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Business Mgmt Old May 2016 1st Year Paper
Page 1 of 26 Business Management (BM) S2016
Business Management (Old Syllabus) 1
st Year Examination
May 2016
Solutions & Marking Scheme & Examiner’s Comments
Business Mgmt Old May 2016 1st Year Paper
Page 2 of 26 Business Management (BM) S2016
NOTES TO USERS ABOUT THESE SOLUTIONS
The solutions in this document are published by Accounting Technicians Ireland. They are intended to provide
guidance to students and their teachers regarding possible answers to questions in our examinations.
Although they are published by us, we do not necessarily endorse these solutions or agree with the views
expressed by their authors.
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 ideal or the one preferred by us. Alternative
answers will be marked on their own merits.
This publication is intended to serve as an educational aid. For this reason, the published solutions will often be
significantly longer than would be expected of a candidate in an examination. This will be particularly the case
where discursive answers are involved.
This publication is copyright 2016 and may not be reproduced without permission of Accounting Technicians
Ireland.
© Accounting Technicians Ireland, 2016.
Business Mgmt Old May 2016 1st Year Paper
Page 3 of 26 Business Management (BM) S2016
Accounting Technicians Ireland
1st Year Examination: Summer 2016
Paper: BUSINESS MANAGEMENT
(OLD SYLLABUS)
Thursday 12th May 2016
9.30 a.m. to 12.30 p.m.
INSTRUCTIONS TO CANDIDATES
Answer FOUR questions in total. QUESTION 1 IN SECTION A IS COMPULSORY AND MUST BE
ANSWERED. Answer ANY THREE questions in Section B. If more than the required number of
questions is answered, then only that number, in the order filed, will be corrected.
Candidates should allocate their time carefully.
Answers should be illustrated with examples, where appropriate.
Question 1 begins on page 2 overleaf.
Business Mgmt Old May 2016 1st Year Paper
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SECTION A
Answer QUESTION 1 (Compulsory) in this Section.
QUESTION 1 (Compulsory)
A colleague of yours works with Tourism Ireland, a body responsible for marketing Ireland as a tourist
destination overseas. He has been asked to prepare a report on the impact of macro environmental factors on the
tourist sector over the last five years. He approached you for assistance. You suggested he should consider using
the PESTEL model. He was not familiar with the model and asked if you could explain it to him and describe
how it might be applied to the tourist sector.
You are required to:
(a) Explain the PESTEL model and describe any FOUR of the variables within the model.
10 Marks
(b) Using the PESTEL model identify and describe FOUR macro-environmental factors which impacted the
tourist sector significantly over the last five years.
10 Marks
(c) Describe TWO ways in which Tourism Ireland may be able to use recent developments in technology to
promote Ireland as a tourist destination.
5 Marks
Total 25 Marks
SECTION B
Answer any THREE of the six questions in this Section.
QUESTION 2
(a) “Some theorists suggest leaders possess distinct traits; others suggest style and situational factors
predominate”.
Explain the above statement drawing on Trait theory and Fielder’s contingency theory of leadership.
15 Marks
(b) Explain what is meant by a matrix form of organisational structure. Outline TWO benefits and TWO
limitations of this form of structure.
10 Marks
Total 25 Marks
Business Mgmt Old May 2016 1st Year Paper
Page 5 of 26 Business Management (BM) S2016
QUESTION 3
“Market positioning is a central element in developing a marketing strategy”.
You are required to
(a) Describe what is meant by market positioning.
7 Marks
(b) Explain TWO roles fulfilled by perceptual diagrams in market positioning, giving examples in support
of your answer.
10 Marks
(c) Describe TWO characteristics of services which distinguish them from products.
8 Marks
Total 25 Marks
QUESTION 4
“Motivating a workforce can lead to gains in productivity, innovation and employee retention”.
(a) Describe the following theories of motivation
(i) Maslow’s Hierarchy of Needs theory of motivation
(ii) Herzberg’s Two-Factor theory of motivation.
14 Marks
(b) Comment on the extent to which the theories in part (a) above are relevant in the present business
climate.
6 Marks
(c) Explain what is meant by the “storming” stage in Tuckman’s theory of team development.
5 Marks
Total 25 Marks
QUESTION 5
(a) “Consumer markets may be segmented in various ways”. Describe FOUR categories of variables that
are commonly used to segment markets, giving examples in support of your answer in each case.
10 Marks
(b) Explain how the market for magazines might be segmented using the four categories of variables
outlined above and explain how this information might be used in tailoring marketing effort.
10 Marks
(c) “Branding is simply a means of recognising a product or service and has no other benefit to either the
buyer or the seller”. Do you agree? Give TWO reasons in support of your answer.
5 Marks
Total 25 Marks
Business Mgmt Old May 2016 1st Year Paper
Page 6 of 26 Business Management (BM) S2016
QUESTION 6
(a) “Cyber-crime is a major risk for businesses”.
(i) Explain what is meant by the following acronyms in relation to e-commerce: B2C; B2B;B2E;
and C2C.
10 Marks
(ii) Identify and explain FOUR intentional threats to computer security.
10 Marks
(b) “Feasibility studies are important in developing new information systems” Do you agree? Give TWO
reasons in support of your answer.
5 Marks
Total 25 Marks
QUESTION 7
(a) “The financial manager fulfils many important roles in business organisations”.
Describe four roles fulfilled by financial managers.
10 Marks
(b) Identify and explain TWO long term sources of finance available to organisations
10 Marks
(c) Explain how profitability should be monitored in organisations.
