THE HONG KONG INSTITUTE OF CHARTERED SECRETARIES THE INSTITUTE OF CHARTERED SECRETARIES AND ADMINISTRATORS

Transcription

1 THE HONG KONG INSTITUTE OF CHARTERED SECRETARIES THE INSTITUTE OF CHARTERED SECRETARIES AND ADMINISTRATORS International Qualifying Scheme Examination STRATEGIC AND OPERATIONS MANAGEMENT PILOT PAPER Marking Scheme 1

2 SECTION A 1a. Ocean Park s position when Tom took over: A knock in attendance (1 mark) Staff members were hard-working, but not as "engaged" as Tom wanted them to be (1 mark) Tom made some changes at the company: Ensuring that staff members were on board and enjoying what they were doing. He organised a staff survey to gather the thoughts of the staff and worked on the engagement aspect. (2 marks) o As a role model: for Halloween, Tom was dressed as "The Slider" in make-up and costume and had a set of knee pads with which to skid up to unsuspecting visitors and give them a fright before making them laugh (1 mark) o As a role model: Tom is a coach, a confidante and a visionary. No one day is ever the same, every day is different, which is why he likes doing everything he does. (1 mark) Instituted partnering sessions, for people to express their views (2 marks) Not removing anyone, but adding two executive directors to the mix (2 marks) Encouraging his co-workers to take calculated risks (2 marks) Breaking down bureaucratic thinking, check-box mentality (2 marks) o There had been some aversion to decision making, with worries about personal blame Management by walking around: takes at least one walk a day around the amusement park, observing visitors' reactions to the different attractions, seeing if they're having a good time (2 marks) Working on visitor growth (2 marks) o Since joining Ocean Park in 2004, he has directed the activities of the park to achieve the highest attendance and revenue in the company's history, while leading the effort of defining the Concept Master Plan for the future of Ocean Park. The theme park, famous for its animals and sea life, now hosts a very healthy 4 million visitors a year. The percentages of income taken from admission, food and retail were changed from 15-18% of revenue from in-park food and retail and 85% from admissions to 35:65 in four years, above industry standard 50:50. (2 marks) 1b. Tom showed his emotional intelligence in the following examples: Self-awareness: the ability to recognise and understand your moods, emotions, and drives, as well as their effects on others (2 marks) o Tom is very modest (1 mark) o As a CEO I'm a coach, a confidante and visionary (1 mark) Self-regulation: the ability to control or redirect disruptive impulses and moods; the propensity to suspend judgment to think before acting (2 marks) o Never see him get angry (1 mark) o Encourages his co-workers to take calculated risks, breaks down bureaucratic thinking and the check-box mentality (1 mark) Motivation: a passion to work for reasons that go beyond money or status; a propensity to pursue goals with energy and persistence (2 marks) 2

3 o Tom Mehrmann is clearly passionate about his job. "Not one day is ever the same, every day is different, which is why I like doing everything I do." (1 mark) o Ensuring that staff members are on board and enjoying what they are doing (1 mark) Empathy: the ability to understand the emotional makeup of other people; skill in treating people according to their emotional reactions (2 marks) o He's sensitive to his staff and very loyal to them (1 mark) o "I'm a good reader of people and can tell by their body language what they are feeling. (1 mark) Social skill: proficiency in managing relationships and building networks; an ability to find common ground and build rapport (2 marks) Any two of the following examples (1 mark x 2) o He organised a staff survey to gather the thoughts of his staff, and then began working on the engagement aspect. o He instituted partnering sessions for people to express their views. o He also made a point of not removing anyone, but in fact added two executive directors to the mix. o He is not happy to claim the award for himself, saying any achievements at Ocean Park have been a team effort. o We ve never had words and it s literally a pleasure to work with him. 3

4 SECTION B 2. Illustrate value chain analysis with a company: Primary activities (1 mark) Inbound logistics (2 marks) Activities, such as materials handling, warehousing, and inventory control, used to receive, store, and disseminate inputs to a product. Operations (2 marks) Activities necessary to convert the inputs provided by inbound logistics into final product form. Machining, packaging, assembly, and equipment maintenance are examples of operations activities. Outbound logistics (2 marks) Activities involved with collecting, storing, and physically distributing the final product to customers. Examples of these activities include finished goods warehousing, materials handling, and order processing. Marketing and sales (2 marks) Activities completed to provide means through which customers can purchase products and to induce them to do so. To effectively market and sell products, firms develop advertising and promotional campaigns, select appropriate distribution channels, and select, develop, and support their sales force. Service (2 marks) Activities designed to enhance or maintain a product s value. Firms engage in a range of service-related activities, including installation, repair, training, and adjustment. Support activities (1 mark) Procurement (2 marks) Activities completed to purchase the inputs needed to produce a firm s products. Purchased inputs include items fully consumed during the manufacture of products (e.g. raw materials and supplies, as well as fixed assets machinery, laboratory equipment, office equipment and buildings). Technological development (2 marks) Activities completed to improve a firm s product and the processes used to manufacture it. Technological development takes many forms, such as process equipment, basic research and product design, and servicing procedures. Human resource management (2 marks) Activities involved with recruiting, hiring, training, developing and compensating all personnel. Firm infrastructure (2 marks) Firm infrastructure includes activities such as general management, planning, finance, accounting, legal support and governmental relations that are required to support the work of the entire value chain. Through its infrastructure, the firm strives to effectively and consistently identify external opportunities and threats, identify resources and capabilities, and support core competencies 4

