Examiners commentaries 2016

Examiners commentaries 2016

MN2177 Core management concepts

Important note

This commentary reflects the examination and assessment arrangements

for this course in the academic year 201516. The format and structure
of the examination may change in future years, and any such changes
will be publicised on the virtual learning environment (VLE).

Information about the subject guide and the Essential reading

references
Unless otherwise stated, all cross-references will be to the latest version
of the subject guide (2016). You should always attempt to use the most
recent edition of any Essential reading textbook, even if the commentary
and/or online reading list and/or subject guide refers to an earlier
edition. If different editions of Essential reading are listed, please check
the VLE for reading supplements if none are available, please use the
contents list and index of the new edition to find the relevant section.

General remarks
Learning outcomes
At the end of the course, and having completed the Essential reading and
activities, you should be able to:
demonstrate understanding of core management concepts
apply these concepts to specific business situations
analyse and evaluate managerial tools such as balance sheets and
marketing plans
explain the relevance of social science to business practice

Examination advice
The examination will be a three-hour unseen written examination covering
all aspects of the syllabus. In the examination, you will be asked to:
reproduce some knowledge. This will get you close to a pass, but you
will also need to be able to apply this knowledge to the question
apply knowledge to new situations. This will lift you to high lower-
second or low upper-second marks, provided you get the answers right
make new connections between topics and concepts. This will enable
you to gain a first-class mark.
In the examination you must read the questions carefully to make sure you
have understood them, choose the questions you wish to answer from the
list available and manage your time carefully. You should always check the
instructions on the examination paper before you begin and follow them
carefully.

1
MN2177 Core management concepts

Examination revision strategy

Many candidates are disappointed to find that their examination
performance is poorer than they expected. This may be due to a
number of reasons. The Examiners commentaries suggest ways of
addressing common problems and improving your performance. One
particular failing is question spotting, that is, confining your
examination preparation to a few questions and/or topics which
have come up in past papers for the course. This can have serious
consequences.
We recognise that candidates may not cover all topics in the syllabus
in the same depth, but you need to be aware that examiners are free
to set questions on any aspect of the syllabus. This means that you
need to study enough of the syllabus to enable you to answer the
required number of examination questions.
The syllabus can be found in the Course information sheet in the
section of the VLE dedicated to each course. You should read the
syllabus carefully and ensure that you cover sufficient material in
preparation for the examination. Examiners will vary the topics and
questions from year to year and may well set questions that have not
appeared in past papers. Examination papers may legitimately include
questions on any topic in the syllabus. So, although past papers can be
helpful during your revision, you cannot assume that topics or specific
questions that have come up in past examinations will occur again.
If you rely on a question-spotting strategy, it is likely
you will find yourself in difficulties when you sit the
examination. We strongly advise you not to adopt this
strategy.

2
 Examiners commentaries 2016

Examiners commentaries 2016

MN2177 Core management concepts Zone A

Important note

This commentary reflects the examination and assessment arrangements

for this course in the academic year 201516. The format and structure
of the examination may change in future years, and any such changes
will be publicised on the virtual learning environment (VLE).

Information about the subject guide and the Essential reading

references
Unless otherwise stated, all cross-references will be to the latest version
of the subject guide (2016). You should always attempt to use the most
recent edition of any Essential reading textbook, even if the commentary
and/or online reading list and/or subject guide refers to an earlier
edition. If different editions of Essential reading are listed, please check
the VLE for reading supplements if none are available, please use the
contents list and index of the new edition to find the relevant section.

Comments on specific questions

Section A
Answer two questions from this section.

Question 1
Compare and contrast industry analysis and the resource based view of the firm
in terms of their ability to explain firm performance.
Good answers will:
describe the five forces model and discuss the problems it was meant
to address
identify the static and retrospective nature of the model, and the
importance of industry boundaries
identify the absence of a discussion of the internal capabilities of the
firm as a key weakness within the five forces framework, as reflected
in Porters later amendments to the approach
describe the resource-based view associated with the work of Barney
identify the analytical problems in identifying key resources and
relating them to various performance measures
summarise the strengths and weaknesses of each approach and the
extent to which they are competitive or complementary explanations
of performance.
Most relevant sections of the subject guide: Chapters 13 and 16.
See also: Willman, P. Understanding management: social science foundations.
(Oxford: Oxford University Press, 2014) [ISBN 9780198716921] Chapter
6 and Chapter 7.

3
MN2177 Core management concepts

Question 2
What are the main activities of the HR function according to Ulrich? How do they
relate to competitive advantage?
Good answers will:
identify the three key activities in the Ulrich model shared services,
centres of excellence and business partnership and relate them to the
competitive position of the firm
describe these activities and their implications
discriminate between those which are operational (the first two) and
strategic (business partnership)
identify the issues involved in relating HR activity within the firm to
firm performance overall and, by extension, to competitive advantage
discuss those performance measures that are most likely to be
impacted by HR practice.
Most relevant sections of the subject guide: Chapters 5 and 13.
See also: Willman (2014) Chapter 4 and Chapter 6.

