Difficult Advanced Higher Business Topics

What are the positive effects of globalisation on UK organisations. (5)

. Globalization allows UK organizations to expand beyond national borders, giving them access to a much larger customer base - higher sales and growth

. Many UK companies benefit from outsourcing production or services to countries with lower labor costs - significantly reduce operational expenses and improve profitability

. Exposure to global competition and international talent pools encourages UK businesses to innovate continuously - could lead to collaboration with foreign firms, thus driving technological advancements, helping UK companies stay innovative

. Globalization makes it easier for UK organizations to attract and retain talent from around the world - this can bring new skills and cultural perspectives to the workforce, thus improving problem solving capabilities

. By operating on a global scale, UK organizations can achieve economies of scale in production - this leads to lower per-unit costs and can make UK products more competitive internationally

What are the negative effects of globalisation on UK organisations. (5)

. Globalization exposes UK businesses to intense competition from larger foreign companies - potentially leading to loss of market share as they can charge lower prices.

. UK organizations are exposed to global economic changes, such as recessions or currency fluctuations - this can destabilize their operations.

. Operating globally increases the risk of intellectual property theft, especially in countries with weaker protections - can lead to higher legal costs

. Increased production for global markets can lead to environmental degradation - the UK companies can facing criticism from local consumers, leading to a damaged brand image

. UK businesses must navigate cultural differences in foreign markets - this can complicate branding, marketing, and customer relations.

Explain the main reasons for the growth of MNCs (10)

. Over the years there has been increased economic interconnectivity through globalisation -this has made it easier for companies to expand and operate across borders

. Innovations in technology such as the internet and digital communication - it is now easier to manage and communicate with international branches where it wasn't possible before

. There has been a reduction of trade barriers through free-trade agreements which has opened up previously restricted markets - enables MNCs to enter new regions with fewer tariffs and restrictions, making international expansion more profitable.

. There has been an increase in worker rights legislation such as minimum wage - this has encouraged MNCs to outsource manufacturing services to countries with lower labour costs such as Vietnam and China

. There has been growth in the middle class populations and consumer spending abroad in rapidly developing countries such as Singapore and China - this has provided new markets for companies to expand into

. Developing countries have increasingly welcomed foreign direct investment (FDI), offering tax breaks and infrastructure improvements to attract businesses e.g. Singapore - in order to access these grants and tax breaks they expand

. As more companies become multinational, others are encouraged to follow suit to remain competitive - this domino effect has contributed to a steady rise in the number of MNCs worldwide.

. Advancement in infrastructure of less economically developed countries has made it possible for companies to manage operations in these countries where it wasn't posible before e.g. roads and ports.

. Advancement in travel has reduced the cost and increased the spead of shipping goods oversees - it is now profitable to do so.

. Some countries that have been recently modernised have large amounts of resources

Explain the disadvantages to firms of setting up their own facilities abroad (5)

. Establishing new facilities in a foreign country often requires significant upfront investment in land, infrastructure, and equipment - this can strain finances, especially for smaller firms with limited resources and tight budgets.

. Acquiring an existing business can provide a firm with an established brand, customer base, and local reputation, which can accelerate its growth and success in the foreign market - Starting from scratch may take longer to scale due to limited brand equity

. New firms may not have the local expertise, networks, and relationships that a pre-existing business may have - it can be difficult to navigate the new foreign markets and regulatory environments effectively which can lead to missteps and costly mistakes

. Establishing a new facility from scratch involves hiring and training a whole new workforce with the corporate culture and rules - this can be more time consuming than buying an existing business

. Unlike existing facilities, new businesses must establish new compliance processes with local laws - increased legal costs

Explain the advantages to firms of setting up their own facilities abroad (5)

. Firms have complete control over their operations, processes, and corporate culture - they can implement their own standards and practices without having to adapt to the existing systems of a purchased business.

. New facilities can be designed and tailored to meet the specific needs of the firm, including layout, technology, and production processes - customization can lead to greater efficiency and effectiveness in meeting market demands.

. While initial investments may be high, firms may find that building their own facilities can lead to lower long-term operational costs since they can implement efficient processes and technology from the start - avoiding the inefficiencies that might exist in an aquired business.

. By starting from scratch, firms have the opportunity to build relationships with local suppliers, customers, and communities - this can foster goodwill and prevent their image being tarnished by a previous companies brand equity or relationships with suppliers

. Firms can strategically position their new facilities in locations that best serve their target market - they can optimise logistics and distribution channels without being tied to the location of an existing business.

Explore the benefits to firms of buying over existing overseas companies (5)

. Acquiring an existing company allows firms to gain an established brand and local reputation - this can accelerate their growth and success in the foreign market

. Existing companies usually have experienced local staff who understand the local market, customers, and regulatory environment - already have valuable local knowledge for firms entering a new market by capitalising on the previous firm's existing research and development

. By acquiring an existing company, firms can inherit an established customer base - which can provide a steady stream of revenue and help to build trust and loyalty with clients

. By acquiring an existing company, firms are, by default, removing competition from the market - they have the opportunity to gain a larger market share

. The acquired company has already established itself in the local market and has a proven track record - buying an existing company is less risky

Explore the costs to firms of buying over existing overseas companies (5)

. Merging operations, cultures, and systems from the acquired company with the acquiring firm - can be complex and may lead to operational disruptions or culture clashes

. Acquired companies may come with existing problems, such as outdated technology, poor management practices, or unresolved legal issues, - can create additional burdens for the company to resolve.

. If the acquired company has a negative reputation or customer dissatisfaction, it can adversely affect the acquiring firm's brand image and customer loyalty.

. Acquisitions may face scrutiny from regulatory bodies - can lead to delays or complications in the approval process, especially in foreign markets

. Employees from the acquired company may resist changes imposed by the acquiring firm - leading to conflicts and decreased productivity.

Explore the benefits to firms doing Joint Ventures with other organisations (5)

. By partnering with another organization, firms can share the risks associated with investing in a new market or project - if it fails, it isn't a huge loss to the business.

For example, Sony and Ericsson shared the risk of entering the mobile phone market by combining resources and splitting potential losses after this joint venture dissolved.

. Partnering with another organization can help firms diversify their business and reduce dependence on a single market or customer - they can keep a healthy cash flow throughout the year instead of focussing on seasonal products.

For example, Starbucks & Tata Group (India) helped diversify geographically entering a new market with Tata's local experise.

. Joint ventures can provide firms with access to new technologies, expertise, and knowledge - therefore, these assets can be used to drive innovation and growth. For example, BMW gained fuel cell tech from Toyota, while Toyota benefited from BMW's diesel expertise—accelerating innovation.

. Partnering with other organizations can enhance a firm's reputation and credibility in the market - increased customer loyalty.

Nestlé boosted its brand image in new markets by partnering with General Mills in the cereal industry.

. By partnering with organisations that have existing relationships and expertise with the local market - joint ventures can help firms overcome language and cultural barriers.

Disney entered China with local support from Shanghai Shendi, helping navigate cultural and regulatory challenges.

Explore the costs to firms doing joint ventures with other organisations (5)

. Firms will have to share all profits from the venture - lower profit margins for each firm

. Partnering with other organizations can create opportunities for partners to exploit the firm, particularly if the partners have unequal power or influence - could lead to intellectual property theft.

Danone accused its Chinese partner (Wahaha) of setting up parallel businesses using Danone's IP—leading to a major legal dispute.

. Joint ventures can result in a loss of control for the firm, as the partner may have equal or greater influence over the venture - less freedom to implement the firm's own ideas. GM had to give significant control to its Chinese partner SAIC, limiting its autonomy in strategic decisions.

. Building trust with partners can be challenging, particularly if the partners have different values or operating styles - could lead to a negative work environment. Cultural and operational differences between Tata & FIAT's JV created friction, with FIAT eventually exiting the JV due to misalignment and lack of trust.

. Joint ventures can be affected by differing management styles - which can lead to conflicts and inefficiencies.

Describe Transfer Pricing

. Transfer pricing is the process of determining the price at which an MNC transfers goods and services between its subsidiaries or affiliates in different countries.

. Companies may manipulate transfer prices to avoid paying taxes through shifting profits to low-tax jurisdictions. For example, Ireland has a low corporate tax which has attracted companies such as Google, Microsoft, and Facebook to set their European headquarters there. (12.5% corporate tax rate)

. This can lead to tax avoidance and evasion, which can be detrimental to governments and the global economy.

. This could also damage the organisation's reputation since consumers are increasingly aware of a business's ethics.

What are the Benefits of using Transfer Pricing

. Transfer pricing allows firms to allocate profits to subsidiaries in low-tax jurisdictions, reducing their overall corporate tax burden legally, leading to higher after-tax profits which provides finance to reinvest. For example Zara reduces its tax liabilities through shifting profits to subsidiaries in low tax regions.

