Cambridge Business Study Tool Kit

Cambridge HSC
Business Studies
Study Toolkit
Marianne Hickey Tony Nader Tim Williams
Marianne Hickey, Tony Nader, Tim Williams 2011 ISBN: 978 1 1074 2227 8 Photocopying is restricted under law and this material must not be transferred to another party
Cambridge University Press
CAMBRIDGE UNIVERSITY PRESS
Cambridge, New York, Melbourne, Madrid, Cape Town, Singapore, So Paulo, Delhi, Tokyo, Mexico City Cambridge University Press 477 Williamstown Road, Port Melbourne, VIC 3207, Australia www.cambridge.edu.au Information on this title: www.cambridge.org/9781107422278 Marianne Hickey, Tony Nader, Tim Williams 2011 This publication is in copyright. Subject to statutory exception and to the provisions of relevant collective licensing agreements, no reproduction of any part may take place without the written permission of Cambridge University Press. First published 2011 Edited by Bree DeRoche Cover design by Tanya De Silva at Maverick Design Text design by Sardine Design Typeset by Cameron McPhail Printed in Hong Kong by C&C Offset Printing Co. Ltd. ISBN 978-1-107-42227-8 Paperback Additional resources for this publication at www.cambridge.edu.au/GO Reproduction and Communication for educational purposes The Australian Copyright Act 1968 (the Act) allows a maximum of one chapter or 10% of the pages of this publication, whichever is the greater, to be reproduced and/or communicated by any educational institution for its educational purposes provided that the educational institution (or the body that administers it) has given a remuneration notice to Copyright Agency Limited (CAL) under the Act. For details of the CAL licence for educational institutions contact: Copyright Agency Limited Level 15, 233 Castlereagh Street, Sydney NSW 2000 Telephone: (02) 9394 7600, Facsimile: (02) 9394 7601, Email: info@copyright.com.au Reproduction and Communication for other purposes Except as permitted under the Act (for example a fair dealing for the purposes of study, research, criticism or review) no part of this publication may be reproduced, stored in a retrieval system, communicated or transmitted in any form or by any means without prior written permission. All inquiries should be made to the publisher at the address above. Cambridge University Press has no responsibility for the persistence or accuracy of URLs for external or third-party Internet websites referred to in this publication and does not guarantee that any content on such websites is, or will remain, accurate or appropriate. Information regarding prices, travel timetables and other factual information given in this work are correct at the time of rst printing but Cambridge University Press does not guarantee the accuracy of such information thereafter.
Contents
Introduction Verbs used in Business Studies assessment and exams HSC skills Sample examination questions Topic 1: Operations
Multiple-choice questions Short-answer questions Extended-response question
iv v vii viii 1
1 6 7
Topic 2: Marketing
8
8 13 15
Topic 3: Finance
16
16 20 23
Topic 4: Human resources

24
24 30 32
Sample responses Solutions to sample examination and marking criteria
33
70
III
Introduction
To the student
Congratulations on choosing to study HSC Business Studies. HSC Business Studies is central to understanding the workings of contemporary Australian business society and will help you to become a better informed individual as you apply your knowledge to business-related problems. This Study Toolkit provides superior study and exam preparation support. It draws on a variety of revision methods to help consolidate what you have learnt in the textbook. The HSC Study Toolkit is divided by: verbs used in business studies assessment and exams HSC skills sample examination questions topic multiple-choice questions, short-answer questions and extended-response questions. solutions to topic multiple-choice questions and short-answer questions solutions to and marking criteria for sample examinations.
Please note that the solutions to the extended-response questions are available on the student support website. Be sure to read the assessment criteria when you attempt any of the assessment tasks, but do not look at the sample responses until after you have completed these tasks. It is recommended that you read this booklet before commencing the subject and that you return to relevant sections as often as you need them. This booklet will provide you with a comprehensive tool for success in HSC Business Studies. Good luck!
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CAMBRIDGE HSC BUSINESS STUDIES STUDY TOOLKIT
Verbs used in Business Studies assessments and exams

In every task there is a verb that tells you what is required in the response. Some questions need only very brief answers, while others require very detailed responses. Below is a list of common verbs used in tasks and what they require in the answer. Account Analyse Apply Appreciate Assess Calculate Clarify Classify Compare Construct Contrast Critically (analyse /evaluate) Deduce Dene Give reasons for; report on; give an account of by telling the story of a series of events or transactions. Identify the parts of something and the relationship between them; draw out and relate implications. Use information, theory or a formula in a particular situation. Make a judgement about the value of something. Make a judgement of value, quality, outcomes, results, size or the advantages and disadvantages. Perform a calculation; determine from given facts, gures or information. Make clear or plain. Arrange or group items into classes or categories. Show how things are similar or different. Make; build; put together items or arguments. Show how things are different or opposite. Add a degree or level of accuracy depth, knowledge and understanding, logic, questioning, reection and quality to an analysis or evaluation. Draw conclusions from information. State the meaning, and identify the essential qualities of, a term or concept.
VERBS USED IN BUSINESS STUDIES ASSESSMENTS AND EXAMS
Demonstrate Show by example. Describe Discuss Distinguish Evaluate Provide information about the characteristics and features of something. Identify issues and provide points for and/or against. Note differences between things or state how something is different from another. Add a degree of accuracy, depth, knowledge, understanding, logic, questioning, reection and quality to an analysis or evaluation. Inquire into, investigate and discuss. Relate cause and effect; make the relationships between things evident; provide reasons why and/or how things happen. Choose relevant and appropriate details. Infer from information that is already known. Recognise and name; write a list. Draw meaning from. Plan, inquire into and draw conclusions about an issue or concept. Support an argument or conclusion with sound reasons and/or data. Sketch in general terms; indicate the main features of something. Suggest what may happen based on available information. Put forward an idea, suggestion or strategy for consideration or action. Present remembered ideas, facts or experiences. Retell a series of events. Express, concisely, the relevant details. Put together various parts to make a whole.
Examine Explain
Extract Extrapolate Identify Interpret Investigate Justify Outline Predict Propose Recall Recount Summarise Synthesise
Recommend Provide reasons in favour.
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HSC skills
One of the most effective success tools for the HSC examination and assessment is to learn the Business Studies syllabus. This is because the syllabus content is the basis for every question and task in the HSC and other assessment items. If students can identify the part of the syllabus being tested, this will provide an indication of the correct answer and the terms required to express it. An effective method to learn the syllabus is to practice lling in cloze passage versions of the section headed Learn about and eventually writing out the syllabus headings from each Business Studies topic from memory. Rote learning the syllabus will also enable students to recall the details of the course as the syllabus is also a scaffold for all the content and concepts in the course.
Answering multiple-choice questions

Although the Board of Studies recommends a time limit for each section of the exam, students should attempt to save time in the multiple-choice and short-answer sections so they have more time for the business report and extended-response sections. Students should allocate approximately 25 minutes to answer 20 multiplechoice questions. For more able students this section of the exam should take 20 minutes to complete. The recommended approach to answering multiple-choice questions is to discard the two obviously incorrect answers and then select the most correct answer from the two that remain. To determine the correct answer, an effective approach is to explain why each potential answer is incorrect or correct. Refer to the example below: (A) Teamwork is not one of the three management roles, which are informational, interpersonal and decision-making. Which management role is used in the leading function of managers? (B) Decisional is concerned with making decisions (such as for allocating resources and organising staff) not motivating. (C) The interpersonal role does involve leading by motivating and enthusing staff to achieve their potential. (D) Acting as a gurehead is part of the leadership role but is generally ceremonial and involves such activities as signing documents and dealing with the media, not motivating. Using this method, you are able to determine precisely why three answers are not correct and why only one (answer C) is correct.
HSC SKILLS
VII
Sample multiple-choice question

1 One of a managers responsibilities is to motivate staff. Which management role is being exercised when performing this duty? (A) Teamwork (B) Decisional (C) Interpersonal (D) Figurehead
Responding to short-answer questions

This component of the examination is worth 40 marks and involves more reading and writing than the multiple-choice component. Therefore, students should aim to complete the short-answer questions in under 1 hour and 15 minutes. The key to maximising marks for short-answer questions is to identify the verb used in each question. Stimulus may be provided, usually in the form of a short case study. When stimulus is provided, incorporate this material into your answer and tailor your response to suit the stimulus. In the example below, the key verb is outline, which means give a very brief description. Most importantly, in your answer you need to make sure the factors are appropriate to South-East Asia. For example, the product needs to suit the tastes of Asian people and the products name and advertising need to appeal to the target market in South-East Asia. Two marks are awarded for this answer: one mark per sociocultural factor.
Sample short-answer question

Question 1 (2 marks) Tasty Treats Ltd, based in New South Wales, makes and markets a range of fruit-avoured chewing gum for sale in Australia. It is planning to purchase a chewing gum factory in Japan to develop a new market for its avoured chewing gum in SouthEast Asia. Tasty Treats is seeking equity nance to fund its international expansion. (a) Outline two sociocultural factors that would affect Tasty Treats marketing strategy in South-East Asia.
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Writing business reports based on stimulus material

Section III of the exam involves writing a business report. Typically, you should allow at least 40 minutes to complete Section III of the exam. Better students in the Trial HSC and HSC exams usually manage to complete the multiple-choice and short-answer sections more quickly than specied, thus giving themselves more time to complete Section III. To best answer this type of question, use the following approach: 1 Read through the stimulus and look for any clues as to what information should be in your answer. In the textbox for the Sample Section III question, Cybegen should introduce marketing through a website to educational markets to compete more effectively. 2 Circle the verbs in the task. There are three here: propose, explain and recommend. These terms tell you how to answer the task and how many parts there should be in your response. Each part should have its own heading. Use subheadings as well to produce a logical, well-structured answer. 3 Identify which topics are being examined. This task covers Topic 1 (Operations), Topic 2 (Marketing), Topic 3 (Finance) and Topic 4 (Human resources). This will assist you to include relevant business theory. 4 Make notes using a mind map for each part of the question. In the exam put these notes on the inside cover of your answer booklet. 5 Start your answer with an executive summary and explain the purpose of your report by including the descriptor terms from the question. A sample executive summary is provided at the end of this section. 6 Throughout your answer use the case study name when appropriate and consistently use the information that is in the stimulus. For this task you should discuss the features of the environment of Cybegen Computers and the changes it has experienced.
HSC SKILLS
IX
Sample Section III question

Answer the following question. In your answer you will be assessed on how well you: demonstrate knowledge and understanding relevant to the question use the information provided communicate using relevant business terminology and concepts present a sustained, logical and cohesive response to the question in the form of a business report.
Cybegen Computers Ltd is a retailer of computer equipment and games. Its target market is mainly males between the ages of 14 and 34 who make purchases for recreational use and using the internet. Cybegen Computers has tailored its marketing mix to suit this type of customer. Cybegen Computers has retail outlets in each major shopping centre in Sydney and Newcastle. Customers like to come to the store to test games and make purchases. The business employs mainly permanent full-time staff and uses casual staff for late-night shopping and weekends. In recent years there have been a number of changes in the market: more computer stores and specialist computer game retailers more females purchasing computers for educational purposes higher expectations by consumers for computer speed and power changing retailing methods with online selling of computers. These changes have forced Cybegen Computers to seek the advice of a business consultant concerning the direction the business needs to take to maintain its market share. You have been hired as an external business consultant by Cybegen Computers to prepare a report for the board of directors. In your report propose an appropriate marketing strategy that would enable the business to expand its sales; explain the impact of this new marketing strategy on the management of human resources; and recommend strategies for effective management of this change.
Sample response
Executive summary The following business report has been prepared by XYZ Business Consultants for Cybegen Computers Ltd. The purpose of this report is to propose an appropriate marketing strategy to increase sales and expand market share in the face of increasing competition and changes in the market. Cybegen should develop web-based marketing. Second, the report aims to explain the impact of this strategy on the management of human resources, in particular the changes to working conditions and downsizing that may be required. Finally, the report will recommend the use of a change model and change agent to effectively manage the changes to human resources and the business.
Answering extended-response questions

You should have 40 minutes remaining to nish Section IV. When answering extended-response questions, your approach should be the same as that outlined for the business report. However, your response will be based on the case studies that have been your area of major study over the year. It is best to use more than one case study in your response. The Crumpler case study that has been included in this text is designed to provide you with a business to use when answering extended-response questions. Throughout your answer use examples from your case studies to support the theory that you have written about. You may use a report style for your answer, but ensure you incorporate headings and subheadings for each part of your answer.
HSC SKILLS
XI
Sample Section IV question

Answer the question in a separate writing booklet. In your answer you will be assessed on how well you: demonstrate knowledge and understanding relevant to the question use relevant business case study/studies communicate using relevant business terminology and concepts present a sustained, logical and cohesive response. Evaluate the inuence of global factors on strategies for operations and human resource management for international global expansion.
The following introduction provides a guide as to how to start your response to the sample question.
Sample response
Introduction Owners and managers may decide to expand their business operations by looking to expand globally. Many businesses expand internationally for operations reasons, source inputs, to achieve economies of scale and gain advantages from research and development. A business may seek to reduce costs and risks by expanding. Reducing production and labour costs by relocating production is another common reason for expansion. The case study businesses and expanded internationally because These businesses have utilised the advantages of global factors to effectively manage operations and human resources because they have achieved their goals and objectives.
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Sample examination questions

