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© Level 4 Diploma in Administration Management – examination paper

Institute of Administrative Management Level 4 Diploma in Administrative Management Examination paper December 2008

Unit 1: People in organisations

Date: 1st December 2008

Time: 09:30 – 12:30

Questions follow. Please do not turn the paper over until told to do so by the invigilator

Time Allowed: 3 hours Section A, is compulsory and all eight questions must be attempted. (40% OF TOTAL MARKS) Section B, two of four questions must be attempted (60% OF TOTAL MARKS)

Allocation of marks as shown on the

paper.


Section A: (Compulsory)

1. What is perception and how does it impact on individuals? (5 marks)

2. Identify and briefly explain the impact of THREE factors that influence the culture of organisations

(5 marks)

3. Briefly explain how an organisation can facilitate an improvement in work-life balance.

(5 marks)

4. Describe the methods administrative managers can us to analyse and evaluate their use of time.

(5 marks)

5. What is human resource planning (HRP)? Identify the main stages in the HRP process.

(5 marks)

6. List five objectives of the induction process. (5 marks)

7. Identify and briefly explain the benefits of performance appraisal. (5 marks)

8. Describe the situational variables that impact on leadership. (5 marks)

(40 marks in total)

Section B: (Two questions must be attempted)

1. “There is a multiplicity of interrelated factors which influence the behaviour of performance of people as members of a work organisation” (Mullins, 2005). Identify and evaluate the main influences on behaviour and performance in the workplace

(30 marks)

2. Managers can make a contribution to organisational success s by getting the best out of themselves and others. Discuss this statement, using examples from an organisation of your choice.

(30 marks)

3. Explain the processes involved in building an effective team. (30 marks)

4. Using an organisation of your choice, analyse the positive and negative consequences of conflict.

(30 marks)


Insti tute of Admi nistrative M anagement Level 4 Diploma in Administrative Management Marking guide December 2008

Unit 1: People in organisations

Date: 1st December 2008

Time: 09:30 – 12:30

Questions follow. Please do not turn paper over until told to by the invigilator

Time Allowed: 3 hours Section A, is compulsory and all 8 questions must be attempted. (40% OF TOTAL MARKS) Two questions from Section B must be attempted (60% OF TOTAL MARKS)


paper.



1. What is perception and how does it impact on individuals? Answer Perception is the manner in which information is selected organised and interpreted, how an individual places their own construct on situations. Perception gives rise to individual responses to situations and causes us to attribute characteristics to others, judge their behaviour on the basis of past knowledge and to stereotype

(5 marks)

2. Identify and briefly explain the impact of THREE factors that influence the culture of organisations

Answer Any three from organisation history, nature of business, technology utilised, goals and objectives, policies and practices, structure and size, location, leadership, management style, characteristics of the workforce, external environment should be identified and supported by a brief explanation of how each factor would impact culture

(5 marks)

3. Briefly explain how an organisation can facilitate an improvement in work-life balance.

Answer Organisations can facilitate work-life balance through the provision of so-called ‘family-friendly’ working arrangements such as flexi-time, compressed working hours, annual hours, term time working from home, job sharing and teleworking. Selected two should be briefly explained in terms of nature and impact

(5 marks)

4. Describe the methods administrative managers can us to analyse and evaluate their use of time.

Answer The use of time can be analysed by examining: ratio of discretionary to controlled time time spells; length of time on any one activity activities; in terms of their importance people; who do you spend time with places; where do you spend your time Key points to look for are: Things that need not be done at all Things that could be equally well by someone else Things we do that waste others time Crises that better systems/procedures/planning could prevent

(5 marks)


5. What is human resource planning (HRP)? Identify the main stages in the HRP process.

Answer An appropriate definition such as that given in the study guide which states: HRP may be defined as the strategic process for the acquisition, utilisation, improvement and retention of an organisation’s human resources. The main stages of Human Resource Planning are typically identified as An analysis of existing staff resources An estimation of likely change in resources A forecast of staffing requirements to achieve corporate objectives A personnel management action plan to ensure the required resources are

available when required. (5 marks)

6. List five objectives of the induction process. Answer To: create a favourable impression of the organisation encourage a sense of belonging and commitment to the organisation facilitate teamwork reduce turnover reduce grievances reduce the time required for the newcomer to settle in and become productive ensure acceptance of the new employee by existing staff

(5 marks)

7. Identify and briefly explain the benefits of performance appraisal. Answer An effective appraisal scheme offers a number of benefits to the individual and the organisation. The following should be included in the response: identifies individual strengths and weaknesses reveals problems restricting progress feedback and discussion improves consistent improved performance provides information for HR planning improves communication

(5 marks)

8. Describe the situational variables that impact on leadership. Answer The situational variables typically identified relate to the leader, the individuals in the group and the organisational context, each variable identified should be illustrated with exemplars e.g. leaders personality, followers readiness too accept responsibility, organisation structure

(5 marks)

(40 marks in total)



1. “There is a multiplicity of interrelated factors which influence the behaviour of performance of people as members of a work organisation” (Mullins, 2005). Identify and evaluate the main influences on behaviour and performance in the workplace

Answer The question offers scope to explore and explain a wide range of influences on performance and behaviour such as: Individuals – attitude, personality, perception, diversity Groups – values, cohesiveness, group development Organisation – structure, technology, leadership styles, management systems Environment – technological and scientific development, economic activity,

social and cultural influences, governmental action, opportunities and threats, change

Answers should identify explain factors individually and in terms of their interrelationships.

