Cima E2 Exam Question No 43

Question No 43:

`Using The Value Chain

The value chain can be used:

• To examine the firm in terms of the processes it uses to serve customers, and the value added, to add more value or remove non-value adding activities.
• As a basis to drive a competitive strategy of cost leadership or differentiation
• Understanding the linkages between processes (e.g. how technology supports each of the primary activities, or how production quality affects after-sales service)
• As a way to analyse competitors for their strengthsand weaknesses.

Cima E2 Exam Question No 42

Question No 42:

Porter's Value Chain - Support Activities

Procurement - The acquisition of inputs, or resources, for the firm. Human Resource management - Consists of all activities involved in recruiting, hiring, training, developing, compensating and (if necessary) dismissing or laying off personnel. Technological Development - Pertains to the equipment, hardware, software, procedures and technical knowledge brought to bear in the firm's transformation of inputs into outputs. Infrastructure - Serves the company's needs and ties its various parts together, it consists of functions or departments such as accounting, legal, finance, planning, public affairs, government relations, quality assurance and general management.

Cima E2 Exam Question No 41

Question No 41:

Porter's Value Chain - Primary Activities?

• Inbound logistics - The relationships with suppliers including all the activities required to receive, store, and disseminate inputs.
• Operations - Activities which transform inputs into outputs (products and services).
• Outbound logistics - Activities required to collect, store, and distribute the output.
• Marketing and sales - Activities which inform buyers about products and services, induce buyers to purchase them, and facilitate their purchase.
• After sales service - Activities required to keep the product or service working effectively for the buyer after it is sold and delivered.

Cima E2 Exam Question No 40

Question No 40:

What is management information?

Management Information Strategic information - For directors to make strategic decisions and understand company performance.

Cima E2 Exam Question No 39

Question No 39:

What is Innovation?

Innovation means to do something differently from the way it was done in the past. In business this can often be linked to:

• New products or services 
• New procedures 
• Use of new technology
• Using new methodologies 

Innovation is particularly important to companies who tend to be on the leading edge of their field of expertise as that innovation can lead to a competitive advantages. Note though that innovation is not just about better products, quality or service, a new process could help to create efficiencies or cut costs, so cost leaders also need to be innovative to succeed. Innovation differs from invention in that innovation refers to the use of a better and, as a result, novel idea or method, whereas invention refers more directly to the creation of the idea or method itself. Innovation differs from improvement in that innovation refers to the notion of doing something different rather than doing the same thing better.

Cima E2 Exam Question No 38

Question No 38:

What is Project management?

The integration of all aspects of a project, ensuring that the proper knowledge and resources are available when and where needed, and above all to ensure that the expected outcome is proceeded in a timely, cost-effective manner.

Cima E2 Exam Question No 37

Question No 37:

 What is Culture?
Culture is a combination of the beliefs, values, and standards of behavior inherent in an organisation. Often individuals behave according to group norms, even to the extent that it might contradict their own usual approach or even company rules.

Cima E2 Exam Question No 36

Question No 36:

What is corporate Appraisal - SWOT analysis?
A corporate appraisal is an overview of the organisation's current position and leads directly on from the analysis undertaken in the internal and external analysis. As the company works towards achieving its objectives, the corporate appraisal is a summary of the company's:

• Strengths
• Weaknesses
• Opportunities
• Threats

Cima E2 Exam Question No 35

Question No 35:

What is Masculinity/femininity (MAS)?

Masculinity relates to assertiveness, competitiveness and acquisitiveness as opposed to more feminine values of compromise, caring and collaboration. Masculinity is very high in Japan where they perceived achievement to be the result of individual ability, determination and hard work. It is very low in Sweden.  

Cima E2 Exam Question No 34

Question No 34:

What are critical success factors?

Developed by John Rockart, critical success factors are the areas in which the organisation has to do well if they are to remain competitive and profitable. Critical success factors should flow directly from the organisation's strategy, so for example an organisation growing through a strategy of buying lots of other companies will need to excel at effectively merging the joint operations. No more than 4-5 critical success factors are usually defined for each organisation so they are focused on the key points.

Cima E2 Exam Question No 33

Question No 34:

What is the key performance indicators?

You might measure: •% of key staff retained.

• Cost savings attained in acquired company 
• Sales/profit growth in joint business 
• Employee satisfaction before and after acquisition 
• Customer satisfaction before and after acquisition

 Each of these provides vital information that the organisation must collect, so for example if they are not doing so already they must measure employee satisfaction, perhaps through conducting employee surveys, both in their own company and in the companies being acquired.

