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COMPAK | BUSINESS MANAGEMENT UNIT 3

BUSINESS MANAGEMENT UNIT 3

Unit 3, Outcome 1 assessment task: case studyDION COHEN | YESODEI HATORAH COLLEGE

This assessment task for Outcome 1 in VCE Business Management Unit 3 focuses on key characteristics of businesses and stakeholders, corporate culture and management styles and skills. Suggested answers are included.

ASSESSMENT TASK DETAILSName of taskCase study

Unit/area of studyUnit 3: Managing a Business

Area of Study 1: ‘Business foundations’

Outcome 1 ‘Discuss the key characteristics of businesses and stakeholders, and analyse the relationship between corporate culture, management styles and management skills.’

Source: VCE Business Management Study Design (2017–2021), VCAA, page 16

Key knowledge and key skillsThis task addresses the following key knowledge and key skills outlined in Area of Study 1 in Unit 3. Where part of a key knowledge point or key skill is covered, the applicable words are highlighted in bold.

vcta.asn.au | published February 2018 | © VCTA and Dion Cohen


Key knowledge

types of businesses including sole traders, partnerships, private limited companies, public listed companies, social enterprises and government business enterprises

business objectives including to make a profit, to increase market share, to fulfil a market and/or social need and to meet shareholder expectations

characteristics of stakeholders of businesses including their interests, potential conflicts between stakeholders, and corporate social responsibility considerations

the areas of management responsibility including operations, finance, human resources, sales and marketing, and technology support, and how each area contributes to the achievement of business objectives

management styles including autocratic, persuasive, consultative, participative and laissez-faire

the appropriateness of management styles in relation to the nature of task, time, experience of employees and manager preference

management skills including communicating, delegating, planning, leading, decision-making and interpersonal

the relationship between management styles and management skills

corporate culture both official and real, and strategies for its development.

Key skills

define, describe and apply relevant business management concepts and terms

analyse case studies and contemporary examples of business management

interpret, discuss and evaluate business information and ideas

apply business management knowledge to practical and/or simulated business situations

analyse and discuss management styles and management skills necessary for successful business management

evaluate management styles and management skills and their appropriateness for a range of business situations

propose and justify management strategies for developing corporate culture.

INSTRUCTIONS AND CONDITIONSAnswer all questions in this question and answer book. The marks for each question are indicated after each question. Extra space is available following the questions if you need extra paper to complete an answer. If you use this additional space clearly label all of your answers with the appropriate question number.

Conditions: Closed book

Time allowed: 70 minutes (plus 5 minutes reading time)

Marks allocated: 40 marks (final mark to be adjusted to a mark out of 20)



CASE STUDY: THANKYOU GROUP

Thankyou Group Pty Ltd is a social enterprise established as a private company and owned by Thankyou Charitable Trust, a registered charitable entity. The business was started in 2008 in response to the global water crisis where millions of people worldwide lack access to safe drinking water. At the same time, the bottled water industry in Australia is worth over $700 million annually.

Seeing an opportunity, Thankyou launched its own line of bottled water with the objective of funding various humanitarian projects overseas. In 2013 Thankyou expanded its operations and launched a range of food and body care products, and in 2016 launched a range of baby care products. Currently, Thankyou has over 50 products available in 5500 outlets in Australia, including large retailers such as Coles and Woolworths.

Thankyou combats poverty using the ‘100% model’ whereby 100% of profits are distributed to the trust, which is then distributed to funding food, water and sanitation programs around the world. So far it has contributed $5.2 million to projects in 16 countries and in the last financial year contributed $853 458.80 to ending world poverty.

As Thankyou is owned by a trust, there are no shareholders.

Reference: ‘Our story’, Thankyou: https://thankyou.co/about and https://thankyou.co/pdf/20130725%20Thankyou%20Group%20Structure%20Letter.pdf

Question 1 (11 marks)

a. Identify two key characteristics of a social enterprise. 2 marks


https://thankyou.co/about


b. Identify and describe two business objectives that the Thankyou Group might have. 4 marks

c. Identify one area of management responsibility and explain how it could contribute to the achievement of one of Thankyou’s objectives described in your answer to part b.

