Business management and behavioral studies By: Syed Hassan Talal

ICAP Part Sub Chapter Chapter name Learning Book

Question part # objective page #
number
Q.1 a 8 Leadership 2.2 186
Q.1 b 8 Leadership 2.2 187
Q.1 c 8 Leadership 2.2 187
Q.1 d 8 Leadership 2.2 187
Q.2 a 7 Motivation 3.1 168
Q.2 b 7 Motivation 3.1 168
Q.3 a 1 Management concepts 2.2 6
Q.3 b i) 1 Management concepts 3.2 14
Q.3 b ii) 1 Management concepts 3.2 14
Q.3 b iii) 1 Management concepts 3.2 14
Q.3 b iv) 1 Management concepts 3.2 14
Q.4 a 3 Organisational culture 4.2 95
Q.4 b 3 Organisational culture 4.2 95/96
Q.5 a 11 Management information systems 1.7 241/242
Q.5 b 11 Management information systems 2.8 251
Q.5 c i) 11 Management information systems 2.5 248
Q.5 c ii) 11 Management information systems 248
Q.6 2 The business environment 8.5 69
Q.7 a 7 Motivation 1.3 156
Q.7 b i) 7 Motivation 3.2 169
Q.7 b ii) 7 Motivation 3.2 169
Q.8 5 Culture 2.3 131
Q.9 a 4 Managing change 2.2 114
Q.9 b 4 Managing change 2.2 114
Q.10 a 10 Negotiation skills and conflict resolution 1.1 217
Q.10 b i) 8 Leadership 1.4 179
Q.10 b ii) 8 Leadership 1.4 179

1
 Business management and behavioral studies By: Syed Hassan Talal
Solution

Q1.

a) The work situation depends on three factors:

▪ The relationship between the leader and the subordinates: If the leader is liked and respected, he is more likely
to have the support of his subordinates.
▪ The structure of the task. If the task is clearly defined, with clear goals, methods of working and standards of
performance, it is more likely that the leader will be able to exert influence.
▪ The position power of the leader. If the organization gives power to the leader, for the purpose of getting the
job done, this is likely to increase the influence of the leader.

b) When the work situation is unfavorable, a task-orientated leader is also more effective.
c) When the work situation is favorable, a task-orientated leader is more effective.
d) He argued that individual leaders are task-orientated, or relationship orientated by nature, and it is impossible
to change them

Q2.

a) Participate in the goal-setting process

▪ Ensure that the goals include intrinsically motivating work
▪ Ensure there is a system that can provide feedback on the achievement of goals
▪ Goals must be SMART (see above)
▪ Align personal and commercial goals
▪ When recording goals state, them in a positive statement
▪ Set priorities

b)
▪ unrealistically challenging – result is the employee simply gives up
▪ too easy – resulting in the employee slacking off, feeling under-utilized and lacking inspiration.
▪ goals create inflexibility and can lead to a narrow focus. This means that an opportunity that falls outside the
scope of recorded and stated goals is potentially overlooked as time spent on the opportunity will not help
achieve the previously agreed goals.
▪ goals may generate stress through a constant pressure and reference to needing to constantly perform at the
highest levels in order to achieve or exceed stated goals. This can detract from taking enjoyment and interest
from the task.

Q3.

a) Four Underlying principles

▪ There should be a science of work, based on the analysis of work methods and work times, with a view to
finding the most efficient way of carrying out tasks. A fair level of performance or efficiency can be identified.
Workers should be rewarded through higher pay if they succeed in performing more efficiently than the
expected or standard level.
▪ Workers should be selected carefully. They should have the skills and abilities that are well-suited to the work.
They should also be trained in how to do the work efficiently.
▪ The scientifically-selected and trained workers and the science of work should be brought together for the best
results and greatest efficiency.
▪ There should be an equal division of work between the workers and management, and workers and managers
should operate closely together.

2
 Business management and behavioral studies By: Syed Hassan Talal
Criticism

Scientific management is still associated with work study and time and motion study. It has been strongly
criticised because it results in dull, repetitive and monotonous work. Tasks are reduced to such small units,
such as tasks on a large production line in a factory, that they demoralise the workers who do the jobs. There
is a risk that when employees are doing dull, repetitive work, their efficiency will be low because they are not
at all interested in what they are doing.

b)

i) Liaison. Managers of groups within an organisation act as a link or bridge with other groups. For example,
different departments often.

ii) Disseminator. Managers disseminate information, acting as a channel of information within the group and
with others.

iii) Disturbance handler. They have a role in resolving conflicts and disputes and dealing with other similar
unexpected problems.

