PPQ Understanding Business Flashcards

Question

Describe a matrix structure. (3)

Answer 1

Employees from different functional areas work together on a project Once complete the employees return to their functional department Different employees can be a project leader at different times Allows employees to develop new skills on different projects May motivate staff Employees may have to report to two different managers

Answer 2

Benefits * many levels of management - may mean better supervision * possibly more promotion opportunities – reducing staff turnover * can allow for more specialisation – improved quality of work Cost * increased management salaries - due to many levels of management * may slow communication - due to a long chain of command * organisation may be slow to react to changes - due to the length of hierarchy

Answer 3

Tactical decisions are made to achieve the strategic objectives whereas an operational decision is made to ensure smooth running of the business on a daily basis Tactical decisions are normally made by middle managers whereas operational decisions can be made by any level of management (most likely to be lower level) Tactical decisions are more likely to be medium term whereas operational are day-to-day Tactical decisions have a medium level of risk however operational decisions have little or no risk

Answer 4

strategic decisions have... -long term decisions -set out the objectives -made by senior management -high risk Tactical decisions have... -medium - term decision -taken to achieve objectives -made by middle management. -Medium risk

Answer 5

Strategic have... -long term decisions -set out the objectives -made by senior management -high risk Operational have... -short term / day to day decision -routine decisions -made by low level supervisors / all employees -are low risk

Answer 6

-Conduct field research -Gather feedback from staff -Compare passenger figures -Compare revenue figures -Compare profit figures -Compare using ratio analysis -Review the number of complaints -Compare share price -Compare market share -Evaluate external media and journalism reports, such as the Which? website, TripAdvisor etc

Answer 7

A manager plans the objectives - which means they have to decide what has to be done in order to reach the objectives A manager organises resources - therefore ensuring the organisation is successful in achieving the objectives A manager commands by giving instructions – this reduces confusion amongst staff A manager coordinates to make sure everyone is working towards the same goal - which means the task is done more efficiently A manager controls by evaluating what has been done and checks it against what was expected - therefore he/she can put different plans in place to rectify the situation Manager delegates responsibility to carry out a task to a subordinate – which gives the manager more time to focus on other work A manager motivates staff and inspires them - therefore the objectives may be achieved by staff working harder

Answer 8

Research customer’s opinions using surveys Gather feedback from staff at meetings Assess the situation to see if the problem has been solved Compare the profits/sales figures for an increase Assess using other financial information for example ratio analysis Compare absenteeism/staff turnover levels for a reduction Check if targets have been met Assess key performance measures for staff Review the number of complaints made Customer reviews/press coverage

Answer 9

the quality and quantity of information available to the manager the amount of training/experience the manager has had in decision making the ability and skill of the manager to make decisions the level of risk the manager is willing to take lack of finance to carry out the decision the time available to make the decision how willing the staff are to cooperate with the decision lack of equipment/technology to implement the decision existing company policy may restrict which decisions a manager is allowed to make a senior management veto of what the manager decides.

Answer 10

* planning – setting targets for policing to meet Scottish Government aims * organising – booking regular meetings with various departments o effective personal organisation such as using an e-diary or todo-list to prioritise work and manage time * controlling – ensuring policing resources are spent within budget * coordinating – carry out workforce planning to ensure there are enough police officers and support staff in the right place to do the job * commanding – showing assertive and strong leadership to make decisions * delegating – giving work to other members of the Senior Management Team * motivating – rewarding police officers for excellent performance Response must include POCCCDM labels to gain marks

Answer 11

check to see if targets have been achieved check to see if profits have increased check sales levels to see if they have improved issue questionnaires to customers for their views check to see if the business reputation has improved evaluate decision with the staff for their views on its success monitor staff morale following decisions monitor staff absence rates following decisions

Answer 12

over 800 job losses – increasing unemployment in the UK Government may have to pay more benefits to those unemployed may result in financial hardship for employees who cannot find a new job may lead to redundancy payments could lead to bad publicity for Santander staff may be fearful of redundancy which lowers motivation trade unions consulted – Santander may have to agree to costly terms time consuming to carry out a third of the UK still does not bank online – Santander may lose out on customers who are technophobes/do not have internet access/security conscious lower income for Santander from its branches due to closures consumers still need access to cash - inconvenience to customers who may need to travel more to a branch customers may switch to a competitor with a branch local to them

Answer 13

Google use flexible working patterns which means staff work when is best suited to them/ when they are most productive. Staff can work from home/where they want which might motivate them to be more productive. Open plan/relaxed office layout encourages collaboration which means better communication and idea sharing This will also lead to better decisions being made Perks such as pool tables, bowling alleys, gyms etc will mean staff are motivated and will work to a better standard This will also mean staff turnover will also be low meaning quality trained staff aren’t lost to competition Perks will also attract the best staff to Google meaning they have an advantage over the competition Roof gardens, coffee shops etc will encourage staff to communicate with each other in a relaxed informal way, leading to better decision making Casual dress code will mean there is a relaxed environment in which to work in/will mean staff want to come to the office Strong corporate identity through corporate colours/language and jargon etc which will mean employees feel part of the organisation Use of relaxed and informal language means staff feel comfortable working there and perform well

Answer 14

Through uniforms staff will form an identity with the organisation which should result in lower staff turnover/absences Increased staff motivation because they feel part of the organisation/associate strongly with the culture A single corporate identity is seen by customers which means they will then associate it with that organisation’s brands/ethics/logos etc Easily be recognised worldwide meaning customers will feel comfortable with products wherever they are Values/beliefs/perks can attract quality staff which results in a better quality service Customer satisfaction can improve because the customers begin to associate with the brands/logos/ethics they like Can attract new customers as they agree with the aims of the organisation Customers may become loyal... Staff can move between branches/departments more easily as they will all be using the same policies and practices Workspace design/layout... Open door policy...

