CIMA | P5 - Integrated Management Sloved Past Papers

The Chartered Institute of Management Accountants 2004 1

MANAGERIAL LEVEL

BUSINESS MANAGEMENT PILLAR

PAPER P5 – INTEGRATED MANAGEMENT

This is a Pilot Paper and is intended to be an indicative guide fortutors and students of the style and type of questions that are likelyto appear in future examinations. It does not seek to cover the fullrange of the syllabus learning outcomes for this subject.

Integrated Management will be a three hour paper with twocompulsory sections (20 marks and 30 marks respectively) and onesection with a choice of questions for 50 marks.

CONTENTS

Pilot Question Paper

Section A: Eight objective test questions Pages 2-7

Section B: Three short answer questions Pages 8-10

Section C: Three scenario questions Pages 11-12

Pilot Solutions Pages 13-30

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P5 PILOT PAPER 2

SECTION A – 20 MARKS

ANSWER ALL EIGHT SUB-QUESTIONS

Question One

1.1 In a multi-divisional organisation producing a range of products for differentmarkets, the business level strategy of each unit or division is mainly concernedwith

A setting the direction for the organisation.

B the competitiveness of a particular division.

C the efficiency of production, marketing and other functions.

D alignment of strategy with other organisations.(2 marks)

1.2 In the typical hierarchical organisation, the requirement of a lower-level managerto answer to a higher-level manager in the chain of command is referred to as

A authority.

B empowerment.

C accountability.

D super ordination.(2 marks)

Each of the sub-questions numbered from 1.1 to 1.8 inclusive, given below, hasonly ONE correct answer. Each sub-question is worth 2 marks.

REQUIRED:On the indicative ANSWER SHEET, enter either your answer in the space providedwhere the sub-question requires a written response, or place a circle “O” around theletter that gives the correct answer to the sub-question where a list of distractorshas been provided.

If you wish to change your mind about an answer to such a sub-question, blockout your first answer completely and then circle another letter. You will not receivemarks if more than one letter is circled.

Space has been provided on the two-page answer sheet for workings. If yourequire further space, please use the last page of your answer book and clearlyindicate which question(s) these workings refer to.

You must detach the answer sheet from the question paper and attach it to thefront cover of your answer book before you hand it to the invigilators at the end ofthe examination.



P5 PILOT PAPER 3

Integrated Management Write here your full examination number:

Centre CodeINDICATIVE ANSWER SHEET FOR SECTION A Hall Code

Desk Number

1.1 A B C D

1.2 A B C D

1.3 A B C D

1.4 A B C D

1.5 A B C D

1.6 A B C D

1.7 A B C D

Three stakeholders

1.

2.

1.8

3.

You must detach the answer sheet from the question paper and attach it to the frontcover of your answer book before you hand it in to the invigilators at the end of theexamination.



P5 PILOT PAPER 4

Space for workings for Section A



P5 PILOT PAPER 5

1.3 Recent developments towards greater employee involvement, flexible workingand flatter organisational structures have placed greater emphasis on which ONEof the following styles of management?

A Exploitative authoritative.

B Autocratic.

C Participative.

D Benevolent authoritative.(2 marks)

1.4 Research on group effectiveness has concluded that the most consistentlysuccessful groups

A are those in which all members are innovative.

B comprise a range of roles undertaken by various members.

C are those in which all members are very intelligent.

D comprise a range of roles all undertaken by a few members of the group.(2 marks)

1.5 When designing an organisational structure, or reviewing the effectiveness of anexisting structure, the first thing that must be clarified is

A informal organisational relationships.

B objectives of the organisation.

C size of organisation.

D division of labour.(2 marks)



P5 PILOT PAPER 6

The following data is to be used to answer questions 1.6, 1.7 and 1.8 below

Blake plc is a large multi-national designer and manufacturer of specialist roadvehicles. Blake plc’s products include fire engines, breakdown trucks, rescue vehiclesand ambulances. Customer organisations, that are often government-owned, orderBlake plc’s products in small quantities. Each “batch” of products is designed and builtby Blake plc to meet a unique customer specification.

Blake plc has been approached by The Armana Airports Authority (AAA) to provide fourrescue trucks to carry emergency equipment and personnel at a large provincial airport.This contract must be completed (that is the trucks delivered to AAA) within 16 weeksof today’s date. This is essential, as the trucks currently used by AAA have beendeemed unsuitable by the Armana Government Airport Inspectorate (AGAI).

Blake plc has just submitted a proposal to AAA, following an invitation to tenderreceived two weeks ago. The project manager at Blake plc, for the AAA project, isAnnie Li. Annie has a meeting scheduled for later today with the Director ofProcurement at AAA, Charles Crowe. This is Annie’s first meeting with Charles. Annieis aware that Charles is likely to ask for several modifications to the design of the trucksproposed by Blake plc, and that this will have a “knock-on” effect on other aspects ofBlake plc’s proposal. Annie is concerned about the impact of any changes on Blakeplc’s ability to deliver the trucks in 16 weeks.

The normal programme for a project of this scale at Blake plc is as follows:

ActivityDuration(weeks)

Depends on

A. Prepare proposal 2 -B. Negotiate with customer 6 AC. Modify and finalise design 4 BD. Build chassis 3 CE. Build bodyshell 4 CF. Paint bodyshell 1 EG. Assemble, fit out and finish 2 D, FH. Write manuals 3 CI. Print manuals 1 HJ. Test 1 G, IK. Inspect and deliver 1 J

1.6 Based on the normal programme for a project such as this, what is the projectelapsed time, from beginning to end?

A 18 weeks

B 19 weeks

C 21 weeks

D 28 weeks

(4 marks)



P5 PILOT PAPER 7

1.7 Assuming that the durations and dependencies of activities (C) to (K) in theprogramme cannot be changed, how long can Annie spend negotiating withCharles (Activity B), yet still deliver the vehicles in 16 weeks?

A 1 week

B 3 weeks

C 6 weeks

D The vehicles cannot be delivered in 16 weeks.

(3 marks)

1.8 Identify three stakeholders in the project, each of whom is specifically mentionedin the scenario, other than Annie and Charles.

(3 marks)

(Section A = 20 marks)



P5 PILOT PAPER 8

SECTION B – 30 MARKSANSWER ALL THREE QUESTIONS -10 MARKS EACH

Note to candidates:The scenario for the three questions in this section is divided into two parts.Read Part 1 to answer questions two and three and then read Part 2 beforeanswering question 4.

House Project – Part 1

E, a management accountant, and three of her colleagues have decided to venture intothe buy-to-rent market. Recently, they set up a company, Enterprise Associates, andpurchased a house in which they would each hold a share. E inherited some moneyand holds a 50% share. The other 50% is divided equally between the three otherpartners. E, however, will take on much of the responsibility for the company’s firstventure and she has been given a free hand to develop the property as she thinks fit.

The house purchased by the colleagues is 150 years old and has been poorlymaintained. The interior fixtures, fittings and decor are also old fashioned. A survey ofthe house also reveals that the electric wiring and water piping do not conform tomodern standards and that the walls are subject to rising damp. Without extensiverepairs and renovation the house would be almost impossible to rent.

With interest rates at an all time low and the demand for rented accommodation at avery high level, E has decided, in consultation with her partners, to renovate the housebefore offering it for rent.

The easiest option for E would be to employ a builder to carry out all the renovations atan agreed price. After obtaining a number of estimates, however, she decides that sheand her husband can carry out some of the basic repairs and manage the decoratingthemselves at a considerable saving.

E realises that this will make considerable demands on her time and that carefulplanning will be necessary to fit the work on the house with her demanding job as amanagement accountant, as well as fulfil her family obligations. Conscious of the needto maintain the quality of her work, E has decided, with the agreement of her employer,to work part-time for the duration of the house project, but she recognises that evenwith this change she will have to manage her time very carefully.

On this basis, E has agreed with her partners in Enterprise Associates a profit sharingratio of 70 : 10: 10 : 10 with all expenses for materials and specialist labour sharedequally between the four.

As well as being methodical and hard working, E has developed a number of practicalskills over the years while improving the family home. Hence many of the decoratingtasks are familiar to her. If E has a weakness, it is that she enjoys conversation andmeeting people and often takes more time than is necessary to conduct business andsocial transactions.



P5 PILOT PAPER 9

The damp proofing, wiring and plumbing will need to be carried out by skilledspecialists but E already has contacts with an electrician and a plumber (fitter of waterpipes), and they, in turn have contacts with other specialists in the building trade suchas carpenters (wood workers) and plasterers (who specialise in covering walls with askimming of plaster.)

Although she has no experience of house renovation on this scale, E has a rough ideaof the sequence in which the various jobs – damp proofing, plumbing and so on willneed to be carried out and has received advice from a builder on the estimated timethat each job will take to complete. She has also contacted the various skilledspecialists for estimates of the cost for each job.

This information is most timely for E because she has just had a firm offer from aprospective tenant J, to rent the house, provided he and his family could move into thehouse in three months’ time. E, knowing the family, and confident that they would begood tenants, has agreed that she will have the property ready for them in threemonths and available for rent at an agreed price.

While E naturally wishes to keep costs to a minimum, she also requires that therenovation meets quality standards acceptable to customers who wish to rent property.

Question Two

Required:

Explain to E the benefits of using a Work Breakdown Structure in the planning of theproject.

(10 marks)

Question Three

The management of time is going to be a major issue for E.

Required:

Identify the key factors that will have a bearing on E’s use of time and explain whataction she can take to make the best use of time.

(10 marks)



P5 PILOT PAPER 10

House Project – Part 2: four years later

The renovation of Enterprise Associates’ first house went well and the house is stillrented by the original family. Four years have now gone by and since then much haschanged. Not only has E retired from her position as a management accountant; asEnterprise Associates’ Chief Executive Officer she has helped the company to growvery rapidly.

Encouraged by the initial success, by a buoyant housing market, and by low interestrates, E has negotiated a series of bank loans to buy up other old houses in the localityand Enterprise Associates has renovated these and rented them at market rates.

Unfortunately for Enterprise Associates and others in the buy-to-rent business,however, conditions in the housing market have changed since the company rented itsfirst property. Many more people have entered the buy-to-rent property sector, interestrates have increased and are forecast to rise sharply in the next year. This will probablyreduce the demand for new houses to some extent, and will also deter some would-beentrepreneurs, who might have borrowed funds to enter the buy-to-rent market.

The central government has acted to increase the amount of building land availableand this, in turn, has resulted in a shortage of supply of builders, plumbers, plasterers,electricians and others in the building trades. There is also some evidence from marketresearch that householders have an increasing preference for new houses. Also, in thetown in which Enterprise Associates conducts its business, the local government hasplans for compulsory purchase and demolition of some of the older properties as part ofa new road building programme.

Faced with these changing circumstances , E is not sure what Enterprise Associates’future strategy should be. She feels the need for a better understanding of the changesthat are affecting the buy-to-rent market and has asked you, a management consultant,to provide Enterprise Associates with an analysis of the buy-to-rent industry.

Question Four

Required:

Prepare a report for Enterprise Associates which:

(a) briefly explains Porter’s Five Forces model;

(b) discusses the main opportunities and threats in the buy-to-rent industry.(10 marks)



P5 PILOT PAPER 11

SECTION C – 50 MARKSREAD THE FOLLOWING SCENARIO AND ANSWER TWO QUESTIONSONLY – 25 MARKS EACH

The WAM Organisation is one of the most successful supermarket chains in its owncountry. Its reputation for innovation is unparalleled in its own country with thesuccessful launch of its personal finance, telecom, and internet shopping services.

The WAM Organisation’s customer focus and its ability to provide value for moneythrough efficient operations and the use of the latest technology has enabled it to gainthe largest share of the market.

Following a careful process of internal and external analysis, the senior management ofWAM Organisation has concluded that the domestic market for its goods and serviceshas reached saturation point and that the only opportunity for significant growth lies inventuring abroad.

Acting partly on the advice of the central government’s Overseas Advisory Board, andusing its own research team, WAM Organisation’s management has decided to locateits first overseas supermarket in country Y. The location selected is in the suburbs of agrowing city, where groceries, clothing and the other non-food products that WAMOrganisation intends to supply are currently provided by a large number of small shops.

The new overseas outlet will be staffed initially by managers from WAM Organisation’shome country, but other staff will be recruited and trained in country Y. The companyhas also made it clear that its human resource policy is to provide managementopportunities to local people once the business in country Y is established.

The manager for the overall project is Ms D from WAM Organisation’s BusinessDevelopment division, while the project manager for the construction of the buildings,roads and car park that will make up the supermarket outlet is Mr G from the WAMOrganisation’s Property and Estates division.

The land on which the supermarket outlet will be built has been purchased andfollowing a series of tough negotiations with state and local government officials,planning permission has been granted. Vigorous protest, however, has come from theCity’s Civic Society, local residents and shopkeepers who are located near to theproposed development.

The Civic Society is concerned about the detrimental impact on the local environment.Residents are concerned about the potential increase in traffic and the danger it posesto the children in the local school. The shopkeepers are fearful about the impact of thenew supermarket on their future business prospects.

The media, including television, radio and newspapers have publicised the fears of thelocal residents and shopkeepers and these two groups, together with the City’s CivicSociety, have formed a coalition to attempt to prevent the development.



P5 PILOT PAPER 12

Question Five

Required:

(a) Explain the approach to strategy formulation and the content of the WAMOrganisation’s strategy.

(10 marks)

(b) Identify the secondary stakeholders in the WAM Organisation’s supermarketproject and explain how the project team should manage these stakeholders.

(15 marks)

(Total = 25 marks)

Question Six

Required:

(a) Prepare a report for the directors of a major Investment Bank which explains theresource-based approach to strategic management and analyses theresources/core competences that appear to give the WAM Organisationcompetitive advantage.

(15 marks)

(b) Using your knowledge of research findings on international cultural differences,explain why WAM Organisation’s management might encounter some problemswith managing local staff in country Y.

(10 marks)

(Total = 25 marks)

Question Seven

Required:

(a) Identify the major risks associated with the WAM Organisation’s developmentproject.

(15 marks)

(b) Discuss the general negotiating strategy and principles that would be required byWAM Organisation’s managers in order to gain planning permission to site theirnew supermarket outlet in country Y.

(10 marks)

(Total = 25 marks)

End of Question Paper



P5 PILOT PAPER 13

SOLUTIONS TO PILOT PAPER

Note:In some cases, these solutions are more substantial and wide ranging thanwould be expected of candidates under exam conditions. They providebackground on theorists, frameworks and approaches to guide studentsand lecturers in their studies, preparation and revision.

SECTION A

Question One

1.1 A B C D

1.2 A B C D

1.3 A B C D

1.4 A B C D

1.5 A B C D

1.6 A B C D

1.7 A B C D

1.8 Three stakeholders

Blake plc

AAA

AGAI



P5 PILOT PAPER 14

SECTION B

Answer to Question Two

A work breakdown structure (WBS) is a means of breaking down a project intoindividual elements that can be scheduled, costed and controlled.

In the case of Enterprise Associates’ house renovation project, the breakdown couldconsist of the various jobs that E has already identified, such as re-wiring, plumbing,damp-proofing, re-decorating and so on.

The benefits of using a WBS are numerous and include the following:

Summarising all the activities comprising the project, including support and other tasksIn the case of the house renovation project, the activities would include all the taskssuch as pre-planning, making contacts with specialists such as plumbers andelectricians, negotiating prices, acquiring materials, re-wiring, plumbing, re-decoratingand so on. Such a WBS would enable E to think of the totality of all the activitiescomprising the project.

Displaying the interrelationships of the various jobs (work packages) to each other andto the total projectIn the case of E’s project the advantage would be to provide her with a picture of howthe various activities are related to each other. For example the activities of re-wiringand re-plumbing the house have a knock-on effect for plastering as electricians andplumbers invariably damage existing plaster work in carrying out their work. Unlessthese specialist activities are co-ordinated with each other the outcome of the wholeproject of renovation would be jeopardised.

Establishing the authority and responsibility for each part of the projectIn the renovation project this would involve establishing who was responsible for eachset of activities, be they subcontracted activities such as plumbing and rewiring. Alsothe authority to make decisions on items such as the design of the kitchen and thequality of the fittings must be established. For instance would it be left to E as projectmanager, or would she share such decisions with her husband, or in certaincircumstances refer to her partners?

Estimating project costThe breaking down of the overall project into activities or work packages such asrewiring and redecorating enables project managers like E to more easily estimate thecost of each activity and also the overall cost of the project. For example, in obtainingcost estimates from specialists (plasterers and electricians), the WBS enables E tobuild up a more detailed picture of the overall cost and also a picture of where themajor costs of renovation will fall.

Performing risk analysisThe use of the WBS can also help identify which part, or which activities in the projectcarry the highest risks. In the case of the house renovation project this will probably bein those areas where E has least control, that is, in the areas of work E has tosubcontract to specialists. The risk of poor plumbing work for a house renovationproject, for instance, can be disastrous.



P5 PILOT PAPER 15

Scheduling jobs (work packages)The WBS will enable E to arrange for work to be carried out in a sequence that ensuresthat jobs that must be completed first, such as plumbing and rewiring, are in fact doneprior to finishing activities like plastering and redecorating.

Providing a basis for controlling the application of resources to the projectThe WBS assists in the overall monitoring and control of the project because it providesinformation on all the tasks to be carried out and the materials needed for each. In itssimplest form it provides E with a check list of tasks that must be completed in order forthe project to be successful. These can be ticked off as they are completed. Theactivities outstanding are more easily identified and arrangements made for theircompletion.

Answer to Question Three

The key issues in the use of time are:

• those related to the nature of the job;

• those related to the personality and attributes of the job holder;

• those related to the people who make up the job holder’s role set.

In E’s case, good time management is going to be critical, not only for successfulcompletion of the housing project but also for keeping up with the demands of her jobas a part-time management accountant, as well as fulfilling her family obligations.

The problems of time management are compounded in E’s case because with theaddition of her house renovation project she will now have two jobs, possibly three iflooking after her family is counted as a job. This means that to describe the key issuesaffecting E’s use of time we need to consider the nature of all these jobs, the demandsof other role players in these jobs and the personality and attributes of E.

Taking first the nature of the jobs that E is involved with. E will be in regular contact withother people in her family role. This means that she will be under greater pressure forinterruption than if she lived alone. As Project Manager on the house renovation,contacts will be of a less regular nature and the demands on her time will varydepending on the stage in the life cycle of the project. However, she will need tocommunicate regularly with her partners in Enterprise Associates.

E’s job as a Management Accountant, although it will entail regular contact with a rangeof colleagues, superiors, customers and so on, will have a fixed number of hours perweek and she has already taken action to reduce these by opting to work part-time.The only scope for making additional time available (other than evenings andweekends) for the project will be to use some of her annual leave. This means that themain conflict in her use of time will be that between her family role and the demands ofthe housing project.

Given that the house renovation project will be of limited duration and that her husbandis already committed to sharing the workload, it should be possible to make use of whathas primarily been “family time” to concentrate on the project.



P5 PILOT PAPER 16

In seeking to balance the various demands on her time, E can make use of some of theestablished principles of time management as follows.

It will first be useful to conduct an analysis of her existing use of time and when this hasbeen completed to try to estimate the time that will be required on the project. In doingthis she needs to identify the tasks that she alone will be responsible for and also thetasks that require the greatest effort or produce the greatest return.

Once these have been identified she can discuss them with her husband and othermembers of the family. Her non-core tasks can then be divided up so that she can givegreater attention to the project. In doing this it will be useful for her to emphasise thelimited time duration of the project and its ultimate benefits to the family. In making thedecisions about who will do what it is essential to consider the qualities and skills ofherself, her husband, other members of the family that will form part of the project teamand, where appropriate, her partners.

Some hard decisions will need to be made about the sacrifice of leisure time. Thepersonal inclinations of E and her husband will be particularly relevant here - forexample, how assertive are they? To what extent are they task-oriented or people-oriented? Are they tidy and methodical or untidy and disorganised? We do not know theanswer to all these questions without further information. What we do know of E is thatshe is methodical and hardworking and these qualities will doubtless assist in E’s useof time. However, she will have to exercise considerable self discipline if she is tomaximise the time she can give to the project, particularly given her disposition towardssocialising and meeting people.

There are several other ways in which E can improve the use of time. These includedelegating tasks to other team members, developing appropriate skills (for example,faster reading, writing, handling meetings, and being assertive) and developing anappropriate strategy for self-development.

Of these skills, that of developing the skill to be assertive without offending others willprobably be most relevant in the time constrained situation she is facing. Assertivenesscan contribute to the better use of a person’s time by enabling them to deal moreeffectively with interruptions.



P5 PILOT PAPER 17

Answer to Question Four

To: E, on behalf of Enterprise Associates

From: Buy-to-Rent Management Consultancy

Subject: Analysis of opportunities and threats in the Buy-to-Rent industry

Requirement (a)

Introduction

The competitive situation in the buy-to-rent industry can be analysed using M Porter’sFive Forces model of industry attractiveness. This provides the tools for assessing theforces in the industry’s external environment that will affect competitive positioning.

Porter’s Five Forces model

Porter’s Five Forces model is complex and detailed; its essential features are containedin Figure 1 below.

Analysis of the competitive environment for any given organisation is concerned withassessing the attractiveness of competing in that industry. Industry attractiveness refersto the potential for profitability that derives from competing in that industry. Eachindustry's attractiveness, or profitability potential, therefore, is a direct result of theinteraction of different environmental and industry forces that affect the nature ofcompetition.

The competitive state of an industry, such as the buy-to–rent industry, exerts a stronginfluence on how organisations develop their strategies to earn profits over time. Insome industries, rivals will compete on price, while others compete throughdifferentiation, for example.

Although all industries are competitive, the nature of this competition can differsignificantly between industries over time. The competition in the airline industry at thepresent time, for example is intensely competitive as compared with the situation beforederegulation. Thus, each industry has its own particular structure that determinesattractiveness (profitability). Industry structure refers to the interrelationships amongstdifferent forces that drive or characterise the behaviour of organisations competing inthat industry. Thus, how organisations compete with one another in any given industryis directly related to the interaction of five key forces, initially developed by MichaelPorter.



P5 PILOT PAPER 18

Figure 1 - Porter's Five Forces Model of Industry Attractiveness

Requirement (b)

Analysis of the main opportunities and threats in the buy-to-rent industry

Using Porter’s Five Forces model of rivals, buyers, suppliers, new entrants andsubstitutes we can derive the following conclusions about the potential threats andopportunities facing the sector.

The biggest threat seems likely to arise from the many new entrants that have enteredthe buy-to-rent market in the last few years. If this produces a significantly largeincrease in the supply of rented property then the rentals that businesses such asEnterprise Associates can charge will be forced downwards. In terms of other aspectsof Porter’s model it can be seen that the barriers to entry are not high enough to deterrelatively large numbers from entering the industry.

The shortage of building workers (plumbers, brick layers, plasterers and so on) that hasarisen as a result of the increased supply of building land will make the renovation ofolder properties more expensive because of the shortage in supply of these specialists.

Buyers in the form of tenants are not powerful as individuals, but large buyers such aslocal governments who may wish to rent a number of houses could be in a position tonegotiate discounts.

The reported change in preference amongst consumers for new houses also suggeststhat demand for the properties that Enterprise Associates rent may be less buoyantthan previously. That said, it is feasible that the types of customers who purchase new



P5 PILOT PAPER 19

houses are unlikely to rent renovated older houses. So this is an area where E wouldneed more information.

As regards the supply of property for rent, the local government’s plans for compulsorypurchase and demolition of some of the older houses in Enterprise Associates’ area ofoperations may be a threat or an opportunity, depending on whether any of the housesin question belong to the company. If one or more of Enterprise Associates’ housescurrently being rented are demolished, then this is a threat to its business. However, ifnone of Enterprise Associates’ houses fall within the local government’s plan, thenEnterprise Associates will possess some of the shrinking supply of this kind ofaccommodation.

The decision by the central government to release a significant amount of building landwill mean that more houses will be available for purchase or for rent. This may meanthat, for businesses like that of Enterprise Associates, there will be less demand for theolder types of houses.

The only real substitute to renting a property is to buy a house, and since interest rateshave risen and are forecast to increase even further, this kind of substitution is less andless possible for individuals and families. This may present Enterprise Associates andothers in the buy-to-rent business with an opportunity.

In summary, then, our analysis suggests a mixed picture of threats and opportunities.Overall, however, it seems clear that the threats are greater in the buy-to-rent businessthan they were some four years ago when E and her partners entered the buy-to-rentmarket.



P5 PILOT PAPER 20

SECTION C

Answer to Question Five

Requirement (a)

The strategy process adopted appears to be similar to that described in the rationalplanning model originated by Igor Ansoff and developed by strategists such as MPorter.

This approach to strategy generally involves a deliberate step by step approach. Itcommences with a set of tentative objectives which the CEO or senior managementteam considers necessary for the organisation to achieve its goals

The external environment is then analysed to determine potential opportunities andthreats. An internal audit is conducted to determine the organisation’s strengths andweaknesses. Strategic alternatives are evaluated to determine which strategy will best“position” the organisation so as to capitalise on opportunities and strengths whileminimising threats and weaknesses. Then a plan is prepared to assist in theimplementation of the chosen strategy.

The approach adopted by the senior management of the WAM Organisationsupermarket chain in the scenario appears to be similar to the process describedabove. The management appears to have decided to pursue further growth outside thedomestic market and the proposed development of a supermarket outlet in country Y isthe first step in this direction. The scenario makes clear that the decision to locateabroad has been taken only after careful internal and external analysis of theorganisation and its environment and that subsequent research has been conducted tofind the best location for this tentative first step outside its domestic market.

The product of the strategy process is the content of the strategy and is concerned withthe ‘what’ of strategy. In this case, the corporate strategy of the WAM Organisation is acombination of growth by diversification and growth through market development. Itinvolves WAM Organisation in seeking to diversify by providing different services;personal finance and telecoms in different markets and expanding its operations byselling the same products and services in a new market abroad. This growth strategy isbased on the assumption that its proven method of selling a wide variety of productsunder one roof, using self service, is so much more efficient than the methods of sellingused by the small traditional shops. It can provide its products and services at a muchlower cost than that of existing competitors. In building a new superstore in Y country,therefore, it expects to have a competitive advantage and to capture a substantialshare of the market very quickly.

Requirement (b)

Secondary stakeholders are those who have no formal contractual relationship to theproject but can have a strong interest in the development of the project. Thesestakeholders belong to an informal project stakeholder organisation. They includesocial organisations, competitors, local communities, the general public, consumergroups, private citizens, professional organisations, the media, families, and variousinstitutions such as schools, universities, hospitals, churches, civic groups, and so forth.



P5 PILOT PAPER 21

In the WAM Organisation supermarket project, the secondary groups that poseproblems for the management of the project include local residents, local shop owners,the Civic Society, the media, potential customers of the new WAM Organisation outlet,the local school staff, potential supermarket competitors and the public at large.

The management of secondary stakeholders poses significant challenges for theproject manager and other WAM Organisation managers as well, because thesemanagers have no legal authority or contractual relationship with those stakeholders.

The secondary stakeholders can exert extraordinary influence over the project,supporting, or (as in this case) working against the project and its outcome."Management" of these secondary stakeholders can be particularly arduous, becauseno formal relationship exists with them. Consequently, the authority that the managerscan use is limited to their de facto authority, which is based on interpersonalcapabilities, knowledge, persuasive powers, political skills, expertise in general, andtheir ability to work with, and influence, the secondary stakeholders.

Some of the more important characteristics of secondary stakeholders include:

• there are no limits to where they can go and with whom they can talk to influencethe project;

• their interests may be real or are perceived to be real – because the project andits results may impinge on their "territory";

• their "membership" of the project team is ad-hoc - they stay as long as it makessense to them, in gaining some advantage or in realising their objectives involvingthe project;

• they may team with other stakeholders on a permanent or ad-hoc basis inpursuing common interests for or against the project's purposes;

• the power they exercise over the project can take many forms, such as politicalinfluence, legal actions (such as court injunctions), emotional appeal, mediasupport, social pressure, local community resistance, use of expert witnesses, oreven scare tactics;

• they have a choice of whether or not to accept responsibility for their strategiesand actions.

A useful check list for the management of stakeholders is as follows:

• Identify the key stakeholders.

• Determine vested interests.

• Identify the specific stake.

• Evaluate stakeholder influence.

• Modify project strategy.

The case scenario provides information on the first three items in the checklist above.We know the key secondary stakeholders are those objecting to the supermarketdevelopment proposal, namely local residents, shop owners and the Civic Society andwe know the specific stake of each. The shop owners are seeking to defend theirbusiness future, the residents are protecting the safety of local school children and theCivic Society is defending the amenity and aesthetic surroundings of the local area.



P5 PILOT PAPER 22

The influence of the stakeholders on the development of the project is difficult toascertain because it depends on the campaigning and lobbying skills of the secondarygroup protestors and on the skills of persuasion of the supermarket project team.

