Chapter 4 Management Functions

Answers to Think It Over

1 Developing a plan is important for Miss Cheung because it can help her anticipate potential
problems the company may face in implementing the new business strategy. This can also help
establish a new direction for employees that is consistent with her vision.

2 Miss Cheung involves other managers in developing the plan to make sure that every manager
has a clear direction to follow. This can motivate them to work towards the organisational goal.
At the meeting, Miss Cheung can also listen to the managers’ opinion about the potential
problems they will come across. She can thus take precautionary measures against potential
problems.

3 No. This will violate the principle of unity of direction. Confusion may occur as both the
production manager and the marketing manager have the authority to coordinate the work of
the employees in their respective departments. Each plan in a company should be led by only
one manager.

Answers to Check Your Progress

Q4-2 a First-line management
b Top management
c Middle management

Q4-3 Top management: Chairman, Vice chairman and Treasurer

Middle management: Heads of different committees
First-line management: Heads of workgroups

Q4-4 B

Q4-5 Plans provide clear directions for employees to follow in an organisation. Employees are
more motivated to work towards goals and objectives that are clearly set out in plans.
When they have specific goals in mind, they will become more focused and committed to
completing the tasks.

Q4-6 Goals give people targets they should strive for. An effective goal allows employees to
make plans and understand what the managers want them to achieve. If one does not know
what the goals are, it is not possible to develop a plan and achieve anything.

Q4-7 B

NSS BAFS: Business Environment and Introduction to © Pearson Education Asia Limited 2014
Management 2nd Edition: Answers to Textbook Exercises 34
Q4-8 Canned food, cooking oil and dried seafood are a company’s products. Thus, the importer
has formed departments by product.

Q4-9 For a small toy manufacturer, departments are likely to be organised according to function.
This is because the company produces only a few products.

Q4-10 B
Q4-11 B

Q4-12 Controlling is the process of monitoring activities to ensure that they are done as planned.
As small firms may only have loose planning, managers can be aware of how activities are
done and determine whether they are done properly in the control process. This ensures
that all activities in the company are done towards achieving organisational goals.

Q4-13 D

Q4-14 Performance standards that can be used to monitor the performance of the staff are:
 Number of customer complaints
 Customers’ waiting time to be served
 Attendance rate
 Number of mistakes made by the staff
(Any two of the above)

Q4-15 A
Q4-16 C

Q4-17 People learn faster when they specialise in accomplishing one task or a few tasks. They can
specialise in those tasks which they perform well and improve their skills by repeating a
task many times. Time can also be saved as they do not have to switch from one job to
another.

Q4-18 A
Q4-19 D

Q4-20 This is because Chris is the manager and has been given authority by the company to
instruct other workers to carry out their tasks.

Q4-21 Managers can accomplish tasks only if they possess the authority to give orders, make

NSS BAFS: Business Environment and Introduction to © Pearson Education Asia Limited 2014
Management 2nd Edition: Answers to Textbook Exercises 35
 decisions, supervise other people, and reward those with good performance.
For example, a restaurant requires workers to work together so that it can provide food to
customers. A manager needs authority to instruct cooks to prepare food, waiters to serve
customers, and dishwashers to clean the dishes. He also needs authority to supervise
workers so that all the tasks are done properly. To make the operations more efficient and
competitive with other restaurants, he needs authority to make various decisions on the
food to be produced, staffing, pricing and purchasing.

Q4-22 a Authority and responsibility

b Jimmy, the supervisor, is accountable for the mistake made by his subordinate.
Therefore, Miss Chen should give him a warning.

Q4-23 In MBO, managers of each level and their subordinates jointly set objectives together. This
ensures that the organisation’s overall objectives are translated into objectives for each
succeeding level, such as divisions, departments and individual employees. Each worker
knows how his work can contribute to achieving the organisation’s objectives. MBO thus
enhances coordination among workers at different levels as they work together to carry out
the organisation’s plans.

Q4-24 A

Answers to Try This Activity

A4-1 Free answer

A4-2 Free answer

A4-3 Free answer

A4-4 Free answer

A4-5 Suggested answer:

The typical management levels of a school and their tasks are depicted as follows:
 Top management: Director / School management committee / Chancellor/ Principal /
Headmaster
Task: Determine the overall direction of the school
 Middle management: Assistant director / Vice principal
Task: Supervise all the curricular, extracurricular and administrative activities of the
school to improve the school’s performance

NSS BAFS: Business Environment and Introduction to © Pearson Education Asia Limited 2014
Management 2nd Edition: Answers to Textbook Exercises 36
  First-line management: Directors of teacher (heads of different departments such as
academic, extracurricular activities, disciplinary section, etc.)
Task: Supervise teachers and deal with parents’ complaints
Teachers may modify the above information to suit the specific situation in your school.

