Certificate in Accounting and Finance Stage Examination

The Institute of 25 September 2020

Chartered Accountants 3 hours – 100 marks
of Pakistan Additional reading time – 15 minutes

Business Management and Behavioural Studies

Instructions to examinees:
(i) Answer all TEN questions.
(ii) Answer in black pen only.

Q.1 Falcon Air (FA) is an airline that operates scheduled services to all the major cities within
the country and sixteen international destinations. FA takes pride in its excellent customer
services and is known for spacious passenger seats. It has a fleet of 12 new aircrafts and
4 aging aircrafts that it plans to replace with new ones soon.

The ongoing COVID-19 pandemic has had grave impact on the global aviation industry and
FA operations have also taken a bad hit. It has incurred heavy losses due to international
travel restrictions and there is uncertainty in local air travel business due to the strict travel
SOPs to be followed. In an effort to support the local aviation industry, the government has
waived airport tax for local air travel for the time being. FA management welcomes the
government support and is determined to weather the storm caused by the pandemic.

Required:
(a) Conduct SWOT analysis for FA. (04)
(b) Explain whether the strength of each of porter's five forces has risen or declined for the
aviation industry due to the ongoing pandemic. Provide reasons for your answer. (06)
(c) Based on your analysis in (a) and (b) above, provide recommendations to FA with
supporting reasons. (05)

Q.2 Javed Ahmed has recently been promoted to the post of sales manager to lead a team of five
sales officers in the south region of the country. Two of the sales officers in his team look
after the mature large corporate segment that has very little room for growth and the
remaining three work on the new small business segment (SBS) with high growth prospects.

As his first assignment, the country head of sales assigned Javed the annual target of
10% growth in sales portfolio with biannual performance reviews. Hoping to achieve the
targets by averaging out the results from the sales officers, Javed trickled down the targets
assigning 10% annual growth in each of sales officers’ portfolios. He intends to let the
officers work on their targets independently and only plans to discuss progress with them at
the biannual performance review meetings.

At the six-months’ review, Javed finds out that SBS sales officers are already close to
achieving their targets, however, large corporate sales officers will not be able to achieve the
targets by the year-end.

Required:
In the light of Peter Drucker's management responsibilities:
(a) identify, briefly explain and relate the categories and aspects of management
responsibilities in the above case. (05)
(b) briefly explain how other category(ies) and aspect(s), not identified in (a), that should
be considered by Javed. (03)
(c) discuss Javed’s assignment of targets to his team and suggest a better approach. (02)
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Q.3 (a) Identify and explain the type of information system for each of the reports below and
explain the level of business at which these reports will most likely be used:

(i) Daily sales transactions report.

(ii) Slow moving inventory items report for offering discounts.
(iii) The availability of highly skilled employees report for capacity planning. (09)

(b) Presented below are the examples of transaction processing systems:

(i) ATM machine is linked to the bank’s central computer system and updates the
user’s account immediately.

(ii) A telecom company processes all call data records at the end of each month that
include the details of millions of phone calls to calculate charges.

Required:
For each example:
 identify and explain the type of transaction processing system in use. (02)
 provide two advantages and two disadvantages of each type of system identified
above. (04)

Q.4 The board of directors of Big Bank Limited is not happy with the performance of
Asher Rehman, a branch manager. At the beginning of quarter, Asher was given a task to
implement various cost reduction measures including pay cuts and laying off certain number
of employees to remain competitive in the region. However, Asher could not implement
these measures as he shares a strong rapport with his team and believes that such measures
would adversely impact his liking by his team members.

Required:
By using McClelland’s theory of needs:
(a) explain why Asher was not able to implement the task as assigned by the board. (02)
(b) recommend and explain the characteristics of a person who could be right fit for
successful implementation of the task. (03)

Q.5 The advancements in technology and wide acceptance of online mode of teaching by the
learners has prompted Furqan, owner of Elite Tuition Centre (ETC) with five branches in
the city, to change all teaching sessions to online teaching mode of delivery within one year.
In order to achieve this, he has already devised plan to close five branches and bring them
under one roof at the head office. Furqan is convinced that the online mode of teaching will
not only be cost effective for his business but will also expand reach of his target market. He
is already in talks with online marketing companies to target a wider area of potential
customers.

