BUSINESS MANAGEMENT UNITS 3 AND 4
Business Management Units 3 and 4 practice
exam 2012 and suggested answers
Gillian Somers
Trinity Grammar School
The following Business Management Units 3 and 4 practice exam consists of
four questions, in the form of a question-and-answer book. All questions are
compulsory. The total marks available are 65.
Each question is introduced with stimulus material. The number of lines
provided after each question and the number of marks allocated to it
indicate the appropriate length of a student response.
Additional space is provided at the end of the question-and-answer book.
Please note that the questions and suggested answers have no official
status.
Teachers are advised to preview and evaluate all practice exam material
before distributing it to students.
Disclaimer: This practice examination has been written by the author (Gillian Somers) for students of VCE
Business Management. This does not imply that it has been endorsed by the Victorian Curriculum and
Assessment Authority (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 or distributing them to students.
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BUSINESS MANAGEMENT UNITS 3 AND 4
Name: ______________________________
Teacher: ______________________________
BUSINESS MANAGEMENT UNITS 3 AND 4
Practice written examination 2012
Reading time: 15 minutes
Writing time: 2 hours
QUESTION AND ANSWER BOOK
Structure of book
Number of questions
Number of questions
to be answered
Number of marks
4
4
65
 Students are permitted to bring into the examination room: pens, pencils, highlighters, erasers,
sharpeners and rulers.
 Students are NOT permitted to bring into the examination room: blank sheets of paper and/or
white-out liquid/tape.
 No calculator is allowed in this examination.
Materials supplied
 Question and answer book of 16 pages.
 Additional space is available at the end of the book if you need extra paper to complete an answer.
Clearly label all answers with the appropriate question number.
Instructions
 Write your name and your teacher’s name in the spaces provided above on this page.
 All written responses must be in English.
Students are NOT permitted to bring mobile phones and/or any other unauthorised electronic
devices into the examination room.
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Instructions
Answer all questions in the spaces provided.
Question 1
Are customers changing the way they make their purchases—supermarkets or online?
Supermarkets
US discount supermarket group Costco has been given an extra $140 million by its American parent
company to continue its expansion across Australia, with more stores planned for both Melbourne and
Sydney along with its first Queensland store.
When Costco opened its Docklands (Melbourne) store in 2009 it employed 225 full-time and part-time
employees. One of the drawbacks of Costco’s expansion strategy is securing larger-than-usual pieces
of land, particularly near current residential developments.
Costco specialises in household goods and food in bulk, whitegoods, furniture, alcohol and luxury
items such as diamonds and jewellery. To shop at a Costco warehouse outlet, customers must pay
an annual membership fee of up to $60. It is estimated that in April 2012 the group had more than
10 000 members in Melbourne and Sydney.
Another large international supermarket chain that is expanding rapidly in Australia is German-owned
Aldi. It currently operates 265 stores on the east coast (Australia) and has an objective to open new
stores at a rate of between 25 and 30 a year.
Trying to enter the market and compete with Coles and Woolworths, which between them currently
account for 80 per cent of the nation’s supermarket spending, is a challenging exercise. Although
these foreign players still account for a small percentage (perhaps two per cent of the total
supermarket industry), they have both attracted legions of loyal customers with their heavily
discounted branded and house-brand products.
a. Describe two characteristics that justify the classification of Costco as a large-scale
organisation.
2 marks
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b. Identify two typical management functional areas (other than operations and human resource
management) that you would expect to find at large-scale organisations such as Costco and
Aldi.
2 marks
c. Aldi and Costco understand the importance, both legally and ethically, of providing a safe and
healthy workplace at their supermarket outlets.
Identify and explain the steps of a policy development process that they would need to follow in
order to create an effective occupational health and safety policy.
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6 marks
d. Identify, describe and justify two performance indicators that could be used to evaluate the
effectiveness of the newly created occupational health and safety policy at Costco and Aldi.
4 marks
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Online shopping
Recent statistics indicate that Australians are choosing to shop online at a growing rate.
E-commerce ploughed $44 billion into the Australian economy in 2010, which represents 3.3 per cent
of gross domestic product (GDP).
It is estimated that by 2016, the contribution of e-commerce to GDP will be $67 billion.
A current trend with consumers that has also been noted is that a large number of consumers
undertake online research, but still make their purchase off-line from traditional ‘bricks and mortar’
stores.