Although planning permission has been granted, there is the possibility that, with heavymedia coverage of the issue, some local and national politicians may be persuaded tochange their minds and campaign for the planning permission to be reviewed, morestringent restrictions to be applied or even for the permission to be rescinded.

Some damage to the project will already have been done by the adverse publicity givento it and this means that the WAM Organisation, and the project team in particular, willhave to work hard to overcome the objections of the protestors.

The project team supported by the resources of the WAM Organisation will need tomeet with each of the secondary stakeholders individually and/or collectively and seekto persuade each of these groups that their fears are unfounded or that the projectplans can be amended in some way to meet their concerns. It will be vital during thisprocess to seek to maintain the support of the key decision makers such as localplanning officials and the local politicians who originally supported the decision forplanning permission.

In making their arguments, the project team and WAM Organisation more generally, willneed to emphasise the benefits that the supermarket development will bring to the localcommunity in the form of a wide variety of goods and services at affordable prices, aswell as employment for a considerable number of local people.

Careful management of the media will also be required to enable WAM Organisation toget its case across in the best possible light. In order to do this the company may sendout its own public relations specialists to assist in the persuasion process.

Answer to Question Six

Requirement (a)

To: The Directors of A Investment Bank

Subject: The resource-based approach to strategic management and anassessment of the WAM Organisation’s core competences and resources

The resource-based approach to strategic managementIn contrast to the more traditional positioning approach which takes the environment asthe critical factor in determining an organisation’s strategy, the resource-basedapproach assumes that the key factors for success lie within the organisation itself interms of its resources, capabilities and competences. The choice of the organisation’sstrategy is not dictated by the constraints of the environment but is influenced more bycalculations of how the organisation can best exploit its core competences relative tothe opportunities in the external environment.

The resource-based approach assumes that an organisation is a collection ofresources, capabilities and competences that are relatively unique and that theseprovide a basis for its strategy and its ability to compete. It is also assumed thatorganisations can acquire different resources, skills and capabilities in the process of



P5 PILOT PAPER 23

their development. But because it takes time to acquire and develop such resourcesand capabilities it follows that organisations that already possess a relevant set of thesecan gain competitive advantage over rivals.

For example, the skills and capabilities required for miniaturisation were considered tobe the basis of a core competence for Sony because it takes many years to hone theseskills to perfection. This gave Sony a competitive advantage for some time becausethese skills were not readily available to competitors.

The resources of the organisation in the resource-based approach are typicallyclassified into two types: tangible and intangible resources. Tangible resources areinputs into an organisation that can be seen, touched, and/or quantified. They includeassets like plant and equipment, access to raw materials and finance, a trained andskilled workforce and organisational structure. Intangible resources range fromintellectual property rights like patents, trademarks and copyrights to the know-how ofpersonnel, informal networks, organisational culture and a organisation’s reputation forits products.

The dividing line between the tangible and intangible is often unclear and how they areclassified varies a little from one writer to another. Despite the problems withclassification, proponents of the resource-based approach are agreed on the relativeimportance of the two types of resource. Although it is clear that both types ofresources are required for any business to operate, resource-based theorists argue thatintangible resources are the most likely source of competitive advantage. The reasonfor this, it is argued, is that because intangible resources are less visible they are moredifficult to understand and to imitate than tangible resources. As such they are,therefore, more likely to be a source of sustained competitive advantage.

Resources alone, however, are not a basis for competitive advantage. It is the way inwhich resources are integrated with each other to perform a task or an activity thatprovides the capability for an organisation to compete successfully in the market place.

This being the case then, the most important resource for any organisation is the skilland knowledge possessed by the organisation’s employees. It is this skill andknowledge acquired over time and embedded in the organisation’s culture thatinfluences how it operates and determines its success. Whether or not resources andcapabilities have the potential to become core competences depends on how difficultthey are for competitors to acquire and how valuable they are to the organisation as abasis for competitive advantage. When they are rare, difficult to imitate, non-substitutable and they allow opportunities to be exploited or threats to be neutralised,then they can be considered core competences and serve as the basis of anorganisation’s sustained competitive advantage.

Assessment of WAM Organisation’s core competences and resourcesIn the case of WAM Organisation we are limited in our assessment of its ability toexploit key resources and competences to secure a competitive advantage because ofthe generality of the information provided.

We do know that its performance to date has been exceptional because it has securedthe largest share of its home market. We are also told, with some supporting evidence,that it has an outstanding reputation for innovation and that it is able to provide valuefor money because of its use of the latest technology and its efficient operations.



P5 PILOT PAPER 24

Just which of these resources/competences contributes most to the successfulcompetitive ability we cannot determine from the information available, but we canmake some reasonable assumptions from what we are given.

Its outstanding reputation as an innovator is likely to provide the WAM Organisationwith a competitive advantage because the capacity for innovation is not something thatis easily acquired and it takes time to build up a reputation. In this respect, it will bedifficult for rivals to imitate WAM Organisation; this provides it with a sustainablecompetitive advantage.

The claim that it is efficient suggests that it is able to co-ordinate its resourceseffectively. Whether it is able do so more effectively than rivals we cannot know withoutmore information, but as it is able to provide “value for money” and has gained thelargest market share we assume, other things being equal, that its ability to coordinateresources is contributing to its competitive success.

Finally, the fact that it feels confident enough to venture abroad suggests that it has theconfidence and the resources to seek new markets in which to exploit its resources andcompetences.

Requirement (b)

Social and cultural norms of a particular region affect the behaviour and pattern ofinteraction between individuals and groups in a variety of ways. In face to facemeetings and interaction, the language and behaviour of different peoples vary andtheir mutual understanding of each other's culture will influence the effectiveness andefficiency of communication between them. This influences how well multi-culturalworkplaces operate at all levels, from strategy-setting at the senior level to plant-flooroperations.

Organisations also tend to have different organisational and decision-making practicesdepending on where they have evolved and which groups of people (by religion,gender, age and so on, as well as ethnicity) they encompass. It is to be expected,therefore, that WAM Organisation’s managers might encounter problems in managingthe local staff in country Y, unless they are well prepared.

The most well known research on international differences in national culture is thatconducted by Geert Hofstede, closely followed by that of his countryman, FonsTrompenaars. In this answer Hofstede’s research will be used but answers using othersources of research are equally acceptable. Hofstede conducted one of the earliest andbest-known cultural studies in management, on IBM's operations in 70 countriesaround the world. Obtaining answers to 32 statements from over 116,000questionnaires he mapped key cultural characteristics of these countries according tofour value dimensions.

Hofstede's four dimensions are:

• Power Distance or the extent to which a culture accepts that power inorganisations is distributed unequally.

In countries with high power distance, managers make autocratic decisions andthe subordinates do as they are told. Often these societies have businessstructures that are typified by close control of operations and a fairly weak workethic. Organisation structures tend to be tall and managers have relatively fewsubordinates reporting directly to them. In countries with moderate to low power



P5 PILOT PAPER 25

distance, people put a high value on independence, managers consult withsubordinates before making decisions, and there is a fairly strong work ethic.Organisation structures tend to be flat and managers directly supervise moresubordinates than do their counterparts in high power distance enterprises.

It follows that if WAM Organisation’s managers are from a country in which highpower distance is the cultural norm and that country Y is one in which a low powerdistance is the accepted norm, then there is going to be a degree of conflict. Inthis context WAM Organisation’s managers would tend be seen by local staff incountry Y as acting in an autocratic manner.

• Uncertainty Avoidance or the degree to which members of a society feeluncomfortable with risk and uncertainty.

Countries with high uncertainty avoidance tend to formalise organisationalactivities and depend heavily on rules and regulations to ensure that people knowwhat they are to do. There is often high anxiety and stress among these people;they are very concerned with security, and decisions are frequently a result ofgroup consensus. Low uncertainty avoidance societies have less structuring ofactivities and encourage managers to take more risks. People here are lessstressed, have more acceptance of dissent and disagreement, and rely heavily ontheir own initiative and ingenuity in getting things done.

If local staff in country Y tended towards low uncertainty avoidance and the WAMOrganisation’s managers came from a society that emphasises high uncertaintyavoidance, it follows that problems may well arise in the relationships betweenmanagement and staff in the new supermarket outlet. WAM Organisation’smanagers would tend to prescribe, and try to enforce rules and procedures whilelocal staff would prefer to rely on their own initiative to get jobs done, even if thissometimes meant breaking the rules.

• Individualism or the extent to which people are supposed to take care ofthemselves and be emotionally independent from others.

Countries with high individualism expect people to be self-sufficient. There is astrong emphasis on individual initiative and achievement. Autonomy and personalfinancial security are given high value, and people are encouraged to makeindividual decisions without reliance on group support. In contrast, countries withlow individualism place a great deal of importance on group decision making andaffiliation. No one wants to be singled out for special attention, even for a job welldone. Success is collective and individual praise is embarrassing because itimplies that one group member is better than the others. Countries with lowindividualism emphasise belongingness and draw strength from group affiliation

If, in the case under consideration, WAM Organisation’s managers are from acountry where low individualism is the norm and yet local staff they aresupervising are used to a situation where high individualism is the norm, thenthere are likely to be clashes between management and staff from time to time.For instance, local staff employees who make a significant contribution to therunning of the organisation might well expect some kind of individual reward thatWAM Organisation’s managers may not see as necessary given their culture oflow individualism. This in turn may result in low motivation on the part of the staffthat has made a contribution through its additional efforts.



P5 PILOT PAPER 26

• Masculinity or the value attributed to achievement, assertiveness and materialsuccess as opposed to the stereotypical feminine values of relationships,modesty, caring and the quality of life.

Countries with high masculinity scores place a great deal of importance onearnings, recognition, advancement, and challenge. Achievement is defined interms of wealth and recognition. These cultures often tend to favour large-scaleenterprises and economic growth is viewed as very important. In school, childrenare encouraged to be high performers and to think about work careers where theycan succeed. Countries with low masculinity scores place great emphasis on afriendly work environment, cooperation, and employment security. Achievement isdefined in terms of human contacts and the living environment. There is lowstress in the workplace and workers are given a great deal of job freedom.

If WAM Organisation’s managers are from a country with high masculinity and thelocal staff in country Y are from a culture that emphasises low masculinity, theremay be misunderstandings. This is because, while WAM Organisation’smanagers will be pushing for high performance and achievement from everyonein the company, the local staff will be more concerned with matters of security anda pleasant work environment.

Answer to Question Seven

Requirement (a)

The uncertainties and associated risks involved in the development of the WAMOrganisation’s development depend to some extent on how the scope of the project isdefined.

If we consider the strategic objectives of the WAM Organisation, there is good reasonto think that the project will only be deemed to have been successful when the newoutlet has been completed and is operating successfully. Given that the strategicobjective of the WAM Organisation is that of growth through market development, itfollows that the new outlet would need to be profitable, or at least well on the way tobeing profitable, before the organisation would feel the project was complete.

In this sense the risks are not limited simply to those associated with the construction ofthe supermarket buildings, access roads and car park; they also involve the risksassociated with developing the business in a new country.

Having ascertained the scope of the project, the next step is to identify the uncertaintiesand the risks associated with it. Before doing so, however, it is useful to note that thereare various ways of categorising risks. One way is to consider (a) the impact of therisks and (b) where the control of the risk lies. The impact of risk can again be dividedinto two types: these are business risks and insurable risks.

Business risks are the risks inherent in doing business in general and derive from thenature of all market operations. Insurable risks include such things as those arisingfrom the threat of fire, flood, storm-damage and may or may not, be insurabledepending on the probability of their occurrence. Some risks such as those of possibleinjury to employees are covered by statutory requirements and organisations are legallyrequired to take out insurance to cover these.



P5 PILOT PAPER 27

There are internal risks to the WAM Organisation project that are both technical andnon-technical. The technical risks arise from the technology of the work, such as in theconstruction work of the store outlet building or the poor implementation of a marketingplan. The internal non-technical risks usually arise from the project organisation or fromthe mismanagement of human, financial or material resources. These are risks withinthe control of the project manager, Mr G. Any failures may result in schedule delays,cost over-runs or interruptions to cash flow.

The external risks are largely beyond the control of managers or their organisation.Some of these external risks are predictable in a general sense but the timing is notpredictable. Examples would include changes in market prices or other economicfactors, such as exchange rates and interest rates. Problems may also arise from socialfactors as in the case of the opposition from some of the secondary stakeholders in thescenario case. All of these might have some effect on the success or failure of theproject.

Then there are external risks of an unpredictable nature, such as some actions ofgovernment, acts of sabotage by terrorist groups or natural hazards like earthquakes.

The sources of some of the major risks of the supermarket project lie in operating in aforeign country. Organisations operating overseas face a range of different challenges.Indeed these risks are so widely recognised that a number of research organisationsand consultancy firms specialise in providing data on the risks associated with foreigndirect investment in different countries.

The management of risk involves a number of stages, including the identification ofrisks (see above), assessment of the potential impact if things do go wrong, and adetermination of how risks can be reduced.

In assessing the potential consequences that can arise from taking a particular risk, it isnecessary to consider both the likelihood of its occurrence and the potential damage ifthings do go wrong. In projects such as the WAM Organisation’s supermarket outlet,where a number of risks are involved at different stages, it is necessary to consider thecombination of the risks and the potential damage if things turn out badly.

In the case of this project there are risks associated with the technical problems ofconstruction, risks arising from the mismanagement of the project, risks arising fromstakeholder protests and risks associated with developments in the market for WAMOrganisation’s goods and services. All these risks must be taken into account inestimating the overall risk and its potential consequences.

In assessing the likelihood of undesirable events occurring, the project managers andother senior managers in the WAM Organisation will draw upon past experience. In thisparticular case, it is not envisaged that the construction of the store outlet would involveany substantial risks. The WAM Organisation has commissioned, built and operatedmany supermarket store outlets in its home country and will have expert experiencedstaff to call upon that will minimise the potential risks in this area. Mr G, the site projectmanager, would be wise, however, to plan for possible delays and perhaps some extracosts of construction, given differences in the conditions between the WAMOrganisation’s home country and country Y. In the event that delays did occur, thedamage would result in loss of revenue that would have been generated had the newstore outlet been opened on time.



P5 PILOT PAPER 28

The likelihood of the supermarket not being built because of protests from smallshopkeepers, residents and members of the Civic Society are difficult to estimatebecause of the nature of political protest movements and their outcomes. Nevertheless,the WAM Organisation’s managers will have experienced similar forms of protests intheir home country and should be able to estimate the probability of their success indeveloping the supermarket outlet. The consequences of failure, however, would besevere in that it would have to seek planning permission in a new location if the existingplanning permission was rescinded. The risk could be used by making use ofexperienced negotiators and seeking to satisfy the concerns of the different protestgroups.

The business risks again are not easy to estimate as this is a new venture for the WAMOrganisation. Its managers can build on their experience of opening new outlets in theirhome country, but country Y may differ in a number of ways from that of the homecountry. These differences may be historical, cultural, governmental, legislative,economic, social, climatic and infrastructural, all of which can influence the relativesuccess of a business. In the event that the new supermarket outlet fails to make anadequate return in a reasonable period of time, it follows that the overall project willhave failed. The consequences of failure would be costly in terms of a loss ofinvestment in resources, and in terms of damage to the organisation’s reputation.

The way to avoid such risks are to manage the new supermarket outlet in asprofessional a way as possible using the most experienced managers and taking thebest available advice.

Requirement (b)

In negotiations with national and local government officials in country Y, WAMOrganisation would be wise to make use of established principles of negotiation. Anegotiation can be defined as “a discussion in which the parties involved have differentobjectives”.

In the supermarket case scenario, the national and local government’s interest wouldbe that of gaining a supermarket shopping service in their country and locality that doesnot currently exist. They would also be hoping to provide some of their own retailerswith the opportunity to learn something of the methods and techniques employed byWAM Organisation in running a modern supermarket chain.

The WAM Organisation would be interested in gaining a foothold in country Y as a firststep in its strategy of growth via market development. WAM Organisation’s overallnegotiation strategy, therefore, would be to offer the benefits of a new type of shoppingformat to country Y in exchange for access to country Y’s market.

Negotiations of this kind can end in one of three possible ways:

• Win-Lose: One side achieves its objectives, while the other side does not.

• Lose-Lose: Neither side achieves its objectives.

• Win-Win: Both sides achieve enough of their objectives to be satisfied with theresult.



P5 PILOT PAPER 29

While winning in negotiations may seem like a good idea, experienced businessmanagers are more cautious. For any kind of long-term relationship, it is evidently notgood practice to make someone or some organisation a loser. This can breedresentment and the business relationship may suffer in the long run.

It is, therefore, very important that everyone involved is able to accept agreementswhich are reached at the beginning of a project. This usually means reaching a Win-Win outcome to negotiations, with which both sides can be reasonably satisfied.

In a negotiation, it is unusual for one side to get everything it wants.

Recommended best principles for negotiators, therefore, are as follows:

• Try to work out the ideal outcome – the best one can hope to achieve.

• The realistic outcome – what it is thought one could reasonably expect toachieve.

• The fall-back position – the outcome one could live with, if one really had to.

In the case of WAM Organisation, the fall back position might be that it walks awayfrom the negotiations and tries for planning permission in another city in the samecountry, or even another country.

The art of bargaining involves showing as little of your own hand as possible, whiletrying to find out what cards your opponent holds. It is also a game of give and take.

Some of the established rules of bargaining include:

• Don't give anything without taking something in return.

• Give things you can afford to lose.

• Only take things you want to have.

These rules are useful to remember, especially if one is being pressured to makeconcessions that one does not wish to make. However, their disadvantage is that theyreinforce an adversarial model of negotiation, in which the other side is seen as anopponent, not as a potential partner. There are times when this model needs to beabandoned and another way forward looked for.

Conflict makes negotiations more difficult to resolve. If tempers become raised,participants will find it hard to back down and accept a compromise solution. It is usefulto begin a negotiation by both sides stating their position. The person who is leadingthe discussion can then make a quick assessment of where the areas of agreementand conflict are likely to be. It is usually a good idea to discuss the non-controversialareas first. In this way, commitment to the negotiation can be developed, before beingtested on difficult issues.

It is never advisable to indulge in verbal attacks on the people one is negotiating with. Ifpeople are attacked, they will defend themselves by counter attacking, and adownwards spiral of attack and defence will begin. If one finds oneself under attack, thebest advice is to try not to rise to the bait. In response, an effort should be made toseparate facts from opinions.



P5 PILOT PAPER 30

In a situation in which both sides are insisting on apparently incompatible demands andthe negotiations are in danger of breaking down completely, the best way forward is tolook for areas of common ground and to build upon them. When one is trying topersuade another to accept a point of view, it is important to consider things from theirperspective. Think about what they want from the situation. Some of these objectiveswill be clearly stated in the negotiations. Others will be unspoken, but no less real.

Once one side knows what the other side wants, efforts should be made to convincethem that their requirements can be achieved. One way to do this is to provide a“vision” of what can be achieved. This may be done by powerful speaking, or byproducing a demonstration or model of the project outcomes. It is also extremely usefulto show that similar things have been achieved in the past.

In the case of WAM Organisation, an invitation to government officials in country Y tovisit the company’s domestic supermarket outlets is probably the best means ofdemonstrating what is on offer.



P5 PILOT PAPER 31



P5 PILOT PAPER 32



© The Chartered Institute of Management Accountants 2005

Business Management Pillar

Managerial Level Paper

Paper 5 – Integrated Management

26 May 2005 – Thursday Morning 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, make annotations 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 the question requirement before attempting the question concerned. The requirements for the questions in Sections B and C are contained in a dotted box.

Answer the ONE compulsory question in Section A. This is comprised of eight sub-questions on pages 2 to 4.

Answer the THREE questions in Section B on pages 5 and 6.

Answer TWO of the three questions in Section C on pages 7 to 9.

Write your full examination number, 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.

P5 –

Inte

grat

ed M

anag

emen

t

TURN OVER



P5 2 May 2005

SECTION A – 20 MARKS [the indicative time for answering this section is 36 minutes]

ANSWER ALL EIGHT SUB-QUESTIONS Question One 1.1 Identify which ONE of the following perspectives of strategic management is defined by

Mintzberg as “patterns or consistencies realised despite, or in the absence of, intentions”?

A Rational

B Logical Incrementalism

C Emergent

D Positioning

(2 marks) 1.2 State which ONE of the following represents the four phases of negotiation:

A Preparation, opening, bargaining, closing

B Opening, bargaining, decision, closing

C Preparation, bargaining, negotiating, closing

D Opening, negotiating, decision, closing

(2 marks)

1.3 Which ONE of the following organisational forms is best suited to a project which requires

integration from a number of different functions?

A Functional

B Network

C Divisional

D Matrix (2 marks)

Instructions for answering Section A: The answers to the eight sub-questions in Section A should ALL be written in your answer book. Your answers should be clearly numbered with the sub-question number and then ruled off, so that the markers know which sub-question you are answering.



May 2005 3 P5

1.4 Identify which ONE of the following best describes the scope of a project?

A A statement of client needs

B The extent of work needed to produce the project’s deliverables

C The specification of resources required

D The sequence of activities (2 marks)

1.5 Porter’s work on industry competition suggests that the strength of market entry depends

on the existence of barriers to entry against the entrant. Identify three factors that create barriers to entering an industry.

(3 marks) 1.6 Identify three missing words (using a, b and c) to complete the diagram of the five

process areas of project management proposed by the Project Management Institute.

(3 marks)

1.7 List three types of feasibility study that might be undertaken as part of project planning.

(3 marks)

TURN OVER

Executing

Planning

a

b

c



P5 4 May 2005

1.8 Blake and Mouton developed the managerial grid to provide a framework for applying effective management. Draw the managerial grid labelling the horizontal axis and vertical axis and identify on the grid where the team management style is located.

Note: graph paper is not required.

(3 marks)

(Total for Section A = 20 marks)

End of Section A



May 2005 5 P5

SECTION B – 30 MARKS [the indicative time for answering this Section is 54 minutes]

ANSWER ALL THREE QUESTIONS Question Two T, the HR manager of X Investment Bank is keen to develop and introduce policies that will enhance the relationship between managers and their subordinates. Having recently attended a conference on workplace stress, T has recommended that the Bank should introduce a stress management programme. He feels that the introduction of such a programme would not only minimise the harmful impact that stress can have on organisational performance, but could also improve working relationships.

Question Three Many organisations now include explicit reference to their commitment to act in a socially responsible manner in their mission statement. This then forms an integral part of organisational strategies and policies. However, some shareholders see social responsibility as conflicting with their main interest in the company which is that of creating maximum shareholder wealth.

Section B continues on the next page

TURN OVER

Required: Discuss the measures that T could introduce as part of the proposed stress management programme to minimise stress related problems.

(Total for Question Two = 10 marks)

Required: Explain the main arguments for and against the view that socially responsible business decisions can achieve sustainable competitive performance and improve shareholder value.

(Total for Question Three = 10 marks)



P5 6 May 2005

Question Four R has taken on the responsibility for organising the annual conference for the local Society of Management Accountants. Remembering the project management techniques she came across when studying for her professional qualification, R has decided that critical path analysis may be helpful in planning the conference.

As a start, R has drawn up a list of the activities she must complete in preparation for the conference, she has identified the dependency between the different activities and the time she thinks each will take.

Activity Dependency Time

(weeks) Determine conference theme A - 3 Research alternative venues B - 6 Identify and book guest speakers C A 4 Book venue D B 2 Print conference papers E C 8 Print and send out invitations F D 4

Confirm final arrangements with venue and deliver documents G E,F 2

Total for Section B = 30 marks

End of Section B

Required: Using the information from the scenario, construct a network diagram and explain how information from this could be useful to R in planning the conference.

(Total for Question Four = 10 marks)



May 2005 7 P5

SECTION C – 50 MARKS [the indicative time for answering this section is 90 minutes]

ANSWER TWO QUESTIONS FROM THIS SECTION Question Five A is the Chief Executive Officer (CEO), of L Company, which manufactures and sells electrical appliances such as vacuum cleaners, washing machines and dish-washers. She founded the company fifteen years ago, along with W who provided the financial backing for the business. Whilst A is the CEO, her main interest is inventing new product designs. The company’s competitive advantage has, in the past, been achieved through innovative technological and design features that have been difficult for other companies to copy. This has allowed the company to charge premium prices for its products.

Over the years the company has grown significantly, and it now employs over 1,000 staff. It has diversified into producing televisions and media equipment and has more recently moved into the PC market. The company has manufacturing plants around the world, but the headquarters remains in country G.

When the company was first established it was very much based on an entrepreneurial structure with no formal control systems in place. Staff joined the company because it provided an exciting and creative environment in which to work. Teamworking and lateral communications to solve problems were encouraged. Everyone was on first name terms and the company invested in the development of staff.

However, over time the company has changed to a functional structure and bureaucratic and rigid control mechanisms have been put in place. In recent months sales have slowed down. A is concerned that the company may have lost its ability to be creative and innovative, as well as its entrepreneurial spirit. This could mean disaster in the future.

TURN OVER

Required: (a) (i) Compare and contrast an entrepreneurial structure and a functional structure.

(7 marks)

(ii) Advise A why a functional structure may no longer be appropriate for L Company.

(6 marks)(b) Discuss the different approaches that could be used to encourage creativity and

innovation in L Company. (12 marks)

(Total for Question Five = 25 marks)



P5 8 May 2005

Question Six S Company is a major retailer selling mobile phones. In recent years the Company has opened new outlets and taken on more support staff at the head office. As a result the Company has outgrown its existing headquarters and so the decision has been taken to relocate to a larger purpose-built building.

Although the building work is complete, there are a number of different initiatives associated with the relocation. These include making sure that the premises are ready to move into on time and within budget and setting up a customer service contact team to support the retail outlets dealing with customer enquiries and complaints. In addition, an up graded office IT support system is to be designed and must be ready for installation in the new premises.

P, the head of facilities management, has decided to establish a project team to ensure that all of the activities associated with the move to the new premises are co-ordinated and within budget. She has the formal role of project sponsor working on behalf of the Board and has appointed D to manage the project.

Required: (a) Identify and explain the activities that D would need to undertake in the planning phase

of the project for re-location. (15 marks)

(b) Compare and contrast the roles of P, as the project sponsor and D, as the project manager.

(10 marks)

(Total for Question Six = 25 marks)



May 2005 9 P5

Question Seven V is the Chief Executive of M Company, a manufacturer of prepared frozen foods. The company is facing difficult business conditions with strong competition from supermarket own brand products and consumer demand for variety and new products as their tastes change.

However, V is aware of the problems the company has encountered when undertaking new product development (NPD) in the past. Whilst collaboration is essential, instead there have been disagreements and arguments between the various departments.

The marketers complain that the Research and Development (R&D) department is very slow in responding to their proposals for new recipes and the whole process of R&D takes too long. The production department has protested that R&D does not consider the implications for the production process when coming up with new recipes and product packaging. The sales team is frustrated by the length of time the whole NPD process takes. The lack of new products puts it at a disadvantage when negotiating with retailers to sell M Company’s products.

The Finance department is concerned that the investment in NPD does not provide adequate returns, and both the marketing and R&D departments are always over budget. However, other departments see Finance as controlling and sanctioning spend rather than supporting new product development.

V knows that to remain competitive, changes need to be made to the NPD process in the company. He has decided to establish a cross-functional team to work on a new range of ready prepared frozen foods to appeal to the luxury end of the market.

Total for Section C = 50 marks


Required: (a) Analyse the nature and sources of conflict between the different departments in M

Company. (10 marks)

(b) Describe the factors that V should consider in building a successful cross-functional project team

(15 marks)

(Total for Question Seven = 25 marks)



P5 10 May 2005

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May 2005 11 P5




P5 12 May 2005



P5 - Integrated Management

May 2005

Thursday Morning Session



Paper 5 – Integrated Management Post Exam Guide May 2005 Exam

The Chartered Institute of Management Accountants Page 1

General Comments

The overall performance of candidates in this first diet of Integrated Management was most encouraging. Most candidates were able to obtain a pass mark on the wide ranging set of short answer questions that made up the compulsory Section A. Many candidates did much better, with a small minority gaining full marks. At the lower end of the performance range however, some candidates did not gain any marks at all for Section A. This kind of poor performance underlines the need for careful preparation for this paper. Even with objective test questions that require candidates only to identify the correct answer, trying to gain marks by guess work is futile! The performance of candidates in Section B was rather more variable with marks spread across the whole range. The questions in this Section required the application of relevant theory to issues dealing with stress management, social responsibility and critical path analysis respectively. The specific weaknesses demonstrated by candidates are detailed in the discussion of each question below. Common general weaknesses included insufficient attention to the exact wording of the questions which resulted in all, or most, of some candidates’ answers being incorrect. Another was omitting to answer some parts of the question. For instance in Q3 on social responsibility some candidates only provided the arguments for why organisations should adopt socially responsible policies but neglected the arguments against the adoption of such policies. Similarly in Q4, many candidates concentrated only on providing a network diagram but neglected the second part of the question asking them to explain how information from the diagram could be helpful to the project manager. Performance in Section C was even more variable with the less carefully prepared candidates struggling to gain even a pass mark on some of the questions. Common weaknesses in this part of the paper included the tendency on the part of some candidates to ignore the requirements of particular parts of a question. For example, in Q5 many candidates answered in Part (b) much of what they should have been addressing in Part (a) (i) of the question. Another weakness involved the tendency to repeat parts of question scenarios as the answer to a question. This was most evident in Q7 (a) where many candidates simply repeated the words of the scenario as their answer instead of using their knowledge to work out what the underlying causes of conflict were likely to be in functionally structured organisations. A final weakness observed in a number of answers regards the limited skill of some candidates to summarise material. This weakness was most evident in the answers to Q6 (a). This required candidates to identify and explain the activities that would need to be undertaken in the planning phase of a project. It was clear from many answers that although candidates were familiar with what such activities were, they produced weak answers because they became bogged down in the detail of particular phases of the planning process rather than identifying the key phases and summarizing the key activities briefly as required. The above paragraphs have focused on the main weaknesses of some candidates for each section of the paper. Hopefully those who need to retake the examination will gain some understanding of where they went wrong and gain an idea of how to improve their performance next time around. For the majority who passed the examination, many of the above comments do not apply and to these candidates the examination team offers its congratulations.





