SOLUTION: BUSINESS MANAGEMENT, MAY (b) Factors to consider when deciding on the appropriate structure for an organization include the following:

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1 SOLUTION 1 (a) The structure of an organization defines the patterns of communication, the system of control and the command structure. (b) Factors to consider when deciding on the appropriate structure for an organization include the following: (vi) Size The size of an organization will determine the structure to adopt. A large organization is more likely to be specialized to favour a bureaucracy or traditional hierarchical structure whereas a small organization will prefer a centralized one. Chosen Strategy A company pursuing growth strategy will probably adopt a different organization structure from one which is pursuing a non-growth, low risk strategy. It must be able to move quickly, so the organization structure must allow quick decisions. This means that chains of command should not be long. Extent of Geographical Separation / Dispersion The greater the geographical distance from the head office, the greater the necessity for decentralized control and vice versa. Technology The level of technology adopted by the organization will influence the structure of the organization. A high technology firm will adopt a more decentralized structure to facilitate quick decisions. An organization that uses less technology on the other hand is more likely to adopt a centralized structure. Environment A firm operating in a dynamic environment needs a relatively flexible structure, whilst the firm operating in a stable environment will need a more rigid structure and firms operating in an intermediate environment need a structure somewhat between the two extremes. Extent of diversification A more diversified firm is more likely to adopt a decentralized structure whereas a non-diversified organization is more likely to adopt a centralized traditional structure. Page 1 of 6

2 SOLUTION 2 (a) Primary Stakeholders These are the key people involved in the managing of a business. They are central to all business activities as they are mostly affected by what the organization does. These are mostly internal stakeholders of the business. Examples of primary stakeholders are shareholders, creditors, customers and employees. Secondary Stakeholders Secondary stakeholders are also involved with the activities of the business. Secondary stakeholders are external stakeholders. They are not directly involved with the management of the business but are greatly affected by the decisions and activities of the business. Examples of secondary stakeholders of a business are the general public, societies, business support groups, government agencies and so on. (b) Decision making activities One of the steps or activities in decision making is for the manager to define the issue that needs to be addressed. A problem exists when there is a gap between what is expected and the actual happening. (vi) Another activity is for the decision maker to spell out the decision criteria that are vital for dealing with or solving the gap identified. In this activity the decision maker has to come out with what is relevant in making the decision. Another activity is for the decision maker to identify alternatives for solving the problem. Most times the decision maker has to select from a lot of feasible alternatives. It is recommended that some research is carried out to enable the decision maker come up with good alternatives. Once the alternatives have been identified it is necessary for the decision maker to analyze the various alternatives. A tool that can be used to come up with a good alternative is the SWOT analysis. After analyzing the alternatives to come up with their advantages and disadvantages, the decision maker has to evaluate the alternatives. Alternatives that are ranked high are more preferable to those with low values. Another activity that has to be undertaken by the decision maker is for him or her to implement the alternative that has been selected. A decision has no value until it is implemented. Once the alternative selected is implemented it is vital that follow ups are undertaken. Page 2 of 6

3 SOLUTION 3 SOLUTION: BUSINESS MANAGEMENT, MAY 2014 (a) Communication can be defined as an act by which one person gives to, or receives from another person information about that person s needs, desires or opinions. It can also be defined as a two-way process by which two parties create and share understanding. It is a two-way process because the original sender of the message becomes the receiver when he gets a feedback. (b) Factors to consider before choosing a medium of communication include the following: An important factor to consider in choosing a medium of communication is the urgency attached to the message to be communicated. A person who desires to transmit an urgent message may choose verbal communication. If there is the need for a permanent record of the communication, then written communication will be suitable rather than non-written communication. The medium of communication used should enable the communicator to accurately transmit whatever he intends to share with the other party and at the same time make it possible for the receiver to make the right meaning out of it. The state of mind of the intended recipient of the message must be taken into account prior to choosing a medium of communication. Another factor to consider is the cost involved in an attempt to communicate effectively. In choosing a medium of communication, the communicator will want to choose one that is most cost-effective. SOLUTION 4 (a) Quality refers to the specification or standards set in the design of product/services and the degree of excellence specified. OR Quality has been defined as a totality of features and characteristics of a product that bears on the ability to satisfy stated or implied needs (ISO 8402), whereas total quality management is a philosophy that stresses three principles for achieving high levels of process performance and quality. These principles are customer satisfaction, employee involvement and continuous improvement in performance. OR TQM is a management philosophy that emphasizes managing the entire organization so that it excels in all dimensions of products and services that are important to the customer. Page 3 of 6