3 marks



d. Outline two key characteristics of Thankyou if it were to operate as a public listed company. 2 marks




Co-founder and Brand Director Justine Flynn had seen from previous jobs that too often managers and employers view employees through their position descriptions rather than as people. Doing so tended to hinder the ability to achieve an effective team culture.

Upon establishing Thankyou, Justine and the other co-founders sought to change that. The ‘Human Resources’ department was replaced by a ‘People & Culture’ department, with the focus being on valuing employees as people rather than considering them a resource through which to achieve objectives. The idea is to allow people to be themselves and thereby valued for who they are as individuals.

Justine identifies three things that help create a team culture at Thankyou:

• Trust: Employees who feel trusted by their managers, rather than micromanaged, are more likely to feel confident, empowered and willing to go above and beyond at any opportunity.

• Honour: Avoiding speaking negatively and treating others as you would like to be treated is vital to help build an effective team culture.

• Work hard, play hard: Fun in the workplace is just as important as employees completing their required duties. Employees who have fun at work are more creative and productive. Furthermore, having fun can help staff avoid burnout and achieve a work–life balance.

One of Thankyou’s co-founders and Managing Director, David Flynn, says that ‘No matter the size of the team, maintaining a positive culture will always be a focus for us because when a team of people that work together share the same values it brings unity and strength, empowering us to do our life’s best work’.

References

‘Three way to drive a team culture’, Thankyou, https://thankyou.co/blog/2014/09/three-ways-to-drive-a-great-team-culture

‘In good company: How 5 successful business leaders approach culture in growing companies’, Business Insider Australia, 10 November 2015, https://www.businessinsider.com.au/in-good-company-heres-how-5-successful-business-leaders-approach-culture-in-growing-companies-2015-11

a. Define the term ‘corporate culture’. 1 mark


https://www.businessinsider.com.au/in-good-company-heres-how-5-successful-business-leaders-approach-culture-in-growing-companies-2015-11

https://www.businessinsider.com.au/in-good-company-heres-how-5-successful-business-leaders-approach-culture-in-growing-companies-2015-11

https://thankyou.co/blog/2014/09/three-ways-to-drive-a-great-team-culture

https://thankyou.co/blog/2014/09/three-ways-to-drive-a-great-team-culture


b. Distinguish between a business’s official corporate culture and its real corporate culture. 2 marks

c. With reference to the Thankyou case study, propose and justify two strategies managers can use to develop a positive corporate culture within a business. 6 marks




Thankyou CEO Daniel Flynn says in regard to his management style: ‘My goal is to release people to step up and bring their own dream and passion to what we do’.

Source: ‘Meet the boss—from student to CEO’, The Sydney Morning Herald, 26 May 2014: http://www.smh.com.au/business/meet-the-boss--from-student-to-ceo-20140523-zrm4g.html

a. Identify and evaluate the management style Daniel Flynn most likely uses when managing employees. 4 marks


http://www.smh.com.au/business/meet-the-boss--from-student-to-ceo-20140523-zrm4g.html


b. Thankyou uses ethical suppliers to manufacture its products. This means it selects manufacturers that adhere to high corporate social responsibility standards.

Select and justify a management style Daniel Flynn should use in the event that Thankyou discovers one its manufacturers is using child labour. 3 marks

c. In 2013 Thankyou expanded by broadening its product range to include food and body care products.

Describe how Thankyou management staff could have used planning skills to manage the introduction of the new product range. 4 marks



d. Describe the management skill of communicating and analyse its relationship to management styles. 4 marks




a. Identify two stakeholders of Thankyou. 2 marks

b. Explain one potential conflict that could exist between the two stakeholders identified in your answer to part a. 3 marks



Extra space for responsesClearly number all responses in this space.



Suggested answersQuestion 1 (11 marks)

a. Identify two key characteristics of a social enterprise. 2 marks

One characteristic of a social enterprise is that its primary focus is achieving social objectives, such as funding water sanitation programs worldwide. A second characteristic is that profits are redirected into achieving social or environmental goals.