SECTION A – 20 MARKS ANSWER ALL EIGHT SUB-QUESTIONS

Question 1.1 Identify which ONE of the following perspectives of strategic management is defined by Mintzberg as "patterns or consistencies realised despite, or in the absence of, intentions"? A Rational B Logical Incrementalism C Emergent D Positioning

(2 marks)

The answer is C

Question 1.2 State which ONE of the following represents the four phases of negotiation: A Preparation, opening, bargaining, closing B Opening, bargaining, decision, closing C Preparation, bargaining, negotiating, closing D Opening, negotiating, decision, closing

(2 marks)

The answer is A

Question 1.3 Which ONE of the following organisational forms is best suited to a project which requires integration from a number of different functions? A Functional B Network C Divisional D Matrix

(2 marks)

The answer is D





Question 1.4 Identify which ONE of the following best describes the scope of a project? A A statement of client needs B The extent of work needed to produce the project’s deliverables C The specification of resources required D The sequence of activities

(2 marks)

The answer is B

Question 1.5 Porter’s work on industry competition suggests that the strength of market entry depends on the existence of barriers to entry against the entrant. Identify three factors that create barriers to entering an industry.

(3 marks) The answer could include: 1. Economies of scale 2. Capital requirements 3. Government action Acceptable alternatives included branding, access to distribution channels, market saturation, switching costs, expertise and strength of competition.





Question 1.6 Identify three missing words (using a, b and c) to complete the diagram of the five process areas of project management proposed by the Project Management Institute.

(3 marks) The answer is: a. Initiating b. Controlling c. Closing Acceptable alternatives for (a) included ‘defining’ for (b) ‘monitoring’ or‘ reviewing’ and for (c) ‘completion’.

a

b

c

Planning

Executing





Question 1.7 List three types of feasibility study that might be undertaken as part of project planning.

(3 marks) The answer is: 1. Technical feasibility study 2. Social or Ecological feasibility study 3. Financial (Cost/ Benefit, or Economic) feasibility study Acceptable alternatives included assessment of feasibility in terms of risk, quality, marketing, production and politics.

Question 1.8 Blake and Mouton developed the managerial grid to provide a framework for applying effective management. Draw the managerial grid labelling the horizontal axis and vertical axis and identify on the grid where the team management style is located.

(3 marks) The answer is:

Concern for people

Team Management Style

Concern for production or task





SECTION B – 30 MARKS ANSWER ALL THREE QUESTIONS

Question 2 Discuss the measures that T could introduce as part of the proposed stress management programme to minimise stress related problems.

(Total for Question Two = 10 marks) Rationale Increasingly managers find themselves having to deal with employees with stress related problems. This question tests candidates’ ability to discuss the measures that can be taken to deal with stress in the workplace to minimise the problems that employees suffering from stress can create. Suggested Approach This question requires candidates to discuss the various steps that can be taken to deal with stress related problems. Strong answers will explain how each suggestion will minimise stress related problems. Marking Guide

Marks

Measures that could be introduced, for example:* • Acknowledgement of causes of stress • Stress audit • Changes to job role/content • Stress reduction programmes and counselling • Physical/social environment *To gain full 2 marks requires link to the scenario.

2 marks for each point

Maximum marks awarded 10 Examiner’s Comments Generally well answered. Common Errors Some candidates tended to concentrate on the consequences of stress rather than focusing on the possible measures to overcome the problems of stress.





Question 3 Explain the main arguments for and against the view that socially responsible business decisions can achieve sustainable competitive performance and improve shareholder value.

(Total for Question Three = 10 marks) Rationale This question examines candidates' understanding of the concept of social responsibility. Their ability to develop convincing arguments both for and against socially responsible business decisions in the context of creating sustainable competitive performance and improving shareholder value will be assessed. Suggested Approach Answers should first explain the main arguments for socially responsible business decisions, making explicit reference to how they can improve sustainable competitive performance and shareholder value. The main arguments against socially responsible business decisions should then be explained in terms of why they may not improve competitive performance and shareholder value. Marking Guide

Marks

Arguments against could include: Friedman’s view on maximising shareholder wealth Cost Reduces revenues Diverting funds

2 1 1 1

Arguments for could include: Reference to stakeholder theory To gain competitive advantage Supports corporate image Attracts socially responsible consumers

2 1 1 1

Examiner’s Comments Generally well answered. Common Errors Tendency by some candidates to focus too much on the advantages for firms of adopting a socially responsible stance and too little on the arguments against this approach.





Question 4 Using the information from the scenario, construct a network diagram and explain how information from this could be useful to R in planning the conference.

(Total for Question Four = 10 marks) Rationale The question is designed to assess candidates’ ability to use the information from the scenario to construct a network diagram, and appreciate how the information can be helpful to project planning. It requires candidates to be familiar with the concepts associated with network analysis such as critical path and earliest and latest expected time to calculate project duration. Suggested Approach Candidates should first produce a network diagram to identify the critical path and working out the EET and LET in order to calculate the project duration. The answer should then go on to provide an explanation of how the information in terms of the critical path analysis and time for project duration can be used in planning the various activities for the conference. Marking Guide

Marks

Network Diagram Critical Path identified (A,C,E & G) Project duration (17 weeks) Explanation of how the information could be useful to R

2 2 2 4

Examiner’s Comments Question generally very well answered. Common Errors Some candidates neglected to explain how the information provided by the network diagram could be useful to R.





SECTION C – 50 MARKS ANSWER TWO QUESTIONS FROM THIS SECTION

Question 5(a) (i) Compare and contrast an entrepreneurial structure and a functional structure.

(7 marks)(ii) Advise A why a functional structure may no longer be appropriate for L Company.

(6 marks) Rationale This question examines candidates’ ability to contrast between different organisational structures (entrepreneurial and functional). Drawing on information from the scenario, candidates are asked to argue why a functional structure may no longer be appropriate. Suggested Approach The first part of the question is straightforward and candidates need to explain the characteristics of an entrepreneurial structure and then go on to explain how a functional structure is different. The second part of the question could be approached by identifying the disadvantages of a functional structure. Then using relevant information from the scenario, advise A why such a structure is no longer appropriate for L Company. Candidates must use information from the scenario to support their arguments on why the structure is no longer appropriate, not just produce general answers. Marking Guide

Marks

Part (i) Characteristics of entrepreneurial structure could include: Founder leads Company & supervises tasks; Informal control, power/task culture

3 (max) Characteristics of functional structure could include: Division of specialist activities into functions; role culture, vertical communication, delegated formal authority; job demarcation.

4 (max)

Part (ii) Appraisal of why functional structure not appropriate for L Company could include: Mechanistic; loses flexibility & responsiveness, stifles creativity & innovation; unsuited to quickly changing environment, promotes narrow focus on specialist interests; inter-department conflicts.

6 (max) Examiner’s Comments See 5(b).





Question 5(b) Discuss the different approaches that could be used to encourage creativity and innovation in L Company.

(12 marks) Rationale This question tests candidates' appreciation of the how creativity and innovation can be encouraged in the context of a particular organisational setting. Suggested Approach The question should provide a discussion of the different approaches to encouraging creativity and innovation. To gain a pass each point should be explained in the context of how it could be applied to L Company - rather than a general list of points on creativity and innovation. Marking Guide

Marks

Different approaches to encourage innovation: Structural issues e.g. divisional form. matrix, adhocracy, organic Cultural controls Devolvement of power Internal venturing

4 2 2 4

An alternative approach to the answer could be based on Moss Kanter’s prescriptions and any of the following: Use of Balanced Score Card Adoption of appropriate management style Development of a Learning Organisation Recruitment and selection of people with a track record in innovation Rewards for Innovation Team working and team building to share ideas

Examiner’s Comments See Common Errors section below. Common Errors Part (a)(i) and part (b) generally well answered but in part (a)(ii), many candidates concentrated on what should to done in the future rather than on how the existing functional structure limited innovation.





Question 6(a) Identify and explain the activities that D would need to undertake in the planning phase of the project for re-location.

(15 marks) Rationale The question is designed to examine candidates' understanding of the different activities in the project planning phase of project management. Suggested Approach The answer should develop to identify the different activities in the project planning phase for re-location, providing an explanation of the purpose of each activity. The various activities should be explained with reference to the project for re-location. Marking Guide

Marks

Planning phase activities: Establish project goals/objectives (applied to scenario) Determination of project scope assumptions/risks/obstacles Establishment of project team Plan of authorisation Cost plan Schedule/time plan with reference to relevant techniques

2 3 2 2 2 4

Examiner’s Comments See 6(b).





Question 6(b) Compare and contrast the roles of P, as the project sponsor and D, as the project manager.

(10 marks) Rationale This examines candidates’ ability to contrast between the different roles of key stakeholders (for example, the project sponsor and the project manager) in project management. Suggested Approach The answer should start with an explanation of the role of P as project sponsor, providing some specific examples of what P will be responsible for, relating to the context of the scenario. The answer should then go on to explore the project manager’s role, explaining D’s responsibilities and making the distinction between P and D's roles. Marking Guide

Marks

Role of Project Sponsor could include: Initiate project and appoint project manager Approve project definition and project plans, changes and status reports Ensure priorities are maintained and watch over project progress Oversee budgets Provides support and commitment - champion

5 (max)

Role of Project Manager could include: Leading the project team &line management responsibilities Managing expectations of different stakeholders Defining, planning and co-ordinating the project Allocating and securing resource commitment Monitoring and tracking project progress, controlling costs Delivering project on time and within budget

5 (max) Examiner’s Comments See comments under Common Errors below. Common Errors Part (b) generally well answered but the answers of many candidates often became lost in the detail of a particular phase of the planning process rather than concentrating on the main phases of the process of planning.





Question 7(a) Analyse the nature and sources of conflict between the different departments in M Company.

(10 marks) Rationale This question examines candidates’ ability to analyse a particular situation to determine the nature and different sources of conflict. Suggested Approach The different reasons for conflict should be analysed along with an explanation of the nature and sources of conflict in M company. Examples should be used from the case scenario to support the points made. Answers that discuss conflict without reference to the scenario will not obtain a pass mark. Marking Guide

Marks

Nature and source of conflict analysed: Horizontal conflict Goal incompatibility between different functions, with specific examples Lack of understanding and pressures Task interdependencies Different cognitive and emotional orientations

2 4 1 1 2

Examiner’s Comments See 7(b).





Question 7(b) Describe the factors that V should consider in building a successful cross-functional project team.

(15 marks) Rationale This tests candidates’ knowledge of the factors that need to be considered to build a successful cross functional team. Suggested Approach The range of factors that should be considered to build a cross functional team should be described. Answers should make reference to relevant theories on group development and building effective teams. Marking Guide

Marks

Personality, characteristics and team roles making reference to Belbin Communication and team meetings Common goal Environment/physical surroundings Appropriate leadership style Team development, with reference to Tuckman’s work

4 (max)

2 1 1 3

4 (max)

Examiner’s Comments See Common Errors section below. Common Errors In part (a), many candidates tended to repeat the scenario rather than writing about the underlying reasons/causes for conflict. Part (b) was generally well answered but some candidates did not focus on how to build a good cross functional team as required but instead provided a discussion of what was needed for good project management.





Managerial Level

P5 – Integrated Management

24 November 2005 – Thursday Morning Session

Instructions to Candidates

You are allowed three hours to answer this question paper


You are strongly advised to carefully read all the question requirements before attempting the question concerned (that is, all parts and sub-questions). The question requirement for Sections B and C is contained in a dotted box.

Answer the ONE compulsory question in Section A. This has eight objective test sub-questions on pages 2 to 4.

Answer ALL three compulsory questions in Section B on pages 5 and 6.




P5 –

Inte

grat

ed M

anag

emen

t

TURN OVER



P5 2 November 2005


ANSWER ALL EIGHT SUB-QUESTIONS Question One 1.1 Identify which ONE of the following strategies should be used to deal with stakeholders

who have high power but low interest:

A Keep informed

B Minimal effort

C Keep satisfied

D Key player

(2 marks) 1.2 The cultural dimension that describes a cultural value where individuals are expected to

take care of themselves is referred to by Hofstede as:

A Individualism

B Collectivism

C Power distance

D Masculinity

(2 marks)

Instructions for answering Section A: The answers to the eight sub-questions in Section A should ALL be written in your answer book. Your answers should be clearly numbered with the sub-question number and ruled off so that the markers know which sub-question you are answering. For multiple choice questions you need only write the sub-question number and the letter of the answer option you have chosen. You do not need to start a new page for each sub question.



November 2005 3 P5

1.3 According to transaction cost theory, the mechanisms that organisations have to choose between to control their resources and carry out their operations are:

A Markets or structures

B Hierarchies or markets

C Structures or culture

D Hierarchies or culture (2 marks)

1.4 Which ONE of the following is a part of the ‘identification of need’ phase of the project life

cycle:

A The Completion Report

B The Milestone Review

C Project scheduling

D The project initiation document (2 marks)

1.5 List three benefits of mentoring.

(3 marks) 1.6 Identify the missing words needed to complete the rational model of strategic

management. Record your answers by making reference to the corresponding letters A, B, C and D.

(4 marks) TURN OVER

Mission & Objectives

Strategic options generation

Strategy Implementation

Position Audit D

B C

A



P5 4 November 2005

1.7 Complete the gaps to determine the four stages in the project lifecycle.

(1) Identification of a need; (2)_____________(3) Implementation; (4)_______________.

(2 marks)

1.8 Briefly explain the interests of a ‘project owner’.

(3 marks)


End of Section A



November 2005 5 P5


ANSWER ALL THREE QUESTIONS - 10 MARKS EACH Question Two N Airline operates in the short haul flight industry. Unlike many of its competitors who are constantly seeking to reduce costs, often at the expense of customer service, the foundation of N’s business strategy is based on providing a superior quality of service. Its mission is to be market leader, providing unrivalled customer service, in flight comfort and reliability in the short haul airline industry. N Airlines views its customers as central to strategic developments, and values its staff in building success.

Question Three R Company, a manufacturer and retailer of fashion clothes, has invested in a new technology system to improve the logistics of the movement of clothes between its warehouses and chain of 250 retail outlets. Ensuring that the outlets have the right supply of clothes is a critical success factor for the company.

However, the warehousing stock control and logistics project set up to develop and deliver the new system has experienced numerous problems. The project ended up being well over budget and was also late in delivering the system. Now, only three months after the new system has been installed, it is apparent that the project has not delivered its objective. Instead, the company is facing a crisis with many store managers complaining that they are not receiving the correct stock. Even worse, some stores are out of stock of key ranges, whereas the warehouses are full of clothing.

A meeting between the project team and project sponsor has ended up with everyone blaming each other, saying it was not their responsibility. It is clear that they did not use a project management methodology and did not have adequate project control systems in place so that the problems that have now transpired could have been identified and rectified earlier in the project lifecycle.

Required: (a) Distinguish between the concepts of mission and objectives.

(4 marks)

(b) Using examples, illustrate how the mission for N Airline could be translated into strategic objectives.

(6 marks)


Required: Recommend to R Company a project management methodology/approach, explaining how it could have helped to prevent the failures of the warehousing, stock control and logistics project.




P5 6 November 2005

Question Four S has recently been appointed as the Finance Department Manager in Z Company. During the first month in her new role she has observed that one member of staff, C, is underperforming. C is frequently arriving late to work with no explanation and he is taking extended lunch breaks without permission. He is also making errors and refuses to do certain tasks which are part of his role. One of his colleagues has spoken to S confidentially, saying that C’s poor performance in his work is having an adverse impact on the rest of the team.

It is apparent that the problems have been going on for some time but the previous manager had preferred to ignore them. S has decided that she must now take action on what appears to be a disciplinary case, but is unclear on how to deal with the situation.

(Total for Section B = 30 marks)

End of Section B

Required: Explain to S the stages involved in taking disciplinary action against C.




November 2005 7 P5


ANSWER ANY TWO QUESTIONS FROM THIS SECTION – 25 MARKS EACH Question Five X Company is a global consultancy company specialising in organisational change and re-structuring. The service offered to clients usually involves the formation of teams to carry out change projects in companies. The teams are drawn from different areas of X Company, based around different specialisms.

T, the HR Director, is concerned that the methods of recruitment and selection for new consultants has emphasised the skills associated with particular specialisms, for example marketing expertise, technology or financial technical skills. He feels that insufficient attention has been given to the skills of the project manager which are essential to the success of the company’s project based work.

As a result, he has recently introduced a new recruitment and selection system, which includes a specification of the skills the company should be looking for in future project managers. One of the selection tests he has devised will involve candidates in delivering a presentation which explains why they may need to use different styles of leadership during a project and provides examples of the other key skills that they feel a project manager should possess.

Y recently applied for a job in X Company, specialising in finance, and whilst confident that he has the financial expertise required, he is less certain about the project manager skills he might need. He is pleased that he has been short listed for interview and is researching what he might include in his presentation. As part of this he has asked you to help him to understand the key skills of an effective project manager.

TURN OVER

Required: (a) Explain to Y how an understanding of leadership style theories could help him to be

more effective as a project manager.

(10 marks)

(b) Describe the other project manager skills, besides leadership skills, that Y should include in his presentation, explaining why they are important.

(15 marks)




P5 8 November 2005

Question Six F Company is a medium sized business that manufactures electrical kitchen appliances including food processors, toasters, juicers and coffee makers. In the last twelve months the company has lost market share to its competitors and has underperformed on most of its key performance indicators. Its future survival is threatened as new entrants are stealing market share and the customers are demanding new product and design features.

G, the company’s management accountant, suggests that F Company’s difficulties are because it has been too complacent, not responding to changing environmental conditions and not having undertaken any formal strategic planning. He is also concerned that different areas of the company appear to be pursuing conflicting objectives.

To help the company develop a sustainable competitive advantage, G proposes that a more formal top down approach to developing business strategy should be adopted. He is also of the view that greater emphasis should be placed on understanding the external environment.

However, at a recent meeting where G outlined the benefits that a more formal approach to planning would bring, he was surprised that P, the HR director, disagreed. P argued that the dynamic environment that F Company operates in means that the formal approach is a waste of management time. She suggested that the company should assess how sustainable competitive advantage can be achieved through using its unique combination of resources, skills and capabilities.

Required: (a) Explain the benefits and drawbacks associated with F Company adopting a top down

approach to the formulation of business strategy. (12 marks)

(b) Compare and contrast the different views held by G and P on how F Company can gain competitive advantage.

(13 marks)




November 2005 9 P5

Question Seven T has just returned to his job in the Finance Department of Z Company, having spent the last six months as a member of a project team working on the development of an Educational Visitors Centre for the company.

Reflecting on his experiences whilst working on the project, he feels that most of his time was spent in meetings that did not achieve anything, but rather wasted his time. He also feels that the final stages of the project were not dealt with effectively, with the project members going back to their functional jobs without any discussion or feedback on the project performance and outcomes.

He has now been asked to take on the role of project manager for a new project and is determined that he will improve the experience for his project team.

(Total for Section C = 50 marks)


Required: (a) Discuss the problems that may be associated with project meetings. Make

recommendations on the methods T could use to ensure the meetings he arranges as project manager, are effective.

(15 marks)

(b) Evaluate the contribution of the various activities that should be carried out as part of project closure, the post completion review and audit of the project.

(10 marks)




P5 10 November 2005

[This page is blank]



November 2005 11 P5




P5 12 November 2005




May 2005




Paper 5 – Integrated Management Post Exam Guide November 2005 Exam


General Comments

The overall performance in this diet was generally poorer than that of the previous one. Candidates appeared to have prepared less thoroughly for this paper than for that set in May 2005. There were general weaknesses both in terms of theoretical knowledge and of its application. Particularly noticeable was a lack of knowledge of each of the following:

The nature of strategic objectives in Q2. The concept of a project methodology/approach in Q3. "Style" theories of leadership in Q5 (a). The differences between the ‘positioning approach’ and the ‘resource-based approach’ to

strategy in Q6 (b). The differences between project closure, the post completion review and the audit of a

project in Q7 (b). Candidates who had studied the syllabus material conscientiously did particularly well with one candidate gaining a mark of 91% and many others with scores in excess of 80%. Too many candidates, however, did not do themselves justice. They came to the examination without adequate preparation. We look forward to a better performance from them in the May 2006 diet






Question 1.1 Identify which ONE of the following strategies should be used to deal with stakeholders who have high power but low interest. A. Keep informed B. Minimal effort C. Keep satisfied D. Key player

(2 marks)

The answer is C

Question 1.2 The cultural dimension that describes a cultural value where individuals are expected to take care of themselves is referred to by Hofstede as: A. Individualism B. Collectivism C. Power distance D. Masculinity

(2 marks)

The answer is A

Question 1.3 According to transaction cost theory, the mechanisms that organisations have to choose between to control their resources and carry out their operations are? A. Markets or structures B. Hierarchies or markets C. Structures or culture D. Hierarchies or culture

(2 marks)

The answer is B





Question 1.4 Which One of the following is part of the ‘identification of need’ phase of the project lifecycle: A. The Completion Report B. The Milestone Review C. Project scheduling D. The project initiation document

(2 marks)

The answer is D

Question 1.5 List three benefits of mentoring

(3 marks) The answer could include: 1. Improves motivation among employees 2. Faster career progress 3. Fewer and more quickly resolved disputes Acceptable alternatives include accelerates learning on the job, helps reinforce organisational culture





Question 1.6 Identify the missing words needed to complete the rational model of strategic management. Record your answers by making reference to the corresponding letters A, B, C and D.

(4 marks) The answer is: A. Environmental analysis B Corporate appraisal (SWOT) C. Strategy evaluation and choice D. Review and control

Mission & Objectives

Strategic options generation

Strategy Implementation

Position Audit D

B C

A





Question 1.7 Complete the gaps to determine the four stages in the project lifecycle (1)Identification of a need; (2)______________; (3) Implementation; (4)__________

(2 marks) The answer is: Develop a proposed solution/planning Completion/project closure

Question 1.8 Briefly explain the interests of a ‘project owner’.

(3 marks) The answer is: A project owner is the person for whom the project is being carried out and as such he/she is interested in the end result being achieved and his/her needs being met.

Common Errors Question 1.3 was the question most frequently incorrectly answered in Section A






Question 2 (a) Distinguish between the concepts of mission and objectives.(

4 marks) (b) Using examples Illustrate how the mission for N Airline could be translated into strategic

objectives. (6 marks)

(Total for Question Two = 10 marks) Rationale The question examines candidates’ understanding of the key strategic management concepts of mission and objectives. It also requires candidates to apply their knowledge by using the information in the mini scenario to translate the mission into strategic objectives. Suggested Approach Part (a) of the question requires candidates to first distinguish between the concepts of mission and objectives by defining the term mission and then explaining how strategic objectives are different. Part (b) should be developed from the material in the mini scenario which provides details of the mission. The different components of the mission should be translated into strategic objectives. Marking Guide

Marks

Part (a) Explanation of mission Explanation of how strategic objectives are different Maximum marks for part (a) Part (b) Objectives relating to growth (e.g. numbers of passengers or market share or number of destinations) Objectives relating to quality (e.g. customer satisfaction or percentage of repeat customer bookings or reduction in complaints) Maximum marks for part (b)

2 2 4

up to 3

up to 3 6

Maximum marks awarded 10 Examiner’s Comments Most candidates answered Part (a) of the question quite well but a significant number confused mission with strategy. Part (b) was generally less well answered.





Common Errors In Part (a) a number of candidates confused mission with strategy. In Part (b) many candidates described objectives but did not make clear how the attainment of these objectives could be measured. Some candidates developed their answers based on strategies and actions rather than strategic objectives





Question 3 Recommend to R Company a project management methodology/approach, explaining how it could have helped to prevent the failures of the warehousing, stock control and logistics project.

(Total for Question Three = 10 marks) Rationale This question requires candidates to be familiar with a project methodology/approach. Their ability to apply the methodology to the failures identified in the scenario is assessed. Suggested Approach Answers should first recommend a project management methodology/approach for R Company such as PRINCE2. Answers should then develop to discuss the key features of the methodology explaining how they could have helped to prevent the specific failures of the warehousing, stock control and logistics project. Marking Guide

Marks

Identification of methodology(e.g. PRINCE2) Brief explanation of key features of methodology Features of how PRINCE2 could have helped to prevent failures for R Company e.g. Control achieved through work packages Includes ‘management products’ Exception plan concept Marks will be awarded to candidates who develop answers using other appropriate project management methodologies/approaches

1 3

up to 6

Maximum marks awarded 10 Examiner’s Comments In general this question was not well answered. Common Errors Many candidates confused the idea of a project methodology/approach with the specific tools of project management, while many others neglected to explain how a chosen methodology could have been used by R Company to prevent the failures of warehousing and stock control.





Question 4 Explain to S the stages involved in taking disciplinary action against C.

(Total for Question Four = 10 marks) Rationale The question is designed to assess candidates’ understanding of the stages involved in taking disciplinary action. Suggested Approach A straightforward approach would be to work through the different stages involved in taking disciplinary action. Marking Guide

Marks

Procedures clear and transparent etc Investigation Inform H what actions will lead to disciplinary action Informal verbal warning Implement formal disciplinary proceedings involving HR Formal verbal warning Written warnings Demotion/transfer

Up to 2

Up to 2

Up to 2

Up to 2

Up to 2

Up to 2

Up to 2

Up to 2

Maximum marks awarded 10 Examiner’s Comments Most candidates were able to provide the key stages involved in taking disciplinary action Common Errors Errors tended to be those of omission rather than mistakes in explanation. Some candidates also lost marks because they did not take into account the specific circumstances set out in the case scenario.






Question 5(a) Explain to Y how an understanding of leadership style theories could help him to be more effective as a project manager

(10 marks) Rationale This question examines candidates’ understanding of leadership style theories, specifically in the context of helping a project manager to be more effective. Suggested Approach Candidates need to explain leadership theories such as Tannenbaum and Schmidt, Blake and Mouton or Ashridge Studies. Answers should develop to explain how an understanding of the theories could help a project manager to be more effective. Candidates could use the project lifecycle to explain how different styles might be needed at different stages of a project. There must be application of how leadership style theories could help Y, not just a description of theories. Marking Guide

Marks

Explanation of leadership style approach & identification of ‘theory’ (e.g. Tannenbaum & Schmidt*) Application of how these could help Y: Tells Sells Consults Joins *Marks will be awarded for alternative relevant leadership style theories used as the basis for the answer.

up to 4 max

up to 2 up to 2 up to 2 up to 2

Maximum marks awarded 10 Examiner’s Comments There were few competent answers to Part (a) of the question. Common errors In Part (a) it was evident that few candidates had a knowledge or understanding of any leadership style theories. Of those possessing specific knowledge too many simply explained the theory without applying it to say how it could assist the project manager in the effective management of a project.





Question 5(b) Describe the other project manager skills, besides leadership skills, that Y should include in his presentation, explaining why they are important.

(15 marks) Rationale This question tests candidates' appreciation of the skills a project manager needs, with an explanation of why they are important. Suggested Approach The answer should describe different project manager skills but must develop to provide an explanation of why each skill is important in the context of project management. To gain a pass each skill should be elaborated on rather than producing a general list of skills. Marking Guide

Marks

Communication* Negotiation* Delegation* Problem solving* Managing change* * to gain full marks requires elaboration of skill identified in context of project management

up to 3

up to 3

up to 3

up to 3

up to 3

Maximum marks awarded 15 Marks will be awarded for identification of other relevant skills identified if appropriate to project management up to 3 marks for each

Examiner’s Comments Generally well answered Common Errors No general problems





Question 6(a) Explain the benefits and drawbacks associated with F Company adopting a top down approach to the formulation of business strategy.