4 (b) Fixed position layout is the arrangement where the manufacturing or service site is fixed in a place and employees come to the site with their tools to work. This type of layout makes sense where the product is difficult to move as in shipbuilding. Product layout is the type of layout where manufacturing equipment is arranged in the same sequence a s the operation performed on the production floor. This type of arrangement allows for continuous flow of production. (c) Advantages of product layout include the following: Raw materials, work in progress, finished parts and warehouse stock are reduced, leading to lower production costs and efficiency. Material handling is reduced as work is moved over short distances to the next stage of operation. Due to increased mechanization and the possibility of breaking work into simple tasks, low-skilled workers can be employed and this results in lower labour costs and less difficulty in training labour, Another advantage is reduced manufacturing area. Provided that machine utilization is good, less floor space is required for a given output. This is gained by a more compact arrangement of equipment, the possibility of improved machine utilization and greatly reduced store area. SOLUTION 5 (a) A matrix organization structure is one in which each employee reports to both a functional or divisional manager and a project or group manager. Employees have two bosses that is they work in two chains of command. One chain of command is functional and the other is a horizontal overlay that combines people team led by a project manager who is an expert in the team s assigned task. (b) The matrix structure gives an organization a great deal of cost-saving flexibility. Because each project is assigned only the number of people it needs, unnecessary duplication is avoided. By working together as a team, people come to appreciate the demands faced by those who have different areas of responsibility. It is an efficient means of bringing together the diverse specialized skills required to solve a complex problem. Problems of co-ordination are minimized because skilled personnel for a project work as a team. Page 4 of 6

5 Employees used in the matrix structure to undertake a project have the ease to move back into the functional organization once the project is completed. (c) Operations management is the systematic design, direction and control of processes that transform inputs into goods and services for internal and external customers. SOLUTION 6 (a) Advantages of bureaucracy include the following: (vi) Specialization In a bureaucratic organization, the duties of each post are clearly defined, and so are the qualifications of the person required to fill it. Systems of Rules and Procedures Activities in bureaucratic organizations are governed by the application of rules and procedures, thus leaving no room for deviations. Employment There is a great deal of certainty and security about working in a bureaucratic organization, hence some level of job satisfaction leading to higher productivity. Hierarchy of Authority There is precise hierarchy in the organization. Each manager has a clearly defined authority over subordinates in a particular field. Impersonality Detached impersonality governs decision making and activities in the organization and so there is the possibility of better decisions being made. Co-ordination As a result of standardization of skills and clear definition of duties and responsibilities, effective co-ordination is achieved in a bureaucratic organization. SOLUTION 7 (a) The term discipline is used to describe the situation when organizational members behave and conduct themselves in accordance with standards of behavior acceptable to the organization rules, goals and objectives. (b) Job evaluation is the process of analyzing and assessing the content of jobs in order to place them in an acceptable rank order which can be used as a basis for a remuneration system.

6 Page 5 of 6 SOLUTION: BUSINESS MANAGEMENT, MAY 2014 (c) Advantages of a job evaluation system includes the following: Salary structure is based on a formal study of work content, and the reasons for salary differentials between jobs has a rational basis which can be explained. Regular job evaluation ensures that the salary structure reflects current changes in work content of jobs, and it is not outdated so that pay differentials remain fair. A job-evaluated salary structure can protect an employer from accusation that rates of pay discriminate between different types of worker. Analysis of job content and worth are made available for use in recruitment and selection, training and development, evaluations of new or revised posts, etc. The salary structure is based on job content and not on the personal merit of the jobholder.

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