CIMA E1 Official Learning System - Enterprise Operations Aug 2009
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CIMA Official
Learning System
Managerial Level
E1 — Enterprise
Operations
Bob Perry
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Contents
The CIMA Learning System ix
Acknowledgements ix
How to use your CIMA Learning System ix
Guide to the icons used within this text x
Study technique x
Paper E1 – Enterprise Operations xiii
1 The Global Business Environment 1
Learning Outcomes 3
1.1 Introduction 3
1.2 Free trade and economic nationalism/protectionism 4
1.2.1 International trade 4
1.2.2 Liberalisation – free trade 4
1.2.3 Economic nationalism 5
1.3 Comparative and competitive advantage 6
1.3.1 Comparative advantage 6
1.3.2 Competitive advantage – Porter’s Diamond 7
1.4 Outsourcing and offshoring 9
1.4.1 The growth of outsourcing 9
1.4.2 Advantages of outsourcing 10
1.4.3 Drawbacks of outsourcing 10
1.4.4 Offshoring 10
1.5 Emerging market multinationals 11
1.5.1 Globalisation 11
1.5.2 How transition economies change 13
1.5.3 Emerging market multinationals and international infl uence 13
1.6 National account balances and monetary policy 15
1.6.1 Fiscal policy 15
1.6.2 International trade 16
1.6.3 Monetary policy 17
1.6.4 Impact on business and markets 19
1.7 Cross-cultural management 19
1.7.1 Managing across cultures 19
1.7.2 Hofstede 20
1.7.3 Other models 21
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ENTERPRISE OPERATIONS E1
iv
CONTENTS
1.8 Stakeholders: society and government 24
1.8.1 Stakeholders 24
1.8.2 The role of society 24
1.8.3 The role of government 25
1.9 Corporate social responsibility 25
1.9.1 General principles of CSR 25
1.9.2 The scope of international variation: developed and
developing economies 26
1.10 Corporate governance 27
1.10.1 Why corporate governance? 27
1.10.2 Stakeholders and government 27
1.10.3 General principles (The Combined Code) 28
1.10.4 The benefi ts of corporate governance 29
1.11 The impact of regulation on the fi rm 29
1.11.1 The legal environment 29
1.11.2 The impact of regulation 30
1.12 Corporate political activity 30
1.12.1 Business and politics 30
1.12.2 Developed markets 31
1.12.3 Developing markets 32
1.13 Country and political risk 32
1.13.1 Country and political risk 32
1.13.2 Political risk analysis 32
1.14 Summary 34
References and further reading 34
Revision Questions 35
Solutions to Revision Questions 37
2 Information Systems 39
Learning Outcomes 41
2.1 Information and information systems 41
2.1.1 The role of information systems in
organisations 43
2.2 Organisational dependence on information systems 46
2.2.1 Emerging IS trends in organisations 47
2.2.2 IT – enabled transformation 52
2.2.3 Teams: dispersed and virtual 53
2.3 Information technology, contexts and change 54
2.4 Challenges in IS implementation 55
2.4.1 Evaluating information systems 56
2.4.2 Privacy and security 57
2.4.3 Changeover approaches 59
2.4.4 Managing systems implementation 59
2.5 Organising and managing IS activities within a
corporate framework 63
2.5.1 IS outsourcing 64
2.5.2 Aligning information systems with business strategy 65
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ENTERPRISE OPERATIONS
CONTENTS
2.6 Summary 66
References and further reading 66
Revision Questions 69
Solutions to Revision Questions 73
3 Operations Management 81
Learning Outcomes 83
3.1 Shifting perspectives 85
3.1.1 Procurement and operations 85
3.1.2 Strategic issues 86
3.2 Operations and organisational competitiveness 88
3.2.1 Operations strategy and the organisation 88
3.2.2 The supply chain 91
3.3 Operations and service organisations 91
3.4 Sustainability in operations management 92
3.5 Quality management thinking 93
3.5.1 Methods of quality measurement 96
3.5.2 Approaches to quality management 97
3.6 Process design 101
3.6.1 Process maps 102
3.6.2 Systems used in operations management 104
3.7 Lