E2 Enterprise Management Post Exam Guide May General Comments

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1 May 202 General Comments The pass rate for this examination was in line with that of the previous main May/November examinations. A particular feature of overall performance this time was the noticeable gap between high scoring candidates at the top end of the scale and very poor performers at the lower end. This examination saw a much larger number of candidates than usual scoring over 70% while at the other end of the scale there were candidates who achieved only a few marks. A significant number of candidates appeared to have done little if any preparation for the examination. Time management appeared to be a problem for some candidates with some of their Section A answers more detailed and lengthy than Section B answers; the superficial nature of the Section B answers indicating that these candidates had run out of time and thus sacrificed the opportunity to gain marks in the 25 mark questions of Section B. It was also noticeable in this session that a higher proportion of candidates than usual had been unable to complete all seven questions, again indicating a lack of good time management or lack of breath of knowledge of the syllabus. A noticeable trend in recent examinations is that more and more candidates are not bothering to tick the boxes indicating which questions they have attempted. Candidates should note that this is an essential requirement to ensure that all their answers are marked and their marks credited to their overall score. In Section A, Q2, Q3 and Q5 posed few problems with many candidates gaining a pass mark or more, but Q and Q4 did seem to create difficulties for a sizeable number of candidates. A more detailed consideration of the performance on each question is provided in the relevant section below. The Chartered Institute of Management Accountants Page

2 May 202 SECTION A 50 MARKS ANSWER ALL FIVE QUESTIONS Question Discuss why it would be helpful for CP Company to understand the key concepts of market size, market share and market growth. (Total for Question One = 0 marks) This question tests candidates' understanding of the competitive environment. It examines learning outcome A(b) 'distinguish between different types of competitive environment'. The question requires candidates to explain what is meant by market size, market share and market growth, Good answers will provide a comprehensive explanation of the concepts of market size, market share and market growth, with reference to the scenario information. Weak answers will give a confused account of the key concepts, without any contextualisation. Market size explained Market share explained Market growth explained Up to 4 [Answers could develop with reference to the BCG framework] Maximum marks awarded 0 Main weaknesses were due to candidates discussing the process of competitor analysis in a very general sense, without reference to the key concepts referenced in the question requirement. Some candidates used the BCG matrix, but described the four quadrants without application to the context of the scenario. The Chartered Institute of Management Accountants Page 2

3 May 202 Question 2 Explain the role played by the main project stakeholders in the sourcing and implementation of the enterprise resource planning (ERP) system. (Total for Question Two = 0 marks) This question tests candidates' appreciation of key players in projects. It examines learning outcome B2(c) 'explain the roles of key players in a project organisation'. A good answer could start with an explanation of project stakeholders and then go on and explain the various project stakeholders in the context of the enterprise resource planning (ERP) project. A weak answer will just be a knowledge dump of the project stakeholders with no reference to the enterprise resource planning project. Explanation of project stakeholders Explanation of the Enterprise Resource Planning system stakeholders and explanation of their role - for each stakeholder and role explained Stakeholders could include: Project sponsor Project owner (Finance Director) Functional managers Software suppliers Day to day suppliers Project team X Company Board Project manager each [marks are awarded for other relevant stakeholders] Maximum marks awarded 0 Examiner's comments This question was generally well done. Some candidates discussed the power and interest of the different stakeholder groups and did not go on to discuss the roles - an explicit requirement of the question. The Chartered Institute of Management Accountants Page 3

