business management units 3 and 4 practice exam a (2011 ... · business management units 3 and 4...

BUSINESS MANAGEMENT UNITS 3 AND 4

© VCTA Published September 2011 page 1

Business Management Units 3 and 4 practice

exam A (2011) and suggested answers

Debra McNaughton

Padua College

This year two practice exams are provided for VCE Business Management. Both are identical except for one question related to Area of Study 2 in Unit 4 (the final question in the exam). Question 6 in Exam A examines the Kotter theory of change management, while Question 6 in Exam B focuses on a different part of this area of study.

Both exams consist of six questions, and are presented in the form of a question-and-answer book. Most questions are introduced with stimulus material. All questions are compulsory. The total marks available for each exam are 65. The number of lines provided after each question and the number of marks allocated to it indicate the appropriate length of a student response. Additional space is provided at the end of each question-and-answer book.

Please note that the questions and suggested answers have no official status. Teachers are advised to preview and evaluate all practice exam material before distributing it to students.

Disclaimer: This practice examination has been written by the author (Debra McNaughton) for students of VCE Business Management. This does not imply that it has been endorsed by the Victorian Curriculum and Assessment Authority (VCAA). While every care is taken, we accept no responsibility for the accuracy of information or advice contained in Compak. Teachers are advised to preview and evaluate all Compak classroom resources before using or distributing them to students.




Practice written examination 2011

Reading time: 15 minutes Writing time: 2 hours

QUESTION AND ANSWER BOOK

Structure of book

Number of questions Number of questions to be answered

Number of marks

6

6 65

Students are permitted to bring into the examination room: pens, pencils, highlighters,

erasers, sharpeners and rulers. Students are NOT permitted to bring into the examination room: blank sheets of paper

and/or white-out liquid/tape. No calculator is allowed in this examination. Materials supplied Question and answer book. • Additional space is available at the end of the book if you need extra paper to complete

an answer. Clearly label all answers with the appropriate section and question number. Instructions All written responses must be in English.

Students are NOT permitted to bring mobile phones and/or any other unauthorised electronic devices into the examination room.



Instructions Answer all questions in the spaces provided.

Question 1

‘Myer will nearly double its direct outsourcing of fashion, homewares and merchandise from China to $200 million a year by 2016 … [Chief Executive] Mr Brooks said Myer would soon open an office in Shanghai and a second in Hong Kong to coordinate the increase in outsourcing by Australia’s biggest department store with 40 staff in each location …’

Source: ‘Myer doubles its outsourcing from China’, The Age, 31 July 2011

a. Define the term ‘large-scale organisation’ and explain why Myer is a relevant example.

2 marks

b. Discuss two positive contributions that a large-scale organisation such as Myer would make to the Australian economy.

2 marks



c. Describe a management structure that would be appropriate for a retailer that is outsourcing its production and justify your choice.

4 marks

d. Identify and explain two management roles that would be important for Myer’s managers as they increase the process of outsourcing the production of stock.



4 marks



Question 2

‘Car giant Ford is to cut its workforce in Victoria by 240 after a slump in demand for larger cars … Workers at Ford’s Geelong and Broadmeadows plants were told by management on Thursday they would be redeployed “wherever possible” but voluntary redundancy packages would be offered where alternative roles are not an option.’

Source: Car giant Ford to slash 240 staff after large car sales slump and Toyota cuts production hours, The Australian, 31 July 2011

a. Define the term ‘redundancy’.

1 mark

b. Discuss one entitlement or transition issue that may be related to the termination that is occurring at Ford.

2 marks



c. Remaining staff at Ford may lack motivation, as they fear for their job security. Outline Herzberg’s motivational theory and explain how it could be used to raise the motivation levels of workers in a situation such as this.

6 marks



d. Select and justify two performance indicators that could be used to evaluate the success of Herzberg’s theory.

