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COMPAK | BUSINESS MANAGEMENT UNIT 3

BUSINESS MANAGEMENT UNIT 3

Unit 3, Outcome 1 assessment task: case studies and structured questionsMATT PICKETT | MONTMORENCY SECONDARY COLLEGE

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

ASSESSMENT TASK DETAILSName of taskCase studies and structured questions

Unit/area of studyUnit 3: Managing a Business

Area of Study 1: ‘Business foundations’

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

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

INSTRUCTIONS AND CONDITIONSAnswer all questions in this answer book. The marks for each question are indicated after each question. Additional space is available following the questions if you need extra paper to complete an answer. Clearly label all answers with the appropriate question number.

Conditions: Closed book

Time allowed: 60 minutes (plus 5 minutes reading time)

Marks allocated: 30 marks (final mark to be adjusted to a mark out of 20)

vcta.asn.au | published February 2017 | © Matt Pickett


QUESTIONSQuestion 1 (5 marks)

Online retailer Kogan.com listed on the stock exchange in July 2016, with founder and chief executive Ruslan Kogan and other shareholders retaining nearly 70 per cent of the business at the time of the share market float. The business started as a consumer electronics online store but has since expanded to include general merchandise and food, and purchased the Dick Smith chain of stores in March 2016. The online retailer is valued at $168 million and the shares floated at $1.80 a share. Kogan.com aims to expand the business by increasing sales of the group’s more profitable private brands.

a. In terms of legal structure, identify the type of business that Kogan.com became after the share market float. 1 mark

b. Compare two features of this type of business with those of a social enterprise.4 marks



Question 2 (3 marks)

‘It is important for a business to balance the interests of its various stakeholders. Different stakeholder groups have different priorities.’

Explain this statement with reference to Kogan.com, illustrating your answer using two stakeholders of this business.




Kogan.com aims to be a competitive and profitable online consumer business providing solid returns for shareholders. It aims to expand the company by offering new products and product categories using capital raised from the share market float, while at the same time meeting its ethical and social responsibilities.

a. Describe a practice that would help Kogan.com become more profitable while demonstrating its commitment to ethical conduct and social responsibility. 2 marks

b. Identify and describe how one area of management responsibility that could contribute to the achievement of Kogan.com’s objective to fulfil a market need. 1 mark




In the following extract, Richard Branson, founder of the Virgin Group, compares his leadership style with that of Steve Jobs, the late co-founder of Apple. The Virgin Group includes more than 40 companies worldwide covering sectors as diverse as financial services, transport, health care, food and drink, media and telecommunications.

‘Steve Jobs … had a meticulous eye for detail, and surrounded himself with like-minded people to follow his lead. While he was incredibly demanding of his people, he wasn’t the best delegator—he wanted to involve himself in every detail, which is the opposite of my own approach. Personally, I have always believed in the art of delegation—finding the best possible people for Virgin and giving them the freedom and encouragement to flourish. When I set up Virgin Records, I even decided to separate myself physically from the company, by moving into a houseboat.’

Source: Richard Branson, ‘Virgin's Richard Branson: Apple boss Steve Jobs was the entrepreneur I most admired’, The Telegraph, 6 October 2011, http://www.telegraph.co.uk/technology/steve-jobs/8811232/Virgins-Richard-Branson-Apple-boss-Steve-Jobs-was-the-entrepreneur-I-most-admired.html

a. Based on the information in the extract, identify and describe the management styles used by Steve Jobs and Richard Branson. 4 marks


http://www.telegraph.co.uk/technology/steve-jobs/8811232/Virgins-Richard-Branson-Apple-boss-Steve-Jobs-was-the-entrepreneur-I-most-admired.html



b. Discuss two advantages and one disadvantage of the management style used by Richard Branson, as identified in your answer to part a. 3 marks

c. Describe one management skill, other than delegation, that would be particularly relevant to the management style used by Richard Branson. Justify your choice. 3 marks




A number of articles have been written about the corporate culture of the American consumer electronics company, Apple. Some commentators have spoken about a result-driven work culture, an intense work ethic and a strong commitment to deadlines. Others have commented on secrecy and a degree of combativeness being features of the corporate culture. One employee claimed: ‘Culture here is strictly top down: any attempt to streamline, impact change, or even discuss a better way to do anything is strictly frowned upon when it comes from the bottom. Work longer/harder, don't complain or try to fix any of the myriad broken systems or processes …’