(30 marks)

2. Managers can make a contribution to organisational success s by getting the best out of themselves and others. Discuss this statement, using examples from an organisation of your choice.

Answer The question requires candidates to explore the basis for managerial contribution. Issues to explore would include managerial philosophies, managerial style, managerial effectiveness, adding value, managerial skills and competences. The approach should be analytical and discursive.

(30 marks)

3. Explain the processes involved in building an effective team. Answer Building an effective team is founded on careful selection of team members. Members should: possess the specialist and technical expertise needed for the tasks, selected

for their know how nit their seniority be drawn from a wide range of backgrounds and interests possess a variety personal styles and attitudes to fill the different roles that

are involved in effective teamworking Additionally the following conditions must be met differences must be acknowledged quickly and overcome the primary goal of the group should be made explicit, understood and ideally

agreed mutual respect must be developed leaders should use quality feedback to reinforce desired team behaviours

(30 marks)


4. Using an organisation of your choice, analyse the positive and negative consequences of conflict.

Answer Positive consequences of conflict would include: Better ideas produced People forced to search for new approaches Problems surfaced and resolved Clarification of individual views Clarification of roles, power Stimulation of interest, creativity Chance to test capabilities Negative consequences would include: People feeling demeaned Distance between people increased Climate if mistrust and suspicion Individuals and groups concentrate on own narrow interests Resistance rather than teamwork develops Increase employee turnover Organisational examples should be included

(30 marks)

© Level 4 Diploma in Administration Management – unit 2 - examination paper

Institute of Administrative Management Level 4 Diploma in Administrative Management Examination Paper December 2008

Unit 2: Administrative systems and processes

Date: 2nd December 2008

Time: 09:30 – 12:30




paper.

© Level 4 Diploma in Administration Management – unit 2 - examination paper


1. How does a Not for Profit organisation differ from other forms of organisations?

(5 marks)

2. In designing a system, what would be the main steps in the “Systems Preparation” stage?

(5 marks)

3. Briefly explain the difference between formal and informal procedures (5 marks)

4. Provide a brief description of what happens in a Purchasing and Inventory Management department

(5 marks)

5. Outline the reasons why an organisation would carry out a SWOT analysis? (5 marks)

6. Briefly describe an abstract system. (5 marks)

7. Describe the principles of a Just in time system (5 marks)

8. Why do organisations have policies? (5 marks)


1. a) Provide an explanation of the general role of administration within an organisation.

b) Describe the measures of efficiency that an organisation can use to ensure

systems are operating optimally. (30 marks)

2. How do the policies and procedures of an organisation reflect the organisation’s values?

(30 marks)

3. Provide an outline of the principles behind TQM and explain how these may guide an organisation towards improved performance.

(30 marks)

4. a) Discuss the differences between operational, tactical, strategic and visionary planning.

b) Identify the information needs required by managers at each level of the

organisation in decision making. (30 marks)


Institute of Administrative Management Level 4 Diploma in Administrative Management Marking guide December 2008

Unit 2: Administrative systems and processes

Date: 2nd December 2008

Time: 09:30 – 12:30




paper.



1. How does a Not for Profit organisation differ from other forms of organisations?

Answer Profit maximisation is not the objective, include charities and government bodies and can be private and public. Tend to rely on donations, volunteers and government funding if appropriate. Charities are exempt from taxes. They still have to take part in marketing so that the public remain aware and willing to donate.

LO1 (5 marks)

2. In designing a system, what would be the main steps in the “Systems Preparation” stage?

Answer 1. take the “helicopter view” of the whole organisation to see how the proposed

system will fit in with existing systems 2. consider the external environment 3. look in detail at the organisation’s subsystems 4. consider the resource implications 5. assess the overall feasibility of the proposed system.

LO2 (5 marks)

3. Briefly explain the difference between formal and informal procedures. Answer Formal procedures are written down, recognised, used in training, official. They have been designed and developed by someone in the organisation in order to have a task or tasks carried out. They are in line with organisational aims, objectives and policies. Informal procedures are not written down, they do not have the purpose of carrying out a task.

LO3 (5 marks)

4. Provide a brief description of what happens in a Purchasing and Inventory Management department.

Answer The purpose of this system is to ensure that sufficient supplies of materials are available when needed. This will be linked to the stock control system to ensure that enough time is allowed to replace materials and maintain agreed levels of stock. Also responsible for sourcing reliable suppliers, placing orders, maintaining records of purchases, monitoring invoices and establishing a satisfactory pattern of reordering. Based upon procedures for counting, calculation and recording stock levels. Most systems rely heavily on automated processes, using specialist software to determine and satisfy needs.

LO4 (5 marks)


5. Outline the reasons why an organisation would carry out a SWOT analysis? Answer SWOT should be part of the planning process. It allows managers to look at internal factors and identify objectively the strengths and weakness. It also facilitates the analysis of the external factors and the identification of factors which present opportunities for the future but also those which may pose threats. A SWOT is a useful framework which brings together pieces of information which may become more meaningful due to way they are presented. It should help in provoking thoughts and stimulating ideas. It may also help lead to action plans. Answers which only define what strengths, weaknesses, opportunities and threats should be awarded no more than 3 marks.

LO1 (5 marks)

6. Briefly describe an abstract system. Answer These can be formulae for use in mathematical or statistical calculations. Another example would be a computer model for analysing an organisation’s systems.

