DO NOT OPEN THIS QUESTION PAPER UNTIL YOU ARE TOLD TO DO SO Enterprise Pillar E2 Enterprise Management Instructions to candidates 30 August 2013 - Friday Session You are allowed three hours to answer this question paper. You are allowed 20 minutes reading time before the examination begins during which you should read the question paper and, if you wish, highlight and/or make notes on the question paper. However, you are not allowed, under any circumstances, to open the answer book and start writing or use your calculator during this reading time. You are strongly advised to carefully read all the question requirements before attempting the question concerned (that is all parts and/or subquestions). ALL answers must be written in the answer book. Answers or notes written on the question paper will not be submitted for marking. ALL QUESTIONS ARE COMPULSORY. Section A comprises 5 questions and is on pages 2 to 4. Section B comprises 2 questions and is on pages 6 and 7. The list of verbs as published in the syllabus is given for reference on page 11. Write your candidate number, the paper number and the examination subject title in the spaces provided on the front of the examination answer book. Also write your contact ID and name in the space provided in the right hand margin and seal to close. Tick the appropriate boxes on the front of the answer book to indicate which questions you have answered. E2 Enterprise Management TURN OVER The Chartered Institute of Management Accountants 2013
SECTION A 50 MARKS [You are advised to spend no longer than 18 minutes on each question in this section] ANSWER ALL FIVE QUESTIONS IN THIS SECTION Question One PAL Company manufactures sports wheelchairs and accessories which it sells direct to disabled people wishing to participate in a variety of sports including basketball and tennis as well as athletics events. It was established 10 years ago by J, a keen sportsman, who has a disability himself and who is passionate about making sport accessible to all. All of the products manufactured by PAL Company are designed according to the regulations set out by the relevant sports federations and are sold online or by mail order. In manufacturing its products, the company relies on a small number of suppliers to provide specialist high quality component parts. Not surprisingly, with the success of the Paralympic Games in 2012, there has been a surge of interest in sports for disabled participants with more and more people wanting to get involved. This has made the industry in which PAL Company competes a particularly attractive one to be involved in. J is concerned about the threats to the future profitability of the company because of increased competition. Explain the factors that could lead to a reduction in profits for PAL Company, using Porter's Five Forces model. (Total for Question One = 10 marks) Question Two TL Company is a large retail women's clothing chain with stores throughout Country K. The company currently has a number of regional offices, each with its own dedicated finance department responsible for the finance and administration functions covering all the stores in its region. In response to poor sales in the current business climate and disappointing financial results, F, the CEO, has stated that there is a clear need for the company to pay greater attention to the operational cost effectiveness of the various functional departments. F is proposing that the finance function's focus should be on contributing to the strategic decisions of the company as a whole, rather than its current emphasis on finance operations and processing. However, F doubts that the current structure of the function within TL Company is necessarily the best way forward. She is exploring the possibility of outsourcing some aspects of the finance function to a specialist third party provider. Discuss the relative merits and problems for TL Company of outsourcing some aspects of the finance function. (Total for Question Two = 10 marks) Enterprise Management 2 September 2013
Question Three L Company is a large retailer with 39 stores in its home country. The sales and marketing team in L Company routinely spends time scanning the external environment and seeking to understand the needs of the customers in the markets in which L Company operates. The sales and marketing team has been very successful in generating initial sales from customers. L Company is concerned that it is not so successful at retaining the customers and obtaining customer loyalty. The Board of L Company has recognised the need to invest in new technology in order to manage the customer data in an organised way with a view to using the data to create customer loyalty. The Board believes that customer relationship management (CRM) should be undertaken in order to manage L Company's relationships with its customers. A CRM project is now underway. The project aim is to implement technology that will collect and organise data on customers that will help retain existing customers and attract new customers. The CRM project will include the development of a database that can be used as part of a company-wide business strategy, so that a better insight into the customer experience can be gained throughout L Company. Distinguish the characteristics of the proposed Customer Relationship Management (CRM) project that differentiate it from 'business as usual' in regard to the day to day work of the sales and marketing team in L Company. (Total for Question Three = 10 marks) Question Four A formal top down approach to strategy formulation is not always the most appropriate in organisations that operate in an uncertain, dynamic and complex business environment. This is exactly what DMC Company has discovered as it has struggled to respond and adapt its strategies to changes in the computer video games business. Whilst an innovative company, the combination of legal, economic, technological and lifestyle changes in recent years have all had a major impact on its industry. Not surprisingly, P, the CEO of the company, has realised that it cannot continue to formulate strategy in this way if the company is to improve its competitive performance and survive. In particular, P believes that managers must be prepared to adopt a radically different approach to strategy formulation than the formal top down model that they have traditionally followed in the past. He is proposing that the company adopts a more emergent approach to strategy development. Explain what is meant by environmental uncertainty and the emergent approach to strategy that P is proposing. (Total for Question Four = 10 marks) Section A continues on page 4 TURN OVER September 2013 3 Enterprise Management
Question Five FTF Company runs a leading chain of health and fitness centres. The company has developed over time, and is now looking to refresh its mission statement. In doing this, it wants to involve a range of staff who perform different roles in the company. A communication will go out to invite participants to a series of mission statement workshops. Part of the communication will be to explain the role of a clear mission statement for the business. Explain the points that could be included in the communication of the role of a mission statement and what factors could be considered when formulating a mission statement for FTF Company. (Total for Question Five = 10 marks) (Total for Section A = 50 marks) End of Section A Section B starts on page 6 Enterprise Management 4 September 2013
