Multimedia University of Kenya

University Examinations: Second Semester, Fifth year December, 2015

CAT II - EMG 2512 INDUSTRIAL MANAGEMENT
Instructions to Candidates: Answer all Questions
Q1. a) Discuss the key aspects that influence consumer behavior.
b) State the Maslow's hierarchy of needs.
c) Describe five mains phases of a project life cycle.
a) Key aspects that influence consumer behavior:
Cultural:
i) Culture - Culture is the most basic determinant of a persons wants and behavior
ii) Sub-culture - Subcultures are groups of people with shared value systems based on common
life experiences and situations
iii) Social class - Social classes are relatively permanent and ordered divisions in a society
whose members share similar values, interests, and behaviors
Social factors:
i) Reference groups - An individuals attitudes and behavior are influenced by many small
groups
ii) Family - Family is the most important consumer-buying organization in society
iii) Roles and status - Social roles and status are the groups, family, clubs, and organizations to
which a person belongs that can define role and social status
Personal factors:
i) Age and life cycle stage ii) Occupation - Occupation affects the goods and services bought by consumers
iii) Economic circumstances - Economic situation includes trends in: Personal income,
Savings, Interest rates
iv) Life style - a persons pattern of living as expressed in his or her activities, interests, and
opinions
v) Personality - Personality is a persons distinguishing psychological characteristics that lead
to relatively consistent and lasting responses to his or her environment
vi) Self-concept - Self-Concept is the complex mental pictures people have of themselves, also
known as self-image
Psychological factors:
i) Motivation - Maslows Theory of Motivation sought to explain why people are driven by
particular needs at particular times; Herzbergs Theory - A two-two factor theory that
distinguishes dissatisfiers (factors that cause dissatisfaction) and satisfiers (factors that cause
satisfaction)
ii) Perception - Selective Attention (Consumers are constantly bombarded with information and
will screen out stimuli); Selective Distortion (Messages to do not always come across in the
same way the sender indented); Selective Retention (People will forget much that they learn but
will tend to retain information that supports their attitudes and beliefs)
iii) Learning - Learning describes changes in an individuals behavior arising from experience
iv) Beliefs A belief is a descriptive thought that a person holds about something

v) Attitudes - An attitude describes a persons relatively consistent evaluations, feelings, and

tendencies toward an object or an idea
(15marks)
b) Maslows Hierarchy of Needs
Maslow wanted to understand what motivates people. He believed that people possess a set of
motivation systems unrelated to rewards or unconscious desires. Maslow (1943) stated that people are
motivated to achieve certain needs. When one need is fulfilled a person seeks to fulfill the next one,
and so on. The earliest and most widespread version of Maslow's (1943, 1954) hierarchy of
needs includes five motivational needs, often depicted as hierarchical levels within a pyramid. This
five stage model can be divided into basic (or deficiency) needs (e.g. physiological, safety, love, and
esteem) and growth needs (self-actualization).
The original hierarchy of needs five-stage model includes:
1. Biological and Physiological needs - air, food, drink, shelter, warmth, sex, sleep.
2. Safety needs - protection from elements, security, order, law, stability, freedom from fear.
3. Love and belongingness needs - friendship, intimacy, affection and love, - from work group,
family, friends, romantic relationships.
4. Esteem needs - achievement, mastery, independence, status, dominance, prestige, self-respect,
and respect from others.
5. Self-Actualization needs - realizing personal potential, self-fulfillment, seeking personal growth
and peak experiences.

c) Mains phases of a project life cycle

The size, length, and scope of projects vary widely according to the nature and purpose of the project.
Nevertheless, all projects have something in common: They go through a life cycle, which typically
consists of five phases.
i) Concept, at which point the organization recognizes the need for a project or responds to a
request for a proposal from a potential customer or client;
ii)Feasibility analysis, which examines the expected costs, benefits, and risks of undertaking the
project;
iii) Planning, which spells out the details of the work and provides estimates of the necessary
human resources, time, and cost;
iv) Execution, during which the project itself is done. This phase often accounts for the majority of
time and resources consumed by a project;
v) Termination, during which closure is achieved. Termination can involve reassigning personnel
and dealing with any leftover materials, equipment (e.g., selling or transferring equipment), and
any other resources associated with the project.

