BUSINESS AND MANAGEMENT
MOCK EXAMINATION PAPER ON UNIT 2
INSTRUCTIONS to candidates
Read the case studies carefully.
It’s a closed book test.
HL candidates:
Answer questions 1, 2 (the same for SL and HL) and question 3 marked HL
SL candidates:
Answer questions 1, 2 (the same for SL and HL) and question 3 marked SL
Total number of questions: 3 Marks: 40 Total time: 1 hour 20 minutes
PAPER 1 QUESTION (HL and SL)
1. Total marks: 10, Time: 20 mins
The Juice Truck
The Juice Truck is one of the leading mobile beverage businesses in India. The company sees motivation of
its employees as critical to the business’s long-term success. HR director, Surender Singh was appointed
because of success in her previous roles at getting the very best of from the people that worked for her.
She is someone who truly values people and trusts them to do their own jobs effectively. She believes in
paying people well but more than that she sees that giving workers autonomy and a say in decision-making
are important for a motivated workforce. She also believes very strongly in treating all workers in an
equitable way where they believe they are valued.
a Outline two ways in which John Stacey Adams’ equity theory is being applied by Surender Singh.[4 marks]
Surender Singh applies Adams’ equity theory by rewarding workers not only with pay, but with other
benefits, such as autonomy and having a say in decision-making. By doing this she increases the motivation
of workers, as stated by another motivational theorist Daniel Pink, autonomy is one of the three motivating
forces for employees.
Another application can be seen in her equitable treatment of workers. By treating workers equitably and
not equally Surender Singh provides all of them with fair treatment and opportunities, which also leads to
increased motivation.
(2 MARKS)
b Analyse two non-financial methods of employee motivation being applied by The Juice Truck.
[6 marks]
One non-financial motivation method used by The Juice truck is giving employees a purpose. When the
employees are allowed to have a say in decision making, they might feel that they have a purpose in the
company and have the ability to change things. Knowing they have a purpose in the company motivates
employees and makes them more invested in their work. Purpose is defined as a motivational factor by
Daniel Pink.
Another method is job empowerment, which includes giving employees autonomy. This is closely tied in
with delegation and the empowered employee might be delegated higher-up tasks to do on their own. Job
empowerment creates a trust environment where the employee and the employer trust each other which
might lead to better communication and higher productivity. Nevertheless, empowerment also has a
negative side, as sometimes empowering an untrained employee might cause more problems than it solves
or it could be just a way to cut costs by delayering.
(5 MARKS)
PAPER 2 QUESTION (HL and SL)
2. Total marks: 20, Time: 40 mins
Activation Plc is a publishing company based in Mexico. It specializes in fashion, lifestyle, celebrity and
entertainment magazines. The new CEO is concerned that Activation’s hierarchical organisation structure
slows down decision-making because it is too bureaucratic. The CEO wants to delayer the organisation, but
this has brought significant resistance from many of Activation’s employees who have looked for union
advice on the changes. There is a genuine feeling of unease and morale among the staff of an already
struggling business is low. The CEO is, however, right behind the changes and sees this as the only way to
arrest the business’s decline in performance.
a Define the term “matrix organization structure”
[2 marks]
Matrix organisational structure is a structure where the product departments and functional departments
are intertwined with each other. This means that a product development team A will have the same
functional departments as product team B or C. This structure allows for closer work between the product
teams, removes duplication of function departments in different product teams as well as keeps the
specialization from having a structure by function which leads to economies of scale.
(2 MARKS)
b Explain two reasons why Activation’s management structure might adversely affect the firm’s
performance.
[4 marks]
One reason is that a tall hierarchical structure increases the chain of command. This slows down the
decision-making as well as communication effectiveness of Activation Plc, as a single decision must pass
through many managers. Moreover, implementing an organisation change in a tall hierarchical company
might prove to be very time-consuming and costly.
Another reason is that because tall hierarchical structures have a short span of controls, managers have
small numbers of subordinates, which in turn leads to employees rarely being given any authority and not
being empowered. Because of the lack of authority and empowerment, some employees might feel
demotivated and work less productively as well as their morale and trust in the company will diminish.
(4 MARKS)
c Outline the characteristics of the Shamrock Organisation structure.
[4 marks]
Handy’s shamrock organisation consists of 3 parts:
Core - core workers are the full-time employees of the company.
Flexible - flexible workers are employees that work part-time or flexi-time. Also these workers might be
hired seasonally or when the company has increased work loads.
