, debate still rages over whether such traits are biologically inherent or whether

they are developed over time and situations. Also, the approach is considerably discriminatory on both

gender and social grounds; women were not traditionally considered good leaders for example. Finally,

various studies have identified a significant number of contradictory traits, which makes it very

difficult to identify leadership traits precisely.

The following table lists the benefits and limitations of this approach.

Benefits Limitations

• Certain traits are measurable, and can be identified (e.g. strength)

• Creating a classification of traits enables managers to examine such traits in potential employees

• It may be possible to identify future leaders according to the theory

• Situational (internal or context) forces are secondary

• Socio-economic (external) circumstances have a role to play

• The nature versus nurture debate is not conclusive – are leaders born or made?

• There is strong evidence that certain traits are flexible and can be learned over time

Example: There is evidence which helps substantiate the trait approach. Research conducted on twins

separated at birth suggests far more is inherited than previously thought.

While the trait approach has been somewhat discredited, more recent research has examined traits

which are conducive to leadership. These include the following:

• Demonstrated emotional stability and composure

• Remained calm and confident rather than angry or moody during crises

• Admitted mistakes and then tried to correct problems rather than blaming others or trying to hide

mistakes

• Had strong interpersonal skills

• Had diverse functional and technical experiences that gave them a broader perspective for solving

problems

Thedifficultywiththisapproachisthatitisdifficulttoenumerateallthosetraitsassociatedwithleadership and

there is still some debate as to what constitutes a good leader.

The Behavioural Approach

As a result of the dissatisfaction with the trait approach to leadership, the focus of leadership research

moved to the behaviour of leaders. Part of the reason for this was that it was known that what made

leaders good in one situation was not true for other situations; in other words, context had a bearing. A

good example is Winston Churchill; a superb leader during war time, he was rejected by the British

electorate immediately after the war.

The central assumption in this school of thought is that specific behaviours differentiate leaders from

non-leaders. One of the most famous behavioural leadership studies took place at Ohio State University

in the late 1940s. The study found that there are two principle dimensions to leading behaviour:

• Concern for People – Leaders have a concern for developing mutual trust with subordinates.

• Concern for the Task – Leaders are concerned with structuring their own and their subordinates’ (or

followers’) tasks and goals. These people are highly directive and task orientated.



Research of a similar kind was conducted in Michigan in the 1950s. The Michigan Leadership studies,

as they are referred to, proposed three criteria for effective leaders:

• Task-Orientated Behaviour – Leaders spent time guiding employees in setting tasks that were

challenging and rewarding.

• Relationship-Orientated Behaviour – Leaders were considerate, helpful and supportive of their

subordinates.

• Participative Leadership – Effective leaders promote, foster and encourage collaboration across the

board through teamwork and the generation of ideas.

The behavioural approach recognises the quality of leadership as a determining factor in management

success. It focuses on group relationships and recognises the role of individual psychology and group

behaviour in organisational effectiveness

The benefits and limitations of this approach are set out next.

Benefits & Limitations

• Looks at more dimensions than trait theory

• Far more plausible as a theory

• Backed up by scientific studies (e.g. Ohio State Studies)

• May be possible to shape behaviour of potential leadership candidates

• The theory is very general and may discount peripheral influences like background and social status

• Again, the situational influences are secondary

• Leadership qualities highlighted in the studies will not necessarily guarantee success

Example: Today many organisations endorse participative leadership and collaboration. In fact, this

participation is often indicative of decentralised firms with fewer layers of management.

The Contingency Approach

A third approach to leadership is the contingency approach. This approach is based on the premise that

predicting leadership success and effectiveness is more complex than the simple isolation of traits or

behaviours. Instead the focus is on the situation: the argument is that the time or situation produces the

leader rather than the other way around. Again consider Churchill, often considered the best leader in

war-time Britain.

The leading theorist in this school is Fiedler.