5 Marks
Total 25 Marks
Business Mgmt Old May 2016 1st Year Paper
Page 7 of 26 Business Management (BM) S2016
1st Year Examination: May 2016
Business Management (Old Syllabus)
Suggested Solutions
and
Examiner’s Comments
Students please note: These are suggested solutions only; alternative answers may also be deemed to be correct
and will be marked on their own merits.
Statistical Analysis – By Question
Question No. 1 2 3 4 5 6 7
Average Mark (%) 70% 61% 57% 57% 64% 57% 60%
Nos. Attempting 27 12 11 18 14 16 10
Statistical Analysis - Overall
Pass Rate 92%
Average Mark 62%
Range of Marks Nos. of Students
0-39 2
40-49 0
50-59 9
60-69 7
70 and over 9
Total No. Sitting Exam 27
Total Absent 33
Total Approved Absent 3
Total No. Applied for Exam 63
General Comments:
GENERAL COMMENTS ON THE PAPER AS A WHOLE
Overall the standard of answers was satisfactory with students demonstrating high levels of engagement
with the themes and a good understanding of the concepts and issues examined
Business Mgmt Old May 2016 1st Year Paper
Page 8 of 26 Business Management (BM) S2016
Examiner’s Comments on Question One
Solution One (COMPULSORY)
PART A
PESTEL analysis is a technique for analysing the macro environment of an organization under the following
headings – political, economic, socio-cultural, technological, legal and environmental considerations.
Analysis of the Political environment involves considering the impact of changes in Taxation requirements,
Safety regulations, Consumer protection legislation, Parties in Government, EU Developments etc.
Consideration of the levels of demand within the economy, interest rates, foreign exchange rates, grants, inflation
etc. are indicative of the economic variables to be monitored and considered.
The Socio-Cultural environment encompasses issues of a demographic nature, such as, changes in the structure
of the population – age, gender, income distribution, emigration etc. and issues of a cultural nature, such as,
language, customs, religion etc.
The Technological environment includes consideration of the threats and opportunities arising from IT and
scientific developments in various areas.
Organisations must be aware of the legal parameters of their markets and operating environments including
issues related to employment law, contract law etc.
Increasingly organizations are developing strategies to minimize the effects their operations have on the
ecological systems etc.
The PESTLE model uses a wide lens to assess how broader or more general developments in the Political,
Economic, Socio-cultural, Legal, Technological and Environmental landscapes might impact an industry. Its
effects tend to be the same for all entities in the industry whereas Porter’s model provides a more focused and
tailored analysis of the specific effects of developments on the relative competitive position of major players
within an industry.
Marks Allocated
2 Marks for description of four PESTLE elements
2 Marks for overall quality and presentation 10 Marks
PART B
Many environmental factors have influenced the development of the tourism sector / industry over the last five
years. A number of these are set out below:
Political
Developments in the political field – such as travel restrictions on visa’s, terrorist activities etc.
Technology
This question was very well answered by the majority of students. Students were well able to identify
the variables within the model and to relate them to the scenario presented and to offer real life
examples in support of their answers. Students were also able to elaborate on the potential uses of
recent developments in technology in this sector.
Business Mgmt Old May 2016 1st Year Paper
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Actual developments in the capacity of IT devices (in particular smart phones) have greatly enhanced the range
of services they provide and facilitated booking of flights, accommodation and car rental. All of these
developments has facilitated the promotion of tourism.
Economic
The recession has impacted most industries negatively and this is one industry that appears to have suffered but
is recovering. People’s disposable income and capacity to save money to enable them to travel abroad has been
greatly reduced. Changes in exchange rates etc. also impacts tourism directly.
Socio Cultural factors
Socio cultural factors such as attitudes and perceptions and patterns of behaviour have changed as a result of the
recession etc. Attitudes to spending in particular have hardened since the recession with people being cautious
and circumspect with what they do with their money
Marks Allocated
2 Marks per influence (maximum of four influences)
2 Marks for overall quality and presentation 10 Marks
PART C
Tourism Ireland is able to promote and show case Ireland abroad through the extensive use of digital marketing
techniques. Hotels and transport operators are in a much better position to bundle their offerings and target
specific sectors abroad.
Marks Allocated
2 Marks per area of activity (Max of two activities)
1 Mark for overall quality
5 Marks
Business Mgmt Old May 2016 1st Year Paper
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Examiner’s Comments on Question Two
Solution Two
PART A
Trait Theory of Leadership
Trait theory is one way to describe who leaders are. Trait theory suggests that effective leaders possess a similar
set of traits or characteristics. Traits are relatively stable characteristics, such as abilities, psychological motives,
or consistent patterns of behaviour. Trait theory is also known as the ‘great person’ theory because early versions
of the theory stated that leaders were born not made.
For some time it was thought that trait theory was wrong and that there are no consistent trait differences between
leaders and non-leaders, or between effective and ineffective leaders. However, more recent evidence shows that
‘successful’ leaders are not like other people, that successful leaders are indeed different from the rest of us.
More specifically leaders are different from non-leaders in the following traits; drive, the desire to lead, honesty /
integrity, self-confidence, emotional stability, cognitive ability, and knowledge of the business. There is much
debate as to whether traits are biologically inherent in some people or whether people develop them over time
and situations.
Whilst the trait approach has become somewhat discredited, more recent research has examined traits which are
conducive to leadership. These include the following:
Demonstrated emotional composure and stability
Capacity to remain calm and confident during crisis rather than angry or moody
Ability to admit and try to correct mistakes rather than blaming others
Strong interpersonal skills that prevent problems arising in the first instance
Traits alone however, aren’t enough for successful leadership. Leaders who possess these desirable traits (or
many of them) must also behave in ways that encourage people to achieve group or organizational goals. Two
key leadership behaviours are (i) initiating structure, which improves subordinate performance, and (ii)
consideration, which improves subordinate satisfaction. Some argue there is no ‘best’ combination of these
behaviours.