Negotiator. They negotiate with others and reach decisions through joint agreement.

iv) Initiator of change or improvements. They have an entrepreneurial role, and take initiatives

Q.4

a)

Decision making in Appetite Chocolates: In given scenario senior management retains most of the

authority to make the important decisions and policies. This falls under Centeralised type of decision making

Decision making in Franchises:

In a decentralized organization, the authority to take major decisions is delegated to the management of units
at lower levels in the organization structure, such as strategic business units (SBU) managers, and divisional

managers. It is evident from scenario, franchises contains above type of decision making.

b)

Advantages of centralisation

▪ Decisions by management are more likely to be taken with regard for the corporate objectives of the entity as
a whole. There is a very strong argument in favor of making strategic decisions centrally.
▪ Decisions by management should be coordinated more effectively if all the key decisions are taken centrally.
▪ In a crisis, it is easier to make important decisions centrally.

Advantages of decentralization

▪ In many situations, junior (‘local’) managers have much better knowledge than senior management about
operational conditions. Tactical and operational decisions are probably better when taken by local
management, particularly in a large organization.
▪ Giving authority to managers at divisional level and below helps to motivate the management team.
▪ Decisions can be taken more quickly at a local level, because they do not have to be referred to head office.
▪ In a large and complex organisation, many decisions have to be made –probably too many for senior
management at head office.

3
 Business management and behavioral studies By: Syed Hassan Talal
Q.5

a)

Deterministic systems

▪ Use predetermined rules

▪ Therefore, have predicted operations
▪ Giving predictable outputs
▪ Examples include machines and computer programs
▪ These systems will follow a standard and often have a rule book.

Self-organising or cybernetic systems

▪ Most complex type of system

▪ Continually changing
▪ Adapts to the environment
▪ Example trade union negotiations
▪ These types of systems are the least likely to be computerised
▪ Rely heavily on interaction from people

b)

Components of Personnel system

▪ Recruitment
▪ Redundancy
▪ Personnel management and control
▪ Personnel management reporting

Management can obtain following information from personnel system

▪ Benefits report
▪ Headcount (employee numbers) report
▪ Pay details and total wage expense
▪ Gender and diversity mix information
▪ Age profiling
▪ Tenure profiling
▪ Absence analysis

c)

i) An expert system is a computer program that simulates the judgement and behavior of a human or an
organization that has expert knowledge and experience in a particular field. Expert systems contain a database
of accumulated experience and scenarios as well as a set of rules for applying the knowledge to each particular
situation described by the program. Examples include legal diagnostics, medical diagnostics, processing a loan
application and on a social level, programs that play chess.

ii) Expert systems are most effective when the following preconditions exist:
▪ The problem is reasonably well-defined
▪ The expert can define some rules
▪ The problem cannot be solved through conventional transaction processing systems
▪ The expert can be released to focus on more difficult problems
▪ The investment is cost-justified

4
 Business management and behavioral studies By: Syed Hassan Talal
Q.6

Combination of many forces drive decision of investor to invest in specific region, industry. Porter's Five
Forces is a model that identifies and analyzes five competitive forces that shape every industry and helps
determine an industry's weaknesses and strengths. It is frequently used to identify an industry's structure to
determine corporate strategy, Porter's model can be applied to any segment of the economy to search for
profitability and attractiveness

Following are forces used to measure competition intensity, attractiveness and profitability of an industry or
market.

▪ threats from potential entrants

▪ threats from substitute products or services
▪ the bargaining power of suppliers
▪ the bargaining power of customers
▪ competitive rivalry within the industry or market.

Bargaining power of Buyers

The airline industry is made up of two groups of buyers.

i) Individual flyers.

ii) Travel agencies and online portals

Individual buyers can purchase tickets from online portals and can compare prices with different airlines
providing service in same region with same facilities. So individual buyer can reduce the profitability of MG
by compelling them to reduce their prices.

Travel agencies and online portals. This buyer group works as a middle man between the airlines and the flyers.
They work with multiple airline firms in order to give customers the best flight possible. Between these two
groups there is definitely a large number of buyers compared to the number of firms.

According to Porter buyer will be in position to dominate the decision,

▪ when the volume of their purchases is high relative to the size of the supplier
▪ when the products of rival suppliers are largely the same (‘undifferentiated’)
▪ when the costs of switching from one supplier to another are low.

MG should consider air service providers are very less in number in any developing country and those who
are providing have more or less same facilities. A very notable point here is low switching costs between
service providers because many people choose the flight based on where they are going and the cost at the
time. This is some loyalty to firms but not enough for high switching costs. Each customer needs a lot of
important information. They need to know the details of what is provided during the flight. Buyers need to
understand the timing of the flight and the safety aspects of flying in general. The service provided is unique.
Each airline has a niche. Some airlines focus on cost, while others focus on having the best amenities, etc.
Overall the bargaining power of buyers has an extremely low threat in this industry.

