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Business Management in Practice February 2013
Suggested answers and examiners comments Important notice When reading these suggested answers, please note that the answers are intended as an indication of what is required rather than a definitive right answer. In many cases, there are several possible answers/approaches to a question. Please be aware also that the length of the suggested answers given here may be somewhat exaggerated compared with what might be achieved in the reality of an unseen, time-constrained examination. Examiners general comments Many candidates excelled in this paper. However, it was clear from some answers that some candidates had an understanding of many topics but did not have the depth of knowledge required to get higher grades. Candidates roughly fell into three groups. One group provided superficial or incomplete answers to many questions and there appeared to be a basic lack of understanding of the question and the material. Another group provided some excellent answers to some questions, while producing very weak answers to others. This may be the result of selective revision. The final group clearly revised broadly and extensively and were able to provide some excellent answers. Advice for future candidates:
Read each question carefully, and answer the whole question and not just part of it. Make sure your answer is related to the question specifically.
Attempt the required number of questions (otherwise you are restricting your chances of success) and attempt all parts of questions.
Manage your time effectively so that you do not rush questions that carry a large proportion of the marks.
Make sure you do your revision, and know the concepts and principles explained in the core text. Do not focus your revision too narrowly.
Use the examiners comments and suggested answers as key parts of the examination preparation process.
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Section A Answer all parts of Question 1. Select only one of the options A, B, C or D for each part. 1. (i) The VRIO framework was originally developed with four key criteria to assess
organisational capabilities. These are:
A. Variety, Rarity, Innovation, and Optimisation. B. Value, Rarity, Inimitability, and Organisation. C. Viability, Rationality, Inimitability, and Organisation. D. Value, Rarity, Innovation, and Organisation.
(ii) Many organisations develop an innovation stance that is appropriate for them given
their place in the marketplace. The different innovation stances are called:
A. Primary, Secondary, Tertiary and Support.
B. Principal, Follower, Subordinate and Defender.
C. Leader, Follower, Imitator and Demonstrator.
D. Pioneer, Follower, Imitator and Defender.
(iii) The author Robert House (House, 1971) identified four leadership styles. They are:
A. Directive Leadership, Supportive Leadership, Participative Leadership and Achievement-orientated Leadership.
B. Forceful Leadership, Considerate Leadership, Participative Leadership and
C. Principled Leadership, Supportive Leadership, Sustainable Leadership and Forced Leadership.
D. Directive Leadership, Adaptive Leadership, Principled Leadership and
(iv) Which of the following can be defined as: individuals and groups outside and inside the organisation who have an interest in the organisation and, therefore may wish to influence aspects of its mission, objectives and strategies?
A. Trade associations. B. Shareholders.
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(v) Identify the approach to management that was championed by F.W. Taylor, who
sought to analyse work processes in order to identify the most efficient outcome.
A. Total quality management.
B. Systematic management.
C. Quantitative management.
D. Scientific management. (vi) In recent years organisations have looked to avoid undertaking non-core activities,
contracting these out to other firms. What is this process called?
A. A joint venture.
B. The flexible firm.
D. Internationalisation. (vii) During a change or restructuring phase, the removal of vertical levels of
responsibility in the organisational hierarchy is known as which of the following:
D. Flexibility. (viii) According to Yipps globalisation framework (Yipp, 2003), there are four main
drivers of the process of internationalisation. What are they?
A. Environmental Drivers, Financial Drivers, Competitive Drivers, Sustainability Drivers.
B. Market Drivers, Cost Drivers, Environmental Drivers, Resource Drivers.
C. Competence Drivers, Innovation Drivers, Competitive Drivers, Government Drivers.
D. Market Drivers, Cost Drivers, Competitive Drivers, Government Drivers.
(ix) Which aspect of an organisations marketing activity helps the organisation
establish what the wants and needs of customers are?
A. Market research. B. Customer relationship marketing.
C. Market segmentation.
D. Public relations.
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(x) The aspect of human behaviour which is associated with the way an individual
thinks, stores, processes and utilises knowledge is called:
A. Cognitive style. B. Instrumentalism.
(Total: 10 marks)
(i) B Value, Rarity, Inimitability, and Organisation. (ii) D Pioneer, Follower, Imitator and Defender. (iii) A Directive Leadership, Supportive Leadership, Participative Leadership and
Achievement-orientated Leadership. (iv) C Stakeholders. (v) D Scientific management. (vi) C Outsourcing. (vii) B Delayering. (viii) D Market Drivers, Cost Drivers, Competitive Drivers, Government Drivers. (ix) A Market research. (x) A Cognitive style.
Generally, a very well answered section. A number of candidates scored full marks in this section.
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Section B Answer all ten questions. 2. One way to classify the different types of manager is by the functional roles they
undertake in the organisation. Identify and describe the different types of manager. (4 marks)
Functional managers are responsible for a defined area of work, as opposed to general managers who lead a plant, division or site. Examples of functional managers would be Marketing, Finance or HR.