LO2 (5 marks)

7. Describe the principles of a Just in time system. Answer An approach to production which involves keeping the stock levels to a minimum. This helps to keep costs down. Stocks arrive just in time to be used in production. Goods are not produced unless an organisation has a firm order from a customer. JIT depends on reliable workers and work methods.

LO4 (5 marks)

8. Why do organisations have policies? Answer A policy is different from a procedure. The former is more of a guide and a statement about how an organisations will achieve their objectives. They allow organisation to explain to staff what they can and cannot do. Examples would be discipline and grievance policies.

LO3 (5 marks)



1. a) Provide an explanation of the general role of administration within an

organisation. b) Describe the measures of efficiency that an organisation can use to ensure

systems are operating optimally. Answer Good answers will define and explain administration but will develop into the role within an organisation. Examples drawn from known organisations will be welcome and will enhance answers. Candidates should demonstrate an understanding of the broad remit of administration i.e. managing the organisation’s systems and resources as efficiently and effectively as possible. Discussions on different structures would be acceptable.

LO2 (30 marks)

2. How do the policies and procedures of an organisation reflect the organisation’s values?

Answer Good answers will begin by defining and explaining the term values or they may start by introducing polices and procedures. Candidates are being asked to demonstrate their knowledge and understanding of not only 3 separate issues here but also how they link together. Organisational values are based on the inherent beliefs within an organisation of how things should be done, what is acceptable, what is right etc. They are ethical principles which guide people within the organisation in terms of what is acceptable etc. This then cannot be separated from an organisation’s policies which are in turn statements on how the organisations intends to deal with issues such as whistle-blowing, grievance, risk assessments etc. Procedures are then formulated in line with these policies. Answers which only define each of the 3 terms separately and fail to provide a comprehensive link should not pass.

LO1 and LO3 (30 marks)

3. Provide an outline of the principles behind TQM and explain how these may guide an organisation towards improved performance.

Answer Answers should begin by outlining the principles of Total Quality Management. The rest of the answer should focus on how these principles can improve efficiency and effectiveness and in turn the overall performance of the organisation. A possible structure would be to take each principle of TQM and explain in turn how it could enhance efficiency. An alternative would be to take a holistic approach. Answers which only define TQM should not pass.

LO4 (30 marks)


4. a) Discuss the differences between operational, tactical, strategic and

visionary planning. b) Identify the information needs required by managers at each level of the

organisation in decision making. Answer This question is really self explanatory in that it asks candidates to explain the difference between the 4 levels of decision making. Candidates should discuss the difference in the information required i.e. the lower the level of decision making the more detailed the information required. Good answers will provide examples of the types of decisions being made at each level. Other differences include time-scales, level of delegation and focus.

LO1 (30 marks)


Institute of Administrative Management Level 4 Diploma in Administrative Management Examination paper December 2008

Unit 3: Professional administration

Date: 3rd December 2008

Time: 09:30 – 12:30




paper.



1. Briefly explain the impact Frederick Taylor’s research had on the management of workers.

(5 marks)

2. List five areas covered by legislation, relating to the workplace. (5 marks)

3. What are the external triggers for change? (5 marks)

4. Give five reasons for outsourcing. (5 marks)

5. Describe the elements required for a Supply Chain to succeed. (5 marks)

6. Briefly explain why organisations use Service Level Agreements. (5 marks)

7. Describe Hartley and Bruckham’s five codes of communication. (5 marks)

8. List the barriers to communication. (5 marks)


1. Is Administrative Management a Science or a Profession? Discuss.

(30 marks)

2. As an Administrative Manager describe how you would prepare your team for a forthcoming ‘change programme’.

(30 marks)

3. Explain the benefits of introducing Total Quality Management into an organisation.

(30 marks)

4. Discuss how E-government is changing the way it serves its customers. (30 marks)



Unit 3: Professional administration

DATE: 3rd December 2008

Time: 09:30 – 12:30




paper.



1. Briefly explain the impact Frederick Taylor’s research had on the management of workers.

Answer Frederick Taylor (1856-1917) was an engineer by training. He was the founder of the movement known as ‘Scientific Management’ He believed that there was a mutual interdependence of management and workers, and the necessity of their working together towards the common aim of increased prosperity for all seemed self-evident to him. He wanted every employee to be trained to the maximum of their potential and for them to earn maximum wages according to their skills and aptitude. The theory was good but in practice it failed because it was seen as ‘inhuman’ as it was interpreted as tying the workers to the speed of the machines and therefore his methods reduced the workers to the level of efficient functioning machines.

LO 1 Managers and how they manage (5 marks)

2. List five areas covered by legislation relating to the workplace. Answer Employment Health & Safety Fiscal The Environment Fire Regulations IT Usage Policies and Procedures

LO 1.4 Compliance (5 marks)

3. What are the external triggers for Change? Answer

Competition in the Market Place Technology Globalisation Legislation Changes in attitude of customers Take-overs or mergers

LO 2.1 The Need for Organisational Change (5 marks)

4. Give five reasons for outsourcing. Answer To reduce or control operation costs To make capital funds available To give a cash infusion to the organisation by selling equipment to the outsourcer Resources not available internally The function is difficult to manage or is out of control

LO 2.4 Other Approaches to Business Improvement (5 marks)


5. Describe the elements required for a Supply Chain to succeed. Answer Cost, Quality, Speed, Efficiency and control

LO 3.2 Delivering Customer Satisfaction (5 marks)

6. Briefly explain why organisations use Service Level Agreements. Answer To achieve the most cost-effective provision of services (Green 2001) This requires the continuous evaluation of prices paid, costs involved by both parties and the quality of service obtained.

