E2: Managing Performance

• Topic 01

  Business Models and Value Creation

  65 questions
• Topic 02

  Managing People Performance

  66 questions
• Topic 03

  Managing Projects

  65 questions

A few questions from this unit, with the answer and a full explanation. The complete bank is available when you start practising.

1. A newly appointed department head inherits a team with well-defined standard operating procedures and performance metrics. However, she has limited authority to adjust salaries or make promotion decisions, and the previous manager left after conflicts with the team. According to Fiedler's Contingency Theory, which component of situational favourableness should she prioritise improving FIRST to enhance leadership effectiveness?

   • A
     Position power, as it would give her the authority needed to rebuild team relationships
   • B
     Leader-member relations, as this is the most important factor and currently the weakest
     Correct answer
   • C
     Position power, since formal authority is essential for any leadership effectiveness
   • D
     All three components equally, as Fiedler's model treats them as having equal weight
   Explanation

   According to Fiedler, leader-member relations is the most important of the three factors determining situational favourableness. In this scenario, task structure is already high (well-defined procedures and metrics) and position power is low (limited authority over compensation). The critical weakness is poor leader-member relations (inherited after previous manager's conflicts). Since leader-member relations has the greatest impact on favourableness, improving trust and rapport with the team should be the first priority. Fiedler's research showed that good leader-member relations can partially compensate for weaknesses in the other two factors.

2. A manufacturing company is analyzing its Business Model Canvas to defend against a new low-cost competitor. The company has proprietary technology (Key Resources), efficient operations (Key Activities), premium pricing (Revenue Streams), and loyal customers (Customer Relationships). Which element should be the PRIMARY focus for strengthening competitive differentiation?

   • A
     Revenue Streams - maintaining premium pricing signals quality and differentiation
   • B
     Cost Structure - reducing costs to compete on price while maintaining current offerings
   • C
     Value Propositions - articulating unique benefits that justify premium pricing and convert technology/efficiency into customer value
     Correct answer
   • D
     Key Activities - because operational efficiency creates cost advantages that competitors cannot match
   Explanation

   While the company has strong Key Resources (proprietary technology) and Key Activities (efficiency), competitive differentiation ultimately depends on the Value Propositions - how these capabilities translate into unique customer benefits that justify premium pricing.

   Why this is correct:

   • Technology and efficiency are inputs to differentiation, not differentiation itself
   • Against price competition, customers need clear reasons why premium pricing delivers superior value
   • Value Propositions bridge internal capabilities with external market perception

   Why other options are insufficient:

   • Key Resources/Activities: Already strong but need translation to customer benefits
   • Customer Relationships: Loyalty helps but doesn't address new customer acquisition against cheaper alternatives
   • Revenue Streams: Pricing alone doesn't communicate value
   • Cost Structure: Competing on cost abandons differentiation strategy
   • Customer Segments: Segmentation is tactical; value articulation is strategic

3. A project manager is developing a detailed project plan. Which sequence of planning activities is most logical?

   • A
     Create WBS, estimate work package durations, develop schedule, allocate resources
     Correct answer
   • B
     Allocate resources, create WBS, estimate durations, develop schedule
   • C
     Develop schedule, create WBS, allocate resources, estimate durations
   • D
     Estimate durations, allocate resources, develop schedule, create WBS
   Explanation

   The logical sequence starts with decomposing the scope into work packages (WBS), then estimating how long each package will take, using those estimates to build the schedule, and finally allocating resources to the scheduled activities. This sequence ensures that resource allocation is based on a realistic schedule built from bottom-up estimates.