Source: Boston Consulting Group, March 2012
e. Identify and explain one factor from the macro environment and one factor from the operating
environment that could be acting as a pressure on Australian retail businesses to develop an
online store as part of their business operations.
4 marks
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f. Evaluate one positive and one negative contribution that online stores make to the Australian
economy.
4 marks
Question 2
Wesfarmers is a conglomerate (large business group) that owns supermarkets, coal operations and
chemical production operations, insurance and home improvement stores. CEO of Wesfarmers,
Richard Goyder, says, ‘It would be a huge mistake if we tried to impose one corporate culture over all
these businesses’. For instance, Bunnings and Coles have to be customer-centric, whereas our coal
business has to be absolutely focused on safety—it’s the same with chemicals. We do, however,
have four core values across the group: integrity, openness, accountability and boldness.
a. Define the following terms.
i. corporate culture
1 mark
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ii. values statement
1 mark
b. Describe two ways that management can develop an organisation’s corporate culture.
2 marks
c. Identify and explain the relationship (link) between an organisation having a positive corporate
culture, its level of organisational productivity and its level of business competitiveness.
3 marks
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Question 3
Boeing to produce key component for the new Dreamliner 787 jumbo jet
The Port Melbourne plant of Boeing will hire another 160 workers to meet its production requirements.
This is on top of 470 new jobs created last year as the aircraft manufacturer defies the doom and
gloom clouding other industries in Victoria. The company employs more than 3000 workers across
Australia, its largest operation outside the US. Mr Thomas, Boeing Australia and South Pacific
President, said the Australian manufacturing plants were at the cutting edge of value-adding
manufacturing.
Boeing’s Port Melbourne plant is regarded as a world leader in the manufacture of carbon fibre
components, a key part in winning the lucrative $4 billion, 20-year contract to deliver the moveable
trailing edge (flaps), which controls the aircraft’s take-off and landing.
Boeing also acknowledges the effect that its operations, products and services have on the
environment, and is committed to reducing their impact by pioneering new technologies for
environmentally progressive products and services—and to design, develop and build them in an
environmentally responsible manner.
a. Discuss two differences between the operations of a service business and the operations of a
manufacturing business. Illustrate your answer with examples from Boeing and one other
organisation you have studied this year.
4 marks
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b. Boeing acknowledges the effect that its operations, products and services have on the
environment and is committed to reducing its impact. The key elements of an operations
system are inputs, processes and outputs.
Discuss how ethical and socially responsible management practices could affect each of these
elements at Boeing.
6 marks
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c. The Human Resource Manager at Boeing will be required to hire 160 new employees who will
work in the plant to manufacture the moveable trailing edge (flaps), which controls the aircraft’s
take-off and landing.
Describe two recruitment methods that could be used to ensure that a large pool of
appropriately skilled and experienced applicants applies for these positions.
2 marks
d. Boeing currently employs the workers at its Port Melbourne plant under a collective agreement.
Some of the job applicants have requested that they would prefer to be employed under the
award system rather than being part of the collective agreement.
Analyse the advantages and disadvantages of both types of employment agreement for both
the employees and management. Make a recommendation to Boeing management as to
whether they should continue with the current practice of using a collective agreement to cover
their workers’ pay and working conditions.
6 marks
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e. The Human Resource (HR) management team has appointed you as an HR consultant and
has asked you to review its staff motivation strategies.
Compare two theories of employee motivation—Maslow’s hierarchy of needs theory and
Locke’s goal-setting theory—that will assist the HR management team to manage staff
motivation effectively in order to maximise the contribution of employees to the overall
performance of the organisation.
6 marks
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Question 4
Big changes at Fairfax: it’s digital and tabloid
‘Readers’ behaviours have changed and will not change back. As a result, we are taking decisive
action to fundamentally change the way we do business.’ (Fairfax Media chief executive Greg
Haywood)
‘Fairfax management had no choice but to overhaul the company and change the way it does
business because of a significant deterioration in its outlook.’ It will involve ‘a radical restructure that
will cost almost $250 million’ … ‘the biggest in the 161-year history of the publishing and broadcasting
group’.
The proposed changes are:
•
a reduction of approximately 1900 jobs (that is, staff being made redundant)
•
20 per cent of the job losses to come from the editorial desks at The Age, The Sydney Morning
Herald and The Australian Financial Review
•
axing the broadsheet print editions of flagship mastheads The Age and The Sydney Morning
Herald and changing them to be in tabloid format
•
charging for online content
•
closure within two years of the printing plants at Tullamarine and Chullora (Sydney), saving
approximately $44 million. The Age would instead be printed in Ballarat and Albury.
