Business Management
Sample Paper 3
2016/2017
Questions and Suggested Solutions
NOTES TO USERS ABOUT SAMPLE PAPERS
Sample papers are published by Accounting Technicians Ireland. They are intended to provide guidance
to students and their teachers regarding the style and type of question, and their suggested solutions, in
our examinations. They are not intended to provide an exhaustive list of all possible questions that may
be asked and both students and teachers alike are reminded to consult our published syllabus (see
www.AccountingTechniciansIreland.ie) for a comprehensive list of examinable topics.
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 only correct approach,
particularly with discursive answers. Alternative answers will be marked on their own merits.
This publication is copyright 2016 and may not be reproduced without permission of Accounting
Technicians Ireland.
© Accounting Technicians Ireland, 2016
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Business Management Sample Paper 3
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).
If more than the requisite number of questions are answered, then only the requisite number, in the
order filed, will be corrected.
Candidates should allocate their time carefully.
Answers should be illustrated with examples, where appropriate.
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Business Management Sample Paper 3
Section A
(Answer at least ONE of the questions in this section)
Question 1
(a) Define the term ‘team’
(5 marks)
(b) Describe the FIVE (5) Tuckman’s stages of Group development
(15 marks)
(c) List FIVE (5) team roles as identified by Belbin.
(5 marks)
Total: 25 marks
Question 2
(a)
Explain the following marketing terms:

Market segmentation

Market targeting

Market positioning.
(9 marks)
(b) 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 primary functions above.
(16 marks)
Total: 25 marks
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Business Management Sample Paper 3
Section B
(Answer at least ONE of the questions in this section)
Question 3
“An effective leader is critical to every organization.”
(a) What does 'organisational leadership' mean?
(5 marks)
(b) List the FIVE (5) different types of leadership approach.
(5 Marks)
AND
Explain ONE (1) of them in detail
(9 marks)
(c) Outline THREE (3) advantages and THREE (3) disadvantages of Management by
objectives (MBO)
(6 marks)
Total: 25 Marks
Question 4
(a) Examine Irish culture through the lens of THREE (3) of Hofstede’s dimensions of
National Culture
(21 marks)
(b) List TWO (2) types of Global organisations that exist today
(4 marks)
Total: 25 Marks
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Business Management Sample Paper 3
Section C
(Answer at least ONE of the questions in this section)
Question 5
a)
Describe the term Social Responsibility.
(5 marks)
b)
Outline the variables included in the three (3) content categories found commonly in
various corporate code of ethics.
(15 marks)
c)
Write a short note on the combined code on corporate governance.
(5 marks)
Total: 25 Marks
Question 6
Proper governance has become increasingly important in the modern business world.
(a) Outline the advantages and disadvantages of two (2) different governance models.
(14 marks)
(b) Describe, with use of an illustration the governance chain for a large publicly quoted
organization.
(11 marks)
Total: 25 Marks
REMINDER TO STUDENTS – You are required to answer FOUR questions in total.
Make sure that you have completed the required number of questions.
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Suggested Solutions
DRAFT ONLY
SECTION A
Question 1
(a) Daft (2005) defines a team as ‘a unit of two or more people who interact and coordinate
their work to accomplish a specific goal.’
(5 marks)
(b) Describe the FIVE (5) Tuckman’s stages of Group development
Candidates should describe each of the following 5 stages as per the table on page 27 of
text book;
Forming
Storming
Norming
Performing
Adjourning
(5 x 3 marks)
(c) List FIVE (5) team roles as identified by Belbin.
Candidates should LIST 5 of the nine roles below;
Plant
Monitor/Evaluator
Co-ordinator
Resource Investigator
Implementer
Completer Finisher
Team worker
Shaper
Specialist
(5 x 1 mark)
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Question 2
(a) Market segmentation is the grouping of consumers by some criteria, such that those within a
group will respond similarly to a marketing action and those in a different group will respond
differently.
Market positioning is based around how customers view the firm and its product and changing
the position, to get better reaction.
It is a marketing strategy that emphasises serving a specific market segment by achieving a
certain position in buyers’ minds.
Market targeting is identifying a specific segment of consumers most likely to purchase a
particular product, evaluating the segments and deciding how many to serve best.
(3 x 3 marks)
(b) Human Resource Planning
(2 x 8 marks)
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.
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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
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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 coworkers.
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 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 behavior. 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.
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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
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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 •
Question 3
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 as per text.
(9 marks)
c) Candidates should outline 3 of the advantages and 3 of the disadvantages outlined in the table
on page 125 of the text.
(6 x 1 mark)
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Question 4
If we explore the Irish culture through the lens of Hofstede’s dimensions we can get a good
overview of the deep drivers of Irish culture relative to other world cultures.
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.
At 28 Ireland sits in the much lower rankings of PDI – i.e. a society that believes that
inequalities amongst people should be minimized. Within Irish organisations, hierarchy is
established for convenience, superiors are always accessible and managers rely on individual
employees and teams for their expertise. Both managers and employees expect to be consulted
and information is shared frequently. At the same time, communication is informal, direct and
participative.
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.
At a score of 70 Ireland is an Individualist culture. In the business world, employees are
expected to be self-reliant and display initiative. Also, within the exchange-based world of
work, hiring and promotion decisions are based on merit or evidence of what one has done or
can do.
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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 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).
At 68 Ireland is a Masculine society – highly success oriented and driven. Behaviour in school,
work, and play are based on the shared values that people should “strive to be the best they can
be” and that “the winner takes all”. The Irish are proud of their successes and achievements in
life, and it offers a basis for hiring and promotion decisions in the workplace. Conflicts are
resolved at the individual level and the goal is to win.
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.
At 35 Ireland has a low score on Uncertainty Avoidance. Ideas are important, being imaginative
is appreciated. Irish businesses embrace creativity and are always looking for new ways to
approach problems. Making a point with practical facts is more appreciated than the use of too
much technical language.
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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.
With a low score of 24, Ireland has a culture classified as normative. People in such societies
have a strong concern with establishing the absolute Truth; they are normative in their thinking.
They exhibit great respect for traditions, a relatively small propensity to save for the future, and
a focus on achieving quick results.
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.
With a high score of 65, it is clear that Irish culture is one of Indulgence. People in societies
classified by a high score in Indulgence generally exhibit a willingness to realise their impulses
and desires with regard to enjoying life and having fun. They possess a positive attitude and
have a tendency towards optimism. In addition, they place a higher degree of importance on
leisure time, act as they please and spend money as they wish.
b) Candidates should LIST two of the following types of MNCs
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
A multi domestic corporation

Transnational or borderless organisation

Global corporation
(2 x 2 marks)
Question 5
a) Describe the term Social responsibility

(5 marks)
Managers regularly face decisions that have dimensions of social responsibility.
Examples include employee relations, philanthropy, pricing, resource
conservation, product quality and safety, and doing business in countries that
violate human rights.

