MSIN6001A/MSIN6001B MANAGEMENT PRINCIPLES (MECH2013/MECH2017)

MSIN6001A/MSIN6001B: MANAGEMENT PRINCIPLES-AN INTRODUCTION (MAST6001, MECH2013, MECH2017)

EXAMINATION PAPER WITH MODEL ANSWERS

APRIL/MAY 2013

The examination will last THREE (3)hours. The paper consists of TEN (10) questions. Each question is worth TWENTY-FIVE (25) marks. Candidates are required to answer FOUR (4) questions. If you answer more than FOUR (4) questions, only the first FOUR (4) answers will be marked.

You are advised to allocate your time as follows: Reading through all the questions and planning your answers to each of the questions Answering each question and checking your work Total 20 minutes 160 minutes 180 minutes

MSIN6001A/MSIN6001B: 2012/13

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MSIN6001A/MSIN6001B MANAGEMENT PRINCIPLES (MECH2013/MECH2017)

THERE ARE TEN (10) QUESTIONS IN THIS PAPER. Each question is worth TWENTY-FIVE (25) marks. Candidates are required to answer FOUR (4) questions. If you answer more than FOUR (4) questions, then only the first FOUR (4) answers will be marked.

QUESTIONS 1. Based onMintzbergsclassification of management roles, explain the process of management(how managers influence others to add value to resources). Give concrete examples to illustrate your answer. Managers create value by transforming inputs into outputs of greater value: they do this by developing competences within the organisation which, by constantly adding value to resources, is able to survive and prosper. According to Mintzberg, managers adopt one or more roles in the process of influencing others and adding value within the organisation. These roles can be classified into three categories: informational, interpersonal, and decisional. In the informational category, managers can act as monitors, disseminators or spokepersons. In their monitoring role, they seek and and receive information, scan reports, etc. For example when a manager collects and reviews funding applications. In the disseminator role, they forward information to others, send e-mails, memos, etc. As spokepersons, they represent their units to outsiders and deliver speeches and reports. In the interpersonal category, managers can act as figureheads, leaders and liaison persons. As figureheads, they perform ceremonial duties, receive visitors, etc. For example, signing letters of award to successful applicants. As leaders, they direct, motivate and inspire subordinates. This is an on-going task that happens every time she/he communicates with the staff. As liaison persons, they maintain information links in and beyond the organisation, for example, with government agencies. In the decisional category, they can act as entrepreneurs, disturbance handlers, resource allocators, and negotiators. As entrepreneurs they initiate projects and spot opportunities, like for example introducing new product lines. As disturbance handlers they take corrective action during crises and try to resolve conflicts among staff. As resource allocators, they decide who gets resources, budgets, etc. This can include scheduling. As negotiators, they represent their units during negotiation with unions and suppliers. For

MSIN6001A/MSIN6001B: 2012/13

MSIN6001A/MSIN6001B MANAGEMENT PRINCIPLES (MECH2013/MECH2017)

example, they can work with sponsors and governments to ensure consensus during decision making. 2. Evaluate Taylors assumptions about people and compare them with those of Mayo. Evaluate the accuracy of those assumptions and use a corporation of your choice to illustrate your answer. Taylor underlying assumptions were that scientific analysis and fact, not guesswork, should inform management. He believed that efficiency rose if tasks were routine and predictable. He advocated techniques such as time and motion study, standardised tools and individual incentives. Breaking work into small, specific tasks would increase control. Specialist staff would design these tasks and organise the workers. For example, he advocated the planning of the work of every workman at least one day in advance. Each man should receive complete written instructions, describing in detail the task which he has to complete, and also the means to be used. Mayo, on the other hand, introduced the idea of the social man in contrast to the economic man, who was the centre of earlier theories including Taylors. Instead of stressing the role of financial rewards, Mayo believed that group relationships and loyalties were much more important factors. He believed in humans desire to be continuously associated in work with his fellows. Financial incentives could only work if conditions of working group formation were first satisfied. Unlike Taylor, he believed that efficiency does not rise with routine and predictable tasks, but rather with the collective participation of workers in completing a task. The introduction of team work in organisation is an example of this theory. 3. Discuss Hofstedes five dimensions of culture. Use two countries of your choice to illustrate your answer. Comment on the limitations of Hofstedes work. Hofstedes model attempts to describe cultural differences between countries. He identified five dimensions of culture and sought to measure how people in different countries vary in their attitudes to them. 1. Power distance: the extent to which less powerful members of organisations within a country expect and accept that power is distributed unevenly. If we compare the US versus Greece according to Hofstede, PD is higher in Greece than in the US. 2. Uncertainty avoidance: the extent to which members of a culture feel threatened by uncertain or unknown situations. In our example, Greece shows much higher levels of UA than the US. This can be explained by the fact that Greece is a less stable society than the US, making people to value stability more.
MSIN6001A/MSIN6001B: 2012/13