A4-6 Free answer

A4-7 Free answer

A4-8 Free answer

A4-9 Suggested answer:

Some of the control criteria are:
 Cost of labour (e.g., wages and benefits)
 Number of working hours required to do a specific task (e.g., housekeeping chores)
 Cost of expenditure (e.g., procurement cost, daily operation cost)
 Administrative cost

A4-10 Free answer

A4-11 Suggested answer:

A headmaster should be responsible for the overall development of the school. Some of his
tasks may involve:
 Controlling: Review the school’s performance (both academic and extracurricular
activities) and curriculum
 Planning: Set up a school budget and various plans (e.g., to enhance the school
publicity)
 Organising: Assign teachers to different roles in carrying out a specific school
programme.
 Leading: Meet with panel heads and vice principals to guide their performance

Note: Not all tasks can be classified into the above four management functions. A
headmaster may also be involved in attending various meetings with external parties, such
as the Education Bureau. It is important for the headmaster to keep his connection. He
should also be aware of the policies and the development of the curriculum. These tasks
are not related to the management of the school.

NSS BAFS: Business Environment and Introduction to © Pearson Education Asia Limited 2014
Management 2nd Edition: Answers to Textbook Exercises 37
Answers to Discussion Questions
1 Workers would become passive and unable to take the initiative in their work. Over-
supervision also discourages workers from being innovative and hinders their motivation.

2 Shih believes that people will spend more time and effort on things from which they can derive
the most benefit. When a bonus is given to those with good performance, workers are
motivated to work hard. Therefore, he uses a bonus as an incentive to motivate workers.

3 Under laissez-faire leadership, workers can decide what they want to do and how tasks should
be completed. Managers do not provide any instruction and guidance. Thus, laissez-faire
leadership is not appropriate when
 workers are inexperienced and passive.
 workers are not capable of doing their jobs.
 workers are not motivated.
 coordination among workers is important.
 workers cannot work independently.

Answers to Assessment
MCQ
4.1 A
4.2 C
4.3 B
4.4 C
4.5 A
4.6 A
4.7 D
4.8 B
4.9 A
4.10 D
4.11 B
4.12 A
4.13 D
4.14 C
4.15 C
4.16 B
4.17 D
4.18 A
4.19 B
4.20 D

NSS BAFS: Business Environment and Introduction to © Pearson Education Asia Limited 2014
Management 2nd Edition: Answers to Textbook Exercises 38
Short Questions
4.21 The manager can fulfill this by practising unity of direction. (1 mark)
With unity of direction, each plan is led by only one manager, and there is only one plan for a
group of activities having the same objectives. This can ensure that all staff follow the same
plan and have the same goals. (2 marks)

4.22 Participative leaders delegate authority and involve subordinates in decision-making.

(2 marks)
For example, a manager discusses how to promote a new product with his subordinates. They
finally decide to launch a massive advertising campaign. The manager then delegates
authority to his subordinates to carry out the campaign. (2 marks)

4.23 Controlling is the process of monitoring activities to ensure that they are done as planned.
(2 marks)
An effective control system is important because it ensures that all activities in the company
are done towards achieving organisational goals. (2 marks)

4.24 Goals should be measurable because quantified goals allow managers to determine whether
the goals have been achieved. (2 marks)
Goals should also be specific because goals stated in general terms can cause
misunderstanding between people. (2 marks)

4.25 Participative leadership should be used for Joseph because he is experienced and familiar with
all tasks. (2 marks)
Autocratic leadership should be used for Issac because he is inexperienced and needs more
guidance. (2 marks)

4.26 Line authority means that higher level position have the authority to give instructions to those
directly below them. (2 marks)
Staff authority is, however, given to positions that are created to support, assist and give
advice to line managers or departments. (2 marks)
Staff managers are experts in certain areas such as human resources, accounting, finance, and
information systems. (1 mark)

4.27 If there is no unity of command, workers could receive instructions from two or more
superiors. (2 marks)
When instructions from two or more superiors are contradictory, workers would be confused.
They are not sure which instruction to follow. (2 marks)
Since workers are required to carry out the instructions of superiors, they would find