Q2. a) Discuss how industrialization is basic to the national economic development.

b) What is the importance of Motivation?
c) Discuss the importance of Business planning in a small scale industry.
a) Industrialization plays a vital role in the economic development of any country. The historical
facts reveal that all the developed countries of the world broke the vicious circle of underdevelopment
by industrialization. The role of industrialization in economic development is as follows:
Increase in national income: Industrialization makes possible the optimum utilization of the
scarce resources of the country. It helps in increasing the quantity and quality of various kinds
of manufactured goods and thereby make a larger contribution to gross national product.
(GNP).
Higher standard of living: Industrialization helps in increasing the value of output per worker.
The income of the labour due to higher productivity increases. The rise in income raises the
living standard of the people.
Economic stability: Industrialization is the best way of providing economic stability to the
country. A nation which depends upon the production and export of raw material alone cannot
achieve a rapid rate of economic growth. The uncertainties of Nature, the restricted and
fluctuating demand of the agricultural raw material hampers economic progress and leads to an
unstable economy.
Improvement in balance of payments: Industrialization brings structural changes in the
pattern of foreign trade of the country. It helps in increasing the export of manufactured goods
and thus earn foreign exchange. On the other hand the processing of raw material at home
curtails the import of goods and thereby helps in conserving foreign exchange. The export
orientation and import substitution effects of industrialization help in the improvement of
balance of payments.
Stimulates progress in other sectors: Industrialization stimulates progress in other sectors of
the economy. A development of one industry leads to the development and expansion of other

industries. For instance the construction of a transistor radio plant, develops the small battery
industry (backward linkage). The construction of milk processing plants adds to its line of
production ice cream. cone cream plants etc.. (forward linkage).
Easy to control industrial activity: The industrial activity compared to agricultural is easy to
control. The industrial production can be expanded or cut down according to the price cost and
demand of the product.
Increased employment opportunities: Industrialization provides increased employment
opportunities in small and large scale industries. In an agrarian economy, industry absorbs
underemployed and unemployed workers of agricultural sector and thereby increases the income
of the community.
Promotes specialization: Industrialization promotes specialization of labour. The division of
work increases the marginal value product of labour. The income of worker in the industrial
sector is therefore higher than that of a worker in agricultural sector.
Rise in agricultural production: Industrialization provides machinery like tractors thrashers
harvesters, bulldozers, transport, aerial spray etc, to be used in the farm sector. The increased use
of modern inputs has increased the yield of crops per hectare. The increase in the income of the
farmers has given boost to economic development in the country.
Large scope for technological progress: Industrialization provides larger scope for on the job
training and technological progress. The use of advanced technology increases the scale of
production, reduces cost of production, improves quality of the product and helps in widening of
the market.
Reduction in the rate of population growth: Industrialization leads to migration of surplus
labour from farm sector to the industries mostly situated in urban centers. In cities improved
facilities of sanitation and health care are available. People through the adoption of family
planning measures, reduce the rate of population growth.
Increased saving and investment: Industrialization increases the income of the workers. It
enhances their capacity to save. The voluntary savings, stimulate industrial growth and by
cumulative effect lead to further expansion of industry.
Provision for defense: If a country is industrialized, it can manufacture arms and ammunition
necessary for the defense of the country. A nation which depends on other countries for the
supply of ammunition will eventually suffer and may face defeat.
Lesser pressure on land: The establishment and expansion of industries lessens the excessive
pressure of labour force from the agriculture sector.
Development of markets: With the development of industries the market for raw materials and
finished goods widens in the country.
Increase in the Government revenue: Industrialization increase the supply of goods both for
internal and external markets. The export of goods provides foreign exchange. The customs
excise duties and other taxes levied on the production of goods increase the revenue of the State.
The income tax received from the industrialists adds to the revenue stream of the Government
which eventually is spent for the welfare of the people as a whole.

b) The importance of Motivation

Generally speaking, motivation is what energizes, maintains, and controls behavior. As such, it is clear
why it plays an important role in the workplace. Motivating employees is vital to any business. A
motivated workforce means a highly productive staff, all of which will help the organization achieve
its business goals. And this should be a main objective in the organizational and business plan.
Ultimately when employees are motivated this increases productivity, lowers turnover, and improves
overall performance.
Research has shown that motivated employees will:

Always look for a "better" way to complete a task

Be more quality-oriented
Work with higher productivity and efficiency

c) The importance of Business planning

It provides guidance in an organization and managing a venture
It provides self-assessment forcing organization to bring objectivity to business
Services as a communication tool. It facilitates organization thinking.
Its an indication of owners ability and commitment.
Creates a road map to successful business.