Contingency theorists argue that the ‘best’ leadership style depends on the situation. Fiedler’s contingency theory
was the first to specify how situational factors interact with leader traits and behaviour to influence leadership.
For example, Fiedler assumes that leaders will be more effective when their leadership styles are matched to the
proper situation. More specifically, Fiedler defined situation favourableness as the degree to which a particular
situation either permits or denies the leader the chance to influence the behaviour of group members. In highly
favourable situations, leaders find that their actions influence followers, but in highly unfavourable situations
leaders have little or no success influencing the people they are trying to lead.
Fiedler developed an index called the least-preferred co-worker (LPC) scale. This scale asked a leader to think of
all the persons with whom he has ever worked, and then describe the one person with whom he worked with least
well. The person could be someone from the past or someone he was currently working with. Summarising and
averaging the findings from the study he was able to assess whether respondents had a human relationship
orientation or a task orientation.
Students were able to explain the Trait Theory and Fielder’s contingency theory of leadership and to
engage with the assertion presented.
Students demonstrated a good understanding of the matrix form of organisation structure and were
able to identify relevant benefits and limitations of this form of structure.
Business Mgmt Old May 2016 1st Year Paper
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Matching this information with variables about situation favourableness allowed Fiedler to propose that
relationship-orientated leaders were better as leaders under moderately favourable conditions, while task-
orientated leaders were better as leaders under highly favourable and highly unfavourable situations.
Marks Allocated
6 Descriptions X 2 Marks
3 Marks for overall quality of description 15 Marks
PART B
The Matrix Approach
Functional and divisional chains of command are implemented simultaneously and overlay one another in the
same department. Two chains of command exist and two employees report to two bosses.
Managing Director / CEO
Marketing Production Personnel Accounting
Product A
Product B
This approach attempts to capture the best of both worlds, functional specialisation and expertise and primary
activity / product grouping focus.
Naturally the approach looks well on paper but implementation in the real world may prove a little more
problematic as individuals experience divided loyalties between individual bosses. It is mainly used in large
manufacturing environments.
Marks Allocated
6 Marks for description, 2 for merits, 2 for limitations
10 Marks
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Examiner Comments on Question Three
Solution Three
PART A
Market positioning considers the perceptions of the consumer about the product or service, relative to other
products and services in the market. It explores how you want your customers to perceive your product or service
particularly in relation to those of your nearest competitors. It is the place the product or service occupies in
consumers’ minds relative to competing products or services. The marketer seeks to position the product so it is
perceived to possess the key variables or attributes considered important by customers. Re-positioning involves
moving the product away from its current position to a point that improves its market appeal. Lucozade is a
product that was re-positioned from a drink for people who were feeling unwell to a high energy sports drink.
Positioning examines the associations an organisation wants potential customers to infer about its product or
service. For example, we associate Ryan with low cost flights. Consumers are overloaded with information about
products and services. They cannot re-evaluate products or services every time they make a buying decision. All
products and services will have a position in the mind of the consumer (and this can be positive or negative). It is
a complex set perceptions, impressions and feelings that consumers have for the product or service compared
with competing products or services. It is best not left to chance.
Marks Allocated
4 Marks for the quality and description
1 Mark for overall quality and presentation 5 Marks
PART B
An interesting way of seeing market positioning is to consider a perceptual diagram which maps the brand (i.e.
product or service) on an axis according to certain criteria. It is used to locate or situate the brand in relation to
its competitors.
For example, it may be used to situate customers perceptions of the positions of various brands and organisations
in the retail sector in terms of quality and price. (Lidl, Aldi, M&S, House of Frazer).
These perceptual diagrams can be used to map consumers perceptions of their brands versus competing products
on important buying dimensions. To the extent that a company can position itself as providing superior value, it
gains a competitive advantage. For example, House of Frazer continually strives to position its products as
superior to its competitors on various criteria.
In the case of Motor vehicles a perceptual diagram could be prepared based on consumers perceptions of various
motor vehicles based on the two dimensions of price and quality. A range of other dimensions, such as functional
characteristics, symbolic projections and other experiential attributes may be used to map customers perceptions
of the brand, product or service. In the case of motor vehicles we would probably place the luxury car market
(e.g. BMW’s , Mercedes and Lexus and Porches) in the high quality / high price quadrants, while other lower
end models of motot vehicles (various Ford, Toyota, Fiat models etc.) would all occupy various locations in the
remaining quadrants.
The full positioning of a brand is called the brand’s value proposition. That is, the full mix of benefits upon
which the brand is positioned. Many organisations in the motor sector are striving to differentiate their offerings
from their competitors on the basis of price and quality. (e.g. luxury /special features at an affordable price).
Students demonstrated a good understanding of market positioning and were able to support their
answers with a solid understanding of the perceptual diagrams and the roles they fulfil.
Students demonstrated a strong understanding of the characteristics that distinguish services from
products.
Business Mgmt Old May 2016 1st Year Paper
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Marketers do not want to leave their products’ positions to chance. Positioning helps the marketer develop
products that better match customer needs and wants, define customer priorities and develop competitive
strategies through differentiation. To build profitable relationships with target customers, marketers must
understand customer needs better and deliver more value than competitors do. Marketers must plan positions that
will give their products the greatest advantage in selected target markets.
Some firms find it easy to choose a differentiation and marketing strategy. In other cases two or more firms may
be going after the same position. Each will have to find ways to set itself apart. This may involve drawing on all
elements of the marketing mix for products or services to devise an effective marketing strategy. To the extent
that a company can position itself well, such as providing superior value, it gains competitive advantage.
