ACCA P3 Live Online Revision JUNE2014

1 A.P.C Final ACCA P3 revision

ACCA P3 Business Analysis

June2014

Live Online 2 Days Revision

Answer Rewritten of Revision Qs

Tutor: Steve Harris


Lesco Group Limited, April 2015

All rights reserved. No part of this publication may be reproduced, stored in a retrieval system,

or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording

or otherwise, without the prior written permission of Lesco Group Limited.


Please download ACCA p3 past exam questions in the following order

through this link:

http://www.accaglobal.com/en/student/acca-qual-student-journey/qual-resource/acca-qualificat

ion/p3/past-exam-papers.html

June2012 Q1: (Hammond Shoes) business strategy analysis

June2010 Q2: Acquisition & Porters Diamond

Dec2011 Q3 Homeliver: project management

June2008 Q4: Change Management

DEC2010 Q1: corporate strategy+ change management + small corporate strategy textbook area

DEC2011 Q1: business strategy+ evaluation +CSF

DEC2007 Q2 project management(similar to June2013 Q1(a))

June2011 Q2 8-hats

June 2008 Q3

DEC2008 Q1(c) strategy lenses

DEC 2010 Q3(a)

DEC2009 Q1(c) stakeholder analysis

New pilot paper Q4(a)

DEC2007 Q1 SWOT

New pilot paper Q1(a) Pestel

DEC2009 Q1(a) 5 forces

DEC2008 Q2 Ashridge portfolio

DEC2011 Q2 business process

June2011 Q3 business process

June2009 Q2 people

DEC2010 Q3(b) organizational structure(similar to june2013 Q1(b))

DEC2010 Q4 IAA(business case) Project management- business case

New pilot paper: Q4 DRB(b) Supply Chain

DEC2010 Q2: (marketing) TMP(b) Marketing

June2011 Q4(a) E-marketing

June2011 Q1

DEC2009 Q3


Answer:

June2012 Q1

Tutor tips:

(a) this requirement is slightly weird because the examiners is not asking you to evaluate the

strategic position of business using SWOT, PESTEL, 5 forces etc and thats why I am going to

show you this question. So don't panic when you are encountering a question like this because

remember my saying,you can use your business common sense to solve any questions in p3

exam.

(b)use your business common sense to solve the question line by line as suggested in the live

revision. I have used a different model from your examiner. Im using your old friend Ansoff

but your examiner is trying to use TOWS and because he has set the scenario based on this.

(c)textbook knowledge and I have covered in the tuition video.


(a)

Financial position analysis: (from working1)

Profitability:

1, Profit margin

Revenues and gross profit have both fallen significantly in the four years of data given in Figure 1. In

2007 the company reported a gross profit margin of 235% and a net profit margin of 82%. This has

declined steadily over the period under consideration. The figures for 2009 were 200% and 47% and for

2011, 179% and 29% respectively. This maybe due to decrease in sales revenue and increase in costs.

Sales have fallen by $150m in four years almost an 18% decrease. In contrast the cost of sales has

decreased by only $75m, a decrease of about 115%. This probably reflects the fact that high expenses

of redundancy enacted by law in this country.

2, ROCE

The Return on Capital Employed (ROCE) has dropped substantially, from 2414% in 2007 to 645% in

2011.

The effect of cheap imports appears to be reflected in the profitability of the company and also maybe

because of the problem of high fixed costs given most of the factories and shops are owned by

Hammond shoes.

Gearing:

The gearing ratio of the company has increased from 6.9% in 2007 to 22.5% in 2011 and this has

certainly increase the financial risk of the company together with a big fall in interest cover from 14 in

2007 to 1.33 in 2011. Because Hammond shoes is averse to risk and borrowing so this may be

contradictory to their attitude and makes the $37.5m more difficult to be enacted.

Liquidity:

The payable days has increased dramatically from 28days in 2007 to 63days in 2011 and this is

contradictory to the values of the company that stating the importance of paying suppliers on time. Given

the finance cost has increased 66.67%(5 from 2007 and 15 from 2011) which has led to an decrease in

the interest cover and it may suggest Hammond shoes is using suppliers as a source of free credit as a

financing option. If the Hammond Family is made aware of this and it make the proposed investment to

be very difficult to be enacted.

Cost benefit analysis: (from working2)

From the cost benefit analysis that this proposed investment is not valid given the total expected value of

it is only negative $3 million.

But theres some criticism when using this method:

Firstly, the 70% and 30% predicted by management team of Hammond shoes may not be valid because

this is just a guess from their experience and maybe the reality may turn out that therell be no net

benefits in year 4-6.


Secondly, the prediction about the increase in productivity which would bring a net benefits of $5m may

not be correct because its just a guess by management from Hammond Shoes.

Thirldy, only net benefits are based on the discounted future cash flows but maybe other items such as

the cost of investment has not discounted at all which may make the estimation process not accurate.

However, it has to be recognised that the projection only covers the first six years of the new production

facilities. The factory was last updated twenty years ago and so it seems reasonable to expect net profits

to continue for many years after the six years, but it must be recognised that predicting net benefits

beyond that horizon becomes increasingly unreliable and subjective.

Conclusion

Given the above analysis that the proposed investment of $37.5m can be less likely to raise given

the financial position is getting worse and this approach is contradictory to the attitude of

Hammond family.

Working 1:

Years 2011 2009 2007

Profitability ratio:

Gross profit margin

(gross profit/revenue)

17.9% 20% 23.5%

Net profit margin

(net profit/revnue)

2.9% 4.7% 8.2%

ROCE(PBIT/equity+long

term borrowings)

6.4% 11.3% 24.1%

Gearing ratio:

(DEBT/Equity)

22.5% 16.1% 6.9%

Interest cover

(PBIT/Interest)

1.33 3.5 14

Liquidity Ratio:

Payable days 63days 43days 28days

Receivable days 36.5days 38.9days 38.6days

Working2:

Expected

value

Cost benefit analysis:

Costs =($37.5m)

(benefits from increased productivity) Returns=$5mX3years =$15m

Return from year4-6:

-70%: $5m X 3yrs=$15m --------70%X$15m =$10.5m

-30%:$10mX 3yrs=$30m --------30%X$30m =$9m

Total expected values= ($3m)


(b)

To: board of Hammond Shoes

From: business consultant

Date: 10th DEC2012

Subject: Strategic options

Introduction:

This note details the alternative strategic options that Hammond shoes can use using Ansoff

Growth Vector Matrix.

Market penetration:

Hammond shoes can establish a Hammond shoes experience center to attract customer who can then

enjoy the experience of good customer service for free by Hammond shoes.

Hammond shoes can develop a full e-commerce website where people can buy shoes directly

from the internet given Hammond has a sophisticated information system which has helped

footwear and distribution a lot.

Hammond shoes can upgrade its production facilities in order to produce and sell more shoes to

the current market.

Hammond shoes can focus on producing more children shoes to exploit the opportunity that

parents nowadays spend lot of money on their children.

Hammond shoes can increase its advertising spent on their current shoes which are most suitable

for the children to exploit the opportunity that after the campaign that many parents will buy the

shoes from Hammond shoes.

Hammond shoes can increase its advertising spent on their safe and car free environment to

exploit the opportunity of attracting more customers to shop in Hammond shoes retail village.

Hammond shoes can spend more on the advertising campaign that their products are green to

attract more green consumers.

Hammond shoes can build by its corporate social responsibility better by eg, donating more

money to the society to attract those green consumers who are in favorable of company that it

acting socially responsible.


