The Vaguest Questions Paper 2
The Vaguest Questions Paper 2
The Vaguest Questions Paper 2
Business
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Vaguest questions they can ask:
• Disputes can be settled with the details of the contract (eg. Pay, holiday entitlement)
• Employee is clear on what is expected of him, higher motivation
Describe two methods a business might use to attract applicants to a vacant post
• Advertisement → Social Recruiting: Utilize social media platforms to promote job openings.
• Employer Branding: Create a positive image of your organization by showcasing its values,
culture, and mission. Highlight employee testimonials and success stories.
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State two features of an employment contract
• Capturing a bigger market share as consumers are attracted by a diverse sales force
• Employing a more qualified workforce as selection is based on merit not on discrimination
• Increasing creativity because individuals from different backgrounds approach problem solving
in different ways
• Achieving cultural awareness, leading to improved knowledge about foreign markets
• Promoting diverse language skills, which allows businesses to provide products and services
internationally
• Employee appraisal is the process of assessing the effectiveness of an employee against pre-set
objectives.
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Impacts of training
Good impact
Bad impact
• Expensive
• Well qualified workers leaving for a better paid job once they gain the qualifications (called
poaching)
• Workers may be less productive during the training
• Empower employees with the authority and resources they need to introduce innovations
• Give opportunities to mix and work with other skilled employees from different departments
• Assure them that some failure is expected and acceptable
• Encourage them to start with small ideas and innovations, before moving onto the bigger issues
To the manager
• Developing a strong employer ‘brand’: being viewed as a good employer may make recruitment
easier and attract good applicants; employees are also less likely to leave the business
• Improving employee morale: higher motivation and improve performance, higher labour
productivity
• Improve the business’s corporate image with a range of stakeholders including customers and
investors: this will also improve competitiveness
• Avoiding costs of disputes and negative relationships with employees
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To the workforce
• Financial benefit: Pay will not be lost due to disputes, but also opportunities for improved pay
and conditions
• Job security: The employer is less likely to make jobs redundant, but will look at retraining in the
event of introducing new technology
• Opportunities such as greater participation in decision-making and a feeling of affiliation
• Opportunities to help in moving the business forward through intrapreneurship and subsequent
recognition of new ideas
[Industrial dispute and industrial action are two different things!! Industrial dispute is when they
don’t agree, and industrial action is when they do something about it]
Industrial Dispute means any dispute or differences between employers and employers or
between employers and workmen or between workmen and workmen which is connected with
the employment or non-employment or the terms of employment or with the conditions of
labour of any person.
Industrial action are measures taken by the workforce or trade union to put pressure on
management to settle an industrial dispute in favour of employees
• Employers can negotiate with one trade union official rather than each individual worker →
saves time, and prevents one individual from feeling that the other has obtained better pay
and conditions than others.
• Workers’ problems brought to consideration, two-way communication → increases
motivation and they feel that their problems are heard → secures jobs and can help
raise profits
• Unions can impose discipline on members that plan to take hasty industrial action,
industrial action less likely → production less likely to be disrupted
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Ways employers can resolve an industrial dispute
Negotiations
Motivation
Explain two human needs of an employee
Pro tip: it’s very similar to Maslow’s hierarchy of needs.
Human needs are the wants or desires of people, whether at work or in their life in general →
Demotivated if not given.
Physical needs → Safety needs → Social needs → Esteem needs → Self- actualisation
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Limitations
• Not everyone has the same needs
• In practice it’s difficult to identify the degree to which the need has been met and which level a
worker is on (Is it possible to do this for all workers in a large organisation?)
• Money is necessary to fulfil physical needs, but also can play a role in other levels (High incomes
= high status)
• Self-actualisation is never permanently achieved. Need to constantly offer challenges and
opportunities or regression will occur
Evaluation
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Frederick Herzberg TWO FACTOR THEORY
Evaluation
Motivators
➔ Aspects of a worker’s job that can lead to a positive job satisfaction, such as:
• Achievement
• Recognition
• Meaningful and interesting work
• Responsibility
• Advancement at work
Hygiene factors
To motivate give job enrichment, he says, by giving complete units of work and feedback on
performance.
However, they demand too much of their staff in the achievement of targets and prioritise this above the
many and varied needs of their workers.
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Victor Vroom THE PROCESS THEORY, BASED ON EXPECTANCY
➢ What they expect → and→ performance
❖ Reward satisfy need
❖ Need to expect that they will be rewarded for the work
• Valance: depth of desire for extrinsic reward, like money, or intrinsic reward, like satisfaction
• Expectancy: the degree to which they believe that putting effort will lead to a given level of
performance
• Instrumentality: the confidence of employees that they will actually get what they desire, even
if it has been promised by manager
Jobs which…
• Have a variety
• Require high knowledge and skills
• Give workers more autonomy
• Require workers to show responsibility
• Create chances for personal development
• Produce a meaningful unit of work
BUT
• Depends on worker’s mindset, might think it’s just an excuse to make them to more work
• Need to give training for tasks of higher skill- otherwise leading to demotivation. This leads to higher costs
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Explain two ways employers can encourage employees to participate in the management and
control of the business activity
• Empowerment- the giving of skill, resources, authority and opportunity to employees so that
they can take decisions and be accountable for their work.
