Motivation & Rewards (Edexcel IGCSE Business): Exam Questions

[case-study] *Posh Pets Spain (PPS) *is a pet hotel in the village of Alhaurin el Grande, Spain. It is run by Rachel Goutorbe, an animal enthusiast, and her team of four pet specialists. *PPS *offers overnight accommodation with room for seven dogs or cats, a pet grooming service and a shop selling pet products, such as dog coats and dog leads. Pet grooming involves washing, cutting and combing a pet’s coat.

State one reason why PPS motivates its employees.

[case-study] *TUI *is a holiday business that has over 100 years of experience. It offers customers a variety of holidays including staying in hotels, and river and ocean-going cruises. There are many extras that it offers to holiday makers including: car hire, extensions to the holiday and arranging day trips at all its holiday destinations.

The business is well known and flies its customers to over 180 destinations around the world, including Greece, Turkey and Spain. It has 1,600 travel agencies and 27 million customers. Holidays can be booked by visiting a travel agency or online.

*TUI *has holidays to meet the needs of all its customers: families, children, couples and those with disabilities.

*TUI *wants to maintain its reputation by continuing to provide quality holidays and experiences that customers will enjoy. This will encourage them to return to book future holidays with TUI.

Outline one reason why TUI offers employees working in its travel agencies a commission based on the number of holidays they sell.

[case-study] *Saha *is a small business in Türkiye (formerly known as Turkey) that opened in 2020 with 15 employees. It designs and manufactures robots which are used in hospitals, hotels and restaurants. In hospitals its robots are used to move medical supplies between departments. In hotels and restaurants, the robots are used to welcome customers as they arrive and deliver food and drinks to hotel rooms and restaurant tables. *Saha *provides a seven day a week customer service for all businesses buying its robots.

Many new businesses are entering the global robot market and are competing for market share. Competitors in Türkiye include NIO, *Zoox *and Vention.

*Saha *has ambitious growth plans and has started to design robots that will be used in the home to help people with cleaning, shopping, security and entertainment. It aims to become a multinational business within five years to manufacture robots in all continents of the world.

Which one of the following is a financial method used to motivate employees?

Select one answer.

Define the term fringe benefits.

[case-study] *As We Grow (AWG) *is a clothing business in Iceland. The social objective of the business is to use natural materials, such as wool, and produce environmentally friendly products. It aims to design clothes that will last a long time, to encourage families to buy fewer clothes and reduce waste in society.

*AWG’s *increasing product range now includes jumpers, dresses, shirts and baby clothes. These are produced in small workshops that employ family and friends. Waste is kept to a minimum and any leftover material is used to make scarves and hats. The business has one store in Iceland. It uses its website to advertise and sell its clothing online to customers in other countries. The business has received the Icelandic Design Award for its contribution to the environment.

State one non-financial method *AWG *may use to motivate its employees.

Define the term remuneration.

[case-study] *Artify Studio *was set up in 2015 by Tay Hui Jae in the busy Kampong Glam area of Singapore. Artify Studio’s aim is to have ‘a communal art space where people can come together and paint, where people would be given as much creative freedom as they would have if they were in their own spaces.’ Artify Studio provides many services including its popular Liberty Art Jam where customers can paint as well as listen to music. The studio offers a Corporate Art Jam and Regular Kids Classes. Customers can purchase art materials after attending the studio. *Artify Studio *is a profit-making organisation with a social element. It employs seven part-time people, all of whom are art enthusiasts.

State one financial method of motivation Artify Studio could use to motivate its employees.

[case-study] *Huawei *is a leading global provider of information and communications technology, infrastructure and smart devices. In March 2011, over one million of its C8500 smartphones were sold in China following its launch.

It now manufactures a wide variety of different products including *Huawei *smartphones, watches and tablets. In recent years *Huawei *has won many awards. In 2018 it was named the 68th most valuable brand by Best Global Brands. In 2019 it introduced a smartphone which had new photographic technology.

*Huawei *is one of many businesses that manufacture smartphones and tablets. It therefore needs to keep and retain its staff so that production is continuous. This will help to maintain its customers.

State one possible reason why *Huawei *pays its employees in the UK above the minimum wage.

[case-study] In 1985 *Emirates *started its airline business with just two aircraft. It is now a well‑known airline with over 265 aircraft flying to over 180 destinations around the world.

*Emirates *has won many awards for service and reliability. Until 2016 passengers rated *Emirates *the leading airline to travel with. However, in 2017 its rating dropped from first to fourth.

*Emirates *wants to encourage its employees to remain with the company and offers them incentives to do so. It offers all of its passengers a loyalty programme.

State one non-financial method *Emirates *could use to motivate its employees.