Fiedler’s Theory

Introduced in 1967, Fiedler’s contingency theory was the first to specify how situational factors

interact with leader traits and behaviour to influence leadership. In order to classify leadership styles,

Fiedler developed an index called the least-preferred co-worker (LPC) scale. This scale asked a leader

to think of all the persons with whom he has ever worked, and then to describe the one person with

whom he worked the least well. This person could have been someone from the past or someone he

was currently working with. On a scale of 1 through 8, the leader was asked to describe this person on

a series of scales such as those shown:

Unfriendly 1 2 3 4 5 6 7 8 Friendly

Uncooperative 1 2 3 4 5 6 7 8 Cooperative

Hostile 1 2 3 4 5 6 7 8 Supportive

Guarded 1 2 3 4 5 6 7 8 Open

The responses to these scales (usually 18-25 in total) were summed and averaged.

A high LPC score suggests that the leader has a human relations orientation.

A low LPC score indicates a task orientation.

Fiedler regards a leader’s style as being fixed to the leader themselves. He concluded that task oriented

leaders performed better in situations of very high or very low control, that is, in extremes (favourable

to that type of leader) and relationship-oriented leaders performed better in moderately controlled or

moderately favourable circumstances.

Fiedler suggests that there are two ways to adapt to improve leaders’ effectiveness: change the leader to

suit the situation or change the situation to suit the leader. Favourability or more control depends on

variables such as relationship and maturity of subordinates, the task structure or the level and position

of power.



Fiedler made the point that there is no ideal leader; much depends on the situation. Both task-oriented

and relationship-oriented leaders can be equally successful depending on the situation. When there is a

good leader-member relationship, a highly structured task, and high leader position power, the situation

is considered a ‘favourable situation’. Fiedler found that task-oriented leaders are more effective in

extremely favourable or unfavourable situations, whereas relationship-oriented leaders perform best in

situations with intermediate favourability.

The Charismatic Approach

Still another approach to leadership is the charismatic approach. Charisma is a very strong form of

referent power possessed by relatively few individuals. It is based on an individual’s ability to

influence others through their own inspirational qualities rather than through any formal position of

power. This approach attempts to identify behaviours that differentiate charismatic leaders from their

non-charismatic counterparts. Studies indicate that charismatic leaders display specific traits as shown

in the following table:

Characteristics of Charismatic Leaders Strong needs for power Ability to portray self-sacrifice on

behalf of the company Very self-confident Astute at scanning and ‘reading’ their environment Strong

beliefs in their own ideas. Often behave unconventionally They are visionaries and can communicate

their vision effectively Good at cultivating a certain image (whether accurate or not) Take innovative

actions to achieve goals They are dominant and have a strong desire to influence others

There are many examples of leaders with charisma in the political field, including former US President

John F. Kennedy. In the management field, it might be argued that Richard Branson (Virgin) or

Michael O’ Leary (Ryanair) have charismatic tendencies.

The Situational Approach

A fifth theory was developed by Hersey and Blanchard, who defined leadership in terms of direction

and support that the leader provides to their subordinates. Leadership for them is task relevant and

about adapting the style to suit the situation; the most successful leaders are those that adapt their

leadership style to the task at hand.

Leadership depends primarily on two factors: leadership style and the group or individual’s maturity.

Arguing that there was no one best style of leadership they found four styles:

1.) Directing – Roles and responsibilities are defined by the leader and monitored closely.

2.) Coaching – Roles and responsibilities are defined but with input and collaboration with followers.

3.) Supporting – The leader makes the decisions and delegates the processes but ultimately the control

is with the follower.

4.) Delegating – The leader is involved in decision making but the follower decides when and how the

leader will be involved.

No one of these styles is better than the other. Effective leaders are flexible, and adapt themselves

according to the situation, choosing the best style. The best leadership style will depend on the maturity

of the person or group being led. Hersey and Blanchard identified four levels of maturity, from M1 to

M4:

M1 – worker lack the skill and are unwilling to take on the responsibility for the job.

