Business Management - Accounting Technicians · PDF fileBusiness Management ... HR planning...
Transcript of Business Management - Accounting Technicians · PDF fileBusiness Management ... HR planning...
Business Management
Sample Paper 1
2017 / 2018 Questions and Suggested Solutions
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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 2017 and may not be reproduced without permission of Accounting
Technicians Ireland.
© Accounting Technicians Ireland, 2017
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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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Section A (Answer at least ONE of the questions in this section)
Question 1
(a) 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)
(b) Outline the role of the IT function in an organisation.
(9 marks)
Total: 25 Marks
Question 2
(a) Define Marketing. (5 marks)
(b) The “Ansoff growth matrix” assists organizations to map strategic product market growth.
Draw a diagram to illustrate the Ansoff matrix and use this to outline any two (2) of the
four strategies available to an organisation. (12 marks)
(c) Write a short explanatory note on any two (2) of the following;
Social media marketing
Search Engine Optimization (SEO):
Search Engine marketing (SEM):
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Content marketing
Email marketing
SMS marketing
Video marketing/video infographics (8 marks)
Total: 25 Marks
Section B (Answer at least ONE of the questions in this section)
Question 3
(a) Describe Weber’s theory of management and bureaucracy. (13 marks)
(b) Describe the THREE (3) key objectives AND THREE (3) key benefits of environmental
scanning. (12 marks)
Total: 25 Marks
Question 4
You have recently been promoted to a managerial position in your organization. Some friends
have advised you that communications will be important in your new role.
(a) Illustrate the Communications process.
(5 marks)
(b) Describe the barriers to communication that a manager can face.
(10 marks)
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(c) Describe how managers can overcome these communication barriers.
(10 marks)
Total: 25 Marks
Section C
(Answer at least ONE of the questions in this section)
Question 5
(a) Describe the term Corporate Social Responsibility (CSR) (5 marks)
(b) Write an explanatory note on any TWO (2) of the following;
o CSR in Irish SMEs
o Broad categories of CSR that business are practicing today
o Why CSR matters
o Benefits of CSR
o What Are Some Problems That Businesses Face in Social Responsibility?
(2 x 10 marks)
Total: 25 Marks
Question 6
Business ethics and the concept of ‘social responsibility’ have become increasingly important in
the modern business world.
(a) Describe the term ‘code of ethics’.
(5 marks)
(b) Describe the SIX (6) stages of moral development.
(12 marks)
(c) Describe the term ‘social responsibility’.
(8 marks)
Total: 25 Marks
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REMINDER TO STUDENTS – You are required to answer FOUR questions in total. Make sure
that you have completed the required number of questions.
Suggested Solutions
DRAFT ONLY
SECTION A
Question 1
Human Resource Planning 16 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.
HR planning has four stages; demand analysis, supply analysis, estimating deficits and
surpluses, and developing an action plan.
Recruitment and Downsizing
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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
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
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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 co-
workers.
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.
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;
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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
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.
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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 •
(2 x 8 marks)
(b) Information Technology; It would be difficult to think of a business role that does not
involve the use of computers. Technology assists in the management of HR, in the finance
function, with sales and marketing and just about any role in business can be automated to a
point. Computers abound in offices and shops, factories and homes to the point that they are
common place today. The government is committed to bringing high speed broadband to all
primary schools in Ireland, and most homes in Ireland are connected to the internet. In business
terms, it is expected that computer technology will become more pervasive and there is pressure
on all organisations to automate more and more processes. With this is mind, it is critical to
have a working knowledge of the uses of both Information Technology (IT) and Information
Systems (IS) in a business context. The internet is a growing influence as organisations today
need both an online and off line presence. Cloud computing and social networking are the latest
in a line of technological developments that affect businesses. The financial sector is a clear
example of change; more and more processes are automated as online banking flourishes, and
companies are increasingly using social networking sites, such as Facebook and Twitter, to
reach out to customers. Chapter 1: Functional Areas of Business 11 Business Management
Information technology provides a valuable source of competitive advantage and allows
organisations to integrate their core functions to create efficiencies and reduce costs. For
example, many financial institutions use highly complex IT systems to analyse and predict
stock market trends and outcomes; similarly the educational sector has moved to embrace
online and blended learning. 9 marks
Question 2
(a) Kotler defines marketing as; ‘the science and art of exploring, creating, and delivering value
to satisfy the needs of a target market at a profit. Marketing identifies unfulfilled needs and
desires. It defines, measures and quantifies the size of the identified market and the profit
potential. It pinpoints which segments the company is capable of serving best and it designs and
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promotes the appropriate products and services. (http://www.kotlermarketing.com/phil_
questions.shtml#answer3) 5 marks
(b)
The Ansoff Matrix has four alternatives of marketing strategies; Market Penetration,
product development, market development and diversification.
