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

E1 – Enterprise Operations
Enterprise Pillar

E1 – Enterprise Operations
28 August 2012 – Tuesday Morning Session

Instructions to candidates

You are allowed three hours to answer this question paper.

You are allowed 20 minutes reading time before the examination begins
during which you should read the question paper and, if you wish, highlight
and/or make notes on the question paper. However, you will not be allowed,
under any circumstances, to open the answer book and start writing or use
your calculator during the reading time.

You are strongly advised to carefully read ALL the question requirements
before attempting the question concerned (that is all parts and/or sub-
questions).

ALL answers must be written in the answer book. Answers or notes written
on the question paper will not be submitted for marking.

ALL QUESTIONS ARE COMPULSORY.

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

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

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

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

Write your candidate number, the paper number and examination subject title
in the spaces provided on the front of the answer book. Also write your
contact ID and name in the space provided in the right hand margin and seal
to close.

Tick the appropriate boxes on the front of the answer book to indicate the
questions you have answered.

TURN OVER

© The Chartered Institute of Management Accountants 2012

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

Instructions for answering Section A

The answers to the ten sub-questions in Section A should ALL be written in your answer book.

Your answers should be clearly numbered with the sub-question number and ruled off so the
markers know which sub-question you are answering. For multiple choice questions you
need only write the sub-question number and the answer option you have chosen. You
do not need to start a new page for each sub-question.

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

Question One
1.1 The most significant emerging global economies, in terms of growing power and
influence, are normally referred to as which ONE of the following categories?
A Developed economies
B BRIC economies
C Northern hemisphere economies
D G14 economies
(2 marks)

1.2 According to Herzberg, pay, status and working conditions are examples of which ONE of
the following?
A The preference of Theory Y workers
B Self actualisation
C Motivators
D Hygiene factors
(2 marks)

1.3 An assessment centre commonly refers to which ONE of the following?

A A building where testing occurs
B An approach to selection
C An approach to recruitment
D Online supplier vetting procedure
(2 marks)

Enterprise Operations 2 September 2012

1.4 The system of policies by which an organisation is directed and controlled is known as
which ONE of the following?
A Corporate governance
B Corporate social responsibility
C Corporate infrastructure
D Corporate strategic apex
(2 marks)

1.5 In social marketing, goods that society discourages because of their negative social
effects are known as which ONE of the following?
A Demerit goods
B Durable goods
C International embargoes
D Imports
(2 marks)

1.6 Organisational costs associated with contracted out activities are known as which ONE of
the following?
A Transaction costs
B Offshoring costs
C Transfer costs
D Social costs
(2 marks)

1.7 For organisations failing to adopt the marketing philosophy, which ONE of the following is
NOT recognised as an alternative?
A Sales orientation
B Product orientation
C Lean orientation
D Production orientation
(2 marks)

1.8 Corporate political activity often involves which ONE of the following?
A Clarifying corporate social responsibility
B Scanning the microenvironment
C Lobbying and political campaign contributions
D Internal marketing
(2 marks)

Section A continues on the next page

TURN OVER

September 2012 3 Enterprise Operations

1.9 The basis of a psychological contract is
A an understanding of mutual obligations between a worker and the organisation.
B a corporate responsibility to act in a way that does not harm the environment.
C an emotional affinity for a particular product brand.
D an organisation-wide commitment to listen to customer views.
(2 marks)

1.10 Which ONE of the following is the most complete measure of national economic growth?
A Inflation levels
B Unemployment levels
C The overall level of the FTSE 100 index
D Gross National Product
(2 marks)

(Total for Section A = 20 marks)

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

End of Section A
Section B starts on the opposite page

Enterprise Operations 4 September 2012

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

Question Two
(a) Identify FIVE main advantages of keeping an in-house IS function.
(5 marks)

(b) Explain the benefits of Computer Aided Design (CAD) and Computer Aided
Manufacturing (CAM) to an organisation.
(5 marks)

(c) Explain how Material Requirements Planning (MRP) might improve operations.
(5 marks)

(d) Describe briefly the FIVE main stages involved in the (rational) process of consumer
behaviour when making a purchase.
(5 marks)

(e) Explain queuing theory and give examples of the ways in which it might benefit a hospital
providing services to the public.
(5 marks)

(f) Identify FIVE potential difficulties that might arise for an organisation following the
introduction of a new system if support and training are inadequate.
(5 marks)

(Total for Section B = 30 marks)

End of Section B

Section C starts on the next page

TURN OVER

September 2012 5 Enterprise Operations

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

Question Three
BC4 is a manufacturer of bedroom furniture with four factories in the south of the country. As a
result of declining company financial performance, the Managing Director (MD) engaged a
management consultant to conduct an overall review of BC4’s activities and highlight the issues
of greatest concern.