(Source: Adapted from ‘Broadsheets in gun in radical Fairfax overhaul’, Herald Sun, 19 June 2012
a. Define the term ‘redundancy’.
1 mark
b. Define the term ‘organisational restructure’.
1 mark
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c. Kotter’s eight-step theory of change management can provide assistance to an organisation
when responding to a significant change issue facing it.
Analyse how the Operations Manager and Human Resource Manager as part of the change
team at Fairfax could apply this theory and develop strategies to assist the organisation to
overcome resistance for change and make the transition more effective.
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10 marks
END OF QUESTION AND ANSWER BOOK
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Extra space for responses
Clearly number all responses in this space.
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Suggested answers to Business Management Units 3 and 4 practice
exam 2012
Question 1
a. Describe two characteristics that justify the classification of Costco as a large-scale
organisation. (2 marks)
 The number of employees is more than 200 as determined by the Australian Bureau of
Statistics—with one Costco store having 225 employees, the total number of employees
both within Australia and its overseas operations would be very large.
 The size of operations—Costco has multiple locations within Australia and overseas.
 Substantial revenue—from the stores both within Australia and overseas. Membership
fees of $60 per member can also be counted as revenue.
 Substantial profit—while Costco’s profit within Australia would not be enormous due to
massive set-up and expansion costs, the worldwide profit would be substantial.
 Total assets—the number of warehouse-sized stores that are being opened in residential
areas.
Marking scheme:
Two characteristics listed—1 mark
1 mark for each characteristic described and justified using Costco to illustrate the answer
b. Identify two typical management functional areas (other than operations and human
resource management) that you would expect to find at large-scale organisations such
as Costco and Aldi. (2 marks)
 Finance department where the focus is on planning, maintaining and reporting on the
financial aspects of the organisation’s performance.
 Marketing where the focus is on developing strategies to create an ongoing relationship
between the organisation and its customers.
 Research and development where the focus is on studying and developing new and
improved products for the organisation.
Marking scheme:
1 mark for two functional areas identified—1 mark
1 mark for each functional area with characteristics identified
c. Aldi and Costco understand the importance, both legally and ethically, of providing a
safe and healthy workplace at their supermarket outlets.
Identify and explain the steps of a policy development process that they would need to
follow in order to create an effective occupational health and safety policy. (6 marks)
The policy development process involves a multi-step process (that is, a systematic process).
The steps of a policy development process Cosco and Aldi would need follow in order to create
an effective occupational health and safety (OH&S) policy are:
1 Costco and Aldi have both identified that an OH&S policy needs to be created as part of
their legal compliance and moral (ethical) responsibilities relating to providing a safe
workplace for all their employees.
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2 Both organisations must undertake research and analysis into what guidelines must be
included in the policy and what procedures and processes must be included and adhered to
in the workplace. Initially, this will require them to refer to the relevant legislation. They may
also refer to similar documentation prepared by other organisations.
3 Both Costco and Aldi would then gain input from their stakeholders (those parties with a
vested interest, such as management, employees and unions). This can be gained through
forming working parties or holding meetings to gain input.
4 Following these discussions, the draft OH&S is then formulated, circulated and displayed
(posted). Comments and feedback relating to the draft document are requested. The
working party responsible for developing the policy will then review the feedback and the
proposed changes.
5 The final copy is then prepared and put to the appropriate level of management for sign-off.
Information and training sessions need to be organised for staff to ensure that all parties are
aware of their responsibilities under this new policy.
6 The final step in the process once the policy has been implemented is the evaluation stage.
Costco and Aldi need to determine whether the policy has helped the respective
organisations to achieve their objective of providing a healthy and safe workplace.
Marking scheme:
Note: The number of steps identified may differ, but it should be four to six and they need to be
sequential.
List of steps (four)—1 mark
Identification of some steps (that is, some characteristics included)—2 marks
Description of some (two to three) steps—3 marks
Identification of all steps, minimal description—4 marks
Identification, description of all steps—no reference to legal or ethical aspects—5 marks
Identification, description of all steps, legal and/or ethical aspects, linked to Costco and Aldi—
6 marks
d. Identify, describe and justify two performance indicators that could be used to evaluate
the effectiveness of the newly created occupational health and safety policy. (4 marks)
A performance indicator is a measure used to determine the effectiveness and efficiency of an
organisation in reaching its performance and organisational objectives.
Two performance indicators (PIs) that could be used are:
 Number of workplace accidents that occurred since the introduction of the new occupational
health and safety (OH&S) policy, compared to the number of workplace accidents that
occurred prior to the introduction of the new policy. If the number has declined, this would
indicate that the policy is effective and has created a safer workplace for the employees.
 Level of staff satisfaction—by conducting an attitudinal survey of staff it can be determined
whether staff now feel they are working in a safer environment, are aware of and practising
their safe workplace practices and feel they are more productive. The comments would then
be compared to previous surveys to determine whether the feedback is more positive.
Other PIs could be:
 number of staff who have returned to work on alternative work programs following an
accident/injury
 number of unsafe practices logged by the OH&S committee as needing attention
 workplace audit—determining the number of unsafe work practices following and prior to the
introduction of the new policy
 WorkCover premiums.
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Marking scheme:
List of two relevant performance indicators—1 mark
Identification of two relevant performance indicators—2 marks
Description of one relevant performance indicator—1 mark
Description and justification of one relevant performance indicator—2 marks
Description and justification of two relevant performance indicators—4 marks
e. Identify and explain one factor from the macro environment and one factor from the
operating environment that could be acting as a pressure on Australian retail
businesses to develop an online store as part of their business operation. (4 marks)
Students could choose one relevant factor from both the macro and operating environments,
such as:
 macro environment
 technological development, for example the increased use of the Internet has changed
shopping habits
 economic, for example the increase in the value of the Australian dollar
 global
 social
 operating environment
 customers
 competitors
 suppliers.
Marking scheme:
List of two relevant factors linked to the correct level of environment—1 mark
Identification of two relevant factors linked to the correct level of environment—2 marks
Identification, explanation of one relevant factor, linked to the correct level of environment—
2 marks
Identification, explanation of two relevant factors, linked to the correct level of environment—
4 marks
f. Evaluate one positive and one negative contribution that online stores make to the
Australian economy. (4 marks)
Sample answer:
Online stores can make a positive contribution to the economy if the goods they are selling are
manufactured in Australia and sold in Australia. In this way, the money remains within the
Australian economy by virtue of its contribution to our gross domestic product, being the total of
all goods and services produced within Australia in one year. It also contributes to the level of
employment, as workers would be employed locally to manufacture these goods. Also, it can
act to increase the revenue of Australian businesses that then need to deliver these products,
for example Australia Post.
Online stores can also be judged as making a negative contribution to the Australian economy
if they are importing the goods being sold, as they are making a negative impact on our
balance of trade. The balance of trade relates to the value of our export income compared to
the amount of monetary value of goods imported into Australia. Our economy is adversely
affected if the total value of imports is greater than the total value of exports. Loss of
employment in the traditional retail sector will have flow-on effects to other parts of the
economy as employees will not be paying taxes nor spending their income on other purchases;
they may even need to draw on social welfare benefits, hence leading to an increase in the
outlays of the government sector.
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Marking scheme:
Description of one relevant positive contribution, not directly linked to the economy—1 mark
Description of one relevant positive contribution, directly linked to the 24
economy—2 marks
Description of one relevant negative contribution, not directly linked to the economy—1 mark
Description of one relevant negative contribution, directly linked to the economy—2 marks
Question 2
a. Define the following terms.
i. corporate culture (1 mark)
Corporate culture refers to the shared values and beliefs held by an organisation. It
demonstrates how an organisation’s employees and management behave and interact and
handle relations with their stakeholders. It can be reflected in many ways, such as dress
code, office layout and the organisation’s treatment of clients. Often, the corporate culture is
implied rather than expressly defined and develops organically over time.
ii. values statement (1 mark)
A values statement outlines what an organisation sees as the values that are at the core of
its business; for example, integrity, openness, accountability and boldness have been
identified by Wesfarmers as being core to their entire business group.
b. Describe two ways that management can develop an organisation’s corporate culture.
(2 marks)
Students could choose any two relevant ways. Suggestions are listed below.
Corporate culture refers to the shared values and beliefs of an organisation. These can be
developed by:
 creating a values statement for the organisation—this will identify the values that the
organisation has determined to be important and which should act as a starting place to
model its corporate behaviour
 creating written company policies and objectives that reflect the official objectives and
mission of the organisation
 management and the leadership team’s example as role models
 human resources through its recruitment, selection and diversity policies
 the implementation of induction and training programs
 rewarding and recognising appropriate behaviour
 mentoring new and existing employees to ensure that they adopt the desired culture
 performance appraisal—to ensure that employees are embracing the desired culture
 rituals—after-work drinks on a Friday night, celebratory morning teas.
