Paper E1 Enterprise Operations Post Exam Guide May 2012 Exam

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1 General Comments As in previous examinations this paper included ten 2 mark multiple choice sub-questions (Section A), six mark sub-questions (Section B) and two 2 mark questions (Section C). All questions are compulsory. In common with previous examinations, candidates scored heavily on Section A, encouragingly on Section B and poorly on Section C. Performance varied considerably between examination centres. SECTION A 20 MARKS ANSWER ALL TEN SUB-QUESTIONS Each question is worth 2 marks Question 1.1 A transition economy is one that is A B C D about to be controlled by a different political regime. still introducing the benefits of e-commerce. moving from a planned to a mixed or free market economy. retrenching due to adverse economic circumstances. The answer is C Question 1.2 Corporate governance is best described as A a code for organisational direction, administration and control. B stakeholder guidelines. C a system of penalties for unethical behaviour. D the relationship between an organisation and the government. The answer is A Question 1.3 Which ONE of the following is a program that impairs data and software? A A virus B Corrective maintenance C Electronic Data Interchange (EDI) D Cyber bullying The answer is A Question 1.4 Background and circumstances, special attributes and disposition are all factors often identified in which ONE of the following? A B C D Service level agreements Key performance indicators Person specifications Job descriptions The answer is C The Chartered Institute of Management Accountants Page 1

2 Question 1. IS client-vendor relationship is a feature of which ONE of the following? A An outsourced IS function B Enterprise-wide systems C Social networking D Virtual team working The answer is A Question 1.6 If an employee who is opposing the introduction of a new system is given a key role in its implementation, this is an example of which ONE of the following? A B C D Co-optation Career planning Succession planning Networking Question 1.7 The answer is A Contrived, volume and realistic are examples of which ONE of the following? A System testing methods B Supply relationship categories C Ways of classifying inventory D Ways of estimating market potential The answer is A Question 1.8 A psychological contract refers to which ONE of the following? A Intangible costs arising from outsourcing B The mutual expectations of an employer and employee C The responsibilities of citizens to their nation D The use of contracted experts in psychometric staff testing The answer is B Question 1.9 According to Douglas McGregor, managers believe Theory X people A naturally dislike work and avoid responsibility. B naturally enjoy work and seek the challenge of responsibility. C are a younger generation which is comfortable with new technology. D are an older generation unlikely to engage in e-commerce. The answer is A The Chartered Institute of Management Accountants Page 2

3 Question 1.10 Which ONE of the following is most likely to lead to an organisation accessing a larger market for its goods or services? A B C D Electronic Data Interchange (EDI) Teleworking e-trading Penetration marketing The answer is C Question One sub-questions 1.1 to 1.10 test candidates knowledge of a wide variety of topics within Sections A, C, and E of the syllabus through the use of objective test questions (OTQs) in a conventional 'multiple choice' format. Sub-questions 1.1 to1.10. These sub-questions have been constructed on the basis that there is only one correct answer. Marking is therefore on the basis of 2 marks for a correct answer and 0 marks for an incorrect answer. 0 or 2 Examiner s Comments Most candidates scored heavily on this question, several answering 9 or 10 sub-questions correctly. The Chartered Institute of Management Accountants Page 3

4 SECTION B 30 MARKS ANSWER ALL SIX SUB- QUESTIONS. Question Two and general suggested approach Question two represents 30% of the paper and tests topics from across sections A, C and D of the syllabus. Responses for each sub-question are expected in a form that might include a few headings, sentences and bullet s over a page or so per sub-question. Questions are direct and are not complicated by detailed scenarios. As such, accuracy, brevity and clarity are called for and hopefully candidates should not spend a disproportionately long time on each sub-question. Question Two (a) Explain FIVE ways in which businesses might try to influence government policy in a way that might benefit them. This question examines learning outcome A2(b) 'analyse relationships among business, society and government in national and regional contexts'. Identify the methods available Briefly describe each in turn Using political lobbyists Creating non-executive directorships Making campaign contributions to certain political parties Influencing public opinion Membership of a trade association or professional body Bribery and associated ethical and legal issues Maximum mark awarded 1 mark per The Chartered Institute of Management Accountants Page 4

5 Question two (b) Product manufacturing operations can be explained as a three stage transformation model of inputs, processes and outputs. Distinguish how a service differs from a product using this model as a framework. This question examines learning outcome C1(c) 'explain the particular issues surrounding operations management in services'. Categorise inputs, processes and outputs. For each category highlight how a service differs from a product Inputs: are intangible Processes: Customers participate in the delivery process of a service Services are more labour intensive Standardisation difficult Outputs: Are intangible and incapable of being stored Are intangible and depend upon staff to make sales Inseparability of the service and the person providing it 1-2 marks per substantial The Chartered Institute of Management Accountants Page

6 Question two (c) Explain the main features of organisations that do NOT adopt a market or marketing orientation. This question examines learning outcome D1(a) 'explain the marketing concept, and the alternatives to it'. Identify alternative approaches Explain the main features of each Product- orientated: Little prior research to identify a demand Risk of products not selling Could result in goods with high quality features Production-orientated: Production levels / processes have no regard to demand so units may be left unsold Aim is low production costs which might in turn result in lower selling prices 1 mark per (max 3 marks per category) Sales-orientated: Attention to the sales strategies and the enthusiasm of the sales force Ethically questionable, high pressure sales techniques might be unsustainable Question two (d) Describe FIVE factors that can influence an individual when deciding whether or not to purchase a product. This question examines learning outcome D1(e) 'describe theories of consumer behaviour'. Identify the five factors Briefly describe each in turn The degree to which the product satisfies a need or want The social influence of others on an individual's buying habits The relevance of the purchase The influence of frequency of purchase The influence of new product features Culture and social class Effectiveness of the marketing mix Consumer's motives ( factors include perceptions, beliefs and attitudes, price, availability,etc.) 1 mark per The Chartered Institute of Management Accountants Page 6

7 Question two (e) Explain the relationship between Frederick Herzberg's dual (two) factor motivation theory and job enrichment. This question examines learning outcome E2(c) 'describe the HR activities associated with improving the opportunities for employees to contribute to the firm'. Suggested Approach/Marking guide Describe Herzberg's dual factor motivation theory Describe job enrichment Explain the relationship between the two Explanation of hygiene factors (pay, status, working conditions, rules and levels of supervision) related to satisfaction/dissatisfaction Explanation of motivators (doing a good job, sense of achievement, opportunities for career advancement, responsibility, etc.) Job enrichment - deliberately delegating responsibility for tasks normally associated with someone of a higher grade or level Correct linkage of job enrichment to the theory (nothing to do with Herzberg's hygiene factors but represents a motivator 1 mark per 2 marks Question two (f) Describe the marketing processes that are necessary before an organisation can properly target the most lucrative part of a market. This question examines learning outcome D2(a) 'explain the relationship between market research, market segmentation, targeting and positioning'. Suggested Approach/Marking guide Identify the marketing processes that are necessary before targeting Briefly explain each in turn Market research: explanation, forms (primary, secondary), sources, costs, uses, information provided, etc.) Market segmentation: definition, explanation, rationale, relationship to the marketing mix, etc. Max 2 marks each Competitor analysis: number per segment, mix adopted and market share, etc. The Chartered Institute of Management Accountants Page 7

8 Examiner s Comments There were some encouraging candidate performances when responding to Question 2. Well prepared candidates applied their knowledge to the requirements of the sub-questions and scored highly. Common Errors: A common error for 2(a) was to explain government influence on businesses Not all candidates used the model given as a framework for their answers The Chartered Institute of Management Accountants Page 8