Hammond shoes can increase its advertising spent on non exploitation of labour in their

products by stating how much benefits they have given to those labour in order to attract more

green consumers who are in favor of non exploitation of labor

Hammond shoes can emphasize the shortest time they take to produce the shoes such as from

design to launch in the retail shops and distribute to the consumers such as ZARA by spend

more on the advertising to deal with the threats that cheap products from overseas.

Hammond shoes can also reduce its prices of the shoes by trying to use the fund generated from

selling the disused factory to fund the gap in order to compete with the cheap products from

overseas because price cutting campaign is temporary because there would always be an

increase in fuel and transportation costs in the world.

Hammond shoes can differentiate its products claiming to be social and environmentally friendly

from the cheap products from oversea to gain more market share.

Hammond shoes should comply and also emphasize in its annual report that it complies with the

laws and regulations published by the government and has demonstrated good corporate social

responsibility to try to build up its brand further.

Product Development:

Given Hammond shoes has got lots of experience in retail industry so Hammond shoes can

consider to sell more products to customers using his existing retail shops to exploit this strength.

Market development:

Hammond shoes can develop retail villages on the spare land given it has a disused factory in the

north of Arnland to expand it market.

Hammond shoes can move it production center to a foreign country and produce shoes

organically to exploit lot labor costs advantages to fix its current weaknesses.

Hammond shoes can also franchise a foreign shoes maker to get a annual franchising fees to

increase its current income as well as expand its market share and brand recognition quickly.

Hammond shoes can create a joint venture with a foreign shoes manufacturer given Hammond

shoes may not have enough experience of operating its businesses overseas and by doing so it

can certainly fix the weaknesses of having high production costs as well as building its brand

quickly overseas.

Diversification:

Hammond shoes can sell its shoes to different customers who enjoy buying from the internet and

so Hammond shoes can improve its current internet site in order to sell more to those customers.


Diversification:

Hammond shoes can diversify its business to enter into other industries such as clothes industry

to try to use up its experience in retail and also computer and software.

Conclusion:

The above analysis suggest there are lots of strategic options that Hammond shoes can take to

secure its future position.

(c)

Mission is the way that the company use to arrive at that destination(vision), eg, keep customers

happy whenever they walk into the shop.

Values such as integrity and enthusiasm will help company arrive at the final destination(vision).

Objectives are set from the mission.

One of the problems at Hammond Shoes appears to be that the core values of the organisation

are implied, but not explicitly stated. Originally, these were provided by the beliefs of the

founding brothers provision of education and housing for employees, secure jobs and good

working conditions.

Its core values include the provision of fair employment opportunities for the people of Petatown

and the reaction of the family to removing this central mission illustrates that this value remains

core to the continued existence of the company.

Thus the Hammond family should explicitly state their core values, perhaps as a detailed

expansion of a short, clear mission statement. This would allow the family to articulate its beliefs

and communicate these to customers, suppliers and employees.

A mission statement will normally contains:

1,Purpose of the organisation.

2,Overall strategy of the organisation.

3,The core values of the organisation.

A SMART objective should be set in order to help company reach its goal. Hammond Shoes

does appear to have certain objectives, such as keeping production in Petatown and providing

educational opportunities for employees.

But these are too vague and they are not measurable such as it doesnt state how many

educational opportunities it will provide.

The core value of treating suppliers fairly could have been remembered within an objective of

paying all suppliers within 30 days. Evidence suggests that they now stand at over 60 days, so the

company is failing to meet one of its core values fairness to suppliers.


Hammond Shoes does not have a clearly defined mission or explicitly stated values. Its objectives

are restricted and rarely quantified and they need to be improved.


June2010 Q2

(a)

Financial:

EVM delivers a Return on Capital Employed (ROCE) of 18.2%. This is very similar to the

ROCE of Swift Transport and appears to be a strong performance for the sector. This should

be acceptable to Swift shareholders.

The gross profit margin at 20% is higher than that of Swift, however, its net profit margin of

5.75% is lower. However, it is possible that Swift will be able to improve the profit margin

through economies of scale and by implementing competences gained at Albion. This would

make the prospect more acceptable.

Liquidity (as demonstrated by the current ratio of 1.14% and the acid test ratio of 1.05%) is

much

lower than that of Swift but Swifts capabilities can certainly help drop the trade payables in

EVM after the acquisition.

Gearing (30.9%) is much lower for EVM than for Swift. This may indicate a more conservative

approach to long-term lending.

The interest cover ratio (5) is half that of Swift. This could indicate lower profitability and higher

business taxation and swifts capabilities can help improve this.

Swift has the funds in place and its competences are one of the main factors driving the

acquisition. This would suggest that the acquisition is a feasible strategy for Swift to pursue.

Non-financial:

The Ambion market is mature and highly competitive. This pushes down profit margins so

acquiring EVM will be attractive because this can increase the overall profit for swift.

The Ambion government is hostile to road transport. This has led to high taxes and restricted

working practices which again push down margins so acquiring EVM will be attractive because

swift company will enjoy profit when the Ecuria is encouraging investment in the logistics

company.

Acquiring EVM would provide Swift with access to a new market in which demand is growing,

competition is immature and the government are investing in road transportation.

Acquiring EVM will increase the overall size of the group, allowing increased economies of

scale to be exploited which purchasing trucks and other equipment.

Swift has no experience of operating or acquiring foreign companies and Swift has no


experience of trading in Ecuria so this may be a problem for this strategy to be suitable.

Swift is still a private run company and the family are major shareholders making opposition to

the

acquisition from the shareholders unlikely.

(b)

1, Factor conditions

These are factors, such as skilled labour and infrastructure, that are necessary for firms to

compete in a given industry.

Significant factor conditions in Ecuria are the work ethic of the people, and the government

investment in the transport infrastructure.

2, Demand conditions

The home demand conditions are how firms perceive, interpret and respond to buyer needs.

In Ecuria, there has been a rapid growth in the transport of goods due to the moved to a market

economy. The people of Ecuria are traditionally demanding and have a passion for promptness

and precision which has shaped the operations of EVM.

3,Firm strategy, structure and rivalry

It often includes attitude to short-term profit, national culture and Level of domestic rivalry.

There is little evidence of rivalry in Ecuria. When there is little domestic rivalry, firms are generally

happy to rely on the home market.

There were few competitors initially and raising finance is difficult due to the structure of the

capital markets in Ecuria. As a result, most of EVMs competitors are small, family run firms that

offer a local service.

4, Related and supporting industries

Competitive success in one industry is often linked to success in related industries.

The case study does not provide any evidence that there are internationally competitive

industries related to logistics. The absence of internationally successful related and supporting

industries is an important factor to take into account when Swift decide whether to move a large

part of its logistics business to Ecuria.


Dec2011 Q3 Homeliver (Typical Project management)

Tutor Tips: I have gone through this question in your tuition video

(a) Please remember each of the stages of project management what do they do.

(b) When trying to analyse the problem, t think about textbook but rather use your business

common sense line by line solving the question in (b)

(c)don't think about the textbook but use your business common sense to analyze the

benefits:

Using software: economy(save money?); efficient(faster?); effective(customer will be

satisfied?)

(a)

1, Post-project review

The post-project review happens on completion of the project and may be considered to be the

final stage of the project after which the project is signed off and the team officially disbanded.

The aim is to evaluate the success of the project itself, not the success of the product delivered

by that project. It will look at the processes followed and decisions made during the project to

determine what went well, and what went badly. These findings are summarized as lessons

learned to ensure the same errors are not repeated in future projects again.

2, Post-implementation review

The post-implementation review aims to evaluate the product that the project has produced and

as such will happen some time after the working solution has been implemented. This gives the

users time to work with the new product and feedback their experiences into the formal review.