[case-study] BrightPath is a growing chain of nurseries in the United Kingdom that opened its first branch in 2019 with 20 employees. It now operates five branches across the south of England, employing over 80 staff. The nurseries provide childcare for children aged six months to five years. BrightPath prides itself on the quality of its staff and their commitment to child development.

The nursery sector is highly competitive, with staff turnover being a major challenge. Competitors such as Little Stars, KiddyCare and Sunshine Rooms often try to attract experienced nursery workers by offering higher wages.

BrightPath has found it difficult to match competitors' pay but wants to keep its experienced employees motivated and loyal. The management team is considering different methods to improve employee motivation without increasing wage costs.

Which one of the following is a non-financial method used to motivate employees?

Select one answer.

Explain one of the factors in Herzberg’s motivational theory.

[case-study] The first *Premier Inn *hotel was opened in 1987. Premier Inn now has over 820 hotels in the UK, United Arab Emirates (UAE) and India with over 83,000 rooms. It has recently expanded by opening the first *Premier Inn *in Germany and has plans to open more in other countries.

The majority of the hotels have restaurants with facilities for guests to buy meals and drinks.

Premier Inn employees play an important part in the running of its hotels and providing a good service. If they provide a good service, it means guests may return.

Employees of Premier Inn earn £15.27 per hour when working overtime.

Calculate, to two decimal places, what an employee would earn if they worked six hours of overtime. You are advised to show your working.

[case-study] The first *Premier Inn *hotel was opened in 1987. Premier Inn now has over 820 hotels in the UK, United Arab Emirates (UAE) and India with over 83,000 rooms. It has recently expanded by opening the first *Premier Inn *in Germany and has plans to open more in other countries.

The majority of the hotels have restaurants with facilities for guests to buy meals and drinks.

Premier Inn employees play an important part in the running of its hotels and providing a good service. If they provide a good service, it means guests may return.

Analyse the benefits for Premier Inn of motivating its employees.

[case-study] IKEA is a well-known home furniture retailer with stores throughout the world. It was started in 1943 by Ingvar Kamprad when he was given some money by his father for doing well at school. He wanted to produce furniture at a price that people could afford to buy.

He realised that transporting furniture to customers was difficult as goods were often damaged. He developed flat packs to avoid damage. A flat pack contained all the materials needed to self-assemble a table, a chair or a bed.

All *IKEA *stores are run as franchises.

*IKEA *is keen to reward long-serving employees. An employee who has worked with *IKEA *for 10 years is given a bonus of 7.5% on top of their annual earnings of 177 070 SEK.

Calculate, to two decimal places, the bonus this employee would receive. You are advised to show your working.

[case-study] *As We Grow (AWG) *is a clothing business in Iceland. The social objective of the business is to use natural materials, such as wool, and produce environmentally friendly products. It aims to design clothes that will last a long time, to encourage families to buy fewer clothes and reduce waste in society.

*AWG’s *increasing product range now includes jumpers, dresses, shirts and baby clothes. These are produced in small workshops that employ family and friends. Waste is kept to a minimum and any leftover material is used to make scarves and hats. The business has one store in Iceland. It uses its website to advertise and sell its clothing online to customers in other countries. The business has received the Icelandic Design Award for its contribution to the environment.

*AWG *sells men’s jumpers for 34 000 ISK. An employee who sells a jumper is rewarded with a commission payment. This is 2% of the price of the jumper.

Calculate the commission payment paid to an employee selling 12 jumpers. You are advised to show your working.

[case-study] Most people recognise Heinz for the phrase ‘57 varieties’ even though it now produces many more than the original 57 varieties. H J Heinz, the founder of the Heinz business, believed the phrase sounded lucky.

Kraft Heinz is a world-wide producer of food products. It was formed from the merger of Kraft Foods and Heinz in 2015. This created the third largest food and drinks business in the USA and the fifth largest food and drinks business in the world.

Kraft Heinz has over 24 different brands, including Greenseas in Australia and Nutri+Plus in New Zealand. America has the largest number of brands from Maxwell House to Cool Whip. Kraft Heinz produces many different products including tomato sauce, ‘Mac&Cheese’, pasta and its famous baked beans that are used and eaten by many people.

Kraft Heinz uses many methods to advertise its products. These include posters, billboards and leaflets in supermarkets.

In North America, a Kraft Heinz employee is paid a salary of $15 750. If employees reach their production target for ‘Mac&Cheese’ they receive a bonus of 14%.

Calculate the total pay an employee would receive once the bonus is added to their salary. You are advised to show your working.

[case-study] *The Better Toy Store (TBTS) *is a children’s toy shop. *TBTS *has three shops in Singapore. Two of the shops are located in busy shopping malls and the third is located at the Jewel Changi Airport. *TBTS *has a website for customers looking to buy toys online.