Section I
20 marks Attempt Questions 120 Allow about 35 minutes for this section 1 Which of the following ratios would Alex use to determine whether his rm is meeting shareholders expectations on their investment? (A) Gross prot (B) Gearing debt to equity (C) Accounts receivable turnover (D) Return on equity 2 In which of the following industries is the lead time most critical? (A) Education (B) Healthcare (C) Food manufacturing (D) Agriculture 3 Which of the following best describes a reason for a business to pursue market segmentation? (A) It encourages the business to develop and sell its products to a number of different markets (B) It allows the business to identify the characteristics of buying groups that are most likely to purchase the product and then develop appropriate marketing strategies (C) It encourages the business to research the pricing considerations of its primary target market (D) It allows the business to examine the purchasing trends of its target market 4 A business with low levels of staff turnover would also be characterised by which of the following measures of human resource management effectiveness? (A) High levels of employee satisfaction and low productivity (B) Frequent industrial disputes and low employee morale (C) High levels of productivity and strong employee morale (D) Low levels of employee satisfaction and infrequent industrial disputes
SAMPLE EXAMINATION QUESTIONS
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Which of the following describes the process of controlling working capital? (A) The business recording more current assets than current liabilities (B) The business displaying more non-current assets than current liabilities (C) The business achieving more current assets than noncurrent liabilities (D) The businesses total assets are greater than their total liabilities 6 Which of the following represents the output of a toy retailer? (A) Providing advice to parents on appropriate toys (B) Making a range of toys for different age groups (C) Ensuring that toys comply with safety laws (D) Making sure each toy comes with a warranty 7 Helen perceives that discount variety goods stores sell lowquality items. As a result, she does not purchase goods from these stores. Which of the following factors would be inuencing Helens decision? (A) Economic (B) Government (C) Psychological (D) Sociocultural 8 Which of the following describe benets that training and development offer a business? (A) Employees develop new skills (B) Employees are encouraged to seek new promotions (C) The business is able to diversify into new areas of production (D) The business is provided with a more capable and efcient workforce 9 A business uses factoring to pay its current liabilities. Which of the following nancial objectives is this business trying to achieve? (A) Protability (B) Efciency (C) Liquidity (D) Solvency 10 When input prices are rapidly increasing, which of the following inventory management methods will undervalue the value of closing stock? (A) FIFO (B) JIT (C) LIFO (D) COGS
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11 Which of the following strategies represents market skimming? (A) Nadasonic releases a DVD recorder at a higher price than its competitors to promote its image of quality and design (B) Pacic Airlines has reduced the cost of its airfares in response to a downturn in economic conditions (C) Anne introduces a buy one, get one free to promote her cafs new lunch menu (D) Alpha Medicine release a new arthritis tablet, charging a high price to recover the costs involved in research and development 12 Employees of a coal mine have been locked out of their workplace due to a disagreement with their employer. Which stakeholder has initiated the industrial action? (B) Employers (A) Employees (C) Trade unions (D) Employer associations Use the following information to answer questions 13 and 14. The accounts of Fried Eggs Pty Ltd include the following information.
$ Accounts payable Cash Plant and equipment Overdraft Vehicles Accounts receivable Mortgage Inventories Capital Retained prots 150 000 10 000 225 000 40 000 30 000 75 000 20 000 105 000 200 000 ?
13 What is the current ratio for Fried Eggs Pty Ltd? (A) 1 : 1 (B) 6 : 5 (C) 60 : 52 (D) 1 : 2 14 What is the value of total equity for the business? (A) $0 (B) $20 000 (C) $35 000 (D) $55 000
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15 An operations manager has planned a long-term increase in capacity. What aspect of operations is the manager making a decision about? (A) How to produce (B) What to produce (C) How much to produce (D) Where raw materials will be obtained from 16 How does Worker Participation promote effective human resource management? (A) It is a form of recognising employees for their efforts in the workplace (B) It encourages employees to achieve a better worklife balance (C) It provides employees with an established process of dispute resolution (D) It motivates employees to take a greater interest in the decision-making process 17 Which of the following would be included as an example of the industrial market? (A) Factory used in the production of chocolate (B) Engines used in the production of cars (C) Retail outlets purchasing products to on sell (D) Water sold to the public 18 What inuence does volume have on transformation processes? (A) The amount of goods or services made (B) The value added at each stage of operations to the inputs (C) How many different varieties of products can be made (D) The size of the factory and technology used in the transformation process 19 Brown Box Stationers have been in business for several years but they are currently experiencing some changes in the nature of their business. Due to increasing competition they have noticed that their sales have levelled off and their prots as a result are falling. Which phase of the business life cycle would Brown Box Stationers be entering into? (A) Growth (B) Establishment (C) Maturity (D) Post maturity 20 A business that is characterised by low levels of staff turnover would also have which of the following features in its employment relationship?
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(A) (B) (C) (D)
Low levels of employee satisfaction and high productivity Infrequent industrial disputes and positive worker morale Increased levels of productivity and poor worker morale Low levels of employee satisfaction and frequent industrial disputes
Section II
40 marks Attempt Questions 2125 Allow about 1 hour and 15 minutes for this section Question 21 (8 marks) Marks
Magix Mix has re-launched itself as a value-for-money ladies fashion store aimed at women between the ages of 1845.
(a) What is meant by the term target market? (b) Describe how demographic market segmentation is used by businesses. (c) Examine the role of two ethical issues that the business must consider while developing its new marketing strategies. Question 22 (8 marks)
DVD Central income statement for year ending 30/6/11 $ Sales revenue Cost of goods sold Gross prot Operating expenses Interest paid Net prot 178 000 5 700 475 000 243 000 $
1 3 4
Marks
(a) Identify why businesses use income statements. (b) Calculate and comment on the net prot ratio.
2 3
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(c) Calculate the expense ratio for business and comment on the efciency of this business, given that its major competitor has an expense ratio of 23%. 3 Question 23 (8 marks) Use the following information to answer the questions. Marks
Juglor is a medium-sized business with 45 employees. Management and employees are attempting to negotiate a new wage agreement that applies to the business. Both parties are seeking resolution from Fair Work Australia.
(a) Name the type of wage agreement that is being negotiated. (b) Outline the difference between conciliation and arbitration. (c) Outline TWO strategies that would encourage a more human resource management structure for this business. Question 24 (8 marks)
Silver Bell Wedding and Formal Wear Pty Ltd Financial statement as at 30 June 2011 ASSETS Cash Inventory Accounts receivable Current assets Equipment Land Motor vehicle Non-current assets Total assets 500 700 200 1400 500 1100 150 1750 Total liabilities 1750 Accruals Overdraft Current liabilities Mortgage Other debt Non-current liabilities LIABILITIES Accounts payable 400 250 300 950 700 300 800
1 3 4 Marks
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EQUITY Owners capital Retained earnings Total equity Total liability and shareholders equity 900 500
(a) Identify this type of nancial statement. (b) Calculate shareholders equity for Silver Bell Wedding and Formal Wear Pty Ltd. (c) Calculate the gearing ratio for this business. (d) Discuss TWO strategies that could best be implemented to improve this ratio.
1 1 2 4
Question 25 (8 marks) Marks (a) Identify TWO performance objectives for operations. 1 (b) Describe the purpose of inventory management. 2 (c) Explain the inclusion of corporate social responsibility (CSR) objectives into business operations. 2 (d) Analyse the impact of technological innovation on operations. 3
Section III
20 marks Attempt Question 26 Allow about 35 minutes for this section In your answer you will be assessed on how well you: use your knowledge and the information provided communicate using relevant business terminology and concepts present a logical, well-structured answer to the question in the form of a business report.
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Question 26 (20 marks)
Gerry is an Australian-based furniture retail chain operator. He believes that steady sales over the past two years are reective of the steady state of his business in Australia. He is seeking to expand his operations overseas, primarily through the export of furniture to foreign businesses. On past occasions, his expansion attempts have proven unsuccessful.
You have been employed as a consultant to prepare a report for Gerry. In your report, recommend appropriate marketing strategies that the business could use to improve its performance in the domestic economy, and evaluate the methods of nance available to the owners as a method of funding its expansion plans.
Section IV
20 marks Attempt Question 27 or Question 28 Allow about 35 minutes for this section In your answer you will be assessed on how well you: use your knowledge and relevant business case study/studies communicate using relevant business terminology and concepts present a logical, well-structured answer to the question. Question 27 (20 marks) Discuss reasons for resistance to change and assess the role of strategies in measuring the effectiveness of human resource management within a business. OR Question 28 (20 marks) Discuss performance objectives for a business and assess the impact of these objectives on strategies involved in human resource management.
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TOPIC 1
Operations
Multiple-choice questions
Chapter 1
Role of operations management
1 What is the strategic role of operations? (A) To give the business a competitive advantage (B) To correct problems as they occur (C) To reduce costs of making goods and providing services (D) To make goods and services that consumers want to buy Which the following best describes the relationship between marketing and the operations function? (A) Marketing provides the design specications for products (B) Operations produces a product that satises the wants and expectations of consumers (C) Market research must occur before operations (D) Operations produces a product and marketing must sell it Customer service is the dominant product in which industry? (A) Manufacturing (B) Home building and renovating (C) Tourism (D) Banking and nance Which of the following represents a differentiation operations strategy? (A) A car manufacturer that allows customers to choose the colour, trim and accessories of the car they ordered using a website tool (B) A car manufacturer that offers a car built to a particular price (C) A clothing manufacturer that sells its products in a range of overseas countries (D) A real estate agency
TOPIC 1: OPERATIONS
Which service operation is most relevant to the banking and nance industry? (A) Securing deposits in a safe with time delay locks (B) Reviewing loan applications (C) Printing money and organising investments (D) Researching nancial markets and providing expert advice to customers
Chapter 2
Inuences
1 Which legal regulation requires a business to provide safe equipment and machinery in a factory? (A) Environmental Protection and Biodiversity Conservation Act 1999 (Cth) (B) Occupational Health and Safety Act 2000 (NSW) (C) Workers Compensation Act 1987 (NSW) (D) Standards Australia for manufacturing and safeguarding machinery An Australian manufacturer imported parts and components from the USA. If the value of the Australian dollar appreciates against the value of the US dollar, what would be the impact on the Australian business? (A) The Australian business would need to seek out other suppliers (B) The Australian business will experience increased costs in its supply chain (C) The Australian business would have more funds available for other purposes (D) The operations costs of the Australian business would rise Which of the following represents the most appropriate example of corporate social responsibility (CSR) for an oil exploration company? (A) Restoration of the exploration sites to their original state (B) Paying higher than industry average dividends to shareholders (C) Paying the correct amount of tax (D) A change in its vision statement to include environmental goals
What benets has globalisation created for the operations function of manufacturing business? (A) The opportunity to lower costs through relocation (B) The opportunity to sell a standardised product to a global market (C) The opportunity to access global nancial markets (D) The opportunity to purchase other businesses in countries with higher employment standards What is the inuence of international trade agreements on the operations function of a domestic business? (A) Nations can protect industries of national importance from outside competition (B) Domestic businesses must become more efcient in their operations to compete with imported products which may be cheaper (C) Businesses in the nations belonging to the trade agreement can trade more easily with each other (D) Business must be use environmentally sustainable practices in their operations
Chapter 3
Operations processes
1 Which of the following is a transformed resource for a medical clinic? (A) Medical diagnostic equipment (B) Patients (C) The doctors and nurses (D) Medicines and drugs Which inuences would be most important to a business in the maturity phase of its life cycle? (A) High volume and low variation (B) Low volume and high variety (C) High visibility and high variation (D) Low variety and low variation When does improvement to the operations process occur? (A) After the product has been made or the service provided (B) Before control and monitoring (C) Before monitoring and after control (D) After monitoring and control
TOPIC 1: OPERATIONS
What is the correct order for determining the critical path? (A) Identify all tasks in the operations process, prioritise activities, identify start and nish points, identify tasks outside the critical path, determine critical path (B) Identify all tasks in the operations process, prioritise activities, identify activities outside the critical path, identify start and nish points, determine critical path (C) Perform a task analysis, sequence the tasks, determine start and nish points, determine critical path (D) Identify the time required to complete each activity, determine which tasks take the longest sequence, order the tasks from longest to shortest time to complete What is a warranty? (A) A promise by the business to replace products that do not satisfy the quality expectations of consumers (B) A legally binding requirement that a businesss products are free from defects and t for their purpose (C) A law that prevents businesses from selling poor quality goods (D) A law that prevents false and misleading advertising
Chapter 4
Operations strategies
1 What is the objective of effective supply chain management? (A) Transporting and moving resources so the right input is available at the right time (B) To control the quality and quantity of inputs (C) To coordinate the businesses that supply inputs and distribute products to reduce lead times, increase efciency and add value (D) To have inventory on hand ready for sale Which of the following products has the shortest lead time? (A) Cars (B) Designer clothing (C) A daily newspaper (D) Fruit What does the performance objective of exibility mean in the operations strategy? (A) That the business aims to perform operations tasks and deliver on time (B) That the business aims to do operations quickly (C) That the business aims to do operations at the lowest cost
(D) That the business has the ability to change operations as required Which of the following represents the most appropriate denition of quality for operations? (A) The goods produced by operations are durable (B) Products produced by operations match the expectations of consumers (C) Goods or services produced by operations match the planned specications (D) Goods and services represent good value for money Which of the following technologies are used in CAD? (A) Software and wireless communication (B) Computer programmers (C) Laptops, mobile phones and the internet (D) Robotics and machines
Chapter 5
Operations at Crumpler
1 What is the key material input used by Crumpler? (A) Computer design software (B) Its manufacturing facility in Vietnam (C) The knowledge of its designers (D) Ripstop nylon What is the quality of Crumplers products determined by? (A) Durability that exceeds customers expectations (B) The bags do not need to be used as camera or laptop bags (C) Crumpler do not allow any defective bags to reach the market (D) Regular inspections of products Which of the following inuences has the most signicant impact on the transformation process used at Crumpler? (A) Volume (B) Variation (C) Variety (D) Visibility What is the inventory management system used by Crumpler? (A) JIT (B) FIFO (C) LIFO (D) Work-in-progress Where is Crumpler able to scan and learn about developments in bag and baggage? (A) Chinese manufacturers
TOPIC 1: OPERATIONS
(B) Other clothing brands such as Nike and Adidas (C) Fabric and luggage manufacturers in Australia and overseas (D) The Australian Government
Short-answer questions
Chapter 1