Answer 15

Suppliers’ products ensure sustainability of raw materials. Sainsbury’s commitment to reducing unhealthy food and providing nutritional information. Suppliers’ products don’t have a large carbon footprint (1 mark) and support renewable energies (1 development mark). Sainsbury’s commitment to making a positive difference to the communities in which it operates. Suppliers’ products are fair trade (1 mark) meaning suppliers get a fair price for products and are likely to stay in business (1 development mark). Sainsbury’s recycling partnership with Oxfam. Suppliers ensure high standards of animal welfare.

Answer 16

Rising inflation means goods/services cost more, so Sainsbury’s plans to offer more great food of quality and value. Low interest rates mean consumers are less likely to save and so spend more in shops like Sainsbury’s (1 mark). For example, Sainsbury’s sales have increased by 4·5% (1 mark for development for using Source A). Falling unemployment means consumers may have more wages/disposable income to spend in shops like Sainsbury’s. Rising living costs, however, mean that consumers may have less disposable income to spend in Sainsbury’s. Customers are being more price conscious so Sainsbury’s is offering more promotional offers/deals. Consumers are making fewer but more considered spending choices so are buying higher quality goods such as fair trade products provided by Sainsbury’s. Competitive factors — Sainsbury’s must be constantly aware of these, eg from Asda and Tesco, to maintain or increase its current market share of 16·8% (Exhibit 2).

Answer 17

Google have a charitable arm called Google.org which promotes renewable energy Funding environmental research proves Google are willing to pay to help the environment Google use solar panels at the Googleplex to reduce its carbon footprint Google focus on air quality/letting less harmful chemicals into the environment Google offer free EV charging stations for employees vehicles to reduce emissions Google treat their staff well eg_ Publicity in Fortune: Best Company To Work For Perks

Answer 18

Cannot collude with other organisations to fix prices eg cartel Cannot fix the bid for tendering on projects with other firms Cannot use market power to pay unfairly low prices to suppliers Prevents monopolies occurring Block mergers and take-overs that are deemed anti-competitive Enforcing the selling of divisions/branches/premises eg divestment May be forced to change prices

Answer 19

Political Legislation and regulations will affect an organisation in that they need to comply with the laws Economic Factors such as inflation, recession/boom periods, interest rates will affect organisations in a number of ways ie consumers not spending as much on luxury items/more expensive to borrow money Social Changes in trends and fashions mean that organisations must continually carry out market research Technological As technology changes organisations must keep up-to-date and this will involve a large financial cost Environmental Organisations now attempt to be socially responsible and environmentally friendly to possibly comply with legislation/satisfy consumer groups Weather/flooding can mean a loss in sales if organisation cannot open due to flooding

Answer 20

Weather, such as heavy snowfall, can result in suppliers not being able to deliver goods on time. Can delay production/sales. Climate change may lead to changes in demand for products eg warmer coats, therefore, the firm may need to change the products they offer. Seasonal changes can lead to changes in customer demand/shopping habits. A natural disaster could force the company to close for a period of time which means sales/profits are reduced. Bio-fuels will reduce a firm’s carbon footprint which will improve its image. However eco-friendly chemicals are significantly more expensive.

Answer 21

Sainsbury’s (owners) need employees to operate stores and employees require Sainsbury’s to provide secure jobs. Suppliers need Sainsbury’s to buy their stock and Sainsbury’s needs suppliers to provide good-quality products. Employees need customers to give money to Sainsbury’s in order to have job security and customers need good-quality service from employees. Employees need owners for wages/training/career development and owners need employees for productivity/good customer service. Owners need customers to give them profits/market share and customers need owners for quality services/products.

Answer 22

Employees are likely to want higher wages than the owners/managers are willing to pay Owners/managers may need to reorganise the business but employees may feel this gives them extra responsibility without training or extra reward Owners want to maintain control of their business but managers can become too powerful and influential through their decision making Managers may focus on their objectives for financial reward which will conflict with owners desire for maximum profit Customers want delivery of goods as soon as possible but the managers cannot meet customer expectation because of the cost Managers want to delay payment for goods bought to improve cash flow but suppliers want their money as soon as possible to avoid cash flow issues of their own

Answer 23

Shareholders want high dividends whereas customers want low prices. Shareholders want high profits whereas employees want high wages. Shareholders want high profits whereas government want all legislation followed which could increase costs. Shareholders want a low rate of tax whereas the government may wish to increase it. Shareholders will be looking for a return on their investment whereas managers may want to reinvest profits for product development. Managers want to delay payment of suppliers whereas suppliers want prompt payment. Employees want a low rate of income tax whereas government may wish to increase it.