(12 marks) Rationale The question is designed to examine candidates' understanding of the benefits and drawbacks of a top down approach to the formulation of business strategy. Suggested Approach The answer should develop to firstly explain the benefits for F Company in adopting a top down approach to business strategy and then go on to discuss the drawbacks associated with such an approach. Good answers will develop to relate the benefits and drawbacks to the specific context of F Company. Marking Guide

Marks

Benefits of top down approach (e.g. avoids short termism, helps to identify key strategic issues, goal congruence, control, direction) Drawbacks of top down approach (e.g. too infrequent, changing business environment, loss of entrepreneurial spirit) * to gain full marks elaboration of point is needed in the context of F Company


up to a maximum of

6 marks*


up to a maximum of

6 marks*

Maximum marks awarded 10 Examiner’s Comments This question was not well answered. Common Errors Many candidates spent too much time explaining what a ‘top down approach’ involved rather than concentrating on the benefits and drawbacks of such an approach. That said, a fair number of candidates were able to spell out the key benefits and drawbacks as required.





Question 6(b) Compare and contrast the different views held by G and P on how F Company can gain competitive advantage.

(13marks) Rationale This examines candidates’ ability to compare and contrast between the different approaches to the development of business strategy to gain competitive advantage, specifically the positioning approach and the resource based view. Suggested Approach The answer should start by firstly identifying the different views held by G (the positioning view) and P (the resource based view) to achieve competitive advantage. Candidates should then go on to explore the key features of the positioning view and the resource based view explaining how they differ. Good answers will examine the appropriateness of the different views for F Company. Marking Guide

Marks

Identification of different perspectives to achieve competitive advantage i.e. positioning or resource based view Key points on positioning approach: environment and external scanning need to fit strategy, structure, culture etc with environment Appropriateness to F company to gain CA given nature of environment Differences in RBV: Inside out, emphasis on exploiting resources Assumptions about resources Appropriateness to F company to gain CA Reference to emergent approach to cope with dynamic environment

1

6 max

6 max 2

Maximum marks awarded 13

Examiner’s Comments This question was not well answered Common Errors Too many candidates, either did not read the question or chose to ignore its requirements. Instead of comparing and contrasting as required they tended to simply repeat aspects of the scenario. This suggested a lack of adequate preparation.





Question 7(a) Discuss the problems that may be associated with project meetings. Make recommendations on the methods T could use to ensure the meetings he arranges as project manager, are effective.

(15 marks) Rationale This question examines candidates’ ability to discuss problems associated with project meetings and to assess their ability to recommend the appropriate methods that could be used to ensure meetings are effective. Suggested Approach The suggested approach would be to identify specific problems and then for each problem recommend what T could do in order to ensure the effectiveness of project meetings. Marking Guide

Marks

Problems e.g.: Poor preparation Unclear aims/objectives Inappropriate membership Ineffective chairperson Too long Actions not carried out Recommendations e.g.: Set up schedule of meetings Explain purpose/aims of various meetings Identify who should attend Draw up and circulate an agenda prior to the meeting Factors relating to effective chairperson in managing meetings Summarise responsibilities and action points agreed Distribute minutes

1 mark for each

problem up to a

maximum of 6

1 mark for each

recommend-ation up to a maximum of

9

Maximum marks awarded 15 Examiner’s Comments In general this part of the question was well answered. Common errors No general problems





Question 7(b) Evaluate the contribution of the various activities that should be carried out as part of project closure, the post completion review and audit of the project.

(10marks) Rationale This question requires candidates to evidence their appreciation of the contribution of activities involved in the project closure phase of project management, the post completion review and audit of the project. Suggested Approach The answer should start with an explanation of the purpose of project closure and the contribution of the various activities involved at this stage. Candidates should then explore the contribution of the post completion review and post completion audit. Marking Guide

Marks

Purpose of project closure Project closure activities e.g. Filing project documentation, disbanding project team etc Post completion review, evaluate learning from project. Feedback from staff and client on successes, concerns Post completion audit, formal audit of project against checklist

2 2 3 3

Maximum marks awarded 10 Examiner’s Comments Generally not well answered Common Errors Too many candidates simply repeated the same activities for each part of the question. This suggests that they had some general knowledge of the kind of activities that are required in the final stages of a project but that they were unable to distinguish between activities carried out as part of the Project closure from the Post Completion review or the Post Completion audit.





Managerial Level




You are allowed three hours to answer this question paper


You are strongly advised to carefully read all the question requirements before attempting the question concerned (that is, all parts and sub-questions). The question requirement for Sections B and C is contained in a dotted box.

Answer the ONE compulsory question in Section A. This has eight sub-questions on pages 2 and 3.

Answer ALL three compulsory questions in Section B on pages 4 to 6.




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P5 2 May 2006


ANSWER ALL EIGHT SUB-QUESTIONS Question One 1.1 Corporate appraisal involves

A evaluating strategic options.

B communicating the mission.

C identifying strengths and weaknesses.

D implementing strategy.

(2 marks) 1.2 A project management maturity model is used to

A control the project.

B identify opportunities for continuous improvement.

C determine project risk.

D assess the feasibility of a project.

(2 marks)

Instructions for answering Section A: The answers to the eight sub-questions in Section A should ALL be written in your answer book. Your answers should be clearly numbered with the sub-question number and ruled off so that the markers know which sub-question you are answering. For multiple choice questions you need only write the sub-question number and the letter of the answer option you have chosen. You do not need to start a new page for each sub question.



May 2006 3 P5

1.3 Which of the following can be used to describe the homogeneity of objectives and thinking in group work?

A The Abilene Paradox

B Risky shift

C Group polarisation

D Groupthink (2 marks)

1.4 Which of the following project stakeholders is the person who provides the resources for a

project?

A Project sponsor

B Project manager

C Project owner

D Project customer (2 marks)

1.5 Identify four benefits of corporate governance.

(4 marks) 1.6 In one sentence, explain the purpose of Work Breakdown Structure.

(2 marks)

1.7 Draw the framework that can be used to classify the different ways of managing conflict, labelling the axes. Use the framework to show where the two approaches, collaborating and avoiding, should be located.

(4 marks)

1.8 Identify two ways in which project risk can be classified.

(2 marks)


End of Section A Section B is on the next page

TURN OVER



P5 4 May 2006


ANSWER ALL THREE QUESTIONS - 10 MARKS EACH Question Two M is a member of the Finance Department of L Company. She joined the company two years ago on its management development programme and is currently studying for the CIMA examinations.

A keen and enthusiastic member of staff, M likes to get involved in different aspects of work and is always volunteering to be involved on various committees. She is always ready to chat to her colleagues who pass by her desk and is known as the social events organiser for the department. M likes to be seen to be helping other people and is an expert on the internet, spending a significant amount of her time searching out different websites. However, at her appraisal interview a few weeks ago, M was surprised that her manager, P, raised concerns over the fact that she often appeared to be rushing her work to meet deadlines, and that it had been noted that she often arrived at meetings late. P also made the observation that whilst M’s reports are always carefully researched and very well presented, much of the information is not relevant to the tasks that she has been given. P suggested that M needs to improve on how she manages her time.

Required: Explain how time management techniques could help M become more efficient and effective in her work.




May 2006 5 P5

Question Three H Company designs and manufactures sports equipment and is currently positioned as the market leader in the industry. However, whilst operating in a growth market there are new competitors entering the market with innovative new product offerings. The Marketing Director is aware that to retain market leader position the company must improve its practices involved with New Product Development (NPD), and the time taken to get from the product idea to launch needs to be much quicker. The company has a functional structure with the Marketing Director heading up the marketing function and the R&D Director heading up the function responsible for research and product development. In addition there are separate functions for Production, Human Resources, Finance, Sales and IT. The Marketing Director feels that the functional structure is impeding the company’s NPD. Having recently read an article on organising for NPD, he is proposing that the best way to manage the process is to adopt a project management approach. This will involve introducing a matrix structure and the use of cross functional teams. However, at a recent meeting of the functional heads, the Research and Development Director said that, in his experience, the potential difficulties in using a matrix structure for project management offset the benefits.

TURN OVER

Required: Describe the advantages and disadvantages for H Company of using a matrix structure in project management work for New Product Development (NPD).




P5 6 May 2006

Question Four T is seeking investment funds for his new venture to open a chain of fast-food restaurants. Despite the competition in this sector, having undertaken market research amongst his target market, T is convinced that he can succeed with his fast-food concept. He is currently in the process of putting together a business plan which will outline his strategy to enter the market place. Having recently attended a seminar on what to include in a business plan, T remembers that he will need to determine what the critical success factors (CSFs) for his business are, but he is confused about how these differ from core competences.


End of Section B

Section C is on the opposite page

Required: (a) Explain why T needs to determine the CSFs as part of the development of his strategy

and how they differ from core competences.

(6 marks)

(b) Identify what the CSFs might be for T’s chain of fast food restaurants.

(4 marks)




May 2006 7 P5


ANSWER ANY TWO QUESTIONS FROM THIS SECTION – 25 MARKS EACH

Question Five X Company is a manufacturer of non alcoholic soft drinks and has a well established position and brand recognition in country Z. The potential for future growth in country Z is, however, limited, with the market reaching saturation. One option for expansion is to move into new markets in other countries offering its existing product range.

The business development team is evaluating this option and is currently working on proposals to sell the company’s range of drinks in country Y. One possible strategy to achieve market entry that the team is investigating is through a joint venture with a company that is already established in country Y, and is in the drinks distribution business.

The Board of X Company has given the business development team the task of undertaking a feasibility study to explore the viability of the proposed strategy. As part of the feasibility study there needs to be some assessment of industry competition and the attractiveness of the market in country Y. The feasibility study also needs to assess the cultural compatibility of the ways of doing business in country Y compared to how X Company currently operates in country Z.

TURN OVER

Required: (a) Advise the business development team on how Porter’s five forces model could be

used to assess industry competition in country Y.

(15 marks)

(b) Discuss how Hofstede’s research could be used to assess the compatibility of X Company’s strategy with the culture of country Y.

(10 marks)




P5 8 May 2006

Question Six The main agenda item at the meeting of the Executive Board of C Hospital is to discuss the new pay and reward system. The hospital needs to make changes to the existing pay systems to respond to government requirements to reform reward systems as part of its pay modernisation agenda. The aim is to harmonise the payments systems for different categories of workers in the hospital on to one pay scale. This will mean that there is one pay scale for all employees of the hospital including nurses, physiotherapists, radiographers, technicians and support staff (i.e. cleaners, porters, and kitchen staff). The rationale for the new system is to achieve greater flexibility, to assist in recruitment and retention of staff and to reward people for their contribution to the achievement of hospital targets, The hospital has twelve months in which to design and implement the new system in order to meet the government target of May 2007. There is a huge amount of work that will need to be undertaken to deliver the new system, and a number of different stakeholders to satisfy. At the meeting of the Board there was some discussion concerning who should be responsible for undertaking all tasks and activities associated with the development of the new system. The Human Resource (HR) director proposed that a project manager should be appointed and a project team set up. Whilst he would expect some members of his HR team to be part of the team, he is adamant that although his staff are responsible for administering the current payroll system and dealing with staff enquires about pay and rewards, designing a new pay system should not form part of the “business as usual” work for the HR department.

Required: (a) Describe the attributes of the proposed project in C Hospital that distinguish it from

‘business as usual’ work. (10 marks)

(b) Produce an outline of the different stages in the project to design and implement a new pay and reward system for C Hospital.

(15 marks)




May 2006 9 P5

Question Seven D Company is a manufacturer of electrical components, supplying the car industry. As a result of the downturn in the demand for its products and in response to difficult operating conditions in its existing market, the company is currently going through a major restructuring. It is anticipated that the restructuring plan will involve the consolidation of some business activities which will result in a number of staff having to move to different areas of the company. This could mean re-location to different sites, and other staff being made redundant. While employee relations have in the past been good, the management of the company is aware that employees and their trade unions which represent their interests will be resistant to the changes that need to be made. The first stages of change will require skilful negotiation between the management and unions on a range of issues relating to the movement of staff jobs, the proposed job losses and, specifically, the criteria for redundancy and the redundancy package. The company recognises the potential impact of the changes on staff morale and intends to implement a programme of research amongst staff to gain feedback on the way the change process is managed.



Required: (a) Discuss the role of negotiation in the management of change in D Company, making

reference to the different stages involved in the negotiation process. (13 marks)

(b) Identify the methods that could be used to collect information on staff attitudes towards the changes, explaining for each method the issues that need to be considered when planning the research.

(12 marks)




P5 10 May 2006




May 2006 11 P5




P5 12 May 2006




May 2006






General Comments Overall, candidates’ performance was similar to recent diets. However, a significant number of candidates were unable to distinguish between critical success factors and core competences and/or were unable to apply these concepts to a particular situation. Many candidates also seem to have been unprepared for question 1.7 that carried four marks on the classification of different forms of conflict and for question 5(b) which required an appreciation of the work of Hofestede on country cultures.

Section C usually requires candidates to develop their answers more fully, beyond just description.

To ensure success, candidates need to revise the breadth of the syllabus and to practice application of the main models to real world situations.






Question 1.1 Corporate appraisal involves: A evaluating strategic options B communicating the mission C identifying strengths and weaknesses D implementing strategy

(2 marks)

The answer is C

Question 1.2 A project management maturity model is used to A control the project B identify opportunities for continuous improvement C determine project risk D assess the feasibility of a project

(2 marks)

The answer is B

Question 1.3 Which of the following can be used to describe the homogeneity of objectives and thinking in group work? A The Abilene Paradox B Risky shift C Group polarisation D Groupthink

(2 marks)

The answer is D





Question 1.4 Which of the following project stakeholders is the person who provides the resources for a project? A Project sponsor B Project manager C Project owner D Project customer

(2 marks)

The answer is A

Question 1.5 Identify four benefits of corporate governance.

(4 marks) The answer could include:

1. Reduces risk 2. Improves access to capital markets 3. Demonstrates transparency 4. Demonstrates social accountability Acceptable alternatives include stimulates performance; improves leadership; enhances marketability of goods and services; enhances external perception; reduces fraud

Question 1.6 In one sentence explain the purpose of Work Breakdown Structure

(2 marks) The answer is:

The purpose of work breakdown structure is to divide a project into work packages with defined deliverables and responsibilities.





Question 1.7 Draw the framework that can be used to classify the different ways of managing conflict, labelling the axes. Use the framework to show where the two approaches, collaborating and avoiding, should be located.

(4 marks) The answer is: High Collaborating Focus on one’s own interests Low Avoiding Low Focus on other’s interests High

Question 1.8 Identify two ways in which project risk can be classified.

(2 marks) The answer could include: 1. Quantitative risk 2. Qualitative risk

Acceptable alternatives include: socially constructed risk; internal risk; external risk; technical risk; financial risk






Question 2 Explain how time management techniques could help M become more efficient and effective in her work.

(Total for Question Two = 10 marks) Rationale The question examines candidates’ understanding of time management techniques and requires them to use information from a scenario to explain how such techniques can help in improving efficiency and effectiveness at work. Suggested Approach Candidates should identify specific time management techniques explaining how they could help M become more efficient and effective by making reference to her time management problems described in the scenario. Marking Guide

Marks

Time management techniques could include*:

Reflecting on past mistakes Identifying job priorities Planning Important v urgent Scheduling/task list Use of time management tools Reviewing Time management courses

* points should be related to M's situation

1 2 2 2 2 1 1 1

Maximum marks awarded 10 Examiner’s Comments Most candidates answered this question fairly well. Common Errors

The most common error was to repeat the scenario and to make general observations about how M could save time but with very few, if any, references to recognised time management techniques.





Question 3 Describe the advantages and disadvantages for H Company of using a matrix structure in project management work for New Product Development (NPD).

(Total for Question Three = 10 marks) Rationale This question is designed to test candidates’ ability to describe the advantages and disadvantages of using a matrix structure in project management work. Suggested Approach A straightforward approach would be to first describe the advantages of using a matrix structure in project management work for NPD and then go on to describe the disadvantages. Marking Guide

Marks

Advantages of matrix structure e.g.: (1 mark for each point up to max 5)

Suited to changing environment Creates flexibility Speeds up implementation Improves decision making Improves later communication Facilitates development of new skills Broadens specialist’s outlook Disadvantages of matrix structure e.g.: (1 mark for each point up to max 5)

Lack of clear responsibilities Confusion in reporting to two bosses Tensions in terms of priorities Conflicts due to different backgrounds/interests Complex to manage

1 1 1 1 1 1 1 1 1 1 1 1

Maximum marks awarded 10 Examiner’s Comments A significant number of candidates provided a diagram of the matrix structure at the start of their answers – this was not required. Common Errors

Many candidates struggled to identify the disadvantages of using a matrix structure in project management.





Question 4 (a) Explain why T needs to determine the CSFs as part of the development of his strategy and how

they differ from core competences. (6 marks)

(b) Identify what the CSFs might be for T's chain of fast food restaurants. (4 marks)

(Total for Question Four = 10 marks) Rationale The question examines candidates’ ability to explain the concept of critical success factors (CSFs) and to distinguish between CSFs and core competences. It also requires candidates to apply their knowledge by using the information in the mini scenario to identify CSFs for the chain of fast food restaurants. Suggested Approach The first part of the question requires candidates to explain why CSFs need to be determined as part of the development of strategy, then going on to explain how CSFs differ from core competences. The second part of the answer should be developed from the material in the mini scenario to identify what the CSFs might be for a chain of fast food restaurants. Marking Guide

Marks

(a) Why CSFs important in the development of T's strategy explained eg:

(1 mark for each point up to 4 marks max) Determine resources and competences needed Features valued by customers Where business must excel Performance requirements fundamental to CA CCs explained (b) CSFs for T's chain of restaurants, for example: Convenient location Speed of service Friendly service Variety in menu

1 1 1 1 2

1 1 1 1

Maximum marks awarded 10 Examiner’s Comments This question proved problematic for the majority of candidates and as a consequence many achieved only a few marks. The explanation of core competences was generally better than that for CSFs.





Common Errors Many candidates were unable to define either critical success factors or core competences and many more who provided definitions were unable to apply the concepts to the case in question.






Question 5(a) Advise the business development team on how Porter’s five forces model could be used to assess industry competition in country Y.

(15 marks) Rationale This question is designed to examine candidates’ ability to advise on how Porter’s five forces model can be used to assess industry competition, applying the model to a scenario situation. Suggested Approach Candidates need to explain the purpose of the five forces model and then develop their answer using the model to assess industry competition for X company.

There must be application on how the model could help X company in assessing industry competition relating to non alcoholic soft drinks in country Y, rather than just a description of each of the five forces. Marking Guide

Marks

Threat of new entrants/barriers to entry Bargaining power of suppliers Bargaining power of buyers Threat of substitute products Competitive rivalry (to gain full 3 marks for each of the forces the answer must relate back to scenario)

up to 3

up to 3

up to 3

up to 3

up to 3

Maximum marks awarded 15 Examiner’s Comments This was the most popular of the Section C questions.

Many candidates answered part (a) of the question very well, demonstrating not only a knowledge of the Five Forces model, but also an ability to apply the model to the case in question. Common errors

Weaker candidates were able to discuss the elements of the model in general but unable to apply it to the case scenario as required.





Question 5(b) Discuss how Hofestede’s research could be used to assess the compatibility of X Company’s strategy with the culture of country Y.

(10 marks) Rationale This question tests candidates’ appreciation of Hofstede’s research on cultural compatibility. Suggested Approach A good answer would discuss the basis of Hofstede’s work going on to identify the different cultural dimensions, discussing how they can be used to assess the cultural compatibility of X Company’s strategy with the culture of country Y.

Answers should develop to discuss how the research could be used in the context of the scenario, rather than simply a description of each of the dimensions. Marking Guide

Marks

Basis of Hofstede’s work Dimensions discussed in the context of assessing cultural compatibility: Power distance Uncertainty avoidance Individualism/collectivism Masculinity/femininity Distinction between organisation and consumer markets

up to 2 marks

2 2 2 2 1

Maximum marks awarded 10 Examiner’s Comments Part (b) of question 5 was only answered well by a minority of candidates. Common Errors

Some candidates were able to define the various elements of Hofestede’s model but unable to apply it to the scenario, while others did not explain the elements of the model at all.





Question 6(a) Describe the attributes of the proposed project in C Hospital that distinguish it from ‘business as usual’ work.

(10marks) Rationale This question is designed to examine candidates’ understanding of the attributes of a project. Suggested Approach The answer should develop to describe the various attributes of the proposed project explained in the scenario that distinguish it from ‘business as usual’ work. Marking Guide

Marks

Project lifecycle Other attributes eg: Specific purpose Scope Defined start and end time Temporary process Non routine work Schedule of tasks Cost/budget constraints Unique/non repetitive Staff from different functions

up to

2marks 1 1 1 1 1 1 1 1 1

Maximum marks awarded 10 Examiner’s Comments Most candidates were able to specify a few differences between the proposed project and the idea of ‘business as usual’ work. Common Errors

Differences were stated in general terms without reference to the proposed hospital project.





Question 6(b) Produce an outline of the different stages in the project to design and implement a new pay and reward system for C Hospital.

(15marks) Rationale The question tests candidates’ ability to produce an outline of the different stages of a project using information from the scenario. Suggested Approach The answer should develop to outline the different stages of a project plan in the specific context of the scenario project to design and implement a new pay and reward system for C Hospital. There are alternative models that identify the stages in a project that could be used, but whichever model is used, the stages should be identified and then related to the project to design and implement a new pay and reward system for C Hospital. Marking Guide

Marks

Initiation & identification of need Planning Executing/Implementing Controlling Completing

up to 4

up to 4

up to 3

up to 3

up to 3

Maximum marks awarded 15 Examiner’s Comments In part (b), weaker answers discussed project management techniques rather than outlining the different stages involved in the process of project management. Common Errors

As above.





Question 7(a) Discuss the role of negotiation in the management of change in D Company, making reference to the different stages involved in the negotiation process.

(13 marks) Rationale This question examines candidates’ ability to discuss the role of negotiation in the management of change. Suggested Approach The suggested approach would be to firstly discuss the role of negotiation in the context of the management of change in D Company, and then to identify the different stages involved in the negotiation process, again in the context of D Company. Marking Guide

Marks

To resolve conflicts (using examples from scenario) Reference to collective bargaining process Planning stage Opening Phase Bargaining phase Closing phase Achieve a win-win outcome

up to 3

up to 2

up to 2

1

up to 3

up to 2

up to 2

Maximum marks awarded 13 Examiner’s Comments The least popular of the optional questions with candidates seemingly unprepared to cope with questions on negotiation. Common errors

Weaker answers concentrated on approaches to redundancy or change management rather than on the process of negotiation as required.





Question 7(b) Identify the methods that could be used to collect information on staff attitudes towards the changes, explaining for each method the issues that need to be considered when planning the research.

(12marks) Rationale This question tests candidates’ understanding of the methods that can be used to collect information on staff attitudes Suggested Approach The answer should develop to identify the different methods that can be used to collect information on staff attitudes to change. For each method identified there should be an explanation of the issues that need to be considered when planning the research. The research methods identified should be relevant and appropriate to collecting information on staff attitudes to changes. Marking Guide

Marks

Open meetings Planning issues eg: How to deal with animosity How to encourage staff to attend Dealing with ‘unrepresentative’ voices Qualitative in-depth face to face interviews Planning issues e.g.: Who should conduct interviews Who to interview Where to hold interview Identification of questions How to record information during interview How to analyse information Quantitative – staff survey Planning issues e.g.: Length and style of questionnaire Formulation of questions Sample Timescales Response rate How to analyse information General considerations: Atmosphere created by announcement may not be conducive to participation in research Need to consult with staff reps/Trade union officials (Other methods to collect information could include undertaking focus groups, and observation)

1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1

1 1






Examiner’s Comments Some reasonably good answers to Part (b) of the question demonstrating a good knowledge of methods of research and of issues that needed to be considered when planning the research. Common Errors

A tendency to list methods with bullet point advantages and disadvantages of each without any reference to the context of the question.










You are allowed 20 minutes reading time before the examination begins during which you should read the question paper and, if you wish, make annotations on the question paper. However, you will not be 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 sub-questions). The question requirement for Sections B and C is contained in a dotted box.

Answer the ONE compulsory question in Section A. This has nine objective test sub-questions on pages 2 to 4.





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P5 2 November 2006


ANSWER ALL NINE SUB-QUESTIONS Question One 1.1 Which ONE of the following are three elements of the 7S model proposed by McKinsey?

A Staff, support, sponsor

B Systems, style, support

C Structure, style, status

D Style, systems, structure

(2 marks) 1.2 At what level of control are staff performance appraisal systems used?

A Operational

B Tactical

C Corporate

D Strategic

(2 marks)

Instructions for answering Section A: The answers to the nine sub-questions in Section A should ALL be written in your answer book. Your answers should be clearly numbered with the sub-question number and ruled off so that the markers know which sub-question you are answering. For multiple choice questions you need only write the sub-question number and the letter of the answer option you have chosen. You do not need to start a new page for each sub question.



November 2006 3 P5

1.3 The Deal and Kennedy cultural typology that is characterised as having high risk, long decision cycles and slow feedback is:

A Work Hard/Play Hard

B Bet Your Company

C Tough Guy Macho

D Process (2 marks)

1.4 Which ONE of Mintzberg’s configurations emphasises standardised skills as the

coordination mechanism, has the operating core as the dominant force and operates best in a complex but stable environment?

A Adhocracy

B Machine bureaucracy

C Professional bureaucracy

D Divisional form (2 marks)

1.5 Identify the approach to strategy which proposes that competitive advantage is achieved

from the organisation’s unique assets or competences.

(2 marks)

1.6 Describe two of the situational factors Fiedler uses as the basis of his contingency model

of leadership. (4 marks)

Section A continues on the next page

TURN OVER



P5 4 November 2006

The following data are for sub-questions 1.7, 1.8 and 1.9. R is the operations director of P paper mill. He is in the process of putting together a

project plan for the introduction of a new mill that will enable the company to produce a high quality paper product demanded by customers. The sales director has asked for R to advise him on when he should start the sales campaign for the new paper product.

R has identified a number of activities that must be undertaken and intends to conduct a network analysis as part of the project plan. This will enable him to provide an answer for the sales director. The activities can be broken down as follows:

Activity Preceding Activity Activity Duration In weeks

A - 8 B - 10 C - 6 D A 8 E B,C 9 F C 14

*G D,E 14 H F,G 6

* G = Sales campaign 1.7 Using the information, identify the critical path for the introduction of the new mill.

(2 marks)

1.8 Calculate the overall expected duration of the project.

(2 marks)

1.9 Identify the earliest event time for the sales campaign activity.

(2 marks)


End of Section A

Section B starts on the opposite page



November 2006 5 P5

SECTION B – 30 MARKS [the indicative time for answering this section is 54 minutes]

ANSWER ALL THREE QUESTIONS - 10 MARKS EACH Question Two G, the senior partner of L, a medium sized accountancy firm, has worked for L for over twenty years and has a sound knowledge and understanding of the different activities of the firm’s business. Over the years, G has become known for his fairness in how he manages staff. He is also well liked and respected for his enthusiastic approach. He always has time to encourage and mentor younger members of staff. The firm has recently invested in new technology which will improve the effectiveness of its office systems, but will mean the roles and responsibilities of the support staff will change. G, has taken on the unenviable role of leading the project to introduce the technology and new working practices. He knows that the project will be met with resistance from some members of staff and he will need to draw on various sources of power to ensure the changes are successfully implemented.

Question Three It is often claimed that all project management is risk management since risk is an inherent and inevitable characteristic of most projects. The aim of the project manager is to combat the various hazards to which a project may be exposed.

Section B continues on the next page

TURN OVER

Required: Describe the different sources of power that G has and which will help him in introducing the changes.


Required: Explain the concept of risk and the ways in which risk can be managed in a project.




P5 6 November 2006

Question Four T is the CEO of S Company, a manufacturer of hair and body care products. Over the years the company has been market leader in its field, achieved through being at the forefront of product innovation. S Company has invested heavily in research and development, which has enabled it to be the first in the market to introduce new variants of the product range. However, this has meant that the cost of operations has spiralled leading to an increase in the price of the company’s products.

Up until last year, the company had been very successful in increasing its market share. However, the most recent key performance indicators show that sales are down. It would seem that supermarket ‘own brand products’ are stealing market share and T is worried about the future ability of the company to meet its objectives for continued growth. T has decided to undertake a strategic review, the first stage of which will involve conducting a corporate appraisal.


End of Section B

Section C starts on the opposite page

Required: Explain what would be involved in undertaking a corporate appraisal, demonstrating how the information could be used to help T in his review.




November 2006 7 P5


ANSWER ANY TWO QUESTIONS FROM THIS SECTION – 25 MARKS EACH Question Five As part of M University’s ambitious strategy for growth, investment is being made in the development of a student village.

The finance director of M University has been appointed as the project manager and is in the early stages of setting up the project. This will be a complex project involving the construction of new buildings to provide for the growth in student numbers, including living accommodation for students, teaching rooms, a state-of-the-art business and conference facility aimed at attracting corporate clients to work with the University, and sports and recreation facilities. The build will be a collaborative venture funded by the University and investments from two local businesses.

The regional authority currently owns the land that the University wants to acquire to build the student village. The authority, the members of which are directly elected by local residents, makes the decisions on whether to accept or reject planning proposals made. It was recently reported in the local paper that the local residents are unhappy about the proposal.