• Letting them make some of the decisions regarding their tasks, and let them solve problems by
discussing the issue within the group
• Participation- active encouragement of employees to become involved in decision-making within
an organisation
• Involving in decision making, inviting to meetings, democratic leadership style
• Improving and widening the skills of employees can increase productivity and flexibility of the
workforce and its ability to deal with change
• Training and development increase the status of workers and give them access to more
challenging and probably better paid jobs within the business
• Increase opportunities for self-actualisation
• Often important incentives to encourage employees to stay in the business
Drawbacks
• Expensive to train
• Can take employees away from work for a period of time so other employees will need to cover
for them
• Can lead to the employee leaving the business for better paid jobs
• Competitor might benefit from this
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Advantages and disadvantages of team-working
➢ Team working is when the production is organised so that groups of workers undertake
complete units of work
Benefits
• Empowered
• Will not want to let down other team members so absenteeism should fall
• Social and esteem needs met → better motivated → increase productivity and reduces labour
turnover.
• Makes full use of the talents of the workforce, better solutions
• Lead to lower management costs as it is often associated with delayering so fewer middle
managers required.
• Complete units of work will be given to teams (job enrichment).
Drawbacks
• Not everyone is a team player, some are more efficient working alone. Some workers may feel
left out unless there are real efforts to involve all team members
• Teams may develop a set of values or attitudes that conflict with those of the organisation,
particularly if there is a dominant personality in the group
Evaluation
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Advantages and disadvantages of empowerment
Benefits
• Quicker problem solving- workers have more relevant experience than managers in solving work-
related problems. → better solutions → right decisions → better competitiveness/reduce risk of
loses
• High motivation
• High levels of involvement and commitment improve two-way communications and help reduce
labour turnover
• Managers can focus on bigger strategic issues as they are released from more routine issues and
problem solving
Drawbacks
Benefits
• Workers have hands on experience so they often suggest the best solutions
• The most successful ideas are often adopted, not just in that location, but across the whole
organisation
• Increased efficiency
• Participation from employees. Fits Herzberg’s motivational theory
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Limitations
Management
Which role out of Mintzberg’s management function is the most important for a retailing
business? Evaluate your answer.
❖ Three roles:
➔ Interpersonal
• Figurehead: Guiding people
• Leader: Motivating subordinates
• Liaison: Effective communication within and outside the business
➔ Informational
• Monitor: Deciding which information is relevant to the business
• Disseminator: Making sure that relevant information is passed to the appropriate people in a
suitable way
• Spokesperson: communicating that information to external groups
➔ Decisional
• Entrepreneur: Looking for new opportunities to develop the business
• Disturbance handler: Resolving any actual and potential disagreements within the organisation
or with outside agencies
• Resource allocator: Ensuring efficient and effective allocation of all resources
• Negotiator: Representing the organisation in all important negotiations
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Without Interpersonal role:
• low motivation
• High labour turnover
• High recruitment costs
Evaluation
❖ Whether or not this happens depends on the leadership style.
❖ If it’s Laizez-Faire then minimal input from manager is unlikely to decrease motivation,
especially if the workers are skilled and don’t expect assistance or guiding.
Evaluation
❖ This is only true if the market is growing
❖ If the market is shrinking and doesn’t have a lot of competitors, then such decisions may
not be required as the business should focus on other products instead
❖ Therefore, in this case, decisional management may not be as important
❖ Unless the business decides to enter new markets
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Evaluation
{Disagreements can lead to disruptions in production}
❖ This depends on the scale of the disagreement.
❖ It may not be that large-scale, that may not require an industrial action
❖ Moreover, small disagreements can be resolved among workers themselves and so here
decisional management may not be as important
Evaluation
❖ Retailing business will need to communicate with suppliers and customers effectively→
informational may be more important
❖ Retailer may need to negotiate discounts and prices with suppliers, so decisional may be
more important
❖ Interpersonal and Informational roles only help in keeping the employees motivated
and keep the workings smooth, but Decisional role is important for the effective working
of the business, and hence may be more important. Without a decision-making role,
the business is likely to remain at a standstill and find it difficult to survive.
Evaluation:
❖ Why do you think that role is more important?
❖ To have that role what type of organisation culture is needed??
❖ What type of leadership is required??
❖ What is the objective of firm??