Sources: Jim Edwards, ‘What Apple employees say about the company's internal corporate culture’, Business Insider, 10 October 2013, http://www.businessinsider.com.au/what-apple-employees-say-about-the-companys-internal-corporate-culture-2013-10#anonymous-its-awful-but-the-food-is-nice-6 and Pauline Meyer, Apple Inc. organizational culture: features and implications, Panmore Institute, 8 September 2015, http://panmore.com/apple-inc-organizational-culture-features-implications

a. Explain the concept of ‘corporate culture’. Outline how improvements in corporate culture can lead to an increase in profits for a business. 3 marks

b. Distinguish between the real culture and the official corporate culture of a business. 2 marks


http://panmore.com/apple-inc-organizational-culture-features-implications

http://www.businessinsider.com.au/what-apple-employees-say-about-the-companys-internal-corporate-culture-2013-10#anonymous-its-awful-but-the-food-is-nice-6



c. Analyse the relationship between the management style of Steve Jobs and the corporate culture of Apple. 2 marks

d. Propose and justify a management strategy that Apple could develop to change its corporate culture. 2 marks



Suggested answersQuestion 1 (5 marks)

Online retailer Kogan.com listed on the stock exchange in July 2016, with founder and chief executive Ruslan Kogan and other shareholders retaining nearly 70 per cent of the business at the time of the share market float. The business started as a consumer electronics online store but has since expanded to include general merchandise and food, and purchased the Dick Smith chain of stores in March 2016. The online retailer is valued at $168 million and the shares floated at $1.80 a share. Kogan.com aims to expand the business by increasing sales of the group’s more profitable private brands.

a. In terms of legal structure, identify the type of business that Kogan.com became after the share market float. 1 mark

Kogan would become a public company (or publicly listed company) following the share market float.

Marking guide:

1 mark for identifying the correct type of business structure

b. Compare two features of this type of business with those of a social enterprise.4 marks

Sample answer:

Both public companies and social enterprises earn revenue from the sale of goods or services. However, public companies earn revenue to create wealth as its success is measured by this, whereas wealth creation by social enterprises is a tool used to achieve social change.

Both public companies and social enterprises aim to make a profit. However, a public company like Kogan.com aims to maximise sales and hence revenue in order to make a profit to reinvest it in the business or distribute it to shareholders. On the other hand, a social enterprise earns revenue to make a profit or surplus that is used to support cultural, community or environmental programs.

Marking guide:

For each feature:

1 mark for outlining a similarity (= 2 marks)

1 mark for outlining a difference (= 2 marks)




‘It is important for a business to balance the interests of its various stakeholders. Different stakeholder groups have different priorities.’

Explain this statement with reference to Kogan.com, illustrating your answer using two stakeholders of this business.

Sample answer:

A stakeholder is a person or group with a vested interest in the activities of a business. Every business has a wide range of stakeholder groups, such as customers, shareholders, employees and managers, which can be divided into two categories: internal and external stakeholders. All stakeholder groups of a business have different priorities, interests and expectations. The needs and priorities of some stakeholders can conflict with those of other stakeholders. The managers of a business must be aware of the different stakeholders and their interests and, as far as possible, balance the interests of the groups. For example, the shareholders of Kogan.com might be in favour of moving production offshore to reduce costs. However, such a priority is likely to conflict with the interests of employees who want secure and ongoing employment and who will think that a push to move production offshore will put their jobs at risk.

Marking guide:

2 marks for an accurate explanation of the statement

1 mark for describing two stakeholders and providing an example of their opposing interests


Kogan.com aims to be a competitive and profitable online consumer business providing solid returns for shareholders. It aims to expand the company by offering new products and product categories using capital raised from the share market float, while at the same time meeting its ethical and social responsibilities.

a. Describe a practice that would help Kogan.com become more profitable while demonstrating its commitment to ethical conduct and social responsibility.