Threat of New Entrants

Threat of new entrants is another major aspect of the five forces. This aspect has a low threat for the airline
industry. Existing service providers have a large cost advantage. This industry requires a large amount of
capital and without a strong customer base there will be little to no profit in the first few years. MG should

5
Business management and behavioral studies By: Syed Hassan Talal
understand existing firms can and will use their high capital to retaliate against them with whatever means
necessary such as lowering prices and taking a loss. Consumers tend to only chose well-known names as airline
tickets are expensive, so people don’t want to give that money to firms they don’t trust. There is also a huge
safety aspect involved and most consumers feel safer with firms that have been around for a long period of
time. This industry requires plane and flying experience which also lowers the threat of entry. When firms
decide to enter the market, they first have to become licensed which can take about a year. After that they are
constantly being regulated by several organizations such as the Federal Aviation Administration and the
Department of Transportation. The time and money spend to solely open an airline company is enough to
prevent most people from entering the industry.

Threat of Substitutes

This industry has a medium substitute risk level. There are substitutes in the airline industry. Consumers can
choose other form of transportation such as a car, bus, train, or boat to get to their destination. There is however
a cost to switch. Some means of transportation can be more costly than a plane ticket. The main cost is time.
Planes are by far the fastest form of transportation available. Airlines surpass all other forms of transportation
when it comes to cost, convenience, and sometimes service. Consumers do sometimes choose other methods
for various reasons such as cost if they are not traveling very far which raises the risk.

Bargaining Power of Suppliers

In this case the major suppliers are the airplane manufacturers. The top two manufacturers in the world
currently are Boeing and Airbus. In this industry the inputs are extremely standardized. Airline companies only
seem to differentiate with amenities. The planes are very similar. Currently some manufacturers are trying to
make their plans more ecofriendly. Airline companies cannot easily switch suppliers. Most firms have long
term contracts with their suppliers. Planes are such high capital products that firms probably make long term
loan agreements and have more favorable credit terms when they don’t switch companies. It is difficult to
enter into the plane manufacturing industry because of the capital needed to enter. The amount of money and
expertise needed to make even one plane is around 200 million dollars. For this reason, there are very few
suppliers in the airline industry. Airline firms are the only source of income for these manufacturers, so their
business is extremely important. Based on these things the bargaining power of suppliers is high.

Rivalry among Existing Players

The last area of the five forces is the rivalry among existing players. The rivalry in the airline industry is very
intense for many reasons. The industry is currently very stagnant. It seems to be in the mature stage of the
business cycle. The number of competitors stays the same in the long run and it doesn’t seem to be under or
over capacitated. The fixed costs are extremely high in this industry. This makes it hard to leave the industry
because they are probably in long term loan agreements in order to stay in business. The products involved or
the planes are highly complex which also heightens the competition.

The strongest forces in this industry are the competition of existing firms and the power of suppliers. The
rivalry of existing players is high and will push out any firm that doesn't have enough capital. Suppliers are
strong forces because planes are so costly to make. If the suppliers changed the credit terms by even a small
amount it could mean a significant loss for the firm. On the other hand, the other forces involved seem to have
a weak threat. It is costly and time consuming to enter the market which lowers the risk of entry. Buyers have
a weak force because of the low switching costs and substitutes are weak because they are usually too costly.
The level of competitive rivalry overall is high.

6
 Business management and behavioral studies By: Syed Hassan Talal
Q.7

a) In given scenario it is evident despite of making notable efforts by Mr. Khadija employee turnover is still high.
She took steps for reducing turnover tendency by motivator factors of Herzberg, those are given below:

▪ Achievement
▪ Recognition
▪ Responsibility
▪ Advancement
▪ Growth

According to Herzberg, "The opposite of dissatisfaction is not satisfaction: it is not being dissatisfied."

She should take following measures to reduce dissatisfaction and turnover of employees

▪ Company policy
▪ Supervision
▪ Relationship with the boss
▪ Working conditions
▪ Salary
▪ Relationship with colleagues

b)

i) Ms. Fatima should follow following six steps for implementing MBO

▪ The organizational objectives should be expressed concisely in easily understood mission and vision
statements.
▪ The organizational objectives must be cascaded down to employees. This involves setting goals and objectives
for every business unit, department, team and employee – i.e. cascading down from level to level within the
organization. Goals should be SMART.
▪ Goal setting should be a participative with team members understanding how their personal goals and values
fit with the organization’s objectives.
▪ Monitor the progress of individuals and teams against their achievement of goals.
▪ MBO is designed to drive performance at all levels of the organisation. Whilst the overall approach,
participative nature and monitoring components of the goal setting process are all important, it is as equally
important to adopt a comprehensive evaluation and reward system. The system should allow managers to
strategically compensate employees for work they do and demonstrate that the achievement of objectives will
be rewarded.
▪ Repeat the above cycle

ii) Ms. Fatima may face following difficulties

▪ MBO is often challenging and lengthy to implement needing what can be perceived as an unnecessarily
expensive underlying goal tracking system.
▪ Implementing MBO requires commitment across the whole organisation. Significant employee resistance can
occur

Q.8

According to Hofstede culture is a property of groups, not individuals. There is no such thing as individual
culture. Culture is the collective programming of the mind that distinguishes the members of one group from
the members of another group. National cultures are different, as a result, the culture of business organisations
in one country will differ from the culture of organisations in a different country.

