CHARTERED ACCOUNTANTS EXAMINATIONS

TECHNICIAN LEVEL

T6: MANAGEMENT

SERIES: JUNE 2013

TOTAL MARKS 100 TIME ALLOWED: THREE (3) HOURS

INSTRUCTIONS TO CANDIDATES

1. You have fifteen (15) minutes reading time. Use it to study the examination
paper carefully so that you understand what to do in each question. You will be
told when to start writing.

2. There are FIVE questions in this paper. You are required to attempt any FOUR.
ALL questions carry equal marks.

3. Enter your student number and your National Registration Card number on the
front of the answer booklet. Your name must NOT appear anywhere on your
answer booklet.

4. Do NOT write in pencil (except for graphs and diagrams).

5. The marks shown against the requirement(s) for each question should be taken
as an indication of the expected length and depth of the answer.

6. All workings must be done in the answer booklet.

7. Present legible and tidy work.

8. Graph paper (if required) is provided at the end of the answer booklet.
QUESTION ONE
(a) Describe the main features of the following business organizations:
(i) A Sole Trader (3 marks)
(ii) A Partnership (3 marks)
(iii) A Multinational (3 marks)
(iv) A Public Limited Company (3 marks)

(b) Define the term Stakeholder. (3 marks)

(c) What are the main objectives of the following stakeholders?

(i) An employee (2 marks)
(ii) A shareholder (2 marks)
(iii) A Supplier (2 marks)
(iv) The Government (2 marks)
(v) Customer (2 marks)
Total: 25 marks

QUESTION TWO

The preparation of a strategic plan is a multi-step process. It starts with a critical review
of past performance by owners and management of an organisation. The process
involves preparation of a plan beyond the normal budgetary horizons. The plan requires
a certain mind set among all those involved for it to be achieved.

Required:

(a) Discuss in brief each of the following aspects of a strategic plan:

(i) Vision (2 marks)
(ii) Mission Statement (2 marks)
(iii) Strategy (2marks)
(iv) Values (2 marks)
(v) Objectives (2 marks)

(b) Understanding the macro-environment is crucial to strategic decision-makers in

the process of strategic planning. Explain the five macro-environment variables
that should be considered for assessment during the process of strategic
planning. (15 marks)
Total: 25 marks

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QUESTION THREE
According to Max Weber, organisations can be categorised on the basis of leadership
types.

Required:

(a) Describe:
(i) Charismatic organizations (6 marks)
(ii) Bureaucratic organizations (6 marks)

(b) Briefly explain each of the following four principles of Scientific management
according to F. W. Taylor.
(i) Development of a true Science of work. (4 marks)
(ii) Scientific selection and training. (3 marks)
(iii) The constant and intimate cooperation of management and workers.
(3 marks)
(iv) Bringing together Science of work and the trained man. (3 marks)
Total: 25 marks

QUESTION FOUR
Recruitment and Selection is the major function of human resource department. The
recruitment process is the first step towards creating a competitive strength and
strategic advantage for an organisation.

Required:
(a) Describe the process that a firm takes to recruit new employees. (10 marks)

(b) Proficiency and psychometric tests are used as selection interview tools in the
selection process. Briefly explain the differences between the two tests.
(5 marks)
(c) According to motivation theory by Fredrick Hertzberg, what steps can the
organization take to motivate employees to remain with the company?
(10 marks)
Total: 25 marks

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QUESTION FIVE
Marketing Management is a business discipline which is focused on the practical
application of marketing techniques and management. It involves management of an
organisations resources through development and implementation of a marketing plan.

Required:

(a) Identify and describe any four components of a marketing plan. (8 marks)

(b) Marketing mix is a combination of controllable variables which can be adapted to

suit the requirements of customers. Explain the 4 Ps of the marketing mix.
(8 marks)

(c) With reference to financial management, describe the following terms

(i) Investment decisions (3 marks)
(ii) Financing decisions (3 marks)
(iii) Dividend decisions (3 marks)
Total: 25 marks

END OF PAPER

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 T6

MANAGEMENT
SUGGESTED SOLUTIONS
JUNE 2013 EXAMINATIONS

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SOLUTION ONE
(a)

