E3 – Enterprise Strategy Post Examination Guide docs/2010 syllabus docs/E3/E3... · E3 – Enterprise Strategy Post Examination Guide ... its aim was to test a wide range of syllabus

E3 – Enterprise Strategy Post Examination Guide May 2010

The Chartered Institute of Management Accountants Page 1

General Comments This examination paper was designed to test candidates’ ability to demonstrate their understanding and application of the following learning outcomes: • evaluate the process of strategy development • evaluate the process of strategy formulation • evaluate different organisational structures • evaluate strategic options • evaluate ethical issues and their resolution in the context of organisational change • evaluate the impact of the internet on an organisation and its strategy • evaluate the strategic and competitive impact of information systems • project management: monitoring the implementation of plans • recommend appropriate control measures • discuss the concept of organisational change • recommend techniques to manage resistance to change

Being the first examination within the new diet, its aim was to test a wide range of syllabus areas. Candidates are reminded that they must familiarise themselves with the pre-seen material prior to the examination. Although the examination questions do not directly examine the pre-seen material, the un-seen material does build upon the pre-seen and it does help candidates gain a better understanding of the overall theme of the un-seen material prior to the day of the examination. The Question 1 un-seen scenario was designed to test a number of key skills including both quantitative and qualitative analysis. The pre-seen and un-seen scenario was based upon Aybe, a well established business, manufacturing, marketing and distributing components throughout 20 countries in Europe and the United States. The pre-seen material provided a number of relevant issues relating to the E3 syllabus, including references to both the organisational structure and Aybe’s current strategic planning process. In the un-seen these themes were developed by the introduction of information relating to Aybe’s intentions to expand into the Asian market. Further information was provided on alternative profit forecast figures for the Asian market, provided by the Management Accountant of Aybe and the Operations Director. This final point introduced an interesting challenge to candidates as this issue examined the ethics section of the syllabus which has been newly introduced to E3. In general, candidates performed reasonably well on Question 1. There was good evidence that candidates had spent time preparing the pre-seen material, as many answers demonstrated sound knowledge of the rational planning model and the alternative strategy formation approaches, when answering parts (a)(i) and (ii) of the requirement. Most candidates scored highly on the quantitative aspects requirements (d)(i) and (ii). This was expected as the calculations were very straightforward. Candidates can expect more challenging calculations in future examinations. Many candidates did not appreciate that the forecasts that had been prepared were internal documents and would not necessarily have been publicly available. The most disappointing aspect of answers to Question 1 was those relating to requirement (d)(iii). There was evidence to suggest that many candidates had not adequately prepared for a potential question relating to ethics as many answers were very general and demonstrated a clear lack of basic syllabus knowledge. Other answers lacked the ability to apply the code of ethics to the scenario. Candidates must not only have a sound knowledge and understanding of the ethical code but more importantly, they must be able to demonstrate the ability to apply the code appropriately to a scenario. As this is the first time that this syllabus area has been examined in this subject, candidates were not expected to demonstrate a high degree of application. Nevertheless, candidates must expect that in future examinations they will be required to apply their knowledge to a scenario. The Section B questions on this examination were answered well by many candidates. Question 2 was a very popular choice of candidates and most candidates scored well on this question. Many candidates demonstrated a sound knowledge and understanding of the value chain and were able to apply it sufficiently to JGS. It was encouraging to see the high degree



of application of answers to this question, rather than theoretical based answers. However, evidence of candidates’ knowledge and understanding of e-commerce was not as convincing and more concentration on this aspect of the syllabus is advised. Question 3 was the least popular question on Section B and the least well answered. Most candidates who answered this question did not score well on either part (a) or part (b)(ii) of the question. Most candidates merely described the Johnson, Scholes and Whittington model in part (a) without really answering the question that had been set. Most candidates identified a suitable range of CSF’s but the main weakness in the answers to Question 3 was the poor attempt at presenting and discussing the recommended KPI’s. There was strong evidence to suggest that many candidates did not understand what KPI’s were and most candidates could not successfully provide reasoned arguments for those that they had identified. This was a disappointing answer and an area that candidates must concentrate on in future study. Question 4 was the most popular question on Section B and the one for which candidates obtained the highest marks. Most candidates demonstrated a sound level of knowledge and understanding of the Ansoff product/ market matrix and applied it well to the scenario. Many candidates also demonstrated a good understanding of the problems of change management and there was a very good degree of application in the answers to parts (b) and (c) of the requirement. Overall, candidates performed well in this examination diet. However, there was evidence of a lack of syllabus knowledge and understanding in the area of Ethics and in CSF’s and KPI’s. It is recommended that candidates ensure that they have a wide knowledge and understanding of the E3 syllabus and that they are able to apply this knowledge to the examination scenarios. .



