Enterprise Pillar

E1 Enterprise Operations
24 February 2014 Monday 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 subquestions). 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 to 8.
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.

E1 Enterprise Operations

DO NOT OPEN THIS QUSTION PAPER UNTIL YOU ARE TOLD TO DO SO

TURN OVER

The Chartered Institute of Management Accountants 2014

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

Which ONE of the following is NOT a category featured in Porter's Value Chain?

Procurement

Operations

Marketing and sales

Gross profit
(2 marks)

1.2

'Uncertainty avoidance' is a term used to describe which ONE of the following?

A national cultural dimension

A country risk

A political risk

A sustainability audit key finding

(2 marks)

1.3

Which ONE of the following is an independent member of a company's Board with

particular concern for governance?

Non-executive director

Management consultant

Political lobbyist

External examiner
(2 marks)

Enterprise Operations

March 2014

1.4

An investment made by a company into a company or entity based in another country is

known as which ONE of the following?

Foreign direct investment (FDI)

Portfolio flows

Outsourcing

Offshoring
(2 marks)

1.5

Mendelow's four cell matrix illustrates which ONE of the following?

The dominance of various stakeholders in a decision

The potential growth and market share of a product

The support required by a technostructure

The direction of organisational growth strategies

(2 marks)

1.6

The acronym BRIC refers to which ONE of the following?

A system of business reporting and inventory control

A tool for macroeconomic analysis

Certain important national economies

A framework for determining business risk in a country

(2 marks)

1.7

The range of management issues associated with converting resources into required
goods or services within an organisation is known as which ONE of the following?

Sourcing strategies

Product marketing

Liberalisation

Operations management
(2 marks)

1.8

Electronic Executive Information Systems (EIS) and Expert Systems (ES) are examples of
which ONE of the following?

Customer relationship management software

Database management

Computer networking

Decision based software

(2 marks)

Section A continues on the next page

TURN OVER
March 2014

Enterprise Operations

1.9

Which ONE of the following is the usual reason for dispersed and virtual team working in
an organisation?

Weak management

Utilisation of developments in technology and information systems

Poor hygiene factors in the workplace

Localised human resource management

(2 marks)

1.10 When evaluating a new information system, which ONE of the following would NOT
represent a tangible cost?
A

Additional training undertaken by IS staff

Heating and lighting where the system is housed

Staff uncertainty caused by the change

Time taken on system design

(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

March 2014

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)

Distinguish between ISO9000 accreditation and Total Quality Management (TQM).

(5 marks)

(b)

Describe FIVE features of a successful database system.

(5 marks)

(c)

Explain the relationship between stakeholders and corporate governance.

(5 marks)

(d)

Explain the reasons for, and main types of, systems maintenance.
(5 marks)

(e)

Describe FIVE main features of the Six Sigma approach.

(5 marks)

(f)

Describe the types of waste a lean management approach would try to eliminate.
(5 marks)

(Total for Section B = 30 marks)

End of Section B
Section C starts on the next page

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March 2014

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
The country of Cland has twelve regions, each with a regional government responsible for local
services including education and law and order. Following last years election, SW region has a
new regional government (SWRG) that wishes to simplify pay structures and increase workforce
flexibility and productivity for all its employees.
Employee pay and conditions of service have developed over time as a result of collective
national negotiation between employer representatives and the several national trade unions.
Currently all SWRGs employee groups are paid on separate pay scales and have different
leave, maternity and sickness entitlements. Each pay group has particular features, for instance,
all university lecturers have the same fixed holidays and no teaching takes place at weekends.
By comparison, police officers work more flexible hours in return for generous allowances to
help pay accommodation costs. No bonus payment schemes apply to any group.
Following detailed discussions with Clands national government SWRG has begun a two phase
programme of reform. Although regional bargaining has never been tried before, the national
government supports the idea.
Phase 1 involved a number of senior SWRG managers including Human Resource (HR)
professionals providing a range of policy options. SWRG then made certain choices and
announced that it wishes to make the SWRG more flexible by introducing:

A unified pay scheme incorporating a performance management system (basic pay will
be reduced but high bonuses for individuals meeting performance targets would be
possible);
Promotion based solely on achievement of individual targets.