Answer 24

employees are likely to want higher wages than the owners/managers are willing to pay managers want to delay payment for goods bought to improve cash flow, but suppliers want their money as soon as possible customers want delivery of goods as soon as possible, but the managers cannot meet customer expectations owners/managers may need to reorganise the business, but employees may feel this gives them extra responsibility without training or extra reward owners want to maintain control of their business, but managers can become too powerful and influential through their decision making managers may focus on their objectives for financial reward, which may conflict with owners’ desire for maximum profit.

Answer 25

conflict of interest between employees and managers managers may want to cut wages to cut costs whereas employees may want wage rises managers may want to increase workload to increase efficiency whereas employees may want their workload reduced interdependence between employees and managers both employees and managers will need the business to succeed to keep their jobs secure employees need managers to set them tasks so that they can get paid, whereas managers need employees to carry out the tasks

Answer 26

Can increase market share without investing further capital Is paid a percentage of profits or sales or a royalty Can control the way the business is run.

Answer 27

Has limited liability to shareholders/owners which would reduce the risk of personal loss to the shareholders Becomes larger organisation and should attract finance easier Allows for economies of scale Less risk of liquidation Control is still not lost to complete outsiders Experience and skills can be gained from shareholders

Answer 28

Advantages An organisation may be given grants from governments to locate in that country and the grants will not require to be paid back improving their financial position Organisations will become larger which may result in them being safer from takeovers Can allow organisations to increase their sales which in turn should increase their overall profits Will allow organisations to take advantage of economies of scale and reduce unit costs of products Could allow organisations to employ cheaper staff which will result in greater profitability May help avoid legal restrictions in the organisation’s own country which could allow them to sell/produce their products abroad Could allow for tax advantages which will increase profitability Will mean the organisation can avoid restrictions on imports into a country which will help overall sales Disadvantages Legislation may be different in other countries which may require the organisation to alter its product/service Legislation may exist on how a product/service is marketed and may result in some marketing techniques having to be changed Cultural differences will mean that organisations have to be sensitive to different countries cultures Different languages will exist and this may mean that organisations have to employ specialist linguists to work with the organisation

Answer 29

Using an established name/brand Reduces the risk of failure in the marketplace Franchiser will provide training Franchiser will advertise nationally Business idea is already successful Product innovation is shared Royalties are paid to the franchiser from profits Franchiser can demand exactly how a business operates Bad publicity can affect the whole franchise

Answer 30

Shares can be sold on the stock exchange meaning large amounts of finance can be raised. PLCs often dominate their market meaning they can force smaller organisations out of business dictate market prices. Lenders are more likely to give money as they have greater confidence it will be paid back. Investors will have limited liability meaning PLCs will find it easier to attract shareholders. Initial set-up costs will be high resulting in poorer profit results for the first few years. There is a large amount of legislation which must be complied with or the company may be fined have legal action taken against them. PLCs have no control over who buys shares which might mean investors can plan a hostile takeover. PLCs are required by law to publish annual accounts which will be costly to produce.

Answer 31

Will involve operations in several countries Has a distinct home base country Has a global brand Can dominate markets across many countries Can have budgets that are larger than many individual countries Can greatly influence local economies Cultural variations

Answer 32

Advantages the brand name is already established franchiser will advertise nationally franchiser may provide training therefore staff are skilled and competent Disadvantages the cost to buy into a franchise agreement is often expensive which may result in the franchisee having to borrow finance/ incur debt after some time the franchiser may not renew the contract which will leave the franchise without a business royalty fees are paid regularly which lowers profit figures store layout, prices and promotion etc are dictated creativity can be stifled

Answer 33

to increase profits to dominate the market to eliminate a competitor to be the most innovative (develop product) to survive to grow

Answer 34

Plc To maximise profits To improve image To improve social responsibility To increase market share To grow Public Sector Organisation They may be required to operate within a budget To provide a service

Answer 35

To provide an efficient service. To make effective use of funds. To improve society. To serve the public interest. To stick to agreed budgets.

Answer 36

Private sector organisations’ objectives will focus on profit maximisation whereas public sector will require to operate within a specific budget Private sector will focus on sales maximisation but public sector organisations will focus on provision of a specific product or service Private sector organisations will be responsive to shareholders’ opinions however public sector will have local or national government priorities and objectives Increase market share/will have little or no concern with market share To expand globally/operate on a local or national basis only Both will look to provide a quality service Both will look to be socially responsible Both will try to be as efficient as possible

Answer 37

Profit maximisation Sales maximisation Survival – to continue to be in business, especially important in a recession Provision of a service Growth – to have more outlets, staff and higher turnover Socially responsible – to have a good image in the eyes of consumers or local communities

Answer 38

Operate within a specific budget Provision of a service Meet local or national government priorities Be as efficient as possible/quality service Social responsibility

Answer 39

Horizontal integration Firms producing the same type of product/service join together Firms can then dominate the market Can obtain cheaper supplies due to bulk buying Can benefit from lower administration costs Vertical Integration Firms at different stages in the same industry join together eg brewer and pub Backward vertical Business takes over supplier – guaranteeing stock Stock is cheaper and profits higher Forward Vertical Business takes over a customer Control of distribution is possible Diversification (conglomerate) Firms in different markets merge Reduces risk of failure

Answer 40

To gain their assets (premises) To gain a brand name To turn it into a profitable firm To obtain their customers To remove the competitor from the market (they may take steps in the future to improve)

Answer 41

Divestment allows an organisation to sell off minor areas of their business and concentrate on the core activities of the organisation. The areas sold off are often the less profitable areas. This increases funds available for growth in the core activities. The actual funds from the sale can be used to expand the core activities. De-merger allows an organisation to split into two separate organisations to raise cash for investment. The organisation can then concentrate on its core activities. Cost cutting should make it more efficient and therefore able to expand.

