MGM101 Fall 2014 Section 102

Test #1 Short Answer Questions

1. As discussed in class, Victor Dodig was hired as the new CEO of CIBC bank. He has
promptly reorganized the senior executive team at the bank. These changes will have
sweeping impacts in both the short, and long-term, and are being carefully watched a
variety of stakeholders. What is meant by the term stakeholder? Other than senior
executives, identify three groups of stakeholders from your readings who would have an
interest in these changes and describe what each of their priorities would likely be when
evaluating these changes. (4 Marks)
One mark for properly describing what a stakeholder is. One mark for each proper identification
of a relevant stakeholder along with a reasonable explanation of each of their priorities.
Stakeholders may include Customers (concerned with changes to their banking services and
fees), Employees (Impact on jobs, morale, future career advancement, potential restructuring),
Governments (bank and industry stability, economic impact, ripple effects), Current shareholder
and potential shareholders (profitability and impact on share prices, long term competitiveness
and growth potential)
2. During our in-class exercise we discussed the value propositions provided by several
retail brands. What is meant by the term value proposition? How does a firm create
value? Identify one of the brands discussed in class and describe the key components of
their value proposition. (4 Marks)
One mark for proper explanation of value proposition. One mark for describing how firms
create value. Two marks for properly identifying one of the brands discussed in class and
describe the key components of their value proposition.
Value Proposition Describes the target market(s) for the product and/or service along with the
expected benefits that will be realized by the customer. Communicates product/service
differences and key benefits
Creating Value Firms create value by provide superior benefits to customers (Emotional,
Brand, Service, Product, cost) increasing the amount customers would be willing to pay in
relation to what the customer actually pay.
Walmart VP benefits include everyday low prices, familiar brands, broad selection (one stop
shop)
Canadian Tire VP benefits include broad selection with products within categories, average
price points, quality brands, Canadian owned
Toys R Us VP includes largest selection of toys, games and childrens goods, popular brands,
specialty items, average to higher prices.
Whole Foods VP focuses on local, healthy and organic product lines, higher prices, adequate
staffing and customer service is high, Information about unique products are explained
Hudsons Bay Co. VP focuses on top quality and current fashion, reputable brands, higher
price point, knowledgeable staff and service levels
Harry Rosen VP focuses on craftsmanship, highest quality materials and products, staff
experts, product selection includes all mens needs

3. The word bureaucracy often carries negative associations but successful firms often
follow many bureaucratic principles. Identify any two of Max Webers principles of
bureaucracy and describe why they are essential for modern day business performance. (2
Marks)
One mark for each principle properly identified with an explanation of its importance to modern
business performance.
Principle Managers formal authority derives from their position Important because it creates
clear lines of accountability and decision making. Creates a respect for more senior management.
Principle Positions should be allocated based on performance Important because best person
for a position should fill that position. Avoids poor match of ability and position requirements.
Principle Clear specifications of positions authority and responsibilities Important because
employees know what is expected of them, and what they are accountable for.
Principle Hierarchical structure of positions Important because employees know who they
should take guidance from and where to seek direction.
Principle Need for rules and SOPs Important because these create guidelines and norms to
help control behaviour