Line Managers are responsible for functions that directly interface with customers and add value to the exchange. The role impacts on the customer, the performance and image of the organisation. Staff Managers run functions that do not come into direct contact with customers. They run activities that support line managers. Project Managers provide a short-term functional role and are responsible for a team that is brought together to perform a specific task.
Examiners comments This is a good example of the need for candidates to read the whole question and answer the whole question. One of the errors made by a number of candidates was to only read the second part of the question and therefore to provide an inaccurate answer.
3. In operations management, the choice of facility location is considered important. Explain
the different location strategies that an organisation can apply. (4 marks) Suggested answer
Product-based location strategy: organisations specialise production in certain sites to maximise the use of equipment, skills and knowledge. Market-based strategy: where organisations locate close to their customers either to make it easier for customers to visit, or to make distribution easier. Vertically differentiated locations: a strategy based on the assembly of finished component parts into a final product. It has the efficiency of the product-based strategy. The final assembly site may be a compromise based on a range of locational factors. For example, with Airbus, specialist parts from manufacturers all over Europe are all assembled in France. Examiners comments
This question was generally well answered with many candidates explaining at least two of the of the location strategies. Even where the names of the strategies were not mentioned, candidates gained marks for accurate description and evidence of understanding.
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4. Identify and outline four out of the possible five forces of competition identified in
Porters Five Forces model. (4 marks)
Threat of Entry How easy is it for new entrants to enter an industry. Threat of Substitutes These are other products or services that satisfy similar wants or needs. Bargaining power of buyers The relative power of buyers to control or negotiate on price. Power of buyers increases when there are multiple sources of suppliers. Power reduces when there are few sources of supply. Bargaining power of suppliers A similar principle to the above but related to supply. Competitive Rivalry The intensity of the competition in the market place.
Examiners comments Most candidates appeared to have understood the terms used in the Five Forces model. Candidates who gained full marks additionally displayed an understanding of what the various elements mean and how they interact.
5. Describe Herzbergs two-factor motivation-hygiene theory (Herzberg, 1959). (4 marks)
For Herzberg, motivation is about two factors. Hygiene factors whose absence demotivates, but whose presence is expected and does not motivate. Satisfying hygiene factors prevents dissatisfaction they do not provide satisfaction. The second set of factors motivates an individual to greater output or effort. These are the satisfiers that lead to satisfaction. Herzberg argues that the factors that lead to job satisfaction are separate and distinct from those that lead to dissatisfaction, however, combining together to create satisfaction.
Examiners comments A generally well answered question. Many candidates correctly identified the separate and distinct nature of the different factors but were unable to identify that the two factors work together to create satisfied and motivated employees.
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6. Name and outline four types of innovation process that can be pursued within
organisations. (4 marks)
Any four of the following:
Product Innovation the development of a new or improved product or service.
Process Innovation the development of a new process either manufacturing or administrative.
Organisational Innovation innovation on the structure or configuration of an organisation to provide greater efficiency, learning, improved communication or customer intimacy.
Management Innovation introduction of management initiatives within the organisation that reduce cost or add value. Often difficult to sustain.
Production Innovation innovations related to plant layout, working practices or waste elimination.
Commercial/Marketing Innovation finding new ways to address the market and satisfy customers.
Service Innovation innovation in the provision of service to customers.
Some candidates failed to notice that the important word in the question was processes and gave a more strategic answer or referred to the innovation stances.
7. Define what is meant by the extended organisation. (4 marks)
The extended organisation is network based. It is established for the long-term. The network is strong and trust based. The extended organisation uses the resources and competences of the other organisations in the network to operate. Members of the network have supportive and mutually-beneficial competences and resources which allows the organisation to produce goods and services. The extended organisation is capable of research and development of products and markets it is also capable of innovation. The central core of the extended organisation retains copyrights and intellectual property.
Examiners comments Some candidates confused the concept with outsourcing, which may form a part of an answer, but the extended organisation is much more.
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8. According to Balogun and Hope Hailey (2007), there are four types of strategic change.
Name and comment on each. (4 marks)
Adaption small changes over time. Reconstruction faster change but the essence of the organisation remains unaltered. Evolution a fundamental change in the nature or culture of the organisation that takes place over a period of time. Revolution a fundamental change in the nature or culture of an organisation that takes place rapidly. Examiners comments
Candidates must note that they have to use the right model to get any significant marks. Candidates who did not relate change to the Balogun and Hope Hailey model performed poorly in this question.
9. The push to internationalisation has increased dramatically over the past 20 years.
Identify and explain any two possible models of internationalisation which organisations could pursue. (4 marks)
Any two of the following: Simple export and import this is the oldest and simplest form of international trade and involves the physical movement of goods across an international border. M...