4 marks



Question 3

Charlie Kline’s business, Echo Furniture, uses recycled timber to create modern furniture pieces. The business has recently received several orders from New Zealand and Indonesia to export kitchen and dining settings.

a. Discuss the key elements of an operations system. In your answer explain one example of each element that would be relevant to Echo Furniture.

6 marks



b. Compare and contrast two different quality strategies, and evaluate which could be more effective for Echo Furniture.

6 marks



Question 4

Managers can greatly affect the corporate culture within the internal environment of large-scale organisations.

a. Select and justify a management style that could generate a positive corporate culture.

3 marks

b. Identify and explain two skills that would be important for a manager to possess when employing the style that was selected in Question 4a.



4 marks

c. Discuss one factor from the external macro environment that could impact on the corporate culture of an organisation.

3 marks



Question 5

a. Explain what is meant by organisational change and provide an example to illustrate your answer.

2 marks

b. Explain why the role of leadership is important during a period of change and discuss ways in which a manager can ensure that change is ethical.



6 marks



Question 6

Businesses that embrace change and deal with it effectively can emerge more successful and competitive than they were previously.

Outline Kotter’s eight-step change process and explain how it would have been beneficial for an organisation undertaking a change issue that you have studied this year.



10 marks

END OF QUESTION AND ANSWER BOOK



Extra space for responses Clearly number all responses in this space



Suggested answers to Business Management Units 3 and 4 practice exam A (2011)

Question 1

a. Define the term ‘large-scale organisation’ and explain why Myer is a relevant example. (2 marks) A large-scale organisation is any entity that employs more than 200 people and has substantial assets. It may have multiple locations and many large-scale organisations are public companies.

Myer is an example of a large-scale organisation because it employs thousands of people in its department stores, which are located in many cities in Australia. It is a public company and has assets of substantial value.

b. Discuss two positive contributions that a large-scale organisation such as Myer would make to the Australian economy. (2 marks) Myer employs many people in Australia. This employment creates tax revenue for the government in the form of income tax and enables the employees to spend their incomes in other businesses, thereby contributing to economic growth.

Myer also buys stock from other Australian businesses. This enables smaller businesses to generate profit, which is taxed in the form of company tax, and to employ their own workers.

c. Describe a management structure that would be appropriate for a retailer that is outsourcing its production and justify your choice. (4 marks) Note: There are many possible correct answers to this question. Two correct answers are listed below.

An organic/network structure would work well for a retailer that is outsourcing its production. These structures are quite fluid and can be altered as the demands of a business change. They retain a core of their primary business, but a network structure outsources non-core aspects to other businesses.

This structure would be appropriate for a retailer that is outsourcing its production because selling goods is their core business; this is why it exists and what it is an expert at. Using this model, managers can outsource the production of goods to other businesses whose core business is manufacturing.

OR A divisional structure that is organised along geographic lines would be appropriate. A business with this type of structure would have branches in different locations. Each branch would then have its own structure. This can open up the organisation to new customers in different regions and helps to expand the business.

A divisional/geographic structure would be appropriate for a retailer that is outsourcing the production of its goods because it could have staff in the locations where the goods are produced. This would ensure that control is maintained and may assist with communication with the suppliers, leading to fewer errors.



d. Identify and explain two management roles that would be important for Myer’s managers as they increase the process of outsourcing the production of stock. (4 marks) Note: The management roles are planning, organising, leading and controlling. Two of the following should be explained to answer this question fully.

Planning is the establishment of achievable goals within a clear time frame. Myer’s senior managers would have strategically planned the time frame for the move to increase the outsourcing of production; and the functional managers, such as department heads, would have tactically planned the stock that they would require to come from China.

Organising is the coordination of the resources that are necessary to achieve the plan. In the case of Myer, the resources would include the employees who are to be located in the Hong Kong and Shanghai offices. Accommodation and office space would need to have been organised. Myer’s managers would also have had to organise the orders of the products from the suppliers that are based in China. Transportation of the goods to Australia would also be an important part of the process.