It is important to remember that solid positions cannot be built on empty promises. Companies must do more
than simply shout out their positions with slogans and taglines. They must deliver on the promised quality and
service.
Marks Allocated
10 Marks for the quality of the explanation with examples
2 Marks for overall quality and presentation
12 Marks
PART C
A large number of businesses offer services – airlines, banks, hotels, insurance companies, consulting firms,
medical and legal practices, entertainment and telecommunications companies, real estate firms and others.
Although services are ‘products’ in a general sense, they have special characteristics that separate them from
manufacturing.
Intangibility
Services are intangible: Unlike physical products they cannot be seen or touched before they are bought. Services
are difficult to describe, to demonstrate to the buying public, or to illustrate in communications and promotional
material. An organisations reputation and that of its sales people are essential to service marketing. Airline
passengers have nothing but a ticket and a promise that they and their luggage will arrive safely at the intended
destinations, hopefully at the same time. To reduce uncertainty, buyers look for signals of service quality. Many
factors influence the experience of a service. This is particularly true of hotels where the ambiance and décor and
overall quality of the surroundings and service levels influence the consumer’s perceptions and their
interpretation of the experience. The service provider’s task is to make the service tangible in one or more ways
and to send the right signals about quality.
Inseparability
Services are purchased and consumed simultaneously. The buyer provider interaction is a special feature of
services marketing. Services cannot be separated from their providers. Customers and service providers
participate in and affect the transaction. It is a once off experience. The impressions created by hotel staff cannot
be inspected like the products at the end of an assembly line.
Perishability
Services cannot be stored or inventoried. The perishability of services is generally not a problem when demand is
steady. When demand fluctuates service firms may experience problems. It is difficult to synchronise supply and
demand. Hotels have to strive to ensure they recognise service experiences as one-off and that damage done at
one point in time may be difficult to rectify later.
Heterogeneity / Variability
Business Mgmt Old May 2016 1st Year Paper
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Because services depend on who provides them, (as well as when and where they are provided), service quality
is highly variable. Many services cannot be provided by machines and therefore the human factor is of great
importance in the maintenance of service quality.
There can be a great deal of variability in the output of a services organisation. This arises, as it is more difficult
to establish standards for output and even harder to ensure standards are being met each time the service is being
delivered. For example, hotel employee’s reactions to customers may vary with their levels of tiredness and
fatigue. Even the quality of a single hotel employee’s service varies according to his or her energy and frame of
mind at the time of each customer encounter.
Marks Allocated
4 Marks for the quality and description of each distinguishing characteristic of services
8 Marks
Examiner Comments on Question Four
Solution Four
PART A
One popular content theory of motivation is Maslow’s Hierarchy of Needs. This theory states that human
motivation is dependent on the desire to satisfy various levels of needs and that the type of behaviour results
from the nature of the particular need to be fulfilled at a given time. According to Maslow, five basic needs exist
in a hierarchy from lower level deficiency needs to higher growth level needs. The five basic needs are;
Physiological needs: These needs relate to the basic survival needs which allow for continued existence, such as
food, water and adequate shelter.
Safety needs: These needs relate to physical and psychological safety from external threats to our well-being,
such as the need for security and protection. These needs take effect when physiological needs have been met.
Social needs: This level of need relates to the need for company and companionship, and for a sense of personal
belonging. These needs for personal contact and interaction with other people are triggered once physiological
and safety needs have been met.
Esteem needs: This is the first level of growth needs, which relates to the need for a sense of self-esteem and a
feeling of personal self-worth. They become salient once the first three levels of deficiency needs have been
satisfied.
Self-actualisation needs: The final level in the hierarchy refers to the need for personal growth, and the
development of one’s full potential and capabilities. This need level is different from others in that such needs
can rarely be fully satisfied or fulfilled. The more they are satisfied the stronger the needs become.
Actualisation
Esteem
Social
Students were well able to describe Maslow’s Hierarchy of Needs theory of motivation and Herzberg’s
Two-Factor theory of motivation in detail and to comment on their relevance in the present business
climate.
Most students clearly understood the “storming” phase in Tuckman’s theory of team development.
Business Mgmt Old May 2016 1st Year Paper
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Safety
Physiological
Frederick Herzberg was concerned with the impact of the job and the environment on an individual’s motivation.
Thus rather than needs, Herzberg focused on job satisfaction. He asked ‘what aspects of a job satisfies, and what
aspects of work dissatisfies. To answer this question, he interviewed two hundred engineers and accountants in
Pittsburgh. They were asked to describe what was satisfactory and what was unsatisfactory about their jobs.
From this, Herzberg deduced that certain factors tended to lead to job satisfaction, while others led to
dissatisfaction. He then classified the answers into two categories: one he termed motivators or satisfiers, the
other, hygiene factors or dissatisfiers. What is important to understand in this approach is the idea that what
dissatisfies a person in a job, once removed, does not necessarily satisfy him or her. In other words satisfaction
and dissatisfaction are very different concepts.
The motivators (satisfiers) included:
Achievement
Recognition
The Work Itself
Responsibility
Advancement and Growth
The second classification included those hygiene factors (dissatisfiers). These served to de-motivate employees
and generally lead to dissatisfaction. These included:
Company's Policies and Administration
Quality of Supervision
Working Conditions
Interpersonal Relations
Salary and Job Security
This classification is comparable to the division between intrinsic and extrinsic factors. . Intrinsic factors relate to
things which individuals generally can control themselves. This includes the job itself, and the feelings that an
individual has about his or her job. Factors which lie outside the control of an individual are termed extrinsic
factors, and include such factors as the rewards given to the job and the style of management.