SECTION A – 50 MARKS ANSWER THIS QUESTION

Question 1(a)(i) Discuss the relevance of the style of strategy currently in use at Aybe to the development of the Asian markets.

(5 marks) Rationale This requirement tests learning outcome C 1 (a) ‘evaluate the process of strategy formulation’, and the syllabus content ‘the process of strategy formulation’.

Suggested Approach This question was designed to test candidates’ ability to link the information provided in the pre-seen material to that provided in the un-seen material. Candidates were expected to have identified the current style of strategy from the pre-seen material and then discuss whether this style was suitable to the development of the Asian markets. The un-seen material identified a number of characteristics of the Asian markets which the candidates were expected to use as part of their discussion. This should have been a straightforward start to the examination as the pre-seen material clearly identified Aybe’s current rational planning approach to strategy, so candidates should have already been aware that this element of the pre-seen information was directly relevant to the E3 syllabus.

Marking Guide

Marks

Explanation and justification of use of Rational model/planning, up to 2

Discussion of relevance of rational planning to Asian markets, up to 4

Maximum Marks Awarded 5

Lead Marker’s Comments This question was reasonably well answered by most candidates. As expected, most candidates correctly identified the current rational planning approach to strategy development. It was also encouraging to see that most candidates were able to critically appraise this style of strategy with regard to its usefulness in the fast moving Asian markets. Most candidates used the un-seen scenario information very well and applied their knowledge of the rational planning model to the answer. The level of application was generally very good and there were very few answers that were only based upon theoretical discussions. Common Errors

• Taking statements relating to the Asian markets directly from the un-seen material without discussing the relevance of rational planning to these statements.

• Too much emphasis on detailed discussion of the rational planning model and insufficient time spent on discussing its relevance to the Asian markets.



Question 1(a)(ii) Advise the Board of two alternative approaches to strategy which you consider Aybe could use in the development of the Asian markets. Explain why you consider your choices may be appropriate.

(6 marks)

Rationale

This requirement tests learning outcome C 1 (a) ‘evaluate the process of strategy formulation’, and the syllabus content ‘the process of strategy formulation’.

Suggested Approach The question clearly asked for only two alternative approaches to strategy that could be used in the development of the Asian markets. Therefore, for each alternative strategy, candidates were expected to identify and explain the strategy and also to clearly explain why this approach was considered to be appropriate to the development of the Asian markets. There was a strong link between this question and question (a)(i), where the candidates were expected to recognise the limitations of the rational planning approach. In question (a)(ii), candidates were therefore expected to identify and explain approaches to strategy that were relevant to the development of the Asian markets. This question should have been largely a straightforward knowledge demonstration exercise, with some demonstration of ability to apply this to the given scenario. Marking Guide

Marks

For each alternative approach to strategy identified

For identification of strategy, 1 mark each, up to maximum of

For explanation of strategy, 1 mark each, up to maximum of

For why the choices were considered appropriate, 1 mark each, up to maximum of.

(i.e. 2 x 3 marks per alternative)

2

2

2

Maximum marks awarded 6

Lead Marker’s Comments This question was reasonably well answered. Most candidates were able to identify two appropriate alternative approaches relevant to the development of the Asian markets. The main weakness of candidates’ answers to this question was the lack of application to the scenario. Many candidates were able to identify and describe the alternative styles of strategy but some failed to explain correctly why these approaches were more suitable than the rational planning model to the Asian markets. A few candidates also took a completely incorrect approach to answering this question, by either discussing market entry strategies such as joint developments and mergers or by discussing market and product development strategies. These were not considered to be relevant in the context of the question being asked. Common Errors

• Lack of application of the alternative approaches identified to the scenario information. • Inappropriate/ incorrect focus upon market entry/ market development strategies.



Question 1(b) Evaluate the suitability of Aybe’s current organisational structure in respect of the proposed expansion into Asian markets.

