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Q. With reference to a contemporary business case study, discuss how a business can implement management strategies to respond to its key performance indicators (KPIs). 10 marks. If it is a 6 marker, then you may just need to talk about how flow helped improve net profit. That should be enough in terms of detail. One management strategy is implementing lean production techniques, such as flow. Flow involves ensuring that production happens smoothly without any constant starts and stops. This improves the rate of productivity growth (defined as the percentage change in the ratio of inputs to outputs from one period to another) as removing parts of the production process (such as certain production equipment) that are slowing it down helps a business produce faster and therefore produce more in a given period. Flow can also help improve number of sales (which are a numerical count of how many products were sold in a period) and net profit figures (defined as the amount remaining after all expenses have been subtracted from revenues) since faster production can allow a business to produce more and therefore sell more to meet demand which increases number of sales. Higher number of sales may lead to higher revenues which would help improve net profit. However, as flow may involve temporarily stopping production to identify parts of the production process that are slowing it down, it may cause a minor fall in the rate of productivity growth. Tesla Motors adopted flow in Quarter 2 2018 by removing excessive automation and conveyor belts that were slowing down its production process, allowing it to produce more cars compared to previous quarters, thereby increasing its rate of productivity growth. Although, Tesla’s rate of productivity growth would have been slightly hurt as it would have had to stop its production process to find out what slowing their production. As Tesla were able to produce faster and therefore produce more cars in Quarter 2 and subsequent quarters by implementing flow, this increased production of cars led to more cars being sold which increased their number of sales. An increase in number of cars sold increased Tesla’s revenues, which contributed to a lower net losses in Quarter 2 2018 and a net profit in subsequent quarters.

Another management strategy is cost cutting. As this involves reducing electricity, salary, rent and other expenses, it can help improve net profit. In Quarter 2 2018, Tesla laid off nine percent of its workforce in order to reduce its salary expenses. Tesla’s removal of excessive automation and conveyor belts would also have reduced its depreciation expense. These cost cuttings had a positive impact as Tesla’s net loss was lower in Quarter 2 compared to previous periods and it also made a net profit in Quarter 3 2018 due to lower salary and depreciation costs. Tesla’s implementation of lean production techniques helped increase its rate of productivity growth, net profits and number of sales and its cost cutting also helped improve its net profit figures. Q. With reference to a contemporary business example, explain one strategy that a manager can apply to achieve efficiency and effectiveness in operations. 6 marks Just in time is a materials management strategy whereby a business only orders inputs or products that are needed immediately. Since a business will only have those products that are immediately demanded by customers, it will prevent overproduction, which could otherwise lead to unsold goods perishing and therefore being turned to waste, hence improving efficiency. Also, as few inputs or products are kept on hand at once, it can reduce storage costs, thus improving effectiveness Tesla may use just in time. Tesla may only order car parts and other inputs from suppliers when there is demand for their vehicles. As this prevents their car parts from getting rusted due to being on the shelf and therefore being treated as waste, it improves efficiency. Just in time can also help reduce Tesla’s storage cost in their warehouses and factories as there are no excess car parts, thus improving effectiveness.

Q. With reference to a contemporary business example, evaluate one global consideration. In your answer, explain one management skill that can be useful in relation to the global consideration. 10 marks. One global consideration is the global sourcing of inputs, where a business purchase raw materials for its products from overseas countries. Cadbury uses global sourcing of inputs. A benefit of this is that it can allow a business to source cheaper materials compared to local prices, thus reducing their expenses. Cadbury sources cocoa beans for its chocolates from Ghana, allowing Cadbury to buy them for a cheaper rate compared to the cost of cocoa beans in the United States. However, since the supplier of inputs will be located overseas, there may be several delays in receiving inputs, which can hurt the ability of a business to meet customer demand. Cadbury may fail to meet customer demand as there may be delays in receiving shipments of cocoa beans from suppliers in Ghana as they are located far away from most of Cadbury’s manufacturing facilities. Another benefit is that global sourcing of inputs allows a business to source high quality raw materials that are not otherwise available locally. Cadbury is able to source high quality cocoa beans from Ghana that are not otherwise available in large amounts in the United States or the United Kingdom. However, there is a risk of raw materials getting spoiled or broken as they are transported from far away. For Cadbury, there is a risk of cocoa beans getting spoilt on the way as they have to be transported from Ghana to Cadbury’s manufacturing facilities, such as in the United States or United Kingdom. One management skill that can be used here is communication, which is the transmission of information or ideas from one party to another. Communication allows managers using global sourcing of inputs to ensure that suppliers of raw materials in another country clearly understand the quality and quantity requirements for inputs and by when those inputs are required. This allows a business to meet customer demand as it is able to manufacture products on time as inputs are received on time and to create high quality outputs. Cadbury’s managers can use communication to continue to ensure that cocoa suppliers in Ghana clearly understand the quality and quantity of inputs required by Cadbury for their products such as chocolates, and by when Cadbury needs them. This will allow Cadbury to produce the desired quality of chocolates and meet customer demand in time. Overall, global sourcing of inputs can be effective as it can help a business reduce its input costs, and the use of communication further helps address weaknesses of this global consideration by ensuring that cocoa beans are received on time.

