DO NOT OPEN THIS QUESTION PAPER UNTIL YOU ARE TOLD TO DO SO. Enterprise Pillar. E2 Enterprise Management. 20 November Tuesday Afternoon Session

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1 DO NOT OPEN THIS QUESTION PAPER UNTIL YOU ARE TOLD TO DO SO Enterprise Pillar E2 Enterprise Management 20 November Tuesday Afternoon Session Instructions to candidates 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 5 and 6. The list of verbs as published in the syllabus is given for reference on page 7. 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 2012

2 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 The Board of GG Supermarkets has been steadily increasing the company's visibility both on the high street and online. Although GG has a favourable market position it does not always attract favourable media attention. Some of the media often suggest that GG's growth has come at a price for farmers, customers, workers, town centres and the environment and that GG is ignoring its social responsibilities. The Board feels that the adverse media comments are not its concern as it only has a duty to shareholders. Any consideration of the media issues would be in conflict with the benefit to shareholders which is its primary concern. Discuss why the Board of GG should recognise that being socially responsible does not necessarily conflict with GG's responsibility to its shareholders. (Total for Question One = 10 marks) Question Two KS, the Finance Manager of TZY Company's Finance Department, is aware that it is approaching the time of year when he needs to conduct staff appraisals. However, he is conscious that, in the past, feedback has suggested that many members of his team feel that the appraisal process is a waste of time, and that they have better things to do. This year he wants to make sure that staff perceive it as a valued activity. Explain the points KS could make about the appraisal process to help staff appreciate its value both for themselves and for TZY Company. (Total for Question Two = 10 marks) Enterprise Management 2 November 2012

3 Question Three Cornbridge is a large region in T Country with a beautiful coastline and large areas of natural habitat, which include the nesting grounds of rare birds. However, the region is suffering from high unemployment and unsightly derelict buildings. D Company, an international mining company, has discovered substantial mineral reserves in Cornbridge. It is looking to obtain government permission to undertake a mining project in the area which would provide jobs and boost the economy. There is pressure from the Cornbridge Protection Alliance (an organisation which includes wildlife protection representatives, residents worried about noise and pollution, environmentalists and anti-capitalist groups) to stop the Government from granting permission to D Company. The Alliance has also expressed concerns about the safety of workers given that there has been recent publicity about fatalities in the mining industry. The main union representing the workers of D Company has suggested that it has no concerns regarding this project as D Company has an exemplary record for health and safety. Recommend the different strategies that could be used by D Company to manage its various stakeholder groups with an interest in the mining project. (Total for Question Three = 10 marks) Question Four R Company is in the business of manufacturing contemporary and traditional furniture for the home. When the previous sales director retired after working for more than 20 years for the company, his replacement, BG, was faced with the task of reversing the downward trend in sales. However, BG was disturbed to find a general lack of cohesion throughout the different departments. This was characterised by poor communications and widespread frustration, including hostility between staff in the various departments. Department heads blamed each other for the current financial performance of the company and its reduced sales. In addition, the departments appeared to have developed their own plans resulting in conflicting priorities. BG recognises that for the company to prosper in the future, he needs to get everyone in the organisation to work together. Explain what BG could do to resolve the conflict that has developed in R Company. (Total for Question Four = 10 marks) Section A continues over the page TURN OVER November Enterprise Management

4 Question Five In the face of rising costs, the senior management in PT Company has decided that significant cuts will be needed in the budgets of some of its departments. The promotional budget was singled out to be hardest hit. However, YE, the Marketing Manager, considered that this was a soft target for making major savings and had not been thought through sufficiently. In particular, he feels that plans to launch a new product range would be severely hampered by a lack of promotional support and that this could threaten the future of the company. Unfortunately, his view is not shared by other department heads who feel that perhaps the current business climate is not ideal for such ambitious plans. A meeting has been arranged with senior executives where YE hopes he will be able to negotiate an increase in the promotional budget. Explain how YE should approach the negotiation, including reference to the different stages in the negotiation process. (Total for Question Five = 10 marks) (Total for Section A = 50 marks) End of Section A Section B starts on the opposite page Enterprise Management 4 November 2012

5 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 The Board of S Company has agreed in principle a project for a large scale upgrade to its management accounting systems. The Finance Director has been asked to provide the detailed requirements for the project. So far, no one else in the business has been involved in the discussions about the project. The Finance Director believes that the project process should proceed in the following way: No details of the functionality should be set; it is important that the system is allowed to grow in scale during the life of the project; Progress should be reported as and when the project manager feels it is appropriate; P, who is a member of the Finance Department, should be selected as project manager; the Finance Director believes it is a good opportunity for P, who has not previously managed a project. The main activities and timescales are given in the table below. Activity Duration (weeks) Preceding Activity A Document Requirements 8 - B Review and select package 6 - C Demonstration of package 2 A,B D Training 7 C E Test programs 5 C F Changeover 6 D G Completion 4 E,F The Finance Director has heard that the Project Management Institute recommends a five stage process for managing projects. He is interested in understanding more about this process and how it helps to deliver a successful project. (a) (b) (i) Discuss how each of the Project Management Institute's five project management process areas could be used to address the potential problems that could occur in the Management Accounting System project. (15 marks) (ii) Construct a Critical Path Analysis (CPA) for the Management Accounting System project. (6 marks) Explain how information from the CPA could help to ensure that the project is delivered on time. (4 marks) (Total for Question Six = 25 marks) Section B continues on the next page TURN OVER November Enterprise Management

6 Question Seven FF Company offers high quality perfumes, skin care products and home scents, including candles. Although the company opened its flagship store more than 10 years ago, it was the launch of its internet business shortly afterwards that has contributed to its current status as one of the leading brands in its industry. Indeed, as a result of its online sales success, the company has subsequently opened retail outlets in major cities and airports worldwide. Much of the success of FF Company can be attributed to its abilities in combining different fragrances in order to create unique scents which are unlike anything produced by major competitors. The use of simple but elegant packaging perfectly complements the tasteful and subtle scents in the product line, as well as reinforcing the company's brand identity. The company's marketing capability and use of IT in developing its website has enabled it to track and quickly spot any changes to consumer buying patterns. It is clear from the company's research information that to prosper in this industry constant product innovation is critical. A flexible technology based approach to new product development adopted by FF Company enables its skilled team of fragrance designers to come up with new scents that can be used alone or in combination with others in the collection. The company also has good relationships with its various suppliers, on whom it relies to provide the high quality materials needed to create FF's products. Although FF Company has continued to be the market leader and innovator in the last two years, new competitors have entered the market attempting to imitate the company, but offering cheaper products. In response, the Marketing Department at FF Company is setting up a market analysis team. Its remit will be to undertake competitor analysis to enable the company to keep in touch with the developments of its competitors. This will involve the regular collection of competitor intelligence using qualitative and quantitative research techniques. (a) (b) Explain how FF Company could use the Porter's value chain framework to help it understand its internal capability. (15 marks) Discuss the techniques of undertaking qualitative and quantitative research and the types of data FF Company could collect to inform its competitor analysis. (10 marks) (Total for Question Seven = 25 marks) (Total for Section B = 50 marks) End of Question Paper Enterprise Management 6 November 2012

7 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 November Enterprise Management

8 Enterprise Pillar Management Level Paper E2 Enterprise Management November 2012 Tuesday Afternoon Session Enterprise Management 8 November 2012