NSS BAFS: Business Environment and Introduction to © Pearson Education Asia Limited 2014
Management 2nd Edition: Answers to Textbook Exercises 39
 themselves caught in the middle of conflicting instructions from different superiors. It would
be impossible for workers to carry out their jobs. (2 marks)

4.28 Large companies are more likely to have problems of unity of direction than small companies.
(1 mark)
This is because small companies usually have one or a few simple goal(s) and are mostly
managed by one manager. (1 mark)
Large companies usually have more than one goal which may sometimes be conflicting. Also,
there are many managers in large companies and they sometimes disagree among themselves.
The problem of unity of direction occurs when two managers are assigned to lead one plan
and each of them decides to pursue different goals. (2 marks)

4.29 Although the CEO and senior managers can delegate tasks to their subordinates, they are still
accountable for the final results. (2 marks)
Top management is hired to direct and lead other workers to achieve the company’s goals.
When the company performs poorly, top management must accept the final responsibility.
(2 marks)

4.30 Good leaders can guide, direct and motivate people to work towards achieving organisational
goals. (2 marks)
If managers (leaders) are able to communicate and motivate their workers, workers would be
motivated to perform their tasks and have more job satisfaction. This will enhance the
company’s performance. (2 marks)
When leading is not implemented properly, workers feel confused and are likely to make
mistakes and projects will be delayed. Company performance would be undermined.
(2 marks)

4.31 Delegation is the assignment of work and the transfer of formal authority and responsibility to
complete that work. (2 marks)
Some managers are unwilling to delegate important tasks to subordinates because they are
worried that their subordinates are incapable of carrying out those tasks. (2 marks)
They will be held accountable for the final results. Hence, managers often take on important
tasks themselves. (2 marks)

4.32 MBO helps improve the effectiveness of management as follows:

 Subordinates have a higher commitment to objectives that they establish themselves
compared with those imposed on them by their managers.
 Managers can ensure that the objectives of their subordinates are linked to the
organisation’s objectives.
 Subordinates have a clear understanding of the objectives they are required to achieve.

NSS BAFS: Business Environment and Introduction to © Pearson Education Asia Limited 2014
Management 2nd Edition: Answers to Textbook Exercises 40
  Communication between managers and subordinates is improved because they have
regular meetings to discuss the problems they encounter.
 Subordinates receive feedback and support from their managers on a regular basis. This
can motivate them to accomplish their tasks. Performance may also improve as a result.
 Since the performance of subordinates is regularly reviewed, managers have better control
over the tasks that their subordinates carry out. Rewards can be given to subordinates
immediately after the objectives have been achieved.
(Any three of the above, 2 marks for each point)

4.33 a Goals are the desired outcomes individuals or organisations want to achieve. They are the
foundation of planning. (2 marks)

b The problems with the goal are:

 This goal is not specific. Quality is a general term which can cause misunderstanding
between people. Workers may not know how to achieve this goal.
 This goal is not measurable. It would be difficult for Ms Tsui to know whether the
goal has been achieved.
 This goal is challenging but may not be attainable even with extra effort. (Because
making quality products depend on many things, such as quality supplies, etc.)
 There is no time frame for achieving the goal.
(Any three of the above, 2 marks for each point)

Teachers’ guide
Quality is a subjective attribute. This may be understood differently by different people.
Consumers may focus on whether they are satisfied with the product. Companies may
focus on whether the product can fulfill its intended purpose.

4.34 a In MBO, managers and their subordinates set objectives together. They have regular
meetings to discuss problems encountered by subordinates and feedback is given. In
traditional planning, managers set the objectives themselves and ask their subordinates to
implement their plans. (2 marks)

b Benefits that subordinates can gain include:

 Subordinates have a clear understanding of and a higher commitment to the objectives.
 Subordinates can obtain support from managers when they encounter problems in their
jobs.
 Subordinates can receive regular feedback about their performance. This can motivate
them to accomplish their tasks. Their performance may also improve as a result.
(Any two of the above, 2 marks for each point)

NSS BAFS: Business Environment and Introduction to © Pearson Education Asia Limited 2014
Management 2nd Edition: Answers to Textbook Exercises 41
 c Benefits that managers can gain include:
 Managers can ensure that the objectives of subordinates are linked to the
organisation’s objectives.
 Managers can improve relationships with their subordinates at regular meetings.
 Since the performance of subordinates is regularly reviewed, managers can have better
control over the tasks carried out by subordinates.
(Any two of the above, 2 marks for each point)