. By adjusting transfer prices, companies can manage risks associated with fluctuations in market prices and exchange rates - increases the business's stability of cash flow

. By using internal pricing mechanisms, companies can manage costs that optimise profits across global operations and different divisions: For example, Zara uses transfer pricing to allocate costs for clothing made in low-cost countries and sold in its retail stores worldwide, balancing production efficiency with profitability. .

. It can help support strategic goals, such as entering new markets or supporting underperforming units, by adjusting internal prices to make divisions more competitive or sustainable. E.g. if one part of business is struggling, the company can lower internal price to help part succeed e.g. lowering production cost so marketing has more finance to reinvest in advertising.

. Companies can use transfer pricing to adjust prices to reflect the local market conditions - maintain a competitive advantage over other local companies, thus increasing their market share and sales.

. Transfer pricing can also reduce import duties for MNCs when the tariff paid is calculated as a percentage of the value of goods.

. Quality control: Transfer pricing ensures financial alignment across global operations, helping maintain product consistency. For example, Apple uses transfer pricing to set costs for iPhone components produced in its subsidiaries, ensuring all parts of the supply chain meet strict quality standards.

What are the Costs of using Transfer Pricing

. If companies set high transfer prices for goods coming into a country or low prices for goods leaving it, the host country receives less tax revenue which can negatively effect a business's employees e.g. less invested into healthcare leads to more off sick time.

. Transfer pricing can create internal conflict and demotivation if certain divisions see that their profits have been artificially lowered.

. Companies can face backlash if transfer pricing is perceived as unfair. For instance, Starbucks faced criticism in 2012 for minimising UK tax payments through transfer pricing, prompting them to voluntarily increase their tax contributions.

. Transfer pricing requires specialised teams and extensive paperwork to prove prices are fair and follow the "arm's length" principle, increasing legal costs and administrative effort.

. It masks actual regional performance (1) internal conflicts may occur between regional managers (1)

. Tax authorities closely monitor transfer pricing to ensure companies aren't avoiding tax with MNCs caught breaching transfer pricing regulations facing large fines. In 2022, Coca-Cola was ordered to pay an additional $3.3 billion in tax after being found guilty of using transfer pricing to evade taxes.

What are the reasons MNCs use transfer pricing

. By adjusting transfer prices, companies can manage risks associated with fluctuations in market prices and exchange rates - increases the business's stability of cash flow

. Transfer pricing can be used as a tool for tax planning, enabling companies to optimize their tax strategy and minimize their tax liabilities - more after-tax profit to reinvest into the business

. Companies can use transfer pricing to adjust prices to reflect the local market conditions - maintain a competitive advantage over other local companies, thus increasing their market share

. Transfer pricing can also reduce import duties for MNCs when the tariff paid is calculated as a percentage of the value of goods.

What are the effects of Transfer Pricing on the tax paid + profits earned?

. Companies can shift profits to countries with lower tax rates by setting internal prices in their favor, leading to lower tax paid and results in higher after-tax profits.

. If tax authorities think the pricing is unfair, the business could face audits, fines, or forced tax repayments - leading to lower profits.

. Transfer pricing may increase the costs for high tax jurisdiction divisions, leading to lower profits in these areas.

. If transfer pricing results in boycotts, then this will reduce sales and consequentially profits.

. Profits can be directed to support new markets or weaker divisions by adjusting prices, even if it reduces reported profits in one part of the business.

What are the effects of Transfer Pricing on the host country?

. A country that has low tax rates will encourage multinationals to operate in that country to use transfer pricing to pay lower tax - this will create employment and improve the wealth of the country

. Host governments may need to spend more on auditing, regulation, and enforcement to monitor transfer pricing practices which uses public resources and could create tension amongst local tax authorities.

. MNCs may invest in local infrastructure such as roads or ports to improve efficiency which can have a long term positive impact as the quality of life for people within the host country can improve due to increased transportation.

. The host country isn't raising that much tax revenue due to its low tax rate. For example, in 2017 Amazon won its court case against the EU in allegations that Amazon received €250 million in "illegal state aid" tax benefits in Luxumbourg.

. Transfer pricing puts pressure on host countries to keep their tax rates low which could poorly effect long term projects and can create economic tension in government since these MNCs aren't loyal to these countries and may just repatriate profits to another country when an opportunity arrises. ("race to the bottom" through cutting taxes)

. Local businesses don't have the ability to shift profits like multinationals do - loss in local businesses and culture and leads to monopolly.

What are the effects of Transfer Pricing on the home country?

. If an MNC is able to reduce its tax liability through transfer pricing, it may pass the cost on to its citizens in the form of reduced public services - decreased standard of living for host country residents or higher taxes

. If an MNC is able to shift profits to a low-tax jurisdiction through transfer pricing, the home country may lose revenue.

. When profits are reported overseas, it can understate the multinational's real contribution to the home country's economy - this could negatively effect national statistics like GDP, making it harder to make informed decisions on economic policies.

. Local firms that operate only within the home country can't use transfer pricing, creating unfair compeitition with multinationals that reduce their tax bills through using transfer pricing as local firms will have less to reinvest, leading to unfair monoplies

. Transfer pricing can encourage firms to shift operations (like production or R&D) to lower-tax countries which can result in reduced domestic investment and losses of jobs. For example, in 2018 Jaguar Land Rover, originally a UK-based manufacturer, expanded its production operations in Slovakia which offered lower corporation tax.

What are the ways in which a MNC may exploit local resources and what would be the effects of exploitation on local resources?

. Extracting foreign resources in great quantities/depleting natural resources, leadingto deforestation and extinction of species (1), for example harvesting palm oil without replanting trees (1).

. Dumping industrial waste into rivers or releasing toxic emissions, thus damaging farmland and causing health problems for local residents. For example, Shell's oil spills in Nigeria decreased local fishing and hurt agriculture.

. By pressuring governments by threatening job losses (1) or bribing politicians or other influential businesses (1). For example, Shell used the Nigerian military to suppress protests against their oil extraction in the region.

. Excessive water extraction for factories or products can deplete local water supplies and cause droughts, harming communities. E.g. Coca-Cola has been accused of over-extracting groundwater in areas of India, leading to wells drying up and waste discharge contaminating water supplies.

. Purchasing resources at very low cost for well below their value, leading to losses for local businesses (1). For example, Nestle has been accused of underpaying farmers for cocoa farms, leading to farmer poverty despite growing a highly profitable crop.

. MNCs may take over land owned by local communities in order to extract resources, thus displacing people and increasing homelessness. E.g. Barrick Gold has been accused of displacing villagers in Tanzania without fair compensation for the gold mining operations.

. Transfer pricing

. Low minimum wage e.g. Nike in China, Vietnam, and Taiwan.

What are the impacts of exploitation from MNCs on the economy?

. Transfer pricing - lower tax revenue

. Higher burden on national health resources due to pollution - tax spent

. MNCs may dominate local markets through destroyer pricing, making it hard for local businesses to compete.

. MNCs may invest only in resource-rich areas, ignoring broader development needs - creating regional inequality.

. Temporary resource extraction and then leave - fails to create stable long-term growth, thus deterring more FDI.

. Becomes a low skilled, temporary, and low wage economy due to low minimum wages

. Heavy reliance on MNCs for one resource (e.g., oil, cocoa, copper) can make the economy vulnerable to price shocks or foreign decisions.

What are the impacts of exploitation from MNCs on the organisation itself?

. Cheaper labor, utilities, and raw materials reducing production costs. Also less stringent employee legislation - increasing profits. For example, clothing company in Bangladesh is able to hire more workers and save on wages than producing in the UK. (reinvestmet)

. Exploiting local laws or weak enforcement allows faster setup and expansion in developing countries.

. Exploiting weaker regulations may allow longer working hours, fewer strikes, and higher output - economies of scale + increasing production

. Accusations of exploitation can harm brand image, especially with ethically conscious consumers, leading to boycotts and reduced sales. For example, Nike faced major backlash in 1990s over child labour allegations in its supply chain.

. If governments or international bodies take action, the MNC may face fines, lawsuits, or bans. Shell faced lawsuits and paid over $15 million in a settlement over human rights issues in Nigeria.

. Cheaper labour often means less skilled workers, which may hurt quality and innovation over time.

. Poor ethical practices can scare off investors and damage stock prices. For example, when Nestle was accused of child labor in Ghana, Nestle was removed from FTSE4Good Index for several years.

What are the positive impacts of an MNC on a host country?

. Multinational organisations can create new jobs in the host country through establishing operations there - decreases government welfare spending. For example, Toyota's production plants in Durban South Africa employs thousands of local workers and reduces unemployment in the region.

. Reduced unemployment - reduced crime, positively impacting lives

. Multinational organizations can generate significant tax revenue for host country through the transfer of profits and dividends - able to fund public services e.g. healthcare, transport, infrastructure. Microsoft has its European headquarters in Dublin, where it pays significant corporate taxes.

. Competition within the host country can be stimulated leading to improved efficiency and increased productivity - both directly improving GNP further.

. Gross National Product will increase and a higher GNP shows strong economic activity - results in further investment in that country and a good independent rating. Samsung invested billions in Vietnamese production facilities, significantly boosting Vietnam's GNP through exports, leading to other electronics companies transfering operations to Vietnam.

. Multinational organisations tend to pay higher wages than local companies - increased disposable income and living standards. Honda's manufacturing plants in Mexico offer higher wages than many domestic companies in rural areas.

. MNCs may bring their expertise and knowledge to a country - thus modernising other local businesses.

What are the negative impacts of an MNC on a host country?

. Multinational profits are repatriated to the home country or other host country - this means some of the profits can be returned to the home country and not reinvested in the home country. Apple generated huge profits through its operations in Ireland but was found to channel profits to low-tax jurisdiction, leading to a 13 billion euro payback ruling in 2016.

. Multinationals usually employ staff from the home country in managerial positions and use the local labour for the lower skilled jobs - this means that a country won't be able to develop high-value skills and could take longer to modernise. For example, Foxconn, a major supplier for Apple, employs hundreds of thousands in China which are low-skilled assembly workers while R&D remains abroad.

. Multinationals have no loyalty to the host country and can easily switch production to another location to suit their needs resulting in job losses and lowering economic growth - this may be temporary or government may need to make extra efforts to keep business in that country permanently. GM withdrew from South Africa in 2017, relocating production to other regions for strategic reasons.

. Local companies may be forced to close because they cannot compete with larger companies - loss of cultural businesses. Walmart's expansion led to the closure of many local "tiendas" (small shops) that couldn't compete on price or scale.

. Local governments can feel pressure from large MNCs to offer incentives to keep them operating within the country - may need to lower their tax rates to compete creating a "race to the bottom" mentality. In 2018, cities across the U.S. offered billions in tax breaks and incentives to host Amazon's second headquarters.

What is the main concept of Classical Management Theories?

. The organization is the main machinery while the employees are the means of production.

What are the negative impacts of an MNC on a home country?

. MNCs may make use of transfer pricing and other tax avoidance measures to significant reduce the profits on which they pay tax to the government in the host country. For example, Starbucks have been known to transfer their US profits to the Netherlands and Switzerland for taxation reasons.

. Low cost of unskilled labour in other countries can lead to unemployment in the home - increased spending on unemployment benefits. GM offshored much of its production to lower-cost countries like Mexico, which led to the closure of factories in the U.S.

. MNCs may not feel that they need to meet the home country expectations for acting ethically and/or in a socially-responsible way. Despite being a US company, Nike faced a major scandal in the 1990s for using child labour in sweatshops overseas.

. Wage rate for unskilled workers in many developed countries can fall significantly because of competition from other countries - lower gdp per person. For example, Walmart's status as a large MNC leads to competition with smaller, local businesses, which often couldn't match the prices or brand image.

. In developed countries there is less demand for low-skilled labour placing a burden on society to invest in education to increase supply of skilled workers - increased government spending. For example, as MNCs like Apple, Microsoft, and Google expanded, they created a demand for highly-skilled tech workers in the USA, burdening US education sector.

Describe the aims of The European Union (EU) (6)

. To create a single market where goods, services, capital, and people can move freely between member states.

. To ensure peace and stability in Europe by fostering close political ties and cooperation among member countries

. Through EU funding, it aims to support regional development, reducing economic disparities between rich and poor regions of Europe

. To enforce competition laws to prevent monopolies and promote a fair business environment across the single market

. To help tackle climate change and encourage sustainable development through common environmental policies. For example, all EU member states have signed the Paris Climate Agreement to help reduce global warming.

. To improve living and working conditions, ensuring basic rights and protections for all citizens across its member states.

Describe the aims of The Association of South East Asian Nations (ASEAN). (6)

. To promote Asian studies and to attract foreign investment

. Free movement of goods promoting trade between countries and the free movement of workers to prevent shortages in order to create a flexible workforce and share skills within the ASEAN nations.

. To improve the standards of living within member countries

. Becoming collectively more powerful compared to individual economies

. To promote regional peace and stability

. To increase competitiveness against Western and Chinese organisations.

What are the benefits of trading with and operating with the EU? (5)

. The EU has a large and integrated market, offering businesses a significant customer base - higher sales and growth

. If a business sets up operations within the EU, it may be able to avoid tariffs, duties, and complex customs procedures - decreasing the cost of trade

. The EU's large market size allows businesses to use economies of scale - reducing costs and increasing profit margins

. The EU offers access to funding opportunities such as the European Investment Bank - can help businesses finance their operations and expansion plans.

. The EU has a well-established and standardised framework of rules and regulations - once expanded into one EU country, it is very simple for a business to expand across other member states without complex legal processes

. The EU has a highly skilled and educated workforce, providing businesses with access to a large pool of talented and skilled workers - can increase productivity and quality of products

What are the costs of trading with and operating with the EU? (5)

. Although the EU puts measures in place to try to create a 'Single Market' Businesses operating in the EU face varying tax rates and VAT regulations across member states - this can complicate financial operations and lead to higher administrative burdens.

. Decision-making within the EU often requires consensus among its 27 member states - can lead to slow policy-making and create uncertainty for businesses.

. EU trade policies, often aimed at protecting local industries - may limit the ability of non-EU businesses to access certain sectors or markets within the EU.

. EU has strong labor laws, particularly regarding working hours, employee rights, and termination policies - can limit operational flexibility and increase labor costs.

. Non-eurozone countries face currency exchange risks when trading with EU countries - could reduce financial stability if a company wants to repatriate profits or move funds into facilities in euro-zone countries

What countries are in ASEAN?

. Indonesia, Malaysia, Singapore, the Philippines, Thailand, Brunei, Burma, Cambodia, Laos, and Vietnam

What are the benefits of trading and operating in ASEAN and China

. The ASEAN market alone has a potential market of 600 million customers leading to increased sales.

. There is a large number of raw materials available to access in ASEAN countries such as oil, gas, palm oil and rubber which can be exported cheaply.

. Ability to spread the risk eg companies can raise capital in Singapore and set up factories in low-cost locations like Vietnam

. UK organisations are keen to take advantage of current market conditions to establish their brand. For example, customers in Myanmar are known to be brand loyal-repeat.

. A growing middle class leads to an increase in demand for UK branded goods, leading to an increase in sales.

. Exporting goods to China and ASEAN may not be economic due to vast distance thus setting up in those countries reduces costs.

. ASEAN has created agreements for trade with Australia, New Zealand, India and Japan which allows access to these markets, tariff free.

What are the costs of trading and operating within ASEAN

. Long distance shipping means higher transport costs and greater carbon emissions - some consumers switching to local products to avoid greenhouse gases.

. Each Asian country has distinct business practices with cultural differences, for example Indonesia's population is 90% Muslim while Thailand is 95% Budhist, requiring extensive market research to understand local preferences and cultural sensitivities.

. While Singapore offers modern infrastructure, other countries present practical challenges. Companies operating in some regions face unreliable power supplies and poor transport links.

. Trading across Asia involves multiple currencies with UK businesses forced to handle exchange rates wtih currencies like Singapore dollar, Chinese yuan and Viatnamese dong.

. Intellectual property rights are a particular concern, leading to cheap remakes and duplicates, damaging brand image. While Singapore has strong legal protections, other countries may have weaker enforcement of patents and trademarks.

. Recent political upheaval in Myanmar have created business uncertainties, reminding UK companies that political risks remain a factor when operating in some

What are the negative impacts of the success of the ASEAN and China may have on UK organisations?

. Exporting goods to China and ASEAN may not be economic due to vast distance thus setting up in those countries reduces costs. E.g. Tata Steel at Port Talbot closing due to cheap Chinese steel.

. The low cost operations of ASEAN businesses may force UK organisations to lower their prices to compete, leading to lower profit margins and closure of unsustainable organisations

. Reduced sales as environmental awareness increases, less consumers want UK businesses to trade with Asia, given the increased carbon footprint of doing so.

What are the benefits of trading and operating within China

. Disposable income has doubled in China in the last 10 years, and with more than 400 million middle-class consumers, China offers massive sales potential for UK businesses. For example, Jaguar Land Rover now sells more vehicles in China than in any other market, with annual sales exceeding 150,000 units.

. China's advanced manufacturing sector offers high quality at competitive prices - UK retailers like B&Q source many products from Chinese factories, allowing them to offer competitive prices to British consumers.

. Chinese consumers' increasing disposable income creates opportunities for premium UK brands - Burberry generates around 30% of its global revenue from Chinese customers.

. Chinese mobile payment systems are often more advanced than Western ones, helping UK firms understand future trends. Chinese firms are also major players in AI, telecommunications and electric vehicles, with growing operations in the UK.

. Over 140,000 Chinese students study in UK universities annually, contributing over £2 billion to the UK economy through fees and spending, leading to connections with young employees.

