ICAB Certificate Level - Business, Technology and Finance Exam System
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Chapter 2: Managing a business

Management and leadership; planning, organising and controlling; motivation theories; teams and groups; human resource and operations functions.

ICAB: 1. Business objectives and functions (10%)  |  ACCA BT: BT Section A: management, leadership and motivation  |  ICAEW Business, Technology and Finance: Area 1: business objectives and functions - managing a business

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Question bank (page 1)

1. A production manager reads trade journals and competitor price lists each week to spot market movements, then circulates a short summary to her supervisors. Which TWO of Mintzberg's roles is she mainly performing?

A) Monitor and disseminator
B) Figurehead and leader
C) Liaison and spokesperson
D) Entrepreneur and negotiator

Correct: A complex Mintzberg's managerial roles

Mintzberg's informational roles are monitor (seeking information), disseminator (passing it on internally) and spokesperson (passing it outside). Reading journals is monitoring and circulating the summary internally is dissemination. If you chose liaison and spokesperson you pointed the information outside the unit. Entrepreneur and negotiator are decisional roles. Figurehead and leader are interpersonal roles.

2. A manufacturer raises wages by 8%, improves canteen facilities and fits better lighting, but leaves job content, recognition and responsibility unchanged. According to Herzberg, the most likely outcome is that:

A) dissatisfaction rises because pay rises create new expectations
B) motivation rises sharply because hygiene factors are the main drivers of effort
C) dissatisfaction falls, but motivation does not rise materially
D) both dissatisfaction and motivation are unchanged because hygiene factors have no effect

Correct: C difficult Herzberg's two-factor theory

Pay, working conditions and facilities are hygiene factors: their absence causes dissatisfaction but their presence does not motivate. Motivators are achievement, recognition, responsibility and the work itself. If you chose sharply higher motivation you treated hygiene factors as motivators. If you chose rising dissatisfaction you reversed the effect. If you chose no change at all you ignored that hygiene improvements do reduce dissatisfaction.

3. Which THREE of the following are Belbin's action-oriented team roles? (Select THREE.)

Multiple response
A) Shaper
B) Plant
C) Implementer
D) Team worker
E) Completer finisher
F) Monitor evaluator

Correct: A, C, E difficult Belbin team roles

Belbin groups roles as action (shaper, implementer, completer finisher), people (co-ordinator, team worker, resource investigator) and thinking (plant, monitor evaluator, specialist). If you chose the plant or monitor evaluator you chose thinking roles. If you chose the team worker you chose a people role.

4. Consider management and motivation theories. For each statement, select Yes if it is correct and No if it is not.

Yes/No grid

1. Theory X managers assume most workers dislike work and need close supervision.   Yes

2. Theory Y managers favour close supervision and tight control.   No

3. The Hawthorne studies found that attention and social factors influenced productivity.   Yes

4. Taylor's scientific management emphasises job enrichment.   No

Correct: Y, N, Y, N difficult Early management theories

(1) Yes: that is McGregor's Theory X. (2) No: Theory Y assumes people seek responsibility and managers can rely on self-direction. (3) Yes: Mayo's studies showed social and attention effects. (4) No: Taylor stressed task specialisation, time-and-motion study and piece rates, not job enrichment.

5. Consider process theories of motivation. For each statement, select Yes if it is correct and No if it is not.

Yes/No grid

1. Vroom's expectancy theory links motivation to expectancy, instrumentality and valence.   Yes

2. If instrumentality is zero, motivation is unaffected provided valence is high.   No

3. Adams's equity theory says people compare their input/outcome ratio with that of others.   Yes

Correct: Y, N, Y difficult Process theories of motivation

(1) Yes: those are Vroom's three elements. (2) No: Vroom's model is multiplicative, so a zero in any element gives zero motivation. (3) Yes: perceived inequity leads people to adjust effort or seek change.

6. An operations manager delegates approval of purchase orders up to Tk 500,000 to a supervisor. The supervisor approves an order that later proves fraudulent because of collusion with the supplier. Which statement is correct?