MSIN6001A/MSIN6001B MANAGEMENT PRINCIPLES (MECH2013/MECH2017)

3. Individualism/Collectivism: individualistic societies are those in which the ties between individuals are loose, whereas collective societies are those in which people from birth onwards are integrated into strong cohesive ingroups which protect them in exchange for unquestionable loyalty. According to Hofstedes model, the US shows a higher level of I than Greece, which is much more C. 4. Masculinity/Femininity: M pertains to societies in which social gender roles are clearly distinct, whereas F pertains to societies in which social gender roles overlap. According to the model, these societies show similar levels of M and F. 5. Long-term and short-term orientation: LTO stands for the fostering of virtues oriented towards future rewards in particular perseverance and thrift. Its opposite pole, short-term orientation, stands for the fostering of virtues related to the past and present. As this dimension was added later on, no data for Greece is available. However, we can say that the US is probably more STO than Greece. In terms of criticisms, we can highlight the following elements: - Culture is not static (changes over time) - Culture is not uniform in a country - Surveys are not a suitable way of measuring cultural differences (at least not the only way) - A study of subsidiaries of one company cannot provide information about entire national cultures - These models tend to reinforce stereotypes - These models are too simplistic: culture cannot be measured by a few dimensions. 4. Discuss the criteria that people use for evaluating whether an action is ethical or not. Distinguish criteria used to justify individual actions versus corporate actions. In terms of criteria to justify if individual actions are ethical, people use moral principles, utilitarian approaches, human rights approaches, and individualistic approaches. They use moral principles when they think their decision is consistent with generally accepted principles. Utilitarianism approaches emphasise that the decision that benefits the greatest number of people is the best decision. Human rights approaches emphasise the respect of one or several human rights. Finally, they base their decision on individualistic principles when they think decisions that serve the individuals self-interest are right because in the long-run they will benefit society as well. In terms of criteria to justify if corporate actions are ethical, people use legal responsibilities, economic responsibilities, ethical responsibilities, and
MSIN6001A/MSIN6001B: 2012/13

MSIN6001A/MSIN6001B MANAGEMENT PRINCIPLES (MECH2013/MECH2017)

discretionary approaches. Decisions made under legal responsibilities aim to obey the law. Economic responsibility decisions emphasise that the only function of business is to act legally in the interests of the shareholders. Ethical responsibilities emphasise that business has a wider purpose, since it depends on aspects of the society in which it operates. Finally, in discretionary approaches actions are entirely philanthropic. 5. Explain the contribution of Vroom and Yetton to decision-making theory. How should managers decide which style to use? The idea behind Vroom and Yettons (1973) contingency model of decisionmaking is to influence the quality and acceptability of decision. This depends on the manager choosing how best to involve subordinates in making decisions, and being willing to change their style to match the situation. The model defines five leadership styles: autocratic, information-seeking, consulting, negotiating, and group. Managers decide which approach to take, depending on the situation, the time frame, the expertise of subordinates, her/his relationship with them, and especially on the extent to which she wants to involve her subordinates in the decision making process. In the autocratic style, the manager solves the problem and makes the decision herself using information available to her at that time. In the information-seeking style, the manager obtains the necessary information from her subordinate(s), then decides on the solution of the problem. In the consulting style, the manager shares the problem with the relevant subordinates individually, getting their ideas and suggestions without bringing them together as a group. Then she makes the decision that may or may not reflect her subordinates influence. Finally, in the group style, the manager shares the problem with her subordinates as a group. Together they generate and evaluate alternatives and attempt to reach an agreement on a solution. 6. Explain the concept of value chain introduced by Porter. How is the valuechain analysis useful for managers? Use examples to illustrate your answer. The concept of value chain introduced by Porter (1985) calculates the value added at each stage of a manufacturing or service process. Porter applied this idea to the activities of the whole organisation, as an analysis of each activity could identify sources of competitive advantage. Value chain analysis enables managers to consider which activities benefit customers, and which are more troublesome, perhaps destroying value rather than creating it. Value chain analysis can reveal if the business is good at marketing, outbound logistics and technology development but poor at operations and human resources management. The awareness may lead
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MSIN6001A/MSIN6001B MANAGEMENT PRINCIPLES (MECH2013/MECH2017)

managers to consider which activities the business should do itself, and which it should outsource to other firms. Each activity in the chain can contribute to a firms relative cost position and create a basis for differentiation. (Porter, 1985). For example, analysing the value chain helps managers to consider: which activities have most effect on reducing cost or adding value. If customers value quality more than costs, then that implies a focus on ensuring quality of suppliers. VCA can also reveal the linkages to reduce cost, enhance value, or discourage imitation, and show how these linkages relate to the cost and value drivers. 7. Compare the main characteristics of mechanistic and organic structures. Choose two organisations to illustrate your answer. In an organisation with a mechanistic structure, there is a high degree of task specialisation, peoples responsibility and authority are closely defined, and decision making is centralised. In an organisation with an organic structure, people are expected to work together and use their initiative to solve problems; jobs descriptions and rules are few and imprecise. The following table illustrates the main differences:

For example, Google is known for being a rather organic organisation. Communication is horizontal, team work is encouraged, and there is a low level of formalisation. This approach is believed to encourage creativity and innovation. On the other hand, a bank like JP Morgan possesses a mechanistic structure. Tasks are specialised and there is a clear hierarchy. Knowledge is located at the top management and communication is generally from the top down. Controls are emphasised and obedience is stressed. This mechanistic approach seems more appropriate for a bank, given the degree of specialisation required at different levels of the organisation.

