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Chapter 1 to 3 extract from our ExPress notes for

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Notes
CIMA Paper E2
Enterprise Management

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ExPress Notes
CIMA E2 Enterprise Management
Contents
About ExPress Notes 3
Strategic Management & Assessing the
1. 7
Competitive Environment
2. Developments in Strategic Management 14
3. Project Management 16
4. Project Management Tools 21
5. Project Management – Teamwork & Quality 28
6. The Effective Operation of an Organisation 32
7. Managing People 36
8. Corporate Governance & Ethics 42
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© 2011 The ExP Group. Individuals may reproduce this material if it is for their own private study use only. Reproduction by any means for any
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ExPress Notes

Chapter 1
Strategic Management & Assessing

the Competitive Environment
START
The Big Picture
This chapter introduces us to a variety of methods of analysing the competitive environment

faced by an organization.
KEY KNOWLEDGE
PESTEL (or PEST or SLEPT) Analysis

An analysis of the external macro environment. The organisation is unlikely to be able to
influence these factors but it should have an awareness of the issues.
Political - global, national and local changes and trends. Taxation policies. Relationships
between certain countries.
Economic - global, regional and local issues. Exchange rates. Link to topical issues such as
global recession, current interest rates for funding.
Social - changes in behavior and expectations in society. Demographics, lifestyle.
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ExPress Notes

Technological - changes including hardware, software, e-issues, materials and services.
Global communications.
Environmental – what are the environmental considerations such as recycling, pollution,

attitude of the media, customers, etc.
Legal - changes and predicted changes to regional (e.g. EU) and national legislation.
Regulatory bodies. Changes to employment law.
KEY KNOWLEDGE
Stakeholder mapping

Stakeholders are individuals, groups or organisations that can impact or be impacted by, an
organisation.
Mendelow’s Matrix allocates stakeholders into quadrants according to their level of power
and how likely they are to exercise that power (i.e. their interest).
Stakeholder Interest
Low High
Low
Minimum effort Keep informed
Stakeholder
Power
Keep satisfied Key players
High
KEY KNOWLEDGE
SWOT analysis

Strengths (internal) Weaknesses (internal)
e.g. resources and capabilities e.g. lack of certain resources or capabilities
Opportunities (external) Threats
e.g. arrival of new technology e.g. arrival of substitute product
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ExPress Notes

Threshold resources and competencies: These are the minimum required by an organisation
to meet customer’s minimum requirements. In effect, this is what is required to stay in
business.
Core competencies: These are processes and activities undertaken by an organisation which
are seen as being central to their success. Core competencies are capabilities which are
critical to a business achieving competitive advantage.
They provide customer benefits and are difficult for competitors to imitate.
A core competency can take many forms such as technical knowhow or customer
relationships.
Amazon.com has a number of core competencies such as reliable and efficient online
ordering and delivery system.
KEY KNOWLEDGE
Porter’s value chain

Firm Infrastructure
Support
Support
Human Resource Management
Activities
Technological Development
Procurement
Service
Operations
Outbound
Marketing
Logistics
Primary
Inbound
& Sales
Logistics
Primary Activities
The value chain was introduced by Porter and represents an approach to looking at the
development of competitive advantage within an organisation. All organisations consist of
activities which “link” together to develop the value of a business. Together these activities
represent the value chain.
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ExPress Notes

The value chain represents a series of activities that both create and build value. Combined
they represent the total value delivered by an organisation. The “margin” in the diagram is
the added value (the difference between the total value of the activities and the cost of
performing them).
Primary activities: related with production. Support activities: provide the background
for the effectiveness of the organisation (e.g. HRM)
KEY KNOWLEDGE
Data for environmental analysis

Data for environmental analysis can be obtained from a number of sources:
 Official government sources (e.g. trade reports)
 Online – specialist subscription databases (e.g. Reuters)
 Online – publically available information (e.g. corporate websites)
 Private intelligence agencies (e.g. Dun and Bradstreet)
 Tailored research (e.g. market surveys, discussion groups)
Quantitative research Qualitative research
• analysis of numerical data • analysis of words
• more objective • more subjective
• statistical tests • could use focus groups or
• e.g. data provided by interviews
customers • e.g. opinions of customers
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ExPress Notes
KEY KNOWLEDGE
Porter’s 5 Forces