1 2 3 4 5 Explain the difference between efcient and effective operations management. Describe a cost leadership strategy used in the airline industry. Assess the importance of being able to customise outputs in service-based businesses. Describe the strategic decisions made by an operations manager. Explain why there is interdependence between operations and the other key business functions.
Chapter 2
Inuences
1 2 3 4 5 Explain how a product differentiation strategy can assist a business to achieve a competitive advantage. Explain the impacts of government policies on the operations function of a building company. Explain the difference between legal compliance and ethical responsibility. Describe TWO consequences of a business producing a standardised product when operating globally. Discuss the reasons for incorporating environmentally responsible strategies into operations management
Chapter 3
1 2 Outline the transforming resources used in the operations of a hospital. Outline the transformed resources used in the production of a fast food meal.
3 4
Describe the mix of good and service outputs of a restaurant. Explain the inuences of volume, variety, variation and visibility on the operations process used in the production of a monthly magazine. Analyse the impact of technology on the layout of equipment used in a business that manufactures LCD televisions.
Chapter 4
1 2 3 4 5 Describe how the performance objective of speed may be assessed for a supermarket. Discuss the potential conict between the performance objective of cost and quality. Dene the term JIT and analyse the impact of JIT on the operations strategy used by a business. Assess the use of critical path analysis in operations. Explain how a business can gain a competitive advantage from Scanning and Learning.
Chapter 5
1 2 3 4 5 Explain the importance of working capital management for Dave Roper and Will Miller. Discuss the advantages and disadvantages of using consignment of goods to gain sales. Identify what Crumpler believes to be the basis of its success. How do Crumpler use the internet? Since 1998, Crumplers strategic plan has been directed towards expansion in the global market. Explain how Crumpler has achieved this goal.
Extended-response question
Describe and explain the impact of the 4Vs on the transformation processes used at Crumpler.
TOPIC 1: OPERATIONS
TOPIC 2
Marketing
Chapter 6
Role of marketing
1 Which of the following represents a strategic role of marketing? (A) The release of a new advertising campaign aimed at teenagers (B) The development of a promotional strategies emphasising the quality of a particular good (C) The process of developing appropriate product, pricing and promotional strategies for a business (D) The decision by management to invest in research and development facilities Which of the following best describes the role of marketing within the human resources function of a business? (A) Human resources are responsible for the manner in which goods and services devised by the marketing department are developed (B) Human resources are responsible for developing sales forecasts for promotional campaigns developed by the marketing department (C) Human resources should be trained and developed in skills that would facilitate the production of goods devised by the marketing department (D) Human resources should be offered improved incentives to better sell goods and services Astero is a business specialising in the production of quality Australian-made furniture. Promotional campaigns used by the
business emphasise the quality of the businesss products. Which of the following approaches to marketing is the business using? (A) Production (B) Selling (C) Marketing (D) Relationship Wedding For You is a business that specialise in organising all aspects of exotic overseas wedding celebrations. Which of the following markets does this business cater to? (A) Industrial (B) Mass (C) Market segment (D) Niche Which of the following describes a market segment? (A) A product aimed at a wide group of customers (B) A product aimed at a group of customers that share similar characteristics (C) A product sold to businesses to be further used in the production process (D) A product sold to a very specic group of customers
Chapter 7
Inuences on marketing
1 Which of the following represents a government inuence on marketing? (A) Age restrictions on the availability of specic goods and services (B) The cultural and religious values of individuals (C) Peoples attitudes and perceptions towards a product (D) Increased interest rates and a decrease in the rate of employment in the Australian economy A fast-food store has recently changed their menu to cater to the cultural needs of the local community in which the business operates. Which of the following factors inuencing consumer choice is described in this example? (A) Physiological (B) Sociocultural (C) Economic (D) Government A new foreign business operating in Australia has offered a large retailer stock at a lower price compared to other retailers. Which area of consumer law is the foreign business breaching? (A) Price discrimination (B) Implied conditions (C) Deceptive advertising (D) Sugging
TOPIC 2: MARKETING
In business, which of the following is considered to be a concern regarding the concept of sugging? (A) The ability of the business to promote products in a misleading manner (B) The costs of sugging are passed on to the consumer through higher prices (C) Consumers are made to believe that they are engaging in market research (D) A business is able to identify the needs of consumers in a deceptive way Which of the following would represent an example of a business engaging in fair competition? (A) Price xing between two or more major competitors in the market with the aim of reducing competition (B) Long-term loss leader pricing strategy by undercutting smaller competitors in the short term, forcing the smaller business to engage in a price war. (C) Misleading advertising regarding the products of a competitor (D) The development of a promotional campaign outlining the health benets of consuming a particular product
Chapter 8
Marketing process
1 Sams Sundaes is a new travelling store that has been established to sell ice-creams and sundaes across Sydneys beaches. Which of the following marketing issues must be considered during this stage of the businesss life cycle? (A) Methods of retaining customers (B) Strategies aimed at differentiating itself from new competitors (C) Establishing consumer awareness (D) Processes involved in relaunching the product aimed at reinvigorating the image and perception of the product in the marketplace. Which of the following strategies represents the marketing objective of expanding the product range? (A) Developing a promotional campaign to increase the number of customers purchasing the product (B) Expanding into new geographical markets
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(C) Diversifying the product range to attract a broader group of consumers (D) Promoting the product with the use of local celebrities and sporting stars Which of the following marketing strategies is concerned with the packaging of a good? (A) Product (B) Promotion (C) Price (D) Place Which of the following least describes why a business must monitor and revise its marketing campaign? (A) To examine the effectiveness of marketing campaigns (B) To determine the buying patterns of consumers (C) To examine how consumers respond to promotional campaigns (D) To measure the performance of employees Which of the following describes the role of market research? (A) The process of examining market trends and their impact on the operations of a business (B) The study of consumer buying behaviour (C) The process of gathering information relevant to the needs of the business (D) The study of the operations and strategies of a businesss competitor
Chapter 9
Marketing strategies
1 A business has relaunched its slogan and logo as a part of the process of product renewal. Which element of the marketing mix is this an example of? (A) Positioning (B) Branding (C) Packaging (D) Price Which of the following is an example of the loss leader pricing strategy? (A) A pharmaceuticals company sets a high price for a vaccine that prevents certain types of illnesses (B) An airline enters the market by offering prices substantially lower than its competitors (C) A supermarket sells some fruit products at a very low price in order to entice consumers to purchase items while in store
TOPIC 2: MARKETING
11
(D) A fashion store deliberately sets a high price to enhance its image of quality and exclusivity Arabia Aroma is a Middle-Eastern restaurant that has invited a leading food critic to sample its new range of dinner selections. Which of the following forms of promotion is the business making use of? (A) Advertising (B) Word of mouth (C) Opinion leaders (D) Personal selling Why does the marketing mix need to be differentiated when selling goods in different countries? (A) The promotional campaign considers government regulations related to advertising (B) Consumers across global markets all share similar interests (C) Businesses are able to achieve cost savings through product standardisation (D) Promotional campaigns developed in one country may then be used across other countries Which of the following is an example of competitive positioning? (A) An airline seeking to reduce its cost base by establishing online operations (B) An electronics brands introduces extended warranty features across its range of products (C) A online business that does not develop customer proles (D) Management of a radio station allocating increased funding to a promotional campaign
Chapter 10
Marketing at Crumpler
1 Crumpler Bags are aimed at people aged between 1835 years old. Which form of market segmentation does this represent? (A) Mass market (B) Market segment (C) Niche market (D) Consumer market Which of the following best describes how psychological inuences impact upon consumer behaviour with Crumpler? (A) Improved economic conditions benet the business through increased sales (B) Customers perceive Crumpler to be an up-market fashion label
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(C) The colours used by Crumpler across their range of products promote the concept of fun, enjoyment and being young. (D) Federal Government legislation impacts upon the manner in which Crumpler promotes their products Which of the following best describes an economic inuence that Crumpler is currently facing? (A) Crumplers use of nylon across all its products is considerable. The business purchases hundreds of thousands of metres of nylon per year. As oil is a key factor in the production of nylon, rising oil costs contribute signicantly to the rising cost of nylon. (B) Strong global economic conditions have adversely affected sales across all regions of Crumplers North American market. (C) The decreasing cost of labour across Europe is placing considerable pressure on the costs of Crumplers imported materials. (D) Increased interest rates have adversely affected Crumplers protability due to higher debt servicing costs Crumplers warranty slogan is: Not just a warranty, but the Legendary Crumpler Til Death Do Us Part Warranty! Which of the following best describes this statement? (A) Crumpler offer only a limited warranty to its customers (B) Crumpler warranty applies to only some of its products (C) Crumple warranty expires when the goods are damaged and become defective (D) Crumpler warranty extends to the life of the consumer Which of the following unethical actions did Crumpler make use of to promote their products? (A) Alcohol (B) Tobacco (C) Gaming (D) Media
Chapter 6
Role of marketing
1 Outline the benets to a business that uses the production approach to marketing.
TOPIC 2: MARKETING
13
2 3 4 5
Identify and describe the different approaches to marketing a business is able to use to sell their products. Describe the role of marketing within the context of other key business functions. Outline the different types of markets a business is able to sell its products to, and for each type of market, list one example. Examine how market share and increased customer awareness inuence the protability of a business.
Chapter 7
1 2 3 4 5 Explain how sociocultural factors impact on the marketing function of a business. Outline the role of legislation in protecting consumers from unfair business practices. Dene the term warranty and outline the benets to a business of offering a warranty. Discuss the role of government in inuencing the provision of goods and services that may damage consumers health. Identify benets to the business of engaging in the practice of sugging.
Chapter 8
Marketing process
1 2 3 4 5 Dene the term situational analysis and outline two methods that a business may use to complete this form of analysis. Dene the term market research and outline strategies a business may use throughout the research process. Identify and describe two strategies a business may implement in the control of its marketing plan. Dene the term target market and outline the three types of markets within the consumer market. Explain the benets to a business of selling to a niche market rather than a mass market.
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Chapter 9
1 2 3 4 5 Dene the term market segmentation and outline methods a business may use in segmenting its market. Identify and describe two issues a business must consider when developing marketing campaigns from an international perspective. Briey dene each of the 7Ps. Assess the benets to a business of adopting a global branding approach to its products. Explain the role of physical evidence in the marketing mix.
Chapter 10
1 2 3 4 5 Describe the Interdependence of Marketing and Other Key Business Functions within Crumpler. Identify the types of markets that Crumpler products are targeted towards. Examine how physiological and economic inuences impact upon the operations of Crumpler. Assess the effectiveness of the manner in which Crumpler conduct their market research. Discuss an ethical issue that has impacted upon the marketing process within Crumpler.
Describe the factors inuencing consumer choice and assess the role of marketing strategies in targeting different forms of consumer markets.
TOPIC 2: MARKETING
15
TOPIC 3
Finance
Chapter 11
Role of nancial management
1 The manager of a furniture manufacturing enterprise has identied the need to improve efciency. Which of the following strategies could be most appropriate? (A) Opening another factory in another suburb (B) Increasing prices (C) Rationalising suppliers (D) Updating and replacing obsolete equipment The management role that provides the link between the business goals and the resources required to achieve the business goals is called: (A) Resource management (B) Strategic management (C) Financial management (D) Objectives Woody Plank wishes to determine the protability of his business. Which of the following would be the best indicator for Woody: (A) Calculation of total sales (B) Calculation of total revenue (C) Calculation of total costs (D) Calculation of both total costs and total revenue For a business, increased efciency can be achieved by: (A) A small business becoming a large business (B) The business producing the same outputs by using more inputs
16
(C) The business producing increased output by using more inputs (D) The business producing increased output by using the original amount of inputs Management of working capital is directly related to: (A) Long-term solvency (B) Short-term liquidity (C) Long-term liquidity (D) Short-term solvency
Chapter 12
Inuences on nancial management
1 Which of the following is a disadvantage of using equity nance as a source of funds? (A) Dividends are not tax deductible (B) There are no interest payments to be met (C) Investors will wait for interest payments to increase (D) Investors will not expect dividends to increase Which of the following is an advantage of a business leasing an asset when compared to using debt nance to purchase the asset? (A) The business owner owns and controls the asset (B) The business can sell the asset if it is no longer required (C) The debt to equity ratio of the business will be higher (D) The gearing ratio will be lower What are commercial bills? (A) Money (B) Long-term overdraft facilities (C) Bills of exchange that are a source of short-term debt nance (D) Bills of exchange that are a source of long-term debt nance Fresh Bakery wishes to organise short-term funds fairly quickly. What is a possible source for such funds? (A) Investment bank (B) The Reserve Bank (C) Superannuation fund (D) Local bank Fred Wheels runs a small business as a sole trader. He has to pay tax to the government on the prots his business has made this year. He will need to pay: (A) Payroll tax (B) Company tax (C) Personal income tax (D) Capital gains tax
TOPIC 3: FINANCE
17
Chapter 13
Processes of nancial management
1 BJC Manufacturing has not deposited cheques received on 10 June from debtors and plans to deposit them on 2 July. Which breach of ethics could BJC be accused of? (A) Asset stripping (B) Inappropriate cut-off periods (C) Stretching accounts payable (D) Withholding revenue to minimise tax payable in the current nancial period Refer to the following table.
Financial information for Abbott Services Sales Less COGS Gross prot Expenses Rent Wages Electricity Telephone $ $9 000 $3 000 $6 000 $360 $1 550 $150 $290
What is the net prot ratio for Abbott Services? (A) 40.5 (B) 66.6 (C) 33.3 (D) 44.4 What is the liquidity of a business a measure of? (A) The relationship between debt and equity (B) The differences between total revenue and total costs (C) The ability of a business to meet its short-term debts as they fall due (D) The ability of a business to meet its long-term debts as they fall due Income statement items used to calculate net prot include: (A) Gross prot, goodwill and expenses (B) Gross prot, other income and expenses (C) Total revenue, sales and goodwill (D) Total revenue, assets and liabilities What is a measure of protability? (A) Return on equity (B) Debt to equity (C) Sales (D) Liquidity
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Chapter 14
Financial management strategies
1 Tangree Pty Ltd is currently working to maintain positive cash ow. Which nancial objective is Tangree trying to improve? (A) Protability (B) Growth (C) Efciency (D) Liquidity Many large businesses have engaged in downsizing in recent times. Which nancial management strategy is this an example of? (A) Cost centres (B) Revenue controls (C) Hedging (D) Expense minimisation Use the following nancial information for the month of May to answer Question 3.
Cash sales Wages paid Other expenses paid Cash at bank 1 May Interest received $40 000 $20 000 $10 000 $8 000 $1 000
The cash balance at 31 May is:

(A) $18 000 (B) $19 000 (C) $29 000 (D) $44 000 Bill Stables exports horse hair combs to the USA. What is the likely effect on Bills business if the Australian dollar depreciates relative to the US dollar? (A) Increased demand in Australia (B) Increased demand in the USA (C) Decreased demand in Australia (D) Decreased demand in the USA Harold has entered into a contract where the nancial asset he is importing is based on the value of another asset. This contract is based on: (A) Credit (B) Interest rates (C) Derivatives (D) Insurance
TOPIC 3: FINANCE
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Chapter 15
Finance at Crumpler
1 Dave Roper, Will Miller and Stuart Crumpler decided to set up a business called Crumpler. The legal structure of this business is a: (A) Sole trader (B) Partnership (C) Private company (D) Public company The prime function of the Crumpler enterprise was: (A) Mail delivery (B) Courier delivery (C) Research business (D) Bag manufacturer The major external environmental factors that caused the downfall of the original Citymail enterprise were: (A) Financial inuences (B) Legal inuences (C) Environmental inuences (D) Social inuences The Citymail enterprise converted its operations from mail delivery to become a parcel courier. The main internal problem and a weakness in their business operations related to: (A) Liquidity (B) Protability (C) Solvency (D) Gearing Incorporated private companies often need to source additional funds to grow. How did Crumpler source additional funds to facilitate growth into international markets in Europe? (A) Contributed their own savings (B) Advertised to the general public for funds (C) Invited specic investors to join the company on an equal share basis (D) Borrowed from a merchant bank
Chapter 11
1 2 3 4 Explain why key business functions are interdependent. Explain why nancial management is involved with the strategic planning for a business. Explain why some business goals may conict. Place the following terms under the most appropriate headings:
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Terms Market share Expenses Gross prot Total sales Current assets Number of outlets Net prot Current liabilities Total sales
Headings Protability Growth Efciency Liquidity
Distinguish between the terms gross prot and net prot.
Chapter 12
1 2 3 4 5 Distinguish between the terms debt nance and equity nance. Outline the main forms of short-term debt nance available to a small to medium-sized business. Explain how a business could use factoring. Explain the difference between the primary market and the secondary market on the Australian Securities Exchange (ASX). Explain why a public company would have a placement.
Chapter 13
1 2 Explain why a business would want to match the term and source of nance to business purpose. The information below relates to the accounts receivable of Big Pies Pty Ltd.
14 12 10 8 6 4 2 0
Accounts receivable turnover ratio 2007 2008 2009 2010
TOPIC 3: FINANCE
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3 4
Describe the trend experienced by Big Pies Pty Ltd over the last four years. (b) Explain why Big Pies Pty Ltd may have needed to improve its turnover ratio. (c) Identify the formula that can be used to measure this ratio. Identify two characteristics of a good that would require a quick turnover of inventory. Use the information provided below by Wot Now Pty Ltd to answer the questions below.
Sales Purchases Closing stock Opening stock Expenses $65 000 $25 000 $3 000 $5 000 $20 000
(a)
Calculate COGS for Wot Now Pty Ltd. Calculate the level of gross prot. Calculate the level of net prot Calculate both the gross prot ratio and the net prot ratio for Wot Now Pty Ltd. Explain how nancial ratios can be used to compare one business with the industry it operates within.
(a) (b) (c) (d)
Chapter 14
1 Joe High Pop operates an amusement ride at Lucky Park. He began trading in July. His rst seven months cash ow statement is below:
Cash in Cash out June 500 5200 July 6900 5800 Aug 7600 5700 Sept 2400 5000 Oct 8600 5500 Nov 2100 4900 Dec 7100 5800
Calculate the cash balance at the end of December if the opening cash balance for June was zero. (b) Can you suggest a logical reason that the inows vary more greatly than the outows? Goget Fish operates a deep-sea shing business at Manly Beach. They have provided the following nancial information:
(a)
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Cash at bank Boat Equipment Accounts payable Accounts receivable Mortgage Inventory Net prot from income statement Capital
$10 000 $45 000 $22 000 $5 000 $4 000 $62 000 $6 000 $8 000 $10 000
4 5
Industry average for protability is 40%. (a) Identify the nancial statement where you would nd this nancial information. (b) Identify the accounting equation. (c) Calculate net working capital. (d) Calculate and comment on the return on equity for Goget Fish Explain what is meant by an accounts receivable turnover ratio of six times per annum. How could this business improve its control of accounts receivable? Outline the methods used for international payment. What is an exchange rate and why does it uctuate?
Chapter 15
Finance at Crumpler
1 2 3 4 5 Explain the importance of working capital management for Dave Roper and Will Miller. Discuss the advantages and disadvantages of using consignment of goods to gain sales. Identify what Crumpler believes to be the basis of its success. How does Crumpler use the internet for its sales and promotions? Since 1998, Crumplers strategic plan has been directed towards expansion in the global market. Explain how Crumpler has achieved this goal.
Analyse the methods and the sources of nance used by Crumpler to expand globally.
TOPIC 3: FINANCE
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TOPIC 4
Human resources
Chapter 16
Role of human resource management
1 Which of the following represents a strategic role of human resource management? (A) To train and develop staff in skills relevant to the needs of the business (B) To develop budgets related to staff wages (C) To prepare a marketing campaign involving key stakeholders within the business (D) To produce goods and services in an efcient and effective manner Which of the following best describes the role of human resource management within the operations function of a business? (A) Human resources are responsible for the manner in which goods and services devised by the marketing department are developed (B) Human resources are responsible for developing sales forecasts for promotional campaigns developed by the marketing department (C) Human resources should be trained and developed in skills that would facilitate the production of goods
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(D) Human resources should be offered improved incentives to better sell goods and services Which of the following best describes the concept of outsourcing from a human resource management perspective? (A) The use of external businesses to offer expert assistance (B) The use of internal departments within the business (C) The purchase of supplies from outside the business (D) The purchase of machinery involved in the production of goods and services Which of the following represents a benet to the business of using a domestic contractor? (A) The contractor has specic skills that the business may require for a short-term basis (B) The contractor has limited contact with existing staff, ensuring improved workplace performance (C) The contractor is employed on a long-term basis and is regarded as an employee of the business (D) The contractor is able to train and develop staff Which of the following are issues that a business must consider when employing foreign contractors? (A) Marketing strategies of the foreign contractor (B) Protability results of the foreign contractor (C) Legal guidelines regarding the use of contractors in foreign countries (D) Strategies to develop the skills of staff employed by the foreign contractor
Chapter 17
Key inuences
1 Which of the following stakeholders in human resource management is concerned with the promotion and protection of employee working conditions? (A) Employees (B) Employers (C) Employer associations (D) Trade unions Which of the following wage agreements outlines the minimum wages and working conditions that employees are entitled to within a specic industry? (A) Award (B) Enterprise agreement (C) Certied agreement (D) Better Off Overall agreement
TOPIC 4: HUMAN RESOURCES
25
Decreased interest rates and improved levels of consumer condence are likely to impact upon human resources in which of the following ways? (A) A higher demand for labour as businesses increase production (B) A lower demand for labour as businesses increase production (C) A higher demand for labour as businesses decrease production (D) A lower demand for labour as businesses increase production Which of the following is a benet to the employee of using technology in business? (A) The business is able to achieve cost savings through decreased use of labour (B) Employees may resist change due to the increased levels of training and development (C) The business is able to develop a competitive advantage in its use of technology (D) Employees may become better skilled and improve their career prospects within the industry Which of the following would identify how changing work patterns inuence human resources? (A) Businesses are seeking to encourage increased worklife balance strategies amongst employees (B) Employees are responding less to the offer of exible working conditions (C) Women account for a greater role in positions of management (D) Youth unemployment is becoming an increasing concern across the country
Chapter 18
Processes of human resource management
1 Which of the following processes of human resource management are concerned with the recruitment of staff? (A) Acquisition (B) Development (C) Maintenance (D) Separation Which of the following strategies could be used by a business to motivate its employees? (A) Engage the services of an external recruitment consultant (B) Offer discounts to staff purchasing products from the business
26
(C) Devise strategies to deal with staff conict (D) Offer redundancy packages to staff as part of business restructuring Jennifer is attending a course that will allow her to implement a new computer program at work. Which of the following processes of human resources management is this an example of? (A) Acquisition (B) Development (C) Maintenance (D) Separation Alan has resigned from his work to pursue career opportunities overseas. Which form of separation is this an example of? (A) Retrenchment (B) Redundancy (C) Involuntary separation (D) Voluntary separation Which of the following factors must a business consider during recruitment? (A) The career prospects of the employee and the skills required to full the position (B) The hours of work and the location of the business (C) The skills required to full the position and the ability of the employee to work with others (D) The ability of the employee to work with others and the reputation of the business
Chapter 19
Strategies in human resource management
1 Which of the following describes an authoritarian style of leadership? (A) Managers lead based on the view that they are responsible for telling their employees what they want done and how to accomplish the task. (B) The leader including one or more employees in the decision-making process (C) The leader allows the employees to make decisions (D) Managers consult with external stakeholders for the decision-making process Which of the following describes that function of human resource management where managers develop and specify the work activities of individuals or groups within the business environment? (A) Job rotation (B) Maintenance (C) Job design (D) Recruitment
27
Which of the following describes the role of performance management within an organisation? (A) The process of establishing goals within the workplace (B) The function of management to review the sales performance of key employees within the business (C) The development of new training programs in response to the implementation of new workplace technologies (D) An ongoing process of communication between a supervisor and an employee based on achieving the objectives of the business and the goals of the employee Which of the following is a disadvantage of performance pay? (A) Financial rewards are often a key motivator for employees and performance may improve as employees are encouraged to work more effectively (B) Good employees are attracted to work for the organisation as they may regard performance pay a measure of their successful work attributes (C) It encourages unmotivated and inefcient individuals to improve their performance (D) Performance pay assumes individuals are motivated by money, where some employees may simply seek nonnancial rewards as their form of recognition In some cases an independent party with no ties to either stakeholder may be requested to assist the conicting stakeholders to reach a settlement. Which of the following best describes this form of conict resolution? (A) Conciliation (B) Arbitration (C) Mediation (D) Collective bargaining
Chapter 20
Effectiveness of human resource management
1 Which of the following reasons outlines why worker satisfaction is a measure of human resource management effectiveness? (A) This measures the degree to which employees are satised with working conditions (B) This measures the degree to which employees are achieving set targets (C) This measures the degree to which employees work safely
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(D) This measures the degree to which workplace disputes impact on staff performance Which of the following measures of human resource management effectiveness is related to the setting of goals? (A) Absenteeism (B) Corporate culture (C) Changes in staff turnover (D) Benchmarking key variables Which of the following actions could contribute to increased staff turnover? (A) Employees promoted within the business (B) Effective training and development programs (C) Autocratic management styles with minimal worker participation (D) Implementation of improved worklife balance initiatives A group of employees are placing minimal effort into their work in direct protest against managements decision to not upgrade the air-conditioning. Which two measures of human resource management effectiveness are demonstrated here? (A) Corporate culture and benchmarking key variables (B) Changes in staff turnover and levels of disputation (C) Work satisfaction and accidents (D) Benchmarking key variables and accidents A business characterised by low levels of staff turnover would also have which other features? (A) High levels of employee satisfaction and low levels of accidents (B) A positive corporate culture and high levels of disputation (C) Low levels of employee performance and high accident rates (D) A fragmented corporate culture and low levels of accident rates
Chapter 21
Human Resources at Crumpler
1 Which of the following business operations does Crumpler use for the production of its goods? (A) Outsourcing (B) Financing (C) Marketing (D) Domestic operations
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Which of the following stakeholders promotes the interest of Crumpler as an employer? (A) Retail Employees Union (B) Fair Work Australia (C) Retail Employers Association (D) Australian Council of Trade Unions During which process of human resource management does Crumpler make use of print and online media and interviews? (A) Acquisition (B) Recruitment (C) Training (D) Separation At Crumpler, all employees are encouraged to contribute their ideas and thoughts and take creative ownership of the business. Which of the following leadership styles does this represent? (A) Participative (B) Democratic (C) Authoritarian (D) Autocratic Which of the following represents a technological inuence on human resources within Crumpler? (A) Crumpler bags are manufactured in China. It is the responsibility of these foreign contractors to deal with issues of a human resource nature. All other aspects of Crumplers business operations are completed by Crumpler staff. (B) The investment into quality staff across the key areas of design, retail and marketing may in the short-term affect prots, however, this will pay dividends into the future (C) Management of the business have had the benet of acquiring improved computer software programs to enhance the design process (D) Crumpler is a member of the Australian Retail Employers Association, which is one of Australias leading employer associations
Chapter 16
1 2 Explain what is meant by the term human resources. Outline the strategic role of human resource management.
30
4 5
Distinguish between domestic and foreign contractors and identify issues that a business must consider when choosing to outsource work to either. Outline the role of human resources in context with other key business functions. Explain why a business may outsource elements of its human resource function.
Chapter 17
Key inuences
1 Identify two stakeholders in human resource management and describe how their role in the employment relationship may conict with a businesss nancial objectives. Assess the role of technology in the workplace. Examine the impact of a downturn in economic activity on human resource management within a business. Outline the ethical responsibilities a business has to its employees. Discuss the importance of occupational health and safety within a workplace.
2 3 4 5
Chapter 18
1 2 3 4 5 Dene the term acquisition and describe the processes involved in recruiting staff. Describe two strategies a business may use to recognise staff achievement in the workplace. Outline the benets to an organisation of upskilling its employees. Dene the term separation and examine the methods in which separation could occur in the workplace. Assess the benets of non-monetary benets as a means of recognising achievement within the workforce.
Chapter 19
1 2 Identify and describe the three forms of leadership styles. Discuss the benets of performance management to a business.
31
3 4 5
Dene the term grievance and outline the role of a grievance procedure within a business. Through the use of a diagram, outline the dispute resolution process in Australian workforces. Assess the role of performance pay within the workforce.
Chapter 20
1 2 3 4 5 Briey explain the role of indicators in effective human resource management. Dene the term corporate culture and explain how this is used as an indicator of effective human resource management. Identify two reasons why staff turnover is not always a quality indicator of effective human resource management. Outline the role of occupational health and safety in effective human resource management. Describe the importance of establishing realistic key variables for employees performance to be benchmarked against.
Chapter 21
Human resources at Crumpler
1 2 3 4 5 Outline the strategic role of human resource management in Crumpler. Explain the role of foreign contractors in Crumplers operations. Examine the impact of economic conditions on human resources within Crumpler. Outline the process in which Crumpler recruit their staff. Describe the leadership style of Crumpler.
Describe the process involved in Crumplers human resource management function and assess the role of technology and economic conditions within their workforce.
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Sample responses
Topic 1
Operations
Multiple-choice question responses