(An explanation of any TWO of these is required; examples below)
Market Penetration
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When we look at market penetration, it usually covers products that are existence and that
are also existent in an existing market. In this strategy, there can be further exploitation of
the products without necessarily changing the product or the outlook of the product. This
will be possible through the use of promotional methods, putting various pricing policies
that may attract more clientele, or one can make the distribution more extensive.
In Market Penetration, the risk involved in its marketing strategies is usually the least since
the products are already familiar to the consumers and so is the established market. Another
way in which market penetration can be increased is by coming up with various initiatives
that will encourage increased usage of the product. A good example is the usage of
toothpaste. Research has shown that the toothbrush head influences the amount of
toothpaste that one will use. Thus if the head of the toothbrush is bigger it will mean that
more toothpaste will be used thus promoting the usage of the toothpaste and eventually
leading to more purchase of the toothpaste.
Product Development
In product development growth strategy, new products are introduced into existing
markets. Product development can differ from the introduction of a new product in an
existing market or it can involve the modification of an existing product. By modifying the
product one would probably change its outlook or presentation, increase the products
performance or quality. By doing so, it can appeal more to the already existing market. A
good example is car manufacturers who offer a range of car parts so as to target the car
owners in purchasing a replica of the models, clothing and pens.
Market Development
The third marketing strategy is Market Development. It may also be known as Market
Extension. In this strategy, the business sells its existing products to new markets. This can
be made possible through further market segmentation to aid in identifying a new clientele
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base. This strategy assumes that the existing markets have been fully exploited thus the
need to venture into new markets. There are various approaches to this strategy, which
include: New geographical markets, new distribution channels, new product packaging, and
different pricing policies. In New geographical markets, the business can expound by
exporting their products to other new countries. It would also mean setting up other
branches of the business in other areas that the business had not ventured yet. Various
businesses have adopted the franchise method as a way of setting up other branches in new
markets.
A good example is Guinness. This beer had originally been made to be sold in countries
that have a colder climate, but now it is also being sold in African countries. The other
method is via new distribution channels. This would entail selling the products via e-
commerce or mail order. Selling through e-commerce will capture a larger clientele base
since we are in a digital era where most people access the internet often. In New Product
packaging, it means repacking the product in another method or dimension. That way it
may attract a different customer base. In Different pricing policies, the business could
change its prices so as to attract a different customer base or so create a new market
segment. Market Development is a far much risky strategy as compared to Market
Penetration. This is so as it is targeting a new market and one may not quit tell how the
outcome may be.
Diversification
The last strategy is Diversification. This growth strategy involves an organization
marketing or selling new products to new markets at the same time. It is the most risky
strategy among the others as it involves two unknowns, new products being created and the
business does not know the development problems that may occur in the process. There is
also the fact that there is a new market being targeted, which will bring the problem of
having unknown characteristics. For a business to take a step into diversification, they need
to have their facts right regarding what it expects to gain from the strategy and have a clear
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assessment of the risks involved.
There are two types of diversification. There is related diversification and unrelated
diversification. In related diversification, this means that the business remains in the same
industry in which it is familiar with. For example, a cake manufacturer diversifies into a
fresh juice manufacturer. This diversification is in the same industry which is the food
industry. In unrelated diversification, there are usually no previous industry relations or
market experiences. One can diversify from a food industry to a mechanical industry for
instance.
A good example of the unrelated diversification is Richard Branson. He took advantage of
the virgin brand and diversified into various fields such as entertainment, air and rail travel
foods etc. Another example is the easy jet which has diversified into car rentals, gyms, fast
foods and hotels. Though diversification may be risky, with an equal balance between risk
and reward, then the strategy can be highly rewarding. Another advantage of diversification
is that in case one business suffers from adverse circumstances the other line of businesses
may not be affected.
Analysis Paralysis
Some schools of thought believe that the use of strategic management tools such as the
Ansoff Matrix can result in an overuse of analysis. In fact, Ansoff himself thought about
this and it was he who first mentioned the now famous phrase "paralysis by analysis".
