E2 Enterprise Management Post Exam Guide November General Comments

Transcription

1 General Comments The overall performance of candidates in this last of the E2 Enterprise Management examinations reflects in many respects that of previous diets. The main difference is to be found in the larger number of candidates that only managed to obtain a marginal pass in this diet as compared with that of previous sessions. The reason for this appears to have been a lack of adequate preparation. This is reflected in the relatively poor performance in Part A of the paper. Here many candidates scored relatively low marks because of a lack of knowledge of the subject matter. This was particularly evident in respect of Q4. Very few candidates had any knowledge or understanding of John Adair s concept of Action Centred Learning and hence failed to gain a pass mark on this question. Q3 which asked for an application of Transaction Cost Theory also posed a problem for many candidates. A large number managed to write an answer without even specifying what transaction costs consisted of and consequently received only a few marks for their efforts. The main weakness in the answers to Q which was concerned with differences between the stakeholder view and the shareholder view of social responsibility was that many candidates simply repeated the arguments set out by the Chief Executive and the Finance Director in the scenario rather than attempting to answer the question set. By contrast, Q2 on the use of Critical Path Analysis and Q5 on the application of Porter s Five Forces Model were fairly well answered by a majority of candidates. Given the change in the format of future examinations, it seems fair to warn candidates who will be taking re-sits that the Objective Test Examination will leave no scope for evasion of the question or for repetition and it is thus imperative that candidates have a thorough knowledge of relevant models as set out in the Management Syllabus and an ability to apply these both in the OTQ Examination and in the Management Level Case Study to follow. It is however, possible to end this brief overview on a more cheerful note. Fortunately many candidates who performed badly in Part A, performed much better in Part B with many candidates writing particularly good answers to Q7 though in many cases rather fewer good answers for Q6, details of which are provided in the relevant section below. The Chartered Institute of Management Accountants Page

2 SECTION A 50 MARKS ANSWER ALL FIVE QUESTIONS Question Compare and contrast the viewpoints of the Chief Executive and the Finance Director regarding the social responsibility proposals for FZP Pharmaceutical Company. (Total for Question One = 0 marks) This question tests candidates' appreciation of the concept of social responsibility in strategic decisions. It examines learning outcome A2(b) 'compare and contrast approaches to strategy formulation'. Answers should first explain the concept of social responsibility. They should then develop to compare and contrast the different viewpoints of the Chief Executive and the Finance Director. The main arguments for and against the social responsibility proposals should be explained. Good answers will develop convincing arguments both for and against the social responsibility proposals, making explicit reference to the scenario context. Weak answers will be limited to a general explanation of social responsibility, with a description of benefits and drawbacks, not contextualised to the scenario. Explanation of the concept of social responsibility FD's arguments e.g.: Position taken by Milton Friedman maximises wealth of shareholders/owners Reference to Sternberg's view Legitimate function of business is economic performance Up to legislators to make laws against socially irresponsible acts Additional costs in becoming energy efficient/recycling/reducing emissions Negative impact on shareholder value Management time diverted CE's counter arguments e.g.: If core business conflicts with needs & values of society it may not survive Potential to drive down costs by reducing waste and pollution Reputational benefits - corporate image Attract customers if demonstrate sustainable business practices Attract ethical funds Charitable donation good PR (e.g. morale, retention of staff, legislation) (max 5) (max 5) Maximum marks awarded 0 Very few good answers to this question with most candidates simply repeating parts of the scenario. Only a few candidates managed to come up with the counter arguments of the CEO and even fewer demonstrated any knowledge of the broader debate as summarised in the FD s points above. General lack of knowledge of the topic and repetition of material direct from scenario. The Chartered Institute of Management Accountants Page 2

3 Question 2 Explain how undertaking critical path analysis can assist the project manager in the project management lifecycle. (Total for Question Two = 0 marks) This question requires candidates to be familiar with the concept of risk within the context of project management and to understand the different ways in which risk can be managed. It examines learning outcome B(e) 'apply key tools and techniques, including the evaluation of proposals'. Answers should first provide an explanation of the concept of CPA, developing to explain the detail of CPA in the context of assisting project management during the project life cycle. Good answers will provide a coherent explanation of CPA making reference to the project lifecycle in the context of assisting project management. Weak answers will simply identify what CPA is without developing on the how to assist project management. Project management lifecycle explained CPA as a management tool Diagram to illustrate network diagram and CPA Planning phase: Assist PM in determining project duration Identification of latest time project can commence The sequence of activities Dependence of activities Identifies critical path Identifies non-critical activities Assess slack Project control: Aids PM in project control and actions needed Identifies if there is need to reschedule Change resource allocation mark each 0 Maximum marks awarded Examiner's comments Generally well answered by candidates who had prepared for the examination. Description of CPA but no explanation of how it can assist in the project management lifecycle. The Chartered Institute of Management Accountants Page 3

