IB Business Management HL 2.3 Leadership and Management Question Bank

Chips to Go (C2G)


Chips to Go (C2G) produce potato chips for the British market. C2G's Chief Executive Officer (CEO) is Charles Chip who is a dynamic entrepreneur famous for taking risks with chip flavours such as "banana and sour cream" and "chocolate fudge" and promoting them with humour especially appealing to British culture. C2G has created a number of successful snack products under the C2G family brand. Charles uses intuitive rather than scientific decision-making. He rarely consults with senior managers or considers financial data.
C2G's value as a company in terms of goodwill, brand value and other intangible assets is tied very closely to the personality and lifestyle of Charles. He is the company's most valuable intangible asset and is very popular among the younger generation. He is constantly in the news trying to travel around the world in a canoe, or taking risks by parachuting off high buildings to gain free publicity and word-of-mouth promotion. Current and potential investors have contacted the finance department as to what may happen to the value of these intangible assets if Charles were to have a serious accident.
C2G is looking for ways to increase market share in an increasingly competitive domestic snack market. One long-time aim for Charles has been the creation of a potato chip with all the taste of regular chips but without any fat. The marketing department of C 2 G is very excited with this idea but the Production Manager has indicated to Charles that it cannot be produced. Charles has been told and was furious.
A second strategic option could be to launch the potato chips into a new international market. One of Charles's closest advisers has argued that C2G would need to be careful with its product and promotion, as overseas customers may not share British tastes in potato chips, or British humour in promotion. He urges Charles to take time to carry out extensive market research of the new international market.

With reference to C2G, compare and contrast intuitive and scientific decision-making.

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 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 ".

FrioAire Appliances (FA)


FrioAire Appliances (FA) manufactures medium-priced and medium-quality refrigerators. It is a multinational public limited company. Its factory is located in a less economically developed country that has high unemployment, a tradition of autocratic leadership and labour costs lower than FA's home country. The factory is profitable, and FA pays consistently good dividends. Market growth for medium-priced and medium-quality refrigerators is limited.
As part of a strategic objective to increase productivity and to enter a fast-growing market for high-priced and high-quality refrigerators, F A is considering building a new factory in and relocating production to Germany. This would require closing the factory in the less economically developed country. The new factory will:
- use innovative technologies, including advanced robotics and 3D processes
- require fewer employees, but those it does require will need to have better skills and qualifications.
Germany has a highly skilled, qualified and productive workforce. The new factory would allow FA to reposition its products. However, FA would need to raise significant finance to build and equip the new factory.
FA's leadership style at the factory in the less economically developed country is autocratic. Members of FA's board wonder whether this style would be suitable for the new factory in Germany, where workers have more bargaining power because of their high skill level and the labour-friendly cultural traditions. In Germany, FA would have to follow more regulations regarding the environment, health and safety, and employee rights.
FA workers in the less economically developed country are very loyal to F A, which has continued operation through a civil war at significant cost to itself (for security). If FA were to close in the less economically developed country, the workers would not find such good jobs.

Explain one benefit and one cost to FA of using an autocratic leadership style.