E1 – Enterprise Operations

Enterprise Pillar
Operational Level

E1 – Enterprise Operations
30 August 2011 - Tuesday 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, highlight
and/or make notes 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 the 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 questions 3 and 4 are highlighted 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.

ALL QUESTIONS ARE COMPULSORY.

Section A comprises 10 sub-questions and is on pages 2 to 4.

Section B comprises 6 sub-questions and is on page 5.

Section C comprises 2 questions and is on pages 6 and 7.

The list of verbs as published in the syllabus is given for reference on page
11.

Write your candidate number, the paper number and examination subject title
in the spaces provided on the front of the 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 the
questions you have answered.

TURN OVER

© The Chartered Institute of Management Accountants 2011

SECTION A – 20 MARKS
[You are advised to spend no longer than 36 minutes on this question]
ANSWER ALL TEN SUB-QUESTIONS

Instructions for answering Section A

The answers to the ten 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 the
markers know which sub-question you are answering. For multiple choice questions you
need only write the sub-question number and the answer option you have chosen. You
do not need to start a new page for each sub-question.

Each of the sub-questions numbered from 1.1 to 1.10 inclusive, given below, has only ONE
correct answer. Each is worth two marks.

Question One
1.1 Small groups of employees that meet to identify work problems and their solution are
known as
A quality circles.
B peer counsellors.
C cellular production teams.
D teleworkers.
(2 marks)

1.2 The extended marketing mix does NOT include which ONE of the following:
A People
B Processes
C Physical evidence
D Positioning
(2 marks)

1.3 According to Hertzberg's dual factor theory of motivation, one set of factors is known as
A demotivation factors.
B disposition factors.
C self actualisation factors.
D hygiene factors.
(2 marks)

Enterprise Operations 2 September 2011

1.4 Porter's value system shows the organisation in terms of
A the value chains of suppliers, channels and the customer.
B primary activities, support activities and margin.
C the technostructure, strategic apex and operating core.
D passive, independent, supportive and integrative approaches to supply.
(2 marks)

1.5 Which ONE of the following is NOT associated with quality management?
A 5-S practice
B 180 degree feedback
C Six Sigma methodology
D Five-why process
(2 marks)

1.6 Intrinsic satisfaction is said to be derived from which ONE of the following issues:
A Perks of the job
B Job content
C Job rewards
D Group cohesiveness and belongingness
(2 marks)

1.7 Which ONE of the following is an example of direct marketing?

A Writing an article for a trade journal
B Targeting individual customers with promotional material
C Posting 'blogs' to draw attention to the organisation
D Public relations activities
(2 marks)

1.8 Motivation theories and reward systems derived from F W Taylor's thinking are by nature
best described as
A behavioural.
B human relations.
C content.
D scientific.
(2 marks)

Section A continues on the next page

TURN OVER

September 2011 3 Enterprise Operations

1.9 Service Level Agreements are normally associated with
A job reductions negotiated with staff groups.
B deskilling.
C agreed appraisal outcomes.
D outsourcing.
(2 marks)

1.10 Which ONE of the following is NOT associated with a government's fiscal policy?
A Levels of taxation
B Level of spending by the government
C Revenue raising
D Interest rates
(2 marks)

(Total for Section A = 20 marks)

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

End of Section A
Section B starts on the opposite page

Enterprise Operations 4 September 2011

SECTION B – 30 MARKS
[You are advised to spend no longer than 9 minutes on each sub-question in this section]
ANSWER ALL SIX SUB-QUESTIONS IN THIS SECTION - 5 MARKS EACH.

Question Two
(a) Explain why 'Supply' has been described as being more significant than 'Purchasing' for
an organisation.
(5 marks)

(b) Economies in Asia and Latin America have been a target for two main forms of Foreign
Direct Investment (FDI) by Multi National Enterprises (MNEs). Briefly describe the two
main forms of FDI and the likely benefits of these to the host economies.
(5 marks)

(c) Explain the reasons why management might choose a direct approach to a system
changeover in preference to other alternatives (such as phased, parallel running or pilot
schemes).
(5 marks)

(d) Explain FIVE main disadvantages of outsourcing for an organisation.

(5 marks)

(e) Explain FIVE main disadvantages of an organisational policy of HR succession planning.