Q3. a) What do you understand by market research?

b) Market research can be used to improve marketing in an organization. Discuss
c) Define an entrepreneur. What are the attributes of a successful entrepreneur?
a) Market research:
i) Its the gathering recording and analyzing of all facts about problems relating to transfer and
sale of goods from producer to consumer.
ii) Process of analyzing the market and its potential
b) Management can use it to:
i) Locate the customer
ii) Get solutions to satisfy the customer
iii) Analyse and rank them with a profit earning point of view.
iv) Estimate life of maintaining supply of selected products
v) Find quality and quantity of goods wanted by customer
vi) Find best distribution channel
vii) Time when products are required
viii)
Enter Competition
c) Entrepreneur:
An entrepreneur is a person who recognizes a business opportunity and organizes, manages, and
assumes the risks of a business enterprise, with the intent of increasing the market value of the
business.
The attributes of a successful entrepreneur
i)
Recognizes opportunities

ii)
iii)
iv)
v)
vi)
i)
ii)
iii)

Desires achievement
Has high energy
Takes risks
Has determination
Has self-confidence
Is enthusiastic
Desires to earn profit
Wants to control his/her destiny

Q4. a) What are the benefits of management by objectives?

b) Explain four bases through which industries are classified.
c) Outline any five advantages of budgeting and Budgetary Control.
a) Management by Objectives (MBO)
Management by objectives (MBO) is a systematic and organized approach that allows management to
focus on achievable goals and to attain the best possible results from available resources. MBO aims at
increasing organizational performance by aligning goals and subordinate objectives throughout the
organization; ideally, employees get strong input to identify their objectives, time lines for completion,
etc. The benefits of management by objectives are:
i)
MBO programs continually emphasize what should be done in an organization to achieve
organizational goals.
ii)
MBO process secures employee commitment to attaining organizational goals.
iii)
MBO focuses workers on most important tasks and objectives.
iv)
MBO focuses supervisors efforts on important areas of support.
v)
MBO contributes to relationship building.
vi)
MBO gives workers a structured opportunity to participate in decision making;
employees can be m o t i v a t e d because they participate in the goal setting
process.
vii)
Performance can b e i m p r o v e d because MBO concentrates on objectives.
viii) Unnecessary efforts will be m i n i m i z e d because objectives are set clearly.
ix)
MBO helps managers t o e x e r c i s e better c o n t r o l over
employees.
b) Bases through which industries are classified
i)
Raw material industrial which may be agriculture based, marine etc.
ii)
Size the amount of capital invested the number of people employed and volume of
production.
iii)
Ownership industries can be classified.
iv)
Time changes that have taken place in industry due to various discoveries and
development.
c) Advantages of budgeting and Budgetary Control:
There are a number of advantages to budgeting and budgetary control:
i) Compels management to think about the future, which is probably the most important
feature of a budgetary planning and control system. Forces management to look ahead, to

set out detailed plans for achieving the targets for each department, operation and (ideally)
each manager, to anticipate and give the organization purpose and direction.
ii) Promotes coordination and communication.
iii) Clearly defines areas of responsibility. Requires managers of budget centers to be made
responsible for the achievement of budget targets for the operations under their personal
control.
iv) Provides a basis for performance appraisal (variance analysis). A budget is basically a
yardstick against which actual performance is measured and assessed. Control is provided
by comparisons of actual results against budget plan. Departures from budget can then be
investigated and the reasons for the differences can be divided into controllable and noncontrollable factors.
v) Enables remedial action to be taken as variances emerge.
vi) Motivates employees by participating in the setting of budgets.
vii) Improves the allocation of scarce resources.
viii) Economizes management time by using the management by exception principle.
Only 5 advantages 1 x 5
(5 Marks)

Q5. a) Explain the internal and external factors that influence marketing.
b) What is decision making?
c) What is the purpose of planning?
a) Internal and external factors that influence marketing
Internal
i) Working culture
ii) Working condition
iii) Productivity
iv) Employee satisfaction
External Factors
i)
Economic factors
ii)
Social factors
iii)
Political factors
iv)
Environmental factors
v)
Technological factors
vi)
Psychological factors
b) Decision making
Decision making is defined as the selection of a course of action among alternative
c o u r s e s of action. Decision making should be rational. Decision making involves a
choice among alternatives.
c) The purpose of planning
Planning is a process by which a manager looks to the future and discovers
alternative courses of action. In other words, planning is anticipatory decision making.
Planning is the process used by managers to identify and select goals and courses of

action of the organization. The purpose of planning can be summarized as

follows:
i) To determine the direction of an organization
ii) To provide a basis for team work
iii) to minimize wastages in the future
iv) To facilitate decision making
v) To improve morale of the employees.
vi) To reduce the risk or uncertainty
vii) To facilitate control