A) Authority and accountability both passed to the supervisor, so the manager has no further responsibility for the loss
B) Authority was passed to the supervisor, but the manager remains accountable to senior management for the outcome
C) Neither authority nor accountability passed, because delegation is effective only when it covers routine tasks with no financial value
D) Accountability passed to the supervisor, but authority stayed with the manager because authority can never be delegated at all

Correct: B complex Delegation

Delegation passes authority and responsibility for carrying out the task, but accountability to one's own superior cannot be delegated away. The manager therefore remains answerable. If you chose full transfer you ignored accountability. If you chose no transfer you misunderstood the scope of delegation. If you reversed authority and accountability you contradicted the definition.

7. A packaged-food brand sold across Bangladesh has stable sales, many close competitors, price competition and falling margins after a period of rapid growth. Which stage of the product life cycle is it in, and which response is most appropriate?

A) Maturity: defend share, differentiate and cut costs, and look for new uses or markets to extend the life
B) Growth: increase capacity quickly and invest heavily in building awareness among customers who have not yet tried the product
C) Decline: withdraw promotion immediately and stop all investment because sales are bound to fall in every segment
D) Introduction: set a high price to recover development costs while keeping distribution selective and limited in reach

Correct: A difficult Product life cycle

Slowing sales growth, many competitors and price pressure after rapid growth indicate maturity. Typical responses are defending market share, differentiation, cost reduction and extending the life cycle through modification or new markets. If you chose growth you ignored the slowdown. If you chose introduction you ignored the existing competition and sales base. If you chose decline you assumed collapsing sales that the question does not describe.

8. A private hospital in Dhaka is reviewing its marketing mix. Which THREE of its features belong to the additional elements of the extended (7Ps) service mix, rather than to the traditional 4Ps? (Select THREE.)

Multiple response
A) The fee schedule for consultations
B) The courtesy and training of nurses and reception staff
C) Advertising in national newspapers
D) Appointment, billing and discharge procedures
E) The location of its branches
F) The cleanliness and design of the waiting areas

Correct: B, D, F difficult Extended marketing mix

The extended mix adds people (staff), process (procedures) and physical evidence (the environment). Fees are price, advertising is promotion and location is place. If you chose the fees, advertising or location you picked elements of the traditional four.

9. Consider Tuckman's model of group development. For each statement, select Yes if it is correct and No if it is not.

Yes/No grid

1. Groups typically reach maximum efficiency at the norming stage.   No

2. Most groups pass through a conflict stage in which members compete for roles.   Yes

3. The norming stage establishes how the group will take decisions and its level of trust and openness.   Yes

4. At the forming stage the group is a collection of individuals defining its purpose.   Yes

Correct: N, Y, Y, Y difficult Group development

(1) No: maximum efficiency needs the performing stage. (2) Yes: that is storming. (3) Yes. (4) Yes.

10. Consider the rational goal and internal process models of organisational effectiveness. For each statement, select Yes if it is correct and No if it is not.

Yes/No grid

1. The rational goal model relies mainly on devolved decision-making with minimal planning.   No

2. The internal process model emphasises stability, control and formal rules.   Yes

3. The rational goal model focuses on productivity, efficiency and the achievement of goals.   Yes

4. The internal process model puts the greatest weight on staff morale and group cohesion.   No

Correct: N, Y, Y, N difficult Competing values models

(1) No: the rational goal model uses planning and goal-setting. (2) Yes. (3) Yes. (4) No: morale and cohesion belong to the human relations model.

11. A garment factory manager sets next quarter's output target, sees from the weekly report that output is 8% below plan and then reallocates two cutting teams to the delayed line. In Fayol's terms of management activities, which have been shown, in order?