Question 3
How does the transactions cost framework explain the existence of firms? Is this
a satisfactory explanation? Give examples.
Good answers will:
describe the transactions cost frameworks in the work of Coase and
Williamson
describe the market failure theory of the firm and its purpose
critically examine the limitations of the market failure theory
indicate how these limitations might be addressed, in particular
discussing the work of other approaches to firm formation, such as
Chandler
provide an empirical example of the transition from market to firm,
e.g. vertical integration.
Most relevant sections of the subject guide: Chapter 2.
See also: Willman (2014) Theme 2 and Chapter 2.

Question 4
What is the contribution of institutional theory to an understanding of the
strategy and structure of large firms?
Good answers will:
describe the core elements of the institutionaltheoretic approach to
firm behaviour, in particular discussing the core concepts of bounded
rationality and legitimacy
identify the core forces of isomorphism coercive, mimetic and
normative and the factors that influence their strength
identify separately the effects of such forces on strategy and structure
criticise the omissions of institutional theory, in particular the
relationship to economic approaches to the strategy and structure of
firms
assess the strengths and weaknesses of an institutional approach.
Most relevant sections of the subject guide: Chapters 14 and 15.

4
See also: Willman (2014) Chapter 7.
 Examiners commentaries 2016

Section B
Answer two questions from this section.

Question 5
What should define the optimal level of inventory within a firm?
Good answers will:
identify the key variables in inventory management (D, c, s ,h and Q in
section 6.3 of the subject guide)
illustrate how their interaction is modelled
critically assess the usefulness of this method, in particular its reactive
and internally focused approach
indicate how market pressures might affect calculations about
inventory, in particular whether inventory may be held by suppliers or
customers
discuss the core ideas of supply chain management.
Most relevant sections of the subject guide: Chapters 3 and 6.
See also: Willman (2014) Chapter 4.

Question 6
Show with two examples how Kahneman and Tverskys idea of framing might
affect business decisions.
Good answers will:
define the concept of framing
locate it within the context of Kahnman and Tverskys Prospect theory
identify an example of a positively-framed business decision
identify an example of a negatively-framed business decision
compare and contrast their implications both for the decision process
and the decision outcome.
Most relevant sections of the subject guide: Chapter 17.
See also: Willman (2014) Theme 4.

Question 7
What are the key elements of a cash flow statement and how should they be
interpreted?
Good answers will:
identify that cash flow consists of inflow minus outflow
identify the 14 items of the cash flow statement; these appear in
Section 10.3.3 of the subject guide
identify that cash flow is equal to income minus any change in the
balance sheet
discuss any impact of changes to the cash flow statement of various
business activities; for example, depreciating an asset (neutral), buying
inventory (decrease) or making a share issue for cash (positive)
identify that the cash flow statement is influenced broadly by
investment, financing and operating considerations.
Most relevant sections of the subject guide: Chapter 10.
See also: Willman (2014) Theme 1.

5
MN2177 Core management concepts

Question 8
Compare and contrast return on investment measures and balanced scorecard
measures of performance. What are the strengths and weaknesses of each?
Good answers will:
discuss how return on investment (ROI) measures are determined.
This is income over some measure of investment: assets or capital
employed
identify the strengths and weaknesses of ROI measures of performance
note the tendency of ROI to encourage short-term focus on
performance, that it can be increased by reducing capital employed
and that it encourages focus only on financial performance
define the balanced scorecard, identifying the four key perspectives
financial, customer, business and learning
compare the approaches in terms of constituents, discretion,
perspective and scope (see Section 9.3 of the subject guide).
Most relevant sections of the subject guide: Chapter 9.
See also: Willman (2014) Themes 5 and 8.

6
 Examiners commentaries 2016

Examiners commentaries 2016

MN2177 Core management concepts Zone B

Important note
This commentary reflects the examination and assessment arrangements
for this course in the academic year 201516. The format and structure
of the examination may change in future years, and any such changes
will be publicised on the virtual learning environment (VLE).

Information about the subject guide and the Essential reading

references
Unless otherwise stated, all cross-references will be to the latest version
of the subject guide (2016). You should always attempt to use the most
recent edition of any Essential reading textbook, even if the commentary
and/or online reading list and/or subject guide refers to an earlier
edition. If different editions of Essential reading are listed, please check
the VLE for reading supplements if none are available, please use the
contents list and index of the new edition to find the relevant section.

Comments on specific questions

Section A
Answer two questions from this section.