4 Question 3 Discuss, with reference to transaction cost theory, the Finance Director's recommendation to outsource manufacturing. (Total for Question Three = 0 marks) This question tests candidates' understanding of transaction cost theory in making decisions on outsourcing. The question examines learning outcome A2(a) 'discuss concepts in established and emergent thinking in strategic management'. The first part of the answer should explain the fundamentals of transaction cost theory (TCT) and then apply these to the FD's recommendation. This could be achieved by first explaining hierarchy solutions and then market solutions to discuss the factors FD would have needed to consider. Good answers will draw on the issues identified in the scenario to provide illustrations to support points made. Weak answers will provide a descriptive answer on TCT or will simply explain the benefits of outsourcing without reference to theory. Fundamentals of transaction cost theory explained e.g.: Examines way in which resources are organised Focuses on how best economic efficiency can be gained Based on buy or make decisions Reference to asset specificity Hierarchy solutions explained Applied to DY Company Market solutions explained Applied to DY Company Issues for the FD to consider: Transaction costs associated with outsourcing e.g. managing contracts Potential problems of control and asset specificity Issues of dealing with the manufacturer in T Country 2 2 I each Maximum marks awarded 0 Few good answers to this question. Most candidates made reference to the make or buy decision and some candidates explained the more technical terms of hierarchical and market solutions and their associated costs and benefits. Too many candidates however, never got around to explain what transaction costs consisted of and of how this conditioned the decision of whether or not to outsource. Even fewer were able to explain asset specificity and its role in transaction cost theory and/or its relevance to the case in question. Weak answers gave an overview of outsourcing, but without application to the scenario or TCT. The Chartered Institute of Management Accountants Page 4

5 Question 4 Discuss KS's current leadership style and how action centred leadership could help KS in identifying his training needs to become a more effective leader. (Total for Question Four = 0 marks) This question tests candidates' understanding of action centred leadership and how this can help in identifying training needs. It examines learning outcome C(a) 'discuss the concepts of power, bureaucracy, authority, responsibility leadership and delegation'. The answer should develop to first explain KS's current approach to leadership and then use the theory of action centred leadership to identify the training KS needs to become a more effective leader. A good answer will use theory to explain KS's approach to leadership and the use of ACL to explain KS's training needs, drawing on information provided in the scenario. A weak answer will simply describe action centred leadership theory without reference to the scenario context. Concept of leadership defined Explanation of KS's current approach Explanation of action centred leadership e.g.: Leadership skills can be learnt by concentrating on functions that lead to effective performance Effectiveness of leader is dependent on meeting needs of task, group, and individual need Diagram of ACL Using theory, identification of KS's training needs: Need to achieve task KS has strong skills in this aspect of leadership Needs of group: T needs training to improve communication skills T needs training to improve team building skills Need of individual: T needs training on how to develop individuals T needs training on feedback and recognition Each other training need identified using ACL Maximum marks awarded Up to 3 0 The answers to this question were generally very poor and it was evident that few candidates had any knowledge of Adair s Action Centred Leadership. Answers tended to be confined to repeating bits of the scenario and some guess work about how Action Centred Learning could have helped if candidates had known anything about it. The Chartered Institute of Management Accountants Page 5

6 Question 5 Discuss how Porter's Five Forces model could be used as part of the feasibility study to assess the competition within the fruit and cola drinks industry in Country B. (Total for Question Five = 0 marks) This question tests candidates' understanding of the contribution of the five forces framework in assessing industry attractiveness. It examines learning outcome A(a) 'discuss the nature of competitive environments'. The answer could start with an overview of the purpose of undertaking analysis using the five forces framework. It could then develop using each of the five forces to explain the contribution to understanding of industry attractiveness for the scenario organisation. Good answers will develop to explain the contribution of the five forces within the context of the fruit and cola drinks industry. A weak answer will simply identify the five forces labels without development in the context of the scenario. Explanation of purpose of undertaking analysis using Five Forces model Barriers to entry* Power of suppliers* Power of buyers* Substitutes* Competitive rivalry* each *Answers must be developed to explain the analysis in the context of the scenario industry Maximum marks awarded 0 Generally answered as intended with most candidates able to identify each of the Five Forces and to make some brief comment about how each force could threaten the venture of LJ Company into Country N. Better answers related their answer specifically to the case of LJ and to the difference which the proposed joint venture with a company already operating in Country N could make. A number of candidates appeared to be thrown by the reference to feasibility study in the wording of the question and instead of doing as the question asked and applying Porter s Five Forces model went on to discuss aspects of economic, political, financial, social and environmental feasibility that is often covered in the Project Management section of the syllabus. The Chartered Institute of Management Accountants Page 6

