ACCA P3 Business Analysis - 2010 - Study text - Emile Woolf Publishing
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Practice questions
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(1) Reaching an agreement with the supermarket group where he works to sell
the products through its supermarkets, using the own-label clothing brand of
the supermarket group.
(2) Creating a brand for the products, and selling them through a number of
independent fashion stores in the area.
(3) Creating a brand for the products, and marketing and selling them through a
website and the internet.
Stefan can choose only one of these options.
Required
(a) What are the advantages and disadvantages of each channel of distribution,
and what might be the implications of using each channel for Stefan’s
business?
(b) Explain briefly how the marketing mix will probably differ for each of the
marketing and distribution channels that Stefan is considering.
43 Travel goods firm
ABC is a multinational company specialising in travel goods such as suitcases and
travel bags. It has a strong position in the ‘luxury goods’ section of the market, and
its brand is well-known and highly-regarded.
It has manufacturing facilities and distribution centres located around the world. Its
IS/IT systems strategy has been to allow decentralisation of systems. Each division
of the company has been allowed to develop and use its own IS/IT systems.
The company has been successful in using developments in information technology.
It has EDI links with many of its major suppliers, and it was one of the first
companies in the industry to develop a website for advertising and selling its goods
directly to consumers. However, the popularity of the website has been falling, and
the number of ‘hits’ per day is now down to a third of its peak level about three
years ago.
Although the company has EDI links with suppliers, it does not yet have similar
arrangements with its major customers. However, some customers have recently
suggested that improvements could be made in their supply chain by establishing
extranet links.
The company is in a highly-competitive market, and rival companies have been
successful in taking market share by offering well-designed products at lower
prices.
The directors of ABC are aware that some managers have ideas for improving
competitiveness, but these ideas are spread out throughout the company, and it has
been difficult for different divisions in different countries to exchange their ideas. It
has been suggested that a new intranet system could be introduced to improve the
interchange of ideas within the group.
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The directors are also aware that they do not have as much information as they
would like about their competitors. Travel goods are a type of fashion accessory for
many customers, and ABC would probably benefit from learning much faster about
the initiatives that its competitors are taking in the market. It has been suggested
that an information system should be developed for senior managers, giving them
access to information about competitors, including easy access to their internet sites.
Required
Construct a simple SWOT analysis (strengths, weaknesses, opportunities and
threats analysis) for ABC.
44 Electronic marketing
Suggest briefly how electronic marketing is used by theatre companies.
45 Leek and Flood
Leek and Flood is a firm of plumbers. The firm employs 20 full-time qualified
plumbers. Each plumber has a van that is equipped with a wide range of
replacement parts and plumbing items.
Management believes that the success of the company is due to several reasons. It
has marketed its services actively, through door-to-door advertising (leaflets),
building a user-friendly website and advertising in local telephone directories. It
also benefits from ‘word-of-mouth’ recommendations from satisfied customers.
The company expects a high quality of service delivery by its plumbers, who are
given additional training regularly in new skills and technologies and in customer
service skills.
To reduce time lost in obtaining replacement parts for plumbing repairs, the
plumbers’ vans are stocked with a wide variety of different parts. The company also
has a good relationship with a local supplier of parts, from which it buys
exclusively.
The company offers a warranty on all the work done by its plumbers and promises
a quick response to any complaints that it receives. However, the level of complaints
is very low.
Required
(a) Suggest a model that you might use to assess the quality of the plumbing
services that the company provides.
(b) Explain how you would use this model to make your analysis.
46 Business case
List the sections in a report that presents a business case to senior management for a
new IS/IT project.
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47 Risk management process
Many project managers are asked to apply a risk management process to their
project.
Explain the purpose, meaning and content of a risk management process.
48 Project manager
(a) A feasibility study could be described as a project within a project. Explain
why a feasibility study has the characteristics of a project.
(b) List six general responsibilities of a project manager for a project to develop
an IS/IT system.
49 Project management software
A project manager may use special project management software to help him (or
her) with the management of an IS/IT development project.
List three main features of a project management software package.
50 Requirements creep
What is requirements creep in the development of a bespoke IS/IT system? How
can it be controlled?
51 Balanced scorecard
(a) What is the purpose of the balanced scorecard?
(b) What are the four areas of a balanced scorecard?
(c) What types of organisation might benefit most from using a balanced
scorecard, or might be most interested in adopting a balanced scorecard
approach?
(d) A university wishes to adopt a balanced scorecard approach. Suggest some
targets of performance that it might select for its scorecard.
52 Key success factors
In recent years, some low-cost airline companies have achieved commercial success
and have developed a large network of passenger air routes. One such airline uses a
balanced scorecard approach to setting strategic performance objectives.
Required
(a) Suggest three factors that might have been key factors contributing to the
success of the airline company.
(b) For each of the four areas of the balanced scorecard, suggest three
performance targets that might be used by the airline company.
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53 Entity P: financial performance
The financial performance of Entity P is summarised below. ‘Now’ is the end of
Year 3.