5 3. Value-creating diversification Economies of scope (related diversification) (1 mark) Sharing activities (1.5 marks) Operational relatedness in sharing activities Use same distributors and retail dealers to access customers Single sales force for related products Advertising related products together Transferring core competencies (1.5 marks) Corporate relatedness in transferring skills or corporate core competencies among units Using complex sets of resources and capabilities to link different businesses through managerial and technological knowledge, experience, and expertise Market power (related diversification) (1 mark) Blocking competitors through multipoint competition (1.5 marks) Sell its products above the existing competitive level and/or Reduce the costs of its primary and support activities below the competitive level. Vertical integration (1.5 marks) Backward integration a firm produces its own inputs. Forward integration a firm operates its own distribution system for delivering its outputs. Financial economies (unrelated diversification) (1 mark) Efficient internal capital allocation (1.5 marks) Corporate office distributes capital to business divisions to create value for overall company. Business restructuring (1.5 marks) Purchase of other corporations and restructuring their assets A firm creates value by buying and selling other firms assets in the external market. Value-neutral diversification (1 mark) Low performance (1 mark) Firms plagued by poor performance often take higher risks. Uncertain future cash flows (1 mark) Diversification may be defensive strategy if: Product line matures Product line is threatened Firm is small and is in a mature or maturing industry Tangible and intangible resources (1 mark) Free cash flows are tangible financial resources that may be used to diversify the firm, but are less likely to create value on a long-term basis because they are more imitable. Value-reducing diversification (1 mark) Power and prestige (1 mark) Managing a large, multinational corporation confers greater power and prestige on the manager 5

6 Diversifying managerial employment risk (1 mark) Diversify employment risk Increasing managerial compensation (1 mark) Diversification and firm size are highly correlated. If firm size increases, so does executive compensation. Large firms are more complex and difficult to manage. 6

7 4. Illustrate competitive business-level strategies with appropriate examples Cost leadership (3 marks) An integrated set of actions taken to produce goods or services with features that are acceptable to customers at the lowest cost, relative to that of competitors, with features that are acceptable to customers. Relatively standardised products Features acceptable to many customers Lowest competitive price Differentiation (3 marks) An integrated set of actions taken to produce goods or services (at an acceptable cost) that customers perceive as being different in ways that are important to them. Focus is on non-standardised products Appropriate when customers value differentiated features more than they value low cost. Focus (3 marks) An integrated set of actions taken to produce goods or services that serve the needs of a particular competitive segment. Exploiting a particular market niche by being different (differentiation focus) (2 marks) Creating a cost advantage (cost focus) (2 marks) Integrated cost leadership and differentiation (3 marks) Simultaneously pursue cost leadership and differentiation The best performers are those companies which use multiple forms of competitive advantage, i.e. integrated cost leadership and differentiation. They capture both types of customers yielding a larger market scope (i.e. more market share) and higher revenues. (4 marks) 7

8 5a. Parochial self-interest (3 marks) A desire not to lose something of value Misunderstanding and lack of trust (3 marks) Don t understand its implications and perceive that it might cost them much more than they will gain Lack of trust between the person initiating the change and employees Different assessments (3 marks) Assess the situation differently from those initiating the change, and see more costs than benefits resulting from the change, not only for themselves but for their company as well Low tolerance for change (3 marks) Fear that they will not be able to develop the new skills and behaviour that will be required of them 5b. Participation and involvement (4 marks) Involving the potential resistors in the design and implementation of the change leads to commitment. Reason (4 marks) People who participate will be committed to implementing change, and any relevant information they have will be integrated into the change plan. 8

9 6. Explain with an example how an industry s profit potential is affected by the forces below: Threat of new entrants (4 marks) Profits of established firms in the industry may be eroded by new competitors. Bargaining power of buyers (4 marks) Buyers threaten an industry by forcing down prices, bargaining for higher quality or more services, and playing competitors off against each other. Bargaining power of suppliers (4 marks) Suppliers can exert power by threatening to raise prices or reducing the quality of goods and services purchased. Threat of substitutes (4 marks) Substitutes limit the potential returns of an industry by putting a ceiling on the prices that firms in that industry can profitably charge. The more attractive the price/performance ratio of substitute products, the more likely it is that buyers will switch to substitutes. Intensity of rivalry (4 marks) Jockeying for position, price competition, advertising battles, product introductions, increased customer service or warranties 9