LO 3.3 (5 marks)

7. Describe Hartley and Bruckham’s five codes of communication. Answer Candidates can choose from the following: Verbal: All the words, clauses and sentences that we use in speech and

writing Prosodic: All the stress and pitch patterns, such as pauses and intonation

that we use in speech and which make its meaning clear Paralinguistic: All the pauses. ‘ums’, ‘ahs’ and other sounds that are not real

words and which do not have a clear linguistic function Kinesics: All the ways we move our bodies during communication including

our posture and gestures Standing: More static non-verbal features, such as appearance, orientation

(the angel at which you stand in relation to the other person) or distance

Section 1 LO 4.1 (5 marks)

8. List the barriers to communication. Answer Bias – against the speaker for a variety of reasons; we grow up with attitudes

and values and, if the speaker goes against those, we will not listen or we will dismiss what the speaker is saying

Status of the Speaker – if the speaker is perceived to be of higher of lower status than the listener, then the message received will be distorted or dismissed

Emotion – this will prevent the receiver taking in the full message. For example, fear of bad news such as redundancy, not getting the promotion, or anger at a grievance meeting will all impair communication

Lack of trust – if we do not trust the person sending the message then we will not believe what they are saying

Language – a lofty or a poor standard of speech may not be understood or accepted. Jargon may not be understood by the receiver

Information Overload – there may be too much to read, too may e-mails, too may voice-mail messages.

Noise – which can be external or internal i.e. the listener is not well LO 4.2.1

(5 marks)

(40 marks in total)



1. Is Administrative Management a Science or a Profession? Discuss.

Answer The candidate who has read around the subject will be able to discuss this question and may quote from Appleby (1994), Page 6 – 9: Candidates who write about the Deductive and Inductive Methods of reasoning and discuss this in conjunction with the study of the human factor at work and the observation of human relations as Scientific study leading to the relationships to motivation and co-ordination should be awarded marks accordingly. Appleby write about ‘Management – A profession?’ and gives three main points which seem relevant to management being accepted as a profession: There must exist a body of principles, skills and techniques and specialised knowledge There must be formal methods of acquiring training and experience An organisation should be established which forms ethical codes for the guidance and conduct of its members. Any candidates who can link the above with our Institute as given the above professional support to its members and can argue the case well should be awarded marks accordingly

Section 1 LO 1.1 (30 marks)

2. As an Administrative Manager describe how you would prepare your team for a forthcoming ‘change programme’.

Answer To answer this question well the candidate will have to have either read around the subject or have experienced a ‘change programme’ and can put themselves into the managerial role. There has been copious writings about this subject e.g. Appleby, Morden, Osuch etal and Terry Lucey to name a few. Candidates who talk about: Communicating and education, participation; consulting – open-door policy, selling, negotiating, freezing, unfreezing, freezing, counselling, training, re-training, team-building, motivating and coercion should be awarded marks accordingly.

Section 2 LO 2.1 The Need for Organisational Change (30 marks)



Answer Any candidate who has experienced the introduction of TQM into their organisation should be able to write about the benefits – as will the candidates who have read the Study Guide and around the subject. Some of the benefits are: Improved service: customer led - internal and external customers Improved quality: right first time Improved efficiency: value for money Ownership: quality circles – motivated employees Accountability: SLA’s (Internal) Devolution: responsibility given to individuals/teams Rewards: Appraisals/Involvement/Performance related pay Higher skills: Training & Development: Planned development obtained

through identification of training needs Customer Loyalty: Customer surveys Communication: Clear direct communication

Section 3 LO 3.4 Total Quality Management (TQM)

(30 marks)

4. Discuss how E-government is changing the way it serves its customers.

Answer

This question can be answered from the Study Guide (page 37-28) and from experience in the candidates own country, or the country they are working in. In the UK the Government; and this is now being mirrored in other countries, are offering their citizens: Online services where citizens can: Pay their taxes Re-licence their motor cars The paying of pensions, welfare benefits Maintaining patients records Patients can now, through their General Practioner select their consultant on-

line and book their appointments Carers and family members can act on behalf of pensioners and other citizens

unable to go online themselves Apply for visas

Section 4 LO 4.4.2 E-government (30 marks)



Unit 4: Information for decision making

Date: 4th December 2008

Time: 09:30 – 12:30




paper.



1. Explain why timeliness can not be overlooked in the search for the right information in the right form.

(5 marks)

2. Define and give an example of a programmed and a non-programmed decision.

(5 marks)

3. Distinguish between pictograms, line graphs, and pie charts as techniques in the presentation of business information.

(5 marks)

4. Explain what is meant by the term ‘frequency density’. (5 marks)

5. Define the following terms: a. current liabilities b. current assets.

(5 marks)

6. Calculate capital employed from the following: Vehicles £3,000 Land and Buildings £36,000 Stock £2,360 Bank Overdraft £980 Creditors £4740 Debtors £4,960 Cash at bank £600 Plant and Machinery £7,560

(5 marks)

7. Give examples of the costs / expenses that make up prime cost. (5 marks)

8. Explain the relationship between cost centres and cost apportionment. (5 marks)


1. 'Organisations of every size are becoming more dependent on their information systems and the technologies that support them.’ Discuss.

