CH2 QB Managing a business Flashcards
Hu Song works for Premidian plc. Because of his personal stature and credibility, he has
strong support from owners, employees and customers for his application to be a senior
manager. He generates strong feelings of loyalty and commitment among the people that
currently work for him. They know that he has great capabilities and should progress in the
company.
Hu Song appears to exhibit which kind of power?
A Legitimate power
B Referent power
C Coercive power
D Expert power
B Referent power (B) is individual power based on identification with, admiration of or
respect for the individual. This can be summed up as power based on force of
personality. Legitimate power (A) is based on agreement and commonly held values
which allow one person to have power over another person. It normally arises from
position and derives from our cultural system of rights, obligations and duties in which
a ‘position’ is accepted by people as being legitimate. Coercive power (C) enables a
person to mediate punishments for others: for example, to dismiss, suspend or
reprimand them, or make them carry out unpleasant tasks. Expert power (D) is based
upon one person perceiving that the other person has expert knowledge of a given
subject (often based on possession of formal qualifications) and is a recognised
authority in a given situation.
Amanda is a Regional Lending Manager with a major international bank. She has the
authority to lend up to £1 million on an unsecured basis to any single corporate customer
without reference to the bank’s head office. What sort of power does Amanda have?
A Referent power
B Expert power
C Legitimate power
D Reward power
C The company’s procedures allow the manager to authorise lending up to £1 million.
This is legitimate power (C) – power given by her position and bank procedures.
Referent power (A) – sometimes called personal power – is capable of influencing the
behaviour of others. Trust, respect, charm and enthusiasm are all attributes that allow
us to influence people without apparently imposing on them. Expert power (B) is the
power that belongs to an individual because of his/her expertise. Reward power is
power to grant promotion or pay increases (D).
Cerise can authorise her own travel expenses up to £1,000. Cerise will soon travel abroad
on business, and she has a choice between flying economy class for £350 or flying business
class for £1,050. Cerise is an old friend of the company’s travel administrator, Malcolm, who
arranges bookings. She persuades him to book the business class seat. This is an example
of Cerise exercising:
A authority without power
B power without authority
C delegation of authority
D power with authority
B Authority is the exercise of power for the proper purpose. Booking the business class
seat is not within Cerise’s authority, but she has had the power to persuade Malcolm
nevertheless to book the seat. Delegation of authority (C) occurs where a superior
gives to a subordinate the discretion to make decisions within a certain sphere of
influence.
Michael is a Senior Manager working for Chirac plc. He decides to delegate completion of
an internal report to one of his subordinates. In doing this, Michael is transferring to the
subordinate:
A authority, responsibility and power
B authority, accountability and power
C responsibility and authority
D power, responsibility and accountability
A Accountability cannot be delegated so B and D are incorrect. Some power must be
transferred by delegation if the person is to be able to accomplish the task for which
they have been given authority and responsibility.
Delegation embraces both authority and responsibility. Authority can be delegated
readily, but many problems of delegation stem from failure to provide the necessary
information and resources in order to achieve expected results, or from failure to
delegate sufficient power for subordinates to fulfil their responsibilities.
Pamela is a Line Manager in the accounting function of Holland plc. This means that Pamela
has line authority:
A over a subordinate down the chain of command
B to give specialist advice, but not the right to insist the advice is followed
C over a project team’s function
D in certain areas over another department
A Line authority refers to the relationship that exists between a manager and his/her
direct staff, and occurs in most organisations. This line runs in an uninterrupted series
of steps and is based on the scalar chain principle of hierarchy in which there is a clear
line of authority from the top of the organisation to the bottom. Essentially, the scalar
chain is used to implement decision-making and the issue of instructions.
Which of the following managers is operating as a functional manager?
A A human resources manager suggesting aptitude tests for managers to use when
recruiting
B An IT manager setting out rules for internet and email use
C A manager setting targets for the workforce
D A product manager asking IT and marketing staff to help with a big product launch
B A functional relationship means that a manager has authority in certain areas over
another department. The IT manager could have functional authority over all other
departments when defining rules for internet and email use. C is a line manager; D is a
project manager; and A is a staff manager.
Andrew is a Manager in Fortwarren plc. He has to re-arrange a staff rota after a staff
member fell ill. According to Henry Mintzberg, this forms part of Andrew’s:
A decisional role
B interpersonal role
C disseminator role
D informational role
A Mintzberg's managerial roles are interpersonal, informational and decisional. This is a simple decision (A) for Andrew. The disseminator role (C) would form part of the informational role (D) and involves distributing information to staff, either as fact or as information involving some interpretation and integration. The interpersonal role (B) relates to such matters as listening to employees or giving
Charlize is a Manager at Tordos Ltd. She complains to a friend that all she does is attend
meetings along with other managers in the company, and represent her team at
conferences. In terms of Henry Mintzberg’s managerial roles, Charlize is describing her:
A decisional role
B interpersonal role
C disseminator role
D informational role
B Charlize is describing her interpersonal role (B) as a manager – representing her team
in her capacity as their leader as well as interacting with managers of other teams
within the company.
