Enterprise Pillar

Operational Level

E1 – Enterprise Operations

E1 – Enterprise Operations
23 November 2010 – 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 2010

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 benefit of corporate governance?
A Improved access to capital markets.
B Stimulation of performance.
C Enhanced marketability of goods and services.
D Prevention of fraudulent claims by contractors.
(2 marks)

1.2 Corporate political activity is normally undertaken in order to

A secure policy preferences.
B make the world a better place.
C further an environmental agenda.
D understand the external drivers on an organisation.
(2 marks)

1.3 Political risk analysis is conducted by a company considering international operations and
normally focuses on the
A world economy generally.
B relations between the USA, Japan and Europe.
C political and cultural differences between the home and target country.
D industrialisation of the target country.
(2 marks)

Enterprise Operations 2 November 2010

1.4 Efficient regulation of companies is said to exist if
A the total benefit to the nation is greater than the total cost.
B there is greater integration of the world’s economies.
C greater innovation takes place by all businesses.
D the effect on businesses is neutral.
(2 marks)

1.5 The basis of the stakeholder view is that

A only shareholders are legitimate stakeholders.
B only creditors and shareholders are legitimate stakeholders.
C persons, groups and organisations with an interest in the organisation are stakeholders.
D only members that an organisation officially recognises are stakeholders.
(2 marks)

1.6 Which ONE of the following is not an approach to systems implementation?

A Parallel running.
B Phased changeover.
C Matrix operation.
D Pilot testing.
(2 marks)

1.7 Which ONE of the following is not normally associated with outsourced IS solutions?
A Ensuring contract compliance.
B Assembly and maintenance of a suitably skilled workforce.
C Preparing formal tendering documents.
D Invoicing, processing and payment.
(2 marks)

1.8 A necessary product/service requirement to meet the Japanese interpretation of ‘quality’ is

A to comply with all safety standards.
B to cost no more than necessary.
C to meet a design brief.
D to meet customer expectations.
(2 marks)

Section A continues on the next page

TURN OVER

November 2010 3 Enterprise Operations

1.9 Process design can best be improved by
A an organisational restructure to reflect functions not processes.
B improved checks on suppliers.
C adopting a strategy of continuous improvement.
D improved quality control.
(2 marks)

1.10 Collaborating with its suppliers may bring a company added value because it can
A strike a harder bargain with its suppliers.
B work with a supplier to improve quality and reduce costs.
C avoid transaction costs.
D introduce price competition amongst suppliers.
(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 November 2010

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) Briefly explain FIVE reasons for the growth in outsourcing by organisations.
(5 marks)

(b) Describe FIVE ways in which emerging economies have benefited as a result of foreign
direct investment in their countries by multinational enterprises.
(5 marks)

(c) Certain organisations have been transformed by information and communication

technology (ICT). Briefly explain FIVE significant ICT changes using retail organisations
as an example.
(5 marks)

(d) Describe FIVE forms of waste within manufacturing organisations that lean process
improvement aims to eliminate.
(5 marks)

(e) “Lean” thinking was first developed with manufacturing organisations in mind. Describe
FIVE examples of ways in which these waste elimination principles might be applied to
improve efficiency in service organisations (such as hospitals and offices).
(5 marks)

(f) Describe the key aspects of a programme to implement Total Quality Management
(TQM) within a manufacturing organisation.
(5 marks)

(Total for Section B = 30 marks)

End of Section B

Section C starts on the next page

TURN OVER

November 2010 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
The country of Bigland has a democratically elected government which determines broad
national policies. Local services such as education, social care and environmental services are
the responsibility of the elected local government for the regions. These regions are funded by a
combination of local taxes and government grants. The largest region is Middleregion, which is
about to develop a new workforce strategy for its many local government employees. Recently it
has received a report from its external auditor into its overall arrangements for achieving value
for money. The external auditor has made three recommendations relevant to human resources
(HR):
• There needs to be greater clarity over the distinctive roles carried out by both
Middleregion’s Human Resources Department and line managers in developing and
implementing HR practices;
• A new workforce strategy is a good initiative but planning will need to take account of a
changing environment and be relevant to local conditions;
• Middleregion should consider moving to more electronically-based HR processes and
systems (e-HR). e-HR includes using technology to improve HR services, such as
recording and monitoring systems, automating administrative tasks like recruitment, and
communicating HR information on the intranet.

Required:
(a) Discuss the contributions of both Middleregion’s Human Resources Department and
line managers in developing and then implementing HR practices.
(10 marks)

(b) Explain, with examples, how Middleregion should plan a new workforce strategy that
takes account of a changing environment and is relevant to local conditions.
(10 marks)

(c) Explain the costs Middleregion should take account of when considering moving to e-
HR.
(5 marks)

(Total for Question Three = 25 marks)

Section C continues on the opposite page

Enterprise Operations 6 November 2010

Question Four
The DD drinks company was founded over one hundred years ago by a deeply religious family
and has been recognised as being a good employer ever since. The company has a long history
of supporting sporting events as part of its stated commitment to help promote healthy lifestyles.
DD has a corporate social responsibility (CSR) commitment to behave ethically while helping
improve the quality of life of society generally. A percentage of DD’s profits are also allocated to
a number of local charitable causes every year.
Using secret natural ingredients, DD has grown to become the world's leading manufacturer and
distributor of non-alcoholic drinks. The company has an extremely strong brand and its drinks
are sometimes sold alongside ‘own brand’ alternatives which it manufactures and packages on
behalf of a few large supermarket chains. Own brand drinks sell more cheaply than DD branded
products, are less costly to produce (they avoid expensive labelling and promotion) but sales
remain low. DD spends heavily on displaying some of its ever-expanding product lines on
television, normally before and after popular programmes aimed at children and teenagers. For
the first time this year, DD is also spending an equal amount on online advertising. Following the
pattern of its major rivals, DD has recently sought celebrity endorsements for its products. Focus
group research indicated that the endorsement by a controversial rapper Mr TT would appeal to
its target market segment. When this was announced there was criticism from religious and
political groups because of the music’s association with exploitation of females, violence and
bad language. One newspaper editorial accused DD of ‘endorsing immorality’. In response, DD
decided not to use Mr TT in its campaigns and admitted that it had made an error of judgement
in a press statement.
Now a further problem has arisen. An international health ‘watchdog’ body has reported that
DD’s products contain high levels of sugar and, if drunk excessively by children, they can lead to
long term gum and tooth decay. DD has yet to respond to the report.

Required:

(a) Discuss the implications of DD’s activities on its ethical stance and CSR position.
(10 marks)
(b) Explain the role that the basic marketing mix and branding have in DD’s positioning
to appeal to its target market segment.
(10 marks)
(c) Discuss the likely benefits of DD’s increased use of the internet for marketing
purposes.
(5 marks)
(Total for Question Four = 25 marks)

(Total marks for Section C = 50 marks)

End of Question Paper

November 2010 7 Enterprise Operations

 This page is blank

Enterprise Operations 8 November 2010

 This page is blank

November 2010 9 Enterprise Operations

 This page is blank

Enterprise Operations 10 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 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

November 2010 11 Enterprise Operations

 Enterprise Pillar

Operational Level Paper

E1 – Enterprise Operations

November 2010

Tuesday Morning Session

Enterprise Operations 12 November 2010