Alternative answers:

A social enterprise can be a for-profit or a not-for-profit entity.

Social enterprises can adopt one or more legal structures, such as a private company, a cooperative, a public company, an incorporated association, an Indigenous incorporated association, a company limited by guarantee or a charitable trust. Some social enterprises adopt more than one legal structure.

Social enterprises operate just like a traditional for-profit business, producing goods and services.

Mark allocation:

1 mark for identifying each characteristic (x two = 2 marks)

b. Identify and describe two business objectives that the Thankyou Group might have. 4 marks

One objective Thankyou might have is to fulfil a social need. This is when the business exists to produce a good or service that it sells and to use the profits created to make the world a better place, for example assisting one or more disadvantaged groups or improving the environment domestically or globally. Thankyou produces a range of products with the primary goal of fulfilling the social need of combating world poverty.

A second objective that Thankyou might have is to make a profit. This is a primary objective of many businesses. Profit is a financial gain acquired after operating expenses have been deducted from a business’s revenue. It is a major indicator of business success. In the case of Thankyou, profits earned through the sales of its products are used to fund various humanitarian projects.

Other objectives:

to increase market share

to fulfil a market need

to share knowledge and experience of how to create and develop a successful social enterprise.

Marking guide:

1 mark for identifying each objective (two x 1 mark = 2 marks)

1 mark for a description of each objective (two x 1 mark = 2 marks)

Note: The description of each objective must refer to Thankyou, otherwise a maximum of 3 marks can be awarded. As Thankyou has no shareholders, responses that state ‘to meet shareholder expectations’ cannot be awarded full marks; however, at the discretion of the teacher, 1 mark for a description of the objective could be awarded.



c. Identify one area of management responsibility and explain how it could contribute to the achievement of one of Thankyou’s objectives described in your answer to part b. 3 marks

One area of management responsibility that could contribute to Thankyou’s achievement of making a profit is finance. Finance is the area of a business responsible for planning and preparing internal financial documents such as budgets, which examine projected revenue and expenses for a future period, and profit-and-loss statements. This could contribute to Thankyou making a profit, as a budget will assist management in making decisions for the next financial year. Furthermore, financial reports such as profit-and-loss statements could assist management to determine areas in which expenses could be reduced.

Other management responsibilities:

technology support

human resources

operations

sales and marketing.

Marking guide:

1 mark for identifying an area of management responsibility

2 marks for explaining how the area could contribute to the objective selected

d. Thankyou Group Pty Ltd is a private company owned by a charitable trust. Outline two characteristics of a private company. 2 marks

A private company has limited liability, which limits the liability of the owners in the case of business losses to the value of their shares in the company.

A private company has a separate legal existence that is distinct from that of its owners.

Other characteristics:

To start a private company, a minimum number of two shareholders is required and a maximum of 50 non-employee shareholders is allowed.

Shares in the company cannot be listed on the Australian Securities Exchange (ASX).

Making a profit is the primary objective.

Profits are distributed to the owners or reinvested back into the company.

1 mark for outlining each characteristic (two x 1 mark = 2 marks)




a. Define the term ‘corporate culture’. 1 mark

Corporate culture refers to the values, ideas, beliefs and expectations shared by members of an organisation.

Marking guide:

1 mark for a correct definition

b. Distinguish between a business’s official corporate culture and its real corporate culture. 2 marks

Official corporate culture refers to the culture that the business wants to develop and the impression given to external stakeholders such as customers and special interest groups. This can be demonstrated through logos, slogans, policies and values statements. Real corporate culture, on the other hand, is the actual culture that exists in a business and can differ greatly from the official culture. It can be identified through the language, attitudes and behaviour of employees.

Marking guide:

1 mark for defining one of the terms

1 mark for showing the difference between this term and the other term

c. With reference to the Thankyou case study, propose and justify two strategies managers can use to develop a positive corporate culture within a business.