2 marks

Sample answers:

Kogan.com can ensure that it enters contracts with suppliers that make products using ethically sourced raw materials, pay fair wages and provide safe working conditions for their employees. Increasing consumer awareness of and demand for ethical sourcing requires that businesses must ensure their supply chain is ethical. Operating ethically and in a socially responsible way can increase a company’s sales and hence profits. Consumers notice when companies are being socially responsible and will reward them by purchasing from them and demonstrating loyalty.

OR

Providing a responsible working environment and giving employees opportunities for career and skill development will instil a sense of purpose and commitment in employees and improve employee morale and performance. The most talented employees available are likely to be attracted to the company and will want to stay, which will lead to lower staff turnover and reduced recruitment costs. This in turn will lead to an improvement in labour productivity and therefore overall profit levels.



Mark allocation:

1 mark for describing a practice that would help Kogan.com become more profitable while demonstrating its commitment to ethical conduct and social responsibility

1 mark for explaining how the practice could achieve this

b. Identify and describe how one area of management responsibility that could contribute to the achievement of Kogan.com’s objective to fulfil a market need.

1 mark

Sample answer:

The area of marketing and sales would be responsible for helping Kogan.com achieve its objective of fulfilling a market need as it would be responsible for understanding customer needs and wants, helping other departments create products based on these needs/wants, analysing sales of current products, and promoting the company’s products to its target customers.

Marking guide:

1 mark for identifying a relevant area of management responsibility as listed in the VCE Business Management Study Design.

Note: In the context of the question, sales and marketing is the most appropriate area to describe. However, another area could be chosen (operations, finance, human resources or technology support), but a logical description of how the area would directly contribute to the objective is required.


In the following extract, Richard Branson, founder of the Virgin Group, compares his leadership style with that of Steve Jobs, the late co-founder of Apple. The Virgin Group includes more than 40 companies worldwide covering sectors as diverse as financial services, transport, health care, food and drink, media and telecommunications.

‘Steve Jobs … had a meticulous eye for detail, and surrounded himself with like-minded people to follow his lead. While he was incredibly demanding of his people, he wasn’t the best delegator—he wanted to involve himself in every detail, which is the opposite of my own approach. Personally, I have always believed in the art of delegation—finding the best possible people for Virgin and giving them the freedom and encouragement to flourish. When I set up Virgin Records, I even decided to separate myself physically from the company, by moving into a houseboat.’

Source: Richard Branson, ‘Virgin's Richard Branson: Apple boss Steve Jobs was the entrepreneur I most admired’, The Telegraph, 6 October 2011, http://www.telegraph.co.uk/technology/steve-jobs/8811232/Virgins-Richard-Branson-Apple-boss-Steve-Jobs-was-the-entrepreneur-I-most-admired.html

a. Based on the information in the extract, identify and describe the management styles used by Steve Jobs and Richard Branson. 4 marks

Sample answer:

Steve Jobs and Richard Branson appear to have very different management styles. Steve Jobs appears to have used an autocratic style, which is characterised by a manager having a desire to be in control, retaining authority and placing great importance on the achievement of tasks, and an expectation that team members will comply with their requests.





On the other hand, Richard Branson seems to use a laissez-faire approach to management. Managers using this style tend to give their subordinates a lot of freedom to make set their own objectives and make their own decisions, thereby allowing them to run their areas with little direction.

Marking guide:

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

1 mark for a description of each style including at least two characteristics of the style (two x 1 mark = 2 marks)

Note: Alternatively, for Steve Jobs the persuasive management style could be selected and for Richard Branson the participative style could be selected.

b. Discuss two advantages and one disadvantage of the management style used by Richard Branson, as identified in your answer to part a. 3 marks

Sample answer:

One advantage of Branson using the laissez-fair management style is that it would lead to strong motivation, empowerment and job satisfaction among his employees. This is because many employees, particularly managers, enjoy having the freedom to make their own decisions, which is characteristic of this ‘hands-off’ style. A second advantage is that the use of this style can help to create an environment that encourages creativity and innovation among employees. This means that employees have the opportunity to develop innovative ideas and put them into practice without the need to always gain approval from their manager. A disadvantage of using the laissez-faire style is that some employees, particularly those who have previously worked under different management styles (such as the autocratic and persuasive styles), might not be comfortable with this management style, including the autonomy and freedom to make decisions. For this type of employee this can be counterproductive, so it is necessary is to ensure that only employees who are comfortable with this style are employed.

