IB Business Management HL Human Resource Management Question Bank

Creative Toys (CT)


Creative Toys (CT) manufactures toys and markets them business-to-customers (B2C) online only. The business operates in a leased industrial site and relies on word-of-mouth promotion only. To make customers believe that CTs toys are better than its competitors, CT sets prices slightly higher than the competition. Production and sales are mostly between 1 October and 24 December. Most of the employees work on temporary contracts during this busy period. For the remainder of the year, CT operates well below capacity utilization.
Table 1 contains selected data for CT, for 2014:

In 2014, the management of CT considered a change of the marketing mix to include above the line promotion, lower prices, and an additional sales method called "toy parties". Toy parties would be hosted by newly recruited CT sales representatives and attended by parents and their children. At the parties parents could see the toys and children could play with them. Sales would be made at the parties by the new sales representatives, who would be paid on a commission-only basis.

Toy parties could be held throughout the year and make CTs total sales less seasonal. Based on market research, management has estimated that the parents' demand for toys is price elastic and is planning to set lower prices for all toys sold online and at toy parties. The management has prepared forecasted financial data for CT, for 2015, based upon the proposed change to the marketing mix, shown in Table 2 below.

The Finance Manager will carry out a variance analysis in order to determine whether the proposed change to the marketing mix has been successful.

Explain two possible human resource implications for CT's management given the proposed change to introduce "toy parties" as an additional sales method.

The UWP Mission to Loyka was based in Beral, the capital of the country. The autocratic General Ron Meiri was appointed by the UWP as Commander. The organizational structure of the UWP Mission was tall and centralized, with several levels of hierarchy and a narrow span of control (Appendix 1). This structure fitted well with the organizational culture of the military. This organization was not flexible, but it ensured that orders were clearly understood and always followed. As a consequence the security of the UWP troops was maintained. In the first years, the $U W P$ Mission to Loyka experienced some successes but also some failures. The presence of "the Olive Hats" gave a sense of stability and international support. It also benefited the local business community: the provisions for the troops were purchased locally, the soldiers spent a significant proportion of their pay in the local economy and also helped repair roads and bridges that had been damaged during the civil war. As a result of these improvements in infrastructure, local businesses in Beral were able to resume their trade activities to the same levels as before the civil war. However, the UWP presence also caused some problems. There was some resentment at the presence of "the Olive Hats" - some Loykese just did not want these foreign soldiers in their country. Local community leaders had also accused the troops of inappropriate behaviour and the local governor often had disagreements with General Meiri about the frequency of UWP patrols in the Beral area. The reputation of the UWP troops gradually deteriorated and General Meiri did not seem able to control the situation. Originally, when the troops first arrived, the local population was largely supportive. However, opposition to the $U W P$ presence grew as did violence against the troops. Moreover, "the Olive Hats" in Loyka started to resent being there and motivation was beginning to deteriorate. They felt unappreciated by the local population, whom they believed they were assisting by maintaining order, peace and security. Due to these changes in the external and internal environment, the $U W P$ headquarters in Geneva prepared a force field analysis to evaluate whether the $U W P$ Mission to Loyka should change its strategy in 2011 (Appendix 2).

In late 2011 the UWP replaced General Meiri with General Diane Pierce as Commander, in the hope that her situational leadership style and experience of social marketing in previous UWP missions would help reduce the problems. She was given two specific objectives: - Firstly, she had the strategic objective to improve the image of "the Olive Hats" in Loyka in order to improve public relations. This would reduce the number of conflicts with the Loykese, thereby improving the safety of the UWP troops. - Secondly, she had the operational objective to remotivate her troops. As salaries were set by the UWP, she could not use financial rewards so she would have to use non-financial motivational methods. General Pierce decided to undertake a major improvement of social infrastructure in Loyka by using the resources of the UWP to build either a new hospital or a new university campus. She received permission from the UWP headquarters, provided that the new hospital or university be operated as a non-profit organization. The UWP believed that this would allow the Loykese to see an important benefit of the presence of "the Olive Hats". It would also reinforce the UWP Mission's corporate social responsibility. This humanitarian project would remotivate the troops by providing a change of routine, by giving them a sense of achievement, and by building positive relationships with the local population. The construction of a new hospital or university would allow General Pierce to fulfill the two objectives given to her.

A non-profit hospital would increase access to medical care, especially for poorer people.