Leading is the process of influencing workers so that they want to do their best to achieve organisational objectives. Managers would need to demonstrate interpersonal qualities to encourage some staff to make the move to the China offices. They would need to employ sound decision-making skills when deciding which products to source from China and which companies to select to make the products. Managers would also need to demonstrate informational qualities by keeping Myer staff informed about the increased outsourcing so that they can answer customers’ questions and not fear for their own job security.

Controlling involves implementing and monitoring systems necessary to regulate activities and allow the evaluation of the achievement of plans. Controlling would be very important because of the distance between Australia and China. Placing staff in Hong Kong and Shanghai, close to the production centres is a control measure. Clear documentation and contracts with the producers of the goods will ensure that the correct products are produced at the desired quality levels and at the agreed prices.

Question 2

a. Define the term ‘redundancy’. (1 mark) Redundancy describes a situation where a business no longer has a position for one or more of its employees.

b. Discuss one entitlement or transition issue that may be related to the termination that is occurring at Ford. (2 marks) As workers are made redundant at Ford, they may be entitled to receive a redundancy package. The details of this will be outlined in the workers’ collective agreement. It is usual for redundancy procedures to outline the process that must be followed in determining who is to be made redundant and the amount of monetary compensation that workers are entitled to. The redundancy payment is often based on the number of years of service.

c. Remaining staff at Ford may lack motivation, as they fear for their job security. Outline Herzberg’s motivational theory and explain how it could be used to raise the motivation levels of workers in a situation such as this. (6 marks) Herzberg stated that there are two sets of factors. One is motivator factors, such as achievement, recognition, the work itself and responsibility. Motivator factors may increase satisfaction levels, and all are based on the concept of intrinsic motivation.

The second set is called hygiene factors, such as salary and benefits, the physical working conditions and company policies. Hygiene factors can cause dissatisfaction if they are not present or are at a low level, but they are not likely to add to long-term job satisfaction.



In this case, however, the human resource manager would need to reassure the remaining workers that their jobs are secure. This comes under the hygiene factors category, and could be done by re-negotiating contracts with the workers. But it is only the motivator factors, according to Herzberg, that are able to deliver real job satisfaction and, therefore, are motivational, so the human resource manager would then need to put in place motivator factors to ensure that any gains in terms of increased morale and motivation are long-lasting.

d. Select and justify two performance indicators that could be used to evaluate the success of Herzberg’s theory. (4 marks) Note: There are many performance indicators that could be selected to correctly answer this question. Two are outlined below.

If the application of Herzberg’s theory increases the motivation levels of workers, the rate of productivity growth should also increase. Workers who enjoy their work because motivator factors are in place and are satisfied with their working conditions tend to work harder, leading to an increase in the amount of output within the same time period.

The level of staff turnover should decline at the same time. Once workers are more satisfied with their working conditions as a result of applying the hygiene factors of Herzberg’s theory, they are less likely to look for work elsewhere. This is a measure of employee satisfaction.

Question 3

a. Discuss the key elements of an operations system. In your answer explain one example of each element that would be relevant to Echo Furniture. (6 marks) Inputs are the resources that are necessary to make the product. These can be natural, capital or human resources. Charlie would require recycled timber to make the furniture. Without timber, Charlie would not be able to meet the export orders that she has recently received.

Processes are the actions performed on the inputs to transform them into finished products. The processes tend to add value to the resources. One process that Charlie would have to undertake is designing the furniture. Because she is using recycled timber, each piece would have to be separately designed to make the most of the features such as shape, size and type of wood.

Outputs are the finished products (either goods or services) that result when inputs have been processed. These are what the customer ultimately pays for. The customers are paying for the furniture such as the dining settings ready for the export market.