A) Organising, then planning, then commanding
B) Planning, then controlling, then organising
C) Planning, then commanding, then co-ordinating
D) Controlling, then co-ordinating, then planning

Correct: B complex Management process

Setting the target is planning, comparing actual output with plan is controlling and reallocating teams is organising (resourcing). The other sequences name activities that the manager did not perform or place them in the wrong order.

12. A supervisor in a Narayanganj knitwear factory makes every decision herself, issues detailed instructions and checks all work. Output is high but staff turnover is rising and no one suggests improvements. Which leadership style does she show and what is the main weakness?

A) Laissez-faire, with the weakness that staff work without direction
B) Autocratic, with the weakness of low staff involvement and motivation
C) Consultative, with the weakness that managers cannot override staff opinions
D) Democratic, with the weakness that decisions take longer because everyone is consulted

Correct: B complex Leadership styles

Taking all decisions and controlling work closely is autocratic, which can deliver speed and output but reduces involvement, initiative and motivation. Democratic and consultative styles involve staff, and laissez-faire leaves staff largely alone.

13. Workers are paid a good wage, work in a safe building and feel secure in their jobs. They now seek recognition and opportunities to use their skills. According to Maslow, which needs are now the main motivators, and what should management provide?

A) Safety needs, through stronger job security clauses in contracts
B) Social needs only, through more frequent staff social events
C) Esteem and self-actualisation needs, through recognition, responsibility and development
D) Physiological needs, through higher wages and better canteen food

Correct: C complex McGregor and Maslow

Maslow's hierarchy suggests that a satisfied need no longer motivates. With physiological and safety needs met, esteem and self-actualisation become the drivers, so recognition, responsibility and development are appropriate.

14. A new Dhaka online grocery service sets a low price initially to win rapid market share, planning to raise prices later once customers are loyal. Which pricing strategy is this?

A) Penetration pricing
B) Cost-plus pricing
C) Price skimming
D) Premium pricing

Correct: A complex Marketing mix: pricing

Penetration pricing sets a low initial price to gain market share quickly. Skimming sets a high initial price. Cost-plus adds a margin to cost, and premium pricing keeps prices high to signal quality.

15. A manufacturer holds very little stock, relies on frequent small deliveries and works with a few trusted suppliers. A flood closes the main road for a week and production stops. Which risk of this supply chain approach has materialised?

A) Vulnerability to supply disruption caused by low inventory and dependence on few suppliers
B) Loss of quality caused by the use of many suppliers
C) Overproduction caused by holding too much work in progress
D) Higher storage costs caused by large safety stocks

Correct: A complex Supply chain management

Just-in-time purchasing with few suppliers reduces stock costs but exposes the firm to disruption. The other options describe the opposite model.

16. A firm has strong sales but its best engineers keep leaving after two years. An exit survey shows low pay relative to the market, no promotion path and poor feedback. Which HRM response would address the causes most directly?

A) Raise sales targets, because higher targets motivate all staff
B) Benchmark pay, create a career path and introduce regular appraisal and feedback
C) Reduce training spend, because trained staff are more likely to leave
D) Move recruitment to a lower cost agency and shorten the interview process

Correct: B complex Human resource management

HRM covers reward, development and appraisal. The exit survey points to pay, progression and feedback. Cutting training or raising targets would not address those causes and cheaper recruitment would treat only the symptom.

17. Which THREE decisions fall under the traditional product element of the marketing mix? (Select THREE.)

Multiple response
A) Product range and features
B) Credit terms offered to distributors
C) After-sales warranty terms
D) Choice of retail outlets
E) Brand name and packaging
F) Seasonal discount levels

Correct: A, C, E complex Marketing mix elements

Product decisions cover design, features, range, brand, packaging and warranties. Credit terms and discounts relate to price, and choice of outlets relates to place.

18. Which THREE are the overlapping needs in Adair's action-centred leadership? (Select THREE.)

Multiple response
A) Customer
B) Team
C) Task
D) Shareholder
E) Profit
F) Individual

Correct: B, C, F difficult Adair's action-centred leadership

Adair's model balances the needs of the task, the team and the individual. Profit, customers and shareholders are outcomes or stakeholders, not the three needs.