Marking scheme:
Identification of two ways related to corporate culture—1 mark
Description of one way related to corporate culture—1 mark
Description of two ways related to corporate culture—2 marks
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c. Identify and explain the relationship (link) between an organisation having a positive
corporate culture, its level of organisational productivity and its level of business
competitiveness. (3 marks)
Corporate culture, being the shared values and beliefs of a workplace, is an important
determinant of how effectively and efficiently an organisation functions. Employees working in
an organisation regarded as having a positive corporate culture will share in the views, direction
and priorities of that workplace. This will lead to them having a greater feeling of self-worth and
loyalty. Their level of job satisfaction will be greater and this will contribute positively to their
level of productivity. This will also enhance the creation of a team environment. The positive
culture of the team will also contribute to productivity by increasing the self-worth of both
individuals and the team as a whole. The positive corporate culture and the increased level of
productivity will give the organisation a competitive edge within its industry. Therefore, the level
of business competitiveness is in a direct relationship with the other two factors (corporate
culture and organisational productivity) and ultimately benefits from both these factors.
Marking scheme:
Brief description of three terms, no link—1 mark
Description and some link—2 marks
Explanation of three terms and relationship linked—3 marks
Question 3
a. Discuss two differences between the operations of a service business and the
operations of a manufacturing business. Illustrate your answer with examples from
Boeing and another organisation you have studied this year. (4 marks)
The following table provides some examples of the differences between a service business and
a manufacturing business. Examples are provided based on Boeing and a school.
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Manufacturing business
Service business
Example
Products/outputs are tangible
and produced
Services are intangible and
performed
Boeing manufactures an aeroplane from
component parts
A school facilitates the learning process for
a student
Production/consumption
occurs separately
Performance and consumption
often occur simultaneously or
concurrently
Boeing manufactures a plane that is
purchased by airlines and used by
passengers for many years
In regard to teaching, the service is being
provided immediately
Product can be stored as
inventory
Record of service is maintained
Boeing can store component parts or if
needed a completed plane
In teaching, a record is kept of the lesson
and of each student’s achievements
Output (product) can be
standardised in quality and
design
Service is often specifically
provided to meet
individual/customer needs
Boeing would be aiming to produce a
consistent, quality product
Teaching is designed to suit an individual
student’s needs
Minimal customer contact
Higher degree of customer/client
contact
Boeing has no direct relationship with the
ultimate customer, for example passengers
A teacher has close and ongoing contact
with each student
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Marking scheme:
Description of two differences—1 mark
Description of two differences and link to examples—2 marks
Discussion of two differences, no link—3 marks
Discussion of two differences and linked to examples—4 marks
b. Boeing acknowledges the effect of its operations, products and services has on the
environment and is committed to reducing its impact. The key elements of an operations
system are inputs, processes and outputs.
Discuss how ethical and socially responsible management practices could affect each of
these elements at Boeing. (6 marks)
Social responsibility relates to an organisation’s commitment to society beyond its legal
responsibilities and obligations. Ethics refers to the moral standards that are adopted by an
organisation based on its belief of what is ‘right and wrong’ in the actions its takes.
As a socially responsible and ethical organisation, Boeing wants to ensure that it reduces its
impact on the environment.
All organisations adopt an operating system that has the key elements of inputs, process and
outputs. For Boeing, its inputs are the raw materials and component parts, machinery and
equipment, technology, capital, information, and the human skills and effort. When sourcing its
inputs, such as raw materials and component parts, the organisation should ensure that its
suppliers are using environmentally sustainable processes in producing components. It should
also ensure that the suppliers’ employees are being provided with a safe and family-friendly
workplace, and that they are minimising the use of energy and water by using environmentally
friendly processes, such as solar heating and recycling.
Processing refers to the transformation of inputs into outputs. During this part of the operations
process, Boeing must ensure that it is implementing ethical and socially responsible work
practices, such as a diverse workforce, equal pay/position (not gender based), family-friendly
benefits, and occupational health and safety (OH&S) programs. Creating this environment will
mean that the workers have more job satisfaction and ownership over their part of the
production process. Also important is the correct handling of materials, and, in particular, the
use of appropriate waste disposal processes. This includes ensuring that there are no toxic
emissions and that all waste is disposed of in an environmentally friendly manner. Quality
management will also ensure that unsafe or defective products do not make their way through
the system. In the construction of an aeroplane there are millions of component parts; it is
therefore very important that a total quality management (TQM) approach is adopted to ensure
the total commitment of all staff to the attainment and maintenance of quality in the operating
system.
Outputs are the finished product or service from the operating system. Boeing’s adoption of a
TQM approach should help ensure that all their products are of a high quality, are reliable and
fit for their purpose. As part of its marketing program, Boeing would like to be able to state that
their products are of high quality, built to meeting the needs of customers, reliable, safe, not
harmful to passengers’ health and safety, nor harmful to the environment. If these claims are
true, then the organisation could be judged as being both ethical and socially responsible in its
approach.
Marking scheme:
Basic outline of the three elements—1 mark
Weak discussion of practices—1 mark
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Marks to increase based on the level of discussion of practices related to each of the three
elements—up to 2 marks for each element (the discussion could include one practice for each
element in detail or more than one but with a less detailed explanation provided)
c. The Human Resource Manager at Boeing will be required to hire 160 new employees
who will work in the plant to manufacture the moveable trailing edge (flaps), which
controls the aircraft’s take-off and landing.
Describe two recruitment methods that could be used to ensure that a large pool of
applicants apply for these positions. (2 marks)
Recruitment methods—students choose two:
 advertising—print media
 electronic recruiting
 government employment agencies
 personnel management and recruitment consultants
 outplacement firms
 previous job applicants and employee referrals
 graduate recruitment
 unsolicited applications.
Mark allocation:
1 mark for each method described
d. Boeing currently employs the workers at its Port Melbourne plant under a collective
agreement. Some of the job applicants have requested that they would prefer to be
employed under the award system rather than being part of the collective agreement.
Analyse the advantages and disadvantages of both types of employment agreement for
both the employees and management. Make a recommendation to Boeing management
as to whether they should continue with the current practice of using a collective
agreement to cover their workers’ pay and working conditions.
(6 marks)
The tables on the following page list points that students could include in their analysis of both
types of systems (award and collective agreement). They must make a final recommendation
about which option Boeing management should adopt.
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AWARD
Advantages: employee and employer
Disadvantages: employee and employer
Centralised system of wage determination that applies
to all workers within a given industry or occupation.
Must incorporate NES (10 minimum standards)
Applies to all workplaces. Doesn’t allow for individual
workplace circumstances to be considered
Employers don’t have to spend time negotiating with
workers; they just apply the award conditions
Doesn’t encourage employees and employers to work
collectively to achieve better pay and working conditions and
increased productivity
Employees know that their pay and working conditions
at their workplace will be the same as others at other
workplaces working under the same award
Provides no opportunity to recognise or provide increased
remuneration linked to increased performance or increased
productivity levels
Workers are guaranteed four weeks paid leave for
each year of service; shift workers are entitled to five
weeks
No ability to negotiate a cash-out-leave entitlement
Industrial action is allowed during a protected period or
after an order from Fair Work Australia (FWA)
Result from submissions to FWA by employers (and
their peak bodies) and the union representing the
industry or occupation
COLLECTIVE AGREEMENT
Advantages: employee and employer
Disadvantages: employee and employer
Negotiated with a collective group, so it is possible to
put forward a wide range of claims/proposals during
the negotiation stage
Employees can ask for increased pay and working
conditions and the employer can ask for an increased
level of productivity
Time-consuming process and could be a disadvantage for
employees if they are not able to negotiate on equal grounds
with an employer
Submitted to FWA for approval, thereby providing thirdparty checking of the agreement
Pay and working conditions are underpinned by NES
and the relevant award. The Better Off Overall Test
(BOOT) checks the agreement against the award
Tenure—up to four years—certainty for employees
If pay rises/pay scale has been locked into a four-year
schedule, this may reduce the level of flexibility to negotiate
pay rises if economic conditions change during that period
Unions can be a signatory to the agreement, and
employees are able to seek union assistance
Employers may prefer not to have any union representation
Unfair dismissal protection is provided for employees
Employers are able to offer a ‘cash out’ option to
employees for part of their annual leave entitlement
The employer is not able to force employees to take this
offer
Marking scheme:
Broad/general description of advantages/disadvantages—1 mark
Explanation of advantages/disadvantages of an award and a collective agreement—
2 marks
Analyse two advantages/two disadvantages of both an award and a collective agreement—no
recommendation to Boeing—4 marks
© VCTA
Published September 2012
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BUSINESS MANAGEMENT UNITS 3 AND 4
Analyse two advantages/two disadvantages of both an award and a collective agreement and
then make a recommendation (that is, evaluate) to Boeing—6 marks
e. The Human Resource (HR) management team has appointed you as an HR consultant
and has asked you to review its staff motivation strategies.
