CHANGES IN CASE STUDY FORMAT: PAPER P3, BUSINESS ANALYSIS

CASE STUDY ANSWERS

The answers are only indicative and are much longer than would be expected from a

candidate sitting this paper under examination conditions.

Part (a)

Analyse the macro-environment of the IISA. Use this analysis to highlight the key

drivers of change that are likely to affect the IISA in the future.

20 marks)

The PESTEL framework may be used to explore the macro-environmental influences that

might affect an organisation. There are six main influences in the framework: political,

economic, social, technological, environmental and legal. However, these types are

interlinked and so, for example, political developments and environmental requirements

are often implemented by enacting laws. Candidates will be given credit for defining the

main macro-environmental influences that affect IISA, rather than classifying these

influences into the PESTEL framework. In the following answer, it is assumed that social

(socio-cultural) and technological influences will be the most significant drivers of change.

Political

The IISA is situated in a country with a relatively stable political system. All political parties

in this country appear to value and promote education. Tax incentives and Government

schemes help companies and individuals gain appropriate qualifications. Like many

countries, the Government is committed to the promotion of lifelong learning to help its

citizens develop and adapt to changing labour circumstances. There are periodic
initiatives, such as Investors in People and the Skills Task Force, established to ‘ensure

that Britain has the skills to sustain high levels of employment, to compete in the global

marketplace and to provide opportunity for all’. Furthermore, the Government itself is a

major consumer of labour and a large procurer of training. It continues to demand that

employees have appropriate qualifications and that suppliers have a well-qualified work

force. Many of its Information Technology (IT) suppliers use certification as a way of

demonstrating that their workforce is well qualified and this assists them in successfully

bidding for government contracts. Having said all this, British Governments have largely

taken what has been referred to as a voluntarist approach, with organisations left to

finance and organise their own training and development. Other countries have a more

interventionist approach; for example, using a payroll levy which is directly used to fund

training.

Economic

The IISA is situated in a relatively stable economic environment, where interest rates are

relatively low and living standards are high. In general, system architects, like all IT staff,

enjoy a good income. If their employer does not support their interest in professional

accreditation (and this is unlikely – see below) then it is feasible for the individual to fund

their own training and examinations. However, the IISA will have to be aware that this may

not be possible in some of the countries which they are targeting. Hence they will have to

monitor this situation.

Social (or socio-cultural)

The IISA is operating in a country and sector where people tend to already have a good

education and the scenario suggests that many candidates studying for the IISA Diploma

already have a degree. There is evidence to suggest that candidates currently perceive
that getting the Diploma will enhance their career prospects. The IISA will need to monitor

this and ascertain whether this perception is correct and, if it is, ensure that this message

is communicated to prospective candidates. The overseas markets targeted by the IISA

also have high levels of education and are countries where professional qualifications are

highly valued.

There has also been the emergence of competency and skill frameworks with human

resource functions linking personal development and job roles to clearly defined

competencies. Research evidence suggests that competency frameworks have a wide

range of use including a more structured approach to training and development. The IISA

is likely to benefit from linking its qualification to a published framework. The Skills

Framework for the Information Age provides a common reference model for the

identification of the skills needed to develop effective Information Systems (IS) which

makes use of Information Communications Technologies (ICT). It is a simple and logical

two-dimensional framework, consisting of areas of work on one axis and levels of

responsibility on the other. It directly refers to skills in systems architecture and so some

link to the IISA qualification appears both feasible and desirable.

Organisations have been increasingly influenced by writers who believe that the strategic

capability of an organisation often lies in the day to day activities that people undertake in

the organisation. Consequently, developing an individual’s ability to recognise the

importance of what they do and the contribution it may have to the strategic capability of

the organisation is important. The IISA should benefit from this value that organisations

give to improving capability. In many organisations there is a link between developing

competency, delivering training, and supporting professional certification. Human

Resource Development has become a significant force in organisations. Jeffrey Gold has
suggested that ‘it carries the prospect of unleashing the potential that lies within people,

allowing employees to contribute and indeed transform strategy’. Peter Senge’s promotion

of the ‘learning organisation’ has also been very influential. He suggests that the

organisations that will excel in the future will be those that that encourage people to

continually ‘expand their capacity to create the results they truly desire, where new and

expansive patterns of thinking are nurtured, where collective aspiration is set free and

where people are continually learning how to learn together’. It can be argued that

investment in appropriate qualifications can help nurture this.