19. A product in the growth stage has rising sales and increasing competitors. Which TWO actions are most consistent with that stage? (Select TWO.)

Multiple response
A) Harvesting the product by cutting all promotion
B) Building brand preference to hold customers as rivals enter
C) Setting the price to recover development costs through skimming only
D) Dropping the product immediately
E) Increasing distribution outlets to reach more customers

Correct: B, E difficult Product life cycle

In growth, firms widen distribution and build brand preference. Harvesting and withdrawal are decline-stage responses, and skimming alone is more typical of introduction.

20. Consider theories of motivation. For each statement, select Yes if it is correct and No if it is not.

Yes/No grid

1. McClelland identified needs for achievement, affiliation and power.   Yes

2. Maslow states that a satisfied need still motivates strongly.   No

3. Herzberg's motivators include recognition and responsibility.   Yes

4. Alderfer's ERG theory says a lower need must be fully satisfied before any higher need can operate.   No

Correct: Y, N, Y, N difficult Motivation theory

(1) Yes. (2) No: a satisfied need no longer motivates. (3) Yes. (4) No: ERG theory allows several needs to operate at once and allows regression to a lower need.

21. Consider leadership. For each statement, select Yes if it is correct and No if it is not.

Yes/No grid

1. Transformational leaders focus only on maintaining the present routine.   No

2. Laissez-faire leaders give staff close supervision.   No

3. Autocratic leaders tend to centralise decision-making.   Yes

4. Democratic leadership involves staff in decision-making.   Yes

Correct: N, N, Y, Y difficult Leadership

(1) No: transformational leaders inspire change and vision. (2) No: laissez-faire gives staff freedom with little direction. (3) Yes. (4) Yes.

22. Consider pricing approaches. For each statement, select Yes if it is correct and No if it is not.

Yes/No grid

1. Price discrimination charges different customer groups different prices for the same product.   Yes

2. Penetration pricing is intended to gain market share quickly.   Yes

3. Cost-plus pricing ignores production cost.   No

4. Price skimming sets a low initial price to build volume quickly.   No

Correct: Y, Y, N, N difficult Pricing

(1) Yes. (2) Yes. (3) No: cost-plus adds a margin to cost. (4) No: skimming sets a high initial price.

23. Consider supply chain management. For each statement, select Yes if it is correct and No if it is not.

Yes/No grid

1. Supplier relationship management can improve quality and reliability.   Yes

2. A longer supply chain can increase exposure to disruption.   Yes

3. A just-in-time system aims to hold large buffer stocks to protect against disruption.   No

4. Single sourcing from one supplier reduces dependence risk.   No

Correct: Y, Y, N, N difficult Supply chain

(1) Yes. (2) Yes. (3) No: just-in-time aims to minimise inventory. (4) No: it increases dependence.

24. Consider human resource management. For each statement, select Yes if it is correct and No if it is not.

Yes/No grid

1. Performance appraisal is used only to decide dismissals and cannot support training needs analysis.   No

2. A competitive reward package can help retain staff.   Yes

3. Induction is the process of removing staff who underperform.   No

4. Job analysis identifies the tasks and requirements of a role.   Yes

Correct: N, Y, N, Y difficult Human resource management

(1) No: appraisal is also used to identify training and development needs. (2) Yes. (3) No: induction introduces new staff to the organisation. (4) Yes.

25. Consider management levels. For each statement, select Yes if it is correct and No if it is not.

Yes/No grid

1. Strategic managers make long-term decisions about direction.   Yes

2. Tactical managers translate strategy into medium-term plans.   Yes

3. Senior managers normally spend most time supervising routine tasks.   No

4. Operational managers set the organisation's mission.   No

Correct: Y, Y, N, N difficult Management levels

(1) Yes. (2) Yes. (3) No: that is typical of operational supervisors. (4) No: the mission is a strategic matter.

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