AQA A-Level Business: Managers, Leadership and Decision Making

Read the following case study and answer the question that follows.

The following case study was written for this exercise.

Kestrel Engineering Ltd is a UK manufacturer of precision components for the aerospace industry, employing around 240 skilled staff. For years it was run by a long-serving managing director who favoured a participative, democratic style: cross-functional teams met weekly, major decisions were debated openly, and the workforce of experienced engineers prided itself on its autonomy and on the quality culture it had built together. Productivity was high and staff turnover was very low.

Six weeks ago a fire destroyed part of the main assembly hall. Kestrel must now relocate two production lines, renegotiate delivery dates with its largest customer, and decide quickly which contracts to honour and which to delay, all while cash is tight and a major customer is threatening to switch supplier. A new operations director, brought in to manage the crisis, has imposed an autocratic approach: she sets targets unilaterally, issues instructions through team leaders, and has suspended the weekly open meetings to save time. Some managers argue this decisiveness is exactly what a crisis demands; others warn that Kestrel's highly skilled, autonomy-loving engineers are becoming demotivated, and that several have hinted they may leave once the immediate emergency passes.

Question: Evaluate whether an autocratic leadership style is the most effective approach for Kestrel Engineering Ltd as it manages the crisis caused by the fire. [25 marks]

Read the following case study and answer the question that follows.

The following case study was written for this exercise.

Brindle Foods Ltd is a medium-sized producer of chilled ready meals supplying UK supermarkets. The board must decide whether to invest in a new automated production line to launch a premium range, or to extend its existing factory to increase capacity of its current range. The finance director has built a decision tree, assigning probabilities to "strong demand" and "weak demand" for each option and attaching forecast revenues, then calculating the net gain of each. The tree recommends the premium-range automation, which shows the higher net gain.

The marketing director is enthusiastic, arguing the tree gives the board an objective, defensible basis for a major commitment of capital. The operations director is more cautious: she points out that the probabilities were estimated by the management team, that the chilled-meals market is changing rapidly as discount retailers expand, and that the two options' net gains are fairly close. The managing director, who has run Brindle for fifteen years, says simply that the numbers are useful but that she has "a feel" for where the market is going that no tree can capture.

Question: Assess the usefulness of decision trees to Brindle Foods Ltd when making this investment decision. [16 marks]

Read the following case study and answer the question that follows.

The following case study was written for this exercise.

Lumen Creative Agency is a fast-growing design and branding agency employing 60 highly qualified designers, copywriters and strategists. Its work depends on creativity and original thinking, and most projects are non-routine. The agency has just been bought by a larger marketing group, and a new managing director has been appointed. He is deciding how to lead: the experienced creative staff are used to a great deal of freedom over how they work, but the parent group expects tighter financial control and faster delivery, and several recent projects have run over budget.

Question: Analyse two factors that might influence the leadership style adopted by the new managing director of Lumen Creative Agency. [9 marks]

Marrow Lane Bakeries Ltd must choose between two growth options. The managing director has estimated the probability and forecast payoff of success and failure for each option, together with the cost of pursuing it. The data are shown below.

Option	Cost	Outcome	Probability	Payoff
A: Launch new product	£100,000	Success	0.55	£600,000
A: Launch new product	£100,000	Failure	0.45	-£120,000
B: Extend existing range	£40,000	Success	0.70	£250,000
B: Extend existing range	£40,000	Failure	0.30	£40,000

Calculate the expected value of each option, then the net gain of each option after subtracting its cost, and recommend which option Marrow Lane Bakeries should choose. (6 marks)

Tamar Logistics Ltd is deciding whether to spend £1.2 million on a fleet of new delivery vehicles, a major and hard-to-reverse capital purchase. The operations director has plenty of cost, mileage and maintenance data available.

Explain why the operations director might use scientific rather than intuitive decision making for this purchase. (5 marks)

Calder Print Co is considering whether to bid for a large council printing contract. Preparing and submitting the bid would cost £25,000. The managing director estimates the outcomes shown below.

Outcome	Probability	Payoff
Win the contract	0.40	£180,000
Lose the contract	0.60	£10,000

Calculate the expected value of bidding for the contract, and hence the net gain of bidding after the £25,000 cost is taken into account. (4 marks)