Answer 42

Horizontal Integration − firms producing the same product/service combine together. Reduces admin costs. Allows for economies of scale. Can allow firms to estimate competition or be more competitive. Vertical Integration − firms at different stages in the production process in an industry combine together. Forward vertical integration is when a business takes over a customer. Backward vertical integration is when a business takes over a supplier. Allows firms to cut out middle-men and increase profits. Firms can then control supply and distribution of the product. Conglomerate − firms in difficult industries combine. Reduces the risk of failure. Makes for a larger and possible more financially secure business. Internal Growth − firms open more outlets. Increase number of products or services to customers.

Answer 43

Horizontal integration Can use economies of scale and reduce unit cost of products. Can dominate the market as a larger single organisation. May allow for higher prices to be charged as competition is reduced. Reduction in costs – max 1. Vertical integration Profits are increased by cutting out the ‘middle men’. Stock can be cheaper due to backward integration. Guaranteed source of supplies and prices of stock. Reduction in costs – max 1.

Answer 44

Horizontal integration – firms producing the same products combine together. This allows for greater economies of scale which allows for lower unit costs and increased profits By becoming larger they should become better known in the market and this should lead to brand loyalty and increased sales They might dominate the market due to the greater size of the organisation and can then set prices and encourage customers to purchase from them through large promotional activities By removing competitors they will increase sales Vertical integration – firms at different stages in the production process combine together. This can cut out middle men and allow the organisation to retain all profits made in the chain themselves Backward vertical – when a firm combines with a supplier which ensures that there is constant and consistent supplies of raw materials at appropriate prices Forward vertical – when a firm combines with a customer which ensures that sales are constant and can increase profits Conglomerate – when a firm combines with another firm in a completely different market. This means that profits can be made from a variety of markets and sales do not rely on just one industry Internal growth

Answer 45

Specialists can be used to do the work meaning the work should be of a high standard Could increase costs to provide the specialisation However it might reduce staff costs in the area that has been outsourced as the organisation does not need to pay employees continuously Outsourced companies will have specialist equipment again allowing for a high degree of specialisation and a better quality product. The service needs only to be paid for when required Organisations can concentrate on core activities Organisations can lose control over outsourced work Loss of confidentiality Cheaper/dearer to outsource the work

Answer 46

Advantages Experienced decision makers Decisions made for the organisation as a whole Decisions affect all branches equally Less duplication of resources Disadvantages Less responsive to changes in the market Local needs are not taken into account Does not develop staff (eg allow branch managers to make decisions) Decision-making may be a slower process

Answer 47

Teams from different functional areas are formed (1 mark) with each member having specialist skills and responsibility for their own area of expertise (1 mark)

Answer 48

Advantages Decisions are made by experienced managers of the organisation. Decisions are made quickly as managers do not consult staff. Staff know who they are accountable to. Disadvantages Is difficult to use in larger businesses. Top managers carry a heavy workload/burden. Does not allow for initiative from staff. Demotivated staff as they are not included in decision making.

Answer 49

Normally set up to carry out a specific project Will consist of different specialists from functional areas Each team will have a project leader Can be motivational to the staff concerned Is a good method of solving complex problems Gives staff increased experience in different situations Is a relatively costly structure if many different teams are required Can be difficult to co-ordinate staff from different areas Each staff can have two managers, the project manager and their own functional manager which can cause confusion and conflict

Answer 50

One senior member of staff makes all the important decisions. (Accept a few or core members) Decisions are therefore made quickly. Staff are very rarely consulted on decision making. Stifles staff initiative as they are not consulted. Is mainly used in smaller organisations. Employees know who they are accountable to. May place over-reliance on key members of staff.

Answer 51

In a decentralised structure decision making is delegated to departments whereas in a centralised structure it is made by head office. In a decentralised structure staff are more motivated due to empowerment whereas in a centralised structure staff can be de-motivated due to not being consulted. In a decentralised structure senior directors have less responsibility whereas in a centralised structure senior directors carry all the burden of decision making. Decentralised is often seen as being used in a flatter structure where as centralised tends to exist in hierarchical structure. It is harder to promote a corporate image in a decentralised structure than in a centralised structure. In a decentralised structure decisions can be made which only benefit one department but in a centralised structure decisions will be made to suit the whole organisation.