Then it will determined what would go well and what would go wrong of the implementation of

the product itself and they would be summarized as lessons which would be fed back to the

product production process.

3, Benefits realisation review

The benefits realisation review involves returning to the business case for the project and

determining whether or not the costs were accurate and also if benefits identified at the outset

were actually delivered by the project. This review can only be carried out, therefore, once the

product produced by the project has been delivered.

It is likely that this review will heppen at a later date than the post-implementation review due to

the long-term nature of many benefits. The lessons learned from the benefits realisation review

will feed into organizations benefits management process.


(b)

Post project review:

1, Lack of consultation

External stakeholders have not been involved in consultation and this will let them difficult to

understand the software before it was implemented.

Lesson learnt:

External stakeholders should be included in the in requirements gathering process where

appropriate as well as internal stakeholers.

2, Project slippage

Employees were originally only allocated to the project on a part time basis whilst also continuing

to carry out their normal duties.

This led to significant project slippage occurred which could not be rectified completely even

when staff were allocated to the project full-time. This late decision led to delivery of the

software two months behind schedule.

Lessons learnt

Appropriately qualified staff should be allocated to projects on a full-time basis from the outset.

Failure to do so may cause the project to fall behind schedule.

3, Failure to run a pilot project prior to roll-out

Rather than running a pilot project involving only a few supervisors and agents, the software was

rolled out to all supervisors and agents from the outset.

This meant that it was not possible to identify and fix faults prior to roll out.

Lessons learnt

A risk assessment relating to the scope of projects should be carried out.

Project managers should consider mitigating the risk by reducing the scope.

Post implementation review:

1, Lack of formal training

No formal training was given to employees as it was considered that the software was easy to

use.

Lessons learnt

Training should be carried out in order to:

- Pass on the necessary skills and knowledge,

- Allow early identification of possible faults or issues with the software.

2, Software faults and omissions (pick one of those)

There were a number of faults and omissions within the system, including the omission of the


order amendment facility which has already been considered.

The system failed to work with a popular browser suggesting the testing was insufficient as

testing should be carried out using a range of browsers.

Lessons learnt (pick one of those)

Testing of new software should be considered over a number of different browsers.

Wider acceptance testing which includes a range of different users should take place.

3, Documentation faults (pick one of those)

The documentation as a large colour document was provided to the self-employed users of the

system in PDF format. As a result, this was not done, the manual was therefore not properly read

and their ability to use the software suffered as a result.

In addition, the PDF was provided to users as an email attachment and a number of users claimed

to not receive the manual at all.

Finally, the manual contained a number of spelling and functionality errors. This reduces

confidence the software to which it relates.

Lessons learnt (pick one of those)

The method of distribution of software instructions should be carefully considered to ensure it is

appropriate to the needs of the user.

Documentation should be carefully proof read and technically checked to minimise the risk of

errors.

(c)

1, Staff savings

Staff savings from the reduction or elimination of order administrators at HomeDeliver.

There should be a reduction in the staff costs incurred for catalogue supervisors as the amount of

work required of them will fall significantly with the new system suggesting that less of them will

be required.

2, Improved cashflow

Because money is now sent daily rather than at the end of the week. This is a benefit because

Improved cash flow will reduce borrowing costs or increase investment income.

3, Improved customer service

Customer service and associated customer satisfaction should increase as the new system will

allow the customers to receive their items faster. This is because orders are entered daily rather

than weekly.

HomeDelivery will benefit from this as improved customer satisfaction should create more repeat

business (due to the reduced waiting time).


June2008 Q4

Tutor Tips:

(a)is textbook knowledge, many students may foget about this: evolution; revolution etc, but

you can classify this as revolution or evolution if you like if you can justify yourself!

(b) very familiar? Yes, you have attepmted lots of questions about this! Remember the

mncmonic:

TOP RP CDC!!


(a)

PSI currently sells to a specialist niche market the retail pharmacy market.

Therefore the proposed strategic change to sell to the general retail market represents a

significant change to PSIs product and its market. So it represents a diversification strategy.

Nature of change

The nature of a change describes whether it is gradual or a sudden change.

Gradual change builds on existing methods and approaches rather than challenging them.

Sudden change involves a major change to existing methods, processes and cultures.

Scope of change

The scope of a change describes the extent of a change; the extent to which an organisations

business activities or its business model need changing.

A change can either be a minor of a firms existing strategy, or it can be a fundamental change in

which radical changes are made to the existing business model.

Types of change

Bringing together these different components of change means we can identify four different

types of change: adaptation, reconstruction, evolution, revolution.

Adaptation is a change where the existing model is retained, and the change only incurs

gradually.

The chief executive and the sales and marketing director may see the move to selling to the

general retail industry as an adaptation of the existing model, but the software directors

resistance to the change suggests that the change will be more fundamental.

Reconstruction requires a fundamental and slow change in the operations and process of an

organisation often in response to crisis such as a long-term decline in performance. However, it

does not involve any major change to the business model.

The proposed changes at PSI are borne out of a desire for growth, rather than in response to any

critical problems facing the company. So they do not represent a reconstruction.

Evolution is a gradual process that leads to a new business model(fundermental). Evolutionary

change often arises as a result of business analysis, leading to a planned change.

This appears to be the case at PSI. The move into the generic retail market represents a

fundamental change in strategic direction and it is likely that the companys processes and

structure will have to change significantly to develop and sell the new packages successfully.

Revolution change is rapid and wide ranging response to extreme pressures for change. It is likely


to require a fundamental shift in the business model, and in the way a company operates.

Although the proposed changes at PSI represent a diversification, they are not radical enough to

represent a revolution.

(b)

Balogun and Hope Hailey identifies there are eight contextual features that could influence the

success or failure of the change.

1, Time

Given that the software development team already appears to be under pressure to deliver and

upgrade the current problem, it also seems unlikely that they will be able to develop the software

package for the general market quickly. Therefore a longer time scale may be more realistic

anyway.

However, the chief executive wants to introduce the changes quickly to accelerate the growth of

the company and makes it an attractive acquisition target. So the timetable for change could

become a source of conflict between the chief executive and the software director and his staff.

2, Scope of change

This is an evolutionary change, because the change from serving a niche market to serving a

general retail market represents a substantial change of focus.

One possible threat to the success of the change is if the chief executive and the sales and

marketing director underestimate(misunderstand) the scope of the change.

3, Preservation

The software development team are critical to the success of the proposed changes, and PSIs

business more generally. Therefore it is vital that PSI retains as many of its key software staff as

possible.

However, the software developers are already under constant pressure to meet the demands of

existing customers, and so if their workload is increased still further a number may decide to

leave PSI and the whole change project could be seriously affected.

4, Readiness for change

The software developers would prefer to improve the software package they offer existing

customers rather than moving to this new generic package. Therefore it is likely that they will

resist the chief executives proposed changes rather than supporting them.

Since PSI has been growing gradually over the last three years, there is little no evidence to

suggest it is ready for the significant changes proposed.

5, Power

The chief executive appears to be the dominant power at PSI, supported by the sales and

marketing director. However, in practical terms the success of the changes depends on the


software team and the software development director.

6, Capability

PSI has been relatively settled over the last three years, so if the directors do not have any

previous experience of managing change this could hinder the proposals.

7, Diversity

The goals of the sales team and those of the software developers seem to conflicting. The sales

team is making promises to customers that the developers are struggling to meet. As a result,

quality standards are falling leading to customer dissatisfaction.

8, Capacity

The software development director already wants to acquire further resources (people )to

support the existing product.