This model examines the role of 5 forces close to an organisation that impact on its ability to
make a profit and hence how attractive a particular market or industry is.
There are 5 forces as follows:
Entrants
Suppliers Competition Customers
Substitute
1. Threat of substitute products
If there are similar products, a customer will be more likely to switch rather than stay with a
product when there are price rises (elastic demand).
2. Competitive rivalry
The rivalry will depend on the number and strength of competitors, economies of scale and
exit barriers.
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ExPress Notes

3. Threat of new entrants
Markets generating high returns will attract new entrants which in turn could reduce
industry profits. Barriers to entry such as government licenses (mobile phone operators) are
important in reducing the threat of new entrants.
4. Power of customers
The stronger the power of the customer the more pressure it can place on the company.
Issues to consider include the size of the customer relative to the firm’s customer base,
switching costs and availability of substitute products.
5. Power of suppliers
Suppliers of materials and services can exercise power over an organisation. This depends
on the level of differentiation of the product, presence of substitute products, etc. Compare
the power of Intel supplying computer chips to the computer industry vs. a sugar producer
supplying sugar to a soft drinks manufacturer.
KEY KNOWLEDGE
Porter’s Diamond

This is a model outlining the theory why certain industries are competitive in particular
locations.
There are 4 broad factors within the diamond.
Factor
Conditions
Firm Strategy Demand
& Structure Conditions
Related &
Supporting
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ExPress Notes

Factor conditions include physical resources, human resources and specialised resources.
Demand conditions. A country with sophisticated home buyers who “demand” quality,
advanced and innovative products can create international competitiveness
Related and supporting industries can produce inputs for a company which feed into the
success of the business.
Firm strategy, structure and rivalry. Competition in the home market drives innovation and
quality. Protectionism can weaken a market.
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ExPress Notes

Chapter 2
Developments in Strategic
Management
START
The Big Picture
This chapter identifies various different approaches to strategy that organisations can take.
KEY KNOWLEDGE
Different strategic models

1. Ansoff’s Rational Model - adapted by Johnson, Scholes and Whittington (JSW): The
“Rational Model” which shows the strategic planning process in 3 categories of analysis –
choice – implementation.
Analysis Choice Implementation
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ExPress Notes

2. Mintzberg’s Emergent strategy: Very few strategies will result in outcomes exactly as
planned. Instead, strategy will “emerge” and develop over time as the strategy evolves. It
will result in intended, realised and emergent strategies.
3. Lindblom’s incrementalism: Supports the view that strategy delivery should be based
on small (incremental) changes over time rather than a limited number of extensive planned
strategies.
4. Freewheeling opportunism: No planned strategy approach. Grab opportunities as and

when they are identified.
5. Positioning view: adapting the organisation so that it “fits” (i.e. is positioned) with the
environment it faces.
6. Resource based view: focusing on what works best with the organisation’s resources.
Identifying opportunities that work well with their resources.
KEY KNOWLEDGE
Levels of strategy

Strategy Hierarchy:
Corporate strategy: covers the “big view” of the organisation.

It answers the question “What business or businesses should
Corporate we be in?
Business strategy: the strategy of a single business

Business organisation or the strategies of strategic business units
(SBUs)
Functional Functional (or operational) strategy: the functional strategies

involving items such as marketing, IT and HRM that support
the business strategy.
It is important that the strategies support each other. For example, if the Business Strategy
of a SBU revolves around providing high quality consultancy advice on certain areas, a
functional strategy for HRM of minimising labour costs would cause problems.
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ExPress Notes

Chapter 3
Project Management
START
The Big Picture
This chapter looks at the big picture issues surrounding project management and introduces
us to some key concepts that underpin the subject.
KEY KNOWLEDGE
A project

Unlike ongoing work, a project has a beginning, middle and end.
Beginning Middle End
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ExPress Notes
KEY KNOWLEDGE
The project life cycle