Compare two theories of employee motivation—Maslow’s hierarchy of needs theory and
Locke’s goal-setting theory—that will assist the HR management team to manage staff
motivation effectively in order to maximise the contribution of employees to the overall
performance of the organisation. (6 marks)
Maslow’s hierarchy of five needs theory and Locke’s goal-setting theory both act to motivate
employees. Both theories recognise that the challenging nature of ‘the job’ can act to motivate
an employee. Maslow, however, believes this to be the final tier in the hierarchy of needs,
whereas it is the basis of Locke’s theory.
Maslow’s model of needs is a behavioural motivational theory, whereas Locke’s goal-setting
theory relates to an organisational approach. Maslow believes that individuals have a hierarchy
of needs and that they are motivated by the organisation providing or meeting the need of the
next level in the five-level hierarchy. It is only the top level of the hierarchy (self-actualisation)
that directly relates to the challenge of the job that is acting as a motivating force, whereas
Locke bases his theory on the importance of setting challenging goals in relation to a job.
Maslow does not recognise in his theory any direct link between the individual’s level of
motivation and performance to overall performance of the organisation.
Locke’s theory of motivation is based on motivation being derived from establishing clear,
specific, challenging goals and the performance of the employee. These goals are set by the
employee and their manager and require the employee to gain periodic feedback relating to the
achievement of these specific goals. The individual goals relate directly to the job undertaken
by the employee and then link to the goals set by their work team, department and the overall
organisation. The feedback (positive) will provide the employee with the feeling of achievement
and acts to motivate them to improve their job performance over a longer period of time. It also
assists them to feel that they are contributing to the overall performance of the organisation.
Marking scheme:
Identification of one similarity or one difference between the two theories—1 mark
Explanation of two similarities and two differences between the two theories—4 marks
Comprehensive explanation of both similarities and differences between the two theories—
5 marks
Comprehensive explanation of both similarities and differences between the two theories and
linked to the overall performance of the organisation—6 marks
Question 4
a. Define the term ‘redundancy’. (1 mark)
Redundancy occurs when an employer no longer requires the duties that an employee has
been performing to be undertaken by anyone else. It is a form of termination that is involuntary
(decided by the employer) and has no link to an employee’s poor performance or misconduct.
Redundancy can occur as a result of an organisation undergoing a restructure in order to
increase its business competitiveness or profitability. It can also occur as a result of a business
merger, acquisition or because of planned downsizing.
Mark allocation:
1 mark for the definition
© VCTA
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BUSINESS MANAGEMENT UNITS 3 AND 4
b. Define the term ‘organisational restructure’. (1 mark)
An organisational restructure relates to the changing of the framework, typically a hierarchy,
whereby the roles and levels of management, power and responsibilities are defined,
delegated, controlled and coordinated are redefined. The restructure may occur due to a
change in the organisation’s objectives and strategy in response to either external or internal
pressures from the business environment of that organisation.
Mark allocation:
1 mark for the definition
c. Kotter’s eight-step theory of change management can provide assistance to an
organisation when responding to a significant change issue facing it.
Analyse how the Operations Manager and Human Resource Manager as part of the
change team at Fairfax could apply this theory and develop strategies to assist the
organisation to overcome resistance for change and make the transition more effective.
(10 marks)
Once an organisation has identified a significant change issue, it can adopt Kotter’s theory of
change to assist it to successfully implement and adopt the change. If the organisation does not
adopt this strategy, then it can face problems, such as resistance, when trying to successfully
implement the change. Potential problems are a lack of direction and focus, alienation of
internal (employees) and external (unions) stakeholders. As part of the change team, the
Operations Manager and the Human Resource Manager would play important roles in assisting
the organisation to make a smooth transition with the proposed restructure.
Set out below is an example of the points students could raise in their answer.
