Business behaviour: End of Term 2 Test

Full Name:

Score / 40 Percentage %

Test: 50 minutes duration

Section A: (26 marks in total)

(i) Define Lean production (2 marks)

Lean production is an approach to the management that focuses on cutting out the
waste, whilst ensuring quality

(ii) List 4 motivational theorists

Herzberg's two-factor theory. (4 marks)

Maslow's theory of the hierarchy of needs
Alderfer's ERG theory
McClelland's achievement motivation theory

(iii) List 4 non-financial methods of motivation (4

marks)

1. Recognition.
2. Job replacement
3. Empowerment and training
4. Jon protection

Page 1 of 5
(iv) Darcy’s Biscuits are a UK based business established in 1953. It has 3 factories in the
UK including one just outside Preston which employs 1200 people. The business has
recently faced new competition and needs to reduce its costs.
The staff are mainly young people and students and the level of absenteeism is quite
high.
Choose one financial method the business could use to motivate its staff and discuss
how Darcy’s Biscuits may benefit from it. (8 marks)

To encourage employee motivation, Darcy's Biscuits may introduce a performance-

based bonus program that pays bonuses for achieving output goals and preserving

low absenteeism. This strategy would boost output as workers aim to meet bonus-

linked targets, encouraging a high-performance and efficient culture. By rewarding

consistent attendance, it would directly combat absenteeism and produce a more

dependable workforce. Performance-based bonuses would also improve worker

morale and job satisfaction, which would lower turnover and related hiring

expenses. This strategy encourages cost-conscious behavior and improved resource

usage by coordinating staff goals with the business's financial objectives.

Additionally, it offers payroll flexibility because incentives may be changed in

accordance with business success, which facilitates better cost management. Lastly,

by providing these incentives, Darcy's Biscuits becomes a more appealing

workplace for for young people and students, aiding in talent retention and

attraction.

Page 2 of 5
(v) Tata Motors announced a new organisation structure for its vehicle business following
quality problems and a fall in market share in India from 16% to 5%. Tata Motors an-
nounced a new flat organisation structure which eliminated layers of middle manage-
ment.
Discuss how Tata may benefit from this organisational change. (8 marks)
Motors' move to a flat organizational structure, which does away with layers of
middle management, has a number of possible advantages that might help with the
company's declining market share and quality issues. First off, because there are
fewer levels of hierarchy that choices must go through under a flatter organization,
decision-making may happen more quickly. Regaining market share requires Tata
Motors to be able to react to changes in the market and consumer requirements
more swiftly, which is something this agility may assist with. Furthermore, giving
lower-level staff members greater authority and direct access to higher manage-
ment may foster creativity and employee involvement, which will raise the caliber
of the final output. Thirdly, misunderstanding, which frequently afflicts more hier-
archical systems, may be minimized by improving the effectiveness and transpar-
ency of internal communication inside the company. This can lead to departmental
activities that are more unified and well-coordinated, directly addressing quality
concerns. Fourthly, by rerouting cost savings from fewer management layers to
R&D and quality improvement projects, businesses may strengthen their product
offers and reclaim a competitive advantage. Last but not least, a flat organizational
structure may promote a more inclusive and cooperative workplace culture, boost-

Page 3 of 5
ing morale and retention among staff members—a critical component of long-term,
steady growth. In conclusion, Tata Motors may be able to address quality concerns
and regain market share by becoming more inventive, flexible, and efficient thanks
to its flat organizational structure.

Section B Budgeting (18 marks in total)

Page 4 of 5
 (i) Complete the table showing the variance and state whether the variance is Adverse or
favourable (5 marks)

Budget Actual Variance Adverse or

favourable ?

Sales Revenue £48,000 £45,000 3000 A

Fixed Costs £6,000 £4,000 2000 F

Labour Costs £2,000 £2,200 200 A

Material Cost £8,000 £9,000 1000 A

Advertising costs £500 £500 0 -

(ii) Complete the cost budget below, by completing A-I (9marks)

Sales and Cost Budget

Item Budgeted (£) Actual (£) Variance (£) Adverse or

Favourable

Sales 100,000 140,000 A 40,000 Favourable

Material 24,000 B 29,000 5,000 Adverse

Wages 58,500 52,700 C 5,800 D : Favourable

Electricity E 6000 7,000 1000 Favourable

Profit F 188,500 G 228,700 H 40,200 I Favourable

Page 5 of 5