Unit 2 Sample Answers

Essential Business Studies for Cambridge IGCSE® and O Level

Sample Answers to Practice questions

Unit 2 People in business

Section 1: Short-answer questions

1. If there is an emergency, then the best communication method is immediate and audible to all,
such as the sounding of an alarm and instructions using a megaphone. Credit for fire procedures
having been notified in advance and practised in a fire drill.
If the MD wants to tell all staff about objectives, then this will most likely take place in a
visual/oral presentation and allow for questions. This may well be followed up by a written
communication such as a letter or email or even a notice on the board.
Communication with customers about a new product is, essentially, marketing communication.
This may be via the whole range of advertising media, including TV and web based methods.
Appropriate explanation and examples [6]

2. People are motivated to work for various reasons. The main two are likely to be because of the
need to earn money (physiological/basic need) and to gain a sense of satisfaction from
achievement and recognition. Working allows people to earn money so that they have a
satisfactory material standard of living. It also allows people to feel ‘happy’ through their
achievements at work.
Two reasons explained [4]

3. In some countries, laws have been passed that limit how many hours people can be asked to
work in a week. The maximum weekly hours refers to this upper limit. No one can be required to
work more than this.
Understanding plus explanation [3]

4. If people have social needs, they find that working as part of a team or group is rewarding. This
is because working together towards a common goal produces a strong sense of bonding and
togetherness. The group wants to succeed and people see their role in helping achieve this.
They therefore see their social and esteem needs met. Achievement of these needs can act as a
great motivator for many. They do not want to or be seen to letting their fellow workers down.
Ideas plus application [4]

5. Overtime pay is earned from working extra hours over and above the amount stated in the
contract. It is usually paid at a higher hourly rate than normal contracted hours. A bonus is an
additional payment usually as a reward for performance in excess of a target.
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Explanation of methods [4]

6. Profit sharing means that there is a direct link between company profits and employee rewards.
The reasons why they are offered are
 They are an incentive for employees to work hard to boost profits.
 The method is self-financing because the employees are generating more wealth.
Two reasons explained [4]

7. A suitable benefit for a shop worker would be to be allowed to buy unsold stock at the end of
the day at cost price (particularly sensible if stock is perishable).
For a car factory worker it would be suitable to offer say 10% off the price of a car. This helps car
sales as well! For an airline stewardess, a suitable benefit would be a free flight on routes where
perhaps some capacity is under-used.
Reasons plus examples [6]

8. Workers in a call centre may have a repetitive type of job, so it is important that factors that
increase job satisfaction are introduced. One way would be for their line manager to praise
workers for jobs well done (perhaps for meeting a target of, say, 30 calls per hour). People like
to be noticed and praised. The management could also ‘enlarge’ and ‘enrich’ the jobs by
introducing a greater variety of tasks into the work schedule of the employees. This too would
increase job satisfaction.
Two reasons explained [4]

9. An appraisal interview aims to set targets for an employee to reach during the coming year. It
also identifies strengths and weaknesses in the current performance of a worker, and often
results in a training plan being developed. The process can be motivating as it sets targets for an
employee to reach along with an assessment of how well they have been met in the past. Goal
setting is a strong method of motivation. The whole thinking is positive in that it aims to help
improve employee performance in the future and does not simply focus on existing
shortcomings. Thus the approach motivates because people are recognised and noticed in what
they do at work. They are therefore made to feel important because time is being spent on
them.
Reasons explained [4]

10. Autocratic style as urgent problem requires an immediate response. A rapid and clear decision
needs to be made.

Democratic as the situation requires sounding out people’s opinions and listening to their views.

If this is seen as a health and safety issue then autocratic management is more suitable. Staff
have to carry out certain hygiene tasks.
Identification of style recommended and justified [6]
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11. Laissez-faire management can sometimes result in a lack of clarity over what has to be done and
by whom. Such confusion can be demotivating because employees are not set targets or goals
and perhaps do not really have much idea over the direction that the business wishes to take.
Targets set goals to be met and allow assessment of performance. This can act as a positive
motivator. The laissez-faire approach by proving greater freedom tends not to do this.
Reason explained [4]

Section 2: Longer-answer questions

The Sea Breeze Hotel

1. The previous manager adopted an autocratic style of management. His methods of shouting
orders implies that he saw his job as one of telling staff what to do. He obviously had no interest
in finding out what the staff felt should be done. The fact that he was often absent also shows
that he distanced himself from other employees.
Description in context [4]

2. The two main reasons for low morale were

 The staff were not given any leadership or sense of direction.
 The staff were not treated with any respect and hence felt undervalued.
Two reasons explained [4]

3. Jon can motivate/reward his staff by giving praise and awards, such as employee of the month.
He could also offer free meals and uniforms, as well as training. He also needs to show he is a
capable manager because employees respect people who are clearly good at their job.
Two ways plus explanation [6]

4. The change in management style will not guarantee an improvement in guests’ experience.
However the change has the potential to succeed in this aim. This is because, if the staff feel
more committed to their job, they will carry out their tasks with more enthusiasm and greater
efficiency. Attitude is very important in a service-based activity such as an hotel. The staff will
also have close contact with guests and hence understand their likes and dislikes. If his
consultative style allows staff to put forward ideas, then the experience of guests will almost
certainly improve.
Ideas explained in context [6]

5. The introduction of incentive pay in the form of performance bonuses will obviously give staff a
financial incentive to ‘perform well’. This should certainly have a positive impact on the raising
of standards. However the extent of the impact will depend on a number of factors.

