Key Terminology:

Conglomerate: A conglomerate is a corporation that is composed of different independent

businesses. That usually targets a different market.

Commodities: A commodity is a basic good used in commerce that is interchangeable with other
goods of the same type. Traditional examples of commodities include grains, gold, beef, oil, and
natural gas.

Shareholder: any individual, group or organization with a direct interest in, and is affected by the
activities and performance of a business.

Partnerships: A profit-seeking business owned by two or more persons. (max. 20)Director: senior
executives who have been elected by the company’s shareholders to direct business operations on
behalf of their owners.

Board of Directors: Elected by shareholders to run the company on their behalf.

Diversification: A high-risk strategy that involves selling new products in new markets.

Investments: the purchase of an asset with the potential to yield future financial benefits.

Private limited company: A business owned by shareholders with limited liability but whose shares
cannot be bought by or sold to the general public.

Public limited company: an incorporated business that allows the public to buy and sell shares in the
company via a stock exchange. All shareholders enjoy limited liability.

Consolidation: the action or process of combining a number of things into a single more effective or
coherent whole.

Merger: the amalgamation (or integration) of two or more businesses to form a new organisation,
thereby losing their original identities.

Property portfolio:

Licensing: When a third party organisation buys the right to produce the goods of another business.

Worker representative: A worker's representative may be a union delegate or official, or any other
person the worker authorised to represent them in negotiations.

Sustainability: Sustainability is a concept that promotes intergenerational equity.

Trade union: an organisation whose members unite to protect their rights and welfare.

Decentralization: decision-making authority and responsibility is shared with others.

Delegation: the passing on of control and authority to others

Take over: when one business buys out another by purchasing a majority stake in the target
company.

Joint venture: when two or more companies invest in a shared business project, pooling their
resources to form a separate business.

Operations: concerned with providing the right goods and services in the right quantities and at the
right quality level in a cost-effective and timely manner.

Intro to Business Management:

- With reference to the case study, describe the difference between public and private limited
companies (lines 14-15). A public limited company is a company listed on a recognised stock
exchange and stocks are traded publicly. On the other hand, a private limited company is neither
listed in the stock exchange nor are they traded. It is privately held by members only. Megamin
Mining went public so that they had increased access to capital so they could make international
trading easier and facilitate future growth.

- Outline one benefit and one limitation for MM being a public limited company (lines 14-15). One
benefit for MM being a public limited company is that they would have increased access to capital
by issuing public shares which would list MM on a recognised public exchange and so members of
the public and big time investors would be able to buy MM’s stock/shares and become equity
owners, which would in turn raise capital for MM. One limitation for MM becoming a public limited
company would be that it is possible that the original owners of MM will lose some control in the
direction of the company since it will be much harder to control who is a shareholder of the
company, and who the directors are ultimately accountable to, this could cause disputes which
would be a negative effect on MM.

- Outline one benefit and one limitation for MM merging with a Chilean company (lines 20-22). One
benefit for MM merging with a Chilean company would be that it allows access to new markets and
a greater reach to more of these consumers, thus increasing sales, and therefore profits, since Chile
is much smaller than Canada, there is a larger access to its market. One limitation for MM merging
with a Chilean company would be that since the two companies that have agreed to merge are from
different countries, their businesses may have different cultures, and so this may result in a gap in
communication and affect the performance of the employees.
- Outline one benefit and one limitation of MM using a decentralized structure for decision making?
MM uses decentralisation for day-to-day decision-making where possible, for example the local
management teams of each mine can make decisions about their operations, wages and
employment contracts. A benefit of using a decentralised structure for decision making is that it
takes some of the burden of daily business operations off the business owners, since
decentralisation allows others in a lower-levels of hierarchy such as the local management teams, to
get the job done. One limitation of MM using a decentralised structure for decision making is that
the owners may lose control over the day-to-day activities of MM. The lower-level managers that
would be in charge may also have a different agenda to the owners which can create conflict.

- Outline two forms of primary market research MM could conduct to help identify methods to
increase hotel bookings. One form of primary market research MM could conduct to help identify
methods to increase hotel bookings are online surveys. Online surveys are increasingly popular and
relatively low cost, they will be beneficial to capture the views of existing and potential customers,
another way online surveys could be used is as a guest satisfaction survey to attain feedback from
guests as they leave the hotel after their stay which would measure guest satisfaction and this would
allow MM to improve on any areas of dissatisfaction to increase hotel bookings. Another form of
primary market research that MM could use is telephone interviews, which would allow quick
feedback about the customers’ stays in their hotels. This feedback would then be useful to make the
changes necessary to increase hotel bookings, however it is worth mentioning that customers may
be reluctant to give anything other than short answers and so it may not prove to be very beneficial.

- Outline one benefit and one limitation of MM using primary market research. One benefit of MM
using primary market research is that the data collected via the primary research would be up-to-
date, relevant and specific to MM’s research objectives, it is also quite cheap and simple. One
limitation of MM using primary market research would be that for example, with telephone
interviews, attracting enough customers to take part, can be challenging, the process of contact with
multiple customers would also be time-consuming and perhaps the time could be better spent
elsewhere in the business.