(9 marks) Rationale

This requirement tests learning outcome C 1 (c) ‘evaluate different organisational structures’ and the syllabus content ‘the relationship between organisational strategy and organisational structure.’ Suggested Approach This question again required candidates to link information provided in the pre-seen material to information provided in the un-seen material. Candidates were provided with information relating to the current organisational structure of Aybe in the pre-seen which they should have recognised as being relevant to the E3 syllabus. Candidates were expected to identify the strengths and weakness of the current functional organisational structure and to discuss its suitability in relation to the proposed expansion into the Asian markets. The question did not require candidates to propose or evaluate alternative organisational structures. Marking Guide

Marks

For identification and explanation of functional structure

For discussion of advantages of functional structure to Asian markets, up to

For discussion of disadvantages of functional structure to Asian markets, up to

For discussion of factors affecting structure in Asian market

1

2

4

4


Lead Marker’s Comments This question was not well answered. Most candidates correctly identified the current functional structure of Aybe, but few were able to directly relate the advantages and disadvantages of a functional structure to the proposed expansion into the Asian markets. Many answers incorrectly focused upon discussions of alternative structures such as matrix or divisional. This was not asked for in the requirement and therefore awarded no marks. Many answers did not adequately focus upon the evaluation of the current structure in respect of the Asian markets, instead merely discussing in general, the strengths and weaknesses of a functional structure. Common Errors

• Discussions of alternative organisational structures. • Limited application of discussion of the current structure to the Asian markets.



Question 1(c)(i)

Explain two control problems Aybe might encounter if it chooses to conduct its business in Asia using agents.

(4 marks) Rationale

This requirement tests learning outcome C 1 (b) ‘evaluate strategic options’ and the syllabus content ‘the identification and evaluation of strategic options’.

Suggested Approach This question required candidates to identify and explain the control problems that Aybe might face if it should use agents to operate its business in Asia. There was no requirement for candidates to have a detailed knowledge or understanding of the operations of agents. The focus of the question was to test candidates understanding of the difficulties in controlling operating in overseas locations. Candidates were expected to identify and explain two control problems that would be related directly to using agents to conduct their business. The focus of the question was not upon the difficulties of operating overseas (i.e. foreign exchange issues or currency conversion issues). The focus of answers was expected to be upon the control problems faced in the use of overseas agents. Marking Guide

Marks

Possible control problems identified (1 mark) and explained (1 mark):

• Delegation/autonomy • Probity • Performance • Culture • Communication

2 2 2 2 2


Lead marker’s Comments This question was reasonably well answered. Most candidates were able to identify at least two relevant control problems relating to the use of agents in Asia. The main weakness of answers to this question was the lack of direct application of the control problems to the use of agents. Many control problems identified related to the difficulties of overseas operations but many candidates failed to adequately relate these to the use of overseas agents. Common Errors

• Focus upon general control problems and not directly related to the use of overseas agents.



Question 1(c)(ii)

Advise Aybe of appropriate control measures it could use to deal with the problems you have explained in (c)(i).

(6 marks) Rationale


Suggested Approach The focus of this question was upon identification and explanation of relevant control measures to deal with the problems identified in (c)(i). Marking Guide

Marks

Possible control measures identified (1 mark) and explained (2 marks):

• Delegation/autonomy • Probity • Performance • Culture • Communication

3 3 3 3 3


Lead marker’s Comments This question was reasonably well answered. Most candidates were able to identify a good range of relevant control measures relating to the problems identified in their previous answer. Many candidates correctly identified measures such as service level agreements, confidentiality clauses and having locally based Aybe managers supervising agents. The main weakness of answers to this question was the lack of explanation of the control measures in relation to part (c)(i) of the answer. A large number of candidates merely listed a range of control measures without any explanation of their relevance to the problems identified previously. The question clearly asked for the control measures directly linked to the control problems identified in the answer to (c)(i) but many candidates failed to do this. Common Errors

• Listing of control measures with little or no explanation. • Limited explanation of the relevance of the control measures identified to the control problems

discussed in (c)(i).



Question 1(d)(i)

Construct an incremental profit forecast for the Asian expansion for the period 2010 – 2014 using the assumptions proposed by the Director of Operations and the actual results for year ended 31 December 2009.

(4 marks) Rationale


Suggested Approach This question should have been very straightforward. The information to undertake this straightforward calculation was provided in the scenario and candidates were merely required to use this information to present a revised profit forecast calculation based upon the information provided by the Director of Operations. Marking Guide

Marks

Incremental Profit Forecast for 2010-2014

4


Lead marker’s Comments This question was well answered. Very few candidates made any mistakes in this answer.



Question 1(d)(ii)

Discuss the consequences for the shareholders of the revised incremental profit forecast constructed in d(i).

(6 marks) Rationale


Suggested Approach The revised profit forecast calculated in part (d)(i) clearly had implications for the EPS and DPS, therefore candidates were required to prepare a revised EPS and DPS forecast, based upon the information provided in the un-seen material. Again, this should have been a straightforward calculation. Candidates were also expected to then discuss the consequences for the shareholders of these revised calculations. Marking Guide

Marks

Incremental Earnings per Share for 2010-2014 Incremental Dividend per share 2010-2014 Discussion of implications for shareholders of revised EPS/ DPS

2 2 2


Lead marker’s Comments This question was well answered. Most candidates were awarded maximum marks for their calculations of the EPS and DPS. Few candidates, however, scored well on their discussions of the consequences of these revised forecasts on the shareholders. Very few candidates recognised that these figures were in fact only forecast and until they become actual, will have no consequences at all for shareholders. There was clearly evidence to suggest that this was highly unlikely due to the optimistic nature of the Director of Operations forecast figures, therefore the chances of these revised EPS and DPS calculations becoming a reality for shareholders was relatively slim.

Common Errors

• Incorrect methodology to calculate EPS and DPS resulting in incorrect calculations. • Lack of recognition that the revised figures were only forecast and therefore not published to

shareholders.



Question 1(d)(iii) Evaluate how the views of the Director of Operations about the Management Accountant’s profit forecast and the role of management accountants represent an ethical dilemma for the Management Accountant of Aybe.

(10 marks) Rationale

This requirement tests learning outcome B 3 (b) ‘evaluate ethical issues and their resolution in the context of organisational change’ and the syllabus content ‘business ethics in general and the CIMA Code of Ethics for professional accountants in the context of implementation of strategic plans’.

Suggested Approach The focus of this question was upon CIMA’s code of Ethics and was designed to test the candidates' understanding of the basic elements of the code and their ability to apply the code to an ethical issue. Candidates were expected to identify only those elements of the code which were relevant to this ethical dilemma. Candidates were not expected to provide a detailed description of the code, but rather to apply those aspects directly relevant to this scenario. Marking Guide

Marks

Relevant elements of CIMA’s fundamental principles: Integrity – identification and explanation of relevance Objectivity - identification and explanation of relevance The ethical dilemma is the director's request to destroy the original forecast

4 4 2


Lead marker’s Comments This question was not well answered. Some candidates demonstrated a detailed knowledge of CIMA’s Code of Ethics but failed to apply it adequately to the ethical dilemma presented. Few marks were awarded for a basic listing of the elements of the code with no application. A large number of candidates demonstrated a very poor knowledge of ethics, providing only very general discussions of the problems faced by the Management Accountant, with little or no reference at all to the ethical guidelines. There were also some candidates who analysed the problem from the point of view of the Director of Operations rather than the Management Accountant, which was an incorrect approach and therefore awarded no marks. Very few candidates highlighted the most important challenges to the Management Accountant of her ‘Integrity’ and ‘Objectivity’, but those that did scored well. Common Errors

• Lack of knowledge/application of the CIMA Code of Ethics. • Description of the Code rather than application.



SECTION B – 50 MARKS ANSWER TWO QUESTIONS FROM THREE

Question 2(a) Analyse the strengths and weaknesses of JGS using the value chain model.

Note: You are not required to draw a value chain diagram in any part of your answer to this question. (8 marks)

Rationale

This requirement tests the learning outcome A 2 (a) ‘evaluate the impact of the internet on an organisation and its strategy’ and the syllabus content ‘the impact of IT (including the internet) on an organisation (utilising frameworks such as Porter’s Five Forces and the Value Chain)’.