(30 marks)

2. a) Explain what is meant by the term ‘summary statistics. b) Draw a histogram from the following information relating to wages

Costs Frequency £200 to under £400 4 £400 to under £500 10 £500 to under £600 12 £600 to under £800 10 £800 to under £1,200 4

c) From the histogram identify the value of the mode (30 marks)


3. a) Prepare a Profit and Loss Account for S Plywood from the following

information £ £ Purchases 1,100 Closing Stock 200 Sales 6,000 Rent 400 Van expenses 600 Wages 1,000 Opening stock 300 Insurance 400

b) Draw a diagram of the working capital cycle and explain how a company

can utilise the working capital cycle to increase its profitability. c) Discuss how a company can make a profit and yet have a cash shortage.

(30 marks)

4. ‘To provide management with the opportunity to manage effectively some budgets need to afford greater flexibility.’ Discuss.

(30 marks)

© Level 4 Diploma in Administration Management – Information for Decision Making examination paper


Answer To provide management with the opportunity to manage effectively some budgets need to afford greater flexibility. Fixed budgets remain unchanged despite the level of activity attained and have no analysis of cost. By not distinguishing between fixed and variable cost these types of budget are not particularly useful when assessing performance and exercising cost control. Fixed budgets are however useful when the level of activity does not fluctuate and when the items being controlled are not affected by any changes in the level of activity. Flexible budgets are designed so that permitted cost levels can be adjusted to suit the level of activity actually attained. A flexible budget is more useful for control purposes. With flexible budgets

Actual Costs For Actual Activity

Are compared with Budgeted costs for actual Activity

This is achieved by flexing or adjusting the budget to correspond to actual activity. The third main type of budget is a cash budget, which forecasts the cash position of a company in the months ahead. A cash budget is usually prepared for three or six months at a time. Its preparation allows a company to decide in advance if it needs an overdraft, needs to arrange borrowings, decrease costs or increase sales etc.

LO4 Learning syllabus 4.3 (30 marks)



Unit 4: Information for decision making

Date: 4th December 2008

Time: 09:30 – 12:30




paper.



1. Explain why timeliness can not be overlooked in the search for the right information in the right form.

Answer Timeliness is something that is overlooked in the search for the right information in the right form. Irrespective of how good the information is or how well it is presented, if it is provided too soon it may be ignored and if it is provided too late then it is useless.


2. Define and give an example of a programmed and a non-programmed decision.

Answer H.A. Simon classified decisions into programmed (structured) and non-programmed (unstructured) decisions. Programmed decisions are routine and repetitive. For these types of decisions there are usually laid down rules and procedures. Examples of this type of decision are scheduling, re-ordering, and credit approval. Non-programmed decisions have a high degree of uncertainty. There are no decision rules to aid the manager. Examples of this type of decision are mergers, capital investments and product planning.


3. Distinguish between pictograms, line graphs, and pie charts as techniques in the presentation of business information.

Answer Pictograms consist of a recognisable picture or symbol of the data being represented. Pictograms are simple and easy to understand and are useful in presenting data to a wide and varied audience, in terms of age and ability. The disadvantages of pictograms are that only a limited amount of data can be displayed and partial symbols lack precision.

A graph is a visual display of data showing the relationship between two variables. Graphs are good at highlighting underlying patterns.

A pie chart is constructed as a circle, resembling a pie, with the ‘slices of pie’ used to represent the proportions of the component parts. Pie charts are clear and easy to understand as they provide a clear picture of the significant components making up the total. A pie chart allows for comparisons as a pie chart can be completed on a yearly basis to compare the same data as it reoccurs annually. The disadvantages of pie charts are that they can be difficult and tedious to draw and they are only really effective if there is no more than 6/7 components.



4. Explain what is meant by the term ‘frequency density’. Answer If one of the classes was double the width of the others, then its height would have to be halved to keep the same area. This adjusted height is known as the frequency density.

Hence Area = width * height


5. Define the following terms: i. Current liabilities ii. Current assets.

Answer The current liabilities are the short-term debts of the company and include bank overdraft, creditors (who are normally the company’s suppliers) and provisions. Provisions are money that the company puts aside for items that it expects to pay for within the year, for example taxation and any interest or dividends due.

The current assets are the short-term assets of a company and are either cash or things that will be turned into cash within the year. So current assets are cash, cash on short term deposit, cash owed by the customers or debtors and cash tied up in stock.


6. Calculate capital employed from the following: Vehicles £3,000 Land and Buildings £36,000 Stock £2,360 Bank Overdraft £980 Creditors £4740 Debtors £4,960 Cash at bank £600 Plant and Machinery £7,560 Answer Capital employed = Fixed assets + Current assets – Current liabilities Fixed assets = £3,000 + £36,000 +£7,560 = £46,560 Current assets = £2,360 + £4,960 + £600 = £7,920 Total assets = £54,480 Current liabilities = £4,740 + £980 = £5,720 Capital employed = £54,480 - £5,720 = £48,760



7. Give examples of the costs / expenses that make up prime cost. Answer Prime cost = Direct Materials + Direct Labour + Direct Expenses Direct materials cost is the cost of the raw materials that become the finished product or saleable service, e.g. wood and screws of a desk Direct labour (wages) cost includes the wages of those workers who transform the raw materials into the finished product or service, e.g. printer Direct expenses are costs other than materials or labour that can be associated with a product or saleable service, e.g. hiring a guest speaker to speak at a function or seminar.