Therefore, it is likely it will need to recruit a significant number of suitably skilled new developers

to support the planned expansion.

This will increase costs, but it will also take time to recruit new staff, and to allow them to

become familiar with PSIs systems.

We do not know the details of PSIs financial position, but it seems likely that it will have to

increase its borrowings to fund the expansion


DEC2010 Q1

Tutor TIPS:

(a)its unusual for the p3 examiner to examine corporate strategy in Q1 but if he did so please

remember the 4 steps we take in setting up a corporate strategy in class together with 3 basic

models behind it. Use your business common sense to build your answers. Many students lock

themselves in SWOT analysis+PESTEL analysis but end up with a low quality answer. You

dont have to do that because the examiner doesnt ask you to use any models at all and I think in

this question the only well scoring model is BCG matrix and any other commentseven a non p3

student can make because just analyze the fact and assess its potential

consequences(performance).

(a)

Shoalfish:

Contribution and performance:

The government has recently introduced quotas to conserve fish stocks which will have an impact

onto the future performance of Shoalfish that the number of fishes that Shoalfish catches will be

reduced and will further lead to a reduction in the turnover.

The market share of ShoalFish is nearly 11%-12%(21.5/190) and the market growth for it is 5%

decline((200-190)/200).

So according to BCG matrix this is a thin dog which has a low market share and market growth.

40% of fish caught by ShoalFish are processed in the ShoalPro factories and 60% are sold in the

wholesale market which means the existence of ShoalFish will guarantee the supply of fishes to

ShoalPro and Captain restaurant and so keep the costs of raw materials down.

Position in the portfolio

According to Ashridge Portfolio Shoalfish has a high benefit with Shoal plc because all the fishes

they caught can be sold and create revenue and profit together with a high feel because Shoal plc

is also specializing in fishing industry so that it knows exactly how to make Shaolfish succeed and

so Shaofish can be classified as Heartland and so Shoal should keep it.


ShoalPro:

Contribution and performance

Unemployment in this area still remains high which means ShoalPro can still invest in these areas

and enjoy a large amount of government grant and hence reduce the overall costs.

Because ShoalPros modern facilities have a low costs together with the incentive by government

to this area so therell be more fishing companies who would like to enjoy low costs facilities

together with the grant by government will invest in this area and hence increase the overall

revenue of ShoalPro.

The market share of ShoalPro is nearly 40%(16.50/40.80) which is high and the market growth is

nearly 3%((16.5-16)/16.5) which is low .

So according to BCG matrix this is a cash cow according to BCG matrix which can generate into

lots of cash to fund other companies into the portfolio.


Since ShoalPro has lots of potential growth in the future given the low cost facility and large

government grant and also it is a cash cow so Shoal plc should keep ShoalPro in the portfolio.

ShoalFarm:

Contribution and performance

Since its getting more difficult for ShoalFarm to secure areas for new fish farms and requires a

greater investment so if ShoalFarm continues to acquire a new fish farm this would further

impact adversely on the gross profit figure which has already been deemed to be low now.

The market share of ShoalFarm is 9%(1.12/12) which is low but the market growth of it is nearly

12%(1.12-1/1) compared to the total market growth of 20%((12-10)/10) which means theres still

a big space for ShoalFarm to grow.

According to BCG matrix ShoalFarm can be classified as a problem child which would need an

increasing investment to ensure that it becomes a key player in a significant market place.


But its up to the risk attitude of Shoal plc. If its risk aggressive then Shoal plc can provide the

large investment for ShoalFram to acquire for the expensive fish farm and provide more fish

supply to ShoalPro.

If its risk averse then Shoal plc can divest this company as well and get the fund to develop other

companies.


Tutor TIPS:

(b)easy marks: models identification+justification; well prepared students should have no

problems in this part of the questions. Set up the model and link information from scenario

under each heading should be no problems at all.

The mnemonics we use in class and I hope you can remember:

TOP RP CDC;

SMSM ERP

(b)(i)

A model came up with by Balogun and Hope Hailey to identify factors that would influence

whether or not strategy would be accepted by stakeholders would be used.

Preservation

Captain Haddock has a strong brand, excellent staff and highly regarded staff training

programmes. These competences need to be retained and so Shoal will have to ensure suitable

policies are put in place to retain staff and re-affirm the brand.

Diversity

Change will not be easy if theres just one set of tune within the company and This is the case at

Captain Haddock where there is a tradition of recruiting staff directly from schools and

universities. Shoal will need to bring in the required diversity whilst remaining sensitive to the

views of the employees of Captain Haddock.

Time

Captain Haddocks financial performance is rapidly declining and the concerns over breaking bank

covenants has led to the resignation of both the chairman and the managing director. Any

strategic change program that is implemented by Shoal plc will have to be implemented very

quickly.

Readiness

It is clear that Captain Haddock will be receptive to the change. Two senior managers have

already left and employee representatives have indicated that the staff are looking for a leader to

guide a demoralised workforce.

Power

Shoal plc will need to identify who will have the power to bring about the change and ensure that

person is given sufficient power to implement those changes. This power will come from Shoal

plc, rather than the existing management at Captain Haddock.

Capability

For change to be successful, the capability to manage that change needs to exist. Captain


Haddock has little change management experience, however Shoal does have the relevant

experience and capability to successfully implement change. This is the first time, however, Shoal

has moved into the restaurant industry and has no experience in this sector. Their experience

from other sectors may not transfer.

Capacity

Change is expensive so Shoal will have to consider the resources it has available to support the

change. This is the capacity for change. Captain Haddock has no resources available so the

change, and the outstanding bank covenants, will have to be financed by Shoal.

Scope

Reconstruction can also be undertaken with an existing paradigm but requires extensive and

rapid action. This is the most appropriate approach for the change at Captain Haddock. There is

nothing fundamentally wrong with Captain Haddocks business so the paradigm doesnt need to

be changed. However, rapid action needs to be taken to reverse the disastrous diversification

programme which Captain Haddock has undertaken.

(b)(ii)

Facing decline in financial performance and changing market conditions at captain haddock a

turnaround strategy would be used which focuses on getting existing business right not

diversifying its businesses.

There are seven elements that form the basis of a turnaround strategy.

Crisis stabilisation costs need to be reduced and revenues increased. This could be achieved

through the synergies achieved through ShoalFish directly supplying the restaurants. Improving

productivity and reducing direct costs is likely to be more successful than reducing overheads.

Management changes a new chairman and chief executive will need to be found. Cost savings

will also be made as a result of the resignation of the previous post-holders. The replacements

should be less expensive as reducing the cost of senior management is a feature of a turnaround

strategy.

Communication with stakeholders support by the stakeholders is vital for a change programme

to succeed. Employees already appear to be supportive of the change and the banks are also

likely to be in favour of the acquisition by a large and trusted parent company.

Attention to target markets a lack of focus is a common cause of decline and there is evidence

that this may have happened with the disastrous diversification. Target markets must be clearly

defined and the Captain Haddock brand will have to be emphasised to re-establish itself in its

traditional market.

Concentration of effort resources should be concentrated on the best opportunities to create

value. Poor performers, or those not focused on the target market, should be eliminated and


none-core activities outsourced. The acquired land should be sold if possible.

Financial restructuring of Captain Haddock is required. Shoal will make an initial investment of

$15 million to meet the short-term cashflow problems and improve liquidity. This is not a

significant amount compared with the gross profit of approximately $11 million per year that

Captain Haddock should be able to delivered, based on the performance of other companies in

this sector.

Prioritisation The eventual success of the change will depend on Shoals ability to prioritise

necessary activities and to deliver fast, significant improvements.