. China's massive infrastructure project connecting Asia with Europe offers UK businesses providing opportunities in construction and engineering + better transport links for UK goods to reach Asian markets through new shipping routes.

What are the positive impacts of an MNC on a home country?

. Provision of significant employment and training to the labour force in the home country. e.g. Nestle budgeted 50% of R&D spending for Switzerland.

. Other firms in the home country may gain opportunities from any expertise gained which will in turn create wealth for the country in the form of increased taxation collected from these other successful firms.

. Creation of additional high quality technical and managerial jobs at the MNC's HQ - enhance spending power in the UK as the nationals employed to these new positions are financially rewarded according to the amount of responsibility they are given. Unilever's UK headquarters hosts senior managers, strategists, and specialists, providing high-income jobs.

. International relations between the host and home country can improve - may lead to future trade deals or more profitble negotiations. For example, Rolls-Royce has deepened Indian ties through joint ventures which has in turn helped strengthen UK-India relations, helping open possibilities in wider trade agreements and diplomatic relations

. Multinational organizations can invest in the infrastructure of their home country, such as transportation systems, telecommunications networks, and energy systems. BP has invested heavily in UK energy infrastructure, including offshore wind and hydrogen energy projects.

Analyse the reasons for Chinese organisations expanding production in recent years

. Traditionally low wages (relative to western wages) has allowed the Chinese organisations to have lower operating costs

. Steady reduction in transport costs due to mega-tankers has reduced costs/increased profitability/expansion

. Increased demand for products worldwide has increased the disposable income of Chinese workers which stimulates domestic demand

. Growing middle class - as wealth grows so does demand for goods

. Growing links with the west leads to more exports

. Growing economy means the government can afford to invest in manufacturing

. The large population means there is an abundance of labour - lots of the population are moving to urban areas from the countryside

How may EU enlargement affect UK businesses?

. As new countries join the EU, they adopt the EU's common external tariff and regulations, which can make it harder for UK firms to trade with them compared to before accession.

. UK firms might expand operations or form partnerships in new EU countries, taking advantage of emerging economies and EU development funding.

. New businesses from enlarged EU states may enter the UK market, increasing competition and potentially undercutting local prices, especially in low-margin industries.

. EU enlargement used to benefit the UK through migration from new members, filling skill gaps in industries like construction or agriculture. Post-Brexit, UK businesses no longer benefit from free movement, leading to labour shortages.

. Enlargement may strengthen the EU's negotiating power, potentially making it harder for the UK to secure favourable trade terms in future.

What are the positive and negative effects of China and ASEAN becoming more powerful

. Component parts needed for UK production can be made cheaper in Asia (lower wage rate/cheaper materials), which reduces the raw material costs to UK businesses.(1) These reduced costs may also mean that prices can be reduced to be more competitive or the UK businesses can be more profitable.(1)

. UK businesses can learn new production techniques from ASEAN and Chinese organisations, which can make them more efficient and competitive.

. UK businesses who manufacture luxury products, can now increase sales to Asian consumers who are now more wealthy (1 mark), eg Jaguar sells a high amount of cars to wealthy customers in China. (1)

. Potential subsidies from the UK Government to UK businesses, in response to increased competition from ASEAN and Chinese organisations.

. ASEAN and Chinese organisations have been investing in/buying UK businesses, which may keep struggling UK companies stable. (1 mark) This also means that local suppliers to these businesses have regular custom. (1)

. Specialisation by ASEAN and Chinese organisations can produce higher quality parts, which can improve the quality of products manufactured in the UK (1), eg Nissan — made in Japan, assembled in England. (1)

. UK-based suppliers to other UK businesses will also suffer reduced sales due to increased competition.

. Cultural differences/language barriers when dealing with suppliers in ASEAN organisations could put pressure on UK businesses to recruit staff with language skills and this can be very expensive.

. Distance from suppliers in China/ASEAN — transportation costs increase/less environmentally friendly/lead times could increase and this means that they may not be able to respond quickly to customers' needs.

What would be the effects of increased Protectionism in the EU, ASEAN, or China on UK businesses?

. Tariffs or quotas would make UK goods more expensive in protected markets, leading to falling demand. E.g. Jaguar Land Rover may struggle to compete in China or the EU

. Non-tariff barriers (e.g. stricter regulations or licensing requirements) could restrict entry to those regions, especially for pharmaceuticals or food.

. UK businesses reliant on imports from these regions (e.g. electronics from China, car parts from the EU) would face higher input costs and delays.

. If other global competitors are given preferential trade deals or local businesses are subsidised, UK firms may struggle to remain competitive.

. Multinationals may choose not to base operations in the UK if access to nearby protected markets is restricted, reducing foreign direct investment (FDI).

. UK businesses might diversify exports to less protectionist markets, prompting innovation and expansion into regions like Africa or Latin America.

. UK firms might benefit if foreign products become expensive or limited in the UK due to reciprocal protectionism.

What does CSR mean?

. Corporate Social Responsibility is the responsibility the company has to all its stakeholders internal and external.

Analyse the factors which have led to Corporate Social Responsibility becoming an essential part of organisation policy

. Increased competition - CSR allows them to gain a better public image and increases media coverage

. Rise in public awareness for CSR and changing consumer demands, thus expecting the businesses to include it into the policies in order to give back to the society and look after the environment

. Motivates employees - Employees like working for a company that has a good public image. Happy employees leads to better output.

. Helps attract and keep investors as they are more likely to continue supporting companies that demonstrate a commitment to wellbeing of employees and customers alongside organisations and causes that help others

What are examples of how businesses can be more ethical?

. Use less energy to lower pollution levels, meeting government aims as the government is committed to slowing down climate change

. Using less water reduces water pollution which is vital as water shortages threaten farmers.

. Implementing a recycling policy reduces waste which will reduce costs for owners as it will reduce the amount they need to pay in landfill tax. Reducing costs = increased profits, leading to increased dividends for shareholders.

. Reduction of transport will help to reduce their carbon dioxide emissions in order to improve air quality

. Reducing their packaging can reduce amount of packaging thrown away which will meet the need of customers as their awareness and desire for less packaging has risen dramatically over the last few years

. Reduction in noise pollution from changing to quieter machinery will reduce noise and disturbances for the local community

. Reduction of transport will help to reduce their carbon dioxide emissions in order to improve air quality e.g. using local suppliers

. Change hiring policies to include previously under represented groups e.g. 10% of all roles go to Low Socio-economic Background candidates

. No animal testing

. Fairtrade sourced materials e.g. Patagonia 90% clothes made in fairtrade certified factory

Explore the effects of following a policy of Corporate Social Responsibility on an organisation's Marketing

. Can add CSR branding to packaging to promote sales for example Fair Trade Logo

. May release public relations statement outlining CSR policy to general public to improve image, leading to loyalty from customers and allowing business to expand customer bases through targetting ethically conscious consumers

. May give funds to local charity or sponsor local community projects, thus enhancing connection to local community

. May limit what promotions it uses for example not celebrities who have been inappropriate

. May limit where a business advertises for example may not advertise in certain magazines etc due to their stance on certain issues.

Explore the effects of following a policy of Corporate Social Responsibility on an organisation's Operations

. May set up a quality circle within department to investigate how waste could be reduced, possibly implementing a reduce, reuse, recycle policy to reduce costs.

. New procedures may have to be implemented to ensure non-essential equipment is switched-off when not in use

. May increase costs as firms may switch to suppliers who fit with their policies - total revenue may decrease as increased costs may increase prices

. Reduce the level of packaging used in the product which requires less storage space - reduced storage costs with smaller warehouses

. Increased R&D to find ways of reducing the level of raw materials used in production process

What are the Benefits of ethical business practices

. Ethical practices build trust with consumers, leading to stronger brand loyalty and expands reach through appealing to ethically conscious consumers.

. Employee satisfaction will increase due to paying living wages and good brand image - lower staff turnover

. Ethical businesses appeal to socially responsible investors, increasing funding opportunities.

. Through environmentally friendly policies, the organisation may receive subsidies or grants from the government, helping fund these endeavours.

. Following ethical and legal standards lowers the risk of fines and lawsuits, thus avoiding legal costs

. Buying from local suppliers helps foster community ties and comply with government regulations.

What are the costs of ethical business practices

. Using sustainable materials or paying fair wages often increases expenses - lower dividends for shareholders

. Ethical decisions may require more research and consultation, slowing down processes and potentially leaving missed opportunities.

. To cover ethical costs, prices may rise, possibly reducing competitiveness, reducing short term profits as businesses invest in better long term practices.

. Ethical sourcing might restrict the number of suppliers that meet strict standards - unhappy customers due to different formulations and variations of products

What are the environmental issues and pressures facing organisations?

. The rising temperatures and extreme weather events from climate change can disrupt supply chains, production, and operations - leaving staff idle

. Air, water, and soil pollution caused by industrial activities can damage ecosystems and lead to public backlash or fines. For example Shell forced to pay over $15 million.

