Management Level

E2 Enterprise Management
23 November 2010 - Tuesday Afternoon Session
Instructions to candidates
You are allowed three hours to answer this question paper. You are allowed 20 minutes reading time before the examination begins during which you should read the question paper and, if you wish, highlight and/or make notes on the question paper. However, you are not allowed, under any circumstances, to open the answer book and start writing or use your calculator during this reading time. You are strongly advised to carefully read all the question requirements before attempting the question concerned (that is all parts and/or subquestions). ALL answers must be written in the answer book. Answers or notes written on the question paper will not be submitted for marking. ALL QUESTIONS ARE COMPULSORY. Section A comprises 5 questions and is on pages 2 to 4. Section B comprises 2 questions and is on pages 5 and 6. The list of verbs as published in the syllabus is given for reference on page 7. Write your candidate number, the paper number and the examination subject title in the spaces provided on the front of the examination answer book. Also write your contact ID and name in the space provided in the right hand margin and seal to close. Tick the appropriate boxes on the front of the answer book to indicate which questions you have answered.

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The Chartered Institute of Management Accountants 2010

E2 Enterprise Management

Enterprise Pillar

SECTION A 50 MARKS
[You are advised to spend no longer than 18 minutes on each question in this section]

ANSWER ALL FIVE QUESTIONS IN THIS SECTION

Question One
TS Consultants has been asked to investigate the issues underlying the underperformance and low staff morale of the Finance Department in YR Hospital. The consultants have access to various sources of information such as the recent staff satisfaction survey which shows that staff morale in the department is low. In addition, statistics from the HR Department reveals that both absenteeism and staff turnover are exceptionally high in the Finance Department. There have also been many complaints from other areas of the hospital about both the management and staff working in the department. However, staff enjoy competitive salaries and other excellent working conditions such as free car parking, a subsidised canteen and access to sports facilities. The consultants have run some focus groups with members of staff working in the department to try to gather more information to help them better understand the causes of underperformance and low staff morale. The findings suggest that there appears to be very much a them and us culture between management and staff, with the managers in the department exerting power based on their position and status. Staff say that they are only allowed to undertake the specific activities included in their narrow job descriptions and feel unable to fully contribute as a result of the chain of command in the Finance Department. Staff also say that they are not involved in decisions regarding the departments activities, and many say they have not had any training. They mentioned that there are very few career progression opportunities because of this. They feel their contributions are not recognised by management and that they never receive feedback on their performance. Staff characterise the leadership and management of the department as task-focused, with tight controls and close supervision. Having undertaken the review, the consultants are preparing the recommendations on how to improve the poor performance and low staff morale.

Required
With reference to theory, discuss the recommendations TS Consultants could make to help improve performance and staff morale in the Finance Department of YR Hospital. (Total for Question One = 10 marks)

Section A continues on the opposite page

Enterprise Management

November 2010

Question Two
M is a business that sells custom made computer-based information systems. Each customer order is for a unique system, which will involve experts from many functional areas within M. Each customer expects a high level of individual attention. Some systems take only four to six months to design and produce and cost less than 50,000, whereas other systems cost several million Euros and can take up to three years to complete. Projects are continually being completed and started. A Management Consultant's review of M's organisational effectiveness has concluded that the matrix structure is the most appropriate for M.

Required:
Identify the characteristics of the organisation that make it appropriate for M to have a matrix structure. (Total for Question Two = 10 marks)

Question Three
JB has recently joined the Finance Department of P Company as a trainee management accountant. As part of the Company's induction, she has been offered a mentor. However, since JB has not had any previous experience of mentoring, she is unconvinced of the benefits. She has asked LC, the facilitator of the induction session, to explain what is involved in the process of mentoring and how it might be a benefit to her as a new member of staff.

Required:
Explain the points that LC should make concerning the process and the benefits of mentoring for new members of staff. (Total for Question Three = 10 marks)

Section A continues on the next page

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November 2010

Enterprise Management

Question Four
PRC Company, a retailer of baby clothes and toys, has been in existence for 20 years. Its approach to strategy has tended to be informal and emergent rather than planned. However, the company is facing uncertain times and at a recent Board meeting, one of the directors suggested that the company should adopt a more formal approach to how it develops its strategy. He has suggested that the use of strategic management tools and techniques could help and, as a start, has recommended that the company should undertake a corporate appraisal.

Required:
Explain the purpose of corporate appraisal (SWOT), and what would be involved in PRC Company undertaking a corporate appraisal. (Total for Question Four = 10 marks)

Question Five
The data on sales performance in LS Company has shown a significant downward trend over the last year. The Marketing and Sales Department is blaming the Finance Department for the poor performance, since it was the pressure from the Finance Department that led the Marketing and Sales Department to increase the product price. The Marketing and Sales Department staff say that, in current market conditions, this was inappropriate and was the main reason for the loss of market share. They feel that the Finance Department staff are short sighted, too focused on costs in pricing decisions and do not appreciate that there are other factors that should be considered in product price setting. However, the Finance Department thinks that the Marketing and Sales Department has been complacent and has not had an aggressive marketing and sales strategy in place. Perhaps not surprisingly, communications and cooperation between the staff in the two departments is at an all time low and in meetings there is constant in-fighting and disagreements. To make matters worse, a consequence of the drop in sales has been that the senior management is proposing that there will need to be job losses in the Production Department. The trade union which represents the production workers is now threatening to take industrial action.