(5 marks)

(f) Briefly explain the main arguments for a country wishing to restrict free trade.
(5 marks)

(Total for Section B = 30 marks)

End of Section B

Section C starts on page 6

TURN OVER

September 2011 5 Enterprise Operations

SECTION C – 50 MARKS
[You are advised to spend no longer than 45 minutes on each question in this section]
ANSWER BOTH QUESTIONS IN THIS SECTION – 25 MARKS EACH

Question Three
Over the past few years, the company iB4e has underperformed compared with its competitors
which enjoy stronger brand recognition. In addition, many experienced staff responsible for key
customer accounts have left the company. Even though it pays comparable salaries to its rivals,
iB4e has had difficulty replacing these staff with outside appointments. This has led to some
existing employees temporarily taking on customer relationship management in return for small
one-off payments. This has been good for staff morale but the effectiveness of this measure as
a long term alternative to appointing suitably experienced new staff is questionable given that
some of these staff have been more successful than others.
The Chief Executive has responded decisively to these events by creating a new senior post of
Director of Branding and launching a new initiative which he calls 'sharpening the focus' which is
centred on:
• improved corporate performance;
• connecting more closely with customers, and
• improving marketing practices.
The new Director of Branding is highly experienced in brand management and promised at her
interview to 'revitalise the iB4e brand'. In addition to leading the 'sharpening the focus' initiative,
she has been tasked to review a number of issues including internal marketing and employer
branding.
The new Director believes that employer branding can be enhanced by developing a stronger
corporate brand and making employee benefits more explicit. As someone new to the
organisation, she is struck by the fact that iB4e offers a number of benefits beyond basic pay.
Although she was previously aware of iB4e's good pension scheme, she was unaware of the
flexitime scheme, training and development opportunities and a subsidised canteen and social
club until she took up her position. She believes that a 'total reward package' approach which
draws together all financial and non-financial benefits (including working practices, development
opportunities and the challenge of working for iB4e itself) should be combined into an integrated
scheme which would be available to all employees and be visible to potential employees. In
addition, she feels bonuses for good performance could be awarded that involve an employee
choosing from a range of benefits to a maximum value from a 'menu' offered by the company.

Required:
(a) Explain how effective brand management can assist iB4e's 'sharpening the focus'
initiative.
(10 marks)
(b) Describe the advantages and disadvantages of iB4e developing a 'total reward
package' approach.
(10 marks)
(c) Explain the value of internal marketing for iB4e.
(5 marks)

(Total for Question Three = 25 marks)

Section C continues on the opposite page

Enterprise Operations 6 September 2011

Question Four
The LD2 group has grown rapidly over the past five years through acquiring a number of smaller
kitchen accessory manufacturers and kitchen suppliers and fitters. As a consequence of this
strategy LD2 has 'inherited' many different systems which it has continued to operate. LD2's
technology now lags far behind that of its competitors, many of whom are experimenting with
online trading. A number of quality and other problems within the group have now become
apparent including:
• incompatibility of software;
• complex reconciliation of systems output being performed;
• stock shortages leading to contract delays;
• late management reports, and
• payroll and invoicing errors due to faulty data entry and calculation.

LD2 now wants to consolidate its business by simplifying and improving the quality of its
operations. A budget has been established to introduce a quality approach, renew equipment
and standardise systems. LD2 has established two working groups to develop solutions and
bring about improvements.

Working Group 1 is required to advise on the replacement of the existing administrative and
management systems with the most advanced available. The group has already had its
recommendations approved to:
• introduce a single People and Payroll system for the whole group. Within this system a
web browser would allow managers to have immediate access to information on diaries,
overtime, holidays and sickness, as well as being able to submit accurate timesheet
entries directly into a central payroll system;
• engage a specialist to develop a corporate website comparable to the best in the
industry.
Working Group 2 has been tasked with advising on the implementation across the group of the
most appropriate approach to improving quality.

Required:

(a) Explain how the People and Payroll system could benefit LD2.
(10 marks)
(b) Describe the main approaches to quality that are available to LD2.
(10 marks)
(c) Briefly describe the likely features of the proposed corporate website if it is to be
comparable to the best in the industry.
(5 marks)
(Total for Question Four = 25 marks)

(Total marks for Section C = 50 marks)

End of Question Paper

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Enterprise Operations 10 September 2011

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
Level 1 - KNOWLEDGE
What you are expected to know. List Make a list of
State Express, fully or clearly, the details/facts of
Define Give the exact meaning of

Level 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
or purpose of
Identify Recognise, establish or select after
consideration
Illustrate Use an example to describe or explain
something

Level 3 - APPLICATION
How you are expected to apply your knowledge. Apply To put to practical use
Calculate Ascertain or reckon mathematically
Demonstrate To prove with certainty or to exhibit by
practical means
Prepare Make or get ready for use
Reconcile Make or prove consistent/compatible
Solve Find an answer to
Tabulate Arrange in a table

Level 4 - ANALYSIS
How you are expected to analyse the detail of Analyse Examine in detail the structure of
what you have learned. Categorise Place into a defined class or division
Compare and contrast Show the similarities and/or differences
between
Construct Build up or compile
Discuss Examine in detail by argument
Interpret Translate into intelligible or familiar terms
Prioritise Place in order of priority or sequence for action
Produce Create or bring into existence

Level 5 - EVALUATION
How you are expected to use your learning to Advise Counsel, inform or notify
evaluate, make decisions or recommendations. Evaluate Appraise or assess the value of
Recommend Propose a course of action

September 2011 11 Enterprise Operations

 Enterprise Pillar

Operational Level Paper

E1 – Enterprise Operations

September 2011

Tuesday Morning Session

Enterprise Operations 12 September 2011