B, C
The positioning approach means considering the external environment and then changing the business to fit the market. The market doesn’t necessarily have to be predictable, the business would change as the market changes. A resource-based view takes the opposite approach and focuses on internal
competences that can be used to approach the market in any situation.
Chapter 1b
Answer to Lecture Example 1
Limited growth in traditional & home markets
Increased competition in home markets
Consolidation and development of trading blocks
Liberalisation of trade, resulting in increased international investment
Free trade opening up emerging markets
Potential cost / market share advantages
Lower production costs in developed countries
Development in communication networks
Developments in transportation technology
Global financing.
Answer to Lecture Example 2
Widening differences in incomes and living standards in industrialised countries
Increased demand for flexibility in workforces, both numerically and functionally
Change in government policy to promote small firms, increased use of IT, attracting FDI
Increased pressure for global governance
ANSWERS TO LECTURE EXAMPLES
182
Answer to Lecture Example 3
B
A joint venture results in a separate legal entity being created and the sharing of risks and rewards.
Answer to Lecture Example 4
Transaction costs:
Negotiating / drafting the contract
Monitoring the supplier’s compliance
Pursuing legal action in the event of a breach
Penalty / cancellation payments if the customer’s needs change Difficulties in quantifying the above are caused by:
Bounded rationality
When the contract is entered into, neither party will be able to predict the future, and, by extension, their future needs.
Opportunistic behaviour
The supplier may try to exploit loopholes in the contract in order to further their own self-interest.
Answer to Lecture Example 5
Arguments in favour:
Firms may incur additional costs (e.g. paying staff more than minimum wage)
Revenue may be reduced (e.g. not promoting alcohol to teenagers)
Dividends could be diverted to charitable donations
Management and staff time could be diverted to charitable projects Arguments against:
To be sustainable, a firm cannot conflict with society.
Attracts socially conscious investors and customers.
Improves relations with governments and other regulatory bodies.
Improves staff motivation and morale
Chapter 2
Answer to Lecture Example 1
B
The management’s accountant’s research is national and has captured demographic factors. As such it belongs in the “national social” category.
ANSWERS TO LECTURE EXAMPLES
183
Answer to Lecture Example 2
According to the World Trade Organisation, most nations have pledged to abolish protectionism.
Factors in favour of Free Trade:
The country would be able to utilise its resources to gain a global competitive advantage
Encourages entrepreneurship and free rein
Protectionism promotes international conflict
Encourages most efficient use of resources
Encourages general economic growth Factors against Free Trade:
Undermines national culture (impact of goods from abroad)
Big multi-nationals can exert significant power (e.g. Wal-Mart)
Reduction in national security due to reduced border control Protectionism protects small start-up companies and allows them to grow
Answer to Lecture Example 3
D
High competition would discourage new entrants, both a monopoly supplier and one large customer would make it harder for an organisation to break into a market and establish beneficial working relationships. Low competition could mean there is much to be gained from entering a market.
Answer to Lecture Example 4
B
Strategy structure and rivalry consider whether a company’s culture, structure, and position in the market help or hinder a company. Demand in the home market is “demand conditions”, the presence of
competitive supplier industries is “related and supporting industries” and demand in the global market is not an element of the diamond.
Chapter 3
Answer to Lecture Example 1
B
An industry competitor is where the companies sell the same products but are different in size and/or structure.
Answer to Lecture Example 2
Products & services Marketing Competitive intelligence capacity Strategy
Customer value analysis Financial
ANSWERS TO LECTURE EXAMPLES
184
Answer to Lecture Example 3
(a) Physical analysis (reverse engineering) Ex-employees
Current employees (but this would be industrial espionage and therefore unethical. Not one to recommend in the exam!)
Generalisation based on own cost base Industry experts/consultants
Physical observations (stand outside factory) Sony’s published accounts (limited detail) Trade and media coverage
(b) Sony’s strategy was to secure the Blu-Ray’s dominance over Toshiba’s HD-DVD as the successor to the DVD. By effectively giving the hardware away free, it succeeded. The question is whether the life cycle of Blu-Ray will be long enough to justify the cost of doing this.
Answer to Lecture Example 4
A
While big data does allow an organisation to hold more data that can be mined for insights and potentially lead to new revenue streams, it doesn’t necessarily mean that decisions will be made any faster.