The development will mean that staff from two University departments will be relocated to the new site which is two miles away from the main campus. In the first open meeting held by the finance director to communicate the proposals, he was met with a hostile reaction from staff, with most of them being very unhappy about moving to the new site.

The finance director knows that this will be a complex project to manage and that project management software will be essential in making his job objectives achievable. He is also aware that the project has a number of different stakeholders that he must consider in putting together the project plan.

Section C continues on the next page TURN OVER

Required: (a) Discuss how project management software might help the finance director and his

team successfully carry out the project.

(15 marks)

(b) Using examples, explain why the finance director should consider the interests of the different stakeholders in the student village project.

(10 marks)




P5 8 November 2006

Question Six N Company is a manufacturer and retailer of electrical goods such as cameras, PCs, TVs and hi-fi equipment. The company has its head office, four manufacturing plants and a chain of 350 retail outlets in K country. It also has a call centre, which is on the same site as its head office, to deal with customer queries and provide service support for PCs. Following the appointment of a new CEO, the senior management of N Company is evaluating options for its future strategic development. The company faces a challenging time with the growth and increased strength of competition in the sector.

N Company has previously had excellent employee relations and staff have enjoyed superior reward and recognition packages. However, the arrival of D, the new CEO, has unsettled staff. They have heard that D is proposing a major restructure aimed at improving efficiency and controlling costs. They understand that this will mean some of the manufacturing plants will be closed and more emphasis placed on selling cheaper “bought-in” products. In addition, certain activities related to the facilities management of the company, such as catering, cleaning and store maintenance are likely to be outsourced. It also seems that the senior management is investigating the possibility of moving the call centre to another country where operating costs are lower.

D has been heard to say that to compete effectively the company needs to be more flexible, and that he will be using the ideas of the “flexible firm” model and the “shamrock organisation” as the basis to create greater flexibility and adaptability in N Company.

Section C continues on the opposite page

Required: (a) Use transaction cost theory to analyse the restructure strategy D is proposing in N

Company. (13 marks)

(b) With reference to either the “flexible firm” model or “shamrock organisation” discuss how N Company might achieve greater flexibility.

(12 marks)




November 2006 9 P5

Question Seven The Direct Sales and Customer Contact Centre (the Centre) of A Insurance Company deals with vehicle, home and contents insurance products. B, who has been the manager of the Centre for the last three years, has a participative leadership style, involving staff in key decisions about the Centre. Initially she was very successful in achieving high staff morale as evidenced in the results of annual staff surveys for the first two years of her appointment. The Centre scored consistently higher on dimensions such as job satisfaction, communication and co-operation when compared with other parts of the company.

However, twelve months ago B was responsible for introducing a sales target system which involved allocating staff to teams as part of a restructuring programme. Each team is set targets and the results are published on a monthly basis in a league table. The team that is top of the league receives a cash bonus.

B is concerned that the restructuring has had an adverse effect on the performance of the Centre. She is particularly concerned that the results of the most recent staff survey show that communication and co-operation between teams have fallen dramatically. She has also observed animosity between the team leaders. Absenteeism has increased significantly, particularly in team Y. As part of her review of the issues facing the Centre, she has noted the following:

Team X is always at the top of the league and, as a result, receives the cash bonus. The team leader of X is highly motivated and team spirit is high. Team members are constantly coming up with ideas on how to increase sales. The team seems to be a very cohesive group and team members regularly organise social events for themselves.

Team Y never succeeds in meeting its targets. The team leader does not seem bothered by this, and appears more interested in working out how much longer he needs to work before he can retire. Team members have complained to B about the team leader, and two members have resigned. There is a personality clash between the team leader and another member of the team who is viewed by the rest of the team as the ‘unofficial’ leader.

Team Z, whilst achieving its targets, is always behind Team X. The team members are an extremely tight knit group, but have become very insular and are no longer responsive to the work needs of other members of staff in the Centre. They appear to have their own agenda.

The restructure of the Centre into teams and the sales target system was dictated by Head Office. Nevertheless, B is determined to take action to resolve the problems she currently faces.



Required: (a) Discuss the benefits and problems of introducing sales teams and the sales target

system in “the Centre” of A Insurance Company. (13 marks)

(b) Explain the strategies that could be used by B to minimise the problems caused by introducing sales teams and the sales target system in order to improve performance in “the Centre”.

(12 marks)




P5 10 November 2006




November 2006 11 P5




P5 12 November 2006




November 2006




Paper 5 – Integrated Management Post Exam Guide

November 2006 Exam

General Comments

The overall performance has declined since the first paper was set in May 2005. Candidates appear to be inadequately prepared. There were general weaknesses both in terms of theoretical knowledge and in its application. Particularly noticeable was the large number of candidates who scored poorly in Section A. All the topics are covered in the CIMA Study System but the very low marks of some candidates suggest they are hoping to get by on general knowledge rather than by systematic study. Also noticeable in this diet was the wide range of marks achieved by different candidates. At the top end a significant number of candidates performed brilliantly with marks in excess of 80% while at the bottom end a large number of candidates achieved only a handful of marks. Many candidates lost marks because they did not read the question properly: this was most evident in question 5(a) in which many answers simply claimed that project management software could ‘help’ a project manager to carry out a project but did not discuss ‘how’ software might help. A strong recommendation is that candidates should read carefully the question requirements. Other general weaknesses included the tendency to list points without any attempt at discussion or explanation as required by the question. Candidates should be aware that such a listing will only bring the odd mark at most so it is best to avoid this practice altogether.





November 2006 Exam

SECTION A – 20 MARKS ANSWER ALL SEVEN SUB-QUESTIONS

Question 1.1 Which ONE of the following are three elements of the 7S model proposed by McKinsey? A Staff, support, sponsor B Systems, style, support C Structure, style, status D Style, systems, structure

(2 marks)

The answer is D

Question 1.2 At what level of control are staff performance appraisal systems used? A Operational B Tactical C Corporate D Strategic

(2 marks)

The answer is B

Question 1.3 The Deal and Kennedy cultural typology that is characterised as having high risk, long decision cycles and slow feedback is: A Work Hard/Play Hard B Bet Your Company C Tough Guy Macho D Process

(2 marks)

The answer is B





November 2006 Exam

Question 1.4 Which ONE of Mintzberg's configurations emphasises standardised skills as the coordination mechanism, has the operating core as the dominant force and operates best in a complex but stable environment? A Adhocracy B Machine bureaucracy C Professional bureaucracy D Divisional form

(2 marks)

The answer is C

Question 1.5 Identify the approach to strategy which proposes that competitive advantage is achieved from the organisation’s unique assets or competences.

(2 marks)

The answer is: Resource based view

Question 1.6

Describe two of the situational factors Fiedler uses as the basis of his contingency model of leadership. (4 marks)

The answer could include: Leader member relations Task structure Or Leader position power

Question 1.7 Using the information identify the critical path for the introduction of the new mill.

(2 marks)The answer is: The critical path is B, E, G, H





November 2006 Exam

Question 1.8

Calculate the overall expected duration of the project. (2 marks)

The answer is: The time taken is 39 weeks

Question 1.9

Identify the earliest event time for the sales campaign activity. (2 marks)

The answer is: The earliest event time for the sales campaign is 19 weeks. Common Errors Q1.6 The majority of candidates appeared to have little if any knowledge of Fiedler’s Contingency theory of leadership despite the fact that it is covered in the Study System. In many cases candidates did not attempt the question and of those who did only a minority provided the correct answer.





November 2006 Exam


Question 2 Describe the different sources of power that G has and which will help him in introducing the changes.


Rationale The question examines candidates understanding of the sources of power. It also requires candidates’ to apply their knowledge by using the information in the mini scenario to explain how different sources of power can help in introducing change. Suggested Approach The question requires candidates to explain the different sources of power that G has. French and Raven’s classification of sources of power would provide a helpful structure to develop the answer. Good answers will use the information from the scenario to provide specific examples of how the different sources of power will help G in introducing change. Other classifications and sources of power could be used to develop the answer. Marking Guide

Marks

French and Raven’s sources of power: Referent* Reward* Coercive* Expert* Legitimate* *To gain full marks must explain how power will help G in introducing change. Other classifications and sources of power could be used to develop the answer. For example, Lukes and Sheldon’s classifications and sources of power such as resource power, physical power, informational power.

Up to a max of 2 for each source of power

Maximum marks awarded 10 Examiner’s Comments Overall, candidates appear to have revised this topic well. Common Errors Weaker candidates were unable to specify a typology of power so unable to apply it to the scenario in the question.





November 2006 Exam

Question 3 Explain the concept of risk and the ways in which risk can be managed in a project


Rationale 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. Suggested Approach Answers should first provide an explanation of the concept of risk in projects. Answers should then develop to discuss how risk can be managed. Good answers will include reference to the different strategies for dealing with risk in projects. Marking Guide

Marks

Explanation of concept of risk Stages in the process of managing risk And Strategies for managing risk

Up to 2 marks

Up to 8 marks

Maximum marks awarded 10 Examiner’s Comments Some strong answers to this question. Common Errors The tendency for weaker candidates was to concentrate on the explanation of different types of risk rather than addressing the question set, which also asked for the ways in which risk can be managed in a project.





November 2006 Exam

Question 4 Explain what would be involved in undertaking a corporate appraisal, demonstrating how the information could be used to help T in his review.


Rationale The question is designed to assess candidates’ understanding of what is involved in undertaking a corporate appraisal, and also how the information from a corporate appraisal can be used. Suggested Approach Answers should start by firstly discussing what is involved in undertaking a corporate appraisal. Candidates could develop their answers by discussing what is required in conducting an internal review and how the outcomes of the analysis can help T. They then need to discuss what is entailed in analysing the external environment, again making reference to how the outcomes can help T. Good answers will mention some of the strategic management frameworks that can be used in this process. Marking Guide

Marks

Internal review: Analysing strategic capability How help T (identity strengths and weaknesses - ref to value chain analysis) External environment review Identifying external factors (e.g. using PESTEL/five forces) How help T (identify opportunities and threats) (If only generic discussion of internal and external analysis maximum of 5 marks to be awarded)

Up to 6 marks Up to 6 marks

Maximum marks awarded 10 Examiner’s Comments Overall most candidates did appreciate what is involved in corporate appraisal. Common Errors The most common weakness was the lack of application to the scenario case. Some candidates did not develop their answers to explain how the information could be used.





November 2006 Exam


Question 5(a) Discuss how project management software might help the finance director and his team successfully carry out the project.

(15 marks)

Rationale This question examines candidates’ appreciation of how project management software can help in the project management process. Suggested Approach Candidates need to explain the aspects within a project where pm software could help, and then go on to discuss in detail how the software will help the finance director and his team. Good candidates will use the information in the case study to develop their answers. To gain a pass mark there must be development of how the pm software can help, rather than just a list of pm software features. Marking Guide

Marks

Examples of software packages Help Student Village project which is complex and has sub projects Budget and control features Project planning Contingency planning Resource planning Production of pm reports and associated documentation

1

up to 3

up to 3

up to 3

up to 2

up to 2

up to 2

Maximum marks awarded 15 Examiner’s Comments Although this was the most popular of the Section C questions, it proved problematic for a significant number of candidates. Candidates need to read carefully the requirements of the question set, Common Errors A large number of candidates defined project management software but did not go on to explain how the software could be used to assist in the management of a project. Many candidates also confused the idea of ‘project management software’ with that of ‘project methodology’ and some simply described the stages in project management.





November 2006 Exam

Question 5(b) Using examples, explain why the finance director should consider the interests of the different stakeholders in the student village project.

(10 marks)

Rationale This question assesses candidates’ appreciation of the interests of different stakeholders and why these need to be considered in the project management process. Suggested Approach Answers could start by providing an explanation of what stakeholders are and how an understanding of the different interests could help the finance director. Candidates should determine the different stakeholders in the student village project, and then go on to provide an explanation of why it is important that the finance director should consider the interests of the different stakeholders. Good answers will systematically work through the different stakeholder groups, referring to information in the scenario to explain their interests and the implications for the project. To gain a pass mark, each stakeholder should be elaborated on in terms of their interests. Marking Guide

Marks

Explain concept of stakeholders in context of PM Stakeholders and their interests - could include: Project sponsor* Project board* Users* Staff* Regional Authority* Local residents* To gain full marks for each stakeholder, answers must make reference to stakeholder interests and why they need to be considered by finance director – rather than simply describe Medelow’s matrix (Other stakeholders could include project team, suppliers, sub contractors)

Up to 2

Up to 2

Up to 2

Up to 2

Up to 2

Up to 2

Up to 2

Maximum marks awarded 10 Examiner’s Comments Some reasonable answers to this question Common Errors The most common weakness was a tendency to describe Mendelow’s matrix but to make little or no use of it in the explanation of why the director should consider the interests of particular stakeholders. Again candidates need to read carefully the specific requirements of the question.





November 2006 Exam

Question 6(a) Use transaction cost theory to analyse the restructure strategy D is proposing in N Company.

(13 marks)

Rationale The question is designed to examine candidates' understanding of transaction cost theory and their ability to be able to use the theory to analyse the restructuring strategy. Suggested Approach The answer should develop to firstly explain the basis of transaction cost theory. Candidates should then go on to use the two mechanisms – hierarchy and markets – to analyse the restructuring strategy proposed by D. Good answers will develop to discuss the theory in terms of the benefits and potential limitations of the restructure strategy. Marking Guide

Marks

Basis of transaction cost theory Hierarchy solutions Market solutions Analysis of transaction costs in context of restructure in N company

Up to 3

Up to 3

Up to 3

Up to 7

Maximum marks awarded 13 Examiner’s Comments This was the least popular of the Section C questions, but some solid answers, evidencing a good grasp of Transaction Cost Theory. Common Errors A significant number of candidates spent too much time discussing the merits and drawbacks of ‘outsourcing’ for the firm concerned rather than addressing the question set.





November 2006 Exam

Question 6(b) With reference to either the “flexible firm” model or “shamrock organisation” discuss how N Company might achieve greater flexibility.

(12 marks)

Rationale This examines candidates’ understanding of how flexibility can be achieved in organisations and their appreciation of the theories underpinning workforce flexibility. Suggested Approach The answer should start by firstly explaining the different kinds of flexibility that can be provided. Answers should then explain the basic principles and key features of either the “flexible firm” model or the “shamrock organisation” to evaluate how N company can achieve flexibility. Good answers will develop to make explicit use of the scenario information to provide examples of how flexibility could be introduced. Marking Guide

Marks

Principles of “flexible firm” or “shamrock organisation”, for example Financial flexibility Numerical flexibility Functional flexibility Discuss how to achieve flexibility – using models: for example three leaves of shamrock organisation Professional core Contact staff Contingent workers Alternatively the same marks would be available for using the flexible firm model to evaluate how N can achieve flexibility.

up to 2

up to 2

up to 2

up to 3

up to 3

up to 3

Maximum marks awarded 12 Examiner’s Comments Some reasonable answers to this question Common Errors A significant number of candidates failed to read the question properly. The terms, ‘either’/ ‘or’ in the question were highlighted in bold but despite this many candidates set out both the alternatives i.e. ‘the flexible firm’ and the ‘shamrock organisation’. In doing so they wasted valuable time and often provided a confusing answer.





November 2006 Exam

Question 7(a) Discuss the benefits and problems of introducing sales teams and the sales target system in “the Centre” of A Insurance Company.

(13 marks)

Rationale This question examines 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. Suggested Approach 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 benefits and problems. Marking Guide

Marks

Benefits of sales teams, for example 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 Problems of sales teams, for example Intra group conflict Social loafing Personality clashes Hostile attitudes Inter-group conflict Lack of effective communication De-motivation of members

Up to 6 marks

Up to 7 marks

Maximum marks awarded 13 Examiner’s Comments Most candidates were able to identify the advantages and disadvantages of team work, although not always in the context of the question scenario. Common Errors The errors consisted mainly of omission of key points and/or a simple listing of points without elaboration. Candidates must understand that when asked to ‘discuss’ or to ‘explain’, a simple listing of points is insufficient for a competent answer.





November 2006 Exam

Question 7(b)

Explain the strategies that could be used by B to minimise the problems caused by introducing sales teams and the sales target system in order to improve performance in “the Centre”.

(12marks)

Rationale This question requires candidates to evidence their understanding of the strategies that could be used to minimise the problems associated with introducing sales teams and the sales target system. Suggested Approach 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. Marking Guide

Marks

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

up to 2

up to 2

up to 2

up to 2

up to 2

up to 2

up to 2

up to 2

Maximum marks awarded 12 Examiner’s Comments Some reasonably good answers, although candidates are advised that whilst having a balance of roles (i.e. Belbin’s research) there are a number of other important factors. Some candidates did not use the clues provide in the scenario in order to develop appropriate responses. Common Errors As for part (a) the errors consisted mainly of omission of key points and/or a simple listing of points without elaboration. Candidates must understand that when asked to ‘discuss’ or to ‘explain’, a simple listing of points is insufficient for a competent answer.






Managerial Level





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 sub-questions). The requirements for the questions in Sections B and C are contained in a dotted box.

ALL answers must be written in the answer book. Answers or notes written on the question paper will not be submitted for marking.

Answer the ONE compulsory question in Section A. This has nine sub-questions on pages 2 and 3.



The list of verbs as published in the syllabus is given for reference on the inside back cover of this question paper.

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.


P5 –

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TURN OVER



P5 2 May 2007


ANSWER ALL NINE SUB-QUESTIONS Question One 1.1 The scope and amount of discretion given to a person to make decisions by virtue of the

position he/she holds in the organisation is referred to as

A accountability.

B responsibility.

C delegation.

D authority. (2 marks)

1.2 Which ONE of the following provides a common understanding of a project for all its

stakeholders by defining the project’s overall boundaries?

A Project lifecycle

B Project milestones

C Project scope

D Project schedule (2 marks)

1.3 Which ONE of the following leads to high buyer power?

A High capital requirements

B Low switching costs

C Economies of scale

D Limited substitute products (2 marks)

Instructions for answering Section A: The answers to the nine sub-questions in Section A should ALL be written in your answer book. Your answers should be clearly numbered with the sub-question number and ruled off so that the markers know which sub-question you are answering. For multiple choice questions you need only write the sub-question number and the letter of the answer option you have chosen. You do not need to start a new page for each sub-question.



May 2007 3 P5

1.4 Which ONE of the following is the term used in project management to assess how achievable various project options are?

A Feasibility analysis

B Risk analysis

C Contingency analysis

D Resource analysis (2 marks)

1.5 Explain briefly the characteristics of the positioning view of strategy.

(3 marks) 1.6 An organisation is experiencing conflict up and down the hierarchy, between the

executive team in head office and regional offices. What type of conflict is this? (2 marks)

1.7 Name the technique used in network analysis that allows the uncertainty about the times of each activity to be considered.

(2 marks)

1.8 In critical path analysis what is the spare time for an activity called? (2 marks)

1.9 Identify each of the different team roles, as defined by Belbin, from the following descriptions:

(i) Imaginative and very good at coming up with original ideas and suggestions.

(ii) Gives attention to detail and is concerned with meeting deadlines.

(iii) Supports other members of the team and helps to promote harmony. (3 marks)


Reminder All answers to Section A must be written in your answer book. Answers to Section A written on the question paper will not be

submitted for marking

End of Section A Section B starts on the next page

TURN OVER



P5 4 May 2007


ANSWER ALL THREE QUESTIONS - 10 MARKS EACH Question Two T is the owner manager of a small business that designs and produces high quality garden furniture. The business started out as a hobby using T’s creative design and carpentry talents, and he has been surprised by his success. Over the last year the business has experienced unplanned growth and by chance T has just won a contract to supply a local chain of DIY stores.

The local Chamber of Commerce has recently sent him an invitation to attend a number of seminars entitled “Formal Strategic Planning for Small Businesses”. However, T is doubtful that the content of the seminars will be of any relevance to him and feels he cannot afford time away from his business. His view is that it is best to let the strategies and developments for his business emerge.

Question Three A number of volunteers were so moved by news coverage reporting on the difficulties facing earthquake victims in F country that they organised a sponsored walk to raise funds for the appeal. Two of the volunteers visited some of the worst hit areas and this prompted them to set up their own charity. Their first major project is to rebuild and provide equipment for a school in one of the villages that has been devastated by the disaster. They hope to have the school up and running in twelve months’ time.

A number of people have been enlisted to help with the project, including some local businesses as well as family and friends. The volunteers realise this will be a more complex project than organising a sponsored walk and therefore will require a much more professional approach to ensure that they achieve their objectives. They have limited experience of managing projects and are trying to determine the purpose of the different phases and activities. P, one of the volunteers, has been given the task of finding out about the first stage, initiating the project, and specifically, how to put together a project initiation document.

Required: Explain the reasons why T is right to be doubtful about the relevance of formal strategic planning for his business.


Required: To help P, describe what is involved in the initiation stage of a project and explain what should be included in the project initiation document for the school project.




May 2007 5 P5

Question Four M is Chairman and Managing Director of Y Company which he started 15 years ago, specialising in the manufacture of hospital uniforms. The company has been very successful and, through a series of acquisitions, has diversified into the manufacture of a range of corporate and other uniforms, employing 3,500 people. M is a major force in the company. His management style is very autocratic and he is unwilling to involve others in decisions about the future strategic direction of the company. Recently, M announced to the Board that he is intending that Y Company becomes listed on the stock exchange.

D, the Finance Director of the company has become increasingly concerned about the decisions being made by M and the fact that he has put pressure on her to participate in some questionable accounting practices. She has had to cover up M’s substantial remuneration package, which M has awarded to himself. D is also aware that M has accepted bribes from foreign suppliers and of insider dealing relating to a number of the acquisitions. There is a lack of appropriate control systems and accountability in the company.

D has discussed her concerns with other members of the Board, all of whom work for Y Company, including the Marketing Director, Production Director and HR Director. However, they seem willing to overlook the wrongdoings of M and never challenge the decisions made by him. The opportunity to do so is limited since the Board meets on an irregular and infrequent basis.

At the last Board meeting M set out his plans to close the existing factories and move operations to L country where he has been in secret negotiations with representatives of the government. The main objective is to benefit from low cost labour, since the country has very little employment legislation to protect workers and has a poor human rights record.


End of Section B

Section C starts on the next page

TURN OVER

Required: Explain the corporate governance and ethical issues facing Y Company.




P5 6 May 2007


ANSWER ANY TWO QUESTIONS FROM THIS SECTION – 25 MARKS EACH Question Five B Local Council is responsible for providing public services, serving the local community. A new Chief Executive has recently been appointed with the explicit brief of improving the performance of the Council, which is currently in the spotlight for being inefficient and not focused enough on the needs of the local residents.

Over the last three months the Chief Executive has undertaken a review and is not impressed with what he has found. He has identified a number of weaknesses and problem areas which need to be remedied. The culture of the Local Council needs to change radically to become a more performance oriented one.

The initial findings from the review suggest that B Local Council is typified by a very bureaucratic culture, where power is determined by position and status. The managers in the Council defend their territory and are unwilling to share information and cooperate with other departments. Staff are only allowed to undertake the specific activities included in their job description. Many say they have had no training and that opportunities for career progression are limited. They receive no feedback on their performance but work under close supervision in what appears to be a “them and us” culture between management and staff.

The review also identifies that morale is low. Staff feel they are not encouraged to participate in decision making and any ideas they have are stifled as a result of the chain of command. A significant number of staff have told the new Chief Executive that if they could get another job, they would leave the Council. Discussions with the HR Manager reveal that both absenteeism and staff turnover are high, despite competitive salaries and other excellent working conditions and benefits such as free car parking, a subsidised canteen and sports facilities.

The Chief Executive has identified a number of significant changes that need to be made to improve the performance of B Local Council. He is surprised that there is currently no staff performance appraisal in place and is keen that an effective system should be designed and implemented.

Required: (a) Analyse the problems in B Local Council, and discuss what the Chief Executive could

do to improve performance. You should include reference to appropriate theories to support your analysis.

(13 marks)

(b) Explain the key issues that should be considered in the design and the implementation of an effective staff performance appraisal system for B Local Council.

(12 marks)




May 2007 7 P5

Question Six C Company operates in the leisure and entertainment industry. The company has achieved significant growth over the last five years through the acquisition of bars, restaurants, coffee shops and, more recently, road side hotels. The company is organised on a functional basis and the senior management team has maintained tight control over the operations of the different business areas, making decisions centrally.

Despite its successes in making acquisitions, a number of key performance indicators are concerning the Board. It has recently undertaken a benchmarking study and discovered that the costs of the company are significantly higher than other operators in the industry. Decision making takes longer and the company is slower than its competitors to respond to new trends in the industry. It is also difficult to determine the revenue contributions of the different business activities.

Complaints have been made by managers working in the bars, restaurants, coffee shops and hotels that they need to be much more responsive to the needs of their customers but they have no authority to make decisions. Any suggestions they make have to go up the hierarchy, and so take far too much time. They also feel that the senior managers in Head Office are too removed from the business activities, each of which has different needs and priorities.

The Board is undertaking a major review of the strategy and organisational structure of the company. The HR Director is insistent that the problems facing the company are not so much to do with the strategic direction, but more about the unsuitable structure and mechanistic design. She believes that the functional structure is no longer appropriate. Her proposal is that the structure should change and that a more organic organisational design with decentralisation would help to improve performance.

Section C continues on the next page

TURN OVER

Required: (a) Explain the purpose of organisational structure and explain why it is an important

concept for C Company. (10 marks)

(b) Evaluate the extent to which the HR Director’s proposal will help to resolve the problems facing C Company and recommend what would be an appropriate organisational structure.

(15 marks)




P5 8 May 2007

Question Seven Over the years, D, an entrepreneur, has had a number of business successes in the retail sector. She is keen to move on to bigger things and has identified an opportunity to develop a Shopping Centre.

Having secured the interest of several potential investors, identified a suitable site, had an architect draw up plans and received planning permission, D is eager that construction work on the Shopping Centre should start as soon as possible. She appointed G, who has an impressive record of managing successful projects, to be project manager. However, D is already interfering in the management of the project and is in conflict with G. She is frustrated by the time G seems to need in the planning phase, and is irritated by his insistence on formalising the project management process. D is now putting pressure on G to miss out elements in the first stages of planning the project, and to get started on the construction work for the Shopping Centre.



Required: (a) Explain the potential problems that the Shopping Centre project could face without

good project planning. (10 marks)

(b) Explain the contribution of different project management tools and techniques that could help G in planning the project.

(15 marks)




May 2007 9 P5




P5 10 May 2007




May 2007 11 P5

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

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

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 of Identify Recognise, establish or select after

consideration Illustrate Use an example to describe or explain

something

3 APPLICATION How you are expected to apply your knowledge. Apply

Calculate/compute To put to practical use To ascertain or reckon mathematically

Demonstrate To prove with certainty or to exhibit by practical means

Prepare To make or get ready for use Reconcile To make or prove consistent/compatible Solve Find an answer to Tabulate Arrange in a table

4 ANALYSIS How are you expected to analyse the detail of what you have learned.

Analyse Categorise

Examine in detail the structure of Place into a defined class or division

Compare and contrast Show the similarities and/or differences between

Construct To build up or compile Discuss To examine in detail by argument Interpret To translate into intelligible or familiar terms Produce To create or bring into existence

5 EVALUATION How are you expected to use your learning to evaluate, make decisions or recommendations.

Advise Evaluate Recommend

To counsel, inform or notify To appraise or assess the value of To advise on a course of action



P5 12 May 2007




May 2007




Paper 5 – Integrated Management Post Exam Guide May 2007

General Comments The overall performance in this diet was significantly better than that of recent diets. Candidates scored reasonably well on questions 1, 3, and 4 and many candidates were able to develop fuller answers than in the past to the Part C questions. That said, too many candidates fail to do themselves justice because they do not read the questions thoroughly enough. This was particularly evident in candidates’ responses to Q2, Q3, 6(b) and 7(a). Many candidates also spent too much time providing background material to the questions which was already provided for them in the scenario: the outcome of which was that much time and effort was consumed without adding any marks to their total. A more careful reading of the question so as to tease out the essential requirements will pay dividends for such candidates.





SECTION A – 20 MARKS ANSWER ALL NINE SUB-QUESTIONS

Question 1.1 The scope and amount of discretion given to a person to make decisions by virtue of the position he/she holds in the organisation is referred to as A accountability B responsibility C delegation D authority

(2 marks)The answer is D

Question 1.2 Which ONE of the following provides a common understanding of a project for all its stakeholders by defining the project's overall boundaries? A Project lifecycle B Project milestones C Project scope D Project schedule

(2 marks)The answer is C

Question 1.3 Which ONE of the following leads to high buyer power? A High capital requirements B Low switching costs C Economies of scale D Limited substitute products

(2 marks)The answer is B

Question 1.4 Which ONE of the following is the term used in project management to assess how achievable various project options are? A Feasibility analysis B Risk analysis C Contingency analysis D Resource analysis

(2 marks)The answer is A





Question 1.5 Explain briefly the characteristics of the positioning view of strategy.