Technical (or technological)

The introduction of computer-based assessment has been a major influence on many

examining boards. They have been able to roll out examination schemes worldwide using

centres (such as those provided by Prometric (www.prometic.com)) that provide the

technical infrastructure, software and security required to successfully deliver computer-

based assessments. Candidates for such examinations appreciate the objectivity of much

computer-based assessment as well as the provision of immediate results. Although the

Board of the IISA has rejected computer-based assessment, it must maintain a watching

brief on its flexibility and functionality, particularly if it wishes to expand worldwide. It is

likely that such software will be developed to support much more sophisticated question

types.

The introduction of examination workflow systems is much newer, allowing conventional

handwritten examination scripts to be scanned into a computer system and then

distributed electronically to markers. Such systems eradicate the need for couriers and so

remove the cost and security risks associated with the physical movement of scripts.

Furthermore, markers can be geographically remote. E-marking software allows scripts to

be partitioned, allowing answers to be distributed to specific markers. For example, the

answers to Question 1 of this examination might only be sent to experts in business

process modelling. E-marking software also guarantees anonymity, so that markers are

marking a particular question cannot see the name, examination centre or even marks

from other answers on the script.

Increased use and availability of electronic media may mean that options are available for

moving away from conventional handwriting in examinations. The production of answers in

a word processed format could be fed directly into examination script workflow software

and be subjected to e-marking.

Environment

Environmental issues continue to have an impact on organisations, as they are

encouraged by politicians and legislation to reduce their emissions and improve their

recycling. The cost of disposal is also increasing. The IISA is currently a significant user of

paper (for its paper-based examinations) and it currently has to pay for secure storage and

disposal. The cost of this is rising and will continue to rise. Paperless examinations will

increasingly be seen as environmentally friendly and cost effective. However, if a move to

paperless examinations is not feasible, the organisation may commit itself to the publicised

recycling of its examination scripts.

Legal

The IISA is working in a country where there are many laws defining employer

responsibilities and employee rights. It is likely that regulation will continue and the IISA

will, like all organisations working in the European Union (EU), have to evaluate the

benefits and cost of working within such legal structures. Some organisations seek to gain
advantage by moving to countries where regulation is more lax, thereby avoiding the

compliance costs incurred by their competitors. The IISA is potentially a relatively

footloose organisation, so moving to a less regulated regime might provide cost

advantages. It promotes itself as an international organisation (although all of its

examinations are currently held in the UK), so moving from the UK may actually give out a

positive message.

Marking Scheme

Up to two marks awarded for identifying macro-environmental influences in each of the six

PESTEL areas – even if justifying the lack of influence.

A further five marks are available for candidates who have extended their argument in

selected areas of the framework. It must be accepted that each area of the PESTEL

framework will have a differential effect and that candidates will interpret this in various

ways. A further three marks are available for professional marks.

Part (b)

Explain the principles of strategic alliances and assess how appropriate this

development method is to the IISA.

(10 marks)

A strategic alliance takes place when two or more organisations share resources and

activities in order to pursue a particular strategy. This approach has become increasingly

popular for a number of reasons. In the context of the IISA, it would allow the organisation

to enter into a marketplace without the large financial outlay of acquiring a local

organisation. Furthermore, it would avoid the cultural dislocation of either acquiring or

merging with another organisation. The motive for the alliance would be co-specialisation,

with each partner concentrating on the activities that best match their capabilities.

Johnson, Scholes and Whittington suggest that co-specialisation alliances ‘are used to

enter new geographic markets where an organisation needs local knowledge and

expertise’. This fits the IISA requirement exactly.

The exact nature of the alliance would require much thought, and indeed different types of

alliance might be forged in the three markets targeted by the IISA. A joint venture is where

the new organisation is jointly owned by the parents. This is a formal alliance and will

obviously take some time to establish. The IISA will have to contribute finance and

resources to the newly-established company, but such costs and resources should be

much less than those incurred in an acquisition. However, joint ventures take time to

establish and it may be not be an option if the IISA wants to quickly move into a target

marketplace in order to speedily arrest its falling numbers. A licence agreement could be

an alternative, where the IISA licenses the use of its qualification in the target market. This

could be organised in a number of ways. For example, a local organisation could market

the IISA qualification as its own and pay the IISA a fee for each certificate and diploma

issued. Alternatively, the qualification may be marketed by the local organisation as an

IISA qualification, with the IISA paying the organisation a licence fee for every certificate

and diploma it issues in that country. This requires less commitment from the IISA but it is

likely to bring in smaller financial returns, and affords less control over how the

qualification is marketed. Furthermore, if the qualification is successful, there is the risk

that the local organisation will develop its own alternative so that it gains all the income

from the transaction, not just a percentage of the transaction fee.

At first sight, the strategic alliance appears very appropriate to the IISA’s current situation.

The licensing approach is particularly attractive because it seems to offer very quick

access to new markets without any great financial commitment and without any cultural

upheaval within the IISA itself. However, the uptake of the qualification is unpredictable

and the marketing and promotion of the qualification is outside the control of the IISA. The

IISA may find this difficult to accept. Furthermore, the IISA will only be receiving a fraction

of the income and so it must ensure that this fraction is sufficient to fuel growth

expectations and service the newly qualified members in other countries. Finally, there is

often a paradox in organisations where internal development has been the strategic

method adopted so far. An organisation used to internal development and control often

finds it difficult to trust partners in an alliance. Yet trust and cooperation is probably the

most important ingredient of making such strategic alliances work.

Marking scheme

One mark for each relevant point, up to a maximum of 10 marks, with a maximum of five

marks for identifying appropriate principles.

Part (c)

Evaluate the significance of the script handling system in the context of Harmon’s

process-strategy matrix.

(10 marks)

Organisations operate using many different processes, most of which could benefit from

investigation and improvement. A classification of the complexity and value of these

processes helps organisations develop an appropriate response to requests for their

improvement. Figure 1 is a process-strategy matrix adapted from Paul Harmon’s book

‘Business Process Change’.

FIGURE 1: MATRIX – COMPLEXITY AND IMPORTANCE OF PROCESSES

The matrix in Figure 1 can be used to classify business processes. The vertical axis

shows the complexity and dynamics of the process. Some processes are very

straightforward (such as sorting mail) and do not change very much. In contrast, other

processes have complex business rules and involve elements of judgement. Such

decisions may also be dynamic in that they have to continually respond to changes in the

environment. The horizontal axis shows the strategic importance of the decision. Some

processes (such as payroll) are enabling processes and contribute little to the products or

services that the organisation provides. In contrast, other processes are very important to

the success of the organisation.

Processes in the lower left hand quadrant are relatively straightforward and should be

automated using standard software packages or perhaps outsourced to a specialist

computer services company. Processes in the lower right hand quadrant are also relatively

straightforward but may offer an important competitive edge. Such processes have to be

made as efficient as possible and may then be automated using either a software package

or a bespoke solution. Processes in the upper left hand quadrant are complex processes

that have to be done but do not add much to the organisation’s product or services. These

processes may be difficult to automate successfully and perhaps should be considered for

outsourcing to an organisation that specialises in this type of process. The processes in

the top right hand quadrant are high value but are difficult to automate. Setting

examinations might be an example for this quadrant of the matrix.

In the context of the IISA, evidence suggests that the script handing system is arguably a

relatively high complex process but it is of little strategic importance. Evidence of its overall

complexity is provided by the problems reported in the case study scenario, such as:

• loss of scripts during transfer by courier

• poor maintenance of marker and auditor addresses and records of availability

• incorrect and delayed publishing of examination results

The IISA may wish to investigate the outsourcing of examination distribution and

administration. Some logistic companies may offer this, but the most likely source of such

a service is another examination body which already has appropriate systems to support

its own examinations. The IISA is based in a country where there are significant

examination boards providing a range of services to schools and colleges. They have the

systems in place to support high volume processing of the type required by the IISA.
Marking scheme

There are up to four marks available for the description of the Harmon process-strategy

matrix, and up to four marks for the application of the matrix to the situation faced by the

IISA. Up to two professional marks are available for this question.

Part (d)

Define TWO options for the redesign of the current script handling system at the

IISA. Explain the advantages and disadvantages of each option.

(10 marks)

Candidates may suggest a range of options to improve the script handling process.

However, the decision to continue with open book written examinations, and not to adopt

computer-based assessment, should be noted and reflected in the answer. Candidates

must take into account the low volume of transactions and the risk averse nature of the

organisation. Two possible options, and the advantages and disadvantages of each, are

discussed below.

The first option is to essentially remove the courier swim lane and treat the examination

script as a document in a workflow system. All scripts are currently moved three times by

couriers, and audited scripts have two further movements, to and from the auditors. Each

movement incurs cost and delay, and increases the risk of losing the physical script. If the

script was scanned into a computer system (either by the invigilator at the examination

centre or by HQ Admin after one courier movement) then the script could be distributed

electronically. Scanning by the invigilator appears to offer the best solution, but the

technical feasibility of providing high quality portable scanners to invigilators would have to
be investigated. Markers and auditors would work with electronic copies of the script,

either marking the script on screen or by physically marking a script they had chosen to

print out. However, all marks would be entered into the workflow system and so even if

markers and auditors print out copies of the script they would not physically distribute it.

Markers would have to be provided with appropriate technology for downloading and

printing out examination scripts. However, these technical requirements are not particularly

onerous. It can be reasonably assumed that markers and auditors already have access to

the Internet. It appears that the average number of scripts marked per day is 10, and with

an average script length of 6 pages, sixty pages per day is a very light load for a

contemporary laser printer. Interestingly, because the cost of data transmission is not

related to physical location, the IISA could consider employing markers and auditors

overseas and this would allow them to address the marker shortage alluded to in the case

study scenario. The work flow solution also provides them with a scaleable process which

would cope with the planned expansion of the scheme. However, the IISA is noted as a

risk averse organisation and they may not wish to use, or pay the cost of, such a

technology dependent solution. The transmission of scripts across the Internet may also

raise security issues which would have to be addressed.

The second option is to retain the physical scripts but to reduce their movement by

relocating markers or auditors or reducing the direct involvement of HQ Admin. For

example, scripts may be sent directly from the invigilator to the marker and from the

marker to the auditor. This would remove one transport of scripts (for scripts not requiring

audit) and a further movement for scripts requiring audit. However, such time and cost

savings may not be too attractive given the problems of maintaining marker and auditor

addresses and availability. It could be argued that removing HQ Admin from this process is

very risky as it removes important controls performed by full-time employees of the IISA.
Markers and auditors are sub-contracted resources. An alternative to reducing the

involvement of HQ Admin is to move the physical location of marking or auditing. For

example, the role of marker and invigilator might be combined so that people who have

invigilated the examination are also paid to mark the scripts and to submit them to HQ

Admin. The process may be further streamlined by inviting auditors to HQ to perform their

auditing. These two changes would reduce the physical movement of scripts to one move

(invigilator/marker to HQ Admin). Furthermore, this movement would take place AFTER

the scripts were marked and so marker/invigilators could be asked to physically record

their marks before sending the scripts. Hence, there is a fail safe system if the scripts are

lost. The script scanning option does not offer this (unless scripts are scanned by the

invigilator at the examination centre). This second option is technically less risky and

expensive than the script scanning option and so might be a more appropriate solution in

an organisation which is noted as being risk averse.

Marking scheme

One mark for each valid point up to a maximum of 10 marks up to a maximum of five

marks for each option.