Postgraduate Diploma in Marketing December 2012 Examination Advanced Management Competencies (AMC) Date: 18th December 2012

Time: 1400 Hrs – 1700 Hrs

Duration: Three (03) Hrs

Total marks for this paper is 100 marks. There are two parts in this question paper. All questions in Part One are compulsory. It includes a mini case.

Part Two includes 6 Essay Type Questions. Answer 03 questions from this part.

Instructions to candidates

1

State your Registration Number on the front cover of the answer book and on each and every additional paper attached to it. Your name must not appear anywhere in the answer book or answer scripts.

2.

Always start answering a question on a new page.

3.

You are reminded that answers should not be written in pencil or red pen except in drawing diagrams.

4.

Answer the questions using: 

Effective arrangement and presentation



Clarity of expression



Logical and precise arguments



Clear diagrams and examples where appropriate

5. Illegible hand writing and language errors will be penalised.

PART ONE Answer All Questions Question 01: Case study Stewart (Stew) J .Leonard’s father, Leonard, owned and operated a small diary route with four milk trucks. While Stewart was in high school, he supported his father and opened his own milk route. After Stew graduated from the college, his father passed away and Stew took over the business. In the late 1960’s the state of Connecticut decided to build a highway through Stew Leonard’s dairy land. Furthermore, the presence of supermarkets and refrigerators had made the cost of running a milk delivery route prohibitive. So Stew decided to move and start a new store. In 1968, Stew took the largest SBA loan granted to date. He expected to compete with other stores in the area by stocking mostly his own products in a specialised dairy store. He refused to form a corporation because he wanted not to be liable for any losses. Before opening his own store, Stew Leonard’s Dairy, he visited many food stores across the country to gather information on what worked and what did not. During one visit he met a farmer who was bottling and selling milk on the premises. Stew decided his store would do the same. Just after opening, he worked hard and earned above the breakeven point. In the following week an incident occurred that was to become the foundation of the Stew Leonard’s management philosophy. When a customer complained that the eggnog that she purchased was sour, Stew tasted the eggnog and concluded the customer was wrong. He told her so and added, “We sold over 300 half –gallons this week and you‘re the only one who’s complained.” The customer angrily left the store and stated she would never be come back. Later he acknowledged that not only had he failed to empathise with the customer, but he had ignored potential repercussions of the complaint. His wife said that he had just lost a valuable customer of over to 99 dollars cartons of eggnog. This was the customer who may have later spent thousands of dollars on groceries, money that Stew Leonard’s Dairy would never see. This mistake led Stew to form a mission statement of this business: Rule 1: The customer is always right! Rule 2: I f the customer is ever wrong, reread Rule 1 This became the credo upon which Stew Leonard built his business. And the mission statement formed the backbone of the strategy that enabled the organisation to expand 27 times in roughly 20 years. Stew differentiated his store by eliminating Page 2 of 7

middlemen and passing the savings on to his customers. Stew also sold the idea of freshness. To further distinguish itself from other stores, Stew Leonard’ added entertainment to the marketing mix. A Petting zoo with barnyard animals was placed in the parking lot, encouraging parents to bring children. Animated signing signals filled the store, employees roamed the aisle in cow, chicken and duck costumes. All of this was part of Stew’s emphasis on marketing grocery shopping as an enjoyable experience. Stew Leonard‘s established a special commitment to following up on a customer’s comment. A suggestion box was filled to capacity each day. By 11:00 of each morning, all the complaints and suggestions were typed and submitted to the appropriate departments, Managers held weekly meetings to report what had been done with the customers’ suggestions. Customer feedback was also gathered through in-store focus groups. Each month specially selected customers were given 20 store gift certificates for offering suggestions on what items should be stocked and how items should be displayed. Employees referred as team members, were well trained in customer relations. Many employees were family members. Team members understood that having a job at Stew Leonard’s meant providing superior customer service. The company was open 364 days per year, and team members were required to work during various times of the day and on holidays. Also, team members were expected to be well groomed and display positive attitudes. As a result of Stew Leonard’s hiring practices, the staff had only 60 percent turnover rate much better than the supermarket industry average of 82 percent. Training and customer relationship methods consisted of how to handle dissatisfied customers and behave appropriately as team members and motivate fellow members. On August 23rd, 1993 Inland Revenue dept. reported the case against Stew Leonard as the largest computer driven criminal tax evasion case in U.S history, calling it a crime of the 21st century. Leonard was sentenced 52 months prison. Stew gave no reason for the crime he committed, although he apologised to customers and employees. Stew Leonard commented, “somehow, I just lost my core values.” Indeed many people believed that tax as personal rather than a business issue. Several customers even expressed sympathy for the Leonard family and pledged they would continue to support the company. Although the news of the crime drew harsh criticism from industry professionals and the media, it caused only a minor decline in sales. After the incident, the company continued to grow and was even planning to open a third store other than the two existing stores. (Source: Stew Leonard's Diary; Strategic Management: Concepts and Cases, A. Thompson, Jr., A.J. Strickland) Page 3 of 7