Cima E2 Exam Question No 32

Question No 32:

Gathering Competitor Intelligence?
To understand a competitor, you need to identify their:

1. Current Strategy
2. Objectives
3. Assumptions about the industry
4. Resources and capabilities

- Qualitative and Quantitative Information

Cima E2 Exam Question No 31

Question No 31:

What is Internal analysis?

Internal analysis is undertaken to understand the strengths and weaknesses of the organisation in comparison with its competitors. This enables the organisation to capitalise on its strengths and overcome its weaknesses.

Cima E2 Exam Question No 30

Question No 30:

What is Scenario Analysis?

Whether analysing the broad environment (PESTEL analysis) or the industry environment (Porter's Five Forces) it is important not just to consider the current position but also the future possible scenarios. Scenario analysis is the examination of different possible scenarios which may unfold in the future as any of the PESTEL factors or five forces change and evolve. So for example scenarios might be considered where:

• The economy goes into recession
• A competitor enters or leaves the market
• Exchange rates fall dramatically
• Competitors develop a new product which is cheaper than the current products available.
• A major suppler goes into liquidation.

• The analyses of the consequences of this scenario help the organisation to:
• Define a strategy which will reduce risk of events causing problems for the organisation.
• Prepare to take appropriate action if the situation arises.

Cima E2 Exam Question No 29

Question No 29:

What is Internal analysis?

Internal analysis is undertaken to understand the strengths and weaknesses of the organisation in comparison with its competitors. This enables the organization to capitalist on its strengths and overcome its weaknesses.

Cima E2 Exam Question No 28

Question No 28:

What is PESTEL analysis?

The PESTEL analysis examines the broad environment in which the organization is operating. PESTEL is a mnemonic which stands for Political, Economic, Social, Technological, Environmental and Legal. These are simply 6 key areas in which to consider how current and future changes will affect the business. Strategies can then be developed which address any potential opportunities and threats identified. There are various alternatives to this, the most common being the slightly simpler PEST analysis.

Cima E2 Exam Question No 27

Question No 27:

What is long-term and short-term time Orientation?

This relates to the extent that a society demonstrates a future versus a historically based perspective of time. China has a high score in this respect, meaning its people focus on the long term. The UK has a more short-termist approach in its culture.

Cima E2 Exam Question No 26

Question No 26:

What is Stakeholder Mapping (Mendelow's Matrix)?
 Mendelow's matrix helps to identify the relationships that should be built with different stakeholders. A stakeholder's position in the matrix depends on two factors:
Power- The power to influence the organization, and affect its decision making.
Interest - The interest which the stakeholder has in the organization. The greater the interest in the organization the greater the level of communication that will be required with them. Many employees have little power, but good communication of plans is important to retain their loyalty and motivation. Each stakeholder is placed in one box depending on each factor and then treated differently depending on where they are:
Minimal effort - e.g. Temporary employee. Give them basic information to meet their needs, but pay little attention to them in decision making and strategy.
Keep informed - e.g. Full time employee. Regularly communicate with them, particularly things they are interested in. This helps retain good relationships and avoids them seeking to increase power (e.g. through staff grouping together in a union).
Keep satisfied e.g. Government. They have high power so to avoid them exercising the power they should be kept satisfied e.g. by paying them on time or meeting whatever needs they have. As they have little interest only information is given to them as is necessary (e.g. profit information to government to help assess tax payable).
Key players (Keep Close) e.g. Major shareholder - Regular communication is
maintained and their goals and objectives included as part of the strategy setting process and business approach.

Cima E2 Exam Question No 25

Question No 25:

What is Stakeholder power?

The degree to which stakeholder needs are considered as part of the objective setting process depends on the level of power they have to impact the organization and its results. The needs of powerful groups will tend to be prioritized

Cima E2 Exam Question No 24

Question  No 24:

What is Stakeholders and their needs include?

Internal - Directors - Pay, bonus, overall performance, job security - Employees - Pay, bonus, personal performance, job security
Connected - Shareholders - Share price growth, dividend payments (usually have - Customers - Prices, quality, delivery times, assured supply a contract) - Suppliers - Assured custom, high prices - Financiers - Interest payments, ability to payback loans
External - Government - Tax, law, wealth of nation (Other) - Pressure groups - E.g. environment - Local community - Employment, nice place to live - Wider community - Environment

Cima E2 Exam Question No 23

Question No 23:

What are stakeholders?

Stakeholders of an organization are people who are affected in some way by what the organisation does. Organizational objectives should always be considered in relation to the objectives of different stakeholders. This ensures that a wide range of needs are considered in the objective setting process and balanced objectives are produced.

Cima E2 Exam Question No 22

Question No 22:

What is Qualities of effective objectives?