Answer 52

Allows organisation to cater for the differing needs of customers in different locations Can identify poorly performing regions Expensive as functions (marketing, finance, administration) exist in all the divisions = duplication of resources

Answer 53

Function Staff are grouped together in departments according to skill and expertise Each functional area employs specialists Staff know who to go to when they need a job done Organisations may become too large to be managed effectively Unresponsive to change Individual departments become more concerned about their own interests rather than those of the whole organisation Product Product/service groups where each deals with a different product or service Organisations with different products can concentrate on them individually Expertise can develop regarding the product Easier for management to identify which areas of the business are less successful Unnecessary duplication Divisions may be competing with each other Customer Divisions dealing with different types of customer eg overseas/home, business/personal Product/service suited to the customer Customer loyalty builds up because of personal service Additional staffing required (costly) Duplication of procedures Technology Business activities are grouped according to technological or production process Only suitable for large organisations which have different products and/or production processes

Answer 54

Advantages Expertise can develop in dealing with each product or service Managers can easily identify how the different products or services are performing. Each decision can be more responsive to changes in the field. Disadvantages Duplication of staff and resources across the different products Divisions may find themselves competing against each other.

Answer 55

Product/Service Grouping Products or services are grouped together in divisions or departments within a different product range. This allows for each separate division to be more responsive to customers requirements and trends in its area. Specialism can be developed in each division. It is easier to identify parts of the organisation that are under performing. Duplication of resources and personnel across each division. Can cause competition within each division of the one organisation. Customer Grouping The organisation is grouped around different customer types. This allows each division to offer a unique service to each segment or customer type. Builds up strong customer loyalty due to the personal service given to each type of customer. There are high staff costs. Duplication of functional departments exists. Technological Grouping Manufacturing companies can group their business around the technological or production process that exists. Specialism can occur within each process. Can reduce wastage and costs. Only an option for very large organisations who have different products with similar production processes.

Answer 56

Advantages Allows for specialisation in each functional area There is a clear structure to the organisation Clear lines of authority exist Staff can seek support from colleagues if required No duplication of resources Disadvantages Organisational aims can be lost due to departments pursuing their own aims Can be unresponsive to change in the market Can produce large and unwieldy organisations Max of 4 for advantage or disadvantage. Accept advantages and disadvantages for both the employee and the organisation

Answer 57

Advantages Service and product is tailor-made to customer needs Promotions can be directed towards specific customer groups Customer loyalty is built up due to personal service Quick response to change Disadvantages Is an expensive system, due to high staff costs New staff are required if new customer group is formed Duplication of resources Competition between departments (either advantage or disadvantage depending on explanation)

Answer 58

Staff with similar expertise work together in functional grouping but in product grouping staff are organised around a specific product or service and will have different areas of expertise. The organisation will have functional departments which service the whole organisation whereas in product grouping each functional area will be responsible for a specific product or service only. In both methods departments can be more concerned with their own results than the organisation as a whole. Also departments may compete against each other in both forms of grouping. In product grouping it is easier to identify areas that are performing well whereas in functional grouping results tend to be for the organisation as a whole. In product grouping each department is more responsive to change but in functional grouping the organisation can become very large and unresponsive. In functional grouping staff will know exactly who to turn to but in product grouping this may not be the case. In functional grouping the organisation will have a clear structure but in product grouping the structure may be less clear and line relationships less clear.

Answer 59

Customer loyalty can be easily built up There is a high level of customer care given The organisation can respond to the needs of customers quickly Can be expensive due to high staffing costs to meet customer needs New staff are needed if there is a new customer grouping or product created Competition between customer groupings/departments can exist

Answer 60

Saves money on expensive managerial salaries or employee wages. Leads to better communication due to less layers for information to pass through. Employees are more motivated as they are empowered to make decisions. Can respond quicker to market changes. May improve productivity. Decision making is faster due to fewer layers.

Answer 61

Delayering involves removing a whole level of management to flatten an organisation’s structure. Downsizing involves closing specific areas of the organisation to cut costs. Purpose. Span of control. Communication. Efficiency. Cost. Competitiveness. Empowerment. (3)

Answer 62

Advantages Staff are empowered to make their own decisions and to carry out their own tasks without interference by managers. Less managers are required and wages are saved. Less levels of communication for decisions to pass through. High quality staff should exist. Disadvantages Managers may make snap decisions as they are looking after too many employees. Managers time will be at a premium. Managers will have less time for planning. Subordinates may make decisions they are not trained to make.

Answer 63

Will also mean more empowerment is possible – can give for both employee and management (1 mark each) Allows for delegation to staff as they should be reasonably skilled Managers time to deal with staff problems will be at a premium Can place managers under stress Can mean workers rarely have time to meet with their line manager to discuss ideas Subordinates may resent having to make all the decisions Managers will have less time for planning Can result in poor decisions – both employee and organisation (1 mark each) Managers are in charge of more staff Can be motivational to managers as can be seen as greater power

Answer 64

Cuts out a complete level of management within the organisation which will reduce the salaries paid out by the organisation Managers have an increased span of control which may result in increased workload for the manager increased stress for the manager staff having to wait to meet with a manager less time for planning Communication should be improved and quicker to pass on which means the organisation will be more responsive to changes in the marketplace Empowers the staff which can lead to increased motivation Fewer promotion opportunities for staff which could lead to them leaving the organisation to gain promotion