6 marks

Focus on team building—cultivating strong employee relationships through team building improves a business’s corporate culture because it promotes effective communication, increases productivity, leads to less conflict and improves loyalty and work performance. Thankyou has adopted a team-building culture to strengthen its corporate culture by encouraging trust among its employees, positive and courteous communication between employees and providing an enjoyable and creative workplace.

Positive communication—positive and effective communication builds strong, supportive relationships that can work well in challenging conditions, thereby creating a positive workplace culture. One of the components of Thankyou’s team-building strategy is honour, which means respecting all co-workers and avoiding speaking negatively about them. This can help a team work together effectively and hence contribute to the development of a positive team culture.

Another strategy:

Focus on people by recognising their individuality—regarding employees as people rather than as job descriptions helps to ensure they are valued as individuals rather than treated just as a resource. Thankyou’s team culture approach encourages trust among employees, which promotes self-confidence and helps to empower staff members who are willing to go above and beyond what is required of them. This helps to promote a positive corporate culture.

Marking guide:

1 mark for proposing each strategy (x two = 2 marks)

1 mark for providing a justification for each strategy (x two = 2 marks)

1 mark for an example from the case study related to each strategy (x two = 2 marks)




a. Identify and evaluate the management style Daniel Flynn most likely uses when managing employees. 4 marks

As Daniel Flynn is encouraging employee involvement and providing them with opportunities to ‘step up’, he is most likely utilising the participative management style. The main feature of this style of management is that authority is decentralised and managers and employees work together in making decisions. One advantage of this management style is that employees feel a sense of empowerment and ownership as they are able to take part in Thankyou’s decision-making processes. However, this style may not be suitable for all employees as some people would rather not contribute to the decision-making process, preferring to be given instructions from managers. The participative management style enables managers to demonstrate trust in their employees’ abilities, boosting morale and further empowering employees to ‘step up and bring their own dream and passion’, as stated by Thankyou’s CEO, Daniel Flynn. However, conflict may arise between employees who may question each other’s abilities leading to a breakdown in the dynamics of a team.

Alternative answer:

As Daniel Flynn’s goal is to ‘release people to step up and bring their own dream and passion’, he could be using the laissez-faire management style where managers relinquish control to a large degree and provide little direction to employees. One advantage of this style is that employees have a high degree of control and are able to set their own tasks with little involvement from management. This would serve to motivate employees as they take ownership over their work. However, with little guidance from management, some employees might struggle with the lack of direction and experience a loss of morale and productivity as a result. A second advantage is that the laissez-faire management style fosters an environment of creativity and innovation, which is an essential element of social enterprises such as Thankyou. However, unskilled employees who require structured tasks might find it difficult to work under the ‘free reins’ approach.

Note: To evaluate the management style chosen, students do not need to provide an equal number of strengths and weaknesses. For example, they could outline one strength and two weaknesses or two strengths and one weakness.

Marking guide:

1 mark for identifying the participative or laissez-faire management style

3 marks for evaluating the style selected, including its strengths and weaknesses



b. Thankyou uses ethical suppliers to manufacture its products. This means it selects manufacturers that adhere to high corporate social responsibility standards.

Select and justify a management style Daniel Flynn should use in the event that Thankyou discovers one its manufacturers is using child labour. 3 marks

An appropriate style for Daniel to use is the autocratic management style. This style is characterised by centralised authority and top-down communication. The autocratic style is suitable in this case as a decision needs to be made quickly by an experienced manager without consultation with other employees. Consulting other employees in these circumstances would be time-consuming and detrimental to the business. Thankyou would need to quickly disassociate itself from the unethical manufacturer in order to maintain the business’s reputation for social responsibility. Furthermore, it would have to quickly find an alternative manufacturer to avoid disruption to production schedules.

Marking guide:

1 mark for identifying an appropriate management style

2 marks for justifying the style chosen with reference to the case study

c. In 2013 Thankyou expanded by broadening its product range to include food and body care products.