Q. ‘With reference to a contemporary business example, explain the use of one global consideration’. One global consideration is global sourcing of inputs, defined as a business purchasing raw materials for its products from overseas countries. Sourcing inputs globally can allow a business to access high quality inputs for its products, thus helping it make better quality outputs. At the same time, a business can also source those materials cheaply due to lower production costs in certain overseas countries. For example, Cadbury, the chocolate manufacture, sources a key input in chocolates, cocoa beans from Ghana. Buying from Ghana allows Cadbury to source high quality cocoa beans as people in Ghana specialise at growing cocoa beans, while at the same time, Cadbury is also able to source them cheaply from Ghana due to lower production costs in Ghana compared to the United States.

Q. With reference to a contemporary business example, explain how a manager could apply Lewin’s Force Field Analysis to successfully implement change. Lewin’s force field analysis is a theory a business can use to identify driving and restraining forces relating to their change and later develop strategies to promote the driving forces and eliminate the restraining forces to get rid of the equilibrium to successfully implement change. Tesla used the theory in implementing a redundancy plan in 2018. The target of change was to implement a redundancy of some of their workforce. One driving force Tesla identified was reduction of costs as Tesla were facing losses. A restraining force here was Tesla’s employees, who felt anxious about losing their jobs. Tesla would have then given a numerical score to each force based on their importance, then analysed all these forces to determine how they can get rid of the equilibrium. Lastly, CEO Elon Musk implemented the strategy of clear communication by honestly explaining to employees that the redundancies had to be made so that Tesla can survive to achieve its long term vision, which led to employees more easily accepting the change. In the end, Tesla was able to implement the redundancies.

Q. Analyse the long term and short term effects of one motivation strategy. In your answer, explain one potential impact of your chosen motivation strategy on the corporate culture of a business.6 marks. Short-term effects on employee motivation of performance related pay  Can immediately motivate employees  Can create an efficient and effective work environment where all employees are trying to be the best

Long-term effects on employee motivation

May not be as effective after some time as employees may be satisfied by a certain level of pay  May create a negative sales-based culture over time in the business  Employees may get tired and stressed of having their pay constantly decided on a performance basis and on how well they achieve sales targets rather than having a stable, fixed salary  Some employees may get tired of and leave business due to an over-competitive work environment Can integrate the culture thing within the long term effects of the motivation strategy, but not necessary. Look at the sample: 

Define performance related pay. Then, A short term effect of performance related pay is that since there is a direct correlation between the efficiency and effectiveness of performance and pay, it can immediately push employees to perform better. Another short term effect is that it can create a competitive work environment, which can allow a business to produce better quality goods and services for customers as all employees are trying to do better than the other in order to receive more pay. In terms of long term effects, performance related pay may not be as effective since after some time employees might be satisfied with the level of pay they are getting, thus they will not be motivated to perform better to receive higher pay. In the long-term performance related-pay may also negatively affect the corporate culture of a business as employees may worry more about personal financial gain than what is positive work behaviour, thus creating a culture of dishonesty where employees may claim false recognition for the work of someone else in order to increase their pay.

Short-term effects on employee motivation of career advancement

Long-term effects on employee motivation of career advancement

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Employees may be motivated in the shortterm by the desire to impress their managers and get a career advancement.

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Some employees may give up after failing multiple times in advancing in their careers in a business May reduce staff turnover as staff will want to stay in the business to receive more career advancements

Short-term effects on employee motivation of investment in training  Employee may feel valued by the business and morale may improve  Could cost the business a lot of money

Long-term effects on employee motivation of investment in training  May help ensure employee loyalty to the business  Over time, by applying newly acquired skills and knowledge, employees can become more confident and feel more effective

Short-term effects on employee motivation of support  Employee morale and confidence may improve

Long-term effects on employee motivation of support  Employee loyalty may be strengthened  May create a positive culture throughout the business over time

Short-term effects on employee motivation of sanctions  May immediately instil fear in and therefore motivate employees to react as the manager needs them to

Long-term effects on employee motivation of sanctions  Over time, employees may develop resistance to sanctions  A negative culture of hatred of managers by employees may develop  Employees not willing to take risks and think creatively but rather just focusing on completing the assigned tasks  Highly demotivated employees may leave the business, thereby increasing staff turnover...