TIPS: textbook knowledge and as long as you link these knowledge into the scenario and youll

score high.

(c)

Portfolio manager

The portfolio manager adds value though investment, standard setting and performance

monitoring.

Portfolio managers purchase undervalued companies, improve their performance and sell

them on at a premium.

Portfolio managers manage businesses with a low cost center and dont intervene significantly

in the running of each business in the portfolio. Instead they set financial targets for the senior

execuives of those companies.

This approach is not suitable for Shoal plc.

Synergy manager

Synergy manager creates value through the shared use of resources and competencies.

Synergies can arise in two ways, first by applying common skills across the business.

Shoal plc knows very little about the restaurant industry yet is planning to acquire Captain

Haddock. This company is very different from the rest of the companies in the Shoal group and

so planned synergies may never arise.

Secondly though one company being the customer of another (as ShoalPro is to ShoalFish).

Where one company is the customer of another, there is a risk that inefficiencies may arise

and each companys objectives may become confused. For example ShoalFish may not

control its costs as it knows ShoalPro is a guaranteed customer. ShoalPro may, as a result, be

unable to meet its profit objective.

This is a relevant approach for Shoal plc as it is clear that synergies are valued by the

organisation.

Parental developer

In this method value is created via the competences of the parent.


An example might be where the parent has a strong brand name that is globally recognised

and associated with quality and value.

The parent identifies businesses that are not fulfilling their potential but may be able to if they

were associated with the brand. The brand name opens the business up to a wider market of

people who are already familiar with the brand and so place the same trust in that business as

they do the brand itself.

This approach focuses on providing companies with the competences of the parent, rather

than achieving synergies, and so is not an appropriate approach for Shoal plc.


DEC2011 Q1

Tutor Tips:

(a)very standarised analysis of strategic position of business. The reuiqrement for this question

has been specifically requiring you to use an appropriate model so say to the examiner which

model you are going to use. Don't just copy the information from scenario but rather say why

and its implication.

(b) very standarised analysis of the proposed strategy. Really in class I don't recommend

students to use SFA to lock their mind but in this requirement it seems that SFA test is most

suitable to generate into ideas.

(c)textbook knowledge but remember you have to link to the scenario because the

requirement specifically asks you to do so. (have covered in video lecture)


(a)

EXTERNAL ANALYSIS: (use PESTEL and PORTERs 5 forces model)

Political

The government is also considering terminating the failing franchises and re-opening bidding.

GET can take this opportunity to bid for the franchisee.

If opposition government party were to be voted in and they take a larger proportion of the

companys profits then GETs profits would fall dramatically or, if they were to revert to their

original policy, GETs existence would be threatened. GET should continue to monitor the

views of the main opposition party and take action to influence these opinions where possible.

Economic

Rudos has in the last couple of years slipped into an economic recession which has led to a

fall in passenger numbers. Combined with the end of government subsidies this has had a

significant impact on the profitability of GET. GET must monitor the economic state of Rudos

and revise its passenger number preditions to be in line with economic indicators.

Social

The rise of the green consumer is evidenced in Rudos by the ecology party winning seats in

the government for the first time in the countrys history. This suggests there is a degree of

green awareness in the country and may mean that customers are more likely to chose to

travel methods that are more energy efficient and limit the impact on the environment. Rail

travel would therefore appeal to such consumers and this message should be reflected in

GETs strategy and marketing materials

Environmental

The roads in Rudos are becoming increasingly congested and fuel prices are spiralling out of

control as a result of the increasing scarcity of oil. The impact on the environment of this kind

of travel is therefore high and customers may be more likely to switch to rail travel in order to

limit the damage they cause.

Legal

GETs costs are currently rising as a result of the increased legislation of safety that has

recently been enacted. In addition, increased legislation relating to track relaying is also

expected and GET and the other franchises will have to take immediate action to implement

the requirements made by legislation. This is likely to have a significant effect on the

profitability of GET as its unlikely that these costs would have been anticipated at the time of

winning the contract for the franchise.

A further factor that GET will have to consider is the worldwide trend towards privatisation.

GET should monitor other countries who may plan to make similar changes to its rail network

and remain alert for any opportunities that may present themselves abroad.


Threat of substitute products

The main substitute for rail travel is driving on the roads which is also very congested as

government hasn't invested lots of money in it. Combined with the increasing fuel costs (due to

the increased scarcity of oil) this makes road travel much less attractive.

This threat therefore is reducing as rail travel is both congestion free and may not use oil. GET

should ensure this is reflected this their strategy and marketing materials.

Bargaining power of customer

The bargaining power of the customers is weak. They have little choice but to use GET if they

wish to travel by rail through the East Rudos area and so are not in a strong position to bargain

down the prices.

The congestion of the road would further reduce the choice of the customer and hence further

reduce their bargaining power.

Threat of new entrants

The franchise contracts have been awarded for ten years and so it is not possible for new

entrants to join the market whilst these contracts are in place. This is a strong barrier to entry

to this market.

Threat from existing competitors

The franchise set up means that there is no rivalry from existing firms as the network is divided

into geographical areas. As such, if a customers intended journey passes through the East

Rudos area, the customer will have no choice but to use GET.

INTERNAL ANALYSIS: (focus on strengths and weaknesses)

STRENGTHS:

The management team of GET gained lots of operating experience with Rudos Rail and make

GET become very successful. This is a strength of the management who can subsequently

use these experience into somewhere else to achieve greater success.

The investment in new trains and the excellent reliability record has built up a good reputation

for GET and certainly this becomes a strength because it can differentiate itself from other

companies.

Customers have rated the advertisement of GET to be memorable and effective and this can

help GET further build up its brand which would lead to further revenue to the company.

GET developed an innovative booking and payment system which has been used by three

other franchise operators for which GET receives a payment for each transaction processed.


This is a strength of GET because it will constitute an extra stream of revenue for GET.

In 2010, GETs profit margin was 34% (110/320) which is above the 22% profit margin for the

industry. GETs operating margin on 22%(70/320) is higher than the 10% for the industry. This

would indicate that GETs overheads are well controlled.(Or GET has a more effective

management to manage the company; or GET can get the extra stream of revenue from other

franchisees.)

The liquidity of GET can be demonstrated by the current ratio of 2.93 (585/200) and acid test

ratio of 1.55 ((585 275)/200) demonstrating that GET is capable of meeting its short-term

liabilities. The acid test ratio is also higher than the industry average of 1.12 which shows it is

better able to do this than most in the industry

The efficiency of GET could be analysed by looking at the revenue generated per employee.

This shows GET generates (320,000,000/3,010 )$106,312 which is significantly higher than

the $85,000 revenue/employee of the industry as a whole. This shows each employee of GET

generates much more income than the average employee working in the industry.

Efficiency can also be measured by looking at the productivity of the employees per kilometre

of track. Employee per kilometre for GET is (3010/920) 3.27 which demonstrates that GETs

employees are more productive than the Rudos average which has 4.1 employees per

kilometre.

Weaknesses:

GET is geared at 75% (2000/(550 + 110 + 2,000)) which is high in comparison to the industry

level of 48%. This may be concerning to their bank if the country is still facing economic

problems and company should find an alternative finance,eg, raising equity.

GETs Return on Capital Employed (ROCE) is 2.63% (70/(550+110+2,000) = 70/2,660) which

is likely to be concerning to shareholders as this is relatively low in comparison with the

industry average of 4.5% and this may be due to the investment in new trains and computer

systems and company can think about raising the fees from franchisees to increase the overall

return.