Required:
(a) Explain the nature of change. Also identify and explain the triggers for change. (02)
(b) In the light of The Gemini 4Rs model:
(i) identify, explain and relate the elements of the model present in the case. (03)
(ii) what else must Furqan do to ensure all elements are covered for a successful
change? (02)

(c) Briefly explain any three possible reactions to change by employees and their resultant
key effect on ETC. (03)
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Q.6 By using Tannenbaum and Schmidt Leadership Continuum model, identify and explain the
leadership styles being followed in each of the following cases:

(a) Arshia Fatima, the owner of a large restaurant has called a meeting with chefs. She told
them that she has decided to include Turkish cuisine in the menu. She mentioned that
Turkish heritage is gaining popularity in Pakistan and inclusion of Turkish cuisine in
the menu would attract new customers. At the end of meeting, she also encouraged
chefs to ask questions, if they have any. (02)

(b) Hamdan Malik, sales head showed his concerns over declining sales of company’s
products to sales managers. He suggested that aggressive marketing could help in
improving sales. He also invited suggestions from sales managers and after due
deliberation, he decided on easing the credit terms to customers to improve sales. (02)

(c) Farzad Khan, CEO of a large media production house has authorized his creative team
to diagnose the reasons for declining ratings of dramas and programs of production
house. He has given his team complete autonomy to develop and evaluate possible
alternatives and implement a course of action that it finds most appropriate. (02)

Q.7 Aura Limited (AL) decided to implement e-procurement system (a project) and for that
purpose, it formed a team comprising of members from Procurement and IT departments.
However, project ended on a high level of conflicts.

The management has appointed a mediator to diagnose the probable reasons for failure of
project and to also play a role in conflict resolution. Mediator has summarized the
viewpoints of project supervisor and representatives from Procurement and IT departments
as follows:

Project Supervisor
Team was formed with right selection of members having relevant experience and
qualification. Initially, there were disagreements regarding the processes to be followed
among both departments. He believed that conflicts were inevitable and would contribute to
positive outcome so he let the departments to come up with solution themselves. However,
the agreed solution turned out to be only ineffective compromise that aggravated further
later on. He also pointed out that Procurement and IT departments did not coordinate and
there were times when members from both departments were performing the same tasks but
independently.

Representative from Procurement Department

His department had been working overtime while members from IT department stayed idle
most of the time. Further, IT department was not truthful in communication and even lied
about its progress on project and kept on interfering and even started to perform the tasks
that fall in the domain of Procurement department without having the relevant knowledge
and experience. He also believed that his department’s contributions and achievement of
milestones towards the task never gained the due recognition from management.

Representative from IT Department

IT department could not start their part of the tasks due to unusual delays from Procurement
department. He said that procurement department did not follow the processes agreed after
the initial conflicts.

Required:
(a) Discuss the probable reasons for the failure of the team to successfully implement the
project. Also suggest measures to overcome these failures. (10)
(b) Suggest the conflict resolution process that mediator may follow to reach a mutually
acceptable solution. (04)
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Q.8 As a part of an internship interview, a candidate submitted the following table of

Mintzberg’s six organizational configurations to be checked for feedback:

Key
Organizational Business Main coordinating
Internal features organizational
Configurations environment factor
element
Professional Complex but static Simple processes. Techno-structure Standardization of
bureaucracy Control by the skills
administration.
Simple structure Simple and Small entity. Strategic apex Indirect control by
dynamic Simple tasks. strategic apex
Divisionalized Fairly static Small and Young. Support staff Standardization of
form Diverse activities Divided activities. outputs
Missionary Complex and Simple systems. - Standard belief and
organization dynamic Fairly well-established values
(not young).
Adhocracy Simple and Complex tasks. Techno-structure Flexibility and
dynamic Young entity. adaptation
Machine Complex and Large and Strategic apex Standardized
bureaucracy dynamic well-established. procedures
Regulated processes
and systems.

Required:
Check the table for errors and make corrections, where necessary. (10)

Q.9 (a) Affan Tareen, HR manager at Cloud Nine Limited, has recently conducted employees’
satisfaction survey. While reviewing the responses, he is surprised that considerable
number of employees has low level of motivation.

He has concluded that increasing the existing pay (rewards) would increase the
motivation level of employees.

Required:
By using following theories of motivation, discuss whether Affan’s conclusion is correct
or not:
(i) Herzberg’s two-factor theory
(ii) Maslow’s hierarchy of needs theory
(iii) Vroom’s expectancy theory (06)

(b) List down any two positive impacts of high job satisfaction among employees on:
(i) Organizations
(ii) Customers
(iii) Teams (03)

Q.10 Muntaha Ibrahim, CEO at Prime Limited (PL), along with the HR manager has conducted
interviews of several candidates for the position of Regional Sales Manager. Three
candidates have been shortlisted on the basis of defined criteria. However, Muntaha believes
that Ahmed will be best fit for the position as he has shown higher self-efficacy and seems
very confident and passionate to take up the challenges ahead.

However, HR Manager has shown concerns that people with high self-efficacy are not
always the best fit for the job.

Required:
List down the positive attributes that Muntaha is expecting from Ahmed. Also discuss the
concerns raised by HR manager. (06)

(THE END)