8. Explain the relationship between cost centres and cost apportionment. Answer A cost centre is a location or function that is used to accumulate overheads. Within an organisation a cost centre may be an individual, a group of individuals, a department, a machine, a factory etc. The total overheads for a cost centre are a mixture of those spent directly by the cost centre (this is referred to as cost allocation) and an appropriate share of general costs such as rates and heating. The process of sharing common costs between cost centres is called cost apportionment.




1. 'Organisations of every size are becoming more dependent on their information systems and the technologies that support them.’ Discuss.

Answer Organisations are becoming increasingly dependent on their information systems and the technologies that support them. Information systems are required for Producing letters, reports, invoices, cash flow statements Providing access to key data on suppliers, customers, credit ratings Processing data into meaningful information for decision making Communicating both internally and externally Networking with suppliers, customers etc Providing information for competitive advantage Information technology can enhance the organisation’s management information system by providing better, faster information, which can result in improvements or changes in management actions. Information technology plays a pivotal role in providing the necessary information through, for example: Internal databases Intranet for internal communications Decision support packages and spreadsheets Routine transaction processing External databases for research Internet. This dependency on information systems can make them more vulnerable and it is important that the technology and the data are protected against a variety of threats such as computer crime, computer viruses and natural disasters.



2. a) Explain what is meant by the term ‘summary statistics b) Draw a histogram from the following information relating to wages

Costs Frequency £200 to under £400 4 £400 to under £500 10 £500 to under £600 12 £600 to under £800 10 £800 to under £1,200 4

c) From the histogram identify the value of the mode Answer a) Summary statistics are measures of location and spread. Measures of location

are mean, median and mode. The range is the simplest measure of spread or dispersion.

b) Histogram of Wages

12

Freq 10

Density

8

6

4

2

200 300 400 500 600 700 800 900 1000 1100 1200

Wages £

Frequency density needs to be employed for the intervals £200 - £400, £600 - £800,

£800 - £1,200. 8 Marks will be deducted if this is not employed. 2 Marks will be deducted if the histogram has no title. 2 Marks will be deducted if the x or y axis have incorrect labels. c) The mode is £550 approx. This indicates the most common wage.

LO2 Learning syllabus 2.2, 2.3 (30 marks)


Raw Materials

Labour

Finished Goods

Sales

Cash

3. a) Prepare a Profit and Loss Account for S Plywood from the following

information £ £ Purchases 1,100 Closing Stock 200 Sales 6,000 Rent 400 Van expenses 600 Wages 1,000 Opening stock 300 Insurance 400

b) Draw a diagram of the working capital cycle and explain how a company can utilise the working capital cycle to increase its profitability.

c) Discuss how a company can make a profit and yet have a cash shortage. Answer a) Profit and Loss Account for S Plywood for year ending July 2008 £ £ Sales 6,000 Less Cost of Sales Opening stock 300 Purchases 1,100 1,400 Less Closing stock 200 1,200 Gross Profit 4,800 Less expenses Wages 1,000 Van expenses 600 Rent 400 Insurance 400 2,400 Net Profit 2,400 Marks deducted for each incorrect entry. 2 marks deducted if title is incorrect. No more than 6 marks for Profit and Loss Account if incorrectly compiled. b)

Diagram of Working Capital Cycle

(5 marks) A company can increase its profitability by speeding up the working capital cycle by:

Minimizing stock Ensuring debtors pay on time Delaying payment to creditors for as long as possible

(5 marks)


c) Profit is not cash. Companies can make a profit and still have no cash. Making a profit means that the assets in the company have grown but there may be a shortage because the working capital cycle may have slowed or there may have been investment in new equipment.

(8 marks) LO3 Learning syllabus 3.1, 3.3, 3.4

(30 marks)



Answer To provide management with the opportunity to manage effectively some budgets need to afford greater flexibility. Fixed budgets remain unchanged despite the level of activity attained and have no analysis of cost. By not distinguishing between fixed and variable cost these types of budget are not particularly useful when assessing performance and exercising cost control. Fixed budgets are however useful when the level of activity does not fluctuate and when the items being controlled are not affected by any changes in the level of activity. Flexible budgets are designed so that permitted cost levels can be adjusted to suit the level of activity actually attained. A flexible budget is more useful for control purposes. With flexible budgets

Actual Costs For Actual Activity

Are compared with Budgeted costs for actual Activity

This is achieved by flexing or adjusting the budget to correspond to actual activity. The third main type of budget is a cash budget, which forecasts the cash position of a company in the months ahead. A cash budget is usually prepared for three or six months at a time. Its preparation allows a company to decide in advance if it needs an overdraft, needs to arrange borrowings, decrease costs or increase sales etc.


© Level 4 Diploma in Administration Management – Case Study examination paper


Unit 5: Case study 1

DATE: 5th December 2008

Time: 09:30 – 12:30


Time Allowed: 3 hours Candidates must answer all four questions


paper.

© Level 4 Diploma in Administration Management – Case Study examination paper

1. Using a SWOT analysis (Strengths, Weaknesses, Opportunities and Threats), assess the viability of the company growing the business, by expanding the way in which its products are sold

(25 marks)

2. Discuss the contribution that systems thinking could make to supporting the development of administrative services within the company.

(25 marks)

3. Evaluate the effect that selling products through television shopping could have on Colourfire’s retail operations

(25 marks)

4. In your role as a Business Advisor from the local college, advise the partners on the changes that should be made to Colourfire’s organisational structure, if the firm is to grow as a private limited company.