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MSIN6001A/MSIN6001B MANAGEMENT PRINCIPLES (MECH2013/MECH2017)

8. Discuss French and Ravens sources of power. Give examples to illustrate your answer. French and Ravens sources of power include coercive, reward, referent, expertise, and legitimate power. Reward power refers to the ability to reward another if they comply with a request, coercive power deals with the ability to obtain something through fear of punishment or harm, referent power, also called charismatic power, occurs when some characteristics in a person are attractive to others, expertise power happens when people are willing to follow someones suggestion because she has the knowledge. Legitimate power is derived from the managers position in the organisation. Thus, a manager has legitimate power over her employees thanks to her position over them in the hierarchy of the organisation. An example of reward power can occur when a manager offers a promotion if an employee acts a certain way. An example of coercive power can occur when an authority says to a subordinate that if he behaves a certain way, then he will be punished for it. A manager who tells a worker not to file a complaint against the organisation because it could affect the workers performance evaluation is exercising coercive power. An example of referent power can be seen in cults, where the leader is so charismatic that drives the followers to do things against their own interests. An example of expertise power could be when a persons comprehensive knowledge of the literature in a particular field, and the use of this knowledge to shape the course of things, gives the person the authority to speak and decide about specific issues. In the classroom, lecturers have expertise power vis--vis their students. Finally, an example of legitimate power can be the power that a Director of Sales has over her sales force, simply because of her higher position in the organisation. 9. Discuss the strengths and weaknesses of the behavioural approaches to leadership. Use examples to illustrate your answers. Leadership refers to the process of influencing the activities of others towards high levels of goal setting and achievement. Behavioural approaches to leadership refer to what managers/leaders do to influence subordinates. Several models describe leaders behaviours. The most popular one is the Ohio State University model which can describes leadership behaviours from two dimensions: (1) Initiating structure (=degree to which a leader defines peoples roles, focuses on goal attainment, and establishes clear communication channels. Those using this approach focus on getting the work done), (2) Consideration (=degree to which a leader shows concerns and respect for followers). Surveys showed that supervisors displayed distinct patterns some scored high on initiating structure and low on consideration, while others were high on consideration and low on initiating structure. Some were high on both, others low on both.
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MSIN6001A/MSIN6001B MANAGEMENT PRINCIPLES (MECH2013/MECH2017)

In terms of strengths, behavioural models are widely used in training events (leaders can relate to them when they define their own styles), they are easy to understand, they allow us to make comparisons and set goals. As far as weaknesses are concerned, they dont consider the contextual and political influences of effective leadership. The personal characteristic that is stressed in these approaches is only part of the requirement (as influencing others can also be supported by institutional arrangements). Behavioural approaches alone only give us one dimension of leadership; they need to be complemented with other approaches like the traits approaches, contingency approaches, follower-centred approaches, etc. 10. Explain how operations management can contribute to the competitiveness of the organisation. Give concrete examples to illustrate your answers. Operation management can contribute to the competitiveness of the organisation by designing and implementing systems and processes that are repeatable, consistent, reliable, efficient and compliant with the legislation that governs the overall environment. For instance, in a franchise like McDonalds restaurants, operation management assures that systems and processes are consistent and reliable all over the world. This contributes to the competitiveness of the company, as it is able to maximise profits by implementing the same processes in all its restaurants. In addition, operation management can contribute to the competitiveness of the organisation by creating an operations system that is aligned with the goals of the organisation in terms of volume of output, variety of product, variation in demand, and visibility of process. Quality management in the operations process also contributes to the competitiveness of the organisation. It should not be separated from production: everyone is responsible for contributing to quality throughout the production process. This philosophy, known as TQM (Total Quality Management) is driven by customer needs and expectations and focuses on continually improving work processes. Examples of methods that can be used include team working, brainstorming techniques, and simple statistical process controls. Thinking about quality at the design stage brings important benefits. Choices here should incorporate ideas and information from as many insiders, customers and suppliers as is sensible. Such processes capture the prevention and right first time ideals and crea te opportunities to save cost and time, therefore contributing to the competitiveness of the organisation.

END OF EXAMINATION PAPER

MSIN6001A/MSIN6001B: 2012/13