Make sure that you do not fall victim to procrastination caused by excessive planning.
(http://www.ansoffmatrix.com/) 12 marks
(c) Write a short explanatory note on any two (2) of the following; (2 x 4 marks)
Social media marketing: this has risen hugely in popularity and there are now countless
dedicated agencies scattered around the web which promise to help with it. Facebook,
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Twitter, Pinterest and LinkedIn are all examples of social networks which can be used
as a part of your marketing efforts, although they are far from the only ones.
Social media marketing allows two-way communication between a company and consumer in a
way that wasn’t previously seen and it’s safe to say that it has changed business approach to
marketing as now, the consumer holds the power.
It’s also based on one of the most effective forms of advertising; word of mouth.
Social media means that communication can be a lot more targeted and personalized than other
forms of marketing, as companies get the chance to receive feedback from customers daily.
It’s also useful for making content ‘go viral’, something which can help to strengthen a brand
very quickly. It’s brand personality that makes social work so well, as if this is done correctly,
across the board, then it can boost engagement considerably.
Search Engine Optimisation
Search Engine Optimization (SEO): is a means of optimizing the content of a website in
order to gain better placement on the Search Engine Results Page (SERPS). A variety
of techniques are employed to achieve this and it’s not a job for amateurs really as there
are many pitfalls that could have Google frowning on your site.
SEO includes:
Keyword research and usage, on-page and off (within HTML)
Link building /outreach blogging
Content delivery
Site structure
Analytics
This is not an exhaustive list, but it does give an indication of how much work is necessary in
order to optimize a site.
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Search Engine Marketing
Search Engine marketing (SEM): is similar to, but incorporates, SEO and uses many of
the same techniques as a part of that. The main difference between the two terms is that
SEM also includes paid online advertising models, such as pay-per-click (PPC).
PPC advertising models are those such as Google Adwords and Bing, which only require
payment when the ad is clicked through to the target website. SEM also requires keyword
analysis as the words and phrases used in the ad and site and these need to be monitored
carefully to reflect the market and current search engine rules.
Whilst it can be said that SEM encompasses all kinds of digital marketing, it’s more commonly
thought of in a narrower niche, to describe paid models.
Content Marketing
Content marketing: is a technique where content is produced and distributed with the
intention of providing relevant, interesting content to attract and engage a particular
audience that a business is targeting. The creation of useful content is a way of
developing communication with the customer in order to drive engagement and
customer action. Content can mean anything from blogs to videos and whitepapers tend
to work well using content marketing techniques too. The goal is to win customer
loyalty and retain it.
Email Marketing
Email marketing: remains a very effective tool, despite claims that it isn’t as important
as social these days. Modern email marketing is just beginning to evolve so that it can
be linked to a database in order to personalise it, so that individual groups of customers
can be sent mail based on previous purchases and interests.
SMS marketing: is also highly effective and rising in popularity, due to the fact that
many of us no longer go anywhere without our cell phones. This ‘always-on’ aspect
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means that when SMS marketing is used, it’s highly likely that the customer will at
least read the text.
Video marketing/video infographics: is again becoming hugely popular and it’s likely
that we’ll see an even bigger move in its direction this year as more and more
businesses begin to recognise the potential it has. People take in more information when
watching video and are more likely to engage, so it’s certainly worth looking at.
Whilst image-based infographics are already hugely popular, making these in the form of a
series of frames for video is beginning to really take off in the digital marketing space too.
SECTION B
Question 3
Describe Weber’s theory of management and bureaucracy (13 marks)
Weber’s Theory Born in Germany, Max Weber (1864-1920) trained as lawyer but later turned
his attention towards the emerging discipline of sociology. Aside from his work in the field of
the sociology of organisations, he wrote widely on religion and on the development of
capitalism. Weber’s particular concern, was how authority is exercised in large organisations.
To him, the essence of effective and democratic management was bureaucracy. Though the
term ‘bureaucracy’ has taken on a negative connotation of late, in Weber’s view bureaucracy
was beneficial. This is because bureaucracy helps to avoid managerial abuses, particularly
nepotism and favouritism. Like Fayol, therefore, Weber has to be seen as a product of his times.
Then (the late 19th century) there was no written knowledge as to how firms should be run.
Managers ruled by decree, commanding employees and showed little concern for human needs.