Chapter 1
1A 2B

3C 4A 5D
Chapter 2
1B 2C
Inuences
3A 4A 5B
Chapter 3
1B 2A
3D 4B 5B
Chapter 4
1C 2C
3D 4C 5A
Chapter 5
1D 2A
3C 4B 5C
SAMPLE RESPONSES
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Short-answer question responses

Chapter 1
1 Effective operations management is concerned with achieving the objectives of the operations plan such as ensuring the outputs match the specications. An operations manager with an efciency objective will focus on reducing waste in terms of time and resources and lowering costs as much as possible. For example, reducing lead time would improve the efciency of operations. A cost leadership strategy is concerned with reducing the costs of operations to an absolute minimum. In the aviation industry there will be facilities such as planes and terminals whose costs are xed. Fuel will also be a cost that cannot be minimised in the short term. However, human resources represent a cost that can be minimised through human resources strategies such as training employees so that they are multiskilled and replacing existing staff with cheaper labour. In the longer term, investment in technologies that will minimise fuel costs and labour resources will be a cost-minimisation strategy. Investing in lightweight, fuel-efcient aircraft such as the A380 will reduce fuel costs. Outsourcing some operations functions such as baggage handling can reduce labour costs. Airlines may also use cheaper materials for variable costs such as less expensive ingredients for in-ight meals and recycle some inputs such as cutlery, in-ight blankets and headsets. Budget airlines reduce operational costs by eliminating in-ight meals, reducing food and drink choices to a few snacks, which passengers purchase. Costs can be further reduced by removing in-ight entertainment, organising for passengers to carry their own bags to the plane and even reusing boarding passes. Service-based businesses nd it difcult to offer a standardised product because every individual customer will have different wants, which need to be accommodated to maximise their satisfaction. Unlike a physical good, a service can be changed at nearly every stage of the operations process, often because they are labour intensive. Customers expect that services can be modied, unlike a tangible product, which is impossible to change once completed. Being able to customise outputs is important for the business to gain a competitive advantage.
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Strategic or long-term decisions need to t with the businesss overall plan. For operations strategic decisions will concern new product development to replace those that reach the end of their life cycle. The capacity or size of operations will be important as the operations manager will need to make decisions about what capital equipment and facilities the business may need in the future. The number of employees will be considered as well. Decisions about where to locate operations to achieve lower costs, relocation to a lower cost country may be an option in the future. The make or buy decision with respect to inputs will also need to be considered if the business outsources part of its operations or continues to make its own inputs. Finally, the strategies to improve quality will need to be considered, particularly if the business uses a total quality management (TQM) system. Interdependence exists because there is specialisation. Operations relies on the nance function to provide it with the capital it needs to buy resources. Operations relies on human resources to supply suitably qualied, experienced and skilled staff. Operations relies on marketing to research the market and identify features of a product customers desire. In return, the operations function supplies a product that will help the business earn revenue from sales and prot so that all resources, including human, can be paid.
Chapter 2
Inuences
1 A product differentiation strategy is where the business provides a product with a unique feature or aspect not provided by the competition. The product may be of a higher quality, have an innovative feature or can be customised. This is different to a cost strategy, which aims to provide the business with a low-cost product, which can be priced below competitors. The relevant government policies and laws in the building industry concern the safety of staff during the operations process of construction and standards for quality of the nished product. Under the Occupational Health and Safety Act 2000 (NSW) it is the responsibility of the employer to ensure that the business site is safe for employees to do their work. In addition, employers must have policies and procedures in place to ensure all staff contribute
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to the welfare of all other employees. The materials and inputs used in construction must also be safe, as well as the construction process itself. Standards Australia will require any building to meet certain standards for quality such as durability and integrity. Legal compliance refers to the laws and regulations that a business must obey. For example, providing products that are safe to use, are t for their purpose and are free from defects complying with the Competition and Consumer Act 2010 (Cth) (formerly the Trade Practices Act 1974 (Cth) superseded on 1 January 2011). Penalties may be imposed on companies by the courts that fail to follow the law. Ethical responsibilities are not legally enforceable but are considered by wider society as actions that business should do. For example, providing products that represent good value for money or using technology to limit the impact on the environment of operations. There is a consequence for marketing. The product may not suit the different tastes or language of customers of the target market overseas. The product may fail in the overseas market unless Operations adjusts it to suit these differences. There may also be legal differences that require the product to have certain features or quality. There is a consequence for nance, as a standardised product will be cheaper to provide because the business does not have to interrupt the operations and make changes to the product. A business using environmentally responsible strategies such as limiting its use of fossil fuels, safely disposing of waste or encouraging recycling is acting in an ethically responsible manner. The managers and owners wish to contribute to environmental sustainability for the benet of future generations. This may be a purely altruistic decision or a response to changes in the market. The operations manager implements environmentally sustainable practices in order to develop an image for the business as a good corporate citizen. However, there may be conict between managers and owners as these practices can be quite costly and reduce returns to owners. There is criticism of businesses that are merely trying to greenwash the business for marketing purposes. Customers have more brand loyalty and prefer businesses that look after the environment. The environmentally friendly practices in reality are not that effective and merely a token effort to enable the business to have a green image so that it does not lose market share.
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Chapter 3
1 Transforming resources include human resources and facilities. In a hospital the human resources include doctors, specialists, nurses, catering and cleaning staff. The facilities will be the hospital building itself, diagnostic equipment and equipment used to care for patients such as hospital beds and wheelchairs. Transformed resources include physical materials, information and customers. For a fast-food meal the materials will be the ingredients used to make the meal, from the meat and bread buns to the salt and sauces that are added. Information resources are the knowledge staff have to make the meal and operate equipment as well as the sequencing tools that analyse the precise order of steps required to produce the meal in the shortest time. Customers are transformed from their hungry state to be satised and nourished. In the hospitality industry there is a equal mix of goods and service outputs. The goods are the physical food and drink that is served, in addition to the table and physical setting of the restaurant. The service outputs are the activities of the server providing information and advice about the meals, taking orders, serving food and drinks, as well as clearing tables. Their interaction with guests may also be considered a service as it can add value to the diners experience. Other services include washing and removing garbage. A monthly magazine will have a very high volume of output when it is printed once a month. Variety will not be a inuence because every magazine is printed the same. Variation will have some impact because the publisher will need to anticipate sales and the amount of magazines will vary during the year (higher in summer and lower in winter) and also vary over the life cycle of the magazine. The operations will not be visible to customers so this will not be an inuencing factor. In the production of LCD televisions, CAM and robotics will be signicant technologies that have an impact on the layout of the operations process. Each robot or machine will have a highly specialised function. Conveyor belts will move the television set between each machine and robot as each adds a component or
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performs a specic task as needed by the product. All robots or machines performing the same task will be placed together in the process layout.
Chapter 4
1 Speed in a supermarket would be most relevant to consumers in terms of the speed at which a person can nd all the items they need and the time it takes to go through the checkout. Speed also relates to lead time, the time it takes between when goods are ordered to when they are delivered, including the time it takes to stack items on shelves ready for purchase. When trying to lower costs, quality may suffer. The business may purchase inputs of an inferior quality, leading to poor quality outputs. Costs may also be lowered by increasing the speed of operations (to increase productivity), however, quality issues may occur as operations are not monitored closely enough, some quality checks may be left out to save time, or quality issues may be detected too slowly to take corrective action. JIT stands for just-in-time, which is an inventory management strategy where a business holds a minimal level of stock and only orders in stock as it requires it for immediate use. The impact of JIT on operations strategy is that the supply chain must be closely monitored and controlled so that stock is ordered and delivered as it is required for operations. The operations will need less physical facilities to store and secure stock, which will save money. Quality control and assurance will be critical as the business will not have spare resources and inputs to correct errors when making outputs. As a planning tool for operations, critical path analysis (CPA) determines the most efcient organisation of the operations process, through planning and monitoring the operations process. This will save time and the business can determine the time scale of operations and link this with inventory management. CPA will help eliminate waste and plans the use of the transforming resources to maximise productivity and avoid bottlenecks. It also identies when and where resources are needed. These will be translated into cost savings for the business. However, in very large complex operations CPA may only have a limited benet. In addition, the effectiveness of CPA depends upon clear and accurate information.
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By scanning the environment such as competitors and monitoring developments and innovations in the industry a business can learn about new operations strategies and processes that it can apply to its own business. For example, a business could scan how an operations process is undertaken in another country by visiting trade shows or other businesses located overseas. This will give a business a competitive advantage as it can incorporate a new operations strategy or process that gives it a quality, speed, dependability, exibility, customisation or cost advantage over its rivals without the cost of expensive research and development.
Chapter 5
1 Globalisation has provided Crumpler with the opportunity to offshore production to Vietnam to reduce operations process costs and has also made markets in Europe, the USA and Asia more accessible to export and sell bags in. Crumplers physical outputs are its extensive range of camera, laptop and messenger bags. In addition, the business also offers customer service in its retailers providing purchasing advice to customers. Customer advice and queries are also managed through its website where customers can contact Crumpler directly. Crumpler also offers free repairs for normal wear and tear even though they are only obliged to cover existing defects and faults under the Competition and Consumer Act 2010 (Cth). Customer service includes the option to exchange items for change of mind, which is not required under existing laws. Overall physical outputs represent about 70% of Crumplers products, and service outputs represents approximately 30% of its outputs. Crumplers operations strategy is concerned with sourcing new material inputs and product development, outsourcing manufacturing for cost advantages, and quality management. Because its operations strategy has emphasised the quality of the businesss outputs, Crumplers products have matched and even exceeded customers expectations. The brand has a strong reputation for quality and durability. Product development has also met the changing needs of customers. As new personal electronic devices and cameras have come onto the market, Crumpler has quickly developed a new product ready to
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complement these products. By outsourcing manufacturing, Crumpler has signicantly reduced the costs of supplying bags, making its products more price-competitive. Offshore factories in Vietnam can achieve better speed, dependability and exibility than domestic manufacturing operations. In addition, their exibility of operations means that Crumpler can order additional batches of a product that is selling well and delete products not selling. This gives Crumpler an efciency advantage in meeting customer demand relative to its competitors who may become overstocked with an unpopular item. Effective supply chain management aims to minimise costs and delays at each point of the supply chain and ensure that the supply of inputs from the supply chain matches the needs of the business. Crumpler is considering outsourcing supply chain management to a rm that specialises in this area. As a business in a competitive market, Crumpler is constantly seeking to improve its products and develop new models. This has the advantage of keeping Crumplers product range fresh and up to date while offering a wide variety of bags to suit specic customer needs. Improvements in design through functionality, versatility and ease of use are a differentiating feature of Crumplers products. However, this is an expensive process as it requires a signicant investment of time from the designer as well as expense to develop new prototypes. Many new designs and features are discarded during the screening process and very few make it to market. This investment in products that never reach commercialisation is not a complete loss as new ideas may be inspired from unsuccessful developments.
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Topic 2
Marketing

Chapter 6
1C 2C
Role of marketing
3A 4D 5C
Chapter 7
1A 2B
3B 4D 5D
Chapter 8
1C 2C
Marketing process
3A 4D 5C
Chapter 9
1A 2B
3C 4D 5B
Chapter 10 Marketing at Crumpler