The project life cycle
KEY KNOWLEDGE
The PMBOK Guide

The Project Management Body of Knowledge (PMBOK Guide) is published by the Project
Management Institute (PMI).
The Guide identifies processes that fall into 5 groups and 9 knowledge areas:
The 5 process groups are:
1. Initiating
5 • Process
groups
2. Planning
3. Executing
4. Monitoring and controlling
5. Closing
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ExPress Notes

The 9 knowledge areas are:
1. Project Integration Management
2. Project Scope Management
3. Project Time Management
4. Project Cost Management
9 • Knowledge
areas
5. Project Quality Management
6. Project Human Resource

Management
7. Project Communications
Management
8. Project Risk Management
9. Project Procurement Management
KEY KNOWLEDGE
Appreciative Inquiry (the 4‐D model)

Appreciative Inquiry (the 4-D model) by Cooperrider and Srivastva is based on the view
that an organisation that inquires into problems will keep on finding more of the same
whereas one that focuses on what it is good at will discover more that it is good at. It is
often used in creative projects.
• Identify • What would
processes that work well in
work well. the future?
1.
2. Dream
Discover
4.
3. Design
Deliver
• Implementing • Planning the
the design. processes.
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ExPress Notes
KEY KNOWLEDGE
The Mckinsey 7‐S model

Developed by Peters and Waterman (who wrote “In Search of Excellence”) the core idea is
that there are 7 internal aspects of an organisation that should be aligned with each other to
maximise the chances of the organisation being successful.
Structure – how the organisation is structured and who reports to whom.
Systems – the processes and procedures undertaken by staff.
Strategy – the plan to build competitive advantage and achieve objectives.
Shared values – (“superordinate goals”) the core values of the company and evidenced by
the culture.
Style – including the style of leadership.
Staff – numbers and categories of employees.
Skills – skills and competencies of the employees.
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ExPress Notes
The 7 aspects are classified as either hard or soft elements:
Hard Soft
Management can Less tangible and
directly influence more difficult to
these. describe.
Shared values
Structure
Style
Systems
Staff
Strategy
Skills
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Chapter 1 to 3 extract from our ExPress notes for

A full set of E2 ExPress notes can be downloaded

4. Project Management Tools 21

5. Project Management – Teamwork & Quality 28

6. The Effective Operation of an Organisation 32

8. Corporate Governance & Ethics 42

Strategic Management & Assessing

This chapter introduces us to a variety of methods of analysing the competitive environment

Social - changes in behavior and expectations in society. Demographics, lifestyle.

Environmental – what are the environmental considerations such as recycling, pollution,

Strengths (internal) Weaknesses (internal)

e.g. resources and capabilities e.g. lack of certain resources or capabilities

Opportunities (external) Threats

e.g. arrival of new technology e.g. arrival of substitute product

 Official government sources (e.g. trade reports)

 Online – specialist subscription databases (e.g. Reuters)

 Online – publically available information (e.g. corporate websites)

 Private intelligence agencies (e.g. Dun and Bradstreet)

 Tailored research (e.g. market surveys, discussion groups)

There are 5 forces as follows:

Suppliers Competition Customers

1. Threat of substitute products

There are 4 broad factors within the diamond.

Analysis Choice Implementation

4. Freewheeling opportunism: No planned strategy approach. Grab opportunities as and

Corporate strategy: covers the “big view” of the organisation.

Business strategy: the strategy of a single business

Functional Functional (or operational) strategy: the functional strategies

Beginning Middle End

The 5 process groups are:

4. Monitoring and controlling

1. Project Integration Management

2. Project Scope Management

3. Project Time Management

4. Project Cost Management

6. Project Human Resource

8. Project Risk Management

9. Project Procurement Management

Structure – how the organisation is structured and who reports to whom.

Systems – the processes and procedures undertaken by staff.

Strategy – the plan to build competitive advantage and achieve objectives.

Style – including the style of leadership.

Staff – numbers and categories of employees.

Skills – skills and competencies of the employees.

The 7 aspects are classified as either hard or soft elements:

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