Suggested Approach This was a straightforward question. The scenario information clearly contained a range of points which were either strengths or weaknesses to JGS. Candidates were therefore expected to identify these points, establish whether they were a strength or weakness to JGS and where this strength or weakness was located in the value chain of JGS. Candidates were expected to clearly apply each issue from the scenario directly to the value chain. Candidates were not expected to evaluate the strengths and weaknesses of the value chain as a model. Marking Guide

Marks

For each point made the candidate must identify:

• The Factor identified from the scenario • Whether it is a strength or a weakness • Location in Value Chain

For each point made, If all three of the above included, 2 marks. If only 2 included, 1 mark

Maximum marks awarded

8

Lead Marker’s Comments This question was reasonably well answered by most candidates. Most answers were able to correctly identify the strengths and weaknesses of JGS. However the main weakness was that some candidates then failed to apply these to JGS’s value chain. The whole point of the question was to do so, therefore this was a major weakness of some answers. However, those candidates that did attempt to apply the strengths and weaknesses to the value chain scored well. Some candidates took an incorrect approach to answering this question, focusing upon the strengths and weaknesses of the value chain model itself rather than the strengths and weaknesses of JGS applied to the value chain. Few marks were awarded to those candidates who took this approach. Common Errors

• Limited application of strengths and weaknesses to the value chain. • Inappropriate focus upon the strengths and weaknesses of the value chain model.



Question 2(b) The owners propose to convert their website to facilitate e-commerce in order to increase turnover and profit.

Advise the owners of JGS what they will have to do immediately, and also on a continuing basis, to carry out this e-commerce solution.

(8 marks) Rationale

Requirement (b) tests learning outcome A 2 (b) ‘evaluate strategies and competitive impact of information systems’ and syllabus content ‘competing through exploiting information (rather than technology) e.g. use of databases to identify potential customers or market segments and the management of data (warehousing and mining)’.

Suggested Approach This question required the candidates to demonstrate their understanding of information systems and in particular the development of an e-commerce facility. Candidates were expected to identify and explain the actions required by the owners of JGS, both in the short term and the in the long term, in order to convert their existing basic website to facilitate an e-commerce approach. Candidates were not expected to provide a detailed project plan, rather positive actions that would enable an e-commerce solution to be implemented and installed within JGS. Marking Guide

Marks

For each relevant suggestion/ action For explanation/ expansion of each suggestion/ action

1 1


Lead Marker’s Comments This question was reasonably well answered. Most candidates were able to identify a range of actions that would be required to convert the current basic website to facilitate e-commerce, including identification of any further hardware and software requirements, cataloguing, photographing and entering their stock onto the web site, identification and implementation of security features and on-going training, consultancy and maintenance. Some candidates spent too much of their answers focusing upon project planning and assessing the viability of an e-commerce solution. This is not what was required and awarded few marks. Some candidates also focused their answer upon the introduction of a computer system to JGS. The question clearly asked for answers to focus upon the requirements of an e-commerce solution, not the introduction of a computer system. Clearly JGS already has a computer system as it currently has a basic website. Common Errors

• Bullet point answers with limited or no discussion of the actions identified. • Too much focus on project planning and not actual actions to be undertaken. • Lack of focus on e-commerce requirements.



Question 2(c) Evaluate how the introduction of e-commerce could affect JGS’s value chain.

(9 marks) Rationale

This requirement tests the learning outcome A 2 (a) ‘evaluate the impact of the internet on an organisation and its strategy’ and the syllabus content ‘the impact of IT (including the internet) on an organisation (utilising frameworks such as Porter’s Five Forces and the Value Chain)’

Suggested Approach This question was designed to test the ability to link the concepts identified in the previous two requirements in order to evaluate the impact of e-commerce. This question required candidates to link the effects of the introduction of e-commerce to JGS’s value chain. Therefore candidates were expected to demonstrate an understanding of the potential effects of e-commerce on the different aspects of JGS’s value chain. Candidates should have used their analysis undertaken in part (a) of their answer, where they identified the strengths and weaknesses of the business, to identify where the weaknesses of JGS could be improved upon using e-commerce and where the strengths could be enhanced. Candidates were not expected to discuss all elements of the value chain, only those elements that were relevant to JGS. Marking Guide

Marks

For impact of e-commerce upon each element of the value chain identified, up to 3


Lead Marker’s Comments This question was reasonably well answered. In general, those candidates who applied the value chain successfully in part (a) of their answer also did so in this part of the answer. Similarly, those candidates that demonstrated a limited knowledge and understanding of the value chain in part (a) also performed badly in this requirement. Most candidates correctly identified the impact upon marketing and sales activities and the effect upon inbound and outbound logistics of the business. However, few candidates identified the impact on the infrastructure of JGS, in that e-commerce would allow JGS to realise its inherent capital gain on disposal of the shop and realise potential benefit from an injection of cash. Overall, most candidates provided a competent answer to this question. Common Errors

• Limited focus on the value chain. • Incorrect emphasis of answer being upon the impact of technology and not the impact of e-

commerce.