. Use of non-renewable resources i.e. oil, minerals, gas, can create long term sustainability issues and cost risings due to reduced supplies

. Laws and environmental standards (e.g. emissions limits, plastic bans) force businesses to adopt greener practices. Potentially requiring upfront costs for wind turbines and solar pannels.

. Customers increasingly demand sustainable and eco-friendly products and may boycott harmful companies - lowering sales.

. Many investors now look at a company's environmental impact before deciding to invest (ESG investing) with competitors going green pressuring other companies to do this in order to prevent loss in market share.

What are the effects of Fiscal Policy on organisations

. Increases in corporation tax reduces the organisations retained profit, impacting reinvestment for expansion. Lower dividens could lead to shareholders selling shares, negatively effecting market value of organisation

. Increasing invome tax reduces disposable income so the demand for goods and services reduces - may have to increase amount spent on advertising to attract customers/make cut backs such as redundancy etc

. Decrease in government spending will negatively impact on the ability to provide a quality service by public sector organisations for example NHS and state schools - more off sick days, harming productivity

. Increases in VAT and excise duties increases the price the customer pays and organisation may not wish to pass the increase onto customers thus reducing their profits

What are the effects of Monetary Policy on organisations

. Higher interest rates increase the cost of borrowing for an organisation which may mean it will be unable to invest in product development - results in loss of competitive edge, customers, and market share

. Higher interest rates encourage saving which reduces consumer spending

. Lower interest rates may increase borrowing and therefore spending and consumer purchasing

. Quantitive easing is used by government to encourage spending by introducing new money to boost economy - allowing organisations to invest in growth.

What are the effects of Social Policy and Legislation on UK organisations

. Minimum wage increased by government increases labour costs for UK organisations - reducing profit and opportunity for growth

. Organisations may have to appoint specialist staff to review safety equipment and procedures, ensuring compliance with health and safety regulations - may require purchasing of new safety equipment to meet these standards

. The organisation liable for work-related injuries, compensation payments will reduce cash flow

. Companies have to keep a thorough record oof how and when an individual gives consent for personal data storage - must show a clear audit trail of consent.

. Equality act 2010 prohibits discrimination based on 9 protected characteristics

What are the effects of Equality Act on organisations?

. The Act makes it illegal to discriminate in hiring, pay, promotion, training, or dismissal, leading to a more inclusive environment - increasing employee motivation, increased productivity

. Not complying with the Act results in costly lawsuits, employment tribunals, or fines for discrimination or harassment claims.

. Organisations may need to ensure accomodation for disabled workers, possibly increasing costs as lifts may need to be installed in workplace

. Organisations may need to change hiring practices e.g. panel interview to avoid bias

. Firms must create a safe and respectful workplace, taking quick action against bullying or harassment based on any protected characteristic - may result in training

. Businesses may need systems to monitor workplace equality (e.g. collecting data, handling complaints), which adds to admin tasks - increased hiring for HR staff

What are the impacts of unethical business practices, for example exploitation, transfer pricing, green- and rainbow-washing?

. Damaged reputation, boycotts - reduced sales. For example, organisations such as Apple, Tesla, and Starbucks have been criticised for suppressing unionisations of workers

. Legal action against organisation - fines and increased legal costs

. Decreased market share and reduced market value as investors sell shares and consumers shop elsewhere.

. Staff may feel ashamed or unsupported if their employer acts unethically. This leads to low motivation and high turnover.

. Transfer pricing costs and benefits

. Lower wage costs

. Exploitation of workers (e.g. poor conditions, low wages) causes real harm to communities

. Increased surveilance from government agencies in future - increases costs as more compliance staff needed

What are ways in which the government can support UK organisations

. Providing grants, subsidies, and low interest loans to help businesses grow and survive tough environments, for example, during Covid-19, the UK government provided businesses with furlough schemes paying up to 80% of wages for those unable to work.

. The government can increase security on corporations' patents, trademarks, and copyrights, helping organisations safeguard their innovations and brands.

. The government may reduce red tape or simplify rules to make it easier to start and run a business such as online business registration through the Companies House website.

. The government can secure trade deals with other countries to relax tarrifs and import fees, leading to expansion of customer bases.

. Through building better roads, transport, and energy systems, businesses can reach customers more efficiently and faster

. The government offers incentives for eco-friendly practices (e.g. switching to clean energy, EV grants, or carbon-reduction funding).

What are the benefits to organisations of using emerging and developing technologies

. Ecommerce

. AI

. Robotics

. Automation

What are the costs to organisations of using emerging and developing technologies

. Ecommerce - cost of website, cybersecurity, training staff, staff 24/7, increased delivery costs, increased cost of technology implementation and maintenance, potential job displacement, ongoing updates and training requirements.

. AI - cost of privacy, costly errors can be made, replacing employees is bad for brand reputation.

. Robotics - cost of maintanance, research and development, training staff, breakdowns lead to delays, costly repairs

. Automation - cost of technology, potential job loss, maintenance expenses, need for staff retraining, infrastructure investments.

Discuss the impact of e-commerce on the functional areas of an organisation

- Definition: − e-commerce is the buying and selling of goods online.

. Can spend less on employees' wages as many of the tasks (accepting orders, checking inventory) can be automated - reducing number of workers needed

. Training costs may increase as employees need to be trained in new ways of working

. Shift workers may have to be employed at unsociable hours if customers are to buy goods 24/7, needing employees at help desks

. Investment in a website will increase short term costs

. Payments for wages/shop rent and other related expenses are reduced as there is no need for a physical outlet for customers to visit

. Computerised inventory system should be used which will make the process of inventory control more accurate in addition to automatic reorder levels - reduced shortages

. Options in delivering product to customer may increase, changing logistics.

. Marketing department may have to change the way they communicate with customers. For example, less face-to-face communications and more electronic vouchers.

. Details of customer's preferences/spending patterns ('other people who bought this ...') can be used to segment customers and save money by targeting customers with specific deals - Customers can be regularly contacted for new details via email lists.

What are the impacts of current issues on Organisations?

. Tarrifs - increased costs, leading to potentially lower sales for MNCs if they pass this onto consumers

. Climate change - disruptions in supply chains

. Interest rates

. Government legislation

. Customers and employees expect businesses to act ethically (e.g. fair pay, diversity, sustainability).

. UK organisations still face challenges with customs checks, trade delays, and regulatory differences, especially in EU trade.

. Increase in data breaches and cyberattacks forces firms to invest more in security - could cause financial losses, legal costs, and reputational harm depending on how cybersecurity is threatened.

What are the costs of trading and operating within China

. Some sectors face barriers entering China. For example, UK technology companies must often partner with local firms to operate in China, limiting their independence.

. UK companies risk their designs or technology being copied. Several UK fashion brands have faced issues with counterfeit products in Chinese markets.

. Diplomatic issues can affect trade which means when political relations cool, UK businesses can face unofficial barriers or delayed approvals, for example, China has put pressure on Western countries when it comes to negotiations with American tarrifs, potentially hurting relations

. Chinese business culture differs significantly from the UK with relationship building essential before doing business in addition to decision making processes often being slower

. China's regulations can change quickly and vary by region. For example, China's Foreign Investment Law which became effective in 2020, creates more legal barriers for foreign investors.

. China's more permissive regulatory environment can be seen as exploitation/unethical, for example, eg over 5% of children between the ages of 10-15 work - leading to potential boycotts from UK consumers concerned about this in addition to treatment of Uyghur population in Xinjiang.

. Language barriers

What are the impacts of exploitation from MNCs on the stakeholders?

. Banks - May not receive payment on loans due to boycotts

. Customers - could lose trust in brands, increase costs to shop more ethically

. Suppliers - Face pressure or reputational damage by association.

. Employees - lower motivation, low wages, unsafe conditions

. Local communities - disruption to traditional lifestyles from pollution and land grabbing

. Shareholders & Investors - Risk reputation damage and financial loss if unethical practices lead to scandals, lawsuits, or consumer backlash.

What are the types of classical school of managment?

. Administrative (Fayol)

. Scientific (Taylor)

. Bureaucratic (Weber)

Explore Fayol's Administrative theory of Management

. Fayol concentrated on the management process rather than specific tasks. He developed 5 functions of management and 14 principles of management.

What are 7 of the 14 principles of management? (Fayol) [CADERSI]

. Centralisation - Balancing decision-making between higher management and lower levels.

. Authority - Managers must possess the authority to give orders, and recognize that with authority comes responsibility.

. Division of work - Delegates certain specialised tasks makes employees more efficient and skilled.

. Esprit de Corps - Promote team spirit and unity for better collaboration.

. Remuneration - Employees should be rewarded for effort and pay should be fair.

. Scalar Chain - A clear chain of command from top to bottom.

. Initiative - Encourage employees to take initiative and suggest improvements.