Describe how Thankyou management staff could have used planning skills to manage the introduction of the new product range. 4 marks

Planning skills refers to the ability to define objectives and decide on the methods or strategies to achieve them. To plan the introduction of the new product range, Thankyou management staff would need to set specific objectives regarding the new product range based on an overall vision or concept, for example to have their competitive new product range on shelves within 12 months. They would then need to gather, organise and analyse relevant data relating to the planned product range, possibly conducting a SWOT analysis in the process. They would need planning skills to develop a strategy and timeline for releasing the product range as well as contingency procedures should problems arise. They would also need planning skills to enable them to monitor and evaluate the project’s success.

Marking guide:

1 mark for a correct definition of planning skills

3 marks for describing how to apply planning skills to implementing the new product range (linked to the process involved)



d. Describe the management skill of communicating and analyse its relationship to management styles. 4 marks

The management skill of communicating refers to the ability to transfer information from sender to receiver and listen to feedback. This is an essential management skill as managers need to be able to clearly explain to employees the tasks to be completed. Communication can be interpersonal, between two people or within a small team, or organisational, delivered to a large group or the entire business. Verbal communication, written or oral, uses words to deliver a message, whereas non-verbal communication refers to body language and tone of voice. There is a strong relationship between a manager’s preferred style and the skill of communicating as the management style will determine for the most part how the skill is used in practice. For example, an autocratic manager—one who prefers to centralise authority—will tend to use one-way, top-down communication while receiving little to no feedback from employees. The persuasive manager will also use one-way communication but will spend more time using verbal communication to explain their decisions to employees. Communicating under the participative style, however, would differ as managers would encourage two-way open communication channels and encourage feedback from employees.

Marking guide:

1 mark for a description of the skill of communicating

3 marks for an analysis of the relationship between this skill and management styles


a. Identify two stakeholders of Thankyou. 2 marks

One stakeholder of Thankyou is the managers who are responsible for managing staff and assisting the business to achieve its objectives. Another stakeholder is Thankyou’s suppliers who provide the enterprise with the materials required to produce its products.

Other stakeholders:

employees

customers

communities that Thankyou supports

competitors

governments.

Note: No mark can be awarded to students for listing ‘shareholders’ as a stakeholder as Thankyou has no shareholders.

Marking guide:

1 mark for each stakeholder identified



b. Explain one potential conflict that could exist between the two stakeholders identified in your answer to part a. 3 marks

Note: This answer is one of a number of possible answers to this question.

Stakeholders are individuals or groups that have a vested interest in a business and its activities. Due to the different types of involvement that stakeholders have in the operations of a business it is inevitable that competing priorities will arise, resulting in some level of conflict at certain times between different stakeholders. One potential conflict that could arise at Thankyou is between managers and suppliers. Managers are interested in reducing operating costs in order to maximise profits so that Thankyou’s programs can be fully funded. On the other hand, suppliers seek to maximise their profits by charging as much for their materials as the market will bear, thereby making it difficult for the managers at Thankyou to minimis costs. Ethical suppliers, such as those used by Thankyou, would not have low prices because their own costs are likely to be high due to the need to follow stringent ethical standards. This would add to the conflict between the priorities of the two stakeholders. At the same time, Thankyou would have to negotiate contracts with its suppliers that satisfy the needs of both stakeholders.

Marking guide:

1 mark for describing two stakeholders and their interests

2 marks for an explanation of how their competing interests may lead to a potential conflict



Teacher notesTeachers are expected to cover all of the key knowledge and key skills related to an area of study; however, for assessment purposes the scope of each key knowledge point and each key skill can be restricted. This particularly applies to key knowledge points that have a stem followed by 'including', as not all items listed after 'including' need to be assessed when students are demonstrating an outcome.

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Disclaimer: This resource has been written by the author (Dion Cohen) for use with students of VCE Business Management. This does not imply that it has been endorsed by the Victorian Curriculum and Assessment Authority (VCAA). The current VCE Business Management Study Design (2017–2021) can be accessed directly via the VCAA website. VCE is a registered trademark of VCAA. While every care is taken, we accept no responsibility for the accuracy of information or advice contained in Compak. Teachers are advised to preview and evaluate all Compak classroom resources before using them or distributing them to students.


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