a. Do you think that Mr. Stew Leonard, as a Manager, had possessed the main three categories of managerial skills? Your answer should be supported by the highlights of the case study. (10 Marks) b. Explain personality characteristics of entrepreneurs by Charles R. Kuehl and Peggy A. Lambing (1994) and identify the main personality characteristics exhibited by Mr. Stew Leonard. (10 Marks) c.

Identify and discuss in brief the leadership style followed by Mr. Stew Leonard and explain what factors affected the success of Stew Leonard’s Dairy. (12 Marks)

d. Critically evaluate how Mr. Stew Leonard had acted on Corporate Social Responsibility. (08 Marks) (Total 40 Marks)

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PART TWO Answer three (03) questions selecting at least one from each section Question 02 The complexity of today’s environment and uncertainty about the future overwhelm many managers and cause them to focus on operational issues and short-term results rather than long term goals and plans.

a.

What do you mean by a contingency plan and explain how those plans are prepared by the managers. (06 Marks)

b.

Explain the main stages of Crisis Management. (06 Marks)

c.

The purpose of planning and goal setting is to help achieving high performance. Explain the approaches of planning for a high performance. (08 Marks) (Total 20 Marks)

Question 03 The Reinforcement Approach to employee motivation sidesteps the issues of employee needs and thinking process described in the content and process theories.

a. What do you mean by the term ‘’ Positive Reinforcement’’. (02 Marks) b. Explain four types of Reinforcements. (08 Marks) In recent years teams have become the primary way in which many companies accomplish their progress from the assembly lines to the executive suite. c. Discuss the process of team development (10 Marks) (Total 20 Marks)

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Question 04 Every organisation grows, prospers or fails as a result of decisions by its managers and executives. They make very difficult and diverse decisions every day.

a. Compare Classical Model, Administrative Model and Political Model of Decision Making. (09 Marks) b.

Discuss the six steps in Managerial Decision Making Process with examples. (12 Marks) (Total 20 Marks)

Question 05 Relationships provide a framework for the vertical control of an organisation. The characteristics of a vertical structure is described in the organisational chart, which is the vertical representation of an organisational structure.

a. What do you mean by the term ‘’ Span of Management’’. (03 Marks) b. Explain the factors which determine a longer spam of control. (05 Marks) Organisational Development can be used to solve the problems which are truly valuable to companies and employees. c. Explain the types of Organisational Development Activities and Steps a manger can use in an organization. (12 Marks) (Total 20 Marks)

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Question 06 a.

An organisation can be thought of as a value chain that receives inputs from the environment and add value by transforming inputs into products and services for customers. Explain the Value chain of any company known to you with examples. (08 Marks)

b.

What do you mean by Total Quality Management? (02 Marks)

c.

Describe any four Total Quality Management Techniques. (10 Marks) (Total 20 Marks)

Question 07 Write short notes on the following: a. Open- Book Management b. Enterprise Resource Planning System c. Level 5 Leadership d. E- Business Strategies (05 Marks x 04 = 20 Marks) (Total 20 Marks) (Total 60 Marks)

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