(3 marks)

The answer could include:

• Competitive advantage stems from the firm’s position in relation to its environment • Aligns internal resources with external opportunities and threats • “Outside in” view of the firm, adapting strategy to fit with its external environment

Question 1.6 An organisation is experiencing conflict up and down the hierarchy, between the executive team in head office and regional offices. What type of conflict is this?

(2 marks)

The answer is:

Vertical Conflict Question 1.7 Name the technique used in network analysis that allows the uncertainty about the times of each activity to be considered.

(2 marks)

The answer is: PERT - Use of acronym is acceptable for 2 marks (Project Evaluation and Review Technique) Question 1.8 In critical path analysis what is the spare time for an activity called?

(2 marks)

The answer is:

Float (or Slack or Buffer)





Question 1.9 Identify each of the different team roles, as defined by Belbin, from the following descriptions: (i) Imaginative and very good at coming up with original ideas and suggestions.

(ii) Gives attention to detail and is concerned with meeting deadlines.

iii) Supports other members of the team and helps to promote harmony. (3 marks)

The answer is: (i) Plant (ii) Completer/Finisher – if just Completer or Finisher mentioned mark allowed (iii) Team worker Examiner’s Comments Generally well answered except for question 1.5. It was surprising how many candidates were unable to explain the characteristics of the positioning view of strategy.

Common Errors

Many candidates confused the positioning approach to strategy with the resource-based approach.






Question 2 Explain the reasons why T is right to be doubtful about the relevance of formal strategic planning for his business.

(Total for Question Two = 10 marks) Rationale The question examines candidates’ understanding of the process of formal strategic planning and their ability to apply their knowledge to the scenario to explain why the approach may not be relevant for a small business. Suggested Approach The question requires candidates to explain why T might be right to be doubtful about the relevance of formal strategic planning for his small business. Good answers will develop in the context of a small business, rather than simply explaining the disadvantages of formal strategic planning in a more general sense. Marking Guide

Marks

Brief explanation of process of formal strategic planning, e.g.: Consciously thought out Deliberately intended Rational approach Reasons why T might be right to be doubtful, e.g.: Expensive process for a small business Complicated process for a small business Too bureaucratic/rigid Static/infrequent Get in way of T's creative approach Success dependent on ideas of T Small business might not have aspirations/capability for growth strategic options Small business might not have the resources to invest in new strategic ventures Goals for small business usually inseparable from goals of owner Preference for strategies emerging than scanning environment Reference to strategic management tools/frameworks Arguments/benefits of formal strategic planning for T

(Up to 2 marks max)

1 mark 1 mark 1 mark

(Up to 10

marks max) 1 mark 1 mark 1 mark 1 mark 1 mark 1 mark 1 mark 1 mark 1 mark 1 mark 1 mark up to 2 marks


Additional Comments

Marks awarded for context





Examiner’s Comments This was the most poorly answered question on the paper. Too many candidates simply explained the process of formal strategic planning without any adequate attempt to address the question requirements in terms of its relevance to a small business.

Common Errors

Too many candidates did not address the question but chose instead to elaborate on the process of formal strategic planning.





Question 3 To help P, describe what is involved in the initiation stage of a project and explain what should be included in the project initiation document for the school project.

(Total for Question Three = 10 marks) Rationale

This question requires candidates to be familiar with what is involved in the initiation stage of a project and what should be included in a project initiation document.

Suggested Approach

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.

Marking Guide

Marks

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 Determines scope Establish goals and objectives Used as base line to measure progress against What should be included in PID e.g. Background - why project necessary (applied to school project) Business objectives/business case Terms of reference Project Scope Project constraints Feasibility * Risk assessment Resources Task list Project deliverable - (Raising funds - applied to school project) Project deliverable - (Quality - applied to school project) Project deliverable - (Time - applied to school project) Project deliverables (applied to school project) Roles and Responsibilities – project management structure Methods of communications, (reports and meetings) Identification of stakeholders *If answer develops around specific feasibility studies award up to 5 marks

(Up to 4 marks max)

1 mark 1 mark 1 mark 1 mark 1 mark 1 mark

(Up to 7

marks max) 1 mark 1 mark 1 mark 1 mark 1 mark 1 mark 1 mark 1 mark 1 mark 1 mark 1 mark 1 mark 1 mark 1 mark 1 mark 1 mark


Additional Comments Marks limited to 4 if candidate adopts a general “shot gun” approach to planning stage or project management techniques





Examiner’s Comments

A few good answers but a number of candidates tended to describe general project management issues rather than being specific about the initiation stage. Common Errors

Many candidates who described the initiation stage omitted to go on to explain specifically what should be included in the project initiation document.





Question 4 Explain the corporate governance and ethical issues facing Y Company.

(Total for Question Four = 10 marks) Rationale The question is designed to assess candidates’ understanding of the principles of corporate governance and ethical issues. Suggested Approach Answers could include a brief explanation of corporate governance and then go on to identify the specific corporate governance issues facing Y Company. Candidates then need to go on to identify the ethical issues, facing Y Company. Good answers will develop by drawing on the information from the scenario. Marking Guide

Marks

Brief explanation of Corporate Governance Corporate Governance Issues facing Y Company* e.g.: Chairman and MD roles both held by M contravening current thinking on CG Example of abuse of power by M Difficult for others to challenge M's decisions Ineffective Board meetings Need for non executive director/s M determines own remuneration NEDs should determine policy on executive directors remuneration Lack of adequate internal controls and accountability Suggest need audit committee Ethical Issues* Bribes/insider dealing Exploitation of labour Loss of jobs * Must be applied to situation in Y Company Consequences for company of poor corporate governance and/or unethical behaviour (e.g. poor image/reputation) Answers which reflect the form of corporate governance in the candidates' own country will be rewarded appropriately.

1 mark

(Up to 8 marks max)

1 mark 1 mark 1 mark 1 mark 1 mark 1 mark 1 mark 1 mark 1 mark

(Up to 3

marks max) 1 mark 1 mark 1 mark

up to 2 marks



Overall this question was well answered, although some candidates did not apply their knowledge of corporate governance and ethical behaviour to the situation in the scenario.

Common Errors

Weaker candidates were unable to apply their knowledge to the scenario as required by the question.






Question 5(a)

Analyse the problems in B Local Council, and discuss what the Chief Executive could do to improve performance. You should include reference to appropriate theories to support your analysis.

(13 marks) Rationale

This question tests candidates’ ability to analyse a case study in order to identify performance problems, requiring them to apply their knowledge of relevant theory to identify the problems and how performance could be improved. Suggested Approach

Candidates should firstly identify the various performance problems, for example, with reference to structure, culture, motivation theory (e.g. Herzberg’s two factor theory), and leadership style to analyse the problems in B Local Council, Answers should then go on to identify what the Chief Executive could do to improve performance. Good answers will develop using the information in the case study. To gain a pass mark there must be development of performance problems (not just repetition from the case study), and improvements in performance must relate to B Local Council. Whilst there must be inclusion of theory within the answer, this should be used as the basis for analysis rather than just simply description of theory. Marking Guide

Marks

Identification of performance problems with reference to theory (e.g.) Bureaucratic structure Culture + relevant theory Reference to Hertzberg's two factor theory Examples of extrinsic/hygiene problems Applied to B - pay/working conditions Applied to B - relationships/close supervision Examples of intrinsic problems Applied to B - e.g. recognition Applied to B - e.g. challenging work/responsibility Use of Maslow – if applied Leadership/management style (could make ref to Theory X and Y) Management of change if applied Reference to different stakeholders What CE could do to improve performance (e.g.) Change to Structure Change to Culture Leadership style Job design - job enlargement Job design - job enrichment Career development - lateral moves Training on customer service Reward system - incentives Recognition system Cross functional teams Team Building Use of performance appraisals Use of exit interviews (marks will be awarded for other appropriate theories but these must be applied)

(Up to 8 marks max)

1 mark 1 mark 1 mark 1 mark 1 mark 1 mark 1 mark 1 mark 1 mark 1 mark 1 mark 1 mark 1 mark

(up to 8

marks max) 1 mark 1 mark 1 mark 1 mark 1 mark 1 mark 1 mark 1 mark 1 mark 1 mark 1 mark 1 mark 1 mark






Additional Comments

Problems cited in scenario as part of analysis accepted for this question

Examiner’s Comments Some high scoring marks but weaker candidates tended not to analyse the problems using relevant theory nor did they develop possible improvements in the context of the scenario.

Common Error

As above

Question 5(b) Explain the key issues that should be considered in the design and the implementation of an effective staff performance appraisal system for B Local Council.

(12 marks) Rationale This question assesses candidates’ appreciation of the key issues that should be considered in the design and implementation of an effective staff performance appraisal system. Suggested Approach Answers could start by providing an explanation of the purpose of a staff performance appraisal system and then go on to explain the key issues that should be considered in firstly the design and then the implementation of such a system for B Local Council. Good answers will discuss both design and implementation issues for B Local Council rather than simply describing the appraisal process. Marking Guide

Marks

Brief explanation of purpose of appraisal Relevant to need of B Local Council and Individual Establish primary role of appraisal process for B Communicate purpose to all involved Design must be fair and objective Staff participation in design phase Consistent approach across areas Criteria used to measure performance - objective Criteria link to strategic priorities of B Commitment of senior management Training for all participants Appraisal format Who should conduct appraisal Not overly time consuming Not costly to administer Preparation and time for appraisal Continuous process Other

1 mark 1 mark 1 mark 1 mark 1 mark 1 mark 1 mark 1 mark 1 mark 1 mark 1 mark 1 mark 1 mark 1 mark 1 mark 1 mark 1 mark 1 mark






Examiner’s Comments The answers to this question were rather disappointing given that an article on Performance Appraisal by the Examiner had recently appeared in the CIMA journal. Common Errors

Tendency to answer in general terms rather than to focus on key design and implementation issues of an effective performance appraisal system for B Local Council.





Question 6(a) Explain the purpose of organisational structure and explain why it is an important concept for C Company.

(10 marks) Rationale The question is designed to examine candidates' understanding of the purpose of organisational structure and why it is an important concept. Suggested Approach The answer should develop to firstly explain the purpose of organisational structure. Candidates should then go on to explain why organisational structure is an important concept for C Company, referencing problems of having an inappropriate structure. Good answers will develop to explain why organisational structure is an important concept for C Company by drawing on the material from the case study. Marking Guide

Marks

Purpose of organisational structure e.g. Help in implementing strategy Help in achieving strategic objectives Impact on productivity, morale, job satisfaction Dividing up of work and grouping of tasks Grouping tasks to achieve goals Framework for communication/coordination Provides hierarchy Why important concept for C Company Applied to C - functional structure causing problems Difficult to identify revenue from different business activities Poor response to new opportunities Conflict - low staff morale Shows where power and accountability can be held Applied to C - senior management

Up to 6

marks max 1 mark 1 mark 1 mark 1 mark 1 mark 1 mark 1 mark

Up to 5

marks max 1 mark 1 mark 1 mark 1 mark 1 mark 1 mark



The response of candidates to this question was mediocre across the board. Weaker answers simply described different organisational structures or Mintzberg’s configurations and so did not answer the question set. The question required an explanation of the purpose of the organisational structure and why it was important for C Company.

Common Errors

Many candidates did not address the requirements of the question.





Question 6(b) Evaluate the extent to which the HR Director’s proposal will help to resolve the problems facing C Company and recommend what would be an appropriate organisational structure.


This tests candidates’ ability to evaluate how changes to organisational structure and design can resolve problems in the context of a specific scenario, recommending what would be an appropriate organisational structure. Suggested Approach

The answer should be structured using the different elements of the HR Director’s proposal. Answers should firstly evaluate the extent to which an organic organisational design could help resolve the problems facing C Company, and then go on to evaluate the proposal for decentralisation. An organisational structure appropriate to C Company’s situation and strategy should be provided, perhaps using a diagram. Good answers will develop to make explicit use of the scenario information to identify an appropriate structure and will evaluate the proposal rather than just describing what is meant by organic organisational design and decentralisation. Marking Guide

Marks

Evaluation of organic organisational design* Suits conditions of change Not hierarchical Emphasis placed on expertise/knowledge Leadership focused on consultation in problem solving Looser structure encourages communication Greater integration of effort Evaluation of decentralisation* Balances control and autonomy Employees have better knowledge of local conditions Employees capable of making more informed decisions Quicker decision making Motivational for employees Reduce stress/burden on senior management Frees up management time to focus on strategic issues Recommend organisational structure appropriate to C Company – Divisional structure based on different business activities Illustration of divisional structure Business areas act as autonomous business units Each division own targets and revenue streams Better identification of business needs Responsive focusing on strategic priorities Emphasis on profit centres (Matrix structure is an acceptable alternative – only if sensible justification) *Must be applied to C Company’s situation to gain full marks

(up to 6 marks max)


(up to 6

marks max) 1 mark 1 mark 1 mark 1 mark 1 mark 1 mark 1 mark

(up to 6

marks max) 1 mark 1 mark 1 mark 1 mark 1 mark 1 mark 1 mark







Although there were a number of very good answers, many candidates did not pick up on the clues provided in the scenario to help them structure their answers to evaluate organic design and decentralisation. A number did not go on to make a recommendation on what would be an appropriate structure - hence did not address all requirements of the question - limiting the number of marks they could gain.

Common Errors

A failure to read the question requirements thoroughly.





Question 7(a) Explain the potential problems that the Shopping Centre project could face without good project planning.

(10 marks) Rationale This question examines candidates’ understanding of the problems that could be encountered in a project without good project planning. Suggested Approach The suggested approach would be to work through the problems that could be encountered in the Shopping Centre project without good project planning. Good answers will make reference to the project described in the scenario to illustrate the problems. Marking Guide

Marks

Potential problems associated with not having clear objectives, budget, time e.g.: Unlikely estimation of base budget can be constructed Unlikely project schedule can be constructed Unrealistic time scales Activities not sequenced logically No realistic assessment of resource requirements Problems associated with not undertaking feasibility and risk assessment e.g.: No opportunity to assess risks No analysis of potential problems - for instance impact on local environment No analysis of potential problems - for instance community objections Vulnerable to changing client spec No defined roles and responsibilities No control systems established Health and safety issues not considered No contingency plans

1 mark 1 mark 1 mark 1 mark

1 mark

1 mark 1 mark 1 mark

1 mark 1 mark 1 mark 1 mark 1 mark

Maximum marks awarded

10

Additional Comments

Unfocused answer on potential problems awarded maximum of 4 marks

Examiner’s Comments A significant number of students answered this question in terms of what is involved in project planning, rather than from the perspective of potential problems. Common Errors

Too many candidates failed to read the question requirements thoroughly.





Question 7(b) Explain the contribution of different project management tools and techniques that could help G in planning the project.


This question requires candidates to evidence their understanding of the contribution of different project management tools and techniques that can be used in planning a project. Suggested Approach

The answer should develop to identify the different project management tools and techniques and explain how they could help G in the planning of the Shopping Centre project. Good answers will explain the contribution of the different project management tools and techniques rather than just describing them.

Marking Guide

Marks

(Max 4 per tool/technique) Work breakdown structure* Contribution - analysis of work required Activities broken down in work packages Each package defined deliverables Identifies people responsible for each activity/work package Can be used to develop task list Gantt Chart* Contribution - visual way of showing sequence of activities Helps in planning Shows time taken for each activity Shows resources needed for each activity Can be used to communicate responsibilities Resource Histogram* Shows resource requirements Helps in scheduling/rescheduling Network Analysis* Diagram showing sequences and dependencies Arranges work packages into logical sequence Estimates time to complete each work package Calculates critical path Determines minimum possible time for project completion Identifies slack/float PERT* Used to account for uncertainty in project lifecycle Estimates optimistic time if conditions ideal Estimates likely duration if conditions normal Estimates pessimistic duration if thing go wrong Helps calculate contingency time allowance

*(marks will be awarded for other relevant tools and techniques–max 4 per tool/technique – for example project management software)



1 mark 1 mark








Additional Comments If PRINCE2 mentioned as technique this is only acceptable if developed to explain contribution to planning, max 4 marks awarded for this. If project management software mentioned – be wary of repetition of other techniques e.g. CPA, Gantt charts – must be developed to say how contributes to project planning.

Examiner’s Comments This part of Q7 was generally well done - low scoring answers simply described PRINCE 2 methodology.

Common Errors

As above.




Paper 5 – Integrated Management Post Exam Guide November 2007

General Comments The overall performance in this diet was similar to that of recent diets but with rather more candidates attaining very high scores which is most encouraging for all concerned. Candidates scored reasonably well on questions 1 and 4 but the picture was more mixed for the other questions with well prepared candidates doing very well on Q5 and Q7, but less well prepared candidates unable to do themselves justice in the more demanding B and C sections of the Paper. Question 6 was the least popular and few competent answers were provided for this question. As in other recent examination diets, too many candidates repeated phrases from the scenarios as part of their answers rather than applying the relevant theory to the scenario situations to answer the questions set.






Question 1.1 Which ONE of the following types of flexibility is described as the ability to redeploy employees to different tasks through multi-skilling? A Numerical flexibility B Organisational flexibility C Temporal flexibility D Functional flexibility


Question 1.2 At which stage of group formation and development does establishing standards and agreeing ways of working occur? A Storming B Performing C Norming D Forming


Question 1.3 At what stage in the project lifecycle is the scope of a project determined? A Planning B Initiation C Growth D Control


Question 1.4 Decisions about acquisitions, mergers and sell-offs occur at which ONE of the following levels? A Functional level B Corporate level C Business level D Competitive level






Question 1.5 Explain briefly what the critical path is in relation to a project.

(2 marks)

Answer:

The critical path is the sequence of activities in a project that takes the longest time and therefore determines the overall project duration.

Question 1.6 Strategy, style, structure and systems are all Ss in the McKinsey 7 S framework. Identify the three missing Ss needed to complete the model.

(3 marks)

Answer:

Shared values, staff, skills (1 mark for each correct S identified). Question 1.7 Mintzberg’s organisational configuration is made up of the strategic apex, operating core and which three other components.

(3 marks)

Answer: Middle line, techno-structure, support staff (1 mark for each correct component identified). Question 1.8 Identify in the correct order the four main stages in the negotiation process.

(4 marks)

Answer:

Preparation, opening, bargaining, closing (0.5 mark for each correct stage identified and 2 marks if in correct order). Examiner’s Comments Overall, reasonably well done, with some high scores. Common errors

• Q1.8 – Stages of negotiation process often placed in wrong order






Question 2

(a) Discuss why a role culture may no longer be appropriate for E Company. (5 marks)

(b) Recommend, with reasons, the type of culture to which the company now needs to move. (5 marks)

(Total for Question Two = 10 marks) Rationale

The question examines candidates’ understanding of the different types of culture and their ability to apply their knowledge by using the information in the mini scenario to recommend a type of culture appropriate to a particular organisation. Suggested Approach

In part (a) the answer should discuss why a role culture is no longer appropriate for E Company, drawing on the key characteristics of role culture. Part (b) should develop to recommend the type of culture that the company needs to move to, providing reasons. This will involve identifying the main characteristics of the recommended type of culture.

Good answers will use the information from the scenario to explain why a role culture is no longer appropriate, rather than simply describing the characteristics of culture. Marking Guide

Marks

Part (a)

Explanation of the characteristics of role culture that make it no longer appropriate for E Company, for example: Strict division of labour Formalised rules and procedures Bureaucratic decision making Rigid controls Hierarchy of authority Tightly defined job structure People do not work across boundaries For each other relevant characteristic making role culture no longer appropriate for E Company - 1 mark Part (b)

Recommendation of appropriate culture for E Company (e.g. task culture) Reasons, justifying recommendation of appropriate culture, for example: Promotes team work Focus on completing task/project Breaks down rigid hierarchies Skills and expertise most important People not hindered by job descriptions Fosters creativity and responsiveness For each other relevant reason – 1 mark

(Max 5 marks)

1 1 1 1 1 1 1

1

(Max 4 marks)

1 1 1 1 1 1






Examiner’s Comments Candidates did not perform well on Part (a). Too much reliance was placed on repeating material from the scenario without expanding specifically on why a role culture is no longer appropriate, by making reference to the key characteristics of role culture. Weaker answers in Part (b) did not recommend a type of culture, and some referred only to structure. Common Errors There was a tendency by too many candidates to repeat phrases in the scenario rather than to address the question set.





Question 3

Explain the key areas that H should cover in the health and safety seminar.


This question requires candidates to evidence their awareness of health and safety issues in the workplace that should be covered in the seminar.

Suggested Approach

Answers should develop to explain the key areas that should be covered in the health and safety seminar. Good answers will make reference to a wide range of health and safety issues in the workplace, rather than focusing on just one or two areas.

Marking Guide

Marks

Areas that could be included: Legal duties/obligations to comply with H & S legislation Requirement for health and safety training Inclusion of H & S issues in induction Employers’ responsibility for safe working practices/plant & machinery etc. Company policy and code of conduct on H & S Communications on H & S H & S risk assessment Accident report system Employees’ duties H & S on third party premises H & S advisors For each other relevant area – 1 mark

1 1 1 1 1 1 1 1 1 1 1

Maximum marks awarded 10 Examiner’s Comments This question was answered moderately well. Common Errors Some candidates tended to focus on specific H & S examples, rather than key areas that should be covered.





Question 4

Explain the purpose of a project feasibility study, making reference to the different types of feasibility that should be considered for the Snow Dome project,

(Total for Question Four = 10 marks) Rationale

This question is designed to assess candidates’ understanding of the purpose of project feasibility and the different types of feasibility that should be undertaken in the early stage of a project. Suggested Approach

Answers should start by firstly explaining the purpose of project feasibility. Candidates should then explain the different types of feasibility that should be considered. Good answers will make reference to the specific issues associated with the Snow Dome project for each type of feasibility study identified. Marking Guide

Marks

Purpose of project feasibility, for example: To establish if proposed project can meet is objectives Can filter out projects Help decide between alternative project strategies Types of feasibility study, (up to 3 marks max for explanation of each type of feasibility study) for example: Technical feasibility, for example: Assess nature of technology needed Possible engineering issues Social feasibility, for example: Fits with business and social environment Impact on people during construction phase Ecological feasibility, for example: Comply with H&S legislation Not harmful to surrounding environment Financial feasibility, for example: Determine cost/benefit Use of financial ratios Business feasibility , for example: Fit with business goals Responds to competitor developments (Marks can be awarded for other types of feasibility identified, but must be explained in context of Snow Dome project to gain marks)

(Max 2 marks)

1 1 1

(Max 8 marks)

1 1 1 1 1 1 1 1 1 1







This was the highest scoring of Section B questions. Candidates did make reference to different types of feasibility and linked their answers to the Snow Dome scenario. Common Errors A number of candidates provided headings such as ‘social feasibility’ and ‘ecological feasibility’ but then demonstrated that they misunderstood the meaning of such labels by writing content that had nothing to do with the headings provided.






Question 5(a)

Explain the responsibilities of X in his role as project manager (12marks)

Rationale

This question examines candidates’ appreciation of the key responsibilities of a project manager.

Suggested Approach

Candidates need to explain the key responsibilities of X as project manager.

To gain a pass mark, answers must develop beyond just a list of bullet points by explaining the specific responsibilities of the project manager within the context of the project. Marking Guide

Marks

Responsibilities could include: Delivering project within budget Delivering project on time Define project objectives Building the project team Supervision of project team Delegation of tasks Co-ordination through PLC Communication with different stakeholders Allocation of resources Monitoring and controlling project Leadership of the team Problem resolutions Risk management For each other relevant responsibility of project manager – 1 mark

1 1 1 1 1 1 1 1 1 1 1 1 1

Maximum marks awarded 12 Examiner’s Comments Part (a) was generally high scoring. Common Errors

Weaker answers tended to develop in terms of the skills of a project manager or repeating problems identified in the scenario rather than focusing on ‘responsibilities’ as the question required.





Question 5(b)

(i) Discuss the purpose of project control. (4 marks)

(ii) Explain the controls that should be set up for the customer information database project in order to help X manage the various stages of the project.

(9 marks) Rationale

This question assesses candidates’ understanding of the purpose of project control during the various phases of the project management process. Suggested Approach

For Part (i) answers should provide an overview of the purpose of project control and why it is needed for the customer database project. Part (ii) should provide specific examples of project control.

Good answers will work through the different phases of the project and explain what controls are needed, making reference to milestones and gates.

Marking Guide

Marks

(i) Purpose of project control, for example: Ensure project remains on course at any given stage Measuring results against plan Detection of deviations Determine corrective action needed (ii) Project controls for customer information database project, for example: Establishing project milestones and gates (in planning phase) Project reporting information systems Progress reports and meetings (execution of project) Monitoring (for example against plan and milestones) Taking corrective action linked to cost, time, quality (execution of project) If project management tools and techniques are mentioned these must be discussed in the context of project control to gain marks.

(4 marks

max) 1 1 1 1

(9 marks max)

Up to 2 Up to 2 Up to 2 Up to 2 Up to 2

Maximum marks awarded 13 Examiner’s Comments Candidates performed less well on Parts (b)(i) and (b)(ii). Very few candidates were able to explain the project controls that should be set up relating to different stages of the project. Common Errors

There was too much reliance on making reference to project management tools, without explaining them in the context of project control.





Question 6(a) Explain the extent to which C Chocolate Company is adopting this strategic approach to gain competitive advantage, making reference to the principles of the Resource Based View.


The question is designed to examine candidates’ understanding of the Resource Based View of Strategy, applying their knowledge to explain how it is being used by the company in the scenario to achieve competitive advantage. Suggested Approach

The answer should firstly explain the underlying principles of the Resource Based View (RBV). Candidates should then go on to use the characteristics of the RBV to explain the extent to which C Chocolate Company is adopting this approach to gain competitive advantage.

To pass, candidates’ answers must develop to explain the use of the RBV in the context of C Chocolate Company, rather than just explaining the theory. Marking Guide

Marks

Basic principles of the RBV, for example Internal resources more important than external factors in creating competitive advantage Inside out approach Sustainable competitive advantage based on possession of unique resources/distinctive competencies Exploiting unique resources/distinctive competencies Application to C Chocolate Company, for example using Barney's criteria: Resources of C Chocolate Company identified Assessment of whether C Chocolate Company resources are valuable Assessment of whether C Chocolate Company resources are rare Assessment of whether C Chocolate Company resources are imitable Assessment of whether C Chocolate Company resources are substitutable (Marks can be awarded using other appropriate criteria/principles of RBV)

(4 marks

max) 1 1 1 1

(9 marks max)

Up to 2 Up to 2 Up to 2 Up to 2 Up to 2



This was the least popular of the Section C questions. Very few candidates were able to evidence any knowledge of the principles of the RBV other than discussing core competences.

Common Errors

Too many answers simply used the core competences from the scenario to illustrate the core competences of C Chocolate Company without attempting to explain how the RBV approach could be used to gain competitive advantage.





Question 6(b) Demonstrate how the value chain framework would assist C Chocolate Company in understanding its internal position.


This examines candidates’ understanding of how the value chain framework can be used in helping to understand an organisation’s internal capability.

Suggested Approach

The answer should start by firstly explaining what the value chain framework is and how it can be used to determine where value is being added. Answers should then go on to explain how it could be used to determine the activities that C Chocolate Company is involved in, where specifically value is being added.

To pass, answers must make reference to the value adding activities of C Chocolate Company rather than simply describing the value chain framework.

Marking Guide

Marks

Explanation of the value chain framework, for example: Examines relationship between different activities to see where value added Assists in understanding C Chocolate Company’s strengths and weaknesses How resources are configured to achieve least cost/differentiation Support and primary activities VC diagram How value chain can be used by C Chocolate Company, for example: Inbound logistics – (delivery of raw materials e.g. cocoa beans) Operations – production of hand made chocolates Outbound logistics – orders processed and delivery dates met Marketing and Sales – building the brand Procurement of high quality cocoa beans Technology development - supporting production Technology development - supporting web based orders Technology development - supporting marketing and sales HR – developing policies to retain staff with key skills and knowledge

For each additional relevant example relating to C Chocolate Company – e.g. relating to service, infrastructure - 1 mark

(4 marks

max) 1 1 1 1 2

(8 marks max)

1 1 1 1 1 1 1 1 1

Maximum marks awarded 12 Examiner’s Comments Candidates performed better in Part (b), demonstrating their understanding of the value chain framework.

Common Errors

Weaker answers described the value chain model without going on to apply it to C Chocolate Company.





Question 7(a)

Explain the different approaches to leadership demonstrated by J and T, making reference to leadership theories.


