MGTA03 - INTRODUCTION TO MANAGEMENT I
2011 Fall – Mid-Term Test – October 29th, 2011
Model Answers to SAQs
Page 1 of 6 Question 1
Identify the degree of competition of the cell phone industry in Canada. 1 mark
Note: The answer to this question will be the same whether the student
understood the question to mean the service provider industry or the hardware
manufacturing industry. The same is true even if you understood the question
to mean operating systems or smartphones
The Canadian cell phone industry is an Oligopoly 1 mark
Explain and justify your answer by identify at least three features of this
degree of competition, and relate these features to the cell phone industry
in Canada 3 marks
We can say that is an oligopoly because the industry has the following attributes:
1) A small number of suppliers dominate the industry.
If you understood the question to mean service providers: 3 companies dominate the
industry (Rogers, Bell, Telus = c. 95% of all subscribers)
If you understood the question to mean cell phone manufacturers 4 or 5 companies
dominate the industry (Nokia, Samsung, LG, and Sony = c. 80% of all sales)
2) Each of the few companies is "large", i.e. large in terms of volume of sales, number of
employees, number of customers, etc.
3) There are only a few suppliers because there are barriers to entry: large capital needs
4) There are economies of scale, i.e. the huge costs of installing a network can be
lowered on a per-customer basis if you have very many subscribers.
5) The competitors watch each others' pricing policies closely, and tend to match each
others' price changes and marketing initiatives, quickly.
Page 2 of 6 Question 2
When measuring an economy's economic performance, the officially reported rate of "unemployment" is
usually thought to under-report an economy's ability to fully and effectively utilise its labour resources.
This was attributed to both "underemployment" and the "discouraged worker" effect.
Explain what is meant by "underemployment" 2 marks
Underemployment: means that workers are not working at their full potential.
Either they are working at part time (rather than full time) jobs, or they are
working at jobs that are not fully exploiting their expertise and education. e.g.
a nuclear engineer driving a taxi, a Ph. D. chemist working as a greeter at Wal-
Unemployment statistics will show these people as having jobs, but they are
earning less than they would like, and contributing to society less than they
Explain what is meant by the "discouraged worker" effect. 2 marks
Discouraged Worker: means people who might normally be looking for a job
(and therefore be counted as part of the workforce) have judged the chances of
their finding employment are too remote to even bother trying. Therefore,
talented people who might be working choose instead to retire, to go back to
school, to travel, or to be full time home makers, rather than to be unemployed
or underemployed. Because they have withdrawn themselves from the work
force (i.e. they are not actively looking for work) they are not considered to be
Page 3 of 6 Question 3
The American Psychologist David McLelland developed the "needs motivation" theory.
McLelland's theory suggests that every person possesses one of three basic motivational
needs. According to Mclelland's theory, depending on which of these motivational needs
each of us possess, we are likely to pursue a kind of career or work environment..
a) Identify each of the three basic human motivators identified by McLelland, 3 marks
Note: You are expected to demonstrate you knowledge and understanding of
the material. If your answer merely inc