Other correct elements that students could explain (along the lines of the examples above) include those listed in the following table:

Inputs Processes Outputs

Cabinet makers Sawing the timber Chairs

Hammers Building the furniture Tables

Saws Delivering the furniture Bookcases

Workshop Sourcing the timber Coffee tables



b. Compare and contrast two different quality strategies, and evaluate which could be more effective for Echo Furniture. (6 marks) Note: To correctly answer this question, it is essential that students outline both the similarities (compare) and the differences (contrast) between the two strategies chosen.

Total quality management (TQM) is a quality system that has the following features: a belief in continuous improvement; an emphasis on teamwork and employee participation to solve quality problems, and the main aim is customer satisfaction.

ISO 9000 is a generic quality assurance system. It has a set of standards for all processes that are to be completed that are considered to be best practice. Businesses that are ISO 9000 compliant have met the criteria for certification. This is awarded by external authorities and is an internationally recognised quality certification.

Both quality strategies are concerned with improving the processes of making products and both can be applied to the production of goods or services. They differ, however, in that a business cannot just say that it is ISO compliant. External inspections are necessary. TQM, however, can be assessed internally.

While both quality systems would be beneficial for Echo Furniture, Charlie Kline may find that her overseas customers will have more trust in a business that is ISO 9000 compliant because it is internationally recognised. Focusing on best-practice processes should ensure that the furniture is of a quality that will satisfy her Australian, New Zealand and Indonesian customers.

Question 4

a. Select and justify a management style that could generate a positive corporate culture. (3 marks) The participative management style could generate a positive corporate culture. Using this style, the manager involves the staff in the decision-making process; thus authority and decision-making is decentralised. It relies on effective two-way communication and is very employee focused. Employing the participative style can lead to staff empowerment, which may raise morale levels, thereby creating a positive culture. Staff may feel valued as trust is placed in them and this, in turn, can lead to staff sharing improved values and believing that they are important to the organisation.

Note: It would also be possible to justify the consultative style, but difficult to justify the autocratic, persuasive or laissez-faire styles.

b. Identify and explain two skills that would be important for a manager to possess when employing the style that was selected in Question 4a. (4 marks) Note: A number of different answers are possible for this question. The skills selected should be ones that would be necessary for a manager to have who is working with the employees, for example people skills and negotiation skills. Students must be aware that they cannot refer to management roles in their answer; that is, answers explaining planning, organising, leading and controlling would not be correct.

Communication is the process of sending and receiving information effectively. It would be impossible to use the participative style without communication, as managers need to discuss issues with the employees, listen to their points of view, and then often come up with decisions together.

Delegation would also be beneficial. This is the process of passing authority or specific tasks to more junior staff members. Employees are encouraged to be involved in the decision-making process. This may require some degree of delegation to occur as decisions that were made in the past by managers only, might now be made by employees.



c. Discuss one factor from the external macro environment that could impact on the corporate culture of an organisation. (3 marks) Note: It is important that the factor is from the macro environment.

New laws can have an effect on the corporate culture of an organisation. The term ‘corporate culture’ refers to the shared values and beliefs of the people within an organisation. While the laws themselves do not reflect the culture, the ways in which people react to them does have an impact within the organisation. For example, smoking legislation has impacted on the ways in which people socialise at work. Smokers have to congregate in outdoor areas to smoke in their breaks, if they are allowed to smoke at all. This has tended to create an ‘us and them’ attitude in some workplaces. If smoking is totally banned in a workplace, it can cause resentment from smokers, although it may be welcomed by non-smokers. This again can lead to disharmony and a less positive culture. If the law is embraced by the workers, it may lead to a stronger and more positive culture being established.

Question 5

a. Explain what is meant by organisational change and provide an example to illustrate your answer. (2 marks) Note: The example provided should be of an organisation or change issue studied, based on Area of Study 2 in Unit 4.