Question 1
Compare and contrast industry analysis and the Resource Based View of the firm
in terms of their ability to explain firm performance.
Good answers will:
describe the five forces model and discuss the problems it was meant
to address
identify the static and retrospective nature of the model, and the
importance of industry boundaries
identify the absence of a discussion of the internal capabilities of the
firm as a key weakness within the five forces framework, as reflected
in Porters later amendments to the approach
describe the resource based view associated with the work of Barney
identify the analytical problems in identifying key resources and
relating them to various performance measures
summarise the strengths and weaknesses of each approach and the
extent to which they are competitive or complementary explanations
of performance.
Most relevant sections of the subject guide: Chapters 13 and 16.
See also: Willman, P. Understanding management: social science foundations.
(Oxford: Oxford University Press, 2014) [ISBN 9780198716921] Chapter
6 and Chapter 7.

7
MN2177 Core management concepts

Question 2
What are the main activities of the HR function according to Ulrich? How do they
relate to competitive advantage?
Good answers will:
identify the three key activities in the Ulrich model shared services,
centres of excellence and business partnership and relate them to the
competitive position of the firm
describe these activities and their implications
discriminate between those which are operational (the first two) and
strategic (business partnership)
identify the issues involved in relating HR activity within the firm to
firm performance overall and, by extension, competitive advantage
discuss those performance measures that are most likely to be
impacted by HR practice.
Most relevant sections of the subject guide: Chapters 5 and 13.
See also: Willman (2014) Chapter 4 and Chapter 6.

Question 3
What do you understand by the term market failure? Does market failure
explain the growth of firms? Give examples.
Good answers will:
describe the market failure approach in the work of Coase and
Williamson
describe the market failure theory of the firm and its purpose
critically examine the limitations of the market failure theory
indicate how these limitations might be addressed, in particular
discussing the work of other approaches to firm formation, such as
Chandler
An example of market failure would be the emergence of the vertically-
integrated firm.
Most relevant sections of the subject guide: Chapters 2 and 14.
See also: Willman (2014) Theme 7 and Chapter 2.

Question 4
What are the main criticisms of the economic approach to the study of
organisations?
Good answers will:
identify the key assumptions of the economic approach to
organisation, specifically, rationality as an assumption, efficiency as an
objective and hierarchy as a means
explain why such approaches have become influential. Pfeffers
account of this is in Section 15.6.2 of the study guide
contrast with the sociological approach emphasising rationality as a
variable, indeterminacy of objectives and complexity of organisational
form
show that economics has greater potential to build models of
organisation, but is less helpful empirically.
Most relevant sections of the subject guide: Chapters 14 and 15.
See also: Willman (2014) Theme 8 and Chapter 8.
8
 Examiners commentaries 2016

Section B
Answer two questions from this section.

Question 5
What should define the optimal level of inventory within a firm?
Good answers will:
identify the key variables in inventory management (D, c, s ,h and Q in
Section 6.3 of the subject guide)
illustrate how their interaction is modelled
critically assess the usefulness of this method, in particular its reactive
and internally focused approach
indicate how market pressures might affect calculations about
inventory, in particular whether inventory may be held by suppliers or
customers
discuss the core ideas of supply chain management.
Most relevant sections of the subject guide: Chapters 3 and 6.
See also: Willman (2014) Chapter 4.

Question 6
Show with two examples how Kahneman and Tverskys idea of framing
might affect business decisions.
Good answers will:
define the concept of framing
locate it within the context of Kahnman and Tverskys Prospect theory
identify an example of a positively-framed business decision
identify an example of a negatively-framed business decision
compare and contrast their implications both for the decision process
and the decision outcome.
Most relevant sections of the subject guide: Chapter 17.
See also: Willman (2014) Theme 4.

Question 7
What is a balanced scorecard? Why has the idea of a balanced scorecard become
so influential?
Good answers will:
define the balanced scorecard, identifying the four key perspectives
financial, customer, business and learning
identify the attempt within the balanced scorecard to establish cause
effect relationships relevant to performance
compare the balanced scorecard approach to more narrow financial
performance measures in terms of constituents, discretion, perspective
and scope (see Section 9.6 of subject guide)
show the complementarity of balanced scorecard approaches to other
measures such as economic value added
use an empirical example of a scorecard (e.g. at p.137 of the course
text) to illustrate the capabilities of scorecards.
Most relevant sections of the subject guide: Chapter 9.
See also: Willman (2014) Themes 1 and 5.
9
MN2177 Core management concepts

Question 8
What are the main differences between traditional and activity based costing
measures? Use examples to illustrate your answer.
Good answers will:
identify that activity-based costing links resource expenses to specific
activities
distinguish unit, batch, product and customer-sustaining activities and
their cost drivers
contrast the outcomes of activity-based and absorption costing for a
specific example (see Section 8.4 of the subject guide)
summarise the main differences of such an approach
recognise that the choice of management accounting technique has a
major impact on the cost allocation outcome.
Most relevant sections of the subject guide: Chapters 7 and 8.
See also: Willman (2014) Theme 1.

10