INSTITUTE OF COST AND MANAGEMENT ACCOUNTANTS OF PAKISTAN

To be the Preference in Value Optimization for To develop strategic leaders through imparting quality Business. education and training in Management Accounting, to continually set and upgrade professional standards and to conduct research, bringing value-addition to the economy.

Vision

Mission Statement

Assignment Questions - New Fall (E) - 2011 Session Management Accounting-Business Strategy Stage 6

INSTRUCTIONS:
1.

A student who takes admission in Correspondence Course shall be required to complete all assignments of his respective subjects within the same academic session. If he/she fails to complete 100% assignments within that session, he/she shall be required to re-enrol himself/herself in the next session after making payment of 100% correspondence course fee. Each assignment is allocated a total of 100 marks. 100% assignments of all subjects must be submitted in the session in which the examination is to be taken. The last date for submission of first 50% assignments is 07 January 2012 and next 50% is 04 February 2012 for April 2012 Examination. Those students who are not appearing in the particular examination may, however, submit the assignments latest by 15th March 2012. You are required to pay Annual Subscription of Rs.700/- during July December each year to avoid payment of Restoration Fee of Rs.1500/-. Examination Fee is payable from February 15 to 29, 2012 [with normal fee] and March 1 to 8, 2012 [with 100% late fee] for April 2012 Examination. Examination forms can be collected from any ICMAP Centre or website: www.icmap.com.pk. Assignments would not be acceptable after due date.

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4. 5. 6.

Examination Eligibility Criteria

7. 8. The student must obtain 50% marks in each assignment and if he fails to obtain the said percentage of marks, he/she has to re-write and resubmit the assignment within one week, otherwise he/she will not be eligible to appear in the examination.

Correspondence course students will be required to appear in two (2) online tests for each subject and the student who secure aggregate 50% marks in tests will be eligible to appear in the final examination."

Assignment# 1:

The Nature of Strategic Management Marks (05) (20) (25) (10) (15)

Q1 Q2 Q3

(a) (b)

Define strategic management. List down stages of strategic management process. Briefly describe each of the above stage. Why it is so important to integrate intuition and analysis in strategic management? Please discuss. (Ref: Fred R. David 11th ed.)

(a) (b)

What do you understand by the term corporate appraisal? The term corporate appraisal is often used synonymously with the term SWOT analysis. Comment on this statement. (Ref: CIMA Strategic Level E3 Study Text: CIMA official terminology) Define strategic vision and mission statement. Compare and contrast vision statements with mission statements in terms of composition and importance. (Ref: Fred R. David 11th ed.) Assignment# 2: Strategies in Action

Q4

(a) (b)

(10) (15)

Q1

(a) (b)

What do you understand by the term competitive advantage?

(Ref: Fred R. David 11th ed.) Discuss the generic strategies suggested by Michael Porter to gain sustainable competitive advantage.

(10) (15) (25) (10) (15) (10) (08) (07)

Q2 Q3 Q4 (a) (b) (a) (b) (c)

Discuss various integration strategies a business organization can pursue to gain control over its customers, suppliers and competitors. List down various intensive strategies available to a business organization. Discuss each of the above strategies. Compare and contrast related diversification and un-related diversification. Describe various situations in which businesses pursue defensive strategies. Briefly describe each of the above defensive strategies. Assignment# 3: The Business Mission

Q1

Developing a strategic vision and a mission statement is the first stage of strategic management process. In this context highlight the importance of a strategic vision and a mission statement. (Ref: Fred R.David 11th ed.) Different strategists may have different answers to the question What is our business? In view of this statement explain why a mission statement should be reconciliatory? (Ref: Fred R.David 11th ed.) (a) (b) Describe the importance of corporate social responsibility in the business environment. How it differs from corporate governance? How does a mission statement indicate the firms attitude towards various stakeholders? Once a mission statement of a firm is developed. Should the mission statement be evaluated for its effectiveness? And should it be changed? (Ref: Fred R.David 11th ed.)

(25)

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(17) (08) (25)

Q4

Assignment# 4: Q1 (a) (b)

External Assessment (10) (15) (25)

What is the basic purpose of an external strategic management audit? Explain how it is conducted? (Ref: Fred R.David 11th ed.) How does PEST or PESTEL framework helps in analyzing various external forces facing an organization? (Ref: Fred R.David 11th ed.)

Q2

Q3

(a) (c)

Which key external forces acting on a business organization are included by Michael Porter in his five forces model? Discuss each of them. Explain why it is important to effectively balance these forces for achievement of organizational objectives? Explain how The External Factor Evaluation (EFE) Matrix is used in industry analysis? The Competitive Profile Matrix (CPM) identifies a firm's major competitors and its particular strengths and weaknesses. A sample CPM comprising three companies in an industry is given below: Critical Success Factors Advertising Product quality Price competitiveness Management Financial position Customer loyalty Global expansion Market share Total Weight 0.20 0.10 0.10 0.10 0.15 0.10 0.20 0.05 1.00 Company - 1 Rating Score 3 0.60 2 0.20 4 0.40 3 0.30 3 0.45 2 0.20 2 0.40 3 0.15 2.70 Company 2 Rating Score 1 0.20 4 0.40 3 0.30 4 0.40 4 0.60 4 0.40 4 0.80 1 0.05 3.15 Company - 3 Rating Score 4 0.80 3 0.30 2 0.20 3 0.30 2 0.30 3 0.30 1 0.20 4 0.20 2.60

(20) (05) (12)

Q4

(a) (b)

Required: (i) Indicate most important critical success factors for a successful company in the industry. (ii) Identify the strength(s) of each company. (iii) List down other factors that can be considered in CPM analysis.