Answer to Lecture Example 5
A
Differentiation is a strategy whereby a company makes its products or services different from those of their competitors, thereby attracting a customer who is looking for a certain characteristic. It is not about competences, brand, or pricing.
Chapter 4a
Answer to Lecture Example 1
B
Management is an admin role, the skills that a manager has should be transferrable to any organisation regardless of the product or service being sold. He should probably not admit that he isn’t the strongest candidate if he wants the job, and the other two options may not help him build a strong case either.
Answer to Lecture Example 2
Weaknesses:
Dehumanises work, presenting workers as machines
Work study misused by management, provoking worker/manager/union conflict Contemporary situations:
Anywhere where a simple, standard process is repeated many times e.g. McDonalds, call centres, hotel chamber maids
ANSWERS TO LECTURE EXAMPLES
185
Answer to Lecture Example 3
C
In a hospital it is important that staff be competent and that there are clear rules and procedures because the risks of something going wrong are high and the consequences devastating. Decisions and actions must be recorded so that patients don’t receive medication twice, for example. A lack of innovation is a problem because there may be better treatments waiting to be discovered but are not because everyone is following standard procedure.
Answer to Lecture Example 4
The “Hawthorne Effect” (aka The Experimenter Effect) is the increase in productivity simply because the staff were being observed. Each time the lighting was changed, it reminded staff that they were being watched and their productivity increased.
However, when Mayo repeated the experiment, the group dynamics were different – this time, the workers had agreed between themselves not to react to being observed.
The examiner mentions in passing that the first group (who changed) were female while the second group (who refused to) were male!
Answer to Lecture Example 5
A, C
HYGIENE FACTORS
Clear rules & procedures (when can you stop & search?)
Fair supervision (probably a degree of trust / discretion given to PCs – i.e. not micro-managed)
Salary (important to highlight as a hygiene factor, even if it is a generic point)
Working conditions (as much safety as possible, manageable hours, a staff canteen) MOTIVATIONAL FACTORS
Sense of achievement – making a difference in the communities he/she polices
Level of responsibility – trusted to deal with potentially volatile situations
Recognition – by superiors (promotion) and public (respect for the uniform?)
New challenges – never the same day twice
Answer to Lecture Example 6
Advantages:
Gets employees involved in performance management More likely to achieve targets
More realistic targets
Training for lower level management Considers more than financial performance Drawbacks:
Takes more time therefore costs more
Could be open to abuse by individuals (although unlikely!) Disagreement over what objectives & measures should be Requires continued input
ANSWERS TO LECTURE EXAMPLES
186
Chapter 4b
Answer to Lecture Example 1
B
It looks like the Finance Director has referent power because his staff are loyal and committed to him and he fosters strong relationships. The fact that he is capable may mean that he also has expert power but the emphasis in this scenario seems to be on his likeability!
Answer to Lecture Example 2
Delegation is the process whereby a manager assigns part of his authority to a subordinate but the manager’s responsibility can never be delegated.
Answer to Lecture Example 3
Famous leaders could include Winston Churchill, Nelson Mandela, Mahatma Gandhi. Many (but not all) of their traits are highlighted in trait theory.
Answer to Lecture Example 4
B
Trait theory is problematic because it is hard to measure characteristics like “charisma” effectively, there are so many traits that it might be unlikely for any one person to have them all, and exceptions to the rule are not considered. If trait theory is used in the search for a leader, it should be possible to choose a highly effective person.
Answer to Lecture Example 5
Country club – in a country club (!) i.e. when the organisation exists solely for the enjoyment of its members/staff. Also applicable if you are reliant on voluntary staff.
Authority compliance – in times of crisis (e.g. military combat; company liquidation looming) when survival depends on swift, task-focussed decisions. Note this approach is not sustainable in the long-term.
Chapter 5
Answer to Lecture Example 1
A, E
Values and beliefs are not observable but they have observable manifestations. A quality product, polite treatment of staff and prompt refunds are observable. Staff contentment and a “customer is king” attitude are not visible in themselves but will be manifested in staff attitudes toward their work and their
customers.
ANSWERS TO LECTURE EXAMPLES
187
Answer to Lecture Example 2
Stories – manager can influence but no more than any other member of staff. In fact, the manager may find themselves excluded from social conversations and therefore have less influence.
