BUSS3 June 2013 read the case study

Payback and ARR You have 8 minutes to answer question 1

Competitive organisational structure (3.18) In pairs write everything you know about competitive organisational structure You have five minutes

Competitive organisational structure The syllabus said : Factors determining choice of organisational structures should include: centralisation and decentralisation, de-layering and flexible workforces (core and peripheral workers, outsourcing and home working). Structures to improve competitiveness

Answers Types of organisational structure : Traditional hierarchy (common, pyramid with one person in charge of a department. Power is at the top. Chain of command from top to bottom). Good chance of promotion, clear reporting lines, good for depts dealing with confidential data BUT slow decision making, can be inflexible, slow communication. Matrix (designed to facilitate horizontal flow of information. Used for projects. Draws staff from different departments to work together whilst still keeping them in their departments). Good as allows staff to work across departments, good for projects BUT conflict between managers. Informal structure (no official structure, group working, ideal for very small firms). Good for R&D or depts where creativity is important, Ideal for very small firms BUT can be disorganised, impractical for large firms Factors determining organisational structure: size of firm, skilled or non-skilled workers, business environment, risk-taking versus risk-averse culture, leadership style Impact of structure on competitiveness – effectiveness of the structure can be judged by how efficiently the firm performs. For example: how quickly are decisions made? does the firm run efficiently at minimum cost? how effective is communication? who is involved in decisions? Are they the right people? Adapting organisational structures: centralisation: taking decision-making powers from local or lower-level parts of a firm, and concentrating them within the head office or centre; decentralisation: devolving power from the head office to the local branches or divisions; delayering: the removal of one or more layers of hierarchy from the management structure of a firm; flexible workforce: staffing that is not dependent upon full-time, permanent jobs. Flexible workforces include the ideas of: Core and peripheral workers: core staff are essential to a firm whereas peripheral workers are at the edge of a firm’s labour force. Peripheral staff can be employed part- time, on temporary contracts or on zero hours contracts Flexible workforces include the ideas of: Outsourcing: finding an outside person or agency to carry out part of your work; Homeworking: earning an income from work undertaken at home. Often involves using IT

Question 2 (1) Look at question 2 and see what you need (3) Refer to the case study for evidence (4) Plan your answer You have five minutes

Question 3: (1)Compare ARR and payback - what do the show? (2)Work out break even for both options using table 1 in appendix B. (3)Compare data in table 2 appendix B (4)Work out the contribution per taxi for both (5) Work out the profit for both assuming they sell at full capacity (6) What happens to profit if the NE capacity is increased? You have ten minutes

Question 4: (1)Work out current ratios (2)Work out the ROCE (3)Work out the gearing (4)Plan your answer

Question 4 continued: (1)Use three headings (2)Include the ratios you have worked out. (3)Plan your answer – remember to back up every point using the case study and explain why it is relevant (4) Come to a conclusion - what is your opinion? Why? Why did you not choose the other view? What does it depend on? (10 marks out of 34)