(b)

Independent Assessment of the Proposed Strategy of GET

Written by: business consultant

Date: 10th

DEC 2012

Introduction

This report independently assesses the proposed strategy of GET to acquire both SOFR and

the franchise for running the Raziacstan railway services by establishing the suitability,

acceptability, and feasibility of this decision.

Management summary

This report finds that the proposed strategy appears to be a suitable approach for GET,

however, the assessment of the acceptability and feasibility of this strategy highlighted a

number of risk and funding issues. This might suggest that a lower risk strategy, such as

waiting for the failing franchises in Rudos to be re-oppened for bidding, could be preferable.

Suitability

Suitability looks at the fit of a proposed strategy with the current strategic position of the

organisation.

Firstly, it provides GET with an opportunity to exploit its acknowledged competencies in running a newly

privatised railway. GET has an experienced and respected management team, together with a

computerised booking system. The contract in Raziackstan provides an opportunity to quickly implement

tested management practices and supporting operational processes.

The acquisition of the Raziackstan contract appears to reduce its dependence on the Rudos franchise

because GET is currently a one-contract company

Furthermore, acquiring contracts outside Rudos also appears to make sense. Although the opposition

political party in Rudos has slightly modified its stance, it still remains a potential long-term threat to both

the existence and profitability of the franchise. In contrast, Raziackstan offers greater political certainty, at

least in terms of its commitment to rail privatisation.

Raziackstan has less safety legislation and so the expensive implications of recent legislation in Rudos

will not be incurred.

GET might also be relatively confident about increasing profits in Raziackstan by bringing the rail network

up to the efficiency levels it has achieved in the East Rudos franchise. At present, the number of

employees employed per route kilometre (533) is greater than at GET If GET can cut staffing in

Raziackstan to achieve similar levels of productivity as it currently achieves, then profits will improve

without the need to raise ticket prices.

GET may also find synergies between SOFR and its franchise operation in Rudos since GET has used


the company to refurbish some of its equipment before.

Feasibility

For a strategy to be feasible, the organisation must have sufficient competences and

resources (including funds) to be able to deliver it.

GET does have some cash, however the analysis in part (a) above indicated that this

organisation is already highly geared and as such it is unlikely that the Bank of Rudos (who

financed the franchise in Rudos) would wish to loan increased amounts to this company,

particularly as it is to be used for an international investment.

Raziacstan has a financial infrastructure which is immature and as such is unlikely to be able

to provide a source of funding to GET.

Other resources and competences GET may require for this strategy such as engineering

expertise may have to be developed.

Although GET have rail franchise experience, they have no experience of operating in

Raziacstan.

Acceptability

The acceptability of a proposed strategy is concerned with the expected performance

outcomes of a strategy in terms of return, risk and stakeholder reactions.

There is a mismatch between the experience of GET, which involves controlling both the trains

and the tracks, but for Raziackstan which would involve controlling trains only while the tracks

remain under state control. GET has no experience of operating under this kind of model and

the mismatch of experience may lead to difficult to resolve conflicts between GET (trains) and

state (rails).

Another factor that increases the riskiness of this proposed strategy is the fact that the GET

management team has no experience of working outside Rudos and it is likely that the culture

in Raziackstan is likely to be very different. In Rudos, railway jobs are perceived to be a job for

life. This is unlikely to be the case in Raziackstan and there may therefore be a number of

culture clashes to contend with. This may prevent efficiency gains from being achieved.

A further issue is that the GET management team has no experience of running an

engineering company such as SOFR. Attempting to do this, especially within a different culture,

could therefore be difficult.

Stakeholders are likely to hold is the risk that the Raziackstan strategy could distract GET from

running their profitable East Rudos franchise and so causing a fall in its performance.

Conclusion


At first sight, the bid for the Raziackstan rail franchise and the associated purchase of SOFR

appears to be a reasonable strategy. However, more detailed analysis suggests that the

rationale is not as strong as it could be and there are many risks involved. Eventually, it comes

down to the companys ability to find funds and its appetite for risk.

(c)

Critical success factors (CSFs) are product features that are particularly valued by customers.

These are therefore the areas in which the organisation must excel in order to outperform their

competitors.

GETs current marketing campaign centres around the message safe and on time. But

customers may also value other aspects such as cleanliness, affordability, environmental

impact, timetabling etc.

It is likely that different groups of customers will value certain features higher than others, for

example leisure travellers may value safety and affordability whereas business travellers may

value punctuality.

Key performance indicators (KPIs) are quantifiable measurements that management can use

to monitor and control progress towards achieving its CSFs.

GET may class a train as on time if it arrives in the station within 5 minutes of the planned

arrival time and so would consider it had achieved the KPI wherever this was met.

The other CSF currently used by GET relates to safety and this could be measured in terms of

the number of accidents or fatalities that have occurred on their tracks.

The balanced business scorecard was established to help focus companies on non-financial,

as well as financial measures of performance. Many companies may have KPIs relating to the

other three besides customers. Eg:

-Financial: A target of 10% of return on capital employed

-Internal business processes: asset utilisation trains should be used for a target number of

hours per day(eg, 15hours)

-Learning and growth: Targets money spent for improving the skills of the workforce via

training and development(eg, 1% of total profit as being spent as training expense)


DEC2007 Q2 project management

(a)

Business case

A business case should clearly set out the financial and non-fianncial benefits of carrying out the

project.

Financial benefits

A cost and benefit should have been carried out before the project starts.

Total costs were estimated at $90,000 and benefits at $110,000. But this doesnt allow for the

time value of money since none of the cash flows are discounted. Whatever discount rate is used

it would result in a negative NPV since the large cash outflow is in year1 with the two large

inflows coming in years 4 and 5.

In addition, since the project is concerned with redesigning a website, it must be questioned

whether the website will still be in use until year4and 5. It is likely to be redesigned again before

these dates, meaning the benefits in these years may never happen.

Finally, one of the reasons given for resigning the website is to increase the amount of goods sold

via the website. But this appears to be a decision of marketing manager alone, this increase may

not fit in with companys overall strategy.

Non-financial benefits

The marketing manager states that the current website looks amateur, old fashiipned and doesnt

give the right image. These may be true but it apperars to have been difficult to specify exactly

what the new website should be like instead.

Project initiation document

This is a document drawn up at the start of the project which clearly states the scope, budget,

desired quality and delaine for a project. In the case of the clothing company this document was

not prepared leading to the following problems:

Project scope

The scope of the project being undertaken is not clear.

The term 're-design' has been interpreted differently by the Board and MM. The Board feel that

a website 're-design' does not include development and implementation of new software,

although MM feels that it does.

There is also confusion about the scope of the project among the members of the project team.

The draft design produced by the image consultant was criticised for being too similar to the

current website. MM and the product range manager 'expected it to do more.'


If a business case and project initiation document had been prepared, the scope would have

been clarified in the process of preparing them.

Project budget

The scope of projects is often constrained by resources usually costs and time.

In this project, costs and budgets were not agreed at the start of the project, not least because

no costbenefit analysis was prepared. Consequently, no-one knew what the resource

constraints in terms of costs were, and cost were allowed to rise until the finance director

intervened.

Project timetable

No timescale for the project was set at the start either. Consequently, the Board 'expressed

concern' about the time taken to produce the re-design, and this led them to look more closely

at the way the project was being conducted.

An expected finish date for the project should have been given in the project initiation

document. This

would then have provided a reference to judge whether the project was running behind

schedule or not.

Project quality

1, Project sponsor

It seems likely that the project sponsor is the MM, although this is not clearly stated. If a project

initiation document had been prepared, it would have stated who the project sponsor was and

he will clearly get enough resources for the redegin work and increase the project quality.