Answer 65

Line – the relationship that exists between a manager and their subordinates Lateral – this exists between staff on the same managerial level within an organisation Functional – this is a specialist relationship where an expert has the responsibility to manage the function for the whole organisation Staff – this is an advisory relationship to staff within an organisation Informal – exists between an level of management or staff outwith the normal working arrangements/conditions

Answer 66

The size of the organisation, larger organisations tend to be more formal and smaller organisations tend to be less formal Technology used – the impact of modern technology can influence how organisations structure their activities, i.e. easier to communicate over larger distances Staff knowledge and skills, if staff are highly skilled a less formal structure can exist The market Products they sell Finance available

Answer 67

Will mean more empowerment is possible – can give for both employee and management (1 mark each) Allows for delegation to staff as they should be reasonably skilled Managers’ time to deal with staff problems will be at a premium Can place managers under stress Can mean workers rarely have time to meet with their line manager to discuss ideas Subordinates may resent having to make decisions Managers will have less time for planning Can result in poor decisions – both employee and org (1 mark each) Managers are in charge of more staff Can be motivational to managers as can be seen as greater power

Answer 68

Strategic – to expand, grow, increase (any long term decision) Tactical – merge with another organisation, increase selling price, reduce costs Operational – change staff rota

Answer 69

A strategic decision is a long-term decision made by senior management which affects the aims of the organisation, eg to increase market share by 5%. A tactical decision is one which is made to achieve the strategic decision and made by middle management, eg to employ additional staff. An operational decision is a day-to-day, routine decision made by lower level managers, eg to order supplies.

Answer 70

Strategic decision made by senior management. Tactical decisions are made by middle managers. Strategic Is longer term. Tactical are medium term. Strategic sets main aims and objectives of an organisation. Tactical assist in the achievement of strategic objectives. Eg, Strategic =move into a new market segment, open retail outlets in other countries. Eg, Tacticalproducts to be developed for new market, suitable locations for retail outlets.

Answer 71

Open new branches. Offer internet shopping. Target new market segments. Launch a new range of products. Vertical integration. Horizontal integration.

Answer 72

They are long term and only senior managers would make decisions They have far reaching or lengthy consequences They shape the objectives/direction of the organisation They have a high financial risk Require a knowledge of the whole organisation and its policies

Answer 73

Tactical decision is medium term/is made by middle level managers/has a slightly increased risk Any appropriate example Strategic decision is long term/made by senior managers/has a greater risk Any appropriate example Tactical decision is medium term/is made by middle level managers/has a slightly increased risk Any appropriate example Strategic decision is long term/made by senior managers/has a greater risk Any appropriate example

Answer 74

Strategic decision is long term whereas a tactical decision is medium term. Strategic decision is made by directors/senior managers, but a tactical decision is made by heads of department or middle managers. Strategic decisions carry high levels of financial risk whereas tactical decisions carry less of a financial risk. Strategic decisions shape the main objectives of an organisation whereas the tactical decisions help to put the strategic decisions into place.

Answer 75

Operational Day-to-day decisions All staff including lower level managers Low financial risk decision Tactical Medium term Made by middle managers Are taken to achieve strategic decisions Strategic Long term decisions Shaping the objectives of an organisation Taken only by very senior managers Carry a large financial risk

Answer 76

A tactical decision is made by middle managers whereas an operational decision can be made by anyone in the organisation normally lower level managers. A tactical decision is a medium term decision whereas an operational decision is made daily or short term A tactical decision carries a medium amount of financial risk but an operational decision carries virtually no financial risk A tactical decision is made to help implement the strategic objectives whereas an operational decision is made to help the smooth running on a daily basis

Answer 77

In a decentralised structure decision making is delegated to departments whereas in a centralised structure decision making lies with senior managers A decentralised structure relieves senior managers of a lot of the daily tasks but in a centralised structure managers carry the whole burden of decision making In a decentralised structure subordinates are given responsibility to make decisions which is motivational whereas in a centralised structure subordinates are less motivated as decision making is made only by senior managers In a decentralised structure decision making is faster than in a centralised structure as local managers do not have to consult national managers prior to making a decision In a centralised structure procedures tend to be standardised throughout the organisation but in a decentralised structure procedures will be decided by local managers In a centralised structure decisions are taken for the organisation as a whole whereas in a decentralised structure decisions take into account local arrangements/customers In a centralised structure a high degree of corporate identity exists whereas in a decentralised structure corporate culture is harder to impose

Answer 78

Plan the objectives of the organisation, this can be either long term or short term in order that the organisation has a vision/direction Organise the staff and resources required to carry out the decision Control staff who the decision affects/ impacts in order to get the best work possible/meet targets Command – inform the staff of decisions that have been made/consult with staff to improve the decision Co-ordinate the activities and ensure timescales/targets met Delegate decision making to junior staff to give them experience/empower them Empowerment to make decisions will motivate staff and improve their performance

Answer 79

Analyses the internal areas of an organisation to indicate where they are performing well Analyses the internal areas of an organisation to indicate where they are weak and need to improve Examines external areas that could be used to improve performance or profitability in the future Examines possible threats that can exist externally which means an organisation is being proactive and ready for any eventuality Gives more/better information and so results in better decisions Saves rash decisions

Answer 80

The ability of the manager making the decision The staff’s ability to use decision-making techniques Quantity and quality of information available to the decision maker Level of risk the decision maker is willing to take Personal interest of the decision maker

Answer 81

Evaluate decision – issue questionnaires etc Feedback from staff and customers – is it positive? Is the problem solved eg Have sales/profits increased? Has staff morale improved? Has staff turnover/absenteeism improved?

Answer 82

Financial constraints may mean that the organisation cannot choose the best solution to a problem. Company policy may restrict the decisions made or options available. Staff can resist change and attempt to sabotage decisions if they disagree with them. Lack of technology can mean that decisions taken may fail. Managers may have limited ideas. May be unable to handle stressful/complex situations. Lack of opportunity to consult may mean that decisions are poor. Managers may be indecisive and make poor decisions. Overpowering Managing Directors may overturn or veto decisions being made. Time constraint.

Answer 83

Have the objectives been reached (ie problem solving)? Is the organisation operating effectively? Is there an increase in sales/profits? Has staff turnover/absenteeism decreased? Has staff morale improved? They may issue questionnaires/interview staff/observe.

Answer 84

The ability and skill of the manager – if the manager has not had proper training or not skilled enough to make decisions then a poor decision may be made The appropriate use of decision making models The quality of the information used to make the decision The level of risk taken The managers own interests The finance available to implement the decision The time available to make the decision

Answer 85

Managers that have the ability and experience to make good decisions from past experience Managers who are properly trained to make good decisions The quality of the information available on which to base the decision (max 1 for any characteristic of information) Use of decision-making models – accept any stage(s) but must be qualified as to how it makes a quality decision How much risk the managers/decision makers will take when making decisions Motivation of staff to properly implement the decision Finance Technology (No ID marks are given.) Finance may be restricted which might mean the organisation cannot afford to implement the best decision. Staff may not agree with the decision and resist the change making it less effective. The organisation may have policies in place that are restrictive and the decisions may need to be altered to suit policies. The decision may be constrained by the lack of technology and mean that new technology needs to be purchased or decisions shelved. Managers may not have the appropriate skills or initiative to make the best decisions and may be unable to cope with complex decisions or situations resulting in a poor decision being made Quality of information Level of risk willing to take.

Answer 86

Finance may be restricted which might mean the organisation cannot afford to implement the decision. Staff may be resistant to change meaning decision making is difficult The organisation may have policies in place that are restrictive The decision may be constrained by the lack of technology and mean that new technology needs to be purchased or decisions shelved. Managers may not have the appropriate skills or initiative to make the best decisions Managers may be unable to cope with complex decisions quality of information level of risk willing to take. Staffing levels Staff skills to implement

Answer 87

Managers that have the ability and experience Managers who are properly trained The quality of the information available (max 1 for any characteristic of information) Use of decision making models – accept any stage(s) but must be qualified as to how it makes a quality decision How much risk the managers / decision makers will take Motivation of staff to properly implement the decision Finance available Technology available Enough time/time available

Answer 88

sets the objectives of an organisation long term decisions made only by top level managers/owners are high risk decisions tend to be proactive allows them to stay ahead of competition affect the entire company and all stakeholders

Answer 89

Employees feel part of the organisation. Is motivational to staff. Improves employee relationships. Increases employee loyalty. Gives customers a sense of quality/efficiency. May attract new workers. Improves the business image.

Answer 90

Implementing the ideals and beliefs of the owner By use of symbols or logos that customers recognise Staff uniforms consistent throughout the organisation Uniformity of layout of offices/branches Use of a phrase or motto that can be recognised by customers/ used in marketing How staff interacts with customers Merchandising of products linked to the organisation

Answer 91

The organisation needs to take into account the ideas/principles of the owners. They need to design appropriate logos, motifs and uniforms. They need to consider a corporate design for shops and outlets. They have to make staff aware of the corporate culture and image this can be expensive may involve staff training costs. Will have large cost implications for changing logos, uniforms etc throughout an organisation. May require the organisation to hold launch events or press conferences. Clearly defined policies and procedures. Empowerment/employee views

Answer 92

Health and Safety at Work Act 1974 States employees’ and employers’ duties with regard to health and safety Employers have a duty to take responsible care of their own health and safety as well as that of their employees Office, Shops and Railway Premises Act 1963 States regulations which must be met by employers regarding working temperatures, toilet and washing facilities, first aid, space requirements, cleanliness Equal Pay Act 1970 States that all employees should receive the same pay when work of equal value is undertaken Employment Rights Act 1996 States duties and rights of employer and employee Includes the right to a written Contract of Employment within 2 months of starting work The right to an itemised pay slip Rights of employees regarding Sunday working Rights of employees regarding maternity and termination of employment Data Protection Act 1998 Data must be obtained fairly and lawfully The organisation must register the purpose for which the information is held They must keep records for no longer than necessary The information must be up to date and accurate Employees have a right to request to see information held about them and have it changed if incorrect The information should not be used for any other purpose than that for which it was collected They must take appropriate security measures to keep the information safe Freedom of Information Act Correct identification of Act = one mark per Act (date not required) Equality Act 2010

Answer 93

Economic Businesses are less likely to borrow money when interest rates are high and their costs are rising. High unemployment means consumers may stop purchasing the product or service. Socio-cultural Changes in life-style and attitudes affect demand Change in working patterns eg increased number of women working has led to an increase in demand for childcare facilities, house-cleaning companies etc Consumers are increasingly conscious of ethical issues and organisations are required to make their products meet these concerns. Technological Machines/technology may change or improve the production process Less workers may be needed Need to update technology which has cost implications Demand for new technology products by consumers Competitors Environment

Answer 94

Political factors − terrorism, government legislation. Economic factors − inflation, exchange rates affecting tourism, recession. Social factors − changes in population distribution, ie, ageing population, smaller families, women into work. Technological factors − e-commerce, use of e-mail and internet for marketing. Environmental factors − changing weather patterns, storms, more rain. Competitive factors − competition from European and other UK resorts.