Question 3(a) Explain why strategic implementation is included in the Johnson, Scholes and Whittington model.

Note: You are not required to draw the model. (5 marks)

Rationale

This requirement tests the learning outcome D 1 (b) ‘evaluate alternative models of performance measurement and the syllabus content ‘project management: monitoring the implementation of plans’.

Suggested Approach This was a straightforward question. Candidates were expected to firstly define ‘strategic implementation’ and then to discuss its role and position in the Johnson, Scholes and Whittington model Marking Guide

Marks

Implementation defined Equal weighting of three aspects Inter-dependent Model is not linear Strategy can start anywhere Without implementation, the plan goes no further

Maximum marks awarded

1 1 1 1 1 1

5

Lead Marker’s Comments This question was generally not well answered. Most candidates failed to answer the question set, in that they defined the term strategic implementation, but did very little else. Most candidates did not discuss why strategic implementation was part of the model. Many candidates could adequately describe the three elements of the model but failed to demonstrate a sound understanding of the model and the inter-dependencies between the three elements. Common errors

• Definition of strategic implementation only. • Description of the model without explaining the inter-dependencies.



Question 3(b)(i) Identify four Critical Success Factors which would be appropriate to use for TDM.

(4 marks) Rationale

This requirement tests the learning outcome D 1 (a) ‘recommend appropriate control measures’ and the syllabus content ‘critical success factors: links to performance indicators and corporate strategy, and their use as a basis for defining an organisation’s information needs’.

Suggested Approach This question was straightforward and designed to test candidates’ ability to analyse the scenario presented in order to establish the critical success factors of the organisation. This question clearly asked for four Critical Success Factors. Marking Guide

Marks

For each CSF identified 1


Lead Marker’s comments This question was reasonably well answered. Most candidates identified suitable CSF’s relating to customer satisfaction and product quality. Fewer candidates recognised the CSF’s relating to employee attitudes and wellbeing and to market leadership and brand awareness. Some candidates used the four headings from the balanced scorecard to identify the four CSF’s but this was not considered to be appropriate, as financial performance is not a critical success factor. Unless the other three headings of the BSC were well applied and explained in relation to TDM, then few marks were awarded for this approach. Some candidates clearly did not understand the concept of CSF’s and identified a range of KPI’s instead. Common errors

• Use of the four headings of the balanced scorecard with limited explanation or application to TDM. • The use of KPI’s instead of CSF’s. • The use of objectives instead of KPI’s.



Question 3(b)(ii) Recommend, with reasons, two Key Performance Indicators to support each of the four Critical Success Factors you have identified.


This requirement tests the learning outcome D1 (a) ‘recommend appropriate control measures’ and the syllabus content ‘critical success factors: links to performance indicators and corporate strategy, and their use as a basis for defining an organisation’s information needs’.

Suggested Approach This was a difficult question. Candidates were expected to identify two key performance indicators (KPI’s) for each of the CSF’s identified in part (b)(i) of the answer. Therefore candidates were expected to directly link the answer to this requirement to the answer provided in the previous requirement. It was also expected that candidates not only identify two KPI’s but that they should also provide a clear reasoning as to why this KPI was appropriate to the CSF identified. Marking Guide

Marks

For each relevant KPI identified (up to a maximum of 8 KPI’s)

For a reasoned recommendation of each KPI, 1 mark, up to

8

8


Lead Marker’s Comments This question was generally not well answered by most candidates. It was disappointing to see how many candidates could not provide correct KPI’s. Many of the KPI’s provided were not measures at all, rather management activities or processes. For example, many candidates stated ‘undertake student surveys’ or ‘interview staff’. Unless there is some measurable aim in doing so, then these activities are not KPIs’. A number of candidates stated that TDM should undertake benchmarking which, again, is not a KPI. A further weakness was that very few candidates adequately provided sound reasoning for the KPI’s they identified. Many candidates explained what the KPI’s were but very few clearly and correctly provided a clear recommendation of why the KPI was suitable for the corresponding CSF nor why it was suitable for TDM. Overall, most answers to this question were superficial and failed to answer fully the question set. There was a disappointing lack of evidence of candidates’ ability to demonstrate a sound ability to apply their knowledge of this area. Common Errors

• KPI’s which were poorly defined or applied to the CSF’s. • Lack or reasoning for the chosen KPI’s.