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Describe two ways in which managers contribute to business success:
• Setting suitable (SMART) objectives → Gives employees a direction
• Allowing employees to work to their full potential
• Through empowerment and encouraging creativity and innovation
• Intrapreneurial culture will improve business performance
• Making good quality decisions
• Quick informed decisions can help the business react to changing market trends
Business finance
Explain the procedures for different businesses, when the business fails due to a lack of finance
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Explain two disadvantages of having too much working capital
• Too much money tied up that could be used profitably elsewhere
• High opportunity cost
• Lose on opportunities
• Can reduce competitiveness
• Cannot achieve objectives
• Can be because of too much credit given to customers
• Increases risk of bad debts
• Money being lost
• Investors getting deterred and not investing
• Lack of finance
• Can indicate inefficient inventory management
• Inventory is included in current assets
• Too much inventory tied up to business
• High storage costs
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Describe two factors that affect the source of finance
• Why the finance is needed and the time period it is needed for
• Cost of obtaining the finance
• Amount required
• Form of business ownership and the desire to retain control
• Level of existing borrowing
• Flexibility
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Causes of cash flow problems
• Lack of planning
• Poor credit control
• Credit control: monitoring of debts to ensure that credit periods are not exceeded
• Allowing customers too long to pay debts
• Expanding too rapidly
• Overtrading: expanding a business rapidly without obtaining all of the necessary finance,
resulting in a cash flow shortage
• Unexpected events
• Like breakdown of delivery truck
Costs
Give two reasons why a business might find it difficult to allocate costs
• Existence of Semi-variable costs (e.g. Electricity)
• For multi-product businesses (How much overheads [office rent rates, depreciation of
machinery, interest on loans] cost for which?)
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Evaluate whether a firm should use full or contribution costing
Full costing → A method of costing in which all indirect costs and direct costs are allocated to
the products, services or divisions of a business.
Limitations
• No attempt to allocate based on actual expenditure incurred
• Inappropriate methods of overhead allocation can lead to inconsistencies between department
and products
• Can be risky to use this for making decisions
• The full unit cost will only be accurate if the actual level of output is equal to that used in the
calculation– a fall in output will push up the allocated overhead costs per unit
Contribution costing → Costing method that allocated only direct costs to cost centres and
profit centres, not overhead costs.
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❖ Situations where Contribution costing would not be used
• Contribution costing does not take into consideration that some products may result in a higher
indirect cost– single product firms wont use this as they have to cover fixed costs from that
product only
• For decisions regarding business expansion or developing new products– all costs will have to be
considered
• May lead to managers choosing to maintain a product just because it has a positive contribution.
Maybe a brand new product could make an even greater contribution- lost opportunity
• Qualitative factors are important too, such as the image the product gives to a business
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Other answers include
• Identify the effect of changes in the fixed or variable costs and revenues.
• Identify how changing circumstances will affect the break-even point and margin of
safety to decide whether this is acceptable.
• Explore different scenarios using amended costs and revenues
• Deciding whether to launch a new product.
• Marketing decision: impact of a price increase.
• Operations management decision: purchase of new equipment with lower variable
costs.
• Choosing between two locations for a new factory.
Budgets
Benefits of using budgets
• Planning
• Allocating resources
• Setting targets
• Coordination
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• Controlling and monitoring a business
• Measuring and assessing performance
• Motivate departmental managers to work within their budget
• Help departmental managers understand their role in the achievement of overall business
objectives
Zero budgeting
• Gives incentive for managers to defend their work for their own section
• And changing situations such as external environment can be reflected in very different
budget levels each year
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Flexible budgeting
❖ Adverse variance:
➢ Can be fixed by:
• Finding cheaper material supplies
• Increasing labour productivity
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Reasons for adverse or favourable variance
❖ Causes of adverse variance
➢ Revenue below budget because either:
• Fewer units sold
• The selling price had to be lowered due to competition
• Actual raw material costs are higher than planned because either
• Output was higher
• Cost per unit of materials increased
• Labour costs are above budget because either
• Wage rates were raised due to shortages of workers
• The labour time taken to complete the work was longer than expected
• Overhead costs are higher than budgeted, perhaps because the annual rent rise was
above the forecast
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The nature of operations
What are the factors that control the amount of value added?
• Design of the product
• The efficiency of operations
• Branding to encourage consumers to pay more for the product than the cost of inputs
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Give reasons why raising productivity may not guarantee success
• If product unpopular: it won’t sell no matter how profitably it is made
• Greater effort from workers to improve productivity can lead to demands for higher wages which
increases costs so cancels out the impact of productivity gains
• Workers may resist measures to raise productivity: increase in productivity can lead to job
losses if sales don’t increase too, industrial disputes
• Quality of management determines the success of a policy to increase productivity. If
management involves workforce, then productivity improvements are likely to be greater and
accepted by the workers
• Effectiveness: meeting the objectives of the business by using inputs productively to meet
customers’ needs
• Sustainability of operations: business operations that can be maintained in the long term, for
example, by protecting the environment and not damaging the quality of life for future
generations
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