(25 marks)



Answer Any candidate who has experienced the introduction of TQM into their organisation should be able to write about the benefits – as will the candidates who have read the Study Guide and around the subject. Some of the benefits are: Improved service: customer led - internal and external customers Improved quality: right first time Improved efficiency: value for money Ownership: quality circles – motivated employees Accountability: SLA’s (Internal) Devolution: responsibility given to individuals/teams Rewards: Appraisals/Involvement/Performance related pay Higher skills: Training & Development: Planned development obtained

through identification of training needs Customer Loyalty: Customer surveys Communication: Clear direct communication

Section 3 LO 3.4 Total Quality Management (TQM)

(30 marks)

4. Discuss how E-government is changing the way it serves its customers.

Answer

This question can be answered from the Study Guide (page 37-28) and from experience in the candidates own country, or the country they are working in. In the UK the Government; and this is now being mirrored in other countries, are offering their citizens: Online services where citizens can: Pay their taxes Re-licence their motor cars The paying of pensions, welfare benefits Maintaining patients records Patients can now, through their General Practioner select their consultant on-

line and book their appointments Carers and family members can act on behalf of pensioners and other citizens

unable to go online themselves Apply for visas

Section 4 LO 4.4.2 E-government (30 marks)





Time: 09:30 – 12:30




paper.


1. Using a SWOT analysis (Strengths, Weaknesses, Opportunities and Threats), assess the viability of the company growing the business, by expanding the way in which its products are sold.

Answer This answer requires the candidate to prepare a SWOT analysis on which to base an assessment of growing the business through ways of retailing its products, whilst not losing site of the industry its in. The answer should systematically identify internal strengths and weaknesses of Colourfire e.g. enterprise and entrepreneurial activity, contrasted with a lack of underpinning systems material and human resources, and external opportunities and threats e.g. how retailing changes are influencing the shopping habits of the public, the development and expansion of digital media, contrasted with the presentational, production, stock, distribution, staffing, time and service demands of satisfying retailing the types of products on offer. The case study provides information as to Colourfire’s present involvement with e-commerce in retailing and the role the partners see it playing in the future growth of the business. Answers should consider types of resource demands that could be made on the business if it is to grow its market from the existing size and profile of the business. A good answer could draw on supply chain concepts to explore the impact of e-commerce and television sales and tourist shop(s) etc. on Colourfire’s operations from procurement through stocks and production, to customer service, relationships and presentational skills, citing examples from ‘real’ organisations. Learning outcome LO1: Apply analytical skill in recognising and appraising information, so as to arrive at a practical evaluation of the problem. LO5: Communicate ideas effectively using diagrams words. Syllabus Unit 2: Administrative Systems and Processes

1. The Organisation in Context The role of organisations in the business environment

Unit 3: Professional Administration 2. Change and Administration

The need for organisational change (25 marks)


Answer The case study offers the opportunity to explore central aspects of administration by highlighting the relevance of a systems approach to the development and formalisation of office systems to support business growth. Answers should explore the nature of the systems approach: application of input-throughput-output, its relationship to efficiency and effectiveness, stages of systems design: preparation-definition-design, and the relationship between systems and procedures.


This should provide a background for exploring the situation regarding different types of office systems in Colourfire, and their role and function in sustaining and developing the business.

Good answers will explore linkages between administrative systems and business operations, their relation to legal and financial requirements, the partners’ awareness of the need to be conversant with systems thinking to underpin the growth of the business, and cite examples from ‘real’ organisations. LO3: Select the best solution to support this choice by logical argument. LO4: Demonstrate an understanding of the subject areas covered in the syllabus. Syllabus Unit 2: Administrative Systems and Processes 5. Principal Administrative Functions Role and purpose of administrative systems

Types and elements of administrative systems – information and communication systems; complaints handling; quality assurance and improvement systems; accounts/budgets, payroll, credit control/cash handling; procurement and inventory management.

(25 marks)


Answer This answer requires the candidate to assess the growth of the business through television shopping. The answer should systematically identify the implications for Colourfire e.g. enterprise and entrepreneurial activity, contrasted with a lack of underpinning systems - production, distribution, as well as material and material and human resources. Reference should be made to how television shopping is shaping shopping habits, the development and expansion of digital media, contrasted with the presentational, production, time, quality and service demand of selling products and satisfying demand.

The case study provides information as to Colourfire’s present involvement with e-commerce in retailing and the role the partners see it playing in the future growth of the business. Answers should consider types of resource demands that could be made on the business if it is to grow its market in the direction suggested.

A good answer could draw on supply chain concepts to explore the impact of e-commerce through television sales on Colourfire’s operations from procurement through stocks and production, to customer service, relationships and presentational skills, citing examples from ‘real’ organisations. LO2: Employ creativity, to apply knowledge and experience, to develop workable solutions, to meet economic, social and technical demands. LO3: Select the best solution to support this choice by logical argument. Syllabus Unit 3: Professional Administration 4. Business Communication Impact of Developments in e-commerce and e-government

(25 marks)



Answer This requires discussion of the impact on Colourfire’s organisation structure that a change to its type of ownership and expansion of business could have. Reference is made in the case study to the partners’ style of operating, and their preference for retaining control whilst avoiding getting tied down with formalised systems and procedures. This offers scope for considering entrepreurial and bureaucratic etc. types of structure.

An answer should explore characteristics of different types/models of organisational structure found in organisations and their relationship to organisation structure and appropriateness for supporting business growth.