 How significant will the bonus be in relation to take home pay? (if small then impact slight)
 Do employees feel that the method of assessment is fair and objective? (if not the system
could damage morale)
 Do all staff have a chance of getting a bonus? Ancillary staff in the kitchen may feel their
efforts may go unnoticed and unrewarded. (This could lead to a sense of injustice.)
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Identification and analysis of at least two points plus evaluative comment [6]

The Vegetarian Treats company

1. An appropriate chart will show Ashok at the top with a hierarchy of managers and teams of staff
for shops and kitchen. Probably three layers.
Chart plus explanation. [4]

2. This is a small organisation, but shops are in different areas and may be in different towns in the
future. Likely forms of communication will be a company email system or internal ‘INTRANET’.
Alternatively FAX or regular memo sent through the post. Methods should be written, so that a
record may be kept and no errors will be made.
Two methods explained in context [4]

3. If Ashok opens shops in different cities, they will no longer be easy for him to visit in person. It is
also possible that there could be some differences in local language spoken by staff as well as
English. Electronic access to communication may be better in some locations than others.
Two barriers explained in context [6]

4. Ashok could reward his employees by paying bonuses linked with shop performance or even
attendance as this may solve the absenteeism problem. He can also communicate effectively
and recognize individual achievements, such as good customer service from ‘mystery customer’
reports.
Three ideas explained in context [6]

5. Ashok was probably right to dismiss the shop manager as the responsibility for selling unsafe
food lies with him and the results could have been customer illness/legal cases/runined
reputation. However, more investigation would find out whether this was a genuine error and
the first time it had happened. If so then a warning may be appropriate. Maybe new quality
checks need to be put in place?
Reasons for and against plus decision [6]

The new low-cost airline

1. The main reason is that the airline is expanding its routes and hence needs more pilots to fly
these routes. They need to recruit trained staff because their need to have extra pilots is urgent
so that their planned expansion can take place. If these employees had to be trained it would
take time and the opportunity might be lost.
Two reasons explained [4]

2. Job description items might be

 Salary $25000 pa
 Job title: assistant stewardess Skyways
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Job specification items might include

 Minimum one year experience as cabin crew member
 Team working skills essential

Two examples in context for each [4]

3. The problems of recruitment from other countries might include language difficulties, cultural
differences, and work permits. It is possible that applicants from other countries might not be
fluent in the language used on airlines in Malaysia and this could present practical problems.
Also cultural differences exist and hence issues like willingness to work on specific days of the
week could occur. Work permits (visas) may not always be made readily available and this would
be a major problem.
Two reasons in context [6]

4. Tests to screen applicants might include

 Aptitude test dealing with customer questions
 Tests to deal with ability to work under pressure
 Tests to assess team working skills.

All three tests would be appropriate to test the skills of a cabin crew member.
Three examples in context [6]

5. Spending on staff training is an investment in people. It will enable them to carry out their work
more effectively. This will clearly be of benefit to Skyways. Clearly there is a danger that staff
will leave. However, if Skyways offers competitive salaries and good working conditions, there is
no reason why staff should leave. So the key to getting a return on their investment in training is
to ensure that their staff turnover is low. The remedy lies in the hands of the company.
Issues explained and analysed resulting in justified conclusion [6]

The ICT skills training company

1. The main reason for outsourcing the ICT training is that companies do not have the skills to train
employees. They might not have the resources to carry out the training. Another reason is
simply that it is cheaper to use the agency than to do the training themselves.
Two reasons identified and explained [4]

2. ICT skills are essential in modern business. If people are to be employable they need at least
basic skills in this area (reason one: to reduce unemployment). People with such skills will help
companies be more efficient and competitive. So this will help the business sector of the
economy (second reason: higher GDP).
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Two reasons explained [4]

3. One advantage of off-the-job training in ICT skills is that the overhead cost of the training is paid
for by TeachIT. They will pay for the buildings, the investment in equipment and teaching
salaries. A business will only pay a fee for each employee trained. A disadvantage of off-the-job
training is that the training offered is not specific to the actual needs and requirements of a
particular business. So it may be cheaper than offering the training yourself but it may not be as
appropriate. Also trained staff may be ‘poached’ by competitors.
Reasons identified and explained [4]

4. All managers need skills to carry out their job functions effectively. Training in leadership and
team building will equip them to do their jobs even better. So to that extent all managers will
benefit from more training. However some may be very experienced and capable and indeed
may know more than a trainer about appropriate methods. So training may not improve their
performance as leaders. Much depends on the quality of the training and the knowledge of the
managers. The impact of training on the performance of a manager probably diminishes as the
amount of training increases.
Analysis of issues plus evaluative comment [6]

5. It is true to say that good staff training is one way to business success. Better trained staff
usually run a business in a more effective and profitable manner. However, training alone will
not guarantee success. If the products of the business are not in demand and the finances of the
business are insecure the business will still fail. Staff training is an aid to business success but on
its own does not guarantee a successful outcome. It is probably true to say that a well-trained
staff will produce better results than an untrained staff given the same resources and products.
Analysis of issues plus evaluation [6]