4 May 202 Question 3 (a) Explain, with reference to AT Company, the characteristics of the positioning approach to achieving competitive advantage. (6 marks) (b) Explain the potential problems AT Company could face in continuing to rely on the positioning approach. (4 marks) (Total for Question Three = 0 marks) The question is designed to test candidates' understanding of the positioning approach to strategy formulation. It examines learning outcome A2(b) 'compare and contrast approaches to strategy formulation'. The first part of the answer should explain how AT Company is currently achieving competitive advantage, with specific reference to the positioning approach. It should then develop to explain the problems associated with the positioning approach. Good answers will contextualise their answer with reference to the scenario information. Weak answers will explain competitive advantage at a general level with no contextualisation. (a) Positioning approach explained: Position relative to its competition and markets Outside in view Fit with environment Scanning and predicting changes in environment How supernormal profits achieved How AT Company differentiates (b) Potential problems with positioning approach Relies on predictions of future markets Competitiveness advantages can be copied in longer term External environment is too dynamic and continually changing Assumes organisation can have its size and shape changed to fit environment Use of resource based view if used to explain weaknesses (max 6) (max 4) Maximum marks awarded 0 The answers ranged from very good to very poor. A large proportion of candidates were able to provide an explanation of the positioning approach and some of its problems, though a minority were unable to define the approach and thus unable to complete an answer that gained any marks at all. Some candidates did not have an adequate appreciation of the positioning approach to the achievement of competitive advantage to do justice in developing a full answer to both parts of the question. The Chartered Institute of Management Accountants Page 4

5 May 202 Question 4 Explain how the organisational culture of PCC Company might influence, both positively and negatively, its performance. (Total for Question Four = 0 marks) This question tests candidates' ability to explain how organisational culture can influence an organisation's performance in terms of positive and negative influences. It examines learning outcome C(b) 'demonstrate the importance of organisational culture'. Answers should develop to distinguish between the positive and negative influences of organisational culture on organisational performance. Good answers will provide wide-ranging positive and negative influences of organisational culture on organisational performance. Weak answer will only discuss positive or negative influences or provide a very narrow answer. Explanation of concept of culture Positive influences: Facilitate communication Social identity Regulate behaviours and norms Minimise perceptual difference Shape personality of company Negative influences: Norms no longer appropriate Difficult to change Rigid view Inappropriate values May not facilitate flexibility Culture conflict in case of merger Maximum marks awarded each (max 5) each (max 5) 0 Some good answers, but many weak answers which tended to discuss general management issues impacting positively or negatively on organisational performance. Some candidates based their answers on structure rather than culture, or discussed the advantages and disadvantages of different types of culture, but did not relate to the scenario. Some candidates did not read the scenario carefully enough and thus failed to note that the answer required an explanation of the positive and negative influences of a strong culture! The Chartered Institute of Management Accountants Page 5

6 May 202 Question 5 Explain, with reference to the above statement, the different levels of strategy that will exist within J plc, with specific reference to the growth possibilities within the BRIC economies. (Total for Question Five = 0 marks) This question tests candidates' appreciation of the different levels of strategy. It examines learning outcome A2(c) 'explain the relationships between different levels of strategy in organisations'. A good answer could start with an explanation of the strategic management process being multi-layered and then go on and explain the various layers in the context of the scenario statement. A weak answer will just be a knowledge dump of the three levels of strategy with no reference to the statement in the scenario. Explanation of multi-levels of strategy Explanation of corporate Strategy Corporate Strategy related to J plc (emerging markets / 5% growth) Explanation of Business Strategy Business Strategy related to J plc (segments and types of car) Explanation of Functional Strategy Functional Strategy related to J plc (production and human resource requirements) Maximum marks awarded 0 Some sound answers but see Common errors below. A significant number of candidates explained growth strategies in BRIC economies without any reference to the different levels of strategy, and hence did not end up answering the question posed. The Chartered Institute of Management Accountants Page 6

7 May 202 SECTION B - 50 MARKS ANSWER BOTH QUESTIONS Question 6(a) Discuss the rationale for TFX Company moving to a shared service centre model, including the benefits and any possible disadvantages. (3 marks) This question is designed to test candidates' ability to discuss the concept of the shared service model. It examines learning outcome C2(c) 'discuss the effectiveness of relationships between the finance function and the other parts of the organisation and with external stakeholders'. Answers could start by explaining what is meant by the shared service centre model and then go on to explain the rationale for moving to a SSC model. Answers should then develop to discuss the benefits and possible disadvantages. Good answers will evidence a sound understanding of the SSC model and provide a robust discussion of the benefits and disadvantages. Weak answers will demonstrate only a limited appreciation of the SSC model, and give a narrow view of benefits and disadvantages. SSC model explained for SSC model Benefits, e.g.: Economies of scale Reduction in premises costs Favourable labour rates Enhanced quality of service Sharing of knowledge Consistent management of data Disadvantages, e.g.: Negative impact on relationships between finance and business units More difficult to gain local knowledge of specific business units More difficult to work as business partner Setting up costs and issues mark each mark each Maximum marks awarded 3 Overall, some strong answers but a number of weaker ones due to incorrect interpretation of SSC model - see common errors below. Weaker answers tended to confuse the Shared Service Centre Model with outsourcing. Generally candidates were better able to articulate the benefits rather than the disadvantages of the SSC model. The Chartered Institute of Management Accountants Page 7

8 May 202 Question 6(b) Explain how TFX Company should develop and build the new finance teams, if the move to a shared service centre goes ahead. (2 marks) This question is designed to test candidates' appreciation of what is involved in building effective teams. It examines learning outcome C2(d) 'identify tools for managing and controlling individuals, teams and networks, and for managing group conflict'. Answers should develop to explain the various steps in building new finance teams. Candidates could use Tuckman's framework to structure their answers. Good answers will develop, with reference to relevant theory, to explain the various steps involved in building the new finance teams. Weak answers will not make reference to any theory on team building, making just a few generalised points about building teams. Brief overview of need to be proactive in building new teams Explanation of Tuckman's view of team development Stages of team formation to be effective: Forming Storming Norming Performing approaches to team building: Defining roles and responsibilities (could refer to Belbin) Leadership Socialising each Up to 4 each Maximum marks awarded 2 Mixed performance. High scoring scripts used theoretical principles associated with team development. Weak answers made a few practical suggestions, and some approached the question from a project management point of view of setting up the SSC, rather than relating their answers to developing and building teams. The Chartered Institute of Management Accountants Page 8

9 May 202 Question 7(a) Demonstrate, with reference to the stages of the project lifecycle, the steps that could have been taken to avoid the problems being experienced in the new Entertainment Attraction Project, as highlighted in the scenario. (5 marks) This question tests candidates' appreciation of the various stages in the project lifecycle. It examines learning outcome B(b) 'apply suitable structures and frameworks to projects to identify common project management issues'. A good answer could start with an explanation of all the stages in the project lifecycle and correctly identify the various steps that could have been taken at each stage to avoid the problems being experienced in the Entertainment Project, drawing on relevant information from the scenario. A weak answer will describe some of the stages in the project lifecycle at a general level and will not develop the answer in the context of the scenario. Explanation of project lifecycle For each stage in the lifecycle, how problems could be avoided: Identification of need Development of solution Implementation Completion Up to 4 Up to 4 [Answers could also develop using the phases: initiation, planning, execution and completion] Maximum marks awarded 5 Overall some candidates achieved high marks. The main two weaknesses included either not applying the answer to the project lifecycle, or not making reference to the scenario and specific problems being experienced. The Chartered Institute of Management Accountants Page 9

10 May 202 Question 7(b) Explain to Z Company the practices associated with continuous project improvement that could be used to help Z Company learn from the mistakes of the New Entertainment Attraction Project. (0 marks) This question tests candidates' appreciation of the importance of continuous improvements on projects. It examines learning outcome B(j) 'apply a process of continuous improvement to projects'. A good answer will start with an explanation of continuous improvement and explain the importance of the process and will then go through the practices Z Company might put in place to achieve continuous improvement. A weak answer will not answer both requirements and will not be structured around discreet practices. Explanation of continuous improvement Explanation of the importance of continuous improvement Explanation of the activities - for each activity Activities might include: Setting the culture Education and training Policies and procedures Benchmarking Feedback each [Answers could also develop with reference to the project management maturity model] Maximum marks awarded 0 Overall a low scoring answer. Many candidates repeated points from 7(a). Very few developed their answers in terms of the practices associated with continuous project improvement. Many answers simply referred to project completion. The Chartered Institute of Management Accountants Page 0