Marks Allocated
6 Marks for the description of theory X 2
2 Marks for the overall quality and presentation 14 Marks
Part B
Maslow’s theory is a general theory not specifically designed for organizations. However it has relevance to
understanding people’s motives within organizational settings.
The theory is universalistic in nature. It assumes that people move from one level to the next. However in reality
people may have a number of unfulfilled needs at a number of levels concurrently.
The theory does not reflect how the motivational process is played out. Different people may construct or
perceive their needs differently. It does not reflect how expectancy and equity interact with people’s needs and it
makes no mention of the impact of people’s perceptions of power differentials.
In summary the model has the following merits and limitations
Business Mgmt Old May 2016 1st Year Paper
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Merits of the model Limitations of the model
Allows mangers to identify the motivations
of employees
Allows for the classification of biogenic
versus hedonic needs – i.e. separates
physical and emotional needs
Allows the self-actualization concept to be
applied in workplace scenarios through
career and personal placement
The model is quite simplistic and
generalized
The model looks at basic needs but does
not consider in great depth how other facets
of human experience evolve (i.e.
aesthetics)
Model makes no direct reference to cultural
issues or situational factors (e.g. parity
issues etc.)
Model is overly sequentialised (i.e. one
must satisfy one level before progressing to
the next).
Although criticised, it is easy to apply Herzberg’s theory. In fact his research approach has been applied to
various groups of workers, including manual workers, and the results have been similar. It is generally accepted
that recognition is a better motivator than money in most situations - that is, people are motivated in a positive
direction to equal or better the work that they are recognised for. That said, money remains problematic as a
motivator; it could be argued that in a consumerist society, money is an important motivator.
The benefits and limitations of the model are outlined next.
Benefits Limitations
Very applicable to management and the
workplace.
Managers can easily determine the
motivators and de-motivators in the
workplace.
Initiatives to develop motivations can be
put in place and policies designed to reduce
de-motivation can be implemented.
No attempt to measure the relationship
between satisfaction and performance.
Some factors are ‘bipolar’ - that is they
may serve to both motivate and/or de-
motivate.
No evidence that satisfied workers improve
productivity.
Marks Allocated
6 Marks for the quality of the discussion on relevance 6 Marks
PART C
Group / Team development is not random, but evolves over definitive stages. The five generic stages of group /
team development are forming, storming, norming, performing and adjourning.
Forming
This stage of team development is characterised by initial orientation and acquaintance. The team is formally
introduced and given its task or brief. Team members typically start “testing the water” with other team members
to understand; what exactly is required from them? What the other team members are like etc.? The first steps in
Business Mgmt Old May 2016 1st Year Paper
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“jockeying for position” emerge at this stage. The team leader should focus on the facilitation of social
interaction and the clear statement of objectives and roles / requirements.
Storming
This is a stage of team development in which individual personalities and roles emerge, and the potential for
conflict or misunderstanding of individual roles becomes an issue.
At this stage a team may break into factions if not properly managed, and this has a serious effect on the overall
cohesiveness of the group. At this stage a team leader must ensure healthy participation by all members, to
ensure that ideas are proposed, disagreements are minimised, and conflicts are dealt with appropriately.
Norming
This is the stage of team development when many of the conflicts that emerged during the earlier stages are
resolved and team harmony and unity evolves. (e.g. boundaries are clearly established). A team leader at this
stage should focus on the team rather than individual performance and assist in the clarification of team roles,
norms and values if any confusion or conflict still exists.
Performing
The focus moves from the assurance of team cohesion towards problem solving and the accomplishment of the
task at hand, although the socio-emotional roles should not be discarded. The team at this stage is highly co-
ordinated and focused on their individual roles. Team leader activity is heavily focused on the facilitation of high
performance.
Adjourning
In this stage of team development members prepare for the teams disbandment. The brief of the team has been
met and is “put to bed”. Various emotions prevail at this stage from complete satisfaction / elation to depression.
The team leader is focused on task accomplishment and reward where appropriate
Organisations today are re-organising employees into groups or teams sharing out work duties and tasks. Teams
personify groups at their best; team members complement each other and work towards a common objective,
hence the productivity is high. Teams also deliver benefits in terms of flexibility, democratising the organisation,
increased motivation and clarity of purpose. Generally speaking it would be accepted that the benefits of
teamwork far outweigh the limitations.
Marks Allocated
4 Marks for an explanation of the storming stage
1 Mark for overall quality and presentation 5 Marks
Business Mgmt Old May 2016 1st Year Paper
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Examiner Comments on Question Five
Solution Five
PART A
Marketing management deals with how the different elements of marketing are organised, planned and
controlled. It is rare for a company to target a market in full; instead marketers concentrate on segmenting
markets, and then select the best segments to better position products.
A three-step process is crucial in marketing management. This set of activities – Segmentation, Targeting and
Positioning (or STP) – defines a pivotal managerial decision making process in an organisation’s attempts to
meet its objectives in competitive markets.
The process of segmentation, targeting and positioning enables the marketer to:-
Select the most profitable and viable customers to serve.
Reach them with an offering that has a competitive advantage
To communicate a position that is clearly perceived
Market segmentation involves analysing the total market into segments that share common properties, such as
consumer’s stage of life needs, purchasing power, geographical spread, buyer behaviour, attitudes to
environmental issues etc. The ultimate in terms of market segmentation is “customised marketing” where sellers
design a separate product for individual buyers. Typical segmentation variables include;
Age range – 18 to 30
Gender – male or female
Location – urban, rural, national or international
Family life cycle – single, married no children, married young children, etc.
Socio- economic status – professional, managerial, skilled workers, unskilled etc.