What was needed, according to Weber, was a set of rules that would ensure that managers
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operated efficiently, competently, and fairly — in short, bureaucracy. To Weber, bureaucracy is
an intelligent and democratic way of running businesses with a system of rules at its core.
Weber’s main academic interest was in authority: where did it come from and how should it be
used?
He suggested there were three main categories of authority; these are listed in the next table.
Rational Legal authority was the type of authority that Weber believed should be used in
organisations. Weber’s Categories of Authority Traditional Authority Leadership and power are
bestowed on individuals simply because this is the way it has always been done. Charismatic
Authority This is a type of authority based on the personality of the person.
Rational-Legal Authority He created this term to describe authority based on one’s position.
Each job has its own specific and individual level of authority that goes along with it. Rational-
legal authority was linked to bureaucracy. For Weber the ideal organisation was a bureaucracy
based on rules rather than personal connection which would offer technical superiority. As a
result of his focus on authority, he also suggested that decisions should be formulated and
recorded in writing; that officials should be separated from company ownership; that
appointment to jobs should be based on technical competence and that a person had no rights to
a particular post, that there should be a hierarchical arrangement of offices and specialisation of
work. In summary there should be rules.
These features, Weber went on to argue, would mean that a bureaucratic organisation was
capable of attaining the highest degree of efficiency and was, in that sense, the most rational
way of controlling people.
Bureaucracy is not without its problems. Though originally perceived as the democratic solution
to managing large organisations, bureaucratic organisations tend to take on a meaning of their
own. As a result, most large organisations nowadays, including the Irish civil service, are
implementing plans to de-bureaucratise.
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(b) Describe the THREE (3) key objectives AND THREE (3) key benefits of environmental
scanning 12 marks
Key Objectives (3 x 2marks)
Detect trends and events important to the organisation.
Define potential opportunities, threats or changes for the organisation implied by those
trends and events.
Promote a future orientation in the thinking of management and staff. Alert
management and staff to trends that are converging, diverging or interacting.
Key Benefits (3 x 2 marks)
Provides a better general awareness and responsiveness to a dynamic business
environment.
Improves strategic planning as the firm has acquired relevant information pertaining to
its industry.
Enables the organisation to be more effective in dealing with its customers.
Improves market analysis and resource allocation.
Question 4
(a) Communication requires a purpose, expressed as a message conveyed between a source (the
sender) and a receiver. It is encoded and is passed by some medium to the receiver, who re-
translates the message initiated by the sender. The result is a transference of meaning from one
person to another. Candidates should illustrate the process with a diagram similar to the one
shown in the core text. 5 marks
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(b) A number of interpersonal and intrapersonal barriers affect the decoding of a message.
Filtering The deliberate manipulation of information to make it appear more favourable to the
receiver.
Selective Perception Receiving communications on the basis of what one selectively sees and
hears depending on his or her needs, motivation, experience, background, and other personal
characteristics.
Information Overload When the amount of information one has to work with exceeds one’s
processing capacity.
Emotions How the receiver feels when a message is received. Language Words have different
meanings to different people. Receivers will use their definition of words being communicated
Gender How males and females react to communication may be different, and they each have a
different communication style.
National Culture Communication differences arising from the different languages that
individuals use to communicate and the national culture of which they are a part.
10 marks
(c) How Can Managers Overcome Communication Barriers?
Use Feedback Check the accuracy of what has been communicated – or what you think you
heard.
Simplify Language Use words that the intended audience understands.
Listen Actively Listen for the full meaning of the message without making premature judgment
or interpretation – or thinking about what you are going to say in response.
Constrain Emotions Recognise when your emotions are running high. When they are, don’t
communicate until you have calmed down.
Watch Nonverbal Cues Be aware that your actions speak louder than your words. Keep the two
consistent.
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Feedback; Many communication problems can be directly attributed to misunderstandings and
inaccuracies. These problems are minimized if the manager uses the feedback loop. Feedback
can be verbal or nonverbal.
Because language can be a barrier, managers should choose words and structure their messages
in ways that will make those messages clear and understandable to the receiver.
Effective communication is achieved when a message is both received and understood. Jargon
can facilitate understanding when it is used within a group of those who know what it means,
but it can cause innumerable problems when used outside that group.
10 marks
SECTION C
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.
Theclassicalviewistheviewthatmanagement’sonlysocialresponsibilityistomaximise profits.
Economist and Nobel laureate Milton Friedman is the most outspoken advocate of this view.