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SECTION B 50 MARKS [You are advised to spend no longer than 45 minutes on each question in this section] ANSWER BOTH QUESTIONS FROM THIS SECTION 25 MARKS EACH Question Six F Company is a private training provider which currently offers its students the ability to study for their qualifications in a traditional classroom environment. F Company s Board has agreed a business case and signed off a project initiation document for a project it has described as 'Rewind and Replay Lectures' (RRL). The project initiation document clearly states that the project budget should not exceed $1 million and that the final deadline for delivery should be six months. The main objective of the project is to record, in a professional recording studio, lectures covering the entire syllabus of each of the qualifications taught by F Company. These recordings will then be made available for the students to purchase and to use the recorded material to support them in their studies. The advantage for the student is that once the product has been purchased they can watch the recordings at any time that is convenient for them. The students can also rewind and replay the recordings as many times as they like which will enhance the learning experience. The Board of F Company is now about to establish a project team for the Rewind and Replay Lectures project and the Finance Director of F Company is going to act as project manager. (a) (b) Produce a project plan for the activities that would need to be undertaken in the planning phase of the Rewind and Replay Lectures project. (13 marks) Explain to the Finance Director his role and responsibilities in the Rewind and Replay Lectures project. (12 marks) (Total for Question Six = 25 marks) Section B continues on the opposite page Enterprise Management 6 September 2013
Question Seven Z Company is a long established and locally based family run engineering business but was recently taken over by GN Holdings. As a traditionally family run business, relationships between managers and factory workers were very strong. Over the years this led to a contented workforce with a strong sense of loyalty towards the family that owned the business. There was a willingness to do whatever was asked of them if it was seen to be in the best interests of the company. In the past this has been tested to the full when, at various times, workers have agreed to take a pay cut, or work longer hours when the survival of the company was threatened. In return workers have always been well cared for, enjoying excellent working conditions and a generous pension on retirement. The last owner, A, was a particularly charismatic figure who many of the workers knew as a boy growing up during the time when his father was still running the business. As a student he worked alongside many of those he was later to manage in the factory. He had been at the head of the company himself for over ten years and was responsible for introducing a number of key changes in recent years in order to modernise the business. In every case he had the full backing and cooperation of the employees and under his leadership the business began to thrive. Unfortunately, and quite unexpectedly, A was forced to step down as leader due to ill health, and with no family able to take over the running of the business A had to take the decision to sell it to GN Holdings. The upheaval came at a particularly difficult time for the company which had just won a major export contract that would necessitate a significant increase in output. GN Holdings wasted no time in installing its own management team in Z Company. However, the approach of the new management has not gone down well since it has adopted what could be termed an autocratic/authoritarian approach. It has told workers that there will be changes in how their work is organised. One significant change will be the introduction of multi-skilled teams, which will mean changes to individual job roles. Workers are generally feeling unhappy and are also sceptical about the proposed changes whilst production for the export contract is now behind schedule. (a) (b) Discuss why an autocratic/authoritarian style of leadership adopted by the new management team is not effective in Z Company and what approach could be introduced to improve the situation in Z Company. Your answer should make reference to relevant theory. (15 marks) Discuss the benefits of team working that GN Holdings could mention in order to gain the support of Z Company workers to its proposal to introduce multi-skilled teams. (10 marks) (Total for Question Seven = 25 marks) (Total for Section B = 50 marks) End of Question Paper September 2013 7 Enterprise Management
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LIST OF VERBS USED IN THE QUESTION REQUIREMENTS A list of the learning objectives and verbs that appear in the syllabus and in the question requirements for each question in this paper. It is important that you answer the question according to the definition of the verb. LEARNING OBJECTIVE VERBS USED DEFINITION Level 1- KNOWLEDGE What you are expected to know. List Make a list of State Express, fully or clearly, the details of/facts of Define Give the exact meaning of Level 2 - COMPREHENSION What you are expected to understand. Describe Communicate the key features Distinguish Highlight the differences between Explain Make clear or intelligible/state the meaning or purpose of Identify Recognise, establish or select after consideration Illustrate Use an example to describe or explain something Level 3 - APPLICATION How you are expected to apply your knowledge. Level 4 - ANALYSIS How you are expected to analyse the detail of what you have learned. Level 5 - EVALUATION How you are expected to use your learning to evaluate, make decisions or recommendations. Apply Calculate Demonstrate Prepare Reconcile Solve Tabulate Analyse Categorise Compare and contrast Construct Discuss Interpret Prioritise Produce Advise Evaluate Recommend Put to practical use Ascertain or reckon mathematically Prove with certainty or to exhibit by practical means Make or get ready for use Make or prove consistent/compatible Find an answer to Arrange in a table Examine in detail the structure of Place into a defined class or division Show the similarities and/or differences between Build up or compile Examine in detail by argument Translate into intelligible or familiar terms Place in order of priority or sequence for action Create or bring into existence Counsel, inform or notify Appraise or assess the value of Propose a course of action September 2013 11 Enterprise Management
Enterprise Pillar Management Level Paper E2 Enterprise Management September 2013 Friday Session Enterprise Management 12 September 2013