Outsourced - outsourced functions or departments are done by a third-party. These might be: HR dept.,
custom service, employee training.
(4 MARKS)
d Evaluate the new CEO’s decision to go ahead with the organizational changes suggested by the project
team.
[10 marks]
The decision of the new CEO can have both positive and negative implications.
For example, because the employee morale is already low, and the company has lost their trust,
implementing a significant change might leave the workers in a worse place than they are now. For
example, delayering of the organisation often leaves many workers redundant, which might even further
decrease the job security of the remaining ones. Moreover, when delayering, bigger workloads are being
placed on less people, especially managers. Increasing the workload for managers in already hard times
could also worsen their morale and decrease their productivity and motivation.
On the other hand, continuing with the change might be a way to get the company out of their already bad
state. If the company manages the change correctly, there could be many benefits. Firstly, the company
would have increased motivation from the employees, as because of delayering spans of control would
increase, allowing managers for employee empowerment. Moreover, this decision would also increase the
effectiveness of communication in the company and speed up decision making.
All in all, while these organisational changes could have both positive and negative effects, the positives still
outweigh the negatives, as without the changes the business would become stagnant and inevitably fail.
Furthermore, the negatives can also be avoided if the change management and communication is effective
at Activation plc.
(10 MARKS)
PAPER 2 QUESTION (HL only!)
3. Total marks: 10, Time: 20 mins
Aztec Mattresses
Aztec Mattresses is a medium-sized company based in Peru with 200 workers operating in one major
production plant just outside Lima. Aztec’s
CEO is a paternalistic leader with an autocratic
management style. He is very reluctant to allow union representation among his workers. His new HR
director thinks differently. She wants some union representation and greater use of industrial democracy.
She also wants to move the business to collective bargaining between Aztec’s managers and its workers.
She has been brought in because the previous HR director has been increasingly unpopular because of his
abrasive management style and poor communication. Under his management, conflict at Aztec had
deteriorated badly. Aztec is about to undergo considerable change as it plans to move production to a new
state-of-the-art factory. The current facility is outdated. The new factory will, however, mean workers
having to travel further to get to work and may also involve some redundancies.
a Evaluate an HR strategy Aztec might use to manage the change to the new factory successfully. [10
marks]
PAPER 2 QUESTION (SL only!)
3. Total marks: 10, Time: 20 mins
Mountain Key
Mountain Key is an outward bounds business based in New Zealand. It is run by one of New Zealand’s
leading mountaineers, David Fox. The organisation employs 22 outward bound specialists who run activities
that include climbing, canoeing, rafting, cycling and hiking. The trips run by Mountain Key are for skilled and
experienced people and they operate in a niche market. A climbing trip run by one of the firm’s lead
climbers Ash Adams might be a 14-day climb and she will have a lot of autonomy to run the trip as she
wants. Indeed, David delegates almost complete control over decision-making to activity leaders because
he “only employs the best” and trusts them to do the right thing. He is very laid-back character and cares
more about choosing the right people and then letting them work.
The trips and activities themselves often involve very autocratic control for their leaders. Ash Adams has a
particularly strict approach to her climbing trips. She has quite an abrasive, direct management style
because she argues that she has to get the trip completed to a precise timescale and they have to be safe.
There have, however, been complaints about her management style particularly from employees in her
team who are not from New Zealand and are not used to her direct approach.
a Discuss the ethical and cultural challenges Ash Adams might find in the way she manages her trips. [10
marks]
Ash Adams is someone who has an Apollo culture, which might cause culture clashes with people who have
different cultures. This could be a problem for her, as when working with other people who have different
cultures, such as Zeus, the communication between her and the other individuals could worsen because of
their cultures clashing.
Moreover, cultural clashes might also happen between people from different countries. For example, if Ash
works with an American person, who could be rather laid back and less formal, there could be tension and
conflict between them as the American might not like the direct and autocratic management, which would
decrease productivity.
Furthermore, there could also be some ethical challenges. This is because David Fox gives a lot of authority
to his trip leaders and is removed from what happens with them. And while this has some benefits, it also
could be considered to be unethical towards the employees working under the leaders, as they are
completely in the control of the leader and have no opportunities to change how their leader is acting or to
have a say in decision-making. Having to work under a leader that is unethical or autocratic and doesn’t
care about their employees might lead to decreased morale and motivation.
(7 MARKS)