Friedman argues that managers’ primary responsibility is to operate the business in the best
interests of the stockholders— the true owners of the organisation. 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. This view purports that corporations are not
independent entities responsible only to stockholders.
From Obligations to Responsiveness to Responsibility.
Social obligation occurs when a firm engages in social actions because of its obligation to meet
certain economic and legal responsibilities. Social responsiveness is seen when a firm engages
in social
actionsinresponsetosomepopularsocialneed.Socialresponsibilityisabusiness’sintention,beyond
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its legal and economic obligations, to do the right things and act in ways that are good for
society.
(b) Write an explanatory note on any TWO (2) of the following;
o CSR in Irish SMEs
o Broad categories of CSR that business are practicing today
o Why CSR matters
o Benefits of CSR
o What Are Some Problems That Businesses Face in Social Responsibility?
(2 x 10 marks)
(Total Marks; 25)
CSR in Irish SMEs
ISME has consistently found that SMEs are very active in CSR but do not equate their actions
with the concept of ‘Corporate Social Responsibility’. They merely class their activities as
community involvement and responsible business without considering the positive impact such
actions have/could have on their business. It also appears that the term ‘Corporate Social
Responsibility’ or ‘CSR’ is not well known or understood amongst SMEs even at a basic level.
All survey respondents in 2015 were active in some forms of CSR.
The term ‘Corporate Social Responsibility’ or ‘CSR’ is not well known or understood
amongst SMEs even at a basic level.
Only 54% understood enough about the term and the nature of CSR to be able to state that
they were engaged in it.
Therefore, although all SMEs were found to be active in CSR in some way, 46% did not
understand the term.
The 46% who did not realise they were conducting CSR activities require further education.
94% of SMEs donate money to charity.
94% have waste reduction programmes and 92% have a recycling programme.
92% are committed to the responsible business practice of paying promptly.
84% actively support the learning and development of their employees.
39% of SMEs have a charity partner (up from 35% in 2013).
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Respondents who answered ‘no’ when asked if they were active in CSR were over 70%+
active in all areas questioned.
Respondents who answered ‘don’t know’ when asked if they were active in CSR were over
80%+ active in all areas questioned.
FROM THIS AND THE PREVIOUS SURVEY OF IRISH SMES IT IS EVIDENT THAT ALL
ARE INVOLVED IN SOME MANNER OF PRACTICE OF CSR, HOWEVER 46% DO NOT
RECOGNISE THE TERM CSR.
ISME does not believe that the term ‘CSR’ fits SMEs and prefers the term ‘responsible
entrepreneurship’ which is running a business that enhances its positive contribution and
minimises the possible negative impacts on society.
The social responsibility behaviour of SMEs has a completely different form to that of large
enterprises and requires a suitable methodology.
CSR is voluntary and all associated measures must be voluntary.
All future policy on CSR should enhance competitiveness and not detract from it.
Improved CSR education is needed. ISME sees the role of government, through the CSR
Forum as awareness raising and encouragement.
ISME members reported that activities related to awareness raising, education and improving
levels of trust in business were the most important.
Broad categories of CSR that business are practicing today
Corporate social responsibility (CSR) refers to business practices involving initiatives that
benefit society. A business's CSR can encompass a wide variety of tactics, from giving away a
portion of a company's proceeds to charity, to implementing "greener" business operations.
There are a few broad categories of social responsibility that many of today's businesses are
practicing:
1. Environmental efforts: One primary focus of corporate social responsibility is
the environment. Businesses regardless of size have a large carbon footprint. Any steps they can
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take to reduce those footprints are considered both good for the company and society as a
whole.
2. Philanthropy: Businesses also practice social responsibility by donating to national and local
charities. Businesses have a lot of resources that can benefit charities and local community
programs.
3. Ethical labor practices: By treating employees fairly and ethically, companies can also
demonstrate their corporate social responsibility. This is especially true of businesses that
operate in international locations with labor laws that differ from those in the United States.
4. Volunteering: Attending volunteer events says a lot about a company's sincerity. By doing
good deeds without expecting anything in return, companies are able to express their concern
for specific issues and support for certain organizations.
- See more at: http://www.businessnewsdaily.com/4679-corporate-social-
responsibility.html#sthash.iR2DnINz.dpuf
Why CSR matters
Liz Maw, CEO of nonprofit organization Net Impact, noted that CSR is becoming more
mainstream as forward-thinking companies embed sustainability into the core of their business
operations to create shared value for business and society.