Year 1
Year 2
Year 3
Year 4
(forecast)
$000 $000 $000 $000
Sales 9,000
13,700
19,600 29,300
Cost of sales 5,670
9,320
13,720 20,600
Marketing costs
800
1,000
1,160 1,400
Distribution costs 1,200
1,500
1,610 1,880
Administration costs 200
220
390 580
Interest charges
0
300
750 2,150
Operating profit
1,130
1,360
1,970 2,690
Inventory 900
1,500
2,700 5,400
Non-current assets 1,900
5,700
10,300 24,000
Loans 0
3,300
9,400 19,600
Number of employees 15
18
19 33
Range of products sold 32
74
106 125
Number of suppliers 12
18
27 45
Required
Evaluate the financial performance of Entity P, and highlight any strategic issues
that you consider should be brought to the attention of senior management.
54 ABC Group: financial analysis
It is now the end of Year 2. ABC Group has three divisions, each producing and
selling a different group of products. Information about the financial performance of
each division/product group is as follows.
Division A
Year 1
Year 2
Year 3
(forecast)
$000 $000 $000
Sales 8,000
8,323
8,741
Cost of sales 4,400
4,520
4,610
Gross profit 3,600
3,803
4,131
Transport costs
400
415
430
R&D expenditure low
low
Low
Market share 11%
10%
8%
Sales volume index 100
102
104
Division B
Year 1
Year 2
Year 3
(forecast)
$000 $000 $000
Sales 10,000
11,220
12,600
Cost of sales 6,000
6,480
7,000
Gross profit 4,000
4,740
5,600
Transport costs
350
390
450
R&D expenditure high
high
high
Market share 27%
27%
27%
Sales volume index 100
110
121
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Division C
Year 1
Year 2
Year 3
(forecast)
$000 $000 $000
Sales 6,000
5,600
5,400
Cost of sales 3,900
4,080
4,210
Gross profit 2,100
1,520
1,190
Transport costs
360
476
540
R&D expenditure medium
medium
medium
Market share 20%
20%
20%
Sales volume index 100
107
114
Required
Use this information to evaluate the performance of the three product groups. You
should try to use an analytical model to support your financial analysis.
55 Role of the accountant
(a) What are the roles of the accounting function within the corporate strategy of
a company?
(b) What should be the role of accountants in the formulation and evaluation of
business and marketing strategies?
56 HR plan
You have been asked to prepare a human resources plan for your company as part
of a strategic review. The company currently employs 2,000 people. In five years, it
is estimated that the workforce will be 2,500, with more qualified engineers and
accountants, and fewer IT specialists.
Required
Explain how you would prepare the HR plan for the next five years.
57 Strategic management styles
Goold and Campbell (1987) identified three strategic management styles in large
organisations:
(a) strategic planning style
(b) financial control style
(c) strategic control style.
A fourth style, the ‘holding company style’ can be added.
Required
Describe briefly the nature of each of these strategic management styles.
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Paper P3
Business analysis
Q&A
Answers to practice
questions
Contents
Page
Strategic position and the business
environment
1 Excellence 465
2 PESTEL 465
3 Airtravel 466
4 Diamond 466
Competitive forces
5 Fiveforces 468
6 Niche 469
7 Productlifecycles 469
8 Railwaycompany 469
9 Tuitioncompany 470
Marketing and the value of goods and
services
10 Benchmarking 470
11 Addedvalue 470
12 Valuechain 471
13 Dairyfarm 471
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14 Marketingmix 472
15 Modelling,measuring,targeting 473
Internal resources, capabilities and
competences
16 Corecompetencies 474
17 SWOT 474
18 MoreSWOT 475
Stakeholder expectations. Ethics and
culture
19 Culturalweb:cultureandstrategy 475
20 Mendelow 476
21 CSRandenvironmentalstrategy 477
22 KenDay 478
Strategic choice: corporate strategy
23 BCG 479
24 Matrices 480
25 Global 480
Strategic choice: achieving competitive
advantage
26 Collaboration 482
27 Sustainablecompetitiveadvantage 482
28 Genericstrategies 482
Strategic direction and strategy
development
29 Mission 483
30 Product‐marketstrategy 483
31 Growthstrategy 484
32 Suitability,acceptabilityandfeasibility 484
33 Strategyselection 484
34 R&Dstrategy 485
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Strategic action
35 Rationalstrategicplans 485
36 Emergentstrategy 486
37 Stageindevelopment 486
Modelling and re-designing business
processes
38 Businessprocesses 486
39 Featuresoforganisationalchange 487
40 Change 488
Information technology solutions
41 Channelformarketinganddistribution 488
42 StefanLund 489
43 Travelgoodsfirm 490
44 Electronicmarketing 491
Business strategy and quality initiatives
45 LeekandFlood 491
Project management
46 Businesscase 491
47 Riskmanagementprocess 492
48 Projectmanager 493
49 Projectmanagementsoftware 493
50 Requirementscreep 493
Finance and business strategy
51 Balancedscorecard 494
52 Keysuccessfactors 495
53 EntityP:financialperformance 496
54 ABCGroup:financialanalysis 497
55 Roleoftheaccountant 498
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Leadership and human resources
management
56 HRplan 499
57 Strategicmanagementstyles 499