Practise IB Business Management SL/HL 2.3.2 by applying management and leadership concepts to exam-style questions.
Just before the Board of Directors voted on "RDB 2020", Anna Holstein had a serious car accident.
She would require years of physical therapy before working again.
Board members now have two important decisions to make:
- Whether to approve the "RDB 2020" strategic plan. Despite Valdemar Holstein's opposition, some board members still supported it, especially because of a recent workforce planning study (Item 1). To help them decide, the board requested and received a decision tree and critical path analysis (Items 2 and 3).
- Who would replace the 83-year-old Valdemar? The succession plan had always been to promote his daughter Anna to Chief Executive Officer (CEO).
There are two candidates for Valdemar's post:
- Jens Holstein, 68, is Valdemar's younger brother. He currently manages the large law firm responsible for most of RDB's legal affairs. He understands all the legal issues related to "RDB 2020". He always pays close attention to detail. In the law firm, he is well respected for his efficient management style, although some lawyers feel that he monitors their work too closely.
- Per Pederson, 44, is the manager of RDB's Swedish megafactory. Though originally hired because of his engineering degree, he was rapidly promoted thanks to his excellent "people skills". Quickly bored with budgeting and industrial planning meetings, Per preferred building relationships with employees and mentoring junior managers. He loved talking to workers and giving speeches about RDB. Valdemar was proud of having "discovered" Per, though some employees criticise his lack of attention to detail.
Regarding the management succession, Valdemar said that "choosing between Jens and Per is the same as choosing between a manager and a leader: it is a key strategic decision for RDB".
Item 1: Extract from workforce planning study
Northern Europe: Population by age groups, 1950–2050
\begin{tabular}{|l|r|r|r|r|r|r|r|r|r|r|}
\hline & \multicolumn{5}{c|}{000s} & \multicolumn{5}{c|}{\% of total population} \\
\hline & 1950 & 1970 & 1995 & 2025 & 2050 & 1950 & 1970 & 1995 & 2025 & 2050 \\
\hline Age 0–14 & 18498 & 21102 & 18199 & 15967 & 14616 & 23.7 & 24.2 & 19.4 & 16.7 & 16.1 \\
\hline Age 15–64 & 51552 & 55289 & 60997 & 59450 & 53288 & 66.0 & 63.3 & 65.1 & 62.0 & 58.8 \\
\hline Age 65+ & 8045 & 10957 & 14485 & 20459 & 22756 & 10.3 & 12.5 & 15.5 & 21.3 & 25.1 \\
\hline Total & 78095 & 87348 & 93681 & 95876 & 90660 & 100.0 & 100.0 & 100.0 & 100.0 & 100.0 \\
\hline
\end{tabular}
Source: http://webarchive.iiasa.ac.at
| Item 2: Decision tree regarding “RDB 2020” (all figures in € millions) \begin{tabular}{|l|l|c|c|c|c|c|c|c|} Option & Outcome & Probability & Year 1 & Year 2 & Year 3 & Year 4 & Year 5 & Total Option A: RDB 2020 & Success & 0.4 & 41 & 51 & 55 & 60 & 62 & 269 Option A: RDB 2020 & Satisfactory & 0.2 & 40 & 41 & 42 & 51 & 60 & 234 Option A: RDB 2020 & Failure & 0.4 & 35 & 30 & 25 & 20 & 25 & 135 Option B: No major change & Success & 0.1 & 39 & 40 & 41 & 42 & 43 & 205 Option B: No major change & Satisfactory & 0.8 & 38 & 39 & 40 & 41 & 42 & 200 Option B: No major change & Failure & 0.1 & 37 & 38 & 39 & 40 & 41 & 195 \end{tabular} The figures are net profit after interest and tax. |
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Item 2: Decision tree regarding RDB 2020
| Item 3: Critical path analysis for restructuring resulting from “RDB 2020” \begin{tabular}{|c|l|l|c|} Activity & Activity & Order/Dependency & Estimated duration (months) A & Construct and open two factories in Brazil & Can start at the same time as B & 6 B & Sell megafactory in Sweden & Can start at the same time as A & 15 C & Construct and open two factories in India & Must follow A & 6 D & Construct and open two factories in China & Must follow B and C & 6 E & Sell megafactory in northern Germany & Must follow B and C & 15 F & Construct and open two factories, one in Australia and one in Kenya & Must follow D & 6 G & Construct and open one factory in Chile & Must follow E and F & 3 H & Downsize megafactory in Denmark & Must follow E and F & 6 I & Construct and open three more factories in China & Must follow G and H & 6 \end{tabular} Total estimated duration: 42 months. |
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Item 3: Critical path analysis for restructuring resulting from RDB 2020
Item 3: Critical path network diagram and task-node timings
Item 4: Extract from The risky century: Crisis management in the twenty-first century (2012), by Toujours Paura
The twenty-first century will be the riskiest era for businesses since the fall of the Roman Empire. Technological change, environmental catastrophe, uncertain energy sources, employee theft and terrorism are just some of the many risks that businesses will face. Chief Executive Officers (CEOs) can no longer imagine that their job is merely to manage their organization, to lead change, and to manage traditional business risks. The twenty-first century CEO must also be creative in anticipating potential threats, both direct (traditional business threats) and indirect (crises of any variety). They must have detailed crisis management plans for every crisis imaginable, however unlikely …
Item 5: Extract from The creative century: How creative firms will win in the twenty-first century (2013), by Robert McFerrin
In the twenty-first century, business, especially Western business long accustomed to critical business advantages, will have to be creative. Because of their high cost structure, Western businesses must seek to add value through creativity. Many forces can prevent creativity and above all create a climate of fear and kill creativity. When Chief Executive Officers (CEOs) plan for every crisis possible, they foster a climate of fear. They communicate the message that any threat of loss matters more than the rewards of innovation and adaptability. The responsible CEO of the twenty-first century will reasonably plan for contingencies, but never to the degree that it cultivates fear … Any catastrophe must be viewed as an opportunity.
Explain Valdemar's statement that "choosing between Jens and Per is the same as choosing between a manager and a leader: it is a key strategic decision for RDB ".
