Cima E2 2012 Notes

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Notes
CIMA Paper E2
Enterprise Management
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CIMA E2 Enterprise Management
Contents
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1. 2. 3. 4. 5. 6. 7. 8. Strategic Management & Assessing the Competitive Environment 7 Developments in Strategic Management Project Management 14 16 Project Management Tools 21 28 32 36 42 Project Management Teamwork & Quality The Effective Operation of an Organisation Managing People Corporate Governance & Ethics
About ExPress Notes
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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 other purpose is prohibited. These course materials are for educational purposes only and so are necessarily simplified and summarised. Always obtain expert advice on any specific issue. Refer to our full terms and conditions of use. No liability for damage arising from use of these notes will be accepted by the ExP Group.
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START About ExPress Notes

We are very pleased that you have downloaded a copy of our ExPress notes for this paper. We expect that you are keen to get on with the job in hand, so we will keep the introduction brief. First, we would like to draw your attention to the terms and conditions of usage. Its a condition of printing these notes that you agree to the terms and conditions of usage. These are available to view at www.theexpgroup.com. Essentially, we want to help people get through their exams. If you are a student for the CIMA exams and you are using these notes for yourself only, you will have no problems complying with our fair use policy. You will however need to get our written permission in advance if you want to use these notes as part of a training programme that you are delivering. WARNING! These notes are not designed to cover everything in the syllabus! They are designed to help you assimilate and understand the most important areas for the exam as quickly as possible. If you study from these notes only, you will not have covered everything that is in the CIMA syllabus and study guide for this paper. Components of an effective study system On ExP classroom courses, we provide people with the following learning materials: The ExPress notes for that paper The ExP recommended course notes / essential text or the ExPedite classroom course notes where we have published our own course notes for that paper The ExP recommended exam kit for that paper. In addition, we will recommend a study text / complete text from one of the CIMA official publishers, but we do not necessarily give this as part of a classroom course, as we think that it can sometimes slow people down and reduce the time that they are able to spend practising past questions.
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Your stage in study for each paper These ExPress notes ExP recommended course notes, or ExPedite notes Dont use yet ExP recommended exam kit Dont use yet CIMA online past exams Prior to study, e.g. deciding which optional papers to take Skim through the ExPress notes to get a feel for whats in the syllabus, the size of the paper and how much it appeals to you. Work through each chapter of the ExPress notes in detail before you then work through your course notes. Dont try to feel that you have to understand everything just get an idea for what you are about to study. Dont make any annotations on the ExPress notes at this stage. Have a quick look at the two most recent real CIMA exam papers to get a feel for examiners style. Dont use at this stage. At the start of the learning phase Work through in detail. Review each chapter after class at least once. Make sure that you understand each area reasonably well, but also make sure that you can recall key definitions, concepts, approaches to exam questions, mnemonics, etc. Nobody passes an exam by what they have studied we pass exams by being efficient in being able to prove what we know. In other words, you need to have effectively input the knowledge and be effective in the output of what you know. Exam practice is key to this. Try to do at least one past exam question on the learning phase for each major chapter.
For people on a classroom course, this is how we recommend that you use the suite of learning materials that we provide. This depends where you are in terms of your exam preparation for each paper.
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Your stage in study for each paper Practice phase
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ExP recommended course notes, or ExPedite notes Avoid reading through your notes again. Try to focus on doing past exam questions first and then go back to your course notes/ ExPress notes if theres something in an answer that you dont understand.
ExP recommended exam kit This is your most important tool at this stage. You should aim to have worked through and understood at least two or three questions on each major area of the syllabus. You pass real exams by passing mock exams. Dont be tempted to fall into passive revision at this stage (e.g. reading notes or listening to CDs). Passive revision tends to be a waste of time. Dont touch it!
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Notes
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START About The ExP Group

Born with a desire to be the leading supplier of business training services, the ExP Group delivers courses through either one of its permanent centres or onsite at a variety of locations around the world. Our clients range from multinational household corporate names, through local companies to individuals furthering themselves through studying for one of the various professional exams or professional development courses. As well as courses for CIMA and other professional qualifications, our portfolio of expertise covers all areas of financial training ranging from introductory financial awareness courses for non financial staff to high level corporate finance and banking courses for senior executives. Our expert team has worked with many different audiences around the world ranging from graduate recruits through to senior board level positions. Full details about us can be found at www.theexpgroup.com and for any specific enquiries please contact us at info@theexpgroup.com.
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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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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.
SAMPLE PAGES KEY KNOWLEDGE Freemapping set from full Stakeholder www.facebook.com/theexpgroup
Stakeholders are individuals, groups or organisations that can impact or be impacted by, an organisation. Mendelows Matrix allocates stakeholders into quadrants according to their level of power and how likely they are to exercise that power (i.e. their interest). Low Low Minimum effort Stakeholder Power Keep satisfied High Key players Keep informed Stakeholder Interest High
Legal - changes and predicted changes to regional (e.g. EU) and national legislation. Regulatory bodies. Changes to employment law.
KEY KNOWLEDGE SWOT analysis

Strengths (internal) e.g. resources and capabilities Opportunities (external) e.g. arrival of new technology Weaknesses (internal) e.g. lack of certain resources or capabilities Threats e.g. arrival of substitute product
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Threshold resources and competencies: These are the minimum required by an organisation to meet customers 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 Porters value chain
Support
Firm Infrastructure
Human Resource Management Technological Development Procurement
Operations
Support Activities
Outbound 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.
Marketing & Sales
Inbound Logistics
Primary
Service
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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).
SAMPLE PAGES KEY KNOWLEDGE Free full analysis Data for environmental set from www.facebook.com/theexpgroup
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)
Primary activities: related with production. Support activities: provide the background for the effectiveness of the organisation (e.g. HRM)
Quantitative research
analysis of numerical data more objective statistical tests e.g. data provided by customers
Qualitative research
analysis of words more subjective could use focus groups or interviews e.g. opinions of customers
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KEY KNOWLEDGE Porters 5 Forces

There are 5 forces as follows:
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.
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.

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 firms 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.
4. Power of customers
KEY KNOWLEDGE Porters 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 & Structure
Demand Conditions
Related & Supporting
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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

This chapter identifies various different approaches to strategy that organisations can take.
KEY KNOWLEDGE Different strategic models
1. Ansoffs 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. Mintzbergs 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. Lindbloms 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 organisations 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 we be in? Business strategy: the strategy of a single business organisation or the strategies of strategic business units (SBUs) Functional (or operational) strategy: the functional strategies involving items such as marketing, IT and HRM that support the business strategy.
Corporate Business Functional
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

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
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Process groups
2. Planning 3. Executing 4. Monitoring and controlling 5. Closing
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The 9 knowledge areas are: 1. Project Integration Management 2. Project Scope Management
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3. Project Time Management 4. Project Cost Management
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 processes that work well. What would work well in the future?
1. Discover
2. Dream
4. Deliver
Implementing the design.
3. Design
Planning the processes.
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SAMPLE PAGES Free full set from www.facebook.

SAMPLE PAGES Free full set from www.facebook.com/theexpgroup

About ExPress Notes

START About ExPress Notes

SAMPLE PAGES Free full set from www.facebook.com/theexpgroup

How to get the most from these ExPress notes

SAMPLE PAGES Free full set from www.facebook.com/theexpgroup

Your stage in study for each paper Practice phase

These ExPress notes

CIMA online past exams

SAMPLE PAGES Free full set from www.facebook.com/theexpgroup

The night before the real exam

At the door of the exam room before you go in.

Our ExPress notes fit into our portfolio of materials as follows:

SAMPLE PAGES Free full set from www.facebook.com/theexpgroup

START About The ExP Group

Strategic Management & Assessing the Competitive Environment

SAMPLE PAGES Free full set from www.facebook.com/theexpgroup

KEY KNOWLEDGE PESTEL (or PEST or SLEPT) Analysis

KEY KNOWLEDGE SWOT analysis

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KEY KNOWLEDGE Porters value chain

Marketing & Sales

KEY KNOWLEDGE Porters 5 Forces

SAMPLE PAGES Free full set from www.facebook.com/theexpgroup

SAMPLE PAGES Free full set from www.facebook.com/theexpgroup

KEY KNOWLEDGE Porters Diamond

Firm Strategy & Structure

Related & Supporting

SAMPLE PAGES Free full set from www.facebook.com/theexpgroup

Developments in Strategic Management

SAMPLE PAGES Free full set from www.facebook.com/theexpgroup

KEY KNOWLEDGE Different strategic models

SAMPLE PAGES Free full set from www.facebook.com/theexpgroup

KEY KNOWLEDGE Levels of strategy

Corporate Business Functional

SAMPLE PAGES Free full set from www.facebook.com/theexpgroup

KEY KNOWLEDGE A project

KEY KNOWLEDGE The project life cycle

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The project life cycle

KEY KNOWLEDGE The PMBOK Guide

2. Planning 3. Executing 4. Monitoring and controlling 5. Closing

SAMPLE PAGES Knowledge areas Free full set from www.facebook.com/theexpgroup

3. Project Time Management 4. Project Cost Management

8. Project Risk Management 9. Project Procurement Management

KEY KNOWLEDGE Appreciative Inquiry (the 4-D model)

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