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Multimedia University of Kenya

University Examinations: Second Semester, Fifth year December, 2015

Instructions to Candidates: Answer question any TWO Questions
Q1. a) Discuss the five important decisions which management of an industry has to
take when developing an advertising program.
b) Define budget and Outline the different budgeting methods used by organizations.
c) What are the advantages and disadvantages of being an Entrepreneur?


a) Important decisions taken by management when developing an advertising program:

Setting advertising objectives
Setting advertising budget
Developing advertising strategy
Selecting advertising media
Evaluating advertising
b) Define budget and budgeting methods used by organizations:
Budget - A budget is a document that translates plans into money - money that will need to be spent
to get your planned activities done (expenditure) and money that will need to be generated to cover the
costs of getting the work done (income). It is an estimate, or informed guess, about what you will need
in monetary terms to do your work in a given period of time.
Budgeting Methods There are two main techniques for budgeting; these are incremental budgeting
and zero based budgeting.
i) Incremental budgets are budgets in which the figures are based on those of the actual
expenditure for the previous year, with a percentage added for an inflationary increase for the
New Year. This is an easy method that saves time but it is the lazy way and is often
inaccurate. This budgeting technique is only suitable for organisations where each year is very
similar to the previous one in terms of activities. Very few dynamic organisations or projects are
so stable that this budgeting technique really works for them.
ii) In zero based budgets, past figures are not used as the starting point. The budgeting process
starts from scratch with the proposed activities for the year. The result is a more detailed and
accurate budget, but it takes more time and energy to prepare a budget in this way. This
technique is essential for new organisations and projects, but it is also probably the best route to
go in a dynamic organisation that is proactive in taking on new challenges.
c) Advantages and disadvantages of being an Entrepreneur:
Advantages: There are many advantages to being an entrepreneur, including:
Satisfaction from taking a risk and becoming a success
Showing expertise and skills
Working from home
Gaining profit
The disadvantages to being an entrepreneur are:

Long hours
Total responsibility for the business
Financial risks
(4 marks)

Q2. a) Briefly describe the Elements of a balance sheet.

b) What is performance Appraisal? What are the advantages of
performance Appraisal?
(6 Marks)

c) Briefly describe the organization structure and management of an industry. (10marks)

a) Elements of a balance sheet are:
i) Assets these are resources with future economic benefit to a business entity as a result of a past
ii) Liabilities - these are legal obligations required for future payments of assets or services as a
result of a business entitys past transactions or events.
iii) Equity these are residual claims (assets-liabilities) to the business entity from stockholders
(3 Marks)
b) Definition of Performance Appraisal
Performance appraisal is the system of measuring Employee performance and
g i v i n g feedback to the employee regarding his performance.
The advantages of performance Appraisal
Getting performance Feedback
Identifying training needs
Motivating Personnel
Promotional consideration
Pay fixation.
(6 Marks)
c) Organization structure and management of an industry:
Top management - designing and strategic long range plans for decision making.
Operation research management aids in conducting research of all operations for
improving productivity in the industry.
Technical department it works with technical groups to ensure system designs human
requirement and work analysis are followed.
Marketing department it provides assistance in the analysis of complete marketing
systems and pricing.
Finance department ensures all areas requiring capital are catered for including
payments and purchases.
Procurement establishes economic order qualities ensure provision of better services
for minimum cost by using better methods of purchasing.
Transportation and distribution it controls distribution and evaluates alternative
patterns of distribution in order to determine the optimum plans in meeting consumer
viii) Production and quality it helps in achieving maximum utilization of equipment
material and labour to achieve optimum performance.
Performance and replacement it assists in reduction of maintenance cost.


Industrial relation human resource it deals with matters concerning working conditions
training compensation.
(10 Marks)
Q3. a) Explain the importance of communication to an organization.
b) How do marketers select a price for a product or service? What are the trends
that influence price setting?
c) Which important aspects should management of an industry consider in order to
effectively manage their human resource?

a) The importance of communication to an organization


Aids in managerial performance

Aids to understanding and acceptance of work.
Helps in leadership 2 way communication
Helps in coordination
Enables job satisfaction
Helps in Public relation

(5 Marks)
b) Selection of a price for a product or service:
Price selection: Marketers must select a price that is not too high or not too low, a price that equals
the perceived value to target consumers
Trends Influencing Price Setting:
i) rate of new product introduction
ii) availability of bargain-priced dealer and generic brands
iii) Price cutting as a strategy to maintain or regain market share
iv) More efficient and better informed buyers
c) Management of human resource:
a. Scientific selection and recruitment
b. Developing and training workers
c. Motivating workers
d. Allowing participation of workers
e. Fair remuneration
f. Proper working conditions
g. Proper channels of communication
h. Proper grievance handling
i. Proper planning and supervision
j. Evaluating performance

Q4. a) Outline any five factors that affect productivity in a manufacturing organization
b) Briefly describe any five managerial functions in an organization.
a) Factors Affecting Productivity
Productivity is how a business can measure its efficiency

(10 marks)

Productivity =

Quantity of Output
Quantity of inputs

Productivity can be affected by the following factors:

i) Human Resources - Providing training to use best method of production; Constantly motivating the
workers by providing financial and non-financial incentives; Keeping high morale of the employees;
Improving working condition on the plant; etc.
ii) Technology and Capital Investment - Investing in new technologies; Use of automation instead of
human resource; invest in new inventory control systems; etc.
iii) Product and System Design - Bad Plant layout can easily waste time (too much time in movement
and can easily cause accidents); Bad product design can result in waste; certain design can be
difficult to implement; etc.
iv) Machinery and Equipment - Preventive maintenance; Use of proper speed, feed, etc.,
v) Skill and Effectiveness of the Worker - Use of skilled, properly trained workers; Using method study
techniques (Using best method); etc.
vi) Production Volume - Economy of scale; Low unit cost; etc.
(10 marks)

b) Managerial functions in an organization:

Planning determines the mission and goals of the business, including the ways in which the
goals are to be attained, and the resources needed for this task. It includes determining the
future position of the business, and guidelines or plans on how that position is to be reached
Organising-developing a framework or organisational structure to indicate how personnel,
equipment and materials are to be employed to attain the predetermined goals
Staffing - staffing involves manning the organization structure through proper and effective
selection, appraisal and development of the personnels to fill the roles assigned to the
Directing or Leading entails giving orders to the human resources of the business and
motivating them to direct their actions in conformity with the goals and plans
Control means that managers should constantly check whether the business is properly on
course toward the accomplishment of its goals. Controlling involves:o Establishing standards of performance.
o Measuring current performance and comparing it against the established standard.
o Taking corrective action that does not meet the standard.
i.e. Control compels the events to confirm to plans.
Co-ordination is the unification, integration, synchronization of the efforts of group members
so as to provide unity of action in the pursuit of common goals. Coordination helps to:
o Maintain Good Human Relations
o Unify Efforts
o Promote Mutual Understanding
o Get Concurrence
Any five functions 2 x 5