All Rights Reserved ASSOCIATION OF ACCOUNTING TECHNICIANS OF SRI LANKA AA2 EXAMINATION JULY 2017 AA26 BUSINESS MANAGEMENT AND STRATEGY Instructions to candidates Please Read Carefully Time Allowed Reading 15 minutes Writing 03 hours All questions should be answered 1 2 3 4 5 6 100 Marks Answers should be in one language in the medium applied for in the booklets provided State clearly assumptions made by you if any Action Verb Check List with definitions is attached Each question will begin with an action verb excluding OTQ s Candidates should answer the questions based on the definition of the verb given in the Action Verb Check List 16 07 2017 Afternoon 1 45 5 00 No of Pages 06 No of Questions 10 SECTION A Objective Test Questions OTQs Ten 10 compulsory questions Total 20 marks Question 01 Select the most correct answer for question No 1 1 to 1 5 Write the number of the selected answer in your answer booklet with the number assigned to the question 1 1 Which one of the following group is correct with reference to basic functions of the management process 1 Planning Decision Making Unity of Command and Communication 2 Planning Decision Making Delegation of Authority and Motivation 3 Planning Organizing Leading and Controlling 4 Planning Organization Structure Unity of Command and Controlling 1 2 Skills specific to the job that are necessary for the performance of specific tasks in an excellent manner are 1 Human skills 2 Conceptual skills 3 Technical skills 4 Diagnostic skills 1 3 According to the nature of Authority Managers could be categorized as 1 Lower Level Managers Middle Level Managers and Top Level Managers 2 HR Manager Marketing Manager and Finance Manager 3 Line Manager and Staff Manager 4 Lower Level Managers and Top Level Managers 1 4 Which one of the following is not an example for esteem needs of Maslow s hierarchy of needs 1 Self respect 3 Recognition 2 Autonomy 4 Shelter theory 1 5 Which one of the following is not a characteristic of controlling 1 It is a dynamic process 2 It is not related with planning 3 It is a continuous activity 4 It is forward looking State whether each of the following statements from question No 1 6 to 1 10 is TRUE or FALSE Write the answer True False in your answer booklet with the number assigned to the question 1 6 Division of labour is a characteristic of bureaucracy 1 7 An organic organizational structure best works when the environment is relatively dynamic and uncertain made in real time 1 8 Porter s five forces model can be used to analyze the internal environment 1 9 Concurrent control is an active engagement in a current process where observations are 1 10 Planning precedes controlling and controlling succeeds planning End of Section A 02 marks each Total 20 marks 2 P a g e SECTION B Five 05 compulsory questions Total 25 marks Question 02 Bureaucracy is a superior way of practicing authority over a person through the power vested by laws and written rules State three 03 advantages and two 02 disadvantages of Bureaucracy 05 marks 05 marks The rapid and continuous changes that takes place in the environment has a direct impact on the manner in which businesses are managed Therefore managers need to respond to the rapid and continuous changes in the environment State five 05 challenges faced by managers in today s context Question 04 Communication is an important function for any organization However most of the managers cannot maintain an effective communication system in the organization due to the barriers affecting effective communication State five 05 actions that could be recommended to overcome communication barriers 05 marks ABC Ltd uses a manual accounting system in order to keep records on their accounting transactions The management of ABC Ltd has decided to use a computerized accounting system from next month However the accounting division s staff is reluctant to change to the computerized accounting system Explain three 03 ways of encouragement available to the employees of ABC Ltd to embrace the change 05 marks Corporate governance means the mechanism processes and relations by which organizations are controlled and directed Explain the importance of Corporate Governance End of Section B 05 marks 3 P a g e Question 03 Question 05 Question 06 Three 03 compulsory questions SECTION C Total 30 marks Question 07 You are required to a b Question 08 Planning is the first and the most important function of management It is needed at every level of management It also assists to make rational decisions in the organization Explain the three 03 types of planning based on the levels of management 06 marks Explain two 02 reasons as to why decision making is important for an organization 04 marks Total 10 marks An organizational structure is a network of job positions responsibilities and authority at different levels Whenever organizations grow in size and complexity an adequate structure is needed When the activities or jobs are grouped according to the functions to be performed it is called as a functional organizational structure You are required to a Explain the steps involved in the process of organizing b State two 02 advantages and two 02 disadvantages of a functional organizational structure 06 marks 04 marks Total 10 marks Question 09 Organizational culture organizations Cultural web is an approach for looking and changing the organization s culture is a key variable that distinguishes an organization from the other You are required to a Explain the following elements of the cultural web i Symbols ii Control systems b Explain the impact of organizational culture on strategy implementation End of Section C 04 marks 06 marks Total 10 marks 4 P a g e SECTION D A compulsory question 25 marks Question 10 Seasons Airlines is the national airline which is owned by the Government of country HH It has the monopolistic power in the industry within the country It operates mainly under five departments namely Sales and Marketing Department Administration Department Finance Department IT Department and Human Resources Department Seasons Airlines is a profit generating entity from its inception however the performance of the company has begun to decrease from the last two years The recently appointed Minister of Finance is keen about this situation and he has asked the CEO of Seasons Airlines Mr Perera to carry out an investigation in this regard A committee was appointed by the CEO to identify the reasons for the poor performances