The management consultant’s main findings are as follows:

• No systematic Quality Control exists and differing operating efficiencies exist both within
and between BC4’s factories;
• There is an increasing incidence of furniture being returned which requires replacement
or reworking. There are also a substantial number of items returned as part of extended
guarantee arrangements;
• Currently BC4 tries to sell its full product range to all potential customers, even though it
is geographically difficult to fulfil obligations to customers in the north of the country.
BC4 needs to rethink this marketing approach and should undertake careful market
segmentation.

Having considered the consultant’s report, the MD has decided that BC4 will conduct a detailed
exercise in market segmentation and, furthermore, will put in place measures to improve product
quality. He thinks that obtaining certification under international quality standard ISO 9000
should deliver significant benefits to BC4, even though the company has no immediate plans to
sell globally. The Production Manager has, however, previously suggested to him that the way
forward is to employ dedicated Quality Control (QC) inspectors as part of a Quality Control (QC)
system.

Required:
(a) Describe the advantages of market segmentation to BC4.
(10 marks)

(b) Describe the advantages of quality standard ISO 9000 certification to BC4.
(10 marks)

(c) Discuss briefly how the Production Manager's suggestion could benefit BC4 as
part of an alternative Quality Control (QC) system.
(5 marks)

(Total for Question Three = 25 marks)

Section C continues on the opposite page

Enterprise Operations 6 September 2012

Question Four
T42 Communication Services is a leading business solutions provider that was founded by two
friends who studied at university together 30 years ago. T42’s webpage explains its business
approach as follows:
“While many changes have occurred in the industry over the past 30 years, our belief in
the need for the best customised communication system and high level of commitment
has remained. T42’s highly trained staff ensure customers always receive excellent
reliability and technology. Should a problem arise, T42’s own technicians are available
24 hours a day, 7 days a week”.
T42 employs 200 technicians who each have detailed specialist knowledge of different systems
and a sales team which stays up to date on the different solutions available. T42’s call centre
staff forward most queries from existing customers to the relevant technician and enquiries from
potential new business clients to the sales team.

One of T42’s founders has retired but the other acts as Chief Executive. He meets monthly with
the company’s Chief Operations Officer to review company strategy and performance (including
budgetary position and comparative ratio analysis from the competitive benchmarking that T42
undertakes). At the last meeting they noted that
• staffing costs as a proportion of sales are higher than its competitors;
• several competitors are now offshoring some of their activities;
• T42’s technicians are highly skilled and knowledgeable but in only a few systems.
The Chief Executive drew reference to the training budget and has asked if economies could be
made.

For their next scheduled meeting the Chief Operations Officer has agreed to investigate the
potential for offshoring part of T42’s operations and introducing job rotation amongst
technicians. She has also agreed to review current training provision.

Required:

(a) Describe the issues T42 should take account of as part of its consideration of the
potential for offshoring.
(10 marks)
(b) Explain the benefits of introducing job rotation amongst technicians for T42.
(10 marks)
(c) Discuss briefly the factors that should be taken into account when deciding upon
T42's training provision and budget.
(5 marks)
(Total for Question Four = 25 marks)

(Total marks for Section C = 50 marks)

End of Question Paper

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LIST OF VERBS USED IN THE QUESTION REQUIREMENTS
A list of the learning objectives and verbs that appear in the syllabus and in the question requirements for
each question in this paper.

It is important that you answer the question according to the definition of the verb.
LEARNING OBJECTIVE VERBS USED DEFINITION

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

Level 2 - COMPREHENSION
What you are expected to understand. Describe Communicate the key features
Distinguish Highlight the differences between
Explain Make clear or intelligible/State the meaning
or purpose of
Identify Recognise, establish or select after
consideration
Illustrate Use an example to describe or explain
something

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

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

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

September 2012 11 Enterprise Operations

 Enterprise Pillar

Operational Level Paper

E1 – Enterprise Operations

September 2012

Tuesday Morning Session

Enterprise Operations 12 September 2012