This question examines candidates’ understanding of leadership theories and their ability to apply their knowledge to a particular scenario. Suggested Approach

The suggested approach would be to start by explaining what leadership is and why it is important, and then go on to use relevant leadership theories to explain the different approaches adopted by J and T. Good answers will draw on the information from the scenario to support their discussion about J and T’s different approaches. Marking Guide

Marks

Explanation of J's approach: Blake and Mouton's grid (high on task and team) Tannenbaum and Schmidt - democratic style Team members contribute knowledge and experience Achieves results through participation/involvement of team in decision making Gives team members stronger ownership Lewin’s research suggests most productive/effective Can take more time Relies on team members being motivated to be involved Explanation of T's approach Blake and Mouton grid ( high concern for task) Low concern for people in team/individual’s needs Tannenbaum and Schmidt - autocratic style Emphasis on planning and controlling work Leader makes all decisions Communications top down Lewin’s research – least satisfying for team Team members not committed to targets (Credit will be given for alternative theories on leadership that are used appropriately)

(6 marks

max) 1 1 1 1 1 1 1 1

(6 marks max)

1 1 1 1 1 1 1 1


Examiner’s Comments There was a mixed performance on Part (a). Some candidates scored high marks, using a range of leadership theories to explain the different approaches. Common Errors

Weaker answers evidenced a lack of knowledge of relevant leadership theory or simply regurgitated theory without application.





Question 7(b) Describe how the concept of action-centred leadership would help in identifying the training T needs to become a more effective leader.

(7 marks) Rationale

This question requires candidates to evidence their understanding of action-centre leadership and how this can help in identifying training needs.

Suggested Approach

The answer should develop to use the theory of action-centre leadership to identify the training that T needs to become a more effective leader.

To pass, answers must develop to explain T’s training needs, drawing on information provided in the scenario, rather than simply describing action-centre leadership theory.

Marking Guide

Marks

Explanation of action centred leadership, for example: 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 or Diagram of ACL` Using theory, identification of T's training needs Need to Achieve Task T 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 Individuals T needs training on how to develop individual T needs training on feedback and recognition For each other training need identified using ACL – 1 mark

1 1 2 1 1 1 1 1

Maximum marks awarded 7 Examiner’s Comments A significant number of candidates did not appear to have knowledge of action centred leadership, hence did not do very well in Part (b). Common Errors Many of those who could describe the theory did not go on to describe how it could help in identifying training needs.





Question 7 (c)

Explain how a mentoring system could help T. (6 marks)

Rationale

The question requires candidates to evidence their understanding of mentoring.

Suggested approach

The answer should develop to explain the different ways in which a mentoring system could help T. Marking Guide How mentoring could help T, for example: Mentor acts as role model Mentor provides support and guidance Identify T’s strengths and weaknesses Sounding board for ideas Help career advancement Development of management competences Networking For each other relevant point explaining how mentoring could help T – 1 mark

1 1 1 1 1 1 1

Maximum marks awarded 6 Examiner’s Comments

A considerable number of candidates did not understand the concept of mentoring and were therefore unable to explain how a mentoring system could help, which was the requirement for Part (c) Common Errors See above.













Answer the ONE compulsory question in Section A. This has eight sub-questions on pages 2 and 3.






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ANSWER ALL EIGHT SUB-QUESTIONS

Instructions for answering Section A: The answers to the eight sub-questions in Section A should ALL be written in your answer book. Your answers should be clearly numbered with the sub-question number and ruled off so that the markers know which sub-question you are answering. For multiple choice questions you need only write the sub-question number and the letter of the answer option you have chosen. You do not need to start a new page for each sub-question.

Question One 1.1 Which ONE of the following types of flexibility is described as the ability to redeploy

employees to different tasks through multi-skilling?

A Numerical flexibility

B Organisational flexibility

C Temporal flexibility

D Functional flexibility (2 marks)

1.2 At which stage of group formation and development does establishing standards and

agreeing ways of working occur?

A Storming

B Performing

C Norming

D Forming (2 marks)

1.3 At what stage in the project lifecycle is the scope of a project determined?

A Planning

B Initiation

C Growth

D Control (2 marks)

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1.4 Decisions about acquisitions, mergers and sell-offs occur at which ONE of the following levels?

A Functional level

B Corporate level

C Business level

D Competitive level (2 marks)

1.5 Explain briefly what the critical path is in relation to a project.

(2 marks) 1.6 Strategy, style, structure and systems are all Ss in the McKinsey 7 S framework. Identify

the three missing Ss needed to complete the model. (3 marks)

1.7 Mintzberg’s organisational configuration is made up of the strategic apex, operating core and which three other components.

(3 marks)

1.8 Identify, in the correct order, the four main stages in the negotiation process. (4 marks)


Reminder

All answers to Section A must be written in your answer book. Answers to Section A written on the question paper will not be


End of Section A Section B starts on the next page

TURN OVER

November 2007 3 P5




ANSWER ALL THREE QUESTIONS - 10 MARKS EACH Question Two Up until two years ago, E Company enjoyed a monopoly position in the energy industry. However, a change in government policy has meant that new competition has been encouraged to move into the industry, with E Company losing its monopoly. The Company now finds itself facing severe difficulties.

E Company has developed a strong culture over the years which can be typified as a role culture. This is now acting as a barrier to the organisation’s ability to change, to become more flexible and to be able to respond more quickly to changes in the environment and initiatives by its competitors.

E Company is falling behind its competitors when it comes to innovations in energy services. Developments in new services require staff to work together across functional boundaries. However, this is unheard of in E Company, where people fiercely protect their functional specialism and will only work on the tasks specified in their job descriptions.

Required: (a) Discuss why a role culture may no longer be appropriate for E Company.

(5 marks)

(b) Recommend, with reasons, the type of culture to which the company now needs to move.

(5 marks)


Question Three Whilst Z Company has a policy and a code of conduct on health and safety, the results from a recent survey suggest that many senior managers are not aware of their responsibilities for health and safety in the workplace.

The Board has nominated H, the finance director, to deliver a seminar to help senior managers appreciate the importance of health and safety at work. He is currently considering what he should include in the seminar.

Required: Explain the key areas that H should cover in the health and safety seminar.


Section B continues on the page opposite

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Question Four S Company operates in the leisure industry and already has a number of different business interests including ice skating rinks and an outdoor artificial ski slope. At the last Board meeting, a suggestion was put forward to convert the “dry” ski slope into an indoor Snow Dome to compete with rival companies who have successfully introduced similar facilities in other parts of the country, and which customers of S Company are now travelling to use.

Such a development for S Company would involve using the latest snow making technology to create real snow in a controlled environment. This would provide a better experience for customers than the “dry” ski slope, which currently uses plastic matting in place of the snow.

A project team has been set up to develop the idea. Having set out the scope for the Snow Dome project, the project team is now at the stage of investigating the feasibility.

Required: Explain the purpose of a project feasibility study, making reference to the different types of feasibility that should be considered for the Snow Dome project.



End of Section B


TURN OVER

November 2007 5 P5




ANSWER ANY TWO QUESTIONS FROM THIS SECTION – 25 MARKS EACH Question Five X is the project manager responsible for the implementation of the new customer information database in Y Company. He was selected to take on the role of project manager because of his strong technical capability.

The project represents an important development and financial investment for Y Company. A number of different business areas in the company have interests in the project and are dependent on the new customer information database going live on the due date.

Unfortunately, the project is not going well and the project steering committee wants answers from X. He feels he is under pressure to keep on schedule but lacks the support of his project team, who keep complaining that they do not know what they are supposed to be doing. It would appear that some members of the project team are not completing tasks on time and are not providing the information needed to progress with the system development. At the same time, the project sponsor is pushing X to make short cuts to make sure the system goes live on time.

X feels that many of the problems he faces are due to lack of project controls.

Required: (a) Explain the responsibilities of X in his role as project manager.

(12 marks)

(b) (i) Discuss the purpose of project control. (4 marks)

(ii) Explain the controls that should be set up for the customer information database project in order to help X manage the various stages of the project.

(9 marks)


Section C continues on the page opposite

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Question Six C Chocolate Company makes and supplies high quality hand made chocolate products. Since the launch of its internet business, it has experienced huge success and is currently enjoying its position as market leader and has built up a strong brand.

The owner of the business attributes much of the success to a combination of factors, including the unique recipes and the skills of staff associated with hand made chocolates and the procurement of high quality cocoa beans. The company’s marketing capability and use of IT in developing the company’s website has enabled it to track and quickly spot trends in changes to consumer buying patterns. It is clear from the company’s research information, that to prosper in the industry, constant product innovation is critical in building and maintaining the customer relationship. The flexible approach to new product development allows the company to quickly come up with new chocolate products.

Required: (a) Explain the extent to which C Chocolate Company is adopting this strategic approach

to gain competitive advantage, making reference to the principles of the Resource Based View.

(13 marks)

(b) Demonstrate how the value chain framework would assist C Chocolate Company in understanding its internal position.

(12 marks)


Section C continues over the page

TURN OVER

November 2007 7 P5



Question Seven J has worked for P Accountancy and Consultancy firm for over fifteen years. For the last five years she was the team leader for client support. J has a vast amount of experience and her overall outlook to work is positive. She takes a keen interest in the performance of individual members of her team, holding regular team meetings and encouraging her staff to contribute their ideas and to participate in target setting and decision making. The team always achieves its targets.

Six months ago, J gained a well deserved promotion which meant moving to another department. Her replacement is T, who has just completed his professional accountancy qualifications and has recently joined P Accountancy and Consultancy. This is his first leadership role and he is keen to impress his departmental manager. T feels that J’s approach had been too soft. His view is that too much time had been spent in meetings and consultation and that staff would have been better just ‘getting on with their work’ since it is his job to make all the decisions.

T expects people to respect his position and authority without question. All his communications are sent by email or memo and he does not see the point of holding team meetings. He has recently introduced new performance targets without consultation. Most of the team feel the targets set are unreasonable. T has little time for people who need support in performing their role. Morale within the team is at an all time low and absenteeism has increased. Some staff are now looking to move out of the client support department.

T’s line manager, F, is aware that T is very ambitious and hopes to progress in the firm. When T was recruited he was identified as having the potential to move quickly up the career ladder within P Accountancy and Consultancy. F feels that T might benefit from the mentoring system operated by the firm. However, F is also aware that there are problems in the client support department since T took over as team leader. He feels that T needs training to help him become more effective in his leadership role.

Required: (a) Explain the different approaches to leadership demonstrated by J and T, making

reference to leadership theories. (12 marks)

(b) Describe how the concept of action-centred leadership would help in identifying the training T needs to become a more effective leader.

(7 marks)

(c) Explain how a mentoring system could help T.

(6 marks)




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1 KNOWLEDGE





something





4 ANALYSIS How you are expected to analyse the detail of what you have learned.

Analyse Categorise




5 EVALUATION How you are expected to use your learning to evaluate, make decisions or recommendations.



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November 2007


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Answer the ONE compulsory question in Section A. This has seven sub-questions on pages 2 to 4.






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ANSWER ALL SEVEN SUB-QUESTIONS

Instructions for answering Section A: The answers to the seven sub-questions in Section A should ALL be written in your answer book. Your answers should be clearly numbered with the sub-question number and ruled off so that the markers know which sub-question you are answering. For multiple choice questions you need only write the sub-question number and the letter of the answer option you have chosen. You do not need to start a new page for each sub-question.

Question One 1.1 In the hierarchy of objectives, what kind of objective is “increase earnings per share”?

A Tactical

B Secondary

C Primary

D Operational (2 marks)

1.2 Which ONE of the following refers to power which is derived from the personal qualities of

the individual and the desire of followers to be like that person?

A Expert power

B Referent power

C Reward power

D Coercive power (2 marks)

1.3 Which ONE of the following perspectives of strategy is where an organisation avoids

radical strategies but instead takes small steps based on what has been done before and worked in the past?

A Ecological

B Positioning

C Bounded rationality

D Logical incrementalism (2 marks)

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1.4 Which ONE of the following is the term used in project management where the potential for risk cannot be removed, but analysis has enabled the identification of alternative ways to lower risk exposure?

A Containment

B Transference

C Absorption

D Reduction (2 marks)

1.5 Distinguish between the terms “span of control” and “scalar chain”.

(4 marks)

1.6 Identify FOUR characteristics that distinguish a project from “business as usual”.

(4 marks)

Section A continues over the page

TURN OVER

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1.7 Identify the reason why diagrams (i) and (ii) shown below do not conform to the accepted conventions of network analysis. (You should provide a different reason for each diagram.)

(4 marks)

(i)

1

2

3

4

(ii)

1 2 4

3




End of Section A Section B starts on page 6

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ANSWER ALL THREE QUESTIONS - 10 MARKS EACH Question Two V plc operates in the leisure and entertainment industry. It has a range of different ventures worldwide including fitness centres, casinos, cinemas and sports bars, each of which operates as a separate business.

Question Three P is the project manager responsible for managing the relocation of H Company’s head office to new premises. He thought all was going well with the project and is very surprised when he learns that various project stakeholders are complaining about his poor communication skills.

Some of the complaints made relate to the complex messages he sends and his use of very technical language associated with the project. Whilst he feels he is keeping the project team members up to date, they feel they are overloaded with e-mails covering lots of different issues, not all of which are relevant to them.

Required: Distinguish between the different levels at which strategy should exist in V plc.


Required: Explain to P what he could do to ensure that his communications with stakeholders about the relocation project are more effective.


Section B continues on the opposite page

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Question Four S has been working on a major IT project for his client, X Hotel chain. The project brief was to design and implement a customer reservation system, which would enable customers to book on-line for rooms at any of X’s hotels worldwide. When commissioning the project, the hotel chain required that the new system should be ready to coincide with the launch of its new flagship hotel opening in six months’ time.

The project is now in the final stage of its lifecycle and the customer reservation system is ready to ‘go live’. S is from an IT background and this is his first time in the role of project manager. He is finding the whole process of finishing off the final details of the project tedious, and is keen to get started with the next project that he is due to manage.


Required: Explain to S why project completion is an important activity and explain what is involved during this stage of the project management lifecycle.


End of Section B


TURN OVER

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ANSWER ANY TWO QUESTIONS FROM THIS SECTION – 25 MARKS EACH Question Five W Company is a fashion retailer which designs and sells its own brand of women’s clothes through its chain of shops in F country. However, it is facing tough operating conditions in its home market where strong competition means there is little opportunity for future growth. The Board has taken the strategic decision that expansion can only be achieved through market development abroad.

Initial research has identified L country as offering the potential to be a possible suitable location for W Company to develop a new market. Further information now needs to be collected on the external environment and competition in L country in order to help evaluate the viability of the strategy being proposed.

If the outcomes from the research are positive, W Company intends to find an existing retail chain in L country that it can acquire, rather than set up a new operation through internal development. A senior management team will be sent from W Company to manage the operations in L country. However, the Board is aware that this could create challenges for the managers if there are cultural differences between the two countries.

Required: (a) Apply appropriate strategic management models/frameworks to explain the key

external environmental and competitive factors on which information should be collected to help W Company evaluate its proposed strategy to move into L country.

(13 marks)

(b) Discuss, with reference to appropriate theory, why the management team from W Company will need to take account of cultural differences when managing the new operation in L country.

(12 marks)



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Question Six T works for J Company which designs and manufactures children’s toys. She has recently been appointed as the project manager of a project to design a new range of educational toys for children aged 3 – 6 years. She is currently thinking about the issues that will face her in delivering the objectives of the project. She is confident that she has a good understanding of what needs to happen at the various stages of the project lifecycle and has strong technical skills which will help her in using some of the project management tools and techniques.

T realises that this will not be enough to ensure successful project outcomes and knows that it will be important to have a good project team. However, she is also concerned that people working in teams can sometimes be problematic, particularly since the project team will be made up of people from different parts of the organisation, who have not worked together before. The team members will come from finance, marketing, production, IT and sales.

Required: (a) Describe the stages of group formation, as suggested by researchers, that T’s project

team should pass through if it is to become effective in performing the project task. (10 marks)

(b) Explain the potential problems that could hinder the effectiveness of T’s project team and explain how they might be overcome.

(15 marks)



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Question Seven E Company, established over ten years ago, designs interactive games software. Up until two years ago it was very successful, performing well in the market place and returning high dividends to its shareholders. However, in recent years, E Company has lost significant market share. The Board decided to employ a consultant to try to help it determine what it needs to do to re-establish the company as market leader.

The findings from the consultant’s initial investigation reported that as the company has grown, bureaucratic controls have been put in place which are stifling the creativity and innovation needed to be at the forefront of games software design and to compete in the current competitive conditions.

Employees no longer feel inclined to contribute new ideas because of the lengthy decision making processes needed to gain approval. In addition, they are unwilling to try out new ways of working because now, when things go wrong, they are blamed for making mistakes. Rather than adopting an open and flexible approach, managers conform to E Company rules. This has led to the organisation failing to exploit potential new ventures because they are considered to have too great a risk. People are rewarded for achieving their personal objectives but this often means that they are not encouraged to think beyond the boundaries of their current activities.

In making her recommendations to the Board, the consultant has suggested that the company needs to encourage greater entrepreneurial spirit within the organisation and reduce the barriers to creativity and innovation.

Required: (a) Explain the characteristics / qualities that people who exhibit an entrepreneurial spirit

have, which might make it difficult for them to work in the environment of E Company. (10 marks)

(b) Explain what could be done to encourage greater creativity and innovation in E Company.

(15 marks)




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May 2008

General Comments The overall performance in this diet was similar to that of recent diets with some very high scoring scripts at one end of the spectrum and a long tail of very poor scripts at the other. The high scoring candidates performed very well indeed and several candidates gained marks of more than 80%. The high scoring scripts were characterised by the following attributes. The writers of these scripts appeared to be very well prepared. They demonstrated a firm grasp of the theory, had read the scenarios and questions very carefully, had planned their answers before starting to write and then applied the relevant theory taking full account of the scenario context in their answers. Poorer scripts by contrast lacked most of the above attributes. Many scripts displayed no evidence of answer planning, with the result that such answers were poorly structured and sometimes incoherent. Too many candidates seem to be under the impression that an explanation can be achieved by providing a list of points. Such candidates should be aware that a list is not an explanation and will receive very few marks for this style of answer. Some candidates appeared not to have read the questions or the scenarios thoroughly enough with the result that their answers lacked the necessary focus. Many of the poorer candidates also misused the scenario material. Instead of using the facts contained in it as a context for the question and their answer, they repeated large sections of the scenarios as part of their answer. Indeed some candidates spent so long in repeating material from the scenario that they lost valuable time in the process and seemed to have had to rush the last few questions on the paper. Re-sit candidates would do well to read the specimen published questions and answers carefully to see how the Examiner has used and applied the scenario material in her answers.





May 2008

SECTION A – 20 MARKS ANSWER ALL SEVEN SUB-QUESTIONS

Question 1.1 In the hierarchy of objectives, what kind of objective is “increase earnings per share”? A Tactical B Secondary C Primary D Operational


Question 1.2 Which ONE of the following refers to power which is derived from the personal qualities of the individual and the desire of followers to be like that person? A Expert power B Referent power C Reward power D Coercive power


Question 1.3 Which ONE of the following perspectives of strategy is where an organisation avoids radical strategies but instead takes small steps based on what has been done before and worked in the past? A Ecological B Positioning C Bounded rationality D Logical incrementalism


Question 1.4 Which ONE of the following is the term used in project management where the potential for risk cannot be removed, but analysis has enabled the identification of alternative ways to lower risk exposure? A Containment B Transference C Absorption D Reduction






May 2008

Question 1.5 Distinguish between the terms “span of control” and “scalar chain”.

(4 marks)

Answer:

The span of control refers to the number of subordinates working for a manager. (2 marks) The scalar chain refers to the number of different levels in the organisation’s structure, connecting the strategic apex to the operating core. (2 marks)

Question 1.6 Identify FOUR characteristics that distinguish a project from “business as usual”.

(4 marks)

Answer:

1 mark for each specific characteristic

• Has a specific purpose which can be clearly identified • Has a defined beginning and end • Cuts across organisational and functional lines • Is unique, intended to be done only once

(Other characteristics that might be included are: a plan towards a clear intended result; has resources allocated specifically to it; it is not routine; has cost restraints; has clearly defined time constraints; is focussed on the customer and customer expectations; has its own goals and objectives; has a lifecycle; has its own budget; has a specific project team )(1 mark for each specific characteristic.) Question 1.7 Identify the reason why diagrams (i) and (ii) shown (in the question paper) conforms to the accepted conventions of network analysis. (You should have a different reason for each diagram.)

(4 marks)

Answer: (i) Loops are not allowed in network analysis; an activity leading from an event cannot then lead back to an earlier event. (ii) Danglers are not allowed in network analysis, since all activities must contribute to the progression of the network. A dummy activity should be used. Examiner’s Comments The marks for this question covered almost the full range from 20 marks down to 4 marks but with most candidates gaining a pass mark for the question. Common errors

Q1.5 seemed to be a barrier for a significant number of candidates. A number of candidates did not attempt the question, others confused ‘span of control’ with ‘scalar chain’ and many candidates simply did not know the answer to the question.





May 2008


Question 2

Distinguish between the different levels at which strategy should exist in V plc.


The question examines candidates’ understanding of the different levels at which strategy can exist.

Suggested Approach

Answers should start by firstly classifying the different levels at which strategy exists in an organisation such as V plc. In order to distinguish between the different levels, the discussion should continue by exploring the purpose of each level. Good answers will make reference to the interrelationship between the different levels of strategy.

Marking Guide

Marks

Classification of corporate, business, functional Different levels viewed as hierarchy Interrelationship between different levels Corporate level: (maximum 4 marks) Purpose of V plc Scope of V plc’s activities Decisions about longer term direction of V plc Examples e.g. on acquisitions, mergers, divestments Responsibility of senior management Business level: (maximum 4 marks) Occurs within an SBU Explanation of an SBU Decisions on choice of products for specific markets How market should be segmented Functional level: (maximum 2 marks) Made at operational level Ensure functions (e.g. production, marketing, etc.) contribute to strategic objectives Level at which strategy is implemented

1 1 1 1 1 1 1 1 1 1 1 1 1 1 1


This question was the one that a significant minority did not attempt. Weak answers discussed how strategy is formed rather than the different levels at which strategy should exist.

Common Errors

A sizable number of candidates omitted to distinguish business level strategy in V plc from the corporate and operational levels. Other candidates adopted the wrong focus, concentrating on how V plc should go about formulating strategy rather than addressing the question set.





May 2008

Question 3

Explain to P what he could do to ensure that his communications with stakeholders about the relocation project are more effective.


This question requires candidates to demonstrate their understanding of the issues involved in making sure that communications are effective.

Suggested Approach

Answers should explain, for each issue identified, what P needs to consider in order to ensure that the communications regarding the relocation project are effective, taking information on the barriers from the scenario.

Marking Guide

Marks

Have clear objectives on what is to be communicated Who he is communicating to (receiver) Medium selected appropriate to message Examples of possible medium Use appropriate language Avoid overuse of technical jargon Anticipate actions by receiver Awareness of selectivity/bias by receiver Communication two way to gain feedback Awareness of use of non verbal signals Non verbal signals should not contradict each other Awareness of ‘noise’ Explanation of ‘noise’ If reference to project management tools is made, marks can be awarded if discussed in context of effective communications. If candidates identify stakeholders, marks can be awarded if discussion develops in terms of effective communications.

1 1 1 1 1 1 1 1 1 1 1 1 1

Maximum marks awarded 10 Examiner’s Comments Performance on this question was the poorest for any of the questions set.

Common Errors

Weak answers developed in terms of stakeholder mapping to identify stakeholder power and interest, but did not explain this in the context of the question requirement, i.e. to explain how P could ensure that his communications with stakeholders could be more effective.





May 2008

Question 4

Explain to S why project completion is an important activity and explain what is involved during this stage of the project management lifecycle.


The question is designed to assess candidates’ understanding of what is involved during the completion phase of a project and why it is an important phase in the project management lifecycle.

Suggested Approach

Answers should start by firstly discussing why the project completion is an important stage of the project management lifecycle. Candidates should then develop their answers by explaining what is required in project closure.

Good answers will provide examples in the context of the question scenario.

Marking Guide

Marks

Why important phase: (up to 3 marks) Determine if project has met requirements / project objectives Have they been met in terms of cost, time and scope Example linked to hotel chain’s requirements What is involved: (up to 7 marks) Gain client sign off Production of completion report to include:

• Achievement of project deliverables • E.g. design and implementation of reservation system • Final budget • Time taken against original schedule • E.g. complete within 6 months

Undertake post completion audit: • Involves input from project team • Identifies lessons to be learnt for future projects • Highlights any discrepancies • Suggestions on how any problems can be prevented

Other relevant aspects of project completion – up to 1 mark each

1 1 1 1 1 1 1 1 1 1 1 1 1



Whilst there were some satisfactory answers, this was poorly answered by a significant number of candidates. Common Errors

Weak answers explained the various stages of the project lifecycle rather than focusing on project completion.





May 2008


Question 5(a)

Apply appropriate strategic management models / frameworks to explain the key external environmental and competitive factors on which information should be collected to help W Company evaluate its proposed strategy to move into L country.

(13marks) Rationale

This question assesses candidates’ ability to apply strategic management frameworks to help the organisation outlined in the scenario evaluate its proposed strategy.

Suggested Approach

Candidates need to identify and then apply the strategic management frameworks that could be used by the Board of W Company to evaluate its proposed strategy. Answers could develop by using the PEST framework to assess the macro environmental influences and also Porter’s five forces model to explain the nature of the competitive environment.

Good candidates will develop their answers by providing specific examples of possible PEST and competitive forces that need to be considered by W Company.

To gain a pass mark the strategic management frameworks must be applied, rather than simply described.

Marking Guide

Marks

Explanation of purpose of PEST in context of W Company’s proposal PEST applied (max 7 marks) Examples of political/legal environment information* Examples of economic environment information* Examples of social factors* Examples of technical factors* Explanation of purpose of 5 forces in context of W Company’s proposal 5 forces applied (max 7 marks) Examples of barriers to entry/new entrants* Competitive rivalry* Power of buyers* Power of suppliers* Substitutes* *Must be developed in the context of W Company’s business 4 marks maximum if SWOT framework used – only to be awarded if applied to consider opportunities and threats (i.e. external factors).

1

Up to 2 Up to 2 Up to 2 Up to 2

1

Up to 2 Up to 2

1 1 1






May 2008

Examiner’s Comments Some candidates gained high marks for this question but many others lost marks for the reasons noted below. Common Errors

The main issue for a number of candidates was that they only used one strategic management framework (either PEST or 5 forces) and hence did not fully address the requirement of the question explaining external factors and competitive factors.





May 2008

Question 5(b)

Discuss, with reference to appropriate theory, why the management team from W Company will need to take account of cultural differences when managing the new operation in L country


This question assesses candidates’ understanding of why cultural differences should be considered when making strategic decisions to operate in new territories.

Suggested Approach

Answers could start by providing an explanation of why managers need to consider cross cultural differences, in terms of implications for how they manage. Candidates could then introduce the work of Hofstede (or alternative models on national culture) to explain the dimensions on which national cultures can vary.

Good answers will systematically work through the different dimensions, explaining the implications if there is variance between L country’s national culture and that of W Company and will go on to consider other factors that may require the managers to modify their approach.

Marking Guide

Marks

Explanation of why there is a need to take account of cultural differences Reference to Hofstede’s model: Power distance* Uncertainty avoidance* Individualism* Masculinity* Time orientation* Other factors (e.g. religion, education, language…) Implications on the effect of culture on the market for the product * To gain 2 marks, the dimension must be explained in terms of why they need to be considered (not just described) Marks will be awarded if candidates refer to alternative models on national culture, for example the work of Trompenaars or the GLOBE project

Up to 2

Up to 2 Up to 2 Up to 2 Up to 2 Up to 2 Up to 2 Up to 2

Maximum marks awarded 12 Examiner’s Comments A mixture of good answers from well prepared candidates to very poor ones for those not having revised the necessary theory. Common Errors

Weaker answers discussed culture in general terms, without reference to appropriate theory. Some candidates described Hofstede’s dimensions, but did not develop to say why the management team will need to take account of cultural differences.

Other candidates applied cultural typologies suitable only for comparison of organisational cultures rather than for international organisational culture comparison.





May 2008

Question 6(a)

Describe the stages of group formation, as suggested by researchers, that T’s project team should pass through if it is to become effective in performing the project task.


The question is designed to examine candidates’ understanding of the stages of team development.

Suggested Approach

Candidates should develop their answer using Tuckman’s framework on team development.

Good answers will develop to describe the impact of the various stages on effective team performance. To pass, the stages must be described in the correct order.

Marking Guide

Marks

Brief explanation of Tuckman’s theory Description of each stage: Forming: Initial objectives are established Members attempt to create their identity Working out of what is acceptable behaviour Storming: Period of internal conflict Disagreements occur on ways of working Individuals come from different backgrounds with different views Norming: Members reach agreement on conflicts Standards of behaviour are determined Team cohesion develops Performing: Team can concentrate on project work Energies focused on task rather than conflicts in the team Reference to mourning / adjourning or dorming stages (in context of project work)

1

Up to 2

Up to 3

Up to 3

Up to 2 1



Generally well done

Common Errors

Weaker answers did not provide sufficient description on the different stages of group formation and some candidates cited the stages in the wrong order, so that, for instance, ‘storming’ was often described as taking place before ‘forming’.





May 2008

Question 6(b)

Explain the potential problems that could hinder the effectiveness of T’s project team and explain how they might be overcome.