Marking guide:

3 marks for outlining two advantages (2 marks) and one disadvantage (1 mark)

c. Describe one management skill, other than delegation, that would be particularly relevant to the management style used by Richard Branson. Justify your choice.

3 marks

Sample answer:

One management skill that is particularly relevant to a manager using the laissez-faire management style is communication. This includes personal communication (the sharing of information and understanding between people), organisational communication (where systems are used to share information with employees), and external communication (which involves the transmission of information to external stakeholders of the business). Having excellent personal and organisational skills are essential when using the laissez-faire management style, as communication tends to be less frequent. When employees are given freedom to make decisions it is important that they fully understand the company’s objectives and the limits placed on decision-making freedom.

Marking guide:

1 mark for describing a relevant management skill

2 marks for justifying the chosen skill




A number of articles have been written about the corporate culture of the American consumer electronics company, Apple. Some commentators have spoken about a result-driven work culture, an intense work ethic and a strong commitment to deadlines. Others have commented on secrecy and a degree of combativeness being features of the corporate culture. One employee claimed: ‘Culture here is strictly top down: any attempt to streamline, impact change, or even discuss a better way to do anything is strictly frowned upon when it comes from the bottom. Work longer/harder, don't complain or try to fix any of the myriad broken systems or processes …’

Sources: Jim Edwards, ‘What Apple employees say about the company's internal corporate culture’, Business Insider, 10 October 2013, http://www.businessinsider.com.au/what-apple-employees-say-about-the-companys-internal-corporate-culture-2013-10#anonymous-its-awful-but-the-food-is-nice-6 and Pauline Meyer, Apple Inc. organizational culture: features and implications, Panmore Institute, 8 September 2015, http://panmore.com/apple-inc-organizational-culture-features-implications

a. Explain the concept of ‘corporate culture’. Outline how improvements in corporate culture can lead to an increase in profits for a business. 3 marks

Sample answer:

Corporate culture refers to a set of shared values and beliefs of a business that guide its practices. Clues about the corporate culture of a business can be gleaned from observations of elements such as the dress code, the physical environment and how people interact with one another. It is an internal factor that management will try and influence in a positive way because a positive culture leads to improved employee engagement and satisfaction, increased productivity levels and improvements in quality in the production of products and services. These across-the-board improvements in turn lead to higher returns and hence greater profits.

Marking guide:

1 mark for a definition (brief explanation) of corporate culture

2 marks for explaining how improvements in corporate culture can lead to an increase in profits for a business

b. Distinguish between the real culture and the official corporate culture of a business.

2 marks

Sample answer:

The official corporate culture of a business is a desired culture, that is, a set of values and beliefs that the business wants to present to stakeholders and the public as its own. This official culture is usually demonstrated through company goals, documentation, slogans and logos. The real culture is the culture that actually prevails within a business, despite the way the official culture is presented. This can be determined by observing interactions between employees in a business and relationships within the business.

Marking guide:

1 mark for defining each term and showing the difference between the terms (= 2 marks)


http://panmore.com/apple-inc-organizational-culture-features-implications




c. Analyse the relationship between the management style of Steve Jobs and the corporate culture of Apple. 2 marks

Sample answer:

Steve Jobs management style is characterised by decision-making and control being centralised—in other words, a top-down approach. This has influenced Apple’s corporate culture, which is demonstrated by some employees feeling disengaged, not trusted or their input valued.

d. Propose and justify a management strategy that Apple could develop to change its corporate culture. 2 marks

Sample answer:

The predominant management style used at Apple could be changed to a participative (or consultative) style where communication is more open and employees feel valued and trusted, and employees’ contribution to decision-making is encouraged. This would lead to a culture of openness with employees feeling more engaged and focused on the goals of the business.

Mark allocation:

1 mark for outlining a strategy

1 mark for justifying the strategy



Teacher notesThis assessment task has been designed as case studies and structured questions and has a mark allocation of 30 marks.

As Outcome 1 of VCE Business Management Unit 3 (Managing a Business) contributes 20 of the 100 marks allocated to School-assessed Coursework for Unit 3, the mark for this assessment task will be adjusted to a final mark out of 20.

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


http://www.vcaa.vic.edu.au/Pages/vce/studies/busmngmnt/businesstindex.aspx

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