© VCTA
Step
Kotter’s eight-step theory of
change at Fairfax
Operations Manager (OM)—
Fairfax
Human Resource (HR)
Manager—Fairfax
1
Establish a sense of urgency
Fairfax had been suffering from
decline in reader numbers for
many years
This had adversely affected its
revenue (gained from advertisers)
and its profitability
Format of The Age
Technology—needs updating
Too many employees—too costly
2
Assemble a group of people
(change team)
A team comprised of senior
executives across the functional
areas of Fairfax headed up by the
CEO
Assist the board of directors to
determine what is required to
make Fairfax operations more
productive and profitable
Assist the board of directors to
determine the final number of
employees to be retrenched
Assist the board of directors to
evaluate the impact the change
will have on the remaining
employees
3
Create a vision for the
organisation
Fairfax is to:
 restructure the organisation by
changing The Age and The
Sydney Morning Herald into
tabloid format
 charge for online content
 change the location of its
printing plants
Provide input into:
 the decision to change the
format of the newspapers from
broadsheet to tabloid format
 the relocation of its printing
plants
 the closure of the Tullamarine
and Chullora plants
Provide support and advice
relating to staffing issues
associated with this new vision
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BUSINESS MANAGEMENT UNITS 3 AND 4
© VCTA
4
Communicate the vision to all
within the organisation
The vision was announced to all
stakeholders by the Fairfax
management (CEO)
As part of the change team,
provide input on operational
changes, for example technology,
plant and equipment required to
implement the vision, and
communicate the benefits of the
changes to all staff members
As part of the change team,
provide advice to the board of
directors on the options available
to reduce staff numbers by 1900,
for example through natural
attrition, redundancies (voluntary
and involuntary) and resignations
Help in determining the timing
and manner of advice to both
employees and their respective
unions
Work with the board of directors
in determining the ways that
employees are to be advised of
the restructure; for example, the
use of an initial mass meeting to
advise staff, followed by more
detailed meetings with affected
staff
Ensure that unions are advised of
the proposed change
5
Empower others to act on the
vision
Functional areas need to work on
strategies to implement the
restructure. An environment that
provides support and constructive
feedback needs to be created
OM teams should be formed to
determine the specific changes
needed in production to change
from broadsheet to tabloid format,
for example facilities, equipment
and technology
HR needs to work on
retrenchment of employees and
the relocation of other employees
Arrange for training for any
updated technology
Work closely with unions to
ensure that they support their
members
Provide outplacement services to
assist retrenched employees
6
Plan to achieve short-term gains
Fairfax needs to determine a
progressive implementation of the
restructure
Provide feedback to all staff on
the progress of the change
OM teams need to have set
deadlines relating to incremental
production changes
HR needs to adopt a timeline by
which employee numbers are to
be reduced—could be a
progressive target in line with OM
changes
Make sure retrenched employees
are feeling supported and using
the outplacement services
7
Consolidate all the changes
Fairfax needs to make sure it is
now keeping up the pressure to
finish its proposed restructure
within the set time frame
OM teams now nearing
completion of plant closures,
changes to format, etc.
HR—staff numbers should now
be at the required level
Training programs should now be
completed
Performance management
programs should now be in place
8
Institutionalise the new
approaches
OM needs to ensure that all areas
of operations are productive—
both print and online
HR needs to ensure that a
positive corporate culture exists
at the restructured organisation
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BUSINESS MANAGEMENT UNITS 3 AND 4
While Kotter’s theory provides a systematisc framework for change, it does not test or reflect on
how successful the change has been. One of the major resistors to change can be employees,
and this is one area where assessment can be undertaken. This can be measured by the level
of satisfaction and commitment of remaining employees. If Operations Management and
Human Resource management have performed their roles successfully, then Fairfax should be
a more competitive organisation due to the change in structure and changes in production
methods; and its workers, while fewer in number, are highly trained and motivated.
Marking scheme:
Outline of Kotter’s theory—eight steps—2 marks
Outline of theory, discussion of operations management (OM) role as part of change team to
overcome resistance and make the transition effective—3 marks
Outline of theory, discussion of Human Resource (HR) Manager’s role as part of change team
to overcome resistance and make the transition effective—3 marks
Outline of theory, discussion of how the role of the OM and HR Manager assist overcoming
resistance to change—3 marks
Outline of theory, discussion of OM role as part of change team to overcome resistance and
make the transition effective and linked directly to Fairfax—5 marks
Outline of theory, discussion of HR Manager’s role as part of change team to overcome
resistance and make the transition effective and linked directly to Fairfax—5 marks
© VCTA
Published September 2012
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