As a general guide, markets are usually segmented along four main variables; demographic, geographic,
psychographic and behavioural variables. Each of these variables is explained below:
Demographic
The intended target audience for a given product or service is divided into
categories based on demographics such as age and life cycle, gender, income,
generation and social class. Demographic variables are easy to measure and
obtain.
Geographic
Intended target audience for a given product is divided according to
geographic units, such as nations, states, regions, counties, cities, or
neighbourhoods. Products and services and communication efforts are
localised.
Psychographic
Psychographics can be defined as the study of consumer lifestyles. This
variable divides the market on the basis of activities (i.e. sports and
entertainment), interests (i.e. level of social interaction) and opinions (i.e.
politics, social and moral issues).
Students demonstrated a clear understanding of Market Segmentation and were well able to relate it to
the scenario presented.
Most students engaged comprehensively with the assertion presented concerning branding.
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Behavioural
Examines the relationship between the consumer and the product. Buyers in a
market will differ in their wants, locations, buying attitudes, and buying
practices and any of these variables can be used to divide a market. (i.e. gift
buying, usage rate, loyalty and user status).
Marks Allocated
2 Marks for explaining the variables with examples X 4
2 Marks for overall quality and presentation
10 Marks
PART B
Candidates were expected to demonstrate how the principles of segmentation might be applied to the analysis of
the market in magazines.
In explaining the benefits of market segmentation as a strategy candidates were expected to outline how
appropriate modes of segmentation facilitated the development of related targeting and positioning marketing
strategies for a firm / brand.
For example for a company in the magazine market in Ireland segmentation would involve selecting appropriate
demographic variables for the target segments – age, gender, stage of life cycle. Added to this will be relevant
psychographic variables such as – activities and interests (politics, business, the Arts, sports and entertainment),
nature of interests (i.e. general and specialist) and opinions. Also of relevance but to a lesser extent would be the
geographic and behavioural segmentation variables..
Demographic variables would be particularly relevant. Age and life style variables allow the marketer to
distinguish between youngsters, teens, singles, young families with children and older people. All these groups
would have distinctive reading interests and requirements.
Demographics is just one variable that may be used to segment the market. Others would include Psychographic,
Behavioural and Geographic. Again marketing efforts would need to be tailored to these distinctive markets.
The Company would also need to decide whether it wishes to target several market segments simultaneously and
designing separate marketing mix strategies for each. It would involve decisions around the attractiveness (size,
potential and scope for development) of the target market.
Segmentation would also facilitate the development of appropriate market positioning strategies. This would
involve decisions around the perceptions the company wishes to create in consumers’ minds associated with its
offerings. (e.g. ‘Specialist focus magazines ” etc.)
Marks Allocated
6 Marks for discussion of variables and 3 marks for direction of marketing effort
1 Mark for overall quality and presentation
10 Marks
PART C
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A brand is defined as a name, symbol or design that identifies the goods or services of one seller and
distinguishes them from those of competitors. Think of the strength and importance to the firm of brand names
such as Ballygowan, Heinz, Coke-Cola, Guinness and Microsoft.
It can be a letter, a word, a group of words or a symbol. (e.g. Nike). A product manager co-ordinates all the
efforts for a particular product (or product line) or brand. An important part of the brand image of a product is
the packaging that is utilised.
Branding
- Makes goods easily identifiable and gives them a distinctive appearance
- If the quality of goods is maintained, it gives the consumer reassurance that they know what they are buying
- It facilitates advertising and promotion and new product development
Marks Allocated
2 Marks for the quality and relevance of points made in support of the position taken
1 Mark for overall quality and presentation
5 Marks
Examiner Comments on Question Six
Solution 6
PART A (i)
B2C Business to Consumer
This is where a business offers products / services via some electronic means (usually online). For example, most
airlines operate a B2C model by allowing passengers to book flights online. Other common examples of B2C are
online banking facilities, and electronic storefronts. (sometimes called e-tailing, for electronic retailing).
B2B Business to Business
This is where two businesses engage in transactions using electronic means. In a sell-side model, transactions are
conducted on the seller’s website. A simple example of B2B e-commerce would be a supermarket placing orders
with their wholesale supplier. The stages involved in a B2B transaction will generally be the same as B2C,
however it is likely that there would be the addition of a ‘negotiation’ stage, which is less common in B2C.
B2E Business to Employee
This is where businesses offer employees certain services / information electronically. Examples might include a
HR system that allows employees to apply for holidays or reserve spaces on training courses. Some companies
may offer their products for sale with employee discounts, and even offer other products / services, such as travel
offers etc.
C2C Consumer to Consumer
This is where individual consumers buy and sell to each other. Web-sites that offer online auctions, such as e-
Bay and Done Deal are good examples of C2C e-commerce websites.
Students were well able to explain the relevant acronyms and to identify and explain various intentional
threats to computer security.
Most students demonstrated a solid understanding of feasibility studies.
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Marks Allocated
2 Marks for quality of explanation of each element
2 Marks for the overall quality and presentation 10 Marks
PART A (ii)
Intentional Threats
There are many ways in which computer systems can be attacked, especially when extensive use is made of e-
commerce. Some of the more common threats include
Theft
stealing physical equipment is difficult because the equipment is likely to be bulky and less valuable.
But laptops, notebooks and disco key storage devices are not. Un-encrypted data on these devices may
be particularly sensitive and vulnerable to theft and misuse.
Hacking
A hacker is a person who tries to gain access to a computer without permission. Usually this would be
done remotely over a network or the internet.
Viruses
A virus is a (usually very small) computer programme that is tacked onto other programmes and is able
to replicate itself (hence the term virus). What the virus does can vary from completely harmless to
extremely destructive (e.g. reformatting the computer hard drive).