Tristam plc has recently established a new project team. The team agreed clear objectives
and performance measures for the project in hand at a meeting last week. At today’s weekly
progress meeting there were many arguments about which roles would be undertaken by
which members of staff. From this, it is clear that the project team is at which stage of group
development?
A Forming
B Storming
C Norming
D Performing
B The forming stage (A) is associated primarily with seeking to define the purpose of the
group (achieved at last week’s meeting), but the storming stage (B) is where conflict
first arises, particularly concerning competition for chosen roles. Once such conflicts
have been addressed, the group will norm (C) and then, hopefully, perform (D)
A management consultant has identified that Samp plc's organisational culture is outwardlooking but controlling. Samp plc is, therefore: A an internal process culture B a rational goal culture C an open systems culture D a human relations culture
B According to Robert E Quinn, when an organisational culture is outward-looking and
high on control, it is termed a ‘rational goal’ culture (B). An internal process culture (A)
is one in which the business looks inwards, aiming to make its internal environment
stable and controlled. Goals are known and unchanging, and there are defined
methods, rules and procedures governing all activities. Security, stability and order
motivate staff. In an open systems culture (C) the external environment is a source of
energy and opportunity, but it is ever-changing and unpredictable. The business must
be highly flexible and open to new ideas, so is very adaptable in structure. Staff are
motivated by growth, creativity and variety. In a human relations culture (D) the
business looks inwards, aiming to maintain its existence and the well-being of staff.
Staff are motivated by a sense of belonging.
Malcolm is a Marketing Manager with Stone plc. The Marketing Director has primary
responsibility for the company’s overall marketing strategies, but Malcolm has day-to-day
responsibility for all aspects of the company’s marketing mix. This means that Malcolm will
be responsible for:
A a set of variables that he manages in order to achieve a desired response from the
company’s various target markets
B budgets setting out the volumes to be sold to the company’s various target markets
C the sets of different features and benefits that are present in the company’s range of
products
D the types of advertising used by a firm to reach and influence its various target markets
A The marketing mix comprises four variables (A): product, price, promotion and place.
The marketing mix is not the same as the sales mix (B) nor is it the same as the
communications mix (D). It is also a broader concept than mere product features and
benefits (C). SAMPLE PAPER
Pemble Ltd emphasises its adoption of the marketing orientation. Which of the following
statements is most likely to be made by Elaine Pemble, its Managing Director?
A Rather than focusing on product development, we offer discounts on our current lines
to increase sales.
B We increase sales by spending money on development of products our customers
want.
C We put all our effort into persuading customers to buy our products as our sales
targets are of paramount importance.
D We aim to increase sales by spending to develop products we think are innovative.
B The marketing orientation looks outwards and is concerned with ascertaining and
supplying customers’ requirements. Marketing is about supplying what the customer
wants (B). The other statements show features of sales-orientation and productorientation – a concentration on selling rather than marketing and a concentration on
what we as a company have to offer (C) rather than on what the customer wants or
needs. Instead of finding out what the customer wants, such a company would be
trying to sell whatever items it happens to have in stock (A) or whatever Pemble staff
thought innovative (D). Instead of a product-centred ‘make and sell’ philosophy, the
marketing approach is a customer-centred ‘sense and respond’ philosophy.
SAMPLE PAPER
In terms of authority, which of the following is the best description of a staff function?
A A situation where a person is entitled to command another
B A function that is carried out only at head office
C A situation where a person can give advice and guidance to another
D A function that is carried out locally only
C A staff function is one in which authority arises in giving specialist advice to another
manager or department over which you have no line authority (C) and, therefore, no
authority to make or influence decisions in that other department.
In terms of the organisational iceberg, which three of the following are classified as covert
variables affecting organisational behaviour in a company?
A Formal goals
B Attitudes
C Underlying competencies and skills
D Organisation design
E Communication patterns LO 1
B,C,E
Attitudes, underlying competencies and skills, as well as communication patterns, are
all classified as covert variables in the model. Formal goals (A) and organisation design
(D) are overt variables.
Hamid is the managing director of Welldean Ltd, a small company selling aromatherapy
products. He has read about the benefits of market segmentation with regard to both
competitive strategy and resource allocation. Adoption of market segmentation by
Welldean Ltd would mean that:
A the company would sell to only one section of the market
B the market is broken down into several different sections
C the company sees the aromatherapy market as homogeneous
D the competitive scope of the company would be narrow
B Market segmentation means that the market can be broken down into several sections
(B) using segmentation bases such as age and gender. You can practice market
segmentation and then target all the segments of the market (A) with a broad
competitive scope (D). Markets are segmented into homogenous (ie, distinct) groups
of customers, each of them likely to react differently to a particular marketing mix. The
fact that there are homogeneous sections within the total market, implies that the total
market is heterogeneous rather than homogenous (C)