(i) A sole trader is an individual who owns and operates a business. They
generally have very limited amount of capital and are heavily reliant on
their own personal commitment for the success of the business. The
business has unlimited liability which means that the owners are
responsible for all of the firms debts.
(3 marks)

(ii) A partnership can have many (minimum two and maximum 20) partners
who share the responsibilities of the business and can contribute according
to their individual expertise. The partnership also has unlimited liability
which means that the partners are responsible for all of the firms debts.
In general, partnerships tend to be larger businesses than sole traders and
tend to continue much longer. (3
marks)

(iii) A multinational is a very large international business that has bases,

factories or assembly plants in several different countries. They are
structured on a global basis although they will have their headquarters in
one particular country. (3
marks)

(iv) A public Limited Company is a limited company formed by and owned

by at least two persons but there is no maximum number of shareholders.
A public limited company can float its shares to the public through the
stock exchange market e.g. Lusaka Stock Exchange Market. The companys
name should end with the words public limited company PLC. (3
marks)

(b) A stakeholder is any individual or group that has an effect on or is

affected by a business or organization. This might include groups such as
employees, owners, trade unions, customers, pressure groups and
competitors. Some management theorists believe that it is beneficial in the
long run for firms to recognize the views of all these groups and to include
their objectives in the decision-making process. (3
marks)

Considering the above categories of stakeholders, we can deduce that they

fall in various groups; workers and managers are internal, the Government
and pressure groups are external while the owners and customers, to
mention but a few, are directly connected to the business. (3
marks)

(c)(i) An employee is concerned with improving his/her standard of living. To do

this the employee wants to achieve higher wages and better working
conditions such as longer holidays and shorter working hours. They are also
concerned with health and safety as they want to work in an environment that

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 protects them from harm. (2
marks)

(ii) A shareholder is primarily interested in the business generating profits. To

do this they want to see the business increase its sales while at the same time
keeping costs under control. Shareholders are also interested in the growth of
the business as this will be reflected in a higher share price. (2
marks)

(iii) Suppliers are also attempting to make a profit and so are trying to get as
many orders from a business as possible. In order to do this, they must
satisfy the business regarding the quality of the products and the reliability of
its deliveries and service. The suppliers also want the business to do well as
this will mean more orders in the future. To this end they often cooperate to
improve each others performance. (2
marks)

(iv) The government is a stakeholder in business because profitable firms pay

taxes on their profits. This is one of the main sources of government
revenue. The government, however, is also concerned that the firm provides
employment in the area and conducts its business in an environmentally
friendly manner. The government will ensure that there is no pollution, no
exploitation of the workers and also that the products meet the required
standards. (2
marks)

(v) Customers are individuals that buy goods and services produced by business
organizations. Customers are concerned about the price, quality and safety of
the goods. Customers expect goods and services to be fairly priced without
exploitation and the quality should be acceptable to satisfy their needs. They
also expect to be readily available for purchase. (2
marks)

Total: 25 marks

SOLUTION TWO
(a) The following are the stages involved in strategic planning Process:

(i) Vision

A brief statement describing direction and growth plans of an

organisation. (2
marks)

(ii) Mission Statement

A statement describing the important business capabilities based on
the customers identified needs.

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 A description of what the organisation does, with whom or for whom
it does it and how it does it. (2
marks)

(iii) Strategies
A description of how the work will be done and the persons to be
involved. (2
marks)

(iv) Values
What the organisation considers the right way to do things and/or
deal with people.
What the organisation believes about the way that, ideally, the world
ought to be organized. (2
marks)

(v) Objectives

Lower level statements that describe the tangible and specific products
and deliverables to be achieved during specified periods. They can be
short term, medium term or long term. (2
marks)

(b) The macro-environment could be assessed using PESTEL analysis. The following
are the variables or factors that are found in the macro-business environment to
be considered for strategic planning

(i) Political environment

Political factors have a strong influence on the business. Political parties

have different economic and social ideologies that may affect the
operations of the business in a positive or negative way. In the process of
strategic planning issues that should be considered are political stability,
legislation concerning business, governments investment policy etc.
(3
marks)

(ii) Economic environment

The economic condition has a strong influence on strategic planning.