This examines candidates’ understanding of the problems that can occur in project team working and how these can be overcome.

Suggested Approach

The answer should develop to explain the difficulties that can hinder the effectiveness of T’s project team, explaining why. Answers should develop to provide an explanation of how T could overcome the problems identified.

Good answers will make specific reference to the impact on the project when explaining the difficulties.

Marking Guide

Marks

Problems - for example: (max 9 marks) Unclear project objectives Team members working to their own objectives Results in slippage to project schedule and cost escalations Different opinions of team members in how project work should be carried out People from different backgrounds e.g. workers from sales and finance hold different view Poor selection of team members Lack of expertise to perform project tasks Lack of clarity of roles Imbalance of role – ref to Belbin Roles / responsibility overlaps Leads to conflict between team members Poor leadership style Leads to lack of commitment by team members Too many meetings getting in way of performing project work Conformity of group in decision making Risky shift phenomenon Group takes decisions about the project that are riskier than if made decision alone Solutions – for example (max 7 marks) T to brief team on project objectives/deliverables T to set team targets T to provide feedback on performance T to articulate roles and responsibilities T to adopt appropriate management style T to investigate team building activities T to set clear agendas for meetings T to encourage members to consider implications of decisions made Other problems / solutions mentioned – 1 mark per pertinent point

1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1






May 2008

Examiner’s Comments A mixture of strong and weak answers Common Errors

Weaker answers focused on general project management issues rather than project team effectiveness. Some only explained the problems and did not go on to explain how they might be overcome. A number of candidates spent too long describing Belbin’s roles in detail, missing out other key issues.





May 2008

Question 7(a)

Explain the characteristics / qualities that people who exhibit an entrepreneurial spirit have, which might make it difficult for them to work in the environment of E Company.


This question examines candidates’ ability to evidence their understanding of the characteristics of entrepreneurs and why they may find it difficult to work in a particular environment described in the scenario.

Suggested Approach

The suggested approach would identify the different entrepreneurial qualities and then discuss why this would make it difficult for individuals possessing these qualities to work in E Company.

Marking Guide

Marks

Examples: (max 10 marks) Focus on results Seek new opportunities Not conducive in bureaucratic environment Independent – do things their own way Problematic when someone has authority over them, as in E Company Will get frustrated with long decision making process Good at networking Not always good at working in teams Likes responsibility Not good at delegating Wants to break rules / not conform E Company will have set rules, procedures and controls Prefers fast growth and developments E Company no longer at this stage of its lifecycle One mark for each other entrepreneurial quality mentioned but must explain why it creates difficulty for working in the environment of E Company to gain additional mark Marks awarded if a candidate develops an answer based on managerial behaviours of entrepreneurs.

1 1 1 1 1 1 1 1 1 1 1 1 1 1


Examiner’s Comments Overall, answers to this question were poor. Common Errors

Candidates repeated information from the scenario and a significant number were unable to identify entrepreneurial qualities. Some candidates explained the features of an entrepreneurial structure, rather than the characteristics / qualities of people who exhibit an entrepreneurial spirit.





May 2008

Question 7(b)

Explain what could be done to encourage greater creativity and innovation in E Company.

(15 marks)

Rationale

This question requires candidates to evidence their understanding of how creativity and innovation can be encouraged in organisations.

Suggested Approach

The answer should develop to provide examples of specific actions needed to encourage creativity and innovation.

Good answers will make reference to the work of Rosabeth Moss Kanter on this topic.

Marking Guide

Marks

Culture that accepts / embraces change Cultural controls rather than bureaucratic controls New ideas encouraged from all staff Create opportunities of interaction between different members of staff Create trust in employees to do things their way Increased delegation Empowerment Tolerate failure Reward creative behaviour Set objectives for innovations Change structure – decentralisation Organic structure Mintzberg’s adhocracy Management style Recruitment and selection policies to attract those with entrepreneurial qualities Internal new venturing Learning organisation For each other relevant point – 1 mark

1 1 1 1 1 1 1 1 1 1 1 1 1 1 1

Up to 2 Up to 2

Maximum marks awarded 15 Examiner’s Comments A mixed performance on this question. Common Errors Weak answers made general points about the structure / culture etc. needing to change, but did not develop to explain specifically how greater creativity and innovation could be achieved.













Answer the ONE compulsory question in Section A. This has nine sub-questions on pages 2 and 3.

Answer ALL THREE compulsory questions in Section B on pages 4 and 5.





P5 –

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TURN OVER





ANSWER ALL NINE SUB-QUESTIONS

Instructions for answering Section A: The answers to the nine sub-questions in Section A should ALL be written in your answer book. Your answers should be clearly numbered with the sub-question number and ruled off so that the markers know which sub-question you are answering. For multiple choice questions you need only write the sub-question number and the letter of the answer option you have chosen. You do not need to start a new page for each sub-question.

Question One 1.1 Which ONE of the following is an example of an ‘intervening factor’ that can encourage

group effectiveness?

A Productivity of the group

B Motivation of the group

C Satisfaction of the group

D Task of the group (2 marks)

1.2 An organisation that seeks to maintain or increase share of an existing market with an

existing product is following which ONE of the following strategies?

A Market development

B Diversification

C Market penetration

D Product development (2 marks)

1.3 The difference between the latest event time and the earliest event time in a project

network analysis is referred to as:

A Critical activity

B Float

C Milestone

D Critical path (2 marks)

P5 2 November 2008



1.4 Which ONE of the nine Project Management Body of Knowledge areas involves project plan development, project plan execution and change control?

A Scope management

B Quality management

C Integration management

D Time management (2 marks)

1.5 Identify the analytical framework that is used in the process of strategic management to

summarise the key issues arising from an assessment of the internal and external environments of an organisation.

(2 marks)

1.6 Describe briefly what is meant by the contingency approach to effective leadership.

(2 marks)

1.7 Kerzner describes a five level model of continuous organisational improvement in the

methodology of project management. The final level is continuous improvement. Identify any TWO of the other levels.

(2 marks)

1.8 Identify THREE types of cost that need to be considered when undertaking the financial

feasibility of a project.

(3 marks)

1.9 Explain briefly the concept of clan/cultural control.

(3 marks)




End of Section A Section B starts over the page

TURN OVER

November 2008 3 P5




ANSWER ALL THREE QUESTIONS - 10 MARKS EACH Question Two M Call Centre takes on outsourced work from a number of different organisations including financial service and telecommunication companies. Whilst the number of companies using M Call Centre is growing, it is facing some internal difficulties in coping with the new business due to high levels of labour turnover and staff absenteeism. Despite performance bonuses being paid, M Call Centre is finding it difficult to retain staff and labour turnover is much higher than the industry norm. A consultant has been brought in to investigate and help diagnose the problems facing M Call Centre.

The consultant has observed that the call centre operates within a system of tight controls and targets. Incoming calls are routed depending on the nature of the query. This means that a telephone operative answers only a narrow range of queries. If a query is made that is outside an operative’s area of responsibility, they have to re-route the call, since they have only been trained on answering specific queries related to their role. Those making outbound sales calls have a script that they must not deviate from.

Discussions the consultant has had with employees revealed that they feel that the working conditions in M Call Centre compare to those of a traditional factory assembly line. Telephone operatives feel that they are used as robots. They report that they are under pressure to keep call length with customers to a minimum time and that their conversations are listened to by their supervisors. Management has measured the time different calls should take to answer or make and imposes these times on staff.

The consultant’s overall conclusion is that the scientific management approach to managing the call centre is unsuitable. She recommends that a more human relations approach should be adopted.

Required: With reference to M Call Centre, distinguish between the scientific management approach currently being used and the human relations approach being proposed by the management consultant.


Section B continues on the opposite page

P5 4 November 2008



Question Three P works for ZCo, whose business is commercial interior design. She is managing her first project which involves the refurbishment of a prime site office building. P is due to make her first report to Q, the project sponsor, but things are not going well, causing her to have sleepless nights worrying about the project. The refurbishment is overrunning on both time and budget and P cannot understand how the project has slipped so seriously without her realising. Keen to overcome the problems, P checks a recommended internet site on project management and finds the section on monitoring and control very helpful, particularly the section on progress reports.

Required: (a) Describe how the use of progress reports could help P.

(6 marks)

(b) Identify the corrective action P could take to overcome the project slippage on time and budget.

(4 marks)


Question Four

Required: (a) Describe the role of each of the five basic building blocks which Mintzberg gives as the

basis of his organisational structural configurations.

(5 marks)

R is the owner/manager of X Company, which he set up just over 12 months ago. The company’s main business is the development of computer based training packages and it currently employs 12 people.

(b) Recommend which of Mintzberg’s structural configurations would be most appropriate for X Company, giving reasons for your choice.

(5 marks)



End of Section B


TURN OVER

November 2008 5 P5




ANSWER ANY TWO QUESTIONS FROM THIS SECTION – 25 MARKS EACH Question Five The Chief Executive of C Company, a chemical manufacturing company, has put a number of proposals to the Board on what the company can do to become more socially and environmentally responsible than simply complying with legislation. He wants to introduce a number of social and environmental objectives linked to reducing carbon emissions in production, improving on waste treatment, using more environmentally-friendly methods of waste disposal and recycling. He also wants to support the local community through financial donations and by seconding staff to provide help to local charities.

The proposals will require some investment in clean production technologies, buying environmentally friendly raw materials where possible, and reducing the use of business transport. The Chief Executive is also suggesting the company should have an eco-balance sheet which includes financial data on environmental costs.

The Chief Executive’s interest in socially and environmentally responsible strategies is partly motivated by the media attention on the carbon footprint of companies such as C but is also driven by his personal beliefs. His view is that sustainability should be at the centre of all C Company’s activities since it makes good business sense. He sees his proposals as ‘win-win’, but is facing strong opposition from the Finance Director, who is concerned about the costs and the potential negative impact on financial performance and hence shareholder value.

Required: (a) Discuss the different viewpoints of the Chief Executive and the Finance Director on C

Company becoming more socially and environmentally responsible.

(15 marks)

(b) Explain the different research methods that could be used to collect information from staff to gain their ideas on the ways in which C Company could become more socially and environmentally responsible.

(10 marks)



P5 6 November 2008



Question Six B Bakery is a family owned firm with around 250 employees. It has been in business for over 50 years and supplies bread and confectionary products to a number of different businesses, including supermarkets and pub-chains. The firm has experienced mixed fortunes over the years in terms of business performance, but in the last few years has experienced a growth in orders for some of its new healthy product ranges. These products have been developed as a result of the Managing Director’s wife’s interest in healthy eating. However, the Bakery has recently lost some key accounts as a result of being unable to produce some of its products at a competitive price.

Six months ago, the first non-family Board member, CT, joined the company as Operations Director. CT is surprised to find that the firm does not have a mission statement or any formal planning process in place. He is even more concerned that the Bakery does not have any clear objectives or key performance indicators. In a recent conversation with the Managing Director, CT suggested that the Board should be more proactive and that adopting a more formal approach to planning would help better inform the future development and direction of the Bakery. He suggests that the Board should consider using the rational approach to strategic management.

He was rather surprised by the response from the Managing Director, who said that in his 30 years with the firm, it had grown and been successful despite the absence of formal plans. He commented that planning creates lots of analysis that does not result in action and he prefers strategies to emerge. His view is that planned and intended strategies often turn out to be invalid.

Required: (a) Distinguish between the views of the Managing Director and the Operations Director

on how strategy occurs. (17 marks)

(b) State the arguments that the Operations Director could use to persuade the Managing Director of the benefits of having a formal strategic plan.

(8 marks)



TURN OVER

November 2008 7 P5



Question Seven Currently, each department of S Company has its own IT support team but a decision has recently been taken to centralise IT support. The Head of IT has stated that the new IT centralised support centre will lead to an improvement in service. However, staff in the different departments are unconvinced of this, rather they see it as a cost cutting exercise and feel that the individual requirements for IT support will be compromised.

A project has been set up and resourced by the Head of IT, who has appointed F as Project Manager. F’s brief is to implement the new IT centralised support service. Her project team is made up of both IT staff and staff representatives from the departments which will use the IT centralised support service.

A key part of the project is the development of a standardised set of working practices, but F is already facing resistance from members of the project team and from department heads. At a recent project meeting there was clearly tension and conflict between the IT staff from the different departments in agreeing new working practices. This appears to be due to the fact that currently each IT support team has its own way of doing things to meet the needs of different departments and each sees its approach as best practice. Departmental heads are also concerned that they have very different needs and through the standardisation process, these needs may not be met.

In addition, there is hostility since the centralisation project will result in the IT staff having to take on different roles with different working practices, and some may lose their jobs.

F is glad that she has recently been on a training course on managing conflict. She had not realised how soon she would need to make use of the skills she has learned.

Required: (a) Explain why F, as Project Manager, needs to be aware of the interests of stakeholders.

Your answer should make reference to the different stakeholder groups for the IT centralised support service project.

(13 marks)

(b) Advise F on the different strategies that can be used to handle conflict between the different stakeholders in the IT centralised support service project.

(12 marks)




P5 8 November 2008




November 2008 9 P5




P5 10 November 2008





1 KNOWLEDGE





something






Analyse Categorise







November 2008 11 P5






November 2008


P5 12 November 2008




November 2008

General Comments

The overall performance in this diet was poorer than that of recent diets. Many candidates were inadequately prepared and so gave themselves little chance of reaching the required standard.

There were general weaknesses both in terms of theoretical knowledge and in its application. Particularly noticeable was the large number of candidates who scored poorly in Section A. All the topics are covered in the CIMA Study System but the very low marks of some candidates suggest they are hoping to get by on general knowledge rather than by systematic study. Questions that were inadequately answered in this section included questions 1.5, 1.6 and 1.9.

The other main weaknesses had to do with the way in which candidates tackled the scenario questions. Too many candidates simply repeated the scenarios as the basis for their answer without drawing on any knowledge of the subject to tackle the question. This was particularly the case for questions 2, 5(a) and 6.

In contrast with the overall poor standard, there were a number of candidates who performed extremely well with marks in excess of 80%. These candidates deserve to be congratulated and their achievement demonstrates what can be done with thorough preparation and good examination technique.

SECTION A – 20 MARKS ANSWER ALL NINE SUB-QUESTIONS

Question 1.1 Which ONE of the following is an example of an ‘intervening factor’ that can encourage group effectiveness? A Productivity of the group B Motivation of the group C Satisfaction of the group D Task of the group


Question 1.2 An organisation that seeks to maintain or increase share of an existing market with an existing product is following which ONE of the following strategies? A Market development B Diversification C Market penetration D Product development






November 2008

Question 1.3 The difference between the latest event time and the earliest event time in a project network analysis is referred to as: A Critical activity B Float C Milestone D Critical path


Question 1.4 Which ONE of the nine Project Management Body of Knowledge areas involves project plan development, project plan execution and change control? A Scope management B Quality management C Integration management D Time management


Question 1.5 Identify the analytical framework that is used in the process of strategic management to summarise the key issues arising from an assessment of the internal and external environments of an organisation.

(2 marks)

Answer:

SWOT Question 1.6 Describe briefly what is meant by the contingency approach to effective leadership.

(2 marks)

Answer:

Effective leaders have the ability to adapt their style according to the situation they face. (Alternatively, could state effective leadership is dependent upon a range of factors including the qualities of the leaders, the characteristics of followers, nature of the task, urgency of the situation.) Question 1.7 Kerzner describes a five level model of continuous organisational improvement in the methodology of project management. The final level is continuous improvement. Identify any TWO of the other levels.

(2 marks)





November 2008

Answer: Any two from:

Common knowledge Common processes Singular methodology Benchmarking Question 1.8 Identify THREE types of cost that need to be considered when undertaking the financial feasibility of a project.

(3 marks) Answer:

Any three from:

Capital costs Revenue costs Finance costs Opportunity costs Question 1.9 Explain briefly the concept of clan/cultural control.

(3 marks)

Answer

Share cultural values and traditions Share the same assumptions Few formal controls (Could also include: strong sense of personal identification with organisational goals; employees are committed to the organisation; give a sense of common purpose) Examiner’s Comments

Overall, candidates did less well on this question than in previous diets.

Common errors Very few candidates were able to answer question 1.7, Kerzner’s model of continuous organisational improvement. A significant number were unable to describe contingency theory (question 1.6) and very few gave a good answer to question 1.9 explaining the concept of clan/cultural control.

There was a mixed performance on question 1.8; some candidates scored a maximum of 3 marks but others gave incorrect answers, for example listing different types of feasibility study rather than types of cost.





November 2008


Question 2

With reference to M Call Centre, distinguish between the scientific management approach currently being used and the human relations approach being proposed by the management consultant.


The question examines candidates’ ability to distinguish between different approaches to management: the scientific approach and the human relations approach.

Suggested Approach

Answers should start by explaining the key features of the scientific approach to management and then go on to explain how the human relations approach is different. Good answers will make reference to the current situation in M Call Centre to illustrate the points regarding the scientific management approach and potential to have a human relations approach.

Marking Guide

Marks

Key features of scientific management approach for example: (max 5 marks) Work study techniques on what and how work should be done Achieve efficiency in production methods Division of labour* One best way to do job* No discretion to workers* Tight controls* Organisation as a machine* How human relations is different for example: (max 5 marks) Need to understand significance of human factors on work performance Work performance influenced by group effects Mayo’s research on understanding of why people behave as they do at work Hawthorne experiments Examples for M Call Centre: better working environment Operative discretions over working practices (Marks can be awarded for reference to other theorists – e.g. McGregor, Hertzberg)

* Should provide examples linked to what is happening in M Call Centre

1 1 1 1 1 1 1 1 1 1 1 1 1


Overall, this question was reasonably well answered.

Common Errors

The main problems were repetition of scenario information without development and lack of underpinning theory needed to distinguish between scientific management and human relations.





November 2008

Question 3

(a) Describe how the use of progress reports could help P. (6 marks)

(b) Identify the corrective action P could take to overcome the project slippage on time and budget. (4 marks)


This question requires candidates to demonstrate their understanding of the purpose of project progress reports and the corrective action that could be taken to get a project back on track.

Suggested Approach

For part (a) answers should describe how the use of progress reports could help P. For part (b) answers should develop to provide examples on the corrective action that could be taken. Good answers will make reference to points in the question scenario as illustrations.

Marking Guide

Marks

Part (a) How progress reports can help P: (max 6 marks) Help in project control Highlight discrepancies between progress and project plan Draw attention to project schedule , cost and scope Report on progress towards key milestones Explanation of milestones Any deviations in report advised to project sponsor Provides information on progress towards resolution of problems Examples: schedule – activities started and finished Money spent on each activity Aids focus on objectives Part (b) Corrective action that can be taken: (max 4 marks) Add extra resources Reschedule work Reduce expenditure on later activities Change project spec (other actions that could be mentioned to warrant a mark might include re-planning, use of planning tools, introducing incentives, working smarter, motivating team)

1 1 1 1 1 1 1 1 1 1 1 1 1 1

Maximum marks awarded 10 Examiner’s Comments Overall, part (a) of the question was answered reasonably well but weaker candidates discussed project management tools rather than describing how progress reports could help..

Part (b) of the question produced a mixed performance. Some of the candidates simply described project management planning tools e.g. WBS, Network analysis, rather than identifying the corrective action needed.





November 2008

Question 4

(a) Describe the role of each of the five basic building blocks which Mintzberg gives as the basis of his organisational structural configurations.

(5 marks)

(b) Recommend which of Mintzberg’s structural configurations would be most appropriate for X Company, giving reasons for your choice.

(5 marks)


The question is designed to assess candidates’ understanding of Mintzberg’s structural configurations and their ability to recommend a configuration for a particular type of organisation.

Suggested Approach

The first part of the answer will explain the building blocks of Mintzberg’s structural configurations.

The second part of the answer will recommend which of Mintzberg’s structural configurations would be most appropriate for X Company. It should then develop to give reasons for the choice of configuration.

Good answers will explain the relationship between the different building blocks configured dependent on organisation type.

Marking Guide

Marks

Part (a) (max 5 marks) Structure exists to co-ordinate activities Role of strategic apex Role of middle line Role of operating core Role of techno structure Role of specialist staff Part (b) (max 5 marks) Simple structure Strategic apex R R make decisions/control Operating core rest of organisation No need for middle line/techno structure/support Diagram explaining structure

1 1 1 1 1 1 1 1 1 1 1 1



Some strong answers by many candidates, but still a significant number of incomplete answers.

Common Errors

The major weakness in part (a) was that some candidates described Mintzberg’s different structural configurations rather than the building blocks. . In part (b) some candidates did not recommend a structural configuration as required.





November 2008


Question 5(a)

Discuss the different viewpoints of the Chief Executive and the Finance Director on C Company becoming more socially and environmentally responsible.

(15marks) Rationale

This question examines candidates’ understanding of the concepts of social and environmental responsibility. Their ability to develop convincing discussion both for and against socially and environmentally responsible business decisions in the context of creating sustainable performance and improving shareholder value will be assessed.

Suggested Approach

Answers should first explain the concepts of social and environmental responsibility. Answers should then go on to discuss the arguments from the perspective of the Finance Director who is against the socially and environmentally responsible proposals. The main arguments for socially and environmentally responsible proposals should then be explained from the perspective of the Chief Executive in terms of why they could improve competitive performance and shareholder value.

Good answers will provide illustrative examples specific to C’s industry.

Marking Guide

Marks

Different views about purpose of company: Chief Executive (CE) recognises interests of different stakeholders Finance Director (FD)maximising wealth FD’s arguments - for example: (max 7 marks) Position taken by Milton Friedman maximise wealth of shareholders/owners Legitimate function of business is economic performance Up to legislator to make laws against socially irresponsible acts Role of state to represent public interest Up to consumers to not use socially irresponsible companies FD’s concern about potential additional costs Additional costs in becoming energy efficient/recycling/reducing emissions Funds diverted Negative impact on shareholder value Management time diverted Other CE’s counter arguments – for example: (max 7 marks) If core business conflicts with needs and values of society – may not survive Potential to drive down costs by reducing waste and pollution Saving energy and recycling could lower overheads Reputation benefits – corporate image Attract customers if demonstrating sustainable business practices Attract ethical funds Charitable donation, good PR Other (for example: morale, retention of staff, legislation, etc.)

1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1






November 2008

Examiner’s Comments Part (a) was not particularly well done.

Common Errors

A number of candidates placed far too much emphasis on simply repeating material from the scenario without using theory to develop the answer. Question 5(b)

Explain the different research methods that could be used to collect information from staff to gain their ideas on the ways in which C Company could become more socially and environmentally responsible.


This question assesses candidates’ awareness of different research methods that can be used to collect information from staff.

Suggested Approach

Answers should explain a range of research methods that could be used to collect information from staff.

Good answers will develop in the context of collecting information needed on social end environmental practices.

Marking Guide

Marks

Staff suggestion box (max 3 marks) Needs promoting with incentives Open meeting Interviews with staff (max 3 marks) Face to face or telephone Need to consider time and who conducts interviews Allows collection of in-depth information Focus groups with different groups of employees (max 3 marks) Time intensive Encourages creativity of ideas Survey – questionnaire sent to a cross section of staff (max 3 marks) Need to develop appropriate set of questionnaires Could email to speed up process Response rate might be low if employees not interested in socially/environmental issues (marks can be awarded for other appropriate research methods up to max of 3 marks)

1 1 1

1 1 1 1

1 1 1

1 1 1 1


Candidates generally did better in part (b) than in part (a)

Common Errors

Some answers did not make links back to the nature of information to be collected and simply described different types of research methods





November 2008

Question 6(a)

Distinguish between the views of the Managing Director and the Operations Director on how strategy occurs.


The question is designed to examine candidates’ understanding of the differences between the emergent and rational perspectives on how strategy occurs.

Suggested Approach

Answers should first identify the perspective of the Managing Director’s view on how strategy occurs by explaining the key features of the emergent view of strategy development. Answers should then go on to identify the perspective of the Operations Director’s view on how strategy occurs , explaining the key features in order to distinguish this view from the MD’s perspective.

Good answers will provide illustrative examples specific to B Bakery.

Marking Guide

Marks

Max 9 marks for emergent view MD’s view that strategy emerges e.g.: Mintzberg’s view that few strategies are consciously/deliberately planned Environments not predictable Strategies emerge due to negotiation/compromise Result from ad-hoc choices Develop out of patterns of behaviour Not consciously thought out Shaped/crafted by management Examples from Bakery scenario Other Max 9 marks for planned/rational view Ops Director view – planned/rational approach Involves deliberate development of strategy Often linked to annual planning cycle Identification of mission and objectives Strategic analysis of Bakery’s current position – external Strategic analysis of Bakery’s current position – internal Generating strategic options for Bakery Evaluation of options Implementation Other

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Part (a) was weak, scripts commonly repeated information from the scenario. Whilst stronger answers were able to explain the rational approach to strategy, very few gave a substantive discussion of the emergent approach.





November 2008

Question 6(b)

State the arguments that the Operations Director could use to persuade the Managing Director of the benefits of having a formal strategic plan.

(8 marks) Rationale

The question examines candidates’ ability to argue the benefits of having a formal strategic plan.

Suggested Approach

The answer should set out the benefits that could be used by the Operations Director arguing for having a formal strategic plan.

Good answers would frame the benefits introduced in the context of B Bakery’s situation.

Marking Guide

Marks

Benefits for having a formal strategic plan e.g. Encourages a longer term view for Bakery Help encourage directors to consider business environment Encourages a more proactive approach Help Bakery in allocation of resources Targets/objectives clear Help strategic control Help in co-ordination of activities Promotes goal congruence Communicated to create employee awareness of direction of Bakery Avoid problems of succession associated with family owned business Other

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Maximum marks awarded 8 Examiner’s Comments This part of the question was generally better executed than part (a).





November 2008

Question 7(a)

Explain why F, as Project Manager, needs to be aware of the interests of stakeholders. Your answer should make reference to the different stakeholder groups for the IT centralised support service project.


This question requires candidates to explain why a project manager needs to be aware of the interests of different stakeholders.

Suggested Approach

The suggested approach would be first to explain the overarching reasons why the project manager should be aware of the needs of stakeholders. The answers should develop to provide examples of specific stakeholder groups and why F needs to understand their specific needs.

Marking Guide

Marks

Stakeholders can affect outcomes of project Stakeholders have different reasons for stake in project Project manager needs to understand power and interest of different groups – link to Mendelow Involvement of stakeholders at different stages of the project Max of 3 marks for discussion for different stakeholder groups linked to scenario Members of project team: Interested in making sure project delivers objectives But IT staff have vested interest in their own practices Possibility of horizontal conflict Project sponsor (Head of IT): Provides resources and budget – power Interested in knowing about any deviations Stands to lose if project fails Project owner (in this case Head of IT): Interested in end result being achieved Wants delivery of better service Project users: Staff in different departments who will use the new service Want as good an IT support as currently received IT staff – high interest They will deliver service Roles likely to change Some staff may no longer have a role (Up to 3 marks can be awarded for other relevant stakeholder groups, for example, department heads)

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November 2008

Examiner’s Comments Overall, this achieved the best performance in Section C. Common Errors

In part (a) weaker answers described Mendelow’s matrix but didn’t apply this to the scenario to explain why F needs to be aware of the interests of stakeholders. Some candidates simply identified different stakeholders but didn’t develop their answers in the context of specific stakeholder interest. Question 7(b)

Advise F on the different strategies that can be used to handle conflict between the different stakeholders in the IT centralised support service project.


This question requires candidates to advise on the different strategies that can be used to handle conflict related to different project stakeholders.

Suggested Approach

The answer should develop to explain the different strategies that can be used to handle different stakeholder groups.

Good answers will provide advice to F on which of the different strategies might be most appropriate in the context of the IT project and which would not be.





November 2008

Marking Guide

Marks

Explanation of conflict management framework that F could use e.g.: Thomas’s based on degree of assertiveness in pursuit of own objectives Level of cooperation in attempting to satisfy others’ interests Up to 3 marks for each strategy explained: Avoidance - one or more stakeholders seek to avoid or ignore conflict Not recommended for F since doesn’t resolve conflict Problems not resolved could emerge once IT service up and running Accommodation – F putting interests of stakeholders first Suppressing his/other stakeholders’ interests in projects If conflict endemic would not resolve differences For example resolving differences of views between IT staff Compromise – each stakeholder would give something up and come to a deal acceptable to all Often viewed as optimum solution F will need good negotiation skills to use compromise Example – change in spec by project owner – F may compromise if more time/budget provided Competition – where different stakeholder groups will not cooperate Different stakeholder groups seek to maximise own interests/goals Can lead to further conflict damaging at least one stakeholder group F advised not to use this strategy since creates winners and losers Collaboration – also optimum solution Differences confronted and jointly resolved Win win situations (Marks can be awarded for other appropriate conflict handling strategies included in answers)

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Maximum marks awarded 12 Examiner’s Comments Weaker answers referred to stakeholder interests rather than advising on strategies that can be used to handle conflict. Others provided practical advice rather than specific conflict handling strategies.




Documents

CIMA | P5 - Integrated Management Sloved Past Papers