Question 4(a) Evaluate, using Ansoff’s product market scope matrix, the alternative strategies XZY could follow to maintain its growth rate in profits and share price.

Note: Ansoff’s model is also described as the growth vector matrix. You are not required to draw this model.


This requirement tests the learning outcome C 1 (b) ‘evaluate strategic options’ and syllabus content ‘strategic options generation (e.g. using Ansoff’s product/ market matrix and Porters generic strategies’).

Suggested Approach

This question should have been a relatively straightforward knowledge demonstration question of the Ansoff product/ market matrix. Candidates were required to evaluate the viability of each quadrant in the matrix to the growth expectations of XZY.

Marking Guide

Marks

For each quadrant of the matrix identified and explained, 1 mark, up to

For an evaluation of the viability of each quadrant to XZY, 2 marks, up to

For additional discussions of evaluation of continued growth strategy, up to

4

8

3


Lead Marker’s Comments This question was well answered by most candidates. Many candidates demonstrated a sound knowledge and understanding of the Ansoff matrix and were able to apply it correctly to XZY. Common Errors

• Too much description of the model rather than application to XZY.



Question 4(b) Advise the CEO of the difficulties which may be encountered in changing the organisational structure of XZY and reducing employee numbers.

(5 marks) Rationale

This requirement tests the learning outcome B 1 (a) ‘discuss the concept of organisational change’ and syllabus content ‘problem identification as a precursor to change’.

Suggested Approach This question was designed to examine candidates’ understanding of the problems that may be encountered when undertaking a change process. Candidates were expected to focus their answers upon the effects of a change in organisational structure upon the management, employees and the overall operations of the business.

Marking Guide

Marks

Points could include the following, 1 mark each:

• Staff resistance

• Effect upon morale

• Effect upon XZY’s profit/share price

• Distract XZY’s management from customers and business

• Cost

• Reorganisation may not be tackling XZY’s real problems

1

1

1

1

1

1


Lead Marker’s Comments This question was well answered. Most candidates presented a suitable discussion of the effect upon

employees and management and most also recognised the costs associated with a change in organisational structure. Some answers focused too much upon the staff morale and possible resistance with limited discussion on the effects upon costs and profit. Very few candidates recognised that the reorganisation may not be tackling XZY’s underlying problems, for example, that its products are at the end of their life-cycles or that the Asian market has structural problems.

Common errors

• Too much emphasis on only the effects upon staff and their possible resistance.



Question 4(c) Recommend how the CEO could manage the process of changing the organisational structure.

(8 marks) Rationale

This requirement tests the learning outcome B 1 (b) ‘recommend techniques to manage resistance to change’ and syllabus content ‘stage models of change’.

Suggested Approach Candidates were expected to discuss the most appropriate method of change management for XZY in changing its organisational structure. Candidates could have undertaken this answer in one of two ways: firstly a suitable change management model such as Lewin’s unfreeze/ change/ re-freeze model or alternatively they could have identified the processes and activities that management should undertake, such as communication, participation and involvement. Either approach would have been acceptable. Importantly candidates were expected not just to provide a theoretical answer to this question but rather apply the chosen model or process to XZY.

Marking Guide

Marks

For an appropriate explanation and application of a suitable change management model

Or alternatively

For an appropriate explanation and application of a suitable process of change management

8

8

Maximum Marks awarded 8 Lead Marker’s Comments This question was well answered. Most candidates scored very well on this requirement, demonstrating a good level of knowledge of the various change management models, the management processes and activities required to undertake successful change management. Most candidates also applied their answers well to XZY. Very few answers were theoretical or unapplied to the scenario.

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E3 – Enterprise Strategy Post Examination Guide docs/2010 syllabus docs/E3/E3... · E3 – Enterprise Strategy Post Examination Guide ... its aim was to test a wide range of syllabus