- Discuss whether MM should form a joint venture or take over an existing lithium producer (lines
148-150). Since the fastest growing section of the mining industry is the extraction of Lithium, MM’s
board of directors see opportunity for major growth in this sector and so they are trying to
determine which external growth method would be best to take advantage of this opportunity. The
first external growth method is to take over an existing Lithium producer (possibly in Chile). The
reason that MM would be involved in a take over is because they would like to diversify their
products – into lithium. The take over may be beneficial for MM as it may increase market share and
since MM lacks expertise or resources to develop their own lithium mine, it would be beneficial to
take over another company. A takeover would also allow for MM to acquire new skills, considering
they are not familiar with lithium mining. However, a takeover is a high risk method of external
growth, there is a high cost involved, customers and suppliers may be unhappy during the process of
a takeover as a result of the disruption involved. A joint venture is when two unrelated companies
combine resources to accomplish a new business idea. The joint venture in this case, would possibly
be with a Canadian lithium producer, and an advantage would be that there is a sharing of risks and
costs, compared to the takeover which was much higher risk. There also may be access to new
knowledge and expertise, including specialised staff from the Canadian lithium producer and
perhaps even access to greater resources, for example technology and finance, however there can
be disadvantages associated with a joint venture too, for example, the partners’ expertise may not
be matched, since one party will most likely have more knowledge surrounding lithium mining and
the other does not, there is a risk that the communication between the partners is not great and so
this may cause conflict.

Human Resource Management:

- With reference to lines 112- 126, how can MM retain employee satisfaction? Currently, MM is
facing a series of issues surrounding employee satisfaction among the various countries they operate
in because their employment practices differ from country to country and are even different within
the country’s divisions. MM is giving their employees wages based off of the local wage rate
corresponding to the countries that the employees come from. Since the employees in the Chilean
mines are aware that employees in Europe and Canada are receiving more favourable contracts, the
Chilean employees are demanding similar contracts. Employee satisfaction could be improved here
by putting the Chilean miners on part-time employment contracts rather than the zero-hour
contracts that are possibly in place. Zero-hour contracts create unpredictability for the worker and
makes it difficult for them to have any sort of financial planning and so are not favourable in this
case. By changing the Chilean miners’ contracts to a part-time contract, there wouldn’t be any wage
increase so that eliminates the concern about reduced competitiveness and profits. The other issue
for MM’s employees was noticed by managers in Africa who reported a decline in productivity as a
result of decline in employee motivation. Employee motivation is being measured in this case by
production level. To motivate these employees, and in turn, retain employee satisfaction, perhaps a
recognition and rewards system could be implemented to create a sense of acknowledgement and
appreciation for the employees which could make a significant impact on their motivation. Maslow’s
Hierarchy of Needs states that recognition is a part of the integral needs that someone needs to be
motivated, so there is some evidence to this suggestion.

- With reference to the case study, discuss Megamin’s decision to utilize local wage rates for their
employees (lines 113-115). MM has decided to allocate wages corresponding to the local wage rates
for each country, and since some countries have lower or higher wage rates than others, employees
working in different countries are paid either less or more depending on what country they live in,
for example, employees in Canada are paid more than employees in Africa, for doing the same job.
Under the FLA code, employers must pay their employees at least the minimum wage required by
local law. Therefore, utilising local wage rates for their employees is legal and not against any
practice, the workers are not being exploited with “sweatshop” working conditions as they are being
paid the correct amount for their country, however when considering the ethical implications of this
decision, perhaps it is worth at least providing benefits on top of the wages that the workers are
receiving to put a stop to the hinderance of motivation which would, in turn, be beneficial for MM
since it would promote better production levels as a result of higher motivation levels.

- With reference to two motivational theories, suggest ways to improve motivation among
employees (line 112-126). Motivation among employees at MM is being hindered by certain factors,
for example, differences in employment contracts and employee rights. Motivation can be improved
in many different ways, the two most prominent motivational theories include Maslow’s Hierarchy
of Needs, and Herzberg’s Two-Factor theory. Maslow’s theory compromises a five-tier model of
human needs, in a hierarchical sort of pyramid. From the bottom of the hierarchy upwards, the
needs are: physiological (food and clothing), safety (job security), love and belonging needs, esteem
needs (recognition and respect) and self-actualisation. Needs lower down in the hierarchy must be
satisfied before individuals can attend to needs higher up. If a reward system is put in place for
employees experiencing demotivation, perhaps this will fulfil the fourth hierarchy of the pyramid of
esteem since it involves recognition and respect and also since the lower hierarchies have already
been fulfilled. A rewards system would enable the employees to feel a sense of recognition if
implemented correctly. This sense of recognition is also apparent in Herzberg’s Two-Factor theory,
the theory is composed of two factors that an organisation can adjust to influence motivation in the
workplace. These factors are motivators which can encourage employees to work harder, and
hygiene factors which won’t encourage employees to work harder but they will cause them to
become unmotivated if they are not present.

Finance

-Detail two reasons why MM’s closing balance was negative in Quarter 2 and Quarter 3. MM had a
negative closing balance in quarters 2 and 3 of 2021, the reasons behind this negative balance could
firstly be that since they are mining minerals, the prices of minerals can be volatile and are
determined by international commodities markets that reflect supply and demand at any given time,
so perhaps between these periods of time, there was not as much of a demand for the minerals that
MM was mining. Another potential reason for the negative closing balance could be that MM’s gold
mine in Egypt has technical problems and is unsafe, so some of the lorry drivers at the mine have
threatened to strike action, meaning that they wouldn’t be able to work as much so MM would face
production issues.

Operations

- Discuss the importance of environmental sustainability for Megamin minings social image relating
to social corporate responsibility. MM has received negative publicity from environmental groups
about its operations, and there have been protests against it at various locations. MM’s
consideration to stop activities in the most polluting areas of the business and to set strict climate
change targets for other levels of the business, is a step in the right way for their social image
relating to corporate social responsibility (CSR). If MM recognises its CSR it will more than likely have
a sustainable business model, by building strong links with society and the environment, MM is more
likely to be a valued part of the society.