7 SECTION B - 50 MARKS ANSWER BOTH QUESTIONS Question 6(a) Discuss the benefits and problems associated with the introduction of the sales teams and sales targets in the Credit Card Sales Department. (5 marks) This question tests candidates' ability to discuss the benefits and problems associated with introducing sales teams and the sales target system in a sales and contact centre environment. It examines learning outcomes C2(d) 'identify tools for managing and controlling individuals, teams and networks, and for managing group conflict. The suggested approach would be to firstly discuss the benefits of team work, specifically within the context of the question scenario and then go on to discuss the problems associated with introducing sales teams and the sales target system. Good answers will draw on the characteristics of the different teams identified in the question to illustrate the advantages and disadvantages. Weak answers will simply identify some advantages and disadvantages in a general sense without elaboration or reference to scenario context. Benefits of teams with reference to scenario ( max 8 marks) e.g.: Work to achieve common goal Leads to higher productivity and high quality outputs Communication and cooperation Help motivation and commitment Satisfies social needs Can lead to greater creativity Team roles Problems of teams with reference to scenario (max 8 marks) e.g.: Intra-group conflict Social loafing Personality clashes Hostile attitudes Inter-group conflict Lack of effective communication De-motivation of members Groupthink Polarisation Maximum marks awarded 5 The Chartered Institute of Management Accountants Page 7

8 There was a mixed response to this question with some good answers providing the points as set out in the marking guide above but also a fairly large number of answers that simply repeated the description of the performance of teams A, B and C as set out in the scenario. Lack of application of general knowledge about the benefits and problems commonly involved in team working and the associated problems of team incentive schemes and potential solutions. Too many candidates simply resorted to repeating bits of the scenario. The Chartered Institute of Management Accountants Page 8

9 Question 6(b) Discuss how the conflicts caused by introducing sales teams and sales targets in the Credit Card Sales Department could be minimised. (0 marks) This question tests candidates' understanding of managing conflict, in particular inter-group conflict. It examines learning outcome C(c) 'identify the nature and causes of conflict' and C2(d) 'identify tools for managing and controlling individuals, teams and networks and managing group conflict'. The answer should develop to provide examples of specific strategies/actions needed to resolve or minimise the problems 'the Centre' is facing through the introduction of sales teams and sales target system. Good answers will make reference to the strategies needed for problems occurring for specific teams linked to the issues identified in the scenario. Weak answers will identify a limited number of actions, not contextualised. Explanation of type of conflict (applied to scenario) Counselling or discipline for particular team members Team leader training Inter-group training Set up super-ordinate goals Rotation of team members Social events Departmental projects/tasks Communication and rewards Balance of team roles Maximum marks awarded 0 Generally mixed response with some very good answers spelling out the points made In the marking guide above but too many answers with hardly any of these points made. Too many answers based on guess work and lack of thought and sometimes providing the most unrealistic of solutions to the problems cited in the case scenario. The Chartered Institute of Management Accountants Page 9

10 Question 7(a) Explain what would be involved in the initiation stage of the project and what should be included in the project initiation document for the shared service centre project. (5 marks) This question requires candidates to be familiar with the initiation stage of a project and what should be included in a project initiation document. It examines learning outcome B(d) 'identify the characteristics of each phase in the project process'. Answers should first describe what is involved in the initiation stage of a project and then develop to describe what should be included in the project initiation document. Good answers will include reference to aspects of the project outlined in the scenario. Weak answers will simply provide a listing of what should be included in the PID without elaboration. What is involved in the initiation stage of a project e.g.: First stage in project planning Involves development of initial project plans Set out vision Determine scope Establish goals and objectives Used as baseline to measure progress against Used in project closure phase What should be included in PID e.g.: Background - why project necessary Business objectives/business case Terms of reference Project scope Project constraints Feasibility Risk assessment Resources Task list Project deliverable - (in budget) Project deliverable - (Quality) Project deliverable - (Time) Roles and responsibilities - project management structure Methods of communication - reports and meetings Identification of stakeholders Maximum marks awarded 5 This was by far the best answered question by candidates in general. The main errors perpetrated by weaker candidates were to produce long lists of points without any attempt at explanation of what the key words they listed meant in the context of the initiation stage. The Chartered Institute of Management Accountants Page 0

11 Question 7(b) Compare and contrast the roles of P, as the project sponsor, and D, as the project manager. (0 marks) This question tests candidates' ability to distinguish between the roles of the project sponsor and project manager. It examines learning outcome B2(c) 'explain the roles of key players in a project organisation'. The answer should start with an explanation of the role of the project sponsor and then go on to distinguish the role of the project manager by articulating what the project manager does. A weak answer will only explain the role of the project sponsor or the project manager. A good answer will provide a range of examples to distinguish between the roles of the project sponsor and the project manager. Role of project sponsor explained ( max 6 marks) e.g.: Initiates projects Appoints project manager Makes resources available Watches over project progress Sees status reports Acts as champion Oversee financial aspects Role of project manager explained (max 6 marks) e.g.: Planning activities Co-ordinates/controls Allocates resources Keeps stakeholders informed Leads and motivates project team Problem solver Delivers project on time, within budget Maximum marks awarded 0 This was generally well answered with some candidates managing to include virtually all of the points listed in the marking guide above. Focus on one of the roles only. The Chartered Institute of Management Accountants Page