What are Fayol's 5 functions of management? [POCCC]

. Planning - developing future activities to secure success through detailed planning and being prepared for all outcomes. Impact - reduces uncertainty and increases clarity. Standard Operating Procedures can be helpful in adapting to situations, preventing costly errors.

. Organising - recruiting and retaining the most skilled employees, ensuring a mix of operational and strategic labour as well as ensuring the organisation of resources. This ensures structure, defined roles, and allocated resources which prevents confusion as each task is covered with clear role.

. Commanding - supervising employees to ensure the company reaches its potential. This helps guide employees to carry out tasks effectively, thus increasing quality of products and services since costly errors aren't made due to manager's experience.

. Co-ordinating - ensuring that all departments and tasks complement each other and result in an efficient workflow, reducing waste and efficiency. This ensures harmony and streamlines processes to achieving goals, thus preventing duplication or gaps -> increasing efficiency.

. Controlling - ensuring all managers and employees are working towards achieving the common goal on time and within budget. This helps identify problems to make corrections and helps monitor performance in comparison to goals.

What is the Impact of 7/14 of Fayol's Principles of Management

. Centralisation - This can improve coordination as there is more control and consistency within decision making. However, this may reduced responsiveness and demotivate lower level employees due to lack of autonomy.

. Authority - This means that managers can give orders and expect complaince, thus ensuring tasks are carried out + discipline.

. Division of Work - This ensures that specialised employees can increase efficiency and quality due to their expertise in tasks. Can improve productivity but may cause boredom or a narrow skill set if overused - high job turnover due to siloed employees.

. Espirit De Corps - Boost morale, unity and cooperation among employees. As a result, less conflict, and more loyalty which reduces HR complaints and turnover.

. Remuneration - Fair pay motivates employees and helps retain talent. This will also give a business a positive reputation if they pay their employees fairly, leading to higher customer loyalty.

. Scalar Chain - A clear hierarchy improves communication and accountability. Can slow communications in emergencies in 'Tall Organisations'.

. Initiative - Encouraging employee input can increase inovation, engagement, and creativity. However, an organisation needs to ensure that balance is put in place to prevent conflict with the Authority principle in procedures.

What are the 3 Categories of Management according to Mintzberg (IDI)

. Interpersonal (contains 3 roles)

. Decisional (3 roles)

. Informational (4 roles)

What are the 3 roles under the Interpersonal Roles of Management

. Figurehead: represents the company as a symbolic leader, attending ceremonial duties and enhancing PR and media relations by embodying the company values. E.g. Yvon Chouinard provided an environmental image for Patagonia's values through his interests in hiking and mountain climbing.

. Leader: Inspires and motivates employees by setting an example, fostering loyalty, reducing turnover, and aligning team goals with the company's vision. E.g. Steve Jobs.

. Liaison: establishing and maintaining effective relationships inside and outside the organisation, creating opportunities for partnerships and knowledge sharing - joint ventures perchance

What are the 3 roles under the Informational Roles of Management

. Entrepreneur: Identifies and initiates opportunities for innovation and growth, setting a strategic direction that provides the company with a competitive edge.

. Disturbance Handler: Addresses conflicts and crises decisively to minimise disruptions and safeguard company operations.

. Resource Allocator: Strategically distributes resources like finance, staff, and technology to optimise performance and avoid inefficiencies.

What are the 3 roles under the Decisional Roles of Management

. Monitor: Actively gathers data about internal and external environments to track staff progress and ensure alignment with objectives, enhancing decision-making.

. Disseminator: Shares critical and relevant information across departments to foster transparency, minimise confusion, and maintain organisational focus.

. Spokesperson: Acts as the public face of the company, communicating its vision and values to stakeholders, including media, investors, and customers.

Explore Taylor's Scientific Management Theory

. Taylor's) scientific management was based on the principles of standardisation, efficiency and discipline (1), viewing the organisation as a machine and tried to make it efficient.(1)

. This would involve improving productivity and working conditions whilst increasing wages with "A fair day's pay for a fair day's work."

. This is based on 4 fundamental principles.

- Scientific Study of tasks: Every job boken down to basic elements and scientifically studied to determine the most efficient method of completion.

- Scientific Selection and Development: Workers selected and trained for specific tasks, matching capabilities to job requirements and providing training in standardised methods.

- Cooperation Between Managers and Workers: Management & worker collaboration to ensure work is performed according to scientific principles. Includes implementing piece-rate payment systems.

- Division of Work Responsibility: equal division of work for managers and workers, managers responsible for planning, workers responsible for carrying out tasks.

. Scientific observation would involve: Breaking complex tasks into basic elements. Measuring the time required for each element. Identifying and eliminating inefficient movements. Developing standardised procedures for all tasks.

Explore Weber's Bureaucratic Management Theory

. This theory aims to create a rational, efficient, and stable organisation through clearly defined roles and a hierarchy of authority.

. This theory involves a clear chain of command where each level controls the level below with authority flowing from top to bottom.

. Organisations operate within written formal rules with set procedures to ensure uniformity and consistency. Decisions are made based on rational-legal authority, not personal preferences.

. The division of labour ensures that tasks are divided into specilised roles with certain employees responsible for specific duties to enhance efficiency and expertise.

. Impersonality: Decisions and interactions are made objectively without favoritism or personal involvement. Additionally, the hiring and promotional process is based on merit, skills, experience and qualifications, not favoritism or inheritance.

. Career Orientation: Employment is seen as a full-time career, with advancement possible through a well-defined career path.

Explore the Human Relations theory (Mayo)

. Elton Mayo focused on importance of social factors and human behaviour and stressed the importance of considering workers' needs to improve productivity. This is based on the Hawthorne experiments in Chicago from 1927 to 1932.

. After these experiments, Mayo concluded:

- Belonging to a group which appreciates you is a stronger motivator than money.

- The social support offered by informal groups has a strong influence on motivation and influenced workers (possibly more than official leaders). The workers also enjoyed the social aspects of working in groups

- Relationships which evolve at work are more motivating to employees than money

- People are motivated by feeling specially selected by management

- Productivity improved when physical conditions were changed

Explore the Neo-Human Relations (McGregor) theory

. This theory suggests managers have 2 ways of looking at subbordinates, falling into Theory X or Theory Y.

. Theory X Managers believe workers:

- Naturally dislike work and will try to get out of it if they can

- Have to be threatened with punishment and supervised to get tasks done

- Want to be told exactly what they have to do

- Have security as their greatest need e.g. financial or perks

. Theory Y managers believe workers:

- Think work is fulfilling and natural

- Are able ot use self-discipline to achieve their objectives

- Want to be given responsibility and decision making power

- Have self-actualisation as their greatest need.

Explore the Neo-Human Relations (Herzberg) theory

. Herzberg studied what motivated workers and discovered two types of factors affecting employee motivation which include Motivators & Hygiene Factors.

. Motivators are factors that motivate employees when present but their absence doesn't necessarily demotivate—just leads to neutral feelings.

. Hygiene factors are factors which don't intrinsicly motivate employees but their absense causes demotivation.

. Simply removing dissatisfaction (like increasing pay or improving conditions) won't motivate workers long-term and so employers must focus on the job's design and enrich jobs with more meaning, responsibility, and opportunities for achievement.

. Hygeine factors: wages or salary, good physical environment and conditions, company rules, & stable employment with job security.

. Motivators: Feeling of success or accomplishment at works, being praised or acknowledged for good work, having responsibility, opportunities for promotions and career paths, & learning new skills.

Explore the Neo-Human Relations (Maslow) theory

. This is the theory that there are 5 hierarchies of need that explain how people are motivated.

. A person will start at the bottom of the hierarchy and will seek to satisfy each need in order.

. After each level of need is achieved, they will no longer serve as a motivator for the employee.

. Physiological, Safety, Belonging, Esteem, Self-actualisation

. Physiological through fair wages to afford essentials.

. Social needs of belonging through group projects and good team culture

. Safety and security needs can be fulfilled through providing employees with a fair wage which means that their living costs can be met and they won't go into poverty. Providing job security which can be done through offering staff permanent contracts.

. Safety and security needs can also be fulfilled through providing a safe working environment and safety equipment which means that they will be less likely to have accidents and injuries in the workplace.

. Esteem needs can be achieved through a job title which means that an employee may have a feeling of importance, thus motivating them.

. Esteem needs can also be achieved through praising an employee when they have done a good job which means that they will continue to work hard and will take pride in their work.

. Offer internal promotion so that staff can climb the career ladder.

. Self-actualisation can be provided through giving meaningful tasks and development opportunities so staff reach full personal growth potential

Explore the Contingency Theory of management

. The Contingency theory tries to get the best fit between task, people and environment

. This theory theory assumes that there is no single "best way" to manage and the most effective management approach depends on the variables (contingencies) that must be considered such as skill of workers, the specific task.

. Each situation and organisation is unique and management must be tailored accordingly to achieve maximum organisational effectiveness.

. The method of management will depend on the individual situtation and therefore management must be flexible and adapt to all circumstances.