Answer 95

Decline in full time workers with move to more part-time and short term contracts. Firms now have core workers and outsource or sub-contractors for non core activities. Increase in service/tertiary sector employment and decline in traditional manufacturing industries. Increase in women in full or part-time employment. More women in managerial posts. Increase in number of older workers due to aging population and changes in pension laws. Homeworking/Teleworking. Smaller firms. Career changes more common. More people are self employed. Changing in patterns of working hours, eg, annualised hours, flexi-time. People choosing to work abroad.

Answer 96

Inflation – increased prices or cost. Exchange rates – value of one currency compared to another. Interest rates – cost of taking out a loan. Recession – a slow down in the economy/fall in demand. Boom period – an upturn in the economy/increase in demand. Unemployment – fewer people working.

Answer 97

Political factors – laws from both UK and EU affect organisations in a variety of ways. Social factors – society is continually changing and organisations must adapt to changing demographic trends as well as cultural trends. Technological factors – technology is continually advancing and organisations must keep up-to-date with new developments in technology. Environmental factors – weather changes in recent years have caused problems, also in recent years environmental issues have become increasingly important. Competition – the way competitors act will impact on how an organisation needs to alter the way it operates.

Answer 98

Political – legislation and regulations will affect an organisation in that they need to comply with the laws of the country they operate in. Economic – factors such as inflation, recession/boom periods, interest rates will affect organisations in a number of ways. Social – changes in trends and fashions mean that organisations must continually carry out market research to see what products will sell or new products are desired. Technological – as technology changes organisations must keep up-to- date and this will involve a large financial cost. Environmental – organisations now need to attempt to be socially responsible and environmentally friendly both to comply with legislation and satisfy consumer groups. Competitive – organisations must continually monitor their competitors prices and alter theirs accordingly.

Answer 99

Legislation − any appropriate law with an appropriate effect, ie, new laws on sale of alcohol have to be complied with or face a fine from the government. Taxation rates may change which will affect the profitability of an organisation. Level of NHS funding may affect the number of or the prices charged by private hospitals. Government initiatives in education have meant that private public partnerships have allowed companies to bid to build new schools. Credit any relevant government policy with an appropriate explanation of the affect on the organisation, ie, giving loans to banks to help with credit crunch in 2009.

Answer 100

Economic factors such as a recession interest rates inflation. Social factors such as changes in trends and fashion changes in patterns of employment. The introduction of new technology that is continually changing. Competitive factors such as the prices charged by a similar organisation. Environmental factors such as the weather/flooding.

Answer 101

Increase in customers shopping at large retail parks have meant that organisations are moving from high street stores to retail parks. Increase in large superstores have meant many small local shops going out to business. Vast use of e-commerce has meant organisations now must have websites with access to online purchasing. Changes to opening hours means many organisations have to pay overtime to staff to work on Sundays and late evenings. Large supermarkets selling a wide range of products has meant customers needs can be catered for under the one roof. Increase in discount stores selling products at discounted prices has meant competitor organisations have had to reduce prices in order to keep customers.

Answer 102

Weather – floods or severe weather can cause organisations to lose stock lose customers have high insurance claims/premiums halt production delay supplies Recycling – can cause organisations to incur higher costs to dispose of waste and this will lower profits Needs 3 different factors eg not 3 weather Accept availability of natural resources if well explained Emission reductions – this can cause organisations to alter their production methods to ensure they are complying with carbon emission levels If they use renewable energy this will save energy costs in the long run Actions of pressure groups such as Greenpeace may cause the business to lose customers due to protests outside the organisation Natural disaster . Ash die-back … Watch for repetition for impact

Answer 103

managers may want to cut wages to cut costs whereas employees may want wage rises managers may want to increase workload to increase efficiency whereas employees may want their workload reduced

Answer 104

both employees and managers will need the business to succeed to keep their jobs secure employees need managers to set them tasks so that they can get paid, whereas managers need employees to carry out the tasks

Answer 105

Retained profit - a business can decide not to distribute profit to its shareholders and use it to reinvest into the business. Divestment – where a business sells off an asset to raise finances to grow. Deintegration - selling off a part of a business that had previously been integrated. Asset stripping - when a business is purchased for the value of its assets which are then sold for profit. Buy-in - when managers not employed by the firm purchase the business as they believe they can run it more profitably. Buy-out - when managers or employees who are currently employed by the business purchase the business from the owners. Outsourcing – where when a firm hires another business to perform some of its activities.