(04) (05) (04)

Assignment# 5: Q1 (a)

The Internal Assessment (10)

The assessment of finance/ accounting function is possible when the results of investment, financing and dividend decisions are analyzed comparing them with previous results, industry norms. You are required to state, what each of the following ratios measures? (Write one sentence for each measure). Current ratio Acid-test ratio Average collection period Inventory turnover Total debt to net worth Long-term debt to total capitalization Gross profit margin Net profit margin Asset turnover Return on assets

(b)

(b) Summarized financial statements of XYZ Company for last three years are given below: Amount in Rs. 2007 2008 2009 Cash Accounts receivable Inventory Net fixed assets 60,000 400,000 800,000 1,600,000 2,860,000 40,000 520,000 960,000 1,600,000 3,120,000 10,000 580,000 1,200,000 1,600,000 3,390,000

Accounts payable Accruals Bank loan, short-term Long-term debt Ordinary share capital Retained earnings Sales Cost of goods sold Net profit

460,000 400,000 200,000 600,000 200,000 1,000,000 2,860,000 8,000,000 6,400,000 600,000

600,000 420,000 200,000 600,000 200,000 1,100,000 3,120,000 8,600,000 7,200,000 400,000

760,000 450,000 280,000 600,000 200,000 1,100,000 3,390,000 7,600,000 6,600,000 200,000 (07) (05) (03) (15) (10) (15) (10) (25)

Required: (i) Calculate the ratios for the three (03) years as mentioned in (a) above. (ii) Analyze the companys performance with respect to financial condition over last three (03) years. (iii) Explain if banker feels comfortable to grant short-term and long-term finance to this company. Q2 (a) (b) Q3 (a) (b) Do you agree with RBV theorists that internal resources are more important for a firm than external factors in achieving and sustaining competitive advantage? Discuss the empirical indicators suggested by RBV theorists. (Ref: Fred R.David 11th ed.) Explain how a firms business activities can be described as a value chain? Does each firm in the same industry have a different value chain? (Ref: Fred R.David 11th ed.) Explain why prioritizing the relative importance of strengths and weaknesses in an IFE matrix is an important strategic management activity. ((Ref: Fred R.David 11th ed.) Assignment# 6: Q1 Q2 (a) (b) Q3 (a) (b) (c) (d) Strategy Analysis and Choice

Q4

Describe the process of generating and selecting business strategies. Discuss how The Quantitative Strategic Planning Matrix (QSPM) is used in decision stage of the strategy formulation framework Discuss the merits and demerits of QSPM as a decision making tool. Write short notes on the following: The Strategic Position and Action Evaluation (SPACE) Matrix. The Boston Consulting Group (BCG) Matrix. The Internal-External (IE) Matrix. The Grand Strategy Matrix. Discuss the cultural, political and governance aspects of strategy choice. (Ref: Fred R.David 11th ed.)

(25) (15) (10) (07) (06) (06) (06) (25)

Q4

Assignment# 7: Q1 (a) (b) Q2

Implementing Strategies

The strategic management process does not end when the firm decides what strategy or strategies to pursue. There must be a translation of strategic thought into strategic action. In this context. Define and explain strategy implementation. Explain how strategy implementation differs from strategy formulation. List down and explain various human resource issues arising in the process of strategy implementation. (Ref: Fred R.David 11th ed.)

(10) (15) (25)

Q3

(a) (b)

State why it is important for a firm to match its structure with strategy for effective strategy implementation? Briefly describe various organizational structures in the context of strategy implementation. (Ref: Fred R.David 11th ed.) Describe the importance of annual objectives and policies in the process of strategy implementation. Explain why does resistance come into play in the process of strategy implementation? How such resistance can be effectively managed? (Ref: Fred R.David 11th ed.) Assignment# 8: Strategy, Review, Evaluation & Control

(10) (15) (13) (12)

Q4

(a) (b)