. A contingency approach helps managers adjust to changes in social and economic circumstances.

What are the Pros and Cons of the Scientific Management theory?

. Tasks are standardised and optimised so workers can perform them faster - economies of scale

. Specialisation prevents waste and increases quality of goods - higher prices and saves waste costs

. Jobs are broken down into small steps, so new workers can be trained quickly.

. Providing workers with a specialised role they are responsible for may provide motivation in addition to the performance based pay encourages faster work through financial incentives, which may suit some workers and prevents loss of wages through idleness.

. Repetitive and simple tasks can become monotonous, leading to low job satisfaction.

. Business isn't adaptable to new conditions due to being siloed to one task - more like machines not individuals, higher turnover and absenteeism

. No room for personal input, initiative, or improvement suggestions - little autonomy and control.

. Seen as controlling and overly focused on output over well-being, creating negative tension environment through lack of trust - increased strikes

. Works best in factory settings; less useful in creative or service industries where flexibility and customer interaction are key where piece rate doesn't work.

Explore the relevance of the Human Relations and Neo-Human Relations management theories in the modern workforce

. Mental health, burnout, and job satisfaction are major concerns with many businesses now focussing on well-being initiatives and employee voice. For example, Google is known for encouraging collaboration, values employeee hapiness in addition to support like free meals and mental health benefits. This meeting the safety and physiological needs on Maslow's hierarchy.

. Workers want meaning, autonomy, and recognition—not just pay which supports Mayo's Hawthorne experiment conclusions and the use of Herzberg's motivators like responsibility and career progression. For example, Salesforce offers career development plans, recognition programs, and leadership opportunities to keep employees engaged. However, this may be more difficult to introduce with less relevance in purely automated and repetitive jobs e.g. factory lines.

. However, this focus on personal goals can be hard to apply universally (some employees still prioritise pay or security) as seen through commission jobs in industries such as sales.

. Modern organisations are more team-oriented and less top-down which fits with Mayo's belief in strong interpersonal relationships and team dynamics as seen through Spotify's use of group projects which promote belonging and unofficial relationships.

. Supports modern values like flexibility, growth, and engagement fulfilling Maslow's higher level needs of esteem and self-actualisation. For example, Microsoft offers hybrid work, supports work-life balance, and fosters a culture of self direction.

. John Lewis Partnership (UK): Gives employees a say in decisions, shares profits, and supports employee wellbeing—applying Theory Y and motivational principles.

Explore the relevance of the Contingency management theory in the modern workforce

. The increase of global online competition from the rise of e-commerce sales in retailing means organisations need to develop a flexible structure to respond to rapidly changing markets.

. Contingency theory is relevant today because managers must be flexible and decide what to do in various circumstances in a rapidly changing environment that exists today.

. Modern organisations are more likely to use a contingency approach choosing the best mix of ideas about management to suit the situation in which they may find themselves in.

. Organisations need to ensure they match suitable managers to relevant areas of work - in informal situations a relationship manager is better suited whereas in a formal situation a task orientated manager is more suited.

. Contingency approach could lead to uncertainty within the workforce if managers are always changing their approach.

. Contingency assumes managers can adapt but in reality this may not be possible.

Explain the relevance of the Classical Management theories in the modern workforce

. A classical hierarchy (Weber) is still seen in traditional and large organisations today as it provides accountability in the workplace.(1) However, limited empowerment of employees prevents employees from contributing good ideas, stifling innovation.(1)

. Classical management involves managers planning and workers carrying out the work. (1) For example, Henry Ford heavily discouraged the involvement of trade unions with modern automotive businesses such as Tesla also following this view. (1)

. Piece rate payment is still used today in industries which require quick rates of output. (1) Financial incentives are still used as a primary motivator with bonuses and piecemeal incentives, and commissions included in many industries.(1)

What are the Pros and Cons of the Bureaucratic Management theory?

. Everyone knows their own responsibilities and who to report to - reduces confusion and improves order

. Rules apply equally to everyone, helping to prevent favouritism or bias - increasing the value of meritocracy and fairness in corporations encouraging development of skills and qualifications

. Works well for repetitive, standardised jobs (e.g. admin, manufacturing) where decisions are based on rules not emotions.

. Excessive rules and procedures can slow down decision-making and reduce flexibility - makes it difficult to adapt in fast changing environments.

. Creativity and initiative are discouraged; employees must follow the rules, even if better ideas exist - lack of innovation and possibly doomed long term

. Workers may feel undervalued or like "just a number" due to impersonal systems with too many layers of authority due to centralised control.

What are the Pros and Cons of the Administrative Management theory?

. Fayol's principles provide a solid foundation for effective management, especially in large organisations - thus making it widely applicable across management

. Promotes specialisation, which increases productivity and reduces waste.

. Encourages long-term planning and coordination, which is essential in today's complex organisations. For example, many small US businesses in prediction of the tarrifs on China, have ordered their materials needed for products in advance.

. Strict hierarchies and rules can reduce flexibility, innovation, and adaptability in fast-changing environments.

. Employees may feel they have little input or autonomy - lower motivation and higher turnover

. Emphasis on structure and discipline may clash with today's focus on collaboration, agility, and employee empowerment - outdated

What are the Pros and Cons of the Human Relations management theory

. Research has proven that workers feel valued when their opinions are heard and relationships are strong - leading to higher job satisfaction and lower turnover.

. Focus on open communication between managers and workers improves trust and reduces conflict - less HR complaints and strikes

. Recognises that workers are not just machines—they have emotional and social needs leading to improved performance and engagement

. Focusing too much on employee happiness can distract from efficiency and productivity as sometimes, poor tools, training, or pay are bigger issues than relationships.

. Emotional factors like morale and relationships are subjective and difficult to quantify.

. In highly repetitive or isolated roles (e.g. factory line work), social needs may have less impact.

. It may negate the fact that all people are different and therefore have different motivations with some being more financially insentivised.

What are the pros and cons of the Neo-Human Relations management

. McGregor's Theory Y promotes trusting employees, giving them autonomy, and encouraging creativity, beneficial in creative industries where innovation is sought out.

. Training & career progression are proven to increase motivation and motivated and satisfied workers are often more loyal, engaged, and productive.

. Herzberg's theory encourages designing jobs that provide responsibility, achievement, and personal growth—improving morale and retention.

. Psychological needs (e.g. esteem, self-actualisation) are subjective and hard to track.

. Developing tailored motivation strategies or redesigning jobs takes time, effort, and money.

. McGregor's Theory Y may not fit all employees—some may prefer structure or simpler tasks (Theory X) thus creating inconsistency among the workforce with tailor fit to everyone being unreasonable and unreachable.

. McGregor's theory was based on working environments in the 1960s - modern workplaces are very different environments.

What are the pros and cons of the Contingency theory of Management

. Recognises that different situations need different management approaches and provides help for managers to adapt their style to suit specific circumstances, leading to tailored decisions - helpful in fast changing environments like tech or retail.

. Recognises that different businesses and teams need different leadership styles—practical and grounded

. Multinational corporations (MNCs) or large businesses benefit from flexible, situational leadership - applicable to modern situations

. Requires managers to accurately assess situations, which isn't always easy - misjudgement leading to poor outcomes as success relies heavily on the manager's ability to interpret the environment and respond effectively.

. Employees may feel confused if management styles keep changing depending on the situation.

. Constantly adapting leadership style takes time, especially in fast-moving businesses.

In relation to the theories of management, what are the different ways the workforce is committed and motivated?

. Classical Management - Workers are seen as motivated mainly by money which can be accomplished through pay, bonuses, and piece rate systems.

. Human Relations - People are motivated by positive relationships, feeling valued, and being part of a team.

. Neo-Human Relations - Theory Y assumes workers are self-motivated and enjoy responsibility when trusted Theory X argues they are motivated by clear structure and supervision. Maslow assumes workers are motivated by whatever level in the hierarchy they are on. Herzberg argues Motivator factors lead to feelings of motivation which are additional factors such as recognition, promotions, and responsibility.

. Contingency theory - Motivation methods change based on the task, team, or environment e.g. more autonomy for creative teams, more control during crises.

Explore the trait theory of leadership and the traits of a leader

. This theory suggests that the ability to lead a group of people is something you are born with, not something you learn. People should be selected as leaders based on their personal characteristics such as decisiveness, self-assurance and assertiveness.

. It depends on traits such as intelligence and personality and cannot be learned. This theory therefore argues that leadership has everything to do with the specific person involved and nothing to do with the job and adapting to its roles.

. Some believe that these qualities can also be physical in appearance, e.g. tall people make better leaders as they may command more immediate respect, or people who look after their bodies are more likely to be successful.

. Modern research, however, suggests successful leaders often share certain traits or characteristics such as visionary thinking, ambition, charisma, self-confidence, and sociability.

. Richard Branson, CEO of Virgin, who displays self confidence through challenging established brands such as British Airways, and charisma + sociability through attending multiple press events and known for personally meeting with employees at various levels of Virgin.