1B 2C 3A 4D 5A

Chapter 6
Role of marketing
1 Businesses place considerable emphasis on ensuring production methods were consistent with the high standards of quality expected. The business would focus on how the good was produced, as it is believed that customers would be drawn to the quality of the product. Marketing approaches: Production approach. During the 19201930s many businesses assumed that the high quality of a product would ensure its success within the marketplace. There was a view that consumers would be seeking goods based on the level of quality. The high price was merely a representation of the high quality. As a result, businesses placed considerable
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emphasis on ensuring production methods were consistent with the high standards of quality expected. The business would focus on how the good was produced, as it believed that customers would be drawn to the quality of the product. Selling approach. The approach, which involves a business placing emphasis on strategies aimed at convincing consumers of the need to buy a product. A good cannot be sold based solely on its quality. People need to believe that the good will be of benet to them. While promotion played some role here, the aim was to take the product and its benets to the consumer through the all-important salesperson. These people were hired to communicate the virtues of their employers products. Promotion assisted businesses in differentiating themselves from their competitors. Marketing mix. A product that is marketed successfully must incorporate a strategy to make the consumer desire the product and think it is catered to their needs. This is known as the marketing mix. It should be promoted appropriately and priced strategically to ensure consumers are willing to buy the good without concerns about its quality. It makes little sense for a business to spend thousands of dollars researching and developing a product without providing avenues for the product to be appropriately promoted to increase its awareness among a core group of customers. The pricing strategy used by the business must be able to generate a return on the funds invested by the owners of the business to develop the product. It must also be competitive and affordable for those to whom the product is targeted. The operations function is concerned with the process of manufacturing a particular good. Operations staff work closely with the marketing department to incorporate product features that consumers will respond positively to. It is the responsibility of the marketing function to develop strategies that would sell the product. The human resource function is focused on the role of employees within an organisation. Staff must be motivated and skilled to develop products within the business that cater to the needs and wants of potential customers. It is through the marketing process that a business is able to determine the skills required for employees to produce the desired product. The features of the product would come through market research.
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In many instances, staff are the public face of the business. Their actions towards consumers will inuence the decision of a consumer to purchase a product, return to the business and recommend the business to others. One of the key goals of marketing is to sell the goods and services that a business produces. This impacts upon the accounting and nance function of the business. The organisation must also consider whether the needs of its potential customers are nancially viable for the business to pursue. Budgets and forecasts must also be established for promotional campaigns and sales. Consumer markets consist of the following markets: Mass markets. This applies to goods and services that appeal to all types of consumers. Examples include water, electricity and public transport. Market segments. This is where a business chooses to focus on only one area of a particular market. This may be based on age, gender, personal interests, faith or culture. Niche markets. This is a smaller section of a market segment. Examples include wedding planners and plus-size clothing stores. Market share refers to the percentage of total sales a business has compared with its competitors in a particular market. The purpose of attempting to increase the market share of a business is to increase the businesss sales and protability. Achieving this objective allows the business to become stronger and allows more consumers awareness in the marketplace. Strong brand awareness allows a product to remain in the mind of consumers. This, in turn, is likely to inuence the consumers purchasing decision. Successful businesses are often those who have high brand awareness from consumers.
Chapter 7
1 Sociocultural inuences on a customers choices are those that come from the customers society and culture. An example of a sociocultural factor is a consumers place of residence. Culture can be dened as an individuals values, beliefs and customs. It inuences almost every aspect of human behaviour, including attitudes towards the various products offered within
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the marketplace. Businesses have recognised the increasing importance of catering to the cultural beliefs and attitudes of particular groups within the community. This presents a business favourably in the community and allows it to expand its available market, both of which will benet the business. Advertising is one of the most powerful and effective methods of promotion. It takes the business and its products directly to the consumer. Because of its benets, some businesses will attempt to use advertising in a way that is unfair, deceptive and misleading to the consumer. Examples of deceptive and misleading advertising under the Competition and Consumer Act 2010 (Cth) include: giving misleading information about a products features, content or place of manufacturer overstating the benets that a product will provide to the consumer offering discounts and special offers that do not, in fact, exist using bait and switch advertising, which promotes a product that is heavily discounted even though the business has very limited supplies or no stock at all when the consumer comes into the store and expresses an interest in buying the product, the salesperson will attempt to switch the consumers interest to a more protable item. Most businesses offer a warranty of at least 12 months for electrical products and home appliances. Warranties are a legal offer from a business that if the product becomes faulty within a specic time period the business will cover the cost of repairs. They can be a very powerful marketing tool for a business to attract customers. When purchasing a product, the consumer expects that the business will full its legal obligation to provide a good or service that is consistent with the description given and is in full working order. The federal and state governments have sought to restrict the provision of various goods and services that may act as a health detriment to the consumer, without applying a ban on their sale. Examples include: the sale of cigarettes and alcohol, restrictions on tobacco sponsorship and entries into casinos. Tobacco sold widely across Australia: purchases restricted to people aged 18 and over must not be displayed openly
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packets contain health warnings unable to sponsor sporting/community events. Alcohol sold across Australia: purchases restricted to people aged 18 and over all staff serving alcohol must complete Responsible Service of Alcohol course sponsorship of sporting/community events permitted. Casino/gaming restricted to people aged 18 and over: visible and clear information informing of support services for gambling addiction restricted opening hours for Leagues and RSL Clubs. Sugging is the process that involves selling under the guise of research. Consumers are asked general questions on a range of topics, such as Where would you like to go for a holiday? and Would you like to be a millionaire in two years? From the responses the interviewer is able to determine the needs of the consumer and suggest products offered by the business that cater to these needs.
Chapter 8
Marketing process
1 The situational analysis provides the rm with an opportunity to examine its current position within the market. The business will examine such areas as: the market share of its product future trends within the market strategies used by competitors changing consumer tastes and preferences. There are two key elements to a situational analysis when presenting a marketing plan: Product analysis examines the current position of the goods and/or services that a business produces in the marketplace. Changing trends, innovation, product prices, sales and prot margins will impact on the success of a product within the marketplace. A business or its product will often go through different phases over the course of its existence. This is known as the business life cycle. A SWOT analysis is used to examine the strengths and weaknesses of a business and the opportunities and threats
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that lie within its external environment. By working through this process, a business is able to determine what strategies would be suitable to rectify the organisations weaknesses and how to best handle the possible opportunities and threats. Market research is the process of gathering information relevant to the needs of the business. It is generally based on customer behaviour. There are two types of data that an organisation may seek to gather: primary and secondary. Primary data refers to information that is collected for the specic purpose for which it will be used. Secondary data refers to information that already exists, having already been collected for another purpose. Sales analysis is an examination of the sales of a particular product among different customer groups, by sales representatives and during various times of the year. Market share analysis is an examination of the sales performance of a business and its comparison with that of its direct competitors. A target market is a group of consumers for whom a particular product has been developed. The business hopes that these people will buy the product when it is made available in the marketplace. Some products appeal to all consumers, while others have very limited appeal. The mass market consists of all consumers; that is, people of both genders and of all ages, geographic locations and income levels. Products targeted to the mass market are not aimed at a specic buyer group. Instead, mass market products appeal to all consumers. A business may choose to target its products to a specic market segment; that is, one area of a particular market. A business decides to segment its market to ensure that appropriate promotional and pricing strategies are developed. Each market segment consists of a number of smaller markets, called niche markets. A business targeting a niche market has a specic, narrow customer base. A niche market allows the business to cater to specic groups of customers. Mass markets are more generalised and may lack appeal to certain customers.
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Chapter 9
1 Market segmentation is the process of breaking down a total market into small markets based on the similar characteristics of a customer group. It allows businesses to focus their efforts and resources on a section of the market. By focusing on a particular target group, a business is able to identify the specic needs of this group and tailor its marketing plan accordingly. Demographic segmentation refers to the selection of target groups based on characteristics such as age, gender, income, family size and level of education. Psychographic segmentation allows a business to segment markets based on peoples lifestyle, personality, values and interests. Behavioural segmentation examines how often and when a consumer will make use of a product, the benets sought when purchasing the product and user loyalty. Standardisation and differentiation: A business may not need to alter its core product to suit the same target market in different countries. Instead, it is able to supply a standardised product. However, often a product will have to be differentiated in some aspect to suit different cultures and the local market. Owing to differences in language, religion, tastes and ethics it is very important that a business planning to sell in a new market adequately research the market to reduce the chances of the product failing. Product refers to the good or service that a business is selling. Positioning is the image that the product has in the mind of a consumer. Branding refers to the reputation that a business or product has developed over a period of time. Packaging is the physical appearance of the product. Price refers to the amount of money a business charges for the purchase of its products. The pricing strategy used by a business will depend on its marketing goals. There are various strategies, including penetration pricing, loss leaders, product-deletion pricing, multiple-unit pricing, market skimming, demand-based pricing, prestige pricing and psychological pricing.
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Promotion is that element of the marketing mix that raises awareness and interest towards a particular product. Common elements of promotion include advertising, direct marketing, personal selling and public relations and publicity campaigns. Place is primarily concerned with the process of distributing the product. It must consider how the good is transported from the place of manufacture to the consumer and from where the good or service will be accessible. The product distribution channels can be categorised as intensive, selective and exclusive distribution. When physically distributing a product, a business must consider issues relating to transport and warehousing and the appropriate level of inventory. The 7Ps of marketing include the standard 4Ps with business analysts now incorporating people, processes and physical evidence into the marketing mix. People refers to the conduct and performance of employees. Processes involves the complete buying experience a customer has. Physical evidence refers to all the visual elements of a business. When a product can be marketed to consumers in many different countries then branding becomes very important. Because a brand has the same meaning in any language, a recognisable name and logo are essential. It is more effective and efcient to promote a brand rather than individual products. Physical evidence/packaging. This refers to the physical appearance of the product across every aspect of its presentation to the consumer. The business should consider the size, shape, colour, material and label of the packaging of the product. The packaging needs to be able to talk to the consumer as it is the nal point of promotion where a business is able to communicate with an interested consumer. Visual packaging of a product is signicant in inuencing customer buying behaviour. Small improvements in the packaging or external appearance of a product or service can lead to different reactions from a businesss customers. It is also important in selling and marketing services and intangible products that you cant see, but that you can
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provide the support needed to the customer who can see and feel the physical evidence. Physical evidence may also refer to the people within a business and the visual presentation that they display to clients. It may relate to how employees dress and act. It can refer to how your ofce is set up, the professionalism of staff and advertising material. In essence, physical evidence relates to every single visual element of a business.
Chapter 10
1 Each year, the focus of marketing represents a different avenue for the Crumpler brand. The marketing strategies used by the business are based on the operational developments of Crumpler. New releases across specic types of bags may be used as a primary focus for the marketing strategies of the business. The diverse range of Crumpler bags are aimed towards 1835 year olds. This is reected through their unique designs and emphasis on colour. Crumpler therefore uses a market segment based on demographic segmentation. Psychological. Given the target market of Crumpler, the business is able to effectively develop unique designs for products that are considered to be mainstream. The use of colour is effective in creating a perception of uniqueness and fun within the brand, both within the business itself and its customers. Economic. There are several economic inuences on the business. These include the rising cost of oil, general economic conditions across North America and Asia and the rising cost of labour across Asia. Crumplers use of nylon across all its products is considerable. The business purchases hundreds of thousands of metres of nylon per year. As oil is a key factor in the production of nylon, rising oil costs contribute signicantly to the rising cost of nylon. The global economic slowdown has adversely affected sales across all regions of Crumplers North American market. The increasing cost of labour across Asia is placing considerable pressure on the costs of Crumplers imported materials.
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The development of Crumpler bags is often determined inhouse through its team of designers who are encouraged by management to bring ideas on board. Consumer input into the process is encouraged through consumer request forms either online or in-store. This has the disadvantage of not taking into account the feedback of consumers and their thoughts. While Crumpler may believe that a product does suit the needs of its consumers, market research should be more consumer-focused. Crumplers origins as a beer bag have led to the development of a unique promotional strategy that did create a signicant degree of controversy across all its markets, both in Australia and overseas. Each year, across all its markets (excluding Adelaide and Brisbane) Crumpler encourages its customers to pay for their products through beer. In essence, beer becomes the currency accepted by Crumpler for one week only. It has been suggested by some commentators that such a campaign is encouraging the illegal trade of alcohol and promotes drinking amongst the 1835 demographic.
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Topic 3
Finance

Chapter 11 Role of nancial management
1D 2C 3D 4D 5B
Chapter 12 Inuences on nancial management

1A 2D 3C 4D 5C
Chapter 13 Processes of nancial management

1D 2A 3C 4B 5A
Chapter 14 Financial management strategies

1D 2D 3B 4B 5C
Chapter 15 Finance at Crumpler

1C 2D 3B 4A 5C

Chapter 11
1 The key business functions include operations, human resources, marketing and nance. Each of these business functions relies on each other for the business to be successful. The nance manager must allocate funds to each department to enable them to complete tasks. The nance manager has to source funds when needed and provide enough funding to allow the human resources department to recruit staff, train and develop their skills and ensure payment of wages and salaries. They must enable the operations department to purchase supplies to complete the prime function of the business. Operations relies on human resources to supply it with the appropriate stafng to complete their work. They rely on marketing to interact with their target market to promote, research and sell their products. Marketing
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needs nances to do this, as well as information from operations such as the availability of the product and time lags in production. All business functions need to work together for the business to enhance its goals. Strategic plans are the long-term plans and set the future goals of the business. These plans need to be developed with the knowledge of the limitations of equity and debt nance available to the business. Finance sources and costs will set the parameters for future growth and development of the business. If the business is seen as high risk, investors will not wish to make funds available. This will limit the strategies the business can use to survive or grow. The nance available will also bear weight on the protability and viability of the business venture. High-risk funding is expensive and may even cost part ownership of the business through venture capital. Businesses set goals that are generally related to liquidity in the short term, solvency in the long term, efciency, protability and growth. Today, many businesses also try to be socially responsible. They need to be seen as giving something back to the community for consumer loyalty. A business may donate excess stock to a charity or sponsor sports teams. This is an added cost in the short term and will conict with their goals of maximising prot. They may also take an active part in recycling of waste and ltering water that they use and put back into the rivers. This may be expensive and beyond what they are legally required to do. In the short term, costs increase and prots decrease. Possibly in the long term, consumers may purchase their products instead of a competitors products because they are environmentally and socially responsible. As outlined in the table below.
Protability Gross prot Net prot Growth Total sales Market share Number of outlets Efciency Expenses Total sales Liquidity Current assets Current liabilities
Gross prot is the revenue remaining after paying the cost of goods sold. Whereas net prot is the nal amount of revenue remaining after all expenses have been paid. It is on the net prot that businesses pay personal income tax or company tax.
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Chapter 12
1 Debt nance is made up of borrowed funds (i.e. some type of loan). Debt nance is categorised according to the term of the loan (i.e. its repayment period). It may be short term, which is repayable within a 12-month period, or long term, which is repayable over a period longer than 12 months. The initial debt needs to be repaid as well as the interest charged for the loan. Equity nance is obtained from the owners of the business. This may be in the form of start-up capital and retained prots for a sole trader and partnership. It also includes capital invested by the shareholders of private and public companies. Equity nance is exchanged for part ownership of the business. Shareholders are entitled to dividends as their share of the prots of the business. The main forms of short-term debt nance available to this business would include a bank overdraft, use of credit card facilities, trade credit and commercial bills. Overdrafts are when the businesss bank agrees to make additional funds available to the business through its cheque account facility. This is a shortterm arrangement available up to an agreed limit. The business pays interest on overdrawn funds based on a daily rate. Trade credit is where the supplier allows the business to have supplies now and pay for them at a later date. This may be 7, 30, 60 or 90 days of effectively free credit. A commercial bill is a written order for a loan that is guaranteed by the businesss bank. This money is borrowed from other companies that have surplus funds. The loan and the interest is repaid on a certain date in the future, usually between 30 to 180 days. Factoring would provide the business with short-term nance. It could obtain cash reasonably quickly without going into a loan agreement. The business sells its account receivable to a factoring business. The factoring rm charges a fee or commission and pays the business the value of the accounts, less this fee. The factoring rm then collects the payments from these accounts as they fall due. This creates an immediate cash inow although the total value of its current assets decreased. The Australian Securities Exchange (ASX) is the market that brings companies and individuals with surplus funds together with companies that require funds. A new issue of shares for example,
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when a public company is initially being listed on the securities exchange are sold on the primary market by businesses in order to raise equity nance. This money goes to the newly listed public company. If these shares are then resold to another investor then they are traded on the secondary market. In this case the ownership of the shares changes and the original owner receives the money paid for the shares (not the public company). A placement is a method of obtaining additional equity nance. In this case, additional shares are issued and offered to specic institutions and specic investors. This is a cheaper method of raising nance as the public company can raise up to 15% of its current capital base without a formal prospectus and without general shareholder approval. These funds can be raised cheaply, quietly and quickly.
Chapter 13
1 The term of a loan needs to be matched with the economic lifetime of the asset it is used to purchase. Thus, a short-term asset needs to be matched with a short-term loan. If a business wished to purchase Christmas stock then it would use trade credit or an overdraft. It would be illogical for a business to take out a two-year loan for inventory that would be sold within the next two to three months. This also applies to non-current assets, which should be nanced with longer term loans. The repayments would be over the term of the economic life of the asset. The economic life of the asset would be the length of time that the business uses the asset to make or provide its product and receives a return from the asset. (a) Big Pies Pty Ltd accounts receivable turnover in 2007 was approximately four times per year. This meant that credit account customers were taking an average of 90 days to pay their accounts. Big Pies Pty Ltd has improved its efciency by improving this ratio in 2010 to 12 times per year. This means that accounts are now paid within the allowable 30 day credit period. (b) Very slow turnover of accounts receivable would have badly affected the inow of money into the business. This could have resulted in cash ow problems with the business having poor liquidity and being unable to pay their short-term debts as they fell due.
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sales (c) Accounts receivable turnover ratio = Accounts receivable Two of the following suggestions: cheap product (i.e. low price) perishable product product with low prot margin. (a) COGS = opening stock + purchases closing stock = $5000 + $25 000 $3000 = $27 000 (b) Gross prot = sales COGS = $65 000 $27 000 = $38 000
= gross prot expenses = $38 000 $20 000 = $18 000 gross prot as % (d) Gross prot ratio = sales 38 000 = 65 000 as % = 58% net prot (e) Net prot ratio = sales as % 18 000 = 65 000 as % = 27.7% Business may wish to determine how well they are doing compared to other businesses in the same industry. Financial ratios allow the nancial manager to compare their business with similar businesses. By comparing the current years ratios with those of previous years nancial managers are able to identify trends in prot, costs and nancial stability. This will determine if the business is on the right track. These results can be compared to other businesses through benchmarking to establish if their performance is above or below average, perhaps prompting a review of strategies and analysis of the market. These ratio results could also be compared to the international standard for this industry through worlds best practice information. (c)
Net prot
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Chapter 14
1 (a) (500 5200) + (6900 5800) + (7600 5700) + (2400 + 5000) + (8600 + 5500) + (2100 4900) + (7100 5800) = negative balance of $2700 (b) Inows may be affected by the weather as the amusement ride would probably be outside. OR Inows may be affected by the timing of the school holidays when families could be more likely to spend time at the amusement park. Outows including the cost of running the equipment may be xed. He may rent or lease much of the equipment needed. He would also have constant maintenance of the equipment and the payment of staff to supervise the ride. Most of these expenses are xed payments, which need to be made even if there are limited sales. Stafng may increase during the peak times such as during school holidays or on public holidays. (a) Balance sheet (b) Assets = liabilities + equity (c) (cash + accounts receivable + inventory) (credit card + accounts payable) = ($10 000 + $4000 + $6000) ($2000 + $5000) = $20 000 $7000 = $13 000 net prot (d) Return on equity = total equity $8 000 = ($10 000 + $8 000) = 44.4% ROE for Goget Fish is 4.4% higher than the industry average of 40%. This is a good result for Goget Fish and indicates that they are making greater prot then their competitors.
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Accounts receivable are goods and services that have been provided to customers who have received an invoice but not yet paid their account. A turnover ratio of six per annum means that on average it takes these debtors 60 days (this is 365 days in a year divided by six times a year) to pay their accounts. This business could offer discounts for early payment of accounts, reevaluate its credit policy by establishing the creditworthiness of a client before allowed credit transactions, send out reminders when an account remains unpaid after the due date; look at introducing (after notication) a late payment fee; or generally employing stricter controls of credit accounts. The main methods of international payment include: Payment in advance where payment is received before the goods are sent. Letter of credit where the buyers bank issues a letter from the buyer giving the seller authority to draw a specied sum of money from the buyers bank account under certain conditions. Often a deposit is paid. Bill of exchange is where an international bank acts as an intermediary and ensures that the importer receives its goods and the exporter is paid. Clean payment is where the exporter trusts the buyer and has an open account. The goods are shipped before any payment is made. An exchange rate is the value of a countrys money calculated using another countrys money (e.g. Australian dollars in terms of the value of the US dollar). The value of a currency is determined by supply and demand on the international market. Australia has a oating exchange rate. Generally, the more of a currency available (i.e. increased supply possibly because more countries are selling that currency) then the price may drop. The more stable a country with positive economic indicators, the more often countries may wish to hold that currency. The demand for it increases and the exchange rate improves or appreciates.
Chapter 15
Finance at Crumpler
1 Working capital management means controlling the short-term liabilities that need to be paid and ensuring that you have enough
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short-term assets to be able to pay these liabilities on time. Crumpler issued monthly invoices for its account clients. This would mean that in some cases clients would have up to 60 days to pay for a service already completed. If deliveries were made on 2 March and accounts were sent out on 31 March, clients would pay the account hopefully sometime in April (i.e. possibly 60 days). However, their couriers were paid each week, thus posing a time lag of maybe seven to eight weeks before they recouped their money. Without a large bank account to fall back on, this time delay has resulted in severe liquidity problems. Consignment of goods means you supply the goods to the seller and you are paid only if and when the goods are sold to consumers. Advantages to Crumpler: Retailer may not have otherwise taken on your product. If sales go well, cash inow increases. Generate greater interest and consumer awareness of your products. Disadvantages: Hard to keep track of your stock. You effectively support the retailer nancially. The retailer may not look after your product. Returned, unsold goods are damaged or out of date. Retailer may not push your stock to consumers. You dont know when items are sold. One of Crumplers foundations for their success appears to be that they prefer to work with small rms and with people who have a vested interest in the brand and rely on it to make a living. Crumpler has commissioned Reactive to design an online system to process sales and manage inventory for its regional ofces. This will involve integrated payment systems and include products, tax and shipping variations. Crumpler attends trade shows in overseas countries to generate interest and sales of its product. In 1998 Crumpler products were on display in Germanys trade fair generating interest in their products. In 2005 Crumpler exhibited at the International Consumer Electronics show. Stalls are set up on a low budget using imaginative and eye-catching displays. They have also diversied their range of products for a wider market and opened stores throughout Australasia and the USA.
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Topic 4
Human resources

Chapter 16 Role of human resource management
1A 2C 3A 4A 5C
Chapter 17 Key inuences

1D 2A 3A 4D 5C
Chapter 18 Processes of human resource management

1A 2B 3B 4D 5C
Chapter 19 Strategies in human resource management

1A 2C 3D 4D 5A
Chapter 20 Effectiveness of human resource management

1A 2D 3C 4D 5A
Chapter 21 Human resources at Crumpler

1A 2C 3A 4A 5C

Chapter 16
1 2 Human resources is the process of managing an organisations workforce. Strategic human resource management is the ability of senior managers within a business to develop proactive strategies in the management of its people. It requires managers to think ahead and develop methods for the business to better meet the needs of its employees, and for the employees to better meet the needs of the business. By being proactive and adopting a long-term approach, managers may seek to affect and improve a diverse range of human resource issues within the business. This includes
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the recruitment policies and practices, employment performance review techniques and training and development strategies. Rather than establish human resource departments in these countries, Australian businesses are able to contract foreign businesses to provide a readymade workforce. This allows the Australian business to access the use of labour, without having to consider such issues as minimum labour requirements, occupational health and safety laws and termination. The operations function is concerned with the process of manufacturing a particular good. Operations staff work closely with the human resource department to ensure that the business has recruited staff with the relevant skills and experience necessary to produce the product. The human resource department will monitor the performance of employees involved in the production of goods and services and, as such, training and development initiatives may also be implemented. The human resource function is focused on the role of employees within an organisation. Staff must be motivated and skilled to develop products within the business that cater to the needs and wants of potential customers. It is through the marketing process that a business is able to determine the skills required for employees to produce the desired product. The features of the product would come through market research. In many instances, staff are the public face of the business. Their actions towards consumers will inuence the decision of a consumer to purchase a product, return to the business and recommend the business to others. One of the key goals of human resources is to recruit skilled and highly motivated staff. This in turn benets the protability of the business. As such, budgets are often established within businesses that allocate funds towards training and development, workplace education issues such as afrmative action and occupational health and safety and remuneration. Human resources managers must work within these budgets to adequately provide for the needs for its employees. The ability to access staff whose specialty is human resource management. These staff would have a much better understanding of issues related to human resources and can advise the business on the most appropriate human resource strategies. Allows managers of the business to focus on the core
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business operations. This means that the focus of the business is on production and attending to the needs of its customers. Other issues such as recruitment and training and development are handled by an external business. The decision of a business to outsource its human resource function can generate cost savings. This reduces the need for the business to employ full-time staff, where in many instances, for smaller businesses, for example, a permanent human resource manager may not be required.
Chapter 17
Key inuences
1 An employer refers to the individual or organisation that pays others to work for its business. They are often the owners of the business and, as such, take responsibility for ensuring that the business has the appropriate staff to achieve the organisations goals. An employee refers to an individual who provides his or her skills to a business in return for a regular source of income. It is the responsibility of employees to complete their tasks in a manner that is lawfully described by the employer. Employer associations are organisations that aim to promote the interests of employers within the business environment. They lobby governments to develop policies that enhance the interests of the employer within the employeeemployer relationship. Employer associations also consult with governments on changes to key policy issues, such as trade and industry assistance schemes. A union (or trade union) is an organisation that aims to protect and promote the interests of employees within the workplace. Unions assist employees with disputes in the workplace and act as a bargaining agent in wage negotiations. They also advise members on workplace rights, wage levels and occupational health and safety issues. The government is one of the most inuential stakeholders in the employment relationship process. The federal government establishes the legal framework by which employers, employees and trade unions coexist and operate within the employment relationship. It is expected that these stakeholders will follow the regulations set by the government and tribunals.
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Positive impacts of technology on human resources: Allows the business to develop more efcient production techniques. Employees can be upskilled in the use of new workplace technologies. Encourages the employee to deliver the product/service in new and improved ways. Fosters a process of continued learning within an organisation. Reduced the repetitive nature of labour-intensive work. Fosters team work whereby staff become mentors to colleagues through the process of learning the new technologies. Negative impacts of technology on human resources: Loss of employment as technology itself becomes the main tool of production. Employee resistance to change as the workforce becomes reluctant to learning the use of new technologies. Reduced employee morale as the workforce, as employees feel their positions are less valued due to the growing importance of technology. Lower levels of employee empowerment and decision making as technology becomes a key driver in production methods. If employees are less condent about their level of job security, they show an decreased willingness to spend more of their income on consumer goods. This decreased spending discourages business to demand more labour as a means of producing more goods and services. The main reason why less goods and services are often produced is because consumer demand has decreased. This is commonly referred to as a decline in economic growth. Low employment will generally result in decreased consumer spending. This has a negative effect on business as decreased revenue will often translate into lower prots. Strategies to promote corporate social responsibility within a workforce: Promote effective afrmative action and anti-discrimination programs within the workplace. Develop initiatives that reduce the businesss impact on the environment.
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Engage in strategies that promote worklife balance and enhance workplace exibility. Encourage staff to volunteer their time to participate in community-building activities. Statistics show that each day one person in Australia dies from a work-related injury. The safety of employees within the workplace is a paramount concern to the state government. The Occupational Health and Safety Act 2000 (NSW) establishes the rights and responsibilities of employers and employees in regard to safety in the workplace. Employers must provide staff with a safe workplace and seek to minimise any potential risk that may arise. Businesses with more than 20 employees must have an occupational health and safety committee. The aim of these committees is to address any work-related health or safety concerns employees may have. While there is a considerable burden of responsibility on employers, employees must also cooperate in maintaining safety in the workplace.
Chapter 18
1 Identifying stafng needs is not as simple as employing more people. It is possible that the existing workforce may not be fully utilised. It may simply involve training existing staff to make them more able to cope with the changes that will be introduced or providing staff with an incentive program to entice them to be more productive and efcient. If this is not the case and more employees are needed, then the specic job needs to be identied and analysed. This should result in a job description, which is a written statement describing the duties, tasks and responsibilities associated with the job. After this, a job specication must be developed. It outlines the key skills, experience and qualications needed for this particular job. Obviously the human resources department would need to work closely with the other functional departments to determine this information. In the function of operations, for example, a welder may be needed on the factory oor. The job specication for the welder would be developed with the operations department. In order to acquire a new member of staff, the value of the job needs to be established and a remuneration gure attached. This involves determining how
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much the job is worth; that is, the pay and entitlements that will be provided to the person employed to do the job. Much of this will depend on conditions that have been established in the wage agreements with which the business must comply. Non-monetary benets are often combined with monetary benets to complete a remuneration package. This package represents payment to employees in exchange for their labour services. Nonmonetary benets may include greater job variety, more exible working hours, increased status in the job or community, being allowed to manage yourself or access to an employee-subsidised cafeteria. Monetary benet may be shown as the following: Bonuses. These are often paid at Christmas time or at the end of the nancial year as an additional reward, above a wage or salary, for hard work. Through a shared ownership scheme. This may take the place of pay increases and provides the added incentive of workers owning part of the business. Both Coca-Cola and Qantas have excellent employee share plan initiatives. Fringe benets. Examples are a company car, a housing loan at a low-interest rate, a mobile phone, an expense account, discounted purchases from the business and additional superannuation payments. Providing staff with a wider range of experiences in activities completed by the business results in greater exibility and increased capacity for change to take place successfully.
Separation
Voluntary Involuntary
retirement resignation voluntary redundancy
involuntary redundancy/ retrenchment instant or summary dismissal dismissal after warnings
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Intrinsic rewards are often associated with non-monetary benets, which are those that come from within employees themselves. This type of reward includes satisfaction of a job well done, or a good inner feeling about the work you are involved in; for example, working for a charity or as a medical researcher. Remuneration packages are the total pay or reward to workers and managers for their labour services and may include both monetary and non-monetary benets. They are designed to provide motivation to individual workers so that they make a 100% effort in their role in the business. People who receive satisfaction from their work often feel that their job is enjoyable and seems to take less effort than for those who are dissatised and nd that time at work passes slowly. Rewards often provide the incentive that encourages the extra effort and the feeling that the job is worthwhile.
Chapter 19
1 Authoritarian leadership. This style of leadership is also known as autocratic leadership. Managers lead based on the view that they are responsible for telling their employees what they want done and how to accomplish the task. There is no role for employees to contribute to the process of making decisions. This is the responsibility of managers or leaders within the organisation. Participative leadership. This style of leadership is also known as democratic leadership. The concept of inclusion is a fundamental aspect of this style of leadership. Participative leadership involves the leader including one or more employees in the decision-making process. Employees are consulted about what to do and how to do it. Given the involvement of staff in the decision-making process, the nal decision-making authority still rests with the leader. Delegative leadership. This style of leadership is also known as free-rein leadership. The leader allows the employees to make decisions. Given this, not all decisions then become the responsibility of employees. The process of effective delegative leadership involves a clear understanding between leaders and employees over who can make what decisions.
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The employee has an improved understanding of how their role contributes to the success of the business. The employee has a clear understanding of what needs to be done to be successful on the job. The employer is able to identify any problems early, and assist the employee with improving their performance. Performance review and improvement is ongoing and allows the employee to be continually aware of their own personal goals and that of the business. A grievance is a dispute between parties. Many businesses have developed a grievance procedure policy, which outlines the process for resolving grievances in the workplace. It will specify the grievance procedures, which are the rules and procedures that employees, unions and employers must follow in order to resolve a dispute. Developing a grievance procedure policy for use in the employment relationship has many benets. For instance, the policy: provides a clear outline of the issues that are regarded as workplace grievances illustrates the correct and appropriate processes to use when raising a complaint provides a mechanism that can be used to achieve a quick resolution of disputes.
Workplace dispute arises Parties notified Negotiation between employer and employees Dispute not resolved Unions and/or mediator enter resolution process Dispute not resolved Fair Work Australia intervenes conciliation Dispute not resolved Fair Work Australia intervenes arbitration Dispute resolved
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Performance pay. Performance pay refers to the process of linking part of an employees income to their performance at work. As the employee reaches targets and demonstrates improved performance, they will be rewarded through increased pay. This concept of performance recognition believes that employee motivation is derived through increased nancial benets. The benets of performance pay: Financial rewards are often a key motivator for employees. Performance may improve as employees are encouraged to work more effectively. Good employees are attracted to work for the organisation as they may regard performance pay a measure of their successful work attributes. It encourages unmotivated and inefcient individuals to improve their performance. The disadvantages of performance pay: There are many occupations where the performance of the employee is considerably inuenced by external factors such as the attitudes of consumers, health and cultural concerns and general economic conditions and the performance of employees may be difcult to measure. Possibility of conict may emerge due to the process of measuring performance. Performance pay assumes individuals are motivated by money, where some employees may simply seek nonnancial rewards as their form of recognition.
Chapter 20
1 There are seven perspectives from which a business may measure the effectiveness of its employment relationship: staff turnover, absenteeism, level of disputation, benchmarking of key variables, accidents, corporate culture and worker satisfaction. Corporate culture refers to the culture within an organisation. It relates to the values and beliefs within a business and directly impacts upon the relationship between management and employees. All successful businesses are able to translate their values and beliefs into actions. An effective corporate culture is one that is believed, demonstrated and acted upon by
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management and employees. In essence, it becomes the way staff perform their work. Companies are encouraging employees to be more responsible and to act and think like owners. They are also encouraging teamwork and the formation of teams as a strong culture is one in which they work together effectively, share the same values, and make decisions to meet the organisations primary goals and objectives. Staff turnover refers to the rate at which employees leave a business. Some employees leave their employment voluntarily to seek employment opportunities elsewhere or to retire. Others, however, are forced to leave owing to their misconduct or the need for retrenchments. It is inevitable that within any organisation, human error may occur. Regrettably this error may result in concerns relating to occupational health and safety arising. Workplace accidents occur across all Australian workforces and may range from minor concerns such as cuts and bruises to more serious issues including permanent physical damage and death. All workplaces across Australia must be aware of potential hazards. Management must then implement strategies to either eliminate or reduce these hazards. Effective human resource management ensures that occupational health and safety within a business is paramount. Benchmarking is a form of control in an organisation. If employees are unable to meet performance goals on a regular basis, it will be clear that management must examine why this is occurring. The reason may be a lack of motivation or that the staff are not adequately trained.
Chapter 21
Human resources at Crumpler
1 Crumpler itself is considered to be a small business. It has a workforce of approximately 20 employees. Given this, the role of human resource management is conducted by senior management within the business. The recruitment, training and development and separation of staff is the role of Will Miller, Dave Roper and Sam Davy. Each of these three individuals liaises with each other regarding the human resource needs of the business.
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Crumpler bags are manufactured in China. It is the responsibility of these foreign contractors to deal with issues of a human resource nature. All other aspects of Crumplers business operations are completed by Crumpler staff. Economic inuences. Management of Crumpler believe that their product is not inuenced by economics conditions. According to Dave Roper, the investment into quality staff across the key areas of design, retail and marketing may in the short term affect prots, however this will pay handsome dividends into the future as we concentrate on developing new products and opening new stores, he says. Crumpler believes that acquiring good staff is an essential aspect to the success of the business. It is the responsibility of staff to design and sell the product two ingredients for a successful business. Acquisition for Crumpler occurs through the traditional means of print media recruitment and, more recently, the use of online methods. Senior management short-list and interview all full-time staff. Casual retail staff are recruited by the national retail manager. Crumpler has successfully adopted the participative approach to leadership. All employees are encouraged to contribute their ideas and thoughts and take creative ownership of the business. The concept of fun is emphasised across all aspects of the human resource relationship.
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Solutions to sample examination and marking criteria