The good answer will firmly establish discussion within the context of Colourfire’s potential development in terms of its business structure, markets served and retail technologies, show an awareness of issues relating to documented systems and procedures, obstacles to structural and cultural change and provide examples of structure and culture in ‘real’ organisations to highlight the significance of having an appropriate organisation structure to support business activities. LO1: Apply analytical skill in recognising and appraising information to arrive at a practical evaluation of the problem. LO5: Communicate ideas effectively manner using diagrams and words. Syllabus Unit 2: Administrative Systems and Processes 1. The Organisation in Context Organisational structure: entrepreneurial, bureaucratic, matrix,

independence; organisational culture: power, role, person, task. (25 marks)





Time: 09:30 – 12:30




paper.


1. Using a SWOT analysis (Strengths, Weaknesses, Opportunities and Threats), assess the viability of the company growing the business, by expanding the way in which its products are sold.

Answer This answer requires the candidate to prepare a SWOT analysis on which to base an assessment of growing the business through ways of retailing its products, whilst not losing site of the industry its in. The answer should systematically identify internal strengths and weaknesses of Colourfire e.g. enterprise and entrepreneurial activity, contrasted with a lack of underpinning systems material and human resources, and external opportunities and threats e.g. how retailing changes are influencing the shopping habits of the public, the development and expansion of digital media, contrasted with the presentational, production, stock, distribution, staffing, time and service demands of satisfying retailing the types of products on offer. The case study provides information as to Colourfire’s present involvement with e-commerce in retailing and the role the partners see it playing in the future growth of the business. Answers should consider types of resource demands that could be made on the business if it is to grow its market from the existing size and profile of the business. A good answer could draw on supply chain concepts to explore the impact of e-commerce and television sales and tourist shop(s) etc. on Colourfire’s operations from procurement through stocks and production, to customer service, relationships and presentational skills, citing examples from ‘real’ organisations. Learning outcome LO1: Apply analytical skill in recognising and appraising information, so as to arrive at a practical evaluation of the problem. LO5: Communicate ideas effectively using diagrams words. Syllabus Unit 2: Administrative Systems and Processes

1. The Organisation in Context The role of organisations in the business environment

Unit 3: Professional Administration 2. Change and Administration

The need for organisational change (25 marks)


Answer The case study offers the opportunity to explore central aspects of administration by highlighting the relevance of a systems approach to the development and formalisation of office systems to support business growth. Answers should explore the nature of the systems approach: application of input-throughput-output, its relationship to efficiency and effectiveness, stages of systems design: preparation-definition-design, and the relationship between systems and procedures.


This should provide a background for exploring the situation regarding different types of office systems in Colourfire, and their role and function in sustaining and developing the business.

Good answers will explore linkages between administrative systems and business operations, their relation to legal and financial requirements, the partners’ awareness of the need to be conversant with systems thinking to underpin the growth of the business, and cite examples from ‘real’ organisations. LO3: Select the best solution to support this choice by logical argument. LO4: Demonstrate an understanding of the subject areas covered in the syllabus. Syllabus Unit 2: Administrative Systems and Processes 5. Principal Administrative Functions Role and purpose of administrative systems

Types and elements of administrative systems – information and communication systems; complaints handling; quality assurance and improvement systems; accounts/budgets, payroll, credit control/cash handling; procurement and inventory management.

(25 marks)


Answer This answer requires the candidate to assess the growth of the business through television shopping. The answer should systematically identify the implications for Colourfire e.g. enterprise and entrepreneurial activity, contrasted with a lack of underpinning systems - production, distribution, as well as material and material and human resources. Reference should be made to how television shopping is shaping shopping habits, the development and expansion of digital media, contrasted with the presentational, production, time, quality and service demand of selling products and satisfying demand.

The case study provides information as to Colourfire’s present involvement with e-commerce in retailing and the role the partners see it playing in the future growth of the business. Answers should consider types of resource demands that could be made on the business if it is to grow its market in the direction suggested.

A good answer could draw on supply chain concepts to explore the impact of e-commerce through television sales on Colourfire’s operations from procurement through stocks and production, to customer service, relationships and presentational skills, citing examples from ‘real’ organisations. LO2: Employ creativity, to apply knowledge and experience, to develop workable solutions, to meet economic, social and technical demands. LO3: Select the best solution to support this choice by logical argument. Syllabus Unit 3: Professional Administration 4. Business Communication Impact of Developments in e-commerce and e-government

(25 marks)



Answer This requires discussion of the impact on Colourfire’s organisation structure that a change to its type of ownership and expansion of business could have. Reference is made in the case study to the partners’ style of operating, and their preference for retaining control whilst avoiding getting tied down with formalised systems and procedures. This offers scope for considering entrepreurial and bureaucratic etc. types of structure.

An answer should explore characteristics of different types/models of organisational structure found in organisations and their relationship to organisation structure and appropriateness for supporting business growth.

The good answer will firmly establish discussion within the context of Colourfire’s potential development in terms of its business structure, markets served and retail technologies, show an awareness of issues relating to documented systems and procedures, obstacles to structural and cultural change and provide examples of structure and culture in ‘real’ organisations to highlight the significance of having an appropriate organisation structure to support business activities. LO1: Apply analytical skill in recognising and appraising information to arrive at a practical evaluation of the problem. LO5: Communicate ideas effectively manner using diagrams and words. Syllabus Unit 2: Administrative Systems and Processes 1. The Organisation in Context Organisational structure: entrepreneurial, bureaucratic, matrix,

independence; organisational culture: power, role, person, task. (25 marks)

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