M2 – while still lacking the responsibility for the task being done, workers are willing to work at the

task.

M3 – workers are capable of doing the task but lack the confidence to take on responsibility.

M4 – workers are capable and willing to take on the task.

Taking the two factors together—style and maturity—it is argued that when follower maturity is high,

a delegating style is best (see following figure). This means minimum intervention of the leader. When

maturity is low, a directing style is best. This means the leader giving clear and detailed instructions.

The supporting style is best for low to moderate situations, where followers are capable of undertaking

the task but lack the confidence. The final style—the coaching—is recommended for moderate to high

readiness situations. Workers lack the capability but are willing to take on the responsibility.

c) Candidates should outline 3 of the advantages and 3 of the disadvantages outlined in the table on

page 125 of the text.

Advantages

Highlights what should be done in a form to achieve organisational goals.



The process secures employee commitment to accomplishing these goals

It may improve morale and motivation amongst employees

Provides a language and set of tools to communicate and co-ordinate activities efficiently

Disadvantages,

Specific goals encourage individual achievement rather than promote a team focus

Specific goals may limit employees potential and discourage efforts for continuous improvement

Frustration may result from the setting of unrealistic targets

The process assumes that the organisation knows its objectives which may change in a dynamic

environment advantages (6 x 1 mark)

Examiner Comments on Question Four

(a) There are five functions of contemporary management and each one is of equal importance:

(i) Planning – the manager has to plan the tasks for the business and how the business should perform;

(ii) Organising – to complete tasks to meet objectives, including people and resources;

(iii) Co-ordinating – the many areas and functions within the business towards a common task;

(iv) Commanding – by communication of the desired outcomes to employees and to maximise returns

from employees;

(v) Controlling – ensure that measures are in place to identify whether or not the business is on the

right path.

(3x3 marks)

(b) Henry Mintzberg suggested that, rather than look at the functions of the manager, it is more

beneficial to consider the following broad categories: interpersonal, informational and decisional.

He drew together the research-based literature that helps to describe the processes of general

management.

This research revealed managers to be hostages to interruptions, flitting from subject-to-subject and

rarely giving undivided attention to anything.

‘The pressure of the managerial environment does not encourage the development of reflective

planners, the classical literature notwithstanding.’

Mintzberg further observed ‘The job breeds adaptive information-manipulators who prefer the live,

concrete situation.

The manager works in an environment of stimulus-response, and he develops in his work a clear

preference for live action.

‘Instead of being isolated figureheads analysing and generating carefully thought-out strategy,

managers were suddenly exposed as fallible and human’.

The corollary of Mintzberg’s conclusions was that, if we don’t understand how managers spend their

time and what they do, how can management be improved and the skills of managers appropriately

developed? He concluded that management is rarely consistent will the models discussed earlier.

Previous management behaviour studies had focused on team and subordinate behaviour or

organisational structure instead of the day-to-day reality of managerial behaviour.

To describe the work life of a CEO, Mintzberg first identified six characteristics of the job.

Mintzberg then identified ten separate roles in managerial work, each role defined as an organised

collection of behaviours belonging to an identifiable function or position.

He separated these roles into three sub-categories which are summarised under the categories above.

(2 marks per valid point x 5)

(c) Henry Fayol developed the theory of management - managerial excellence is a technical ability and

can be acquired.

Fayol developed theories and principles of management which are universally accepted and make him

universalistic.

Mixed marks achieved here. Part a & c were fine. Knowledge of Mintzberg was weak.



He was a pioneer of formal education in management. Fayol’s principles of management meet the

requirements of modern management.

The following are three of the fourteen principles of management;

According to Fayol, ‘The worker always on the same post, the manager always concerned with the

same matters, acquire an ability, sureness and accuracy which increases their output’.

Division of work means specialisation. According to this principle, a person is not capable of doing all

types of work. Each job and work should be assigned to the specialist of his job.