When the civil war broke out, most of the Loykese doctors who could speak English left for countries such as Canada, the United Kingdom, and the United States, where foreign doctors could easily obtain work visas and employment opportunities. As a result, there was a significant decrease in the number of doctors in Loyka. Secondly, complications from the lack of prenatal care had increased significantly. Many young children had a variety of health issues. However, Kos was very concerned about who the staff at the hospital would be. Given the shortage of doctors in the country, would doctors from abroad be employed? Also would those providing obstetrics and gynecology be female doctors? Conservatives in the country, Kos warned, would be strongly opposed to Loykese women receiving care from foreign male doctors. The construction of a university campus presented its own set of issues. On the one hand, a new university campus would be welcomed, as the existing one was small, old and in need of extensive repair. Moreover, because of the civil war, the country desperately needed engineers, school teachers, nurses and many other highly skilled professionals to help rebuild the social infrastructure. However, although instruction would be in the local language, Kos feared that a university built by the UWP would become a symbol of foreign intervention in Loyka and would make it a target for critics of the government and of the UWP presence in the country. Although a hospital might offend some conservatives, it is unlikely that it would be the target of physical attack. A university, on the other hand, with more open access, would be less secure than a hospital. In addition, as a place where free speech is exercised, a university could potentially cause unrest in a country recently torn by civil war. In further discussions with local officials, Colonel Donovan found that Kos' concerns were shared by others. After completing a critical path analysis, he reported to General Pierce that constructing either a university campus or a hospital was feasible within 25 to 30 weeks. He added that the officers in the Civil Engineering Group were excited by the opportunity to lead the project.

The project also had the support of the troops, who would feel empowered and would welcome working in new flexible matrix structures. It would, however, require careful workforce planning and training: some peacekeeping troops would need extra training in construction skills and safety procedures. Colonel Donovan concluded that both types of facilities were greatly needed in Loyka and would offer important benefits. The issue was which one to choose. Given her experience of previous UWP Missions, General Pierce ordered Colonel Donovan to conduct a formal social and environmental audit of the construction of both facilities and to carry out additional primary research. She asked him to prepare and distribute a survey to 2000 local residents for a more valid and reliable indication of the local community's opinion of which was needed more, a university or a hospital. She also wanted focus groups to discuss the two options. Some of the focus groups were to consist of men only, some of women only, and some of both men and women. Unfortunately, the results of the survey did not give General Pierce the clear indication that she had hoped for (Appendix 4). A slight majority preferred the hospital to the university, but it was by such a small margin that she could not be confident of which direction to take. In addition, a far larger percentage of those surveyed were strongly opposed to the hospital than to the university.

After spending weeks gathering data, Colonel Donovan had few doubts. He recommended that the hospital should be built as soon as possible. He still needed to decide what method of production to use. He was considering cell production, where each cell would be responsible for the construction of a separate section of the hospital. On completion, the hospital would provide immediate important benefits to the local population. If the main objection of the local population was the concern that most of the doctors would be male, the U W P, he argued, should do everything it could to recruit female doctors, even if only for the short term. However, the local governor who agreed to contribute the piece of land for the construction site preferred the new university campus rather than a hospital. A new university would be prestigious and contribute to the long-term development of Loyka by training future professionals. It could also attract private capital for future public-private partnerships in research and development (R\&D).

Appendix 3: Comparison of the two construction projects

Appendix 4: Results from the survey

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.

Davidson Studios Ltd. (DS)


Davidson Studios Ltd. (DS) is a private limited company created in 2018 and equally owned by two sisters, Emma and Laura Davidson. Both recent graduates, they design and produce fantasy board games, which are sold to local retailers.
Emma specializes in game design and Laura is the operations manager. The design of a new game takes 12 months. DS's first board game was a success and enabled DS to rent workspace and hire employees. The second game, Held Captive, was a massive commercial success.
DS had to move to larger premises and recruit more design, marketing and production staff. DS's organizational culture empowers employees to solve problems and gives them the opportunity to manage tasks. Employees also enjoy modern office spaces, generous breaks and competitive salaries. Quality circles and job rotation are common. Labour turnover is low and employee morale is high.
As production increased, however, DS ran into problems. With more employees to pay and invoices due, D S had almost run out of working capital (see Table 4).

Two options are being considered to avoid further liquidity problems and continue DS's rapid expansion:
- Option 1: Accept an offer from Big Game Industries (BGI), the market leader, to purchase 51 % of DS's shares. BGI would keep the DS brand and install a chief executive officer (CEO). Emma and Laura would have reduced roles in DS.
- Option 2: Accept an offer from a venture capitalist to purchase 35 % of shares. This would provide a cash injection sufficient for the next 12 months.