Management Level
E2 – Enterprise Management 22 November 2011 - 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
Enterprise Pillar
TURN OVER
© The Chartered Institute of Management Accountants 2011
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 TF Company is about to embark on a restructuring programme which will mean significant changes to the roles and responsibilities of staff in the Finance Department. It is anticipated that there will be some resistance to the proposed changes, so the Board of TF Company has asked KK, a senior manager in the department, to lead the changes. The Board has chosen KK because she is generally well liked and respected by her colleagues. She is also held in high regard for her expert knowledge and her interest in, and support she gives to, all those who work for her.
Required: Describe the different sources of power KK possesses and which could help her to manage the changes in the Finance Department. (Total for Question One = 10 marks)
Question Two Project control processes cannot be overemphasised in their importance to the success of a project. The project manager must continually take a pro-active approach in controlling a project.
Required: Discuss the actions the project manager should take as a project progresses to ensure effective project control. (Total for Question Two = 10 marks)
Section A continues on the opposite page
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November 2011
Question Three The Head of Insurance at JKL Bank has been considering how to make efficiencies in the operation of the Car Insurance Business Unit. One option under consideration is to outsource the Customer Contact Centre (CCC) for its car insurance business. The work of the CCC currently involves dealing with customer telephone enquiries on issues such as insurance claims, policy changes, renewals and premium/payment information. To help him make a decision on whether or not to proceed, the Head of Insurance has asked for an evaluation of the proposed outsourcing of the CCC.
Required: Explain how transaction cost theory could help the Head of Insurance on deciding whether or not to outsource the Car Insurance Business Unit's Customer Contact Centre. (Total for Question Three = 10 marks)
Question Four D is a CIMA member and financial controller for a local government authority. D has recently undertaken an analysis of expense claims for the local authority and believes that the Finance Director, also a CIMA member, has been claiming for non-business related expenses which the authority does not permit. D is unhappy about the situation and has approached the Finance Director with her concerns but has failed to get the answers needed from him. The Finance Director has offered D a large personal bonus in exchange for her silence. As a member of CIMA, D knows that any action taken should be compliant with CIMA's code of professional ethics.
Required: Discuss how the fundamental principles of the CIMA Code of Ethics for Professional Accountants might be compromised if both D accepts the bonus and the Finance Director is allowed to claim non-business related expenses. Note: You should refer to both D and the Financial Director in your answer (Total for Question Four = 10 marks)
Section A continues on the next page
TURN OVER November 2011
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Enterprise Management
Question Five T, a member of the finance team, has been constantly arriving late to work and in recent months he has consistently made significant errors in his work. A number of colleagues have complained to P, their line manager, about T's aggressive behaviour towards them and V, a junior administrator, has suggested that T has bullied her. P knows he must take action to deal with the situation.
Required: Explain to P what is involved in the process of taking disciplinary action. (Total for Question Five = 10 marks)
(Total for Section A = 50 marks)
End of Section A Section B starts on the opposite page
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November 2011
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 VRC is a family owned business which has been manufacturing racing cycles for over a century. Over the years, the company has been relatively successful, although its growth has tended to happen in what can only be described as an unplanned, ad hoc, and opportunistic way. To some extent the developments have been as a result of the personal interests of F, the owner and Managing Director, who was a former road racing cyclist. Two years ago, R, who is F's son, joined the company. The plan is for him to succeed as Managing Director when his father retires. To date he has spent his time working in the various departments to familiarise himself with the operations of the company. More recently, R has taken on a more strategic role and, in particular, is trying to form a view on the longer term future strategic direction the company should take. He acknowledges the company has built up a strong brand but feels this could be used to expand into other product areas. R has approached a Business Consultant for advice on strategic planning. In the first meeting, the Business Consultant has suggested that the company should adopt a more formal/rational approach to business planning and strategy development. The Business Consultant has recommended that, as a first step, R should undertake a strategic analysis of the company in order to help R better understand its current position.
Required: (a)
Distinguish between the way strategy is currently developed in VRC Company and the approach the Business Consultant is recommending. (12 marks)
(b)
Discuss the strategic management models\frameworks that R could use in undertaking his analysis of the strategic position of VRC Company. (13 marks) (Total for Question Six = 25 marks)
Section B continues on the next page
TURN OVER November 2011
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Enterprise Management
Question Seven J Company is a retailer of fashion goods operating in a highly competitive market place. The Board of the company has given the go-ahead to redesign the company’s website to make it more convenient for customers to use. The project is currently at week 12 and there are problems with the functionality of the site and the fact that it is not easy to navigate. The Project Manager, CW, has expressed concern about the rising costs of the project and the time needed to improve the functionality. He estimates that the change to the functionality will delay the project by three weeks. CW understands that improved customer satisfaction (by making the website easy to use) is important. There will also be diminishing returns since the increased levels of customer satisfaction obtained by the change in functionality will be offset by the increased time and cost spent. The Board has had feedback from the project team members who have complained that there has been a lack of visibility of CW. Team members have said that they were unaware of any deadlines as they had not been shown any plan or schedule of work and this had made it difficult to prioritise tasks and understand how they can contribute to the project. The Board of J Company has called an emergency meeting with the Project Manager in order to come up with some immediate solutions which address the project slippage. It has been recommended that CW needs guidance on how to improve his management of project teams before he leads any future projects.
Required: (a)
Analyse the strategies available to J Company to address the issue of time, cost and quality in the website project. (12 marks)
(b)
Explain to CW the factors he should consider to ensure the project teams he manages in future are effective. (13 marks) (Total for Question Seven = 25 marks)
(Total for Section B = 50 marks)
End of Question Paper
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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 Level 1- KNOWLEDGE What you are expected to know.
Level 2 - COMPREHENSION What you are expected to understand.
VERBS USED
DEFINITION
List State Define
Make a list of Express, fully or clearly, the details of/facts of Give the exact meaning of
Describe Distinguish Explain Identify
Communicate the key features Highlight the differences between Make clear or intelligible/State the meaning or purpose of Recognise, establish or select after consideration Use an example to describe or explain something
Illustrate Level 3 - APPLICATION How you are expected to apply your knowledge.
Apply Calculate Demonstrate Prepare Reconcile Solve Tabulate
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.
November 2011
Analyse Categorise Compare and contrast
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
Construct Discuss Interpret Prioritise Produce
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
Advise Evaluate Recommend
Counsel, inform or notify Appraise or assess the value of Propose a course of action
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Enterprise Management
Enterprise Pillar
Management Level Paper
E2 – Enterprise Management
November 2011
Tuesday Afternoon Session
Enterprise Management
8
November 2011