Routines – manager can assert a lot of control over routines
Rituals – these rituals can be set up by the manager. Attendance and participation can be enforced but not enthusiasm or support.
Symbols – entirely controlled by the organisation
Power structures – the management can allocate authority but not power
Control systems – this is decided upon by management, as is the organisational structure
Answer to Lecture Example 3
D
Using a matrix structure that doesn’t follow a traditional functional hierarchy can be confusing to employees who now have more than one manager and may struggle to effectively prioritise their workload.
Chapter 6
Answer to Lecture Example 1
Avoidance strategies and HRM strategies are not viable options here, given the level of union membership and critical nature of employment.
Collective bargaining is the most obvious solution here. It recognises that there is a significant conflict that cannot be easily resolved. Given the nature of the relationship, it is likely that there have been similar issues in the past, and the process of collective bargaining is one that will be familiar to both parties.
In conjunction with collective bargaining, the government may offer alternative gain-sharing initiatives.
This could include a salary increase to compensate for the loss of pension rights which could be weighted towards those with the longest service record who stand to lose the most under the new terms.
Ideally, the government and trade union should build a closer working relationship to prevent conflicts like this emerging in the future. The government could implement labour management teams in order to improve worker participation although, given the level of unionisation, this is likely to be difficult to sell to staff.
The alternative would be a partnership agreement, which would identify areas of common interest for the government, the union and the workers and would act as a point of reference in the event of any future disagreement.
Answer to Lecture Example 2
A
Incurring more costs is not a benefit of offering flexible child care provisions because it will reduce profitability. Offering the provisions does have knock-on benefits however including employee retention, reduced absenteeism and a good reputation.
ANSWERS TO LECTURE EXAMPLES
188
Answer to Lecture Example 3
On the surface, this sounds like discrimination, as discrimination legislation applies to all forms of discrimination, including the “positive discrimination” outlined here.
However, the scenario highlights that the police force is dominated by white, 25 - 35 year old men. There is no evidence of direct discrimination – in fact, there appear to be controls in place to prevent this. This suggests that there may be indirect discrimination taking place.
Indirect discrimination is when criteria are set that, while not obviously discriminatory, effectively prevent people from disadvantaged groups from applying. For example, if police officers were expected to be clean-shaven (for which there is no apparent requirement to perform the job), this would be indirectly discriminatory against Sikhs. Similarly, if recruitment advertising was limited to publications and locations not frequented by ethnic minorities, this could also be seen as indirect discrimination.
Given the duty of the NPF to police the whole community, there will be some situations that a white, 25 - 35 old officer may be ill equipped to deal with. Examples could include crimes of rape or religious / racial hatred. In such cases, the victim is more likely to report the crime if they feel they are going to be sympathetically dealt with by someone who understands their background and life experience.
It is legal (and advisable) to discriminate on the grounds of race, sex or religion if it is a requirement for the job. Given that the NPF is definitely not representative of the population as a whole, the Chief Constable would be advised to include religion, sex and ethnic background as considerations when recruiting police officers until a more reasonable balance is achieved. It would also be beneficial to review the recruitment policies to ensure that any indirect discrimination (however unintentional) is removed.
Answer to Lecture Example 4
C
By including customer feedback in the appraisal system, Y is recognising that the manager does not always see the great customer service being given.
W Co’s method of appraisal fails to keep appraisals relevant because they are happening too infrequently.
X Co might use a 360 degree appraisal system because that system includes rating yourself.
Z Co is using an upward appraisal system because subordinates are rating their superiors.
Answer to Lecture Example 5
By being outside the official organisational structure, the mentor is free from operational issues and able to provide a degree of objectivity and independence.
Henri can therefore address broader issues such as Bruce’s choice of qualification, career goals and any interpersonal problems. He can give Bruce honest advice about his performance in order to identify his strengths and weaknesses. Because this is not done in a formal appraisal context, Bruce has the freedom to be entirely open and honest without fear of undermining his reputation within the workplace.
As the relationship between mentor and pupil develops, the mentor can act as a sounding board for ideas. This will allow Bruce to question and reflect on his experiences in a safe, supportive environment.
The support of a mentor provide the following benefits to Gotham plc:
Improved motivation on the part of Bruce
Lower levels of staff turnover – Bruce is less likely to leave Gotham plc if he has a wider support base
ANSWERS TO LECTURE EXAMPLES
189
Faster career progress – Bruce can use this as an opportunity to develop his management skills (as opposed to his technical knowledge).