In addition, a feasibility study reviewing outsourcing possibilities for some of SWRGs non frontline services was commissioned. (Any decisions arising from this study will follow on after Phase
2 is complete.)
Phase 2 began with a negotiating team led by SWRGs senior HR managers meeting with all
regional union representatives collectively in order to persuade them to abandon nationally
negotiated contracts. A small uniform 'once-off' compensation payment to staff would be made
in return. The parties have met many times over the past ten months and although agreement is
close with others, the lecturers union is reluctant to accept the changes, so halting overall
agreement.
SWs political leaders are frustrated by this slow progress, and have instructed the negotiating
team to meet with each union separately to agree the terms and size of the once-off payments
for their respective groups. In addition, the regional university lecturers union will be made a
'final' offer and, if rejected, all lecturers will be written to personally offering them a 'deal'.
Lecturers accepting a new contract within 30 days will receive a small payment immediately.
Those who do not accept the new contract arrangements will be considered to have resigned
from their jobs.
A newspaper finds out about these plans and the front page headline next day reads 'SWRG's
unethical plans'.

The requirement for Question Three is on the opposite page

Enterprise Operations

March 2014

Required:
(a)

Explain the HR implications of the reforms that are taking place in SWRG.
(10 marks)

(b)

Describe the ethical issues associated with SWRG's attempts to alter pay and
conditions.
(10 marks)

(c)

Explain how outsourcing some of SWRG's non front-line services might help make
SWRG become more flexible.
(5 marks)
(Total for Question Three = 25 marks)

Section C continues on page 8

TURN OVER
March 2014

Enterprise Operations

Question Four
5NX is a growing regional company that has successfully used local radio advertising to raise
awareness of its products. The company supplies fresh 'quality' sandwiches, home baked
snacks, the finest coffee and freshly squeezed fruit juices for sale at relatively high prices in
petrol filling stations. Products are produced by traditional methods from very early morning by a
team of employees at a central depot and are delivered throughout the day by temporary
workers in a fleet of company vehicles. Drivers bring back order sheets at the end of a shift for
future deliveries to be scheduled. Invoicing for payment takes place some time afterwards.
5NX is, for the first time, undertaking a full strategic marketing planning process in conjunction
with a local business advisor. So far, limited market research, financial projections and a SWOT
(strengths, weaknesses, opportunities, threats) analysis have been prepared. One weakness
already identified as part of the SWOT analysis is that the number of deliveries required is
increasing, while some of the drivers are becoming unreliable. The owner is worried that this
may create a poor image with customers and lead to delays in delivery. She is also interested in
two opportunities that have emerged from the planning process:

The use of time saving food preparation and packaging equipment. This will mean
considerably fewer people being involved in food preparation but some employees
could be redeployed as drivers on a permanent basis.
In addition to making deliveries, drivers could get direct feedback from customers,
persuade petrol stations to take new product lines and provide intelligence on
competitors' products. If time allows they could also leave promotional brochures with
staff at other petrol stations and outlets (such as railway stations and newspaper shops)
in the hope of future business.

The business advisor has suggested that the owner captures the elements of 5NX's marketing
mix for incorporation into its marketing plan.

Required:
(a)

Discuss how 5NX's marketing mix might contribute to its marketing plan.
(10 marks)

(b)

From the information that is given, illustrate the extent to which 5NX is following the
marketing concept.
(10 marks)

(c)

Describe other ways in which Information Systems (IS) and Information Technology
(IT) might assist 5NX's marketing operations in the future.
Your answer should not include reference to food preparation and packaging
equipment.
(5 marks)
(Total for Question Four = 25 marks)

(Total marks for Section C = 50 marks)

End of Question Paper

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March 2014

LIST OF VERBS USED IN THE QUESTION REQUIREMENTS

A list of the learning objectives and verbs that appear in the syllabus and in the question requirements for
each question in this paper.
It is important that you answer the question according to the definition of the verb.
LEARNING OBJECTIVE
Level 1 - KNOWLEDGE
What you are expected to know.

Level 2 - COMPREHENSION
What you are expected to understand.

VERBS USED

DEFINITION

List
State
Define

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

Describe
Distinguish
Explain

Communicate the key features

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

Identify
Illustrate
Level 3 - APPLICATION
How you are expected to apply your knowledge.

Apply
Calculate
Demonstrate
Prepare
Reconcile
Solve
Tabulate

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

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

March 2014

Analyse
Categorise
Compare and contrast

To put to practical use

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

Construct
Discuss
Interpret
Prioritise
Produce

Examine in detail the structure of

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

Advise
Evaluate
Recommend

Counsel, inform or notify

Appraise or assess the value of
Propose a course of action

11

Enterprise Operations

Enterprise Pillar

Operational Level Paper

E1 Enterprise Operations

March 2014

Monday Morning Session

Enterprise Operations

12

March 2014