Specific - about a clear focused topic e.g. profit, sales, customer satisfaction, new product development.
Measurable - able to be measured to ensure people can be held accountable for them, and to give people focus. e.g. Turnover from new products launched.
Achievable - To ensure they are motivational to those people tasked with working towards them and to make rewards attached to them meaningful.
Relevant - to the person/division who has been set the objective, and consistent with the organizations mission. E.g. New product launch objectives might be given to the research and development or marketing departments.
Time bound - to provide a deadline to focus and motivate people towards, and ensure accountability at that date

Cima E2 Exam Question No 21

Question No 21:

What is External analysis?

External analysis is undertaken to enable an understanding of how the external environment has or will change so that the opportunities and threats which may arise by these external changes can be assessed and appropriate action taken.

Cima E2 Exam Question No 20

Question No 20:

Stakeholder Mapping (Mendelow's Matrix)?

Mendelow's matrix helps to identify the relationships that should be built with different stakeholders. A stakeholder's position in the matrix depends on two factors:
Power- The power to influence the organisation, and affectits decision making.
Interest - The interest which the stakeholder has in the organisation. The greater the interest in the organisation the greater the level of communication that will be required with them. Many employees have little power, but good communication of plans is important to retain their loyalty and motivation. Each stakeholder is placed in one box depending on each factor and then treated differently depending on where they are:
Minimal effort - e.g. Temporary employee. Give them basic information to meet their needs, but pay little attention to them in decision making and strategy.
Keep informed - e.g. Full time employee. Regularly communicate with them, particularly things they are interested in. This helps retain good relationships and avoids them seeking to increase power (e.g. through staff grouping together in a union).
Keep satisfied e.g. Government. They have high power so to avoid them exercising the power they should be kept satisfied e.g. by paying them on time or meeting whatever needs they have. As they have little interest only information is given to them as is necessary (e.g. profit information to government to help assess tax payable).
Key players (Keep Close) e.g. Major shareholder - Regular communication is
maintained and their goals and objectives included as part of the strategy setting process and business approach.

Former HP FD Madden take CIMA presidency

Former HP FD Madden take CIMA presidency:

 CIMA Myriam Madden elected president next year, after an annual general meeting earlier this month. 

Having worked as vice president during the term of Keith Luck, Madden has experience in global governance roles in the organization, including the president of the world eight years Member Service Committee and member of the Board of Audit and Risk Committee .With a specialization in finance and business transformation in the public sector, financial services and internationally in major global companies, Madden became president in an important moment for the CIMA.The organization joined with the American Institute of Certified Public Accountants (AICPA) and plans to establish the World Chartered Management Accountant (CGMA) as a quality standard worldwide for accounting, and continued promotion of management accounting the company.In her new position, she said: "CIMA has a valuable asset in its global community of students and members - one of my ambitions is to be confident advocates galvanized by CIMA and the profession of management accounting."He added: "The strategic initiatives of the CIMA will be more effective if the ideas of enthusiasm, energy and several of our members and students to reflect."Madden directed change programs and financial functions within a wide range of companies, such as Hewlett Packard, Arts Council of Scotland and the NHS. She became president of CIMA 82.

Cima E2 Exam Question No 19

Question No 19:

What is the Non-substitutable?

A substitute is a product that fulfils the same need as the product being produced. The key need for a hotel is to have somewhere to stay, so substitutes might include camping, hostels and guest houses. If our hotel was a luxury hotel, where the need was to have somewhere to stay in the city center in a luxurious, comfortable environment, those substitutes would not suffice and the hotel would become non-substitutable.

Cima E2 Exam Question No 18

Question No 18:

Political Approach to Strategy

Recognizes the influence of power in strategy development, and hence the use of bargaining and negotiation in setting strategy.
the formulation of strategy is viewed as a political process where political and stakeholder analysis to determine the main sources of power.

Cima E2 Exam Question No 17

Question no 17:

What is crafting strategy?

Emergent strategies can be combined with the successful elements of the planned strategy to define the way forward for the business. This is more appropriate for businesses in a changing environment, such as high technology, where restriction to one planned strategy may be a competitive weakness.

Cima E2 Exam Question No 16

Question No 16:

What is Emergent Strategies (Mintzberg)?

Strategies which emerge outof the course of the business rather than having been formally planned. They could perhaps be due to opportunities which present themselves (e.g.a competitor comes up for sale) or threats which need to be addressed (e.g. a competitor develops a new product and the company must follow suit to remain competitive).

Cima E2 Exam Question No 15

Question No 15:

What is the Criticisms of planned strategies?