It is important, however, that Henri works alongside Alfred and the formal mechanisms within Gotham plc (e.g. appraisal). Both mentor and manager should have a shared goal of maximising the potential of the individual, even though they are coming at it from different perspectives.
Answer to Lecture Example 6
Work done slower
Miscommunication of tasks and results
Misunderstanding/lack of recognition of problems
Poorer quality solution due to lack of collaboration
Chapter 7
Answer to Lecture Example 1
Classical school
Strict adherence to rules and procedures. Control systems such as standard costing and budgeting come in here. The problem is, this doesn’t recognise human aspects: such control is demotivating and, as a result, can lead to poor quality output.
Human Relations school
Control is based on interpersonal interaction rather than adherence to rules. I.e. obey what your manager tells you (rather than what the social group is telling you). This relationship allows the manager to listen to the workforce but relies on the manager acting in the best interests of the company.
Contingency theory
Control is a variable that depends on the particular situation. The control system is therefore unique and tailored. This makes it well-targeted but potentially expensive (in terms of cost and time) to create.
Answer to Lecture Example 2
D
The Balanced Scorecard increases the number of performance indicators used to manage the business because it considers more than just financial factors (customers, internal business processes, and learning and innovation).
The Balanced Scorecard does not create strategy, it is a product of strategy. Any time period can be used for reporting. A “traffic-light” system could be used but this is not mandatory.
Answer to Lecture Example 3
This transition has led to many management accountants focusing their role to that of a business partner, adopting a more commercial, action-orientated approach. This means gaining broad knowledge of the business, participating as full members of operational teams and bringing financial expertise to the management process. They are expected to integrate management accounting information with strategic management accounting data.
ANSWERS TO LECTURE EXAMPLES
190
Answer to Lecture Example 4
Benefits:
Cheaper (economies of scale)
Access to specialist experience of outsourcer
Release internal finance capacity for strategic decision-making support Drawbacks:
Loss of control
Erosion of internal knowledge / skills Loss of competitive advantage Elements to outsource:
Transaction processing elements can be easily outsourced due to their routine nature. Strategic elements of investment and financing decisions are better kept in house where specialist knowledge can be applied. The main issues are the value added by the activities and whether they are considered to be core to the overall objectives of the organisation.
Answer to Lecture Example 5
D
Collaborative working relationships should mean greater efficiency and motivation as staff understand each other and the business much better. This results in greater profit. This does not necessarily translate into staff retention.
Chapter 8
Answer to Lecture Example 1
A company could use environment scanning initially to ascertain the existence of any broad triggers of change. Triggers would then need to be analysed in more detail using primary research. It is important to identify the triggers of change so that a company can plan to deal with them.
Answer to Lecture Example 2
B
A refers to adaptation C refers to reconstruction D refers to revolution
Answer to Lecture Example 3
D
The unfreeze process is about disrupting the current state of affairs so all of the options can be part of the
“unfreeze” phase.
Answer to Lecture Example 4
A
Force field analysis identifies the forces driving change (for change) and the forces restraining it (against change). It does not necessarily help identify forces that facilitate change or people who can help. It does not only identify the factors blocking change.
ANSWERS TO LECTURE EXAMPLES
191
Answer to Lecture Example 5
C
Negotiation and agreement involves compensating employees for losses suffered as the result of a change – a prize would count here as “compensation”. Participation and involvement is asking for employees’ ideas before/during change implementation, facilitation and support involves addressing technical and emotional/psychological needs as a result of the change, and manipulation and co-optation involves encouraging staff to accept the change through indirect means such as making the members of a team put pressure on a resisting team member to change.
Chapter 9
Answer to Lecture Example 1
(a) Stakeholders with a vested interest in the outcome
(b) A unique nature – something that has not been done before (c) Two sets of objectives:
(i) Completing the project within the time / cost / quality scope agreed.
(ii) Helping the organisation to deliver its strategy.
(d) Allocated resources (money, people, time etc) (e) Schedules designed to manage time and resources (f) Customer satisfaction used as a measure of success
(d) Allocated resources (money, people, time etc) (e) Schedules designed to manage time and resources (f) Customer satisfaction used as a measure of success