Section I
20 marks
1D 6A 11 D 16 D
40 marks
2B 7C 12 B 17 B
3B 8D 13 A 18 D
4C 9C 14 D 19 D
5A 10 C 15 C 20 B
Section II
Question 21 (a) A target market is a group of customers the business develops, markets and aims to sell products to.
Criteria Provides a clear denition of the term target market No correct response is provided Mark 1 0
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(b)
Demographic segmentation is the process of developing a customer base based on characteristics such as age, gender, income, family size and level of education. The response explores these issues in further detail.
Mark 3 2 1 0
Criteria Provide clear denition of demographic market segmentation Provide a detailed explanation of such forms of segmentation Provide clear denition of demographic market segmentation Provide a generalised description of such forms of segmentation Provide clear denition of nancial and non-nancial rewards No correct response is identied
(c)
Ethical issues include: truth, accuracy and good taste in advertising products that may damage health sugging engaging in fair competition.
Mark 4 3
Criteria Correctly identies TWO ethical issues related to marketing the business Provides a detailed and clear explanation for each of these issues Correctly identies TWO ethical issues related to marketing the business Provides a generalised explanation for each of these issues Correctly identies TWO ethical issues related to marketing the business OR correctly identies ONE ethical issue related to marketing the business Provides a clear explanation for this issue Correctly identies ONE ethical issue when marketing the business No correct response is identied
2 1 0
Question 22 (a) The purpose of an income statement is to reect over a oneyear period the earnings and expenses of a business. It reects the cost of purchasing stock, revenue levels and a wide variety of expenses. The statement allows the business to examine the effectiveness of its marketing, stock control and cost strategies.
SOLUTIONS TO SAMPLE EXAMINATION AND MARKING CRITERIA
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Criteria Correctly identies the purpose of income statements Provides a generalised response identifying the purpose of an income statement No correct response is identied
Mark 2 1 0
(b) The net prot ratio for the business is 10%. This means that for every $1 in sales, the business achieves a net prot of 10 cents. This is a solid result.
Criteria Correctly calculates the net prot ratio as 10% Provides a correct comment on the net prot ratio Correctly calculates the net prot ratio No correct response is identied Mark 3 1 0
(c) The expense ratio for the business is: 39% (this is rounded to the nearest percentage). The business has a higher expense ratio than its competitors. This means that the expenses of this business need to be examined and possibly reduced. Costs such as wages, rent, insurance and marketing expenses need to be examined against the benet that they bring to the business.
Criteria Correctly calculates the expense ratio Accurately comments on the efciency of this business compared to its major competitor Correctly calculates the expense ratio as 38.7% Identies the efciency of this business compared to its major competitor Correctly calculates the expense ratio No correct response is identied Mark 3 2 1 0
Question 23 (a) The wage agreement negotiated is a certied agreement. It is also known as an enterprise agreement.
Criteria Correctly identies the type of wage agreement negotiated No correct response is identied Mark 1 0
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(b)
Conciliation is a process of dispute resolution used by Fair Work Australia. Parties involved in the dispute are encouraged to discuss their differences with an agreement reached. The agreement is not legally binding. Arbitration is where Fair Work Australia hears arguments put forward by both parties, then makes a decision that is legally binding.
Mark 3 2 1 0
Criteria Provides clear denitions of conciliation and arbitration, emphasising the difference between both forms of dispute resolution Provides basic denitions of conciliation and arbitration, emphasising the difference between both forms of dispute resolution Provides a denition of either conciliation or arbitration No correct response identied
(c)
Suggested answers could outline: corporate culture benchmarking key variables changes in staff turnover absenteeism accidents level of worker satisfaction disputation.
Mark 4 3 2 1
Criteria Clearly outlines TWO different effective human resource management strategies Lists TWO effective human resource management strategies Clearly outlines ONE human resource management strategy Lists TWO effective human resource management strategies Lists ONE effective human resource management strategy
Question 24 (a) The nancial statement shown is a balance sheet

Criteria Correctly identies the type of nancial statement balance sheet No correct response is identied Mark 1 0
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(b) The value of shareholder equity is: $1400.

Criteria Correctly calculates the shareholders equity No correct response is identied Mark 1 0
(c) The gearing ratio is: 1.25 : 1. This means that for every $1 in shareholders equity, the business has $1.25 in debt.
Criteria Correctly calculates the gearing ratio Shows all working Correctly calculates the gearing ratio only OR shows working only No correct response identied Mark 2 1 0
(d)
Strategies to improve the gearing ratio could include: factoring sale and leaseback payment of debt on time increased shareholder capital use of cash payment to reduce current liabilities leasing.
Mark 4 3 2 1
Criteria Clearly discusses TWO strategies that could be implemented to improve the ratio Identies TWO strategies that could be implemented Clearly discusses ONE strategy that could be implemented Lists TWO strategies that could be implemented Lists ONE strategy that could be implemented
Question 25 (a) Any two of: quality, speed, dependability, exibility, customisation, cost.
Criteria Clearly names TWO operational performance objectives Clearly names ONE operational performance objectives Marks 1
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(b) The purpose of inventory management is to ensure that the business has enough stock on hand to meet anticipated demand without holding too much, which will increase inventory expenses. Similarly, the business cannot hold too little or it risks running short of inventory, which is called a stock out.
Criteria Clearly describes the purpose of inventory management in the short term Identies or outlines a purpose of inventory management Marks 2 1
(c) Increasing pressure from customers, society and governments has required businesses to examine the impact their operations strategy has on the environment and the quality of life of society. Corporate social responsibility (CSR) is the duty of care a business has towards its stakeholders. With respect to operations businesses are increasingly obliged to use resources in a sustainable manner, reduce negative environmental impacts, treat people and employees with care and respect, and conduct their business in an open, honest manner. Businesses are no longer evaluated just on their nancial achievements.
Criteria Clearly explains with reasons why business pursue CSR goals in operations Describes CSR or sketches a brief explanation for CSR in general terms Marks 2 1
(d) Implementation of new technology may give a business a signicant competitive advantage in operations through lower operations costs, improved quality and the ability to make more variations of a product. However, the disadvantage is that new technology can be very expensive to purchase, may be quite disruptive to the operations process to install and may suffer problems and issues as the new technology settles in. New training may also be required. There may be conict with displaced employees.
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Criteria Describes both advantages and disadvantages of the impacts of technology innovations with reference to operations Describes an advantage OR disadvantage of the impacts of technology innovations with reference to operations OR analyses in general terms an impact of technology with reference to operations Refers to an advantage OR disadvantage of technology on a business OR analyses the impact of technology without reference to operations
Marks 3 2 1
Section III
20 marks Question 26 Suggested answers could include: Marketing strategies market segmentation, product/service differentiation and positioning products goods and/or services: branding packaging price including pricing methods cost, market, competitionbased: pricing strategies skimming, penetration, loss leaders, price points price and quality interaction promotion: elements of the promotion mix advertising, personal selling and relationship marketing, sales promotions, publicity and public relations the communication process opinion leaders, word of mouth place/distribution: distribution channels channel choice intensive, selective, exclusive physical distribution issues transport, warehousing, inventory people, processes and physical evidence internal sources of nance retained prots external sources of nance
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nance: debt short-term borrowing (overdraft, commercial bills, factoring), long-term borrowing (mortgage, debentures, unsecured notes, leasing) equity ordinary shares (new issues, rights issues, placements, share purchase plans), private equity
Marks
Criteria Presents a sustained, logical and well-structured response Communicates clearly using appropriate business terminology and concepts Provides a comprehensive description of marketing strategies that the business could use Presents a thorough analysis of relevant forms of nance Presents a well-organised response and uses appropriate business terminology and concepts Develops a clear description of marketing strategies that the business could use Provides some analysis of relevant forms of nance Communicates using business terminology and concepts Provides a satisfactory description of marketing strategies that the business could use Provides some relevant forms of nance that the business could use to fund this expansion Uses some business terminology Identies some methods of international expansion that the business could use Uses limited business terminology Makes basic reference to marketing strategies used by the business or relevant forms of nance
1720
1316
912
58
14
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Section IV
20 marks Question 27 Suggested answers could include: overcoming resistance to change nancial costs, purchasing new equipment, redundancy payments, retraining, reorganising plant layout, inertia. Effectiveness of human resource management indicators: corporate culture benchmarking key variables changes in staff turnover absenteeism accidents levels of disputation worker satisfaction.
Criteria Presents a sustained, logical and well-structured response Communicates clearly using appropriate business terminology and concepts Provides a comprehensive and detailed discussion for reasons why stakeholders within the business may resist change Presents a thorough assessment of strategies used by businesses in measuring the effectiveness of human resource management Makes detailed reference to a case study or case studies relevant to the question Presents a well-organised response and uses appropriate business terminology and concepts Develops sound reasons why stakeholders within the business may resist change Provides a generalised assessment used by businesses in measuring the effectiveness of human resource management Makes satisfactory reference to a case study or case studies relevant to the question Marks
1720
1316
78
Communicates using business terminology and concepts Provides a satisfactory description for reasons why stakeholders within the business may resist change Identies some basic arguments assessing the strategies used by business in human resource management Makes some reference to a case study or case studies relevant to the question Uses some business terminology Communicates using generalised concepts and arguments Identies some reasons why stakeholders within the business may resist change Provides a basic description of some measures of effective human resource management performance Lists elements of a business case study/case studies Uses limited business terminology Makes basic reference to reasons for stakeholder resistance Identies and lists some measures of effective human resource management performance
912
58
14
Question 28 Suggested answers could include: performance objectives quality, speed, dependability, exibility, customisation, cost. Strategies in human resource management: leadership style job design general or specic tasks recruitment internal or external, general or specic skills training and development current or future skills performance management developmental or
administrative
rewards monetary and non-monetary, individual or
group, performance pay

global costs, skills, supply workplace disputes resolution negotiation, mediation,
grievance procedures, involvement of courts and tribunals.
79
Criteria Presents a sustained, logical and well-structured response Communicates clearly using appropriate business terminology and concepts Provides a comprehensive and detailed discussion of performance objectives within a business Presents a thorough assessment of strategies used by businesses in human resource management Makes detailed reference to a case study or case studies relevant to the question Presents a well-organised response and use appropriate business terminology and concepts Develops a sound for performance objectives within a business Provides a generalised assessment of strategies used in human resource management Makes satisfactory reference to a case study or case studies relevant to the question Communicates using business terminology and concepts Provides a satisfactory description of performance objectives within a business. Identies some basic arguments assessing the strategies used by business in human resource management Makes some reference to a case study or case studies relevant to the question Uses some business terminology Communicates using generalised concepts and arguments Identies some elements of performance objectives within a business Provides a basic description of some strategies used by business in human resource management performance Lists elements of a business case study/case studies Uses limited business terminology Makes basic reference to performance objectives within a business Identies and lists some strategies of human resource management performance
Marks
1720
1316
912
58
14
80

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Cambridge HSC

Cambridge University Press

CAMBRIDGE UNIVERSITY PRESS

Cambridge University Press

Topic 4: Human resources

Sample responses Solutions to sample examination and marking criteria

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CAMBRIDGE HSC BUSINESS STUDIES STUDY TOOLKIT

Cambridge University Press

Verbs used in Business Studies assessments and exams

VERBS USED IN BUSINESS STUDIES ASSESSMENTS AND EXAMS

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Recommend Provide reasons in favour.

CAMBRIDGE HSC BUSINESS STUDIES STUDY TOOLKIT

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Answering multiple-choice questions

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Sample multiple-choice question

Responding to short-answer questions

Sample short-answer question

CAMBRIDGE HSC BUSINESS STUDIES STUDY TOOLKIT

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Writing business reports based on stimulus material

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Sample Section III question

CAMBRIDGE HSC BUSINESS STUDIES STUDY TOOLKIT

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Answering extended-response questions

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Sample Section IV question

CAMBRIDGE HSC BUSINESS STUDIES STUDY TOOLKIT

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Sample examination questions

SAMPLE EXAMINATION QUESTIONS

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CAMBRIDGE HSC BUSINESS STUDIES STUDY TOOLKIT

Cambridge University Press

SAMPLE EXAMINATION QUESTIONS

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CAMBRIDGE HSC BUSINESS STUDIES STUDY TOOLKIT

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(A) (B) (C) (D)

SAMPLE EXAMINATION QUESTIONS

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CAMBRIDGE HSC BUSINESS STUDIES STUDY TOOLKIT

Cambridge University Press

SAMPLE EXAMINATION QUESTIONS

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Question 26 (20 marks)

CAMBRIDGE HSC BUSINESS STUDIES STUDY TOOLKIT

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Cambridge University Press

CAMBRIDGE HSC BUSINESS STUDIES STUDY TOOLKIT

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Cambridge University Press

CAMBRIDGE HSC BUSINESS STUDIES STUDY TOOLKIT

Cambridge University Press

Cambridge University Press

CAMBRIDGE HSC BUSINESS STUDIES STUDY TOOLKIT

Cambridge University Press

Cambridge University Press

CAMBRIDGE HSC BUSINESS STUDIES STUDY TOOLKIT

Cambridge University Press