"Sustainability isn't just important for people and the planet, but also is vital for business
success," said Maw, whose company connects students and professionals who want to use
business skills to do social good. "Communities are grappling with problems that are global in
scope and structurally multifaceted — Ebola, persistent poverty, climate change. The business
case for engaging in corporate social responsibility is clear and unmistakable."
"More practically, [CSR] often represents the policies, practices and initiatives a company
commits to in order to govern themselves with honesty and transparency and have a positive
impact on social and environmental wellbeing," added Susan Hunt Stevens, founder and CEO
of employee engagement platform WeSpire.
As consumers' awareness about global social issues continues to grow, so does the importance
these customers place on CSR when choosing where to shop. But consumers aren't the only
ones who are drawn to businesses that give back. Susan Cooney, founder of crowdfunding
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philanthropy platform Givelocity, said that a company's CSR strategy is a big factor in where
today's top talent chooses to work.
"The next generation of employees is seeking out employers that are focused on the triple
bottom line: people, planet and revenue," Cooney told Business News Daily. "Coming out of
the recession, corporate revenue has been getting stronger. Companies are encouraged to put
that increased profit into programs that give back
Benefits of CSR
There can be many benefits of a strategic and effective CSR programme:
Positive perception of your brand to customers and public
Reputation driver for your organisation’s values and commitment
Motivating activity for your team
Talent acquisition - high calibre staff attracted by engaging CSR activities
Brand awareness – in community and public
Public relations - vehicle for positive publicity in the media
Positioning – commercial benefits through alliances, sponsorship and contribution
Networking and lobbying opportunities
Awards opportunity for your organisation
What Are Some Problems That Businesses Face in Social Responsibility?
Corporate responsibility programs can help businesses entice customers, attract and retain
talent, assure investors, reduce operating costs, improve employee morale and enhance a
company's reputation. However, business owners should understand the benefits and limitations
of corporate responsibility programs in order to choose an initiative that benefits the community
and the company.
Resource Investment
Convincing shareholders or other financial decision makers to allocate resources to a program
designed to benefit something other than the company's bottom line can be the first obstacle a
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small business owner must overcome. To sway reluctant company leaders or employees, a small
business owner can explain that customer buying decisions are influenced by company
behavior. For example, a 2009 research study conducted by the Richard Ivey School of
Business found that consumers expect steep discounts from companies with questionable
production policies. In addition, corporate responsibility programs can lower costs by reducing
waste. In an post written for the Center for Corporate Citizenship at the Boston College Carroll
School of Management, Bob Langert, McDonald's corporate vice president for social
responsibility, explained how corporate responsibility helped McDonald's use less water and
energy and reduce waste.
Company Integration
To be successful, corporate responsibility programs must be embraced and supported by top
management and woven into company culture and operations. Stakeholders will soon become
sceptical of one-time initiatives or programs that come and go. Timing also can be a problem.
Corporate responsibility programs introduced to sway public opinion immediately after a
company crisis can do more reputation damage if they are perceived by customers and
stakeholders as insincere.
Communication
Small businesses owners should not assume that customers and community members know
about the company's investment in socially responsible programs. They should not only explain
the company's actions but how these actions are helping improve the community, Langert
explains. Including a description of company initiatives in an annual report or taking pictures of
an employee volunteer effort and posting to a company's website are strategies for
communicating a company's corporate responsibility efforts.
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Identifying Benefits
The business benefits of corporate responsibility programs are not always immediately tangible.
For example, while it's difficult to link investments in corporate responsibility programs to
increased profits, there is evidence that these programs can protect the reputation of an
organization during times of company crisis, noted Freek Vermeulen, associate professor at
London Business School writing for the Harvard Business Review Blog Network. Other
benefits include increased brand and customer loyalty, according to the International Institute
for Sustainable Development.
Question 6
(a) Describe the term ‘code of ethics’ 5 marks
A code of ethics is a formal statement of an organisation’s primary values and the ethical rules
it expects employees to follow. In addition, decision rules can be developed to guide managers
in handling ethical dilemmas in decision making. The variables are included in the three content
categories found common to various corporate codes of ethics.
(b) Describe the six (6) stages of moral development. 12 marks
Research confirms three levels of moral development; each level has two stages; (Robbins et al,
2015). Candidates should describe the elements as detailed in the figure on page 179 in the core
text.
(c) Describe the term Social responsibility 8 marks
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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.