Evaluate how leadership and management choices affect motivation, communication, decision quality and organizational performance in IB Business Management HL cases.
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.
In the stimulus it is indicated that F A has an autocratic leadership style. This style appears to dovetail with the culture of the less economically developed country. Also, the factory is profitable and has been efficient through lower costs. It is possible that the leadership style fosters loyalty in this country because of the cultural fit. Accept the likelihood that workers are less skilled and less educated and likely to accept poorer working environment due to high unemployment rate
The costs to FA include that autocratic leadership may stifle creativity and innovation, which could be available in a more democratic system. Also workers less likely to accept a demotivating work environment as they have a high degree of industrial relations leverage. Productivity in Germany could be higher than in a less economically developed country. The fact that F A 's leadership is thinking of
relocating to Germany indicates that they see problems in moving to a new, higher-price segment.
Mark as 2+2.
Award [1] for each relevant benefit / cost explained and [1] with application to FA. Award up to a maximum of [2] per benefit/cost explained.
[2] cannot be awarded per benefit / cost if the response lacks either explanation and / or application.
For example: For an identification/description of a benefit / cost with or without application [1]. For explanation of a benefit / cost with no application [1].
Emma, a marketing graduate at a public relations office, has always wanted to have a more creative and independent role. Falit works in the production planning department of a large multinational oil company. He likes his job but hates the bureaucracy. Ahmed is a charismatic, self-confident project manager at a construction company. The group decided that Ahmed was the right person to manage the project and the group because of his management and leadership skills. They decided to call the app "IBAT" (insect bite analysis test). Regular online meetings would take place to develop the idea. By September 2015, the group agreed that they would go ahead with the business idea in their spare time. They had all talked to friends, relatives and anyone they knew working in healthcare. All of these people liked the idea. The six friends decided to call the business Medimatters. IBAT would consist of a paid-for app that, with a smartphone, would: - take a good quality photograph of the insect bite - send the photograph to IBAT's online automated database. The automated database would then: - compare the photo with the online library of scanned images - produce a report on the findings of the comparison for the IBAT user as well as, if possible, medical professionals such as doctors. After consultation with some doctors, Carlo discovered a technical problem. The image quality of smartphones varies. To obtain the necessary detail of the insect bite, a separate magnifying lens attachment which would convert the smartphone's lens into a microscope would be required. A different design of lens for each make of smartphone would be required. The need for a lens means that IBAT would not be a conventional app that is purchased from an online app store. Customers, who could be members of the public or people in the healthcare profession, would purchase a physical product (the lens) and a password for downloading the app. IBAT would therefore be a service and a product/good that has implications for both marketing and operations management. Ahmed acted decisively. He assigned to each group member tasks to complete within three months. In January 2016, they met face to face and reported their findings and progress (Appendix 1). Emma considered who to target. She told the group during a further online meeting that the best approach to marketing was to concentrate on particular market segments. It would be easier to focus on healthcare professionals, such as doctors. Emma suggested that the best approach to contact these potential customers was through conferences and relevant medical magazines and journals. She was also investigating other potential market segments and distribution channels. Identifying these potential customers was going to be a major challenge and required market research. Could the general public be targeted through large chains of shops that sell health-related products? Ahmed thinks that they should concentrate on launching the product in Brazil before going global, but this might result in competitors copying the idea in other countries. In many areas the project was going smoothly, but frustrations were beginning to show. Bella was keen to make a lot of progress quickly. She thought that the project should be launched as soon as possible and then refined later based on customers' experiences. Didi was clear that they had to get the product absolutely right before it was launched. He also stated that Medimatters would need finance in order to start trading. Carlo was worried about where the lenses should be produced. Ahmed has a lot of work to do to sort out these frustrations. \begin{tabular}{|l|l|}
\hline Group member & Findings and progress \\
\hline Ahmed
Project manager & \begin{tabular}{l}
- Draft business plan: complete \\
- Potential investors: identified \\
- Application for copyright/patents: in progress \\
- Size of market: unclear, believes that there is huge national and global potential
\end{tabular} \\
\hline Bella
IT & \begin{tabular}{l}
- Prototype of image-taking software: written and tested \\
- Medical diagnosis software development: in progress
\end{tabular} \\
\hline Carlo
Medical expert & \begin{tabular}{l}
- Insect bite images: 75% collected and catalogued on database \\
- Communication channels with healthcare professionals: no progress \\
- Reporting format for medical diagnosis: some progress \\
- Approval for the use of the app for medical purposes: cannot be granted by health authorities until lens design finalized
\end{tabular} \\
\hline Didi
Accountant & \begin{tabular}{l}
- Production costs for app and lens: to be determined \\
- Further financial information for business plan: in progress \\
- Set-up cost: $60000
\end{tabular} \\
\hline Emma
Marketing & \begin{tabular}{l}
- Market research: no progress, except for discovering a device/app that measures skin colour to help choose cosmetics and another that helps identify skin cancer \\
- List of potential market segments and target markets: complete \\
- Promotion strategies targeting medical profession: ongoing \\
- Marketing plan: in progress
\end{tabular} \\
\hline Falit
Production & \begin{tabular}{l}
- Lens production: investigate where to produce the lenses, possible manufacturer identified \\
- Production method: investigate batch or flow
\end{tabular} \\
\hline All of them & - Ahmed, Bella and Carlo could each invest $2000, the others could
invest $1000. $51000 extra would need to be found. The list of
problems is getting longer! \\
\hline
\end{tabular} Additional terms not in the guide Copyright/patents Companies, products, or individuals named in this case study are fictitious and any similarities with actual entities are purely coincidental.
"Ahmed considered his role as leader." Recommend an appropriate leadership style for Ahmed.
Evidence in the additional stimulus material suggests he:
- is prepared to be autocratic where necessary
- likes to hear other peoples' views
- puts effort into keeping people informed
- consults widely
- he acted decisively at times.
In addition:
- he has experience with project management
- manages a talented and committed group of people
- the group have chosen him
- people within the group seem to have clearly defined roles
- some of the group need guidance.
It would seem, therefore that:
- autocratic management would not be appropriate except in situations where immediate decisions are required
- democratic leadership might be appropriate, both in terms of the team he manages and his own personal qualities
- laissez faire might mean issues do not get resolved such as disagreements, sense of direction.
The best style of leadership is likely to be to adjust to circumstances and people ie situational leadership.
There are three aspects to this choice;
the nature of the tasks, the nature of his colleagues, his own personal qualities.
Marks should be allocated according to the markbands on page 4.
Purely theoretical answer or with no effective use of stimulus material in range [3] to [4] with better answers award a maximum of [4]. If only one leadership style is considered award a maximum of [4].
Two or more styles considered with more than one aspect, but limited use of evidence award a maximum of [6].
Two or more styles considered, good use of evidence, particularly from Section B, but limited contrast award a maximum of [8].
For full marks two or more styles contrasted, aspects, evidence, particularly from section B, used effectively.