Application Problems
4.35 a Unity of direction (1 mark)

b Mr Kwok should assign only one supervisor (i.e., either Supervisor A or Supervisor B) to
take charge of the plan. Alternatively, he may develop a plan himself and just ask the two
supervisors to follow. (2 marks)

c Mr Kwok can lead the two supervisors by:

 setting meaningful goals.
 giving clear instructions.
 providing support and advice.
 understanding their needs.
 communicating with them effectively.
 recognising their contributions.
 giving rewards for good performance.
(Any two of the above, 1 mark for each point)

4.36 a The four management functions:

 Planning: establishing goals and objectives for an organisation and determining the
best ways to achieve them. (2 marks)
 Organising: determining what tasks need to be done and how the tasks are to be
grouped. (2 marks)
 Leading: guiding, directing, and motivating people to work towards organisational
goals. (2 marks)
 Controlling: monitoring activities to ensure that they are done as planned. (2 marks)

b
9:00 − 10:00 Controlling (1 mark)
10:00 − 11:00 Planning (1 mark)
11:00 − 12:00 Organising (1 mark)

NSS BAFS: Business Environment and Introduction to © Pearson Education Asia Limited 2014
Management 2nd Edition: Answers to Textbook Exercises 42
 14:00 − 15:00 Leading (1 mark)
15:00 − 16:00 Controlling (1 mark)
16:00 − 17:00 Leading (1 mark)

4.37 a Mr Hung is the top management. (1 mark)

He is responsible for determining the overall goals and objectives of the company.
(2 marks)

b The company activities are grouped by function. (1 mark)

c The principle of unity of command is violated. (1 mark)

Purchasing supervisor, assembling supervisor, quality control supervisor and shipping
supervisor have two superiors (i.e., plant manager and operations manager). (1 mark)
When instructions from the two managers contradict each other, these four supervisors
would be confused and unable to carry out their jobs. (2 marks)

4.38 a Ms Wong is responsible for the overall management of the drugstore. (1 mark)
One salesperson should be assigned as the person in charge of one of the three major
products: Chinese medicine, Western medicine and personal health products. (2 marks)

b Ms Wong may delegate authority to her salespersons to provide product information to

customers, sell the products at a discount of no more than a specified percentage (e.g.,
10%), check inventory and complete sales transactions. (2 marks)
These are necessary for them to carry out their jobs. (1 mark)

c Salespersons should not have the authority to make purchase orders or refunds to
customers, or sign any contracts. (2 marks)
These tasks are not related to selling and should be handled by Ms Wong. (1 mark)

4.39 a Control criteria include: frequency of cleaning the toilet each day, number of complaints
about the shop’s cleanliness, etc. (1 mark each)
(Any other reasonable answers)

b The process of control consists of four steps:

Step 1: Setting a performance standard: The manager can set several control criteria as a
performance standard to control the cleanliness of the shops, e.g., cleaning the
toilet three times per day. (2 marks)
Step 2: Measuring actual performance: The manager then carefully records how often
the toilet is cleaned. (2 marks)

NSS BAFS: Business Environment and Introduction to © Pearson Education Asia Limited 2014
Management 2nd Edition: Answers to Textbook Exercises 43
 Step 3: Comparing the actual performance with the standard: He then compares the
actual performance with the standard. (2 marks)
Step 4: Taking corrective actions: If the actual performance does not meet the standard,
he will take action, such as personally supervising the cleaning activities.
(2 marks)

Past Exam Questions

4.42 C
4.44 a Participative leadership / Democratic leadership
 This type of leadership style encourages active involvement of all members of a team
in the identification of goals and the development of procedures or strategies for
achieving the goals of the company.
 The role of a leader is more than just giving orders and assignments. A leader acts a
more important role as the facilitator in the decision making process.

b Advantages of participative leadership/ democratic leadership include:

• facilitating the development of future leaders
• active involvement by all staff
• better utilisation of human resources
• better potential for perfect solution
• ownership of the final decision by staff
• better recognition of staff value
• easy delegation of authority
(Any other reasonable answers)

Participative leadership/ democratic leadership has the benefits of revealing the

alternative ways and directions available to the company. The active involvement of the
members in the decision making process enables a company to approach an issue from
different perspectives. In addition, this type of leadership style is effective in highlighting
the strengths and weaknesses of the various approaches and thus facilitates effective
management.

NSS BAFS: Business Environment and Introduction to © Pearson Education Asia Limited 2014
Management 2nd Edition: Answers to Textbook Exercises 44