Division of work promotes efficiency because it permits an organisational member to work in a limited

area, reducing the scope of his responsibility.

Fayol wanted the division of work not only at factory level but at management levels also.

Unity of direction

Fayol advocates ‘one head and one plan’, which means that group efforts on a particular plan be led

and directed by a single person.

This enables effective co-ordination of individual efforts and energy.

This fulfils the principles of unity of command and brings uniformity in the work of the same nature. In

this way, the principle of direction creates dedication to purpose and loyalty. It emphasises the

attainment of a common goal under one head.

Fair remuneration to employees

According to Fayol, wage-rates and methods of payment should be fair, proper and satisfactory, and all

parties should agree to it. Logical and appropriate wage-rates and methods of their payment reduces

tension and differences between workers and management, creates a harmonious relationship and a

pleasing atmosphere of work. Further, Fayol recommended that proper facilities be provided including

arrangement of electricity, water and so on.

The other principles are authority and responsibility, discipline, unity of command, subordination of

individual interests to general interests, centralisation and decentralisation, scalar chain, order, equity,

stability of use of personnel, initiative and spirit of co-operation (esprit de corps).

(3x2 marks)

Examiner Comments on Question Five

(a) Explain THREE (3) of Hofstede's Dimensions of National Culture.

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.

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.

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

Answered well by most candidates. This question allowed for a little bit more leverage and depth of

discussion around Hosftede & CSR.



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).

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.

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. 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. (3x4 marks)

(b) Explain THREE (3) of the different stances companies can take towards Corporate Social

Responsibility (CSR).

(3x3 marks)



(c) List TWO (2) arguments FOR AND TWO (2) arguments AGAINST companies taking on higher

levels of Corporate Social Responsibility.

Arguments for and against Corporate Social Responsibility

(4 marks)

Examiner Comments on Question Six

(a) Explain the term ‘Corporate Governance’ and how this affects the Board. (15 marks)

Corporate governance is concerned with the structures and systems of control by which

managers are held accountable to those who have a legitimate stake in an organisation. It is the

system of rules, practices and processes by which a company is directed and controlled.

Corporate governance essentially involves balancing the interests of the many stakeholders in a

company - these include its shareholders, management, customers, suppliers, financiers,

government and the community

Corporate Governance has become increasingly important in recent times as there has been a

focus on the importance of separating ownership from management/control, particularly in

large organisations like multi-nationals and banks.

The Reasons for Corporate Governance

There have been many examples (including in the very recent past) that can be used to

illustrate why corporate governance is so important. Some of these are:

• Enron ‘scandal’; Exxon Valdez Disaster

• The Global Financial Crisis of 2007/2008

• News of the World ‘phone hacking’ scandal

• Collapse of Barings Bank

Not a very popular question. Those that answered provided concise coverage of relevant theory and

scored adequately.



• Irish banking sector crisis from 2007

• Increased accountability to wider stakeholder interests and the need for corporate social

responsibility (e.g. green issues).

(b) Explain the role of the Board of a company. (10 marks)

A management board plans strategy and has operational control – Major strategic decisions have to be

approved by both boards Two key issues for boards:

• Delegation: strategy can be delegated to management but it is easier to ensure other stakeholders are

protected with a supervisory board.

• Engagement: The board can engage in the strategic management process but board members may

have insufficient expertise.

Accepted good practice for boards includes:

Operating ‘independently’ of management – the role of non-executives is crucial; avoid conflicts of

interest or the perception of conflicts, e.g. having a personal interest in a company which does business

with the company of which he/she is a non-executive director

Being competent to scrutinise the activities of managers

• Having time to do their job properly.

• Behaving appropriately given society’s expectations for trust, role fluidity, collective responsibility

and performance.

Documents

Accounting Technicians · PDF fileEmployee Induction, ... of the FOUR (4) primary HR ... and the organisation and to Facilitate the outsider-insider transition. Job induction expands