What are the costs and benefits of the Trait leadership Theory?

. Pro: Organizations can be sure they have hired the correct person for the job through being provided with a set of characteristics to look for in a leader and also it provides clarity when creating job descriptions and looking at resumes.

. Pro: Employees may feel more confident and motivated under leaders who display consistent, admirable traits—leading to better communication, stronger relationships, and a more productive working environment.

. Con: The theory is criticised because it is difficult or impossible to measure traits objectively.

. Con: Some will argue that many of the characteristics of a leader already mentioned can be learned, and improved, and that a person does not need to be born with these characteristics to become a successful leader.

. Con: Different roles may require different traits from a leader, for example a crisis manager may need decisiveness and emotional control whereas a creative team leader may benefit more from openness and empathy.

. Con: Employers who define trait characteristics by physical appearance are contravening the Equality Act 2010, that states all employees must be treated equally.

. Con: Deciding which traits are needed for a particular leadership position is difficult.

. Con: There are too many personality and physical traits that are said to affect the ability to lead.(1) Does a leader have to have them all to be successful?(1)

What are the different styles of leadership?

. Laissez-faire

. Autocratic

. Democratic

Explore the Laissez-faire theory of leadership

. It is a hands-off leadership style where managers provide minimal direction with employees being given freedom to make decisions, manage their own time, and complete tasks their own way.

. Leaders must have high levels of trust in their employees to take responsibility and only step in when necessary.

. Tech companies like Google or 3M sometimes use laissez-faire leadership in innovation labs, allowing engineers to work on personal projects.

. This theory encourages innovation and experimentation, working best and experimentation, assuming that employees are skilled and self-motivated.

What are the costs and benefits of the Laissez-faire leadership style

. Employees have space to think creatively and solve problems independantly, thus driving innovation forward e.g. Google argues that Gmail is closely linked to Google's 20 percent time where employees are free to work on their own projects.

. Experienced employees enjoy freedom and responsibility, which can increase engagement - lowering turnover and boosting morale + motivation.

. Decisions can be made faster as they don't need managerial approval - higher productivity at lower levels, also resulting in lower workload for managerial staff.

. However, some employees may feel confused or lost without guidance, especially those who are inexperienced in the company and haven't had much training.

. Without standards or oversight, the quality and output for products may vary, thus risking delays due to low accountability.

. Trust-based approach helps build confidence and independence - save on wages due to less managers needed.

. This method doesn't work in all industries, for example fast food chains and hospitals require strict structure and supervision being critical.

Explore the Autocratic Leadership style

. This is a 'top-down' leadership style where the leader will make all important decisions alone with no group discussion, giving clear and direct instructions.

. This style expects strict obedience and control from employees to follow clear rules and policies.

. Employees in this style have have little to no input in company decisions.

. Employees are also strictly supervised and monitored to ensure compliance and performance.

. Steve Jobs (Apple): Known for making strong, top-down decisions—but balanced with creativity.

What are the features of Situational Leadership

. Paul Hersey and Ken Blanchard suggested four leadership styles based on the level of maturity of the followers.

. The more mature the workers were, the less support and instructions from management they require with 4 levels:

- Telling: lowest stage of maturity where the leader defines the role of the group in a mainly one-way, top down manner. Tasks are simple in nature and the leader takes an autocratic approach.

- Selling: the leader is still setting the direction of travel here, but the communication is more two-way. This is a useful approach for workers who can't work independently due to lack in skills but are enthusiastic about their work.

- Participating - at this level, decision making is shared between the leader and employee. More focus is placed on the relationship than the task and workers are encouraged to think for themselves. Leaders need to ensure this happens as the employee may be reluctant..

- Delegating - the highest in terms of maturity. The leader has the confidence to fully delegate responsibility onto the employee and simply has an overview of the work being carried out.

Explore the Democratic Leadership style

. This style is also known as participative leadership and is where the leader involves employees in decision-making.

. The leader still makes final decisions but values input, ideas, and feadback from the team.

. Open communication and idea sharing is prioritised with group discussions and team involvement taking place.

. Leader encourages feedback which means that employees feel heard and valued.

. This also means that responsibility for outcomes are shared.

What are the costs and benefits of the Democratic leadership style

. Staff feel involved, which increases job satisfaction and commitment.

. Welcomes diverse ideas and creativity - increases innovation

. Combining multiple viewpoints often leads to more effective solutions - less mistakes and better decision making.

. Group discussions take more time than quick, top-down decisions - slower decision making which isn't ideal in all senarios as in urgant and high pressure situations, consultation may waste valuable times

. Conflict risks as too many opinions lead to disagreements or indecision

. Only works well when employees are capable and confident enough to contribute - requires skilled team

What are the costs and benefits of the Autocratic leadership style

. Decisions are made quickly without discussion - useful in emergencies and fast-paced environments like retail. For example, in military operations there is a clear leader and authority figure.

. Workers know exactly what to do, reducing confusion or idleness - boosting productivity

. The strong control keeps teams focused which is useful within large and unskilled workforces, ensuring discipline

. However, employees may feel undervalued or demotivated due to lack of voice - turnover

. Strict control may lead to stress, resentment, and quitting - bad publicity image

. No room for staff ideas or innovation - lack of modernising could stifle the longevity of the company

. Everything relies on one person—if they make a bad decision, it affects everyone even if decision could have been avoided through discussion.

What are factors that influence the style of leadership used?

. Nature of the Task: Creative or complex tasks → may need democratic or laissez-faire (freedom to explore ideas). Routine tasks require autocratic leadership

. Qualities of a Leader: Some leaders naturally prefer control (autocratic), while others are more collaborative or hands-off.

. Skills and Experience of Employees: Highly skilled or experienced staff → benefit from democratic or laissez-faire styles.

. Time Available: More time to plan and discuss → democratic leadership is more suitable.

. Organisational Culture: A formal, rule-based culture might favour autocratic leadership.

. Size of Organisation or Team: Large teams may require more structure and control (autocratic or bureaucratic).

. External Environment/Situation: In uncertain or high-risk environments, autocratic leadership provides clarity and control.

. Technology and Resources: Access to data and communication tools supports collaborative (democratic) leadership.

. Motivation Level of Employees: Highly motivated staff → respond well to trust and freedom (laissez-faire).

What are the costs and benefits of the Situational Leadership style

. Recognises that different situations benefit from different leadership approaches - more applicable to different organisations

. Encourages leaders to be more flexible and respond to the needs and abilities of their team

. Over-simplifies complex situations since it assumes that leadership situations can be neatly categorised into four types. Real business challenges often don't fit cleanly into one category in addition to the subjective nature of these judgements.

. Ignores the challenge of managing multiple team members at different levels simultaneously.

. Focuses mainly on task and relationship behaviour and overlooks important factors like time pressures, resource constraints and external business environment.

Close

Identify Tuckman's Stages of Group Development

. Forming

. Storming

. Norming

. Performing

. Adjourning

Describe the Forming Stage and how it impacts organisations

. This is when the teams first come together.

. People feel excited/motivated but are usually uncertain about the task ahead and their roles with everyone looks to the leader for direction.

. Team members try to make a good impression and work hard to prove themselves.

. There's little conflict as people are still getting to know each other and are generally polite.

. Group members may be confused until the task and rules are clarified which can slow the productivity of the team.

. Vocal members sometimes dominate which can inhibit others from contributing contribute.

Describe the Storming Stage and how it impacts organisations

. As people become more comfortable, tensions emerge within the group as different working styles and personalities clash and conflicts may arise over roles and responsibilities.

. Team members question objectives and methods with some challenge the leader's approach or question whether that person should be leader.

. People express frustration openly and some may display negative behaviour.

. The group becomes difficult to manage which can increase the stress of the team leader. Sub-groups may form which creates a clique culture.

. Power struggles/conflict emerges which detracts from the progress of a project or target and some members may resist or even oppose the work of the group.

. Managers may be required to intervene to resolve these issues, for example, calling a 'clear the air' meeting where issues can be raised. A planned social event during the storming phase can help team members to bond.

. Managers (or the team leader) may also hold meetings with each individual member of the group, allowing issues to be discussed and conflicts resolved. But in some cases, there may be no other option than to remove members from the group.

Describe the Norming Stage and how it impacts organisations

. The team starts to settle and find its rhythm.

. Members begin to appreciate different perspectives with the focus shifts from conflict to collaboration, thus developing clear working procedures.

. Members feel secure in expressing their views which can improve creativity/innovation as team spirit and cooperation improves during this stage.

. People learn to handle disagreements constructively.

Describe the Performing Stage and how it impacts organisations

. The team reaches peak effectiveness.

. Productivity increases and the team achieves a higher quality of output.

. The team leader is less involved in operational tasks, spending more time on quality assurance of the task.

. Leadership duties can be shared and there is strong trust between team members and problems are solved efficiently by working together.