9 SECTION C 0 MARKS ANSWER BOTH QUESTIONS Question Three (a) (b) (c) Discuss the potential advantages for WV8 of decentralising the CIS function. (10 marks) Discuss the issues associated with a total outsourcing of CIS for WV8. (10 marks) Describe the lessons WV8 could learn from marketing principles and practices. (Total for Question Three = 2 marks) Question three requirement (a) examines learning outcome B2(b) 'discuss ways of organising and managing information system activities in the context of the wider organisation'. Requirement (b) examines learning outcome A1(b) 'explain the emergence and importance of outsourcing and offshoring'. Requirement (c) examines learning outcome D1(c) 'explain marketing in a not-for-profit context'. The question examines the ability to apply this thinking to the context of the scenario. Requirement (a) Identify the potential advantages of decentralisation Relate to the scenario Discuss each advantage in turn A positive response to user feedback Symbolic response to external forces Reduced central costs Reduces 'red tape' Empowerment encouraging innovation and compliance, etc. Source of morale and job satisfaction Improve managerial capacity Act as a pilot scheme Overcome staffing difficulties Improved processes through greater staff involvement 1 to 2 marks per 10 The Chartered Institute of Management Accountants Page 9

10 Requirement (b) Explain the idea of total outsourcing Relate to the scenario Discuss the associated issues specifically for IS within WV8 Relative attractiveness of alternative means of provision Outsourcing alternatives (multiple sourcing / strategic joint venture) Cost implications Gaining expertise and IS specialism Strategic fit and flexibility Risk involved (consistent with Quinn and Hilmer's tests) Impact on existing IS staff Contractual complications Service quality and understanding 1 to 2 marks per 10 Requirement (c) Identify marketing principles and practices that may be of relevance given the scenario Identify and describe the lessons WV8 could learn from these Customer focus Identification of user needs and wants A shared philosophy Effective communication with customers Market research Public relations A focus on the marketing mix 1 mark per Examiner s Comments A substantial 2 marks are available. As with previous examinations there was a lack of content in most cases indicating that insufficient time had been spent in addressing the issues in the scenarios. Common Errors Not writing enough! Some answers were nothing more than outline notes when the question had more substantial requirements. There was confusion in some cases between outsourcing and offshoring. With 3(a), it was apparent that many candidates did not understand decentralisation and instead discussed the advantages of outsourcing. The Chartered Institute of Management Accountants Page 10

11 Question Four (a) (b) (c) Explain the requirements for achieving a Total Quality Management (TQM) approach with in 2JN. (10 marks) Identify the important issues and work groups that need to be considered when organising the TQM training in 2JN. (10 marks) Discuss the claim that high quality 'will both put costs down and revenue up'. (Total for Question Four = 2 marks) Question four requirement (a) examines learning outcome C2(d) 'illustrate a plan for the implementation of a quality programme'. Requirement (b) examines learning outcome E2(a) 'explain the HR activities associated with developing the ability of employees', and requirement (c) examines learning outcome C2(a) 'apply contemporary thinking in quality management'. Requirement (a) Identify the requirements for achieving a TQM approach and relate to the scenario Explain each requirement in turn Effective communication Leadership: Senior management commitment Staff commitment (QA rather than QC involvement) Funds for skills and competence development Continuous improvement Scope for TQM Developing team working Developing new measures Alignment of reward systems A focus on customers' quality requirements 1 to 2 marks per 10 The Chartered Institute of Management Accountants Page 11

12 Requirement (b) Identify some TQM training requirements Relate these to the scenario and describe each in turn Agree key elements of TQM for 2JN Identify different training needs Training facilitators and venue(s) Material design and content updates Training senior managers Training the workforce Training supervisors Training Quality Committee members Training in supporting processes and documentation Training Quality Circle participants 1 to 2 marks per 10 Requirement (c) Discuss how high quality can put costs down and revenue up Relate to the scenario Reduce costs (max 3) Re-working costs and scrapped items will be reduced Internal inspection costs will be reduced External quality costs will be reduced (customer complaints and warranty costs) Processing time may be improved Increase revenue: (max 3) Cost savings means lower prices to generate additional sales Retention of existing customers and repeat sales Improves 2JN's image so strengthening the brand New customers attracted through word of mouth Better competitive position 1 to 2 marks per Examiner s Comments As with Question 3, a common error was not writing enough. With regard to 4(b), a significant number of candidates either drew no reference to training or mentioned it only passingly, instead dealing with organisational TQM issues. There also appeared to be a common misconception that ISO9000 and TQM were one and the same quality programme. The Chartered Institute of Management Accountants Page 12