7
 Business management and behavioral studies By: Syed Hassan Talal
Five dimensions to differences in organisation culture arising from differences in national culture

▪ Power-distance dimension. This refers to the way in which power is dispersed within the organisation. When
the power-distance dimension is low, this means that inequalities in the distribution of power within the
organisation are minimized. When the power-distance dimension is high, inequalities in power are regarded
as acceptable and those without power look to those with the power to make the decisions for the organisation.
▪ Individualism versus collectivism dimension. In some countries the interests of the individual come before
the collective interests of the group.
▪ Uncertainty avoidance. This is the extent to which a group feels threatened and endangered by unexpected
and unfamiliar happenings. When a culture of uncertainty avoidance is high, work behavior such as precision
and punctuality are highly esteemed.
▪ Masculinity versus femininity. In some countries there is a much stronger cultural acceptance of ‘feminine’
qualities such as modesty, intuition and quality of life, rather than aggressive ‘masculine’ qualities of
aggressiveness and competitiveness.
▪ Long-term orientation versus short-term orientation. In some countries, there is a greater focus on short-
term goals and short-term results, whereas in other countries there is a greater willingness to consider the
longer term.

Q.9

a)

In given scenario two forces as identified by Kurt Lewin prevails as follows:

1. University management is driving force, those are supporting the need for change

2. Professors of university are restraining force who are opposing the decision of management.

There are two states as identified by Lewin

1. Current state (i.e. professors are not willing to accept Markers) and

2. Targeted state (i.e. SU management want to implement their decision and appoint Markers for marking
examination papers)

b)

According to Kurt Lewin change is only possible when the driving forces for change are stronger than the
restraining forces against change, and by increasing the driving forces, management run the risk that the
restraining forces against the change will also grow stronger. So best approach is reducing the restraining
forces against change. Management should therefore

a) identify the main issues of professors and

b) consider ways of reducing their strength, by discussing the issues and difficulties with concerned professors
, or by trying to win the support of key professors who currently oppose the change.

Q.10

a)

Distributive bargaining

Goals: In the distributive bargaining approach, each party strives to obtain the maximum advantage for its own
self-interest.

Focus: In the distributive bargaining approach the focus is to assume a particular position and stick to it to
obtain the opponent’s agreement to a specific target or as close to it as possible.

8
 Business management and behavioral studies By: Syed Hassan Talal
Sharing of Information: In a distributive bargaining approach, each party withholds information to out
manoeuvre the other party,

Integrative bargaining

Goals: Integrative bargaining approach both the parties attempt to expand the scope and size of the benefits to
be able to maximize them to their mutual advantage.

Focus: The focus is on understanding the respective positions of each of the parties and try to reach a mutually
acceptable outcome

Sharing of Information: in an integrative bargaining approach both the parties share information to satisfy
the interests of each of the parties

b)

i) & ii)

Style of Agree Disagree

leadership

Mr. Bashir’s leadership style is democratic

Democratic considering the customers an integral part of Under democratic style the leader offers guidance
organization. Decision is mutual which lead him and encouragement to the subordinates but in
to work in their way. given scenario Mr. Bashir is giving instructions
only to staff.

Autocratic Mr. Bashir’s leadership style is autocratic.
Characteristics which portray scenario as
autocratic style of leadership are given below:
▪ Little or no input from group members
▪ Mr. Bashir is making all decisions.
▪ Mr. Bashir is dictating all the work method and
process to staff.
▪ Work tends to be highly structured and very
rigid in scenario
In autocratic style of leadership, the leader
continually gave orders and instructions without
considering any suggestion of other members of
the group. In given scenario Mr. Bashir gave once
an order and didn’t actively participated in
problem resolution.

Laissesz- Mr. Bashir’ leadership style can be Laissez-Faire Mr. Bashir did not provide necessary information
faire if we consider the following characteristics of and strictly instructed to staff to resolve the issues
scenario. without asking them to present their ideas.
▪ Very little guidance from Mr. Bashir
▪ Mr. Bashir has not participated or involved
actively with subordinates.
▪ He has provided freedom to make decision
to resolve customers complaints.