Worm
A worm is a self-propagating malware (malicious software) programme that is similar to a virus.
However, worms do not need to be carried by another programme, and are generally more harmful.
Trojan
A Trojan is a programme that appears harmless at first but in time does something illicit without the
user knowing. It is a standalone malicious programme which has the potential to give control of the
infected computer to another computer.
Spyware
Spyware is also a type of malware designed to monitor computer / internet activity. They install
themselves on computers and collect data about the users. For example, some spyware can record
keystrokes (called ‘key logging’) and transfer information over the internet without your knowledge.
Phishing
Phishing is online fraud, usually carried out through e-mail. An e-mail is sent to an unsuspecting user in
order to ‘fish’ for information such as username, password, bank and credit card details by posing as a
trustworthy entity, such as a bank or a well-known website. (Such as EBay or PayPal).
Denial-Of-Service (DOD)
A Denial-Of-Service (DOS) attack is the malicious attempt or attempts by a person or persons to
prevent a website from functioning efficiently, either temporally or indefinitely. If the attack is
successful it generally makes a website or service unavailable to its intended users. DOS attacks tend to
be made against high profile websites.
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Trap door (back door)
A trap door (or back door) is a computer algorithm designed to bypass normal authentication. It takes its
name from the fact that it uses a hidden entrance to a computer system to bypass a computer’s security
system.
Anything that causes a loss of data or a corruption of data can be considered a security threat. A number of steps
can be taken within a single site, ranging from limiting physical access to sensitive areas and installing complex,
encrypted codes to deny entry to data to unauthorised personnel etc. Other procedures one would expect are back
up procedures, disaster recovery plans, effective virus protection and password procedures.
Computer security can be considered under two general headings 1) securing the physical assets (i.e. the
machines and associated hardware) and 2) securing the data. Generally data is considered the most valuable
asset, as it is the most difficult to replace and has the most potential value to competitors and fraudsters.
A control is a method or procedure aimed at ensuring that the company’s assets are secure, including data and
other such intangible assets. Effective control procedures (physical controls, access controls, procedural controls
and organisational controls) should be put in place to combat potential intentional threats to the security of
information systems.
Marks Allocated
2 Marks for the description of threats
2 Marks for overall quality& presentation
10 Marks
PART C
A feasibility study is conducted to determine whether a project is fundamentally worthwhile. There are many
areas to consider when assessing the feasibility of a project, these include its economic feasibility, its technical
feasibility, and its organizational and operational feasibility. The feasibility analysis provides a high level snap
shot of the potential costs and benefits of the proposed system and the technical / organisational feasibility of the
project. If the results of the analysis are favourable an explicit decision is made to proceed.
There are many ways to assess the feasibility of a project. Amongst these are:
1. Economic feasibility
The main question here surrounds the costs of acquiring the system versus the benefits of having the finished
system. This is generally determined using a Cost-Benefit-Analysis. All costs (tangible and intangible) and
benefits (tangible and intangible) need to be considered is assessing the economic feasibility of a computer
project.
Tangible costs
These include all those costs that can be predicted and measured to a fairly accurate degree. Typical examples
include
- Hardware / Equipment
- Wages / salaries and consultancy fees
- Ongoing system benefits
Tangible benefits, would include
- Improved efficiency and throughput
- Reduction in errors
- Reduction in costs
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Intangible costs, refer to costs that cannot be measured accurately and may always occur – some examples would
include
- loss of employee morale
- disruption to the organisation
Intangible benefits would include
- gaining a competitive advantage
- improved employee morale
- faster decision making
2. Operational and Organisational feasibility
The focus here is on whether the organisation has the necessary skills/ capabilities available to actually operate
the system on a day to day basis. And if not, where these can be obtained in a realistic way.
3. Technical Feasibility
The main issue here is whether the organisation is technically capable of developing/ operating the system, and if
not, whether the necessary technology can be developed or acquired in a feasible manner.
4. Schedule Feasibility
This is an assessment of the time-frame involved. Long projects are more likely to run into problems and / or fail.
Also there may be a critical deadline that must be met for the system to be of use (e.g. end of year or to comply
with new legislation).
Marks Allocated
5 Marks for overall quality 5 Marks
Examiner Comments on Question Seven
Solution Seven
PART A
The responsibility for the financial health of the organisation – ensuring that among other things that it has
adequate cashflow – lies with financial managers. Being responsible for finance they analyse data and produce
financial reports, as well as developing long term strategies that deal with finance. They advise senior managers
on financial matters such as investment decisions and sources of capital, as well as providing commentary on the
financial implications of any decision.
Financial managers are an integral part of the decision-making system within organisations. The information
processed by financial managers includes:
- Cost of raising funds
- Analysing foreign exchange exposures
- analysing the effects of movements in interest rates
- providing information on new investment opportunities
- ensuring financial reports comply with best practice.
- budget preparation and analysis
Answers to question 7 were a little disappointing with some students struggling to provide good
descriptions of the roles fulfilled by financial managers and limited explanations of the different sources
of long term finance available to organisations.
Most students were able to explain how profitability should be monitored.
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Marks Allocated
2 Marks for the quality of description of roles (Max of four elements)
2 Marks for overall quality and presentation
10 Marks
PART B
Debentures:
A debenture is a written acknowledgement of indebtedness by a company. Interest is paid at a fixed rate,
normally at half- yearly intervals. Debentures are not part of the share capital of a company and debenture
holders are not members of the company. A debenture holder is a creditor of the company. His interest is a debt
of the company, payable irrespective of whether there are profits or not. Debenture interest is tax deductible.