Organisational change refers to the process that alters existing aspects of an organisation and creates a new form of them. Australia Post has undergone organisational change as it looks to utilise the Internet for many of its services. This is creating a new aspect of their business in the form of e-commerce.

b. Explain why the role of leadership is important during a period of change and discuss ways in which a manager can ensure that change is ethical. (6 marks) Leadership is very important during a period of change. The change process often relies on the qualities that are expected of leaders, such as the ability to make decisions, to be visionary and to be able to communicate the vision. Without strong leadership, the change process may falter if people lose enthusiasm for the project or actively resist it.

Whatever change is initiated, managers need to be mindful of the business’s policies on social responsibility and community expectations regarding ethical behaviour. For example, if an organisation decides that it is going to introduce new machinery, the managers would need to make sure that the machinery is sourced from a company that treats its own employees ethically, that the machinery will not pollute the environment and that any changes to the internal environment of the organisation are handled in an ethical and socially responsible manner. This could mean keeping the staff informed about the changes, especially if some of them are to be retrenched or redeployed as a result of this change.

Question 6

Businesses that embrace change and deal with it effectively can emerge more successful and competitive than they were previously. Outline Kotter’s eight-step change process and explain how it would have been beneficial for an organisation undertaking a change issue that you have studied this year. (10 marks) Note: Kotter has revised his eight-step process several times over the years. The Business Management Study Design outlines one version of the steps on pages 39-40. It does not matter if students’ answers are not worded exactly as the answer below, but in essence it should be the same.

Also, the example below is based on the change issue of a fictitious clothing business (Genies) closing its physical shops and concentrating on its online business. Students would need to apply the



steps to a business or issue that they have studied, making it clear how following the process would be beneficial for the business/issue.

JP Kotter devised a series of eight steps that can be used by managers to assist the process of undertaking change. Following a change model or theory should provide guidelines that give the managers of an organisation an indication of what to expect and help them determine if the organisation is on track for successful change implementation. They can identify the stages that have been achieved and plan how to move to the next step.

1 Create a sense of urgency / Create urgency.

Genies, a clothing business, is closing its physical shops and concentrating on its online business. The managers of Genies could clearly identify possible opportunities and threats that could arise from closing their stores and existing as an online business only. The time frames that they put in place for the closure of the stores can create a sense of urgency.

2 Pull together the guiding team / Form a powerful coalition.

Managers of Genies would need to identify the key people who will ensure that the direction that the change takes is correct. In this case, people with computer skills and those with strong personal qualities may need to be involved as their expertise will guide other stakeholders through the change process.

3 Develop the change vision and strategy / Create a vision for change.

The reasons for the change to an online business, the strategy to achieve the change and the desired end result should be able to be clearly stated. This step can be extremely beneficial as Genies’ managers can refer back to this as they close their stores so that they keep on track.

4 Communicate for understanding and buy-in / Communicate the vision.

Employee resistance is one of the main reasons why change may not succeed. If all stakeholders of Genies know why the change is happening (the vision), and the benefits that should develop as a result, then they are much more likely to be supportive and encouraging. If the staff in the shops are to be made redundant, they need to be clearly informed so that they can plan for the future.

5 Empower others to act / Remove obstacles.

The key guiding team of Genies obviously needs to make the necessary decisions to enable the change to take place. It may be appropriate to empower others in smaller ways so that they too can take ownership of the change.

6 Produce short-term wins / Create short-term wins.

If employees of Genies cannot see any sign of success, they may once again resist the change. Any short-term success stories that can be communicated are good for morale, as employees can see progress and may feel a sense of achievement from them.

7 Don’t let up / Build on the change.

As small goals are achieved, others need to be set and strived for so that the change process at Genies becomes continuous.

8 Create a new culture / Anchor the change in corporate culture.

By discussing and celebrating change success stories, a new culture will emerge for the online Genies business that will be positive.

Each of Kotter’s steps can assist managers of Genies to keep the change process on track and deal effectively with any obstacles that arise.

business management units 3 and 4 practice exam a (2011 ... · business management units 3 and 4...

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