There are two opposing views of social responsibility. The classical view is the
view that management’s only social responsibility is to maximise profits. The
socioeconomic view is the view that management’s social responsibility goes
beyond the making of profits to include protecting and improving society’s
welfare.
b) Outline the variables included in the three (3) content categories found commonly
in various corporate code of ethics.
(15 marks)
Cluster 1. Be a Dependable Organisational Citizen
1. Comply with safety, health, and security regulations
2. Demonstrate courtesy, respect, honesty, and fairness
3. Illegal drugs and alcohol at work are prohibited.
4. Manage personal finances well.
5. Exhibit good attendance and punctuality.
6. Follow directives of supervisors.
7. Do not use abusive language.
8. Dress in business attire.
9. Firearms at work are prohibited.
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Cluster 2.
Do Not Do Anything Unlawful or Improper That Will Harm the Organisation
1. Conduct business in compliance with all laws.
2. Payment for unlawful purposes are prohibited.
3. Bribes are prohibited.
4. Avoid outside activities that impair duties.
5. Maintain confidentiality of records.
6. Comply with all antitrust and trade regulations.
7. Comply with all accounting rules and controls.
8. Do not use company property for personal benefit.
9. Employees are personally accountable for company funds.
10. Do not propagate false or misleading information.
11. Make decisions without regard for personal gain.
Cluster 3. Be Good to Customers
1. Convey true claims in product advertisements.
2. Perform assigned duties to the best of your ability.
3. Provide products and services of the highest quality.
c) Write a short note on the combined code on corporate governance.
(7marks)
The Combined Code on Corporate Governance is published by the UK Financial
Reporting Council.
The report set down standards of corporate governance for companies listed on the
Stock Exchanges in the UK and Ireland. Its contents have become the generally
accepted statement of best practice for companies in Ireland and Britain. The Combined
Code draws to a significant degree on two other reviews published in 2003, the Higgs
Report – Review of the Role and Effectiveness of Non-executive directors, and the
Smith Report – Audit Committees, Combined Code Guidance.
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The Combined Code is set out as a series of principles for companies and for
institutional shareholders.
The key principles for companies are presented on (1) directors, (2) remuneration, (3)
accountability and audit, (4) relations with shareholders EU perspective April 2014.
The European Commission has today [April 2014] announced a package to improve
corporate governance for listed companies within the European Union (EU). The
proposals aim to encourage long-term shareholder engagement and to improve
corporate governance reporting by listed companies.
The report set down standards of corporate governance for companies listed on the
Stock Exchanges in the UK and Ireland. Its contents have become the generally
accepted statement of best practice for companies in Ireland and Britain. The Combined
Code draws to a significant degree on two other reviews published in 2003, the Higgs
Report – Review of the Role and Effectiveness of Non-executive directors, and the
Smith Report – Audit Committees, Combined Code Guidance.
Question 6
(a) Different Governance models’;
Shareholder model
Stakeholder model Advantages
• Higher rates of return
• Reduced risk
• Increased innovation and entrepreneurship
• Better decision making
• Long term horizons
• Less reckless risk-taking
• Better management
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Disadvantages
• Diluted monitoring
• Vulnerable minority shareholders
• Short termism
• Weaker decision-making
• Uneconomic investments
• Reduced innovation and entrepreneurship (Johnson et al, 2010)
14 marks
(b) (Students see illustration in core text; a similar diagram could be included with your answer
as this will help you explain your answer). THE GOVERNANCE CHAIN
The governance chain shows the roles and relationships of different groups involved in the
corporate governance of an organisation. In large business, influence on governance can be
complex. The diagram shows a governance chain for a typical large, publicly quoted
organisation. Individual investors (the ultimate beneficiaries) often invest in public companies
through investment funds, for example unit trusts or pension funds, which they invest in a range
of companies on their behalf. Such funds are of growing importance. The relationships in such
governance chains can be understood in terms of the principal-agent model. (Johnson et al,
2011) In the diagram the beneficiaries are the ultimate principals. Principal agent theory
assumes that agents will not work diligently for principals unless incentives are carefully and
appropriately aligned. The result may be that decisions are taken that are not in the best interests
of the final beneficiary. In this context the governance chain helps to highlight important issues
that affect the management of strategy. The principal agent model, Governance can be seen in
terms of the principal–agent model. Principals pay agents to act on their behalf (e.g.
beneficiaries/trustees pay investment managers to manage funds, boards of directors pay
executives to run a company). Without appropriate rules, sanctions (and incentives). Agents
may act in their own self-interest. The key challenges are Knowledge imbalances: agents
typically know more about what can and should be done. Monitoring limits: it is very difficult
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for the principal to closely monitor the agent’s performance especially if they have diverse
interests. Misaligned incentives: without appropriate incentives agents may pursue their own
objectives.
11 marks
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