Q1

The strategic management process is intended to formulate the firms strategies and then translate them into strategic actions for achievement of stated objectives. Why should the strategists bother about strategy evaluation once the strategy is implemented? Give arguments in support of your answer. (Ref: Fred R.David 11th ed.) (a) While evaluating a strategy, qualitative measures as well as non-financial quantitative measures are as important as financial measures. In this context state how Balanced Score Card helps the strategists in effectively balancing financial and non-financial as well as qualitative measures in the process of strategy evaluation. Do you think that in addition to strategy evaluation, BSC can be used in the process of strategy formulation also? Comment. (Ref: Fred R.David 11th ed.) All companies face to possibility that an event or a combination of events will occur with severe consequences to the companys ability to achieve its targets. Outline the strategies which a company may adopt to counter these problems. (Ref: May 2007 examinations) (a) (b) Discuss the importance of auditing as a strategy evaluation tool. Describe the importance of environmental audit as a strategy evaluation tool. (Ref: Fred R.David 11th ed.) CASE STUDY Assignment# 9: Selected Case Studies

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(b)

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(25)

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(15) (10)

SECTION D:

The Balanced Scorecard: Philips Electronics Philips Electronics, with more than 250,000 employees in 150 countries, uses the balanced scorecard to manage its diverse product lines and division around the world. The company has identified four critical success factors (CSFs) for the organization as a whole: Competence (knowledge, technology, leadership and teamwork); Processes (drivers for performance); Customers (value propositions); Financial (value, growth and productivity).

Philips uses these scorecard criteria at four levels: the strategy review; operations review; business unit and the individual employee. Criteria at one level are cascaded down to more detailed criteria appropriate at each level. This helps employees understand how their day-to-day activities link ultimately to the corporate goals. At a business unit level, for example, each management team determines the local critical success factors and agrees indicators for each. Targets are then set for each indicator based on the gap between present and desired performance for the current year plus two to four years into the future. These targets are derived from an analysis of the market and world-class performance. Targets must be specific, measurable, ambitious, realistic and time-phased. Examples of indicators at the business unit level include: Financial Economic Profit Income from Operations Working Capital Operational Cash flows. Inventory turn over. Processes % reduction in process cycle time Capacity utilization Order response time. Process capability. Customers Rank in customer survey Market Share Repeat order rate. Customer complaints. Brand Index. Competence Leadership competence % of patent-protected turn-over Training days/employee. Quality improvement team Participation. Marks (25) (25) (25) (25)

Q1 Q2 Q3 Q4

Explain how does Philips Electronics apply Balanced score card technique for evaluation of company strategies along the four critical success factors identified by the company? Explain how does balanced score card attempt to reflect the inter-dependence of various performance factors which together will determine success or failure? Describe how organizational structure may an important consideration for BSC implementation? What possible disadvantages or dangers might the balanced scorecard technique have for organizations?
Ref: Exploring Corporate Strategy 7th edition by Gerry Johnson, Kevan Scholes and Richard Whittington)

Assignment# 10: Selected Case Studies The Mobile Phone Industry Competitive Rivalry By 2004 the competitive rivalry between network operators was becoming intense in most countries. In the UK numerous different package were on offer. Initially if a customer threatened to withdraw operations would offer a new free phone and several free months of line rental as an enticement to stay. However, as markets matured, emphasis was placed on price, coverage, general customer service and the offering of new products and services (with the advent of 3G technology). Buying Power Buying power of consumers was high as they had so much choice. The danger for providers was confusing potential customers with over-complex offers. Independent retailers (e.g. in the UK Carphone Warehouse) competed with those owned by network operators (e.g. Vodafone). Other offered cheaper deals through newspaper adverts and the inter-net. Power of Suppliers Equipment manufacturers competed for market share. Prior to 3G launch the manufacturers- Nokia, Motorola and Ericsson had concerns about market saturation. Supplier power was increasing as their sector consolidated through alliances (such as Casio and Hitachi in 2003). Network operators could be held back by supply difficulties as with the Hutchison (3-UK) launch of 3G services in 2003-04. Threats of Substitutes In the 1990s the main threat of substitution was technological regression where customers returned to fixed-line telephony because of high mobile call charges. By 2000 price decreases and the need for everyone to have a mobile phone reduce this threat. By 2004 the greatest threat was the convergence of mobile telephony with PDAs (Personal Digital Assistants) and with the inter-net This could switch both voice and text messaging on to the internet avoiding mobile phone operator networks. Location technology in mobile phones (making the callers easy to find) might encourage this drift.

Threats of new entrants The threat of new entrants was low because of the enormous cost in both licenses and in the general investment needed to be a player in new 3G (broadband) technology. Power was a function of who was ahead of the game in 3G and had the licenses to operate a service. There was only a threat of entrants if public policy towards this heavy regulation of the sector changed in future. Q1 Q2 Q3 Q4 Explain how Micahel Porters five forces model may be applied to the mobile phone industry for identification of various competitive forces acting in the industry? Identify the three most significant competitive forces acting in a mobile phone industry. How could a strategist respond to each of these forces to lessen their impact? What are the main benefits and limitations of five forces model. (Ref: Exploring Corporate Strategy 7th edition by Gerry Johnson, Kevan Scholes and Richard Whittington) Marks (25) (25) (25) (25)

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Institute of Cost & Management Accountants Pakistan Education Department

C O R R E S P O N D E N C E C O U R S E ( N E W F A L L 2 0 1 1 S E S S I O N)

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