Required:
Compare and contrast the different types and sources of conflict occurring in LS Company. (Total for Question Five = 10 marks)

(Total for Section A = 50 marks)

End of Section A Section B starts on the opposite page

Enterprise Management

November 2010

SECTION B 50 MARKS
[You are advised to spend no longer than 45 minutes on each question in this section]

ANSWER BOTH QUESTIONS FROM THIS SECTION 25 MARKS EACH

Question Six
S Company operates in the consumer electronics industry designing and producing component parts which it assembles into products such as mobile phones, laptops and MP3 players. To date, it has only sold its products in D Country, its home market, where until recently it was market leader. However, the competitive landscape has changed significantly as companies from PP Country have entered D Country's market, competing aggressively on product innovation, quality and price. Market intelligence gathered by S Company on the new competitors suggests that they are supported in pursuit of their international strategies by sources of national competitive advantage. Looking to the future, S Company is evaluating its options on how to respond to the increased competition, including how it could better position itself, and what alternative strategies it could pursue. One option under review is to sell its products in new markets. GR, the Sales and Marketing Director, has identified NN Country as a possible market opportunity. As the first step in understanding whether this is a viable option, he has asked his team to undertake an initial assessment of the external environment in NN Country.

Required: (a)
With reference to Porter's Diamond model, explain the different sources of national competitive advantage that the companies from PP Country may enjoy and which could give them a competitive edge over S Company. (15 marks)

(b)

Using an appropriate strategic management framework / model, describe the information that GR, the Sales and Marketing Director, would require to help him assess the external environment in NN Country. (10 marks) (Total for Question Six = 25 marks)

Section B continues on the next page

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November 2010 5 Enterprise Management

Question Seven
V is a regional authority, which is about to invest in a new sporting facility in one of the main towns in the region. The sporting facility will include a large swimming pool, an athletics track and a number of indoor facilities such as a gymnasium and indoor tennis courts. It is hoped that this facility will attract major sporting events to the town and will encourage more local people, particularly school children, to take part in more sporting activities. The Finance Director of V 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 a range of new buildings and facilities involving a large number of specialist building contractors and equipment suppliers. The project is a collaborative venture funded by the regional authority and investment from three large local businesses. The Finance Director has been informed by the Board of V that this is a very high profile project for the regional authority and that overspending on this project is not allowed. It has recently been reported in the local newspaper that the local residents living near to the proposed site for the new sporting facility are not happy with the proposal. This is largely because the proposed site is in a wealthy area on the edge of the town and local residents feel that it would be more appropriate if the new facility was located more centrally. The new sporting facility would mean that two other smaller sporting facilities in the town, currently owned and run by the regional authority, would be closed down and staff relocated to the new facility. In the first meeting held by the project manager to communicate the proposals to staff, he was met with a hostile reaction, with many of them being very unhappy about moving to the new site. The Finance Director is aware that it is a complex project and that the use of project management software will be an important tool in making the project objectives achievable. He is also aware that he must consider the needs of the different stakeholders throughout the duration of the project.

Required: (a)
Explain how project management software could help the project manager and the project team during the life of the project. (12 marks) Identify the main stakeholders of the project and recommend appropriate strategies that the project manager could use to manage the different stakeholders' expectations. (13 marks) (Total for Question Seven = 25 marks)

(b)

(Total for Section B = 50 marks)

End of Question Paper

Enterprise Management

November 2010

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
1 KNOWLEDGE What you are expected to know.

VERBS USED
List State Define

DEFINITION
Make a list of Express, fully or clearly, the details of/facts of Give the exact meaning of

2 COMPREHENSION What you are expected to understand.

Describe Distinguish Explain Identify Illustrate

Communicate the key features Highlight the differences between Make clear or intelligible/State the meaning purpose of Recognise, establish or select after consideration Use an example to describe or explain something

3 APPLICATION How you are expected to apply your knowledge.

Apply Calculate Demonstrate Prepare Reconcile Solve Tabulate

Put to practical use Ascertain or reckon mathematically Prove with certainty or to exhibit by practical means Make or get ready for use Make or prove consistent/compatible Find an answer to Arrange in a table

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

Analyse Categorise Compare and contrast Construct Discuss Interpret Prioritise Produce

Examine in detail the structure of Place into a defined class or division Show the similarities and/or differences between Build up or compile Examine in detail by argument Translate into intelligible or familiar terms Place in order of priority or sequence for action Create or bring into existence

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

Advise Evaluate Recommend

Counsel, inform or notify Appraise or assess the value of Propose a course of action

November 2010

Enterprise Management

Enterprise Pillar

Management Level Paper

E2 Enterprise Management

November 2010

Tuesday Afternoon Session

Enterprise Management

November 2010