Debentures may be redeemable or irredeemable. Redeemable debentures maybe an appropriate source of finance
where a company’s needs are temporary. Redeemable debentures must be redeemed by a fixed date or within a
given time period. Irredeemable debentures are repayable only in the event of some specified contingency, such
as the winding-up of a company or default in the payment of interest.
Debentures may be secured or unsecured. Most debentures are secured by a charge on the assets of the
company. This charge may be fixed or floating. In the case of a fixed charge, the security relates specifically to a
particular asset or group of assets. The company is not permitted to dispose of the asset or assets without
providing equivalent security, or without the prior approval of the debenture holders.
The terms of the debenture and the rights and responsibilities of the parties involved are set out in the Debenture
Trust Deed. Matters outlined in this deed must be complied with by the company. The Debenture Trust Deed
will contain, amongst others, the following:-
(1) restrictions on additional lending
(2) matters pertaining to the disposal of assets on which the loan is secured
(3) insurance relating to the property on which the loan is secured
(4) provisions relating to the retention of title deeds of properties on which the loan is secured
In summary
Advantages
- Represents a good source of long term finance
- Providers of debenture capital have no direct involvement in the day to day running of the company (i.e.
it does not affect the balance of power and control between existing shareholders).
- Interest is tax deductible
Disadvantages
- Debentures are normally secured on the fixed assets of the company
- Debentures may have restrictive loan covenant requirements built in to the loan agreement
- Debenture holders may force receivership / liquidation on the company in the event of non payment.
Ordinary Shares
Ordinary shareholders are members of the company holding voting rights. They own a share of the company’s
assets and a share of any profits earned after all prior claims have been met.
Ordinary shares or Equity, as they are termed, are a permanent source of finance. Ordinary shareholders provide
seed capital to allow the business to develop and grow. There are no fixed repayment or interest charges to be
paid in the case of equity. Equity also provides the owners with authority to influence policy and direction.
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Equity may be raised through offers for sale, public issues, placing, tender or rights issues. Equity is generally
regarded as an expensive source of finance when compared to loan finance, as the dividends to equity holders
unlike loan interest are not tax deductible. Another disadvantage of equity is the potential for change in the
balance of control between existing and new shareholders.
Bank Borrowings
Commercial banks extend short-term facilities mainly in the form of overdraft arrangements. Generally
commercial banks reserve the right to cancel overdraft facilities at short notice. In practice it is probably not to
the banks advantage to pursue this policy to the letter, as they might needlessly force the borrower into financial
difficulties.
Utilising bank facilities in a proper manner will ensure the maintenance of a flexible and comparatively cheap
source of finance. Bank borrowings are flexible in that interest is only payable on the amount outstanding and not
on a fixed advanced sum as is the case with the borrowings from other financial institutions. Bank borrowings are
also comparatively cheaper than long-term loans due to the fact that the risk involved is smaller given that the
lending period is shorter.
The security required by banks differs depending on the risks involved. They might require personal guarantees
in the case of a private company or, alternatively, floating or fixed charges on the assets of the company, or
indeed, both.
Bank lending rates are normally set one to two percent above the bank rate. Bank lending rates can therefore
fluctuate upwards or downwards during the period in which the monies are advanced. This can be an advantage
or a disadvantage depending on the direction of the change when compared to other forms of advances made by
financial institutions at fixed interest rates.
Marks Allocated
4 Marks for the quality of description of each source X 2
2 Marks for overall quality 10 Marks
PART C
A system of budgetary control is a useful way to monitor a firm’s profitability and liquidity.
Budgetary control refers to the analysis, recording and reporting on the activities and financial well being of the
organisation. It involves forecasting likely outcomes of plans in an attempt to control the future for the
organisation. It is a bread and butter activity for the financial team, in that it ensures effective monitoring of
current activities, and gives invaluable information about performance in relation to plans.
Financial control of activities is vital to all organisations. Many smaller firms, for a variety of reasons, such as
lack of expertise or over-trading, opt for informal rather than formal systems of control. This can be catastrophic
for the small firm as the true performance or profitability cannot be gauged.
Budgetary control requires that realistic profit and loss and cash flow forecasts are prepared at the beginning of
the period and that they be updated normally on a quarterly basis as the year progresses. Due care and
consideration is required in interpreting variances from budget to ensure managers are held accountable for all
those matters that fall within their sphere of control
The cash flow forecast may be used to determine if company borrowing is required or if surplus funds are likely
to be available for re-investment. Comparing actual performance against forecasted profit and loss account
projections allows management to monitor margins on a regular basis and to take appropriate corrective action
before deviations become too serious.
Comparisons against budgets may be done in a number of ways but ideally it should be integrated with the
system of responsibility accounting in place in the company – by department etc. Indeed it may be wise to
prepare financial reports on a weekly basis should this be deemed necessary. It is also important to incentivise
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those with the authority to make decisions. (e.g. in the case of a restaurant one may link the Chefs bonus to the
margin earned by the Food section etc.)
Ratios also provide useful information to enable an organisation to monitor liquidity, profitability, asset
utilisation and solvency. This information is important to internal and external users. Ratios provide useful
warning lights but usually require further analysis and explanation. Ratio analysis is enhanced when the
information in comparable (e.g. when we are comparing like with like). Ratio analysis is a good diagnostic tool
to help assess the financial health of an organisation, thereby enabling managers and users to identify areas which
might be seen as strengths, or on the other hand, areas that might be causes for concern. They allow managers to
stand back from the details and zone in on key relationships that highlight financial strengths or possible sources
of financial concern.
Marks Allocated
2 Marks for the quality of the description of the concept and its monitoring
1 Mark for overall quality and presentation 5 Marks
Recommended