Managers need to consider economic factors when making strategic plans
such as inflation rates, foreign exchange rates, interest rates, economic
growth rate, taxation rates, employment levels etc. The stability of the
economic indicators will enable businesses to make strategic decisions
with certainty. (3
marks)

(iii) Social environment

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 The community in which the business operates in has an influence, in
terms of social values, culture and demography. It is from the community
that the business will source for its employees and customers. Elements
in the social environment include skill levels, attitude to work, spending
patterns by consumers, population distribution, religion influence, the
issue of gender in employment etc. (3
marks)

(iv) Technological environment

Rapid advancement in technology is exerting influence on business

organizations. The level of technology determines what products and
services will be produced, what equipment will be used how operations
will be managed. Development in information, communication technology
by use of computers has presented opportunities and threats to
businesses. Therefore, the company should consider technological change
in its strategic planning for it to survive in the industry. (3
marks)

(v) Legal environment

Strategic planning is influenced by the laws and regulations that limit the
operations of the business to protect the society at large. These laws
include labour law, company law, health and safety laws, consumer
protection act, taxation law etc. change in these laws should be taken
into consideration during strategic planning process. (3
marks)

(vi) Ecological and environmental factors

Economic activities have resulted into physical environmental degradation

through pollution, mining, lumbering etc. This has compelled the
government to develop laws to regulate and protect the environment.
This has made companies to consider the issues of the environment in
their strategic planning. (3
marks)
Total: 25 marks
SOLUTION THREE
(a) (i) Charismatic Organizations:

The word charismatic was coined by Max Weber from the Greek
charisma being the supernatural quality found in some people which
not only sets them apart from others, but makes people in general,
without knowing why, treat such leaders as possessing superhuman
powers, knowledge, etc. The prophet, messiah, and Hitler are examples
of such people. The basis of authority of the leader is his/her special
powers, and if these powers fail he/she may lose his/her leadership
powers too.

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 The charismatic organization structure is small; decision-making is
concentrated in the leader; delegation is limited to a small select band of
intensely loyal staff (disciples) and personal obedience and devotion are
the best ways of getting on. Few rules and regulations exist; decisions
are arbitrary and irrational. Everyone who considers the decision they
themselves can make in such a system will always measure the
alternatives against what the leader would wish, approve of or need.

While the charisma lasts, the organization preserves its original identity
but once it has gone or the leader dies, unless a new leader with
charisma succeeds, the organization may change. (6
marks)

(ii) Bureaucratic organizations:

Bureaucratic organization according to Max Weber, is a type of

organization which is rational because such organizations have aims or
goals they try to achieve, e.g., abolition of poverty; a 10% increase in
profit next year, or a greater share of the market, etc.

A bureaucratic organization is legal because authority is exercised by

means of a system of rules and procedures laid down by various officials
who occupy a particular office at a particular time.

The whole system revolves around the fact that the entire structure
including management techniques is largely determined without reference
to named leaders or power holders: it is the office not the holder of the
office which is important.

The basic structure of the bureaucratic system is hierarchical, which

means that:

In the ideal organization tasks would be organized on a continuous

regulated basis

Tasks would be divided into functionally distinct spheres (specification

and division of work)
Offices would be arranged in a hierarchy, with job descriptions;
Rules, technical or legal, would exist in a sufficiently complex form to
create a need for trained men to fill official posts
Officials would not provide the equipment and resources they used in
their work; they would have to account for what is used, and for money
spent;
Great use would be made of written documents; making the office the
hub of the organization. (6
marks)

(b) (i) Development of a true science of works:

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 We do not know what a fair days work is. The boss does not, so how
can we expect the worker to? This is to be remedied by establishing each
persons daily task, i.e., the output expected. Workers are to be well paid
if they meet the target, find if they do not. (4
marks)

(ii) Scientific Selection and Training:

So that workers can earn this high rate of pay we must ensure those
hired are up to the job physically and mentally. Proper training is to be
given so that they become first-class employees. Promotion
opportunities are to be made available. (3
marks)

(iii) The constant and intimate cooperation of management and

workers:
Worker and manager divide the work. The manager provides the
specification; instructions, estimates the size of job, supervises and pays
up afterwards. The worker does the job. With this close personal
cooperation conflict is eliminated. Both managers and workers are
subject to the same basic philosophy the scientific study of and
approach to work, to find the one best way of doing a job. (3
marks)

(iv) Bringing together science of work and the trained man:

The main obstacles are the managers. The workers would welcome it;
and would be willing to cooperate in training if they knew much would be
gained, e.g., high rate of pay. (3
marks)
Total: 25 marks

SOLUTION FOUR
(a) A firm needs to follow a logical sequence to ensure that a suitable number of
employees with the appropriate skills are employed in order to meet the
manpower requirements of the business.