*TBTS *selects toys to sell that are excellent for play, value, design and quality. All *TBTS *toys are environmentally friendly.

Analyse the importance of *TBTS *motivating its employees.

Explain one reason why a business would pay its employees above the minimum wage.

[case-study] The *LEGO *Group is a privately-owned business in Denmark. The business was founded in 1932 by the Kristiansen family. The family still owns it. The name *LEGO *is an abbreviation of two Danish words, ‘leg godt’ which means ‘play well’. It is now one of the world’s largest manufacturers of toys with 15 factories and over 18,000 employees around the world.

*LEGO *manufactures toys, games and art materials for boys and girls of all ages, and products from films such as Star Wars and Harry Potter. It believes that children are the role models of the future and playing with LEGO can support children in a developing and complex world.

*LEGO *ensures its employees are fully prepared to carry out the tasks they are employed for. It looks after and encourages its employees to develop and improve their own skills.

An employee working in the offices earns 150 000 DKK. In 2020 *LEGO *gave its employees a 4.5% pay increase.

Calculate the employee’s new salary. You are advised to show your working.

Explain one of the needs in Maslow’s motivational theory.

[case-study] Irsi Chocolatier is a chocolate shop in Brussels, the capital city of Belgium. There are many other chocolate shops nearby. Opened in 1989 by the Corne family the business now has four directors and three employees. Florent Corne is the Managing Director with three other family members as Directors.* Irsi Chocolatier *opens from Tuesday till Saturday. The shop sells a variety of handmade chocolates and jelly fruit sweets. It delivers locally and has a website for information purposes only.

Irsi Chocolatier is a business with three loyal employees. As it expands it wants to ensure its current and new employees remain happy and motivated within the workplace.

Evaluate the impact of Irsi Chocolatier using financial methods of motivation on its employees. You should use the information provided as well as your own knowledge of business.

[case-study] IKEA is a well-known home furniture retailer with stores throughout the world. It was started in 1943 by Ingvar Kamprad when he was given some money by his father for doing well at school. He wanted to produce furniture at a price that people could afford to buy.

He realised that transporting furniture to customers was difficult, as goods were often damaged. He developed flat packs to avoid damage. A flat pack contained all the materials needed to self-assemble a table, a chair or a bed.

All *IKEA *stores are run as franchises.

To motivate employees working in its factories, *IKEA *is considering two motivational methods.

• Option 1: bonus
• Option 2: job enrichment.

Justify which one of these two options *IKEA *should use.

[case-study] *NEXT *is a well-known clothing retailer that operates in 70 countries and employs over 43,000 employees. Since *NEXT *commenced trading it has introduced many other products to its range such as home interiors, flowers and a wedding list service.

In 1999 NEXT launched its own online shopping platform, enabling customers to purchase its products where ever they live. It continues to improve its customer service by introducing new initiatives such as next day delivery.

*NEXT *mainly uses its own factories for production. However, it does purchase some clothes such as ladies dresses from Turkish factories.

*NEXT *works hard to remain competitive with other retailers of similar products.

*NEXT *understands that some employees are motivated by non-financial methods and these may help with employee retention. To do this *NEXT *is considering the following two options:

• Option 1: job rotation
• Option 2: job enrichment

Justify which one of these two options *NEXT *should choose.

[case-study] *Huawei *is a leading global provider of information and communications technology, infrastructure and smart devices. In March 2011, over one million of its C8500 smartphones were sold in China following its launch.

It now manufactures a wide variety of different products including *Huawei *smartphones, watches and tablets. In recent years *Huawei *has won many awards. In 2018 it was named the 68th most valuable brand by Best Global Brands. In 2019 it introduced a smartphone which had new photographic technology.

*Huawei *use a range of motivational methods to ensure its employees remain with them and do not leave. It has to make a decision on which of the following two options it will use. It is considering two methods:

• Option 1: financial motivation
• Option 2: non-financial motivation

Justify which one of these two options *Huawei *should choose.

[case-study] *The Alternative Drum School (TADS) *was set up in the wealthy area of Cricklade, England in 2008 by Ollie Tanner who had a passion for and enjoyed drumming. Ollie invested all of his savings into the drumming school. He saw the potential of being located away from other drumming schools.

Ollie promotes his business by writing columns in local papers, performing at local music festivals and by word of mouth recommendations. He has invested heavily in computer technology to allow students to produce the music they enjoy playing.

Ollie finds it difficult to maintain a good work-life balance. Ollie currently works 60 hours a week in a business that does not have reliable profits.

*TADS *currently pays its music teachers an hourly rate for every lesson they teach. It is looking to retain the teachers it currently employs.

It is considering the following two options:

• Option 1: commission for each new pupil taught
• Option 2: an increase in the hourly rate.

Justify which one of these two options *TADS *should use.