2, Resources committed to the project

There is no evidence that the resources available to the project have been discussed or

agreed.

Consequently, problems emerge when the Board's decision to launch on 1 March causes the

technical

developer to express concern that he does not have enough developers to deliver the web-site

on time which has decreased the quality of the project.

In this case, the problem of not identifying resource requirements at the start of the project was

compounded by not setting a project timetable either, which is what prompted to the Board to

impose a

deadline of 1 March.

3, Risk analysis

Well managed projects document potential risks to the project, and identify the key risks which

need to be managed. Plans can then be prepared either to prevent significant risks from


materialising, or for

minimising the effect of them if they do occur.

There is no evidence of any risk management in this project, because problems are dealt with

on an ad hoc basis as they occur. Non-compatibility of the website with the popular browsers

should have been identified as a critical risk to the project, but it appears not to have been

addressed until it was too late.

(b)

Initial screen

If the board of company can perform a formal cost benefit analysis at the project initial screening

stage then it should allocate more budget to it which wont lead to a concern about the

inefficient budget as the problem arises.

Risk analysis

An efficient project management should clearly define the scope, timing, budget and quality of

the project. During the subsequent implemation of the project company should monitor whether

it will exceed the time deadline and are there any additional resources needed.

The budget and timescale which the Board approved on 4 January does not appear to take into

account the complexity of the remaining work or the resources available to do it. Effective project

management requires realistic timescales to be established so that a good quality product can be

delivered at the end of a project.

Business Case document

The cost-benefit analysis which the MM belatedly produced is flawed in two key respects.

Firstly, the assumptions underpinning the benefits are not explained. There is no supporting

documentation and it appears, at face value, that year four and five benefits have been greatly

inflated to justify the project.

Secondly, it would be usual to discount future costs and benefits using an agreed discount rate.

This has not been done, so the time value of money has not been taken into account. Effective

project management would have defined standards for the cost-benefit analysis based on

accepted practice.

Project Plan

The project had no detailed plans, and this meant the project was very difficult to review and

control. A

project needs a detailed plan as a baseline to review progress and performance.

If there had been a detailed plan the process of delivering the re-designed website would have

been much more structured.


A project sponsor and project manager should be clearly identified in the actual project

management and if this is done in the company then it would help redesign work get more

resources and hence increase its quality.

Progress on the project was hindered by the absence of key personnel at meetings 3 and 4 and

the

inappropriate sign-off by the product range manager of the technical design at meeting 4 in the

absence of the technical developer. This could have been avoided by each of the key personnel

having a deputy who could represent them at meetings they could not attend, and who had a

similar skill set to the person they were deputizing for.

Project Milestones

All monitoring and control aspects of project management were completely absent from this

project, meaning that the Board were unaware of any of the problems the project was suffering

so that they can do nothing about it during the implementation of the project as well as

realizing how much benefits that projects actually has.

Post implementation review & post project review

Good project management would involve a thorough project implementation review/ project

review to fully learn whats after the project and what can be learnt from the project and this is

absent from the companys perspective which means maybe the company will follow the same

mistakes they made in the future.


June2011 Q2 8-hats

(a)

Payback

Job1

Years 0 1 2 3 4

CF (110) 50 15 40 50

Cum CF (110) (60) (45) (5) 55

Job2

Years 0 1 2 3 4

CF (90) 40 15 30 25

Cum CF (90) (50) (30) (5) 20

The calculations above show that both jobs would have had a payback period of 4 years,

however, job 1 ($55) would pay back more than job 2 ($20) therefore job 1 would still have

been preferable and so selected.

However, had the payback method been used, any such future cashflows would not have

been considered at the time of appraisal and so job 1 would still have been selected over job 2.

Barry Blunts assertion that this method would have led to the selection of job 2 is therefore

incorrect.

The discount rate

The discount rate is not the same as the inflation rate. Although inflation may be taken into

account, other factors such as risks and the type of discount rate suitable for business such as

WACC(weighted average cost of capital) when trying to raise pool funds for the business.

If the company is using 3% or 4% so this may give a bigger advantage of job1 over job2 and

the company still ends up choosing job1 rather than job2.

The internal rate of return (IRR)

The IRR is the discount rate that would give an NPV of zero for the net cash flows of the job as,

and the two jobs are of a similar scale. Therefore, in this case the project with the greater NPV

will produce the higher IRR, and so the result under IIR will the same as that selected under

NPV (ie job 1 would still have been selected).

But IRR does only give a relative figure not an absolute one and if theres conflict between

NPV and IRR figure we should choose the higher NPV which delivers a positive figure and in

this case the job1 has a higher positive NPV so the company still chooses it.

Tangible and intangible benefits


Both jobs allocate significant monetary benefits to intangible benefits such as better

information and

improved staff morale. However, it is unlikely that these benefits could be estimated before

the project is carried out and theyre just an estimate and its not accurate.

If intangible benefits are excluded from the business case, then job 2 does have greater NPV

than job 1, however, in both cases the NPV is below zero and so neither project should be

accepted. Therefore, if the benefits had been properly assessed then the disaster of job 1 (and

indeed job 2) could have been predicted and avoided.

Benefits realisation

Barry has misunderstood the concept of benefits realisation.

The point of the feasibility study is to consider likely costs and benefits from the project for

inclusion in the business case. The benefits realisation process determines whether the

predicted benefits have been actually been delivered, therefore is must take place sometime

after the project (or service) has been completed and has been in place long enough for the

realised benefits to be evident. It compares the benefits actually realised to those outlined in

the business case. It would not be possible to complete the benefit realisation process after

the feasibility study as there would be no actual benefits to compare to the predictions.

(b)

8Hatsis currently structured on a functional basis. There is a department for each activity of the

company and each job is passed between functions.

Each function is focused on optimising its part of the transaction, and has defined objectives

sometimes reflecting the reward system in place. But these objectives are not always aligned

with those in other areas of the business and therefore objectives clash.

Such clashes happen because departments is sub-optimising based on their own interests at

the detriment to the organisational overall objectives. These conflicts can only be resolved by

referring upwards, as shown by the scenario where Barry Blunt had to arrange extra funding to

ensure suppliers could be paid before their event was boycotted.

Implementing a matrix structure would be an attempt to manage the key jobs (projects)

across various the functional departments.

Under the matrix structure the organisation would be split into multi-disciplinary teams come

from the each of the functional departments. Each of these teams would focus on delivering a

successful and profitable project.

Decisions taken within that project will generally represent a consensus view of all those

involved and so their objectives are brought back into line with the overall objectives of the

organisation. Such focus on the event itself should greatly improve customer experience and


satisfaction with 8Hats.

A potential drawback of the matrix structure would be that decisions may take longer due to

the need for consensus. This would perhaps create more conflict within the company,

particularly if cost and profit responsibilities are either unclear or counter-productive.

To minimise potential conflict, the reward systems at 8Hats will probably have to be

re-structured, particularly for sales managers (currently rewarded based on turnover).

It has also been claimed that job and task responsibilities are unclear in a matrix structure and

so the company will have to address this.


June 2008 Q3

Tips: (a)differences between 6Is and traditional markting techniques.

(b)common sense expansion under 7Ps.


(a)

Interactivity

Push marketing: In traditional marketing media, such as advertising and direct mail, the

marketing message is initiated by the supplier sending out a message to potential customers.

Pull marketing:However, there is limited interaction with the customer. In electronic media,

the customer plays a much more active role, for example visiting a website to find out

information about a course or seminar.

Interactivity creates a dialogue between supplier and customer and its a key feature of

electronic media. Usually this dialogue is through e-mail exchanges. For example, AEC could

use e-mails to provide customers with information about courses which may be of interest to

them.