The process is likely to include details about:

(i) The job analysis procedure gathering all the facts relating to the tasks,
responsibilities and context of the job. (2
marks)
(ii) The job description outlining the content of the job. (2
marks)
(iii) The person specification the qualities and qualifications required by the
candidates for the job. (2
marks)

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 (iv) The procedure for advertising the vacancy both internally and externally.
(2
marks)
(v) The selection procedure the initial screening of applications,
interviewing and testing. (2
marks)

This sequence of events should ensure that the applicants fit the job on offer
and that the successful candidate has the requisite skills to do the task.

(b) Proficiency tests measure the candidates ability to perform a task relevant to the
job. It is designed to check if an individual has the skill he or she claims to
posses e.g. Fork-lift operator is required to drive and manoeuvre the vehicle.
Psychometric tests measure the individuals psychological factors such as
intelligence, aptitude and personality. Intelligence tests measure the reasoning
capacity in terms of memory and speed of thought. Aptitude tests are designed
to predict the ability a candidate has to carry out a task within the job e.g.
dexterity. Personality tests asses the individuals behavior which is desirable to
the job. (5
marks)

(c) Frederick Herzberg identified a series of factors that affected the performance of
workers. One set, called the Hygiene Factors, included: company policies,
supervision, salary, working conditions and relationships with same level
workers. If any of these were lacking they would demotivate the workforce but
on their own they do not act as motivators.

According to Herzberg an employee cannot be motivated by pay but can be

dissatisfied by inadequate financial rewards. The hygiene factors have to be
present to avoid demotivation. In order to motivate, Herzberg identified the
following requirements:-
(i) Personal achievement of goals and targets
(ii) Interest in the work itself
(iii) Recognition for achievement
(iv) Responsibility for more complex duties
(v) Personal growth, advancement and promotion
In order to motivate employees to remain, the company must ensure that the
hygiene factors are in place and that sufficient satisfiers are available so that
workers can progress towards personal fulfillment. In practical terms this requires a
well-planned training scheme, good communication between management and
workers, and an active policy of job enrichment. (10
marks)
Total: 25 marks

SOLUTION FIVE

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(a) The factors that have influenced the Present Structure include:
(i) The management style, autocratic vs. democratic.
(ii) The type of products and services offered and the nature of the inputs
required, e.g., capital or labour intensive
(iii) The degree of centralization and/or the location of premises
(iv) The type of skills required and the various characteristics of the
employees
(v) The nature of past Price growth, e.g., by acquisition
(vi) The past approach to the organizational matters, such as manpower
planning or career development
(vii) The impact of developments in the field of data processing
(viii) The structure of financial ownership (8
marks)
(b) The 4Ps of marketing mix are price, product, place and promotion. Price is the
amount of money the customer buys the product at. It will include discounts
given to customers such as cash and trade discounts. It will also include credit
terms and allowances given to customers. Product is a good or service that is
offered for sell to the target customers. It includes features like quality, design,
packaging, variety and safety of the product. Place refers to the channels
through which the product is made available to the target market. This covers
channels of distribution, transport, coverage and locations. Promotion these are
activities that communicate to the public about the product or service such as
advertising, sales promotion and personal selling. (8
marks)

(c) Financial management involves the following decisions

(i) Investment decisions,

These are decisions made concerning where the business will invest its
money into. A business could decide to invest in capital projects, working
capital and financial assets. The objective of any investment is to yield
positive returns or profits. However, there is a risk associated with
investment that the business may make a loss. (3
marks)

(ii) Financial decisions

These are decisions concerning on how much finance is needed and how to
finance the investment. Different sources of finance such as Loans, issuing
of shares, retained earnings etc would be considered.

Factors like cost of borrowing, repayment period and security should be

taken into account. (3
marks)

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(iii) Dividend decisions

These are decisions that concern on how much dividend should be paid to
shareholders based on the profits made by the company.

Management through a dividend policy decides what profit percentage

should be declared. (3
marks)
Total: 25 marks

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