IB Business Management SL

HRM Unit Test

You are to complete this paper in a single 1 hour 15 minutes (75 minutes) session.

This paper is marked out of 30 – the maximum score is 30/30.

You are NOT allowed to use any outside sources for this test.

All questions are subdivided into parts.

The command terms used in each part indicate the depth required.

The questions may require: knowledge and understanding (AO1); application and analysis (AO2);
synthesis and evaluation (AO3); and a variety of appropriate skills (AO4).

The marks available for each part are indicated.

You will need a calculator for this paper.

The formula sheet is attached to this exam.

You are advised to use pen and paper for this test unless you will be using a computer for your IB exams.

Once you are done, you will need to scan and upload your work.

Section A:
Section A includes one compulsory question.

You should allocate around 25 minutes for Section A.

Section A is worth 10 marks (out of a total of 30 marks for this paper).

Section B:
In Section B you are to answer 1 structured question based on stimulus material from a choice of 2. If
you answer both questions, only the first 1 will be marked.

You should allocate around 50 minutes for Section B.

Section B is worth 20 marks (out of a total of 30 marks for this paper).

Host
Host is a public limited hotel chain operating in a highly competitive tourism market. Host is positioned
as a high-price and high-quality chain. The majority of its staff are on permanent contracts, but wage
rates at Host are below the average for the hotel industry. Consequently, staff turnover is high.
Recruitment is difficult due to the number of hotels in the areas where Host hotels are located and the
wages paid.

In 2020, in order to remain competitive, Host outsourced* the cleaning of hotel rooms to Wire.
Outsourcing reduced the cost of cleaning rooms for Host from 5% of total revenue per room to 2%. Net
profit after tax and interest increased and share prices rose by 10%.

Initially, Wire paid cleaners at Host a low wage of:

• $6 per hour for 8 hours, 5 days per week.

In 2023, Wire introduced a piece rate system:

• $2 is paid per room cleaned.

In recent years, newspaper reports highlighting poor pay and working conditions have damaged Host’s
brand image. Recent customer feedback has also highlighted concerns about food quality, room
cleanliness and poor customer service at Host hotels. Room bookings fell during the same period. Profits
in 2023 decreased from $24m to $4m.

The current contract with Wire is up for renewal.

*Outsourcing occurs when a business takes an internal function and has it performed externally by
another person or business.

(a) Outline one benefit and one cost of having high labour turnover. [2]

(b) (i) Explain two disadvantages for Wire of introducing a piece rate system of wages for its
cleaning staff. [4]

(ii) Calculate the financial impact on cleaners employed by Wire from the introduction of
the piece rate system in 2016 (show all your working). [2]

(iii) Calculate the change in cleaning costs per room from the introduction of the piece rate
system used by Wire (show all your working). [2]
 Section B
You are required to answer one question from a choice of two in this section.
(If you answer both, only the first one will receive credit and feedback.)
You are expected to allocate around 50 minutes of this 75-minute paper to this section.

Overseas School
Overseas School was established in Asia in 1973 and by 2012 had established itself as a prestigious, fee
paying international school with a reputation for sending its high school graduates to the best
universities.

Teachers were employed on two-year contracts, which were renewed if performance was deemed to be
satisfactory by the chairman of the board of governors. In 2023 the chairman, Tom Jones, decided that
the school needed to introduce radical changes to head off the challenge from new international
schools. Tom proposed the following changes:

• The existing head teacher, who had been employed by the school for 15 years would be
replaced as soon as possible.
• The appointment of a director of administration who would oversee the non-academic
operations of the school (e.g. catering, transport, cleaning). The director would have a business
(rather than education) background and would receive performance related pay.
• Existing teachers would take a 30 % pay reduction.
• A major building programme would be initiated to distinguish Overseas School from its rivals.
• Members of the union management committee would not have their employment contracts
renewed.
• A rigorous programme of teacher appraisal would be introduced; under-performing teachers
would not have their contracts renewed. Extra money would be given to teachers with a “good”
appraisal.
• Heads of subject departments would be eliminated delayering the current organizational
structure.
• Teachers would be required to report regularly to the director of academic studies. Examination
results would be monitored closely.

Tom’s proposals were strongly opposed by the teachers and management, but supported by the parents
and students. However, since Tom had complete control over the board of governors the opposition
was largely ignored.

(a) Define the term delayering. [2 marks]

(b) Describe Tom Jones’ leadership style. [2 marks]

(c) Analyse the proposal to reward the director of administration on a performance related pay basis. [6
marks]

(d) Using Herzberg’s theory of motivation, examine the likely effects on teacher motivation of Tom
Jones’ proposals. [10 marks]
WJAZ Radio

Elaine Maxwell put down her phone. She was beginning to understand the huge challenge in accepting
the position of chief executive officer (CEO) of WJAZ Radio less than one month ago. The commercial
radio station had been very popular, launching many famous music bands, but it was now in crisis.
Elaine’s vision of expanding the vibrant community of WJAZ appears to be in jeopardy.

Falling audience figures for 2020 (January to May) revealed declining market share for WJAZ Radio.
Budgets were not being controlled and overspending was common. The company appears to have lost
financial control. Some advertisers had threatened to transfer their radio advertisements to competing
radio stations.

Elaine also realized that formal and informal communication was failing. Some celebrity radio presenters
had refused to come to morning meetings and did not reply to e-mails. She had been told that the
presenters were motivated to work at WJAZ Radio due to the laissez-faire leadership style adopted by
senior managers. The presenters brought valuable publicity to WJAZ Radio through social media and
their other paid media commitments such as store openings and television appearances. This publicity
had created significant advertising revenue for WJAZ Radio.

Elaine had just spoken to one of her most important advertisers. The station’s most famous presenter
had not turned up for a store opening despite repeated phone calls to the presenter’s agent. Elaine then
discovered that the presenter had not known about the booking and this was not the first time that this
had happened.

To Elaine, it was proof that the current methods of communication and the leadership style adopted
were not effective. However, she was aware that changing the culture of WJAZ Radio too quickly may
lead to some radio presenters moving to other radio stations. One social media post had already
suggested that competing stations were willing to pay bonuses to attract WJAZ Radio’s top presenters.

(a) Define the term market share. [2 marks]

(b) With reference to Elaine, explain one difference between a leader and a manager. [2 marks]

(c) Analyse two solutions to the communication failure present at WJAZ Radio. [6 marks]

(d) Evaluate the effectiveness of the laissez-faire leadership style present at WJAZ Radio. [10 marks]
Appendices

Formulae

The following formulae will be used in business management external assessment. A copy of the formulae
will be provided to students for the examination.

Formulae for ratio analysis (SL/HL)

Liquidity ratios (SL/HL)

Efficiency ratios (HL only)

64 Business management guide

Other formulae (SL/HL)

HL only

Capacity utilization and productivity (HL only)

Business management guide 65