In this respect, the functionality of AECs website is more characteristic of traditional media

(that is, sending out generic messages) rather than encouraging the interactivity which is

characteristic electronic media.

Individualisation

Another characteristic of electronic media is that they allow marketing messages to be tailored

to specific market segments, whereas with traditional media a single message is sent to all

market segments.

Students could be asked to indicate which courses they are interested in (professional exams,

or CPD) when they first visit the website, and then the information could be filtered so that only

parts relevant to them are displayed on the screen, or they are taken to different screens

depending on their interest.

Intelligence

Because advertisers using traditional media do not engage in any dialogue with potential

customers, they cannot use their marketing to find out anything about customers requirements,

and also

which products or services are meeting them most effectively.

However, website software allows web owners to record information every time a user clicks

on a page. For AEC, this would be useful to see which pages on its website (ie which courses)

potential customers view most frequently.

Integration

Integration means that some part of the website can be integrated with other functions such as

payment.

So as for AEC theres a secure payment facility which allow students who is interested in the


course clicking on the advertisement and then pay for it safely and quickly and this is different

from traditional marketing.

Independence of location

The internet is also accessible 24 hours a day, 7 days a week so it allows potential customers

to find information about a companys products and services outside normal office hours which

is different from traditional marketing which has a limited amount of visiting time.

At AEC students can download materials wherever they live.

(b)

Product

1, Sample products

The website allows customers to see a sample of the training manuals before they buy a

product, so that they can see first-hand the quality of the product they are buying.

They could also include some quotes from students who have been on the most recent

courses to endorse the quality of the courses.

2, Online courses

At the moment, the courses are only run from eight centres worldwide (three for CPD courses).

This is likely to restrict the number of students who can attend courses to those who live

relatively near to the course locations. AEC should consider whether the courses can be

offered online through web seminars and web casts, supported by a virtual learning

environment and online tutors.

3, Product updates

AEC can use the website to publicise any such changes to the syllabus of the course.

Price

1, Pay per access

For example, they would only be charged when they access the material, and the level of the

charge would depend on how many pages they access. The pricing structure could be

explained on the website.

2, Price transparency

The internet allows potential customers to compare AECs prices to its competitors very easily.

Therefore AEC needs to make sure its prices are competitive in the marketplace.

3,Local Price

AEC could consider developing local websites for different countries (with local domain

names), translating the prices into local currency and possibly adjusting prices to reflect the

income levels in the countries.


Promotion

1, Search engine optimisation

If AEC is running promotion then AEC should spend lots of time expecially for advertising and

one of the ways that AEC can do is to optimize the search engine by spending more on the

bidding word so that increase the likelihood of it appearing on the first page of search engine

listings.

2, Click throughs

Where it offers professional qualifications it may be able to build a link from the qualification

providers website. Although AEC will have to pay a commission for the number of visitors who

come to its site via the link, it should still prove a beneficial marketing tactic.

3, Banner advertising

AEC should also publicise its products and services through banner adverts. Although the

logic behind these is no different to traditional press adverts, the more places AEC advertises

itself will increase customer awareness about its products and services.

Place

1, Global reach (selling downloadable manuals)

Although the internet allows AEC to communicate globally, in practice this global reach is likely

to be more use in selling the downloadable manuals than the training courses. Customers can

download and print of the training manuals wherever they live.

2, Online center

If AEC wants to maximise the global reach electronic media offer it, it will either need to

consider opening new centres, or, as we have discussed earlier, provide courses and tutorials

online.

Process

1, Website functionality

Interestingly, the website does allow students to pay for the downloadable material on line, but

AEC should consider adding the functionality to allow them to book and pay for their courses

online instead of asking the admin staff before processing the payment to make the process

more effective to students.

2, Online queries

There is also no evidence that students can register any queries online. This is another feature

which the marketing manager should consider adding to improve the consistency of the overall

marketing mix.

People


AEC can also publish high profile tutors and their innovative teaching method on to the website

so that attracts more students worldwide.

Physical Evidence

AEC can improve the outlook of its current products such as adding more color to it and also

make some gif as an advertisement onto the website about the accountancy courses then it will

make the website more beautiful and attract more students.


DEC2008 Q1(c) strategy lenses

Strategy as design

Definition

The strategy is driven from the top in order to meet the objectives of the organisation.

Senior management responsibility

The design lens considers that it is senior managements responsibility to come up with the

strategy for an organisation, leaving lower levels of management to deliver the operational

actions required by the strategy.

Clear objectives

The design lens assumes that an organisation has clear and explicit objectives, and that it uses

strategy and objective setting to move towards those objectives.

In the case of the National Museum, the government has taken a much increased role in

objective setting, by linking the museums funding budget to the achievement of certain

objectives(eg, number of tourists)

Lack of consultation

The new Director General was responsible for trying to establish a strategy within those

objectives. And it appears he has done this in a top-down manner, in which he has not consulted

his staff. For example, staff were particularly critical of the lack of consultation, feeling that the

proposals had just been handed down from on high with no input from them.

Strategy as experience

Definition

Strategy is basically repeating what has been done in the past.

No change in paradigm

One of the key features of this lens is that sees strategy as being based in the experience and

assumptions of influential figures in an organisation, thereby fitting within the paradigm.

Change

The major changes being imposed by the government suggest that a change in the museums

cultural paradigm is needed, meaning that strategy as experience is no longer an appropriate

approach.

Strategic drift

Given the change of paradigm, it is unlikely that the existing management would have been able

to deliver a strategy that meets the governments requirements.

This is why a new Director General needed to be brought in to develop a new strategy. And

because a new strategy was needed, the strategy as experience approach would have been

unsuitable for him to follow.

Strategy as ideas


Definition

The strategy aims to encourage innovation. These ideas can emerge from all levels of an

organisation, not just from senior management.

Culture

However, for an organisation to be successful at generating ideas there must be a culture and

context which encourage staff to generate ideas and to embrace change.

But this does not appear to be the case at the museum. The museum appears to be dominated

by a small number of section heads who are more interested in protecting their own interests

and preserving their own symbols of power, than cultivating new ideas.

No drivers for change

Another factor which has reduced the need for new ideas has been the protected economic

environment in which the museum has historically operated. Because the museum has been

largely government funded, there have been no incentives to develop new ideas to increase

revenue.


DEC 2010 Q3(a) Frigate Co Cultural Web

Symbols

Organisations are represented by symbols such as logos, offices, dress, language and titles.

Symbols at Frigate that indicate how the managing director wishes the company to be perceived

and run include:

1 Rons nickname The Commander

2 Rons use of naval terminology

3 The naval inspired name of the company

Rons motor cruiser is the main symbol of his success.

Power structures

Power structures look at who holds the real power within an organisation. At Frigate the power

comes from one person, Ron, whose leadership style is based on his strong opinions and beliefs.

Organisational structures

The structure of the organisation often reflects the power structure. There is little formal

structure at Frigate, and the attempt to install a formal organisational structure failed.

Control systems

Organisations are controlled through a number of systems including financial systems, quality

systems and rewards. The areas that are controlled closest indicate the priorities of the

organisation. The focus in Frigate is on cost control and the emphasis is on punishment (such as

wage deductions for being late) rather than reward.

There are few formal process controls at Frigate, and the attempt to install such controls

proposed by ANN was heavily resisted by Ron.

Routines and rituals

The daily behaviour and actions of staff signal what the organisation considers to be acceptable,

expectations and management values.

At Frigate, there is one rule for the man

Documents

ACCA P3 Live Online Revision JUNE2014