Time commitment - they can be very time consuming to create, for large businesses often taking many months, and may be out of date by the time they are published
Cost - costs include staff time, collecting information, using strategy consultants
Lack of flexibility - The organisation can become constrained by a fixed plan and as a result not take new opportunities that arise or adapt to changes in the business environment (e.g. a new competitive threat).

Cima E2 Exam Question No 14

Question No 14:

What is Strategy Evaluation and control?

•Evaluating the success of the strategy by measuringactual performance against objectives
•Taking control action by amending future strategies and objectives.   

Cima E2 Exam Question No 13

Question No 13:

What is the Strategic Implementation?

Putting the strategies into practice including polices and strategies for:
•marketing
•finance
•R & D
•IT
•Human Resources
•Project management
•Change management
•Structure

Cima E2 Exam Question No 12

Question No 12:

What is the Strategic Choice?

Answer:

• Selecting strategic options
• Choosing options the firm is going to take (including financial evaluation using techniques such as NPV, IRR and Payback period).

Cima E2 Exam Question No 11

Question No 11:

What is Strategic Analysis?

• Defining the direction (e.g. Mission and objectives)
• External analysis of the business environment (e.g.PESTEL analysis, Porter's 5 forces)
• Internal analysis of the firm (e.g. Value chain, Resource audit, Product analysis)
• Corporate appraisal (e.g. SWOT analysis)

Cima E2 Exam Question No 10

Question No 10:

Planned strategies tend to consist of four of distinct stages:

Answer:

1. Strategic Analysis
2. Strategic Choice
3. Strategic Implementation
4.Strategy Evaluation and control

Cima E2 Exam Question No 9

Question No 9:

What is Planned Strategies?

Planned strategies are often used in large organisations, and are particularly suitable where the industry is subject to relatively little change.

Cima E2 Exam Question No 8

Question No 8:

What is Approaches of Strategy Formulation?

•Planned strategies
•Emergent strategies
•Incrementalism
•Opportunism

Cima E2 Exam Question No 7

Question No 7:

What is Operational/Functional Strategy?


Each functional area within each business unit will then have its own strategy, so there will be strategies in each department e.g. HR, IT, production, finance and marketing. These should be designed to be consistent with the business strategy of the SBU.

Cima E2 Exam Question No 6

Question No 6:

What is Business Strategy?

Each business unit or subsidiary of the business is likely to have different goals, competitors, suppliers, manufacturing approaches, IT, financial requirements and so on, and so each strategic business unit (SBU) needs its own strategy. 

This covers:
•Which competencies?
•Which products?
•Which markets?
•Tactics to beat competition in this market
•Business resources (people, buildings, machinery, processes)
•How to compete in this business area?

Cima E2 Exam Question No 5

Question No 5:

What is Corporate Strategy?

• The corporate strategy provides the direction for the business as whole, including all parts of the business. It includes consideration of:
• The overriding purpose and scope of the business
• Which businesses and markets should the organisation operate in?
• What should the core competencies be?
• Resources and financing
• How to compete
• How to integrate and structure the business   

Cima E2 Exam Question No 4

Question No 4:

What is The importance of strategy?

Answer:

•Provides a clear direction, focusing management decision making
•Adapts the organisation to the changing environment ensuring it's continuing survival and success
•Ensures competitiveness through understanding and adapting to competition
•Focuses in building key competences to meet customer needs
•Co-ordinates all elements of the business in a structured planned approach.

Cima E2 Exam Question No 3

Question No 3:

Key features of strategic management?

Answer:

Long term approach - decisions are made over the long term, often for periods exceeding one year Focused on organisational objectives - the aim being to ensure that the plan of action achieves the most important objectives for a wide group of key stakeholders Aligned with internal strengths and weaknesses - the aim should be to capitalise on the business strengths and overcome any key weaknesses. Devising a strategy will often follow a position audit of the business to ascertain the businesses current position. Adapted to the changing business environment - so that changes in political, economic, social and technology factors are taken account of, while adapting to industry changes, such as competitive threats, supply issues or changing customer needs.

Cima E2 Exam Question No 2

Question No 2:

What is Strategy in business?

Answer:

A course of action, including the specification of resources required, to achieve a specific objective. Business strategy therefore is concerned with the overall management of an organisation and includes the management of and taking decisions about:

A. Products
B. Markets
C. Locations (production and sales)
D. Structure
E. Personnel
F. Buildings and machinery
G. How to compete

Cima E2 Exam Question No 1

Question No 1:

What is Strategy?

Answer:
 A plan of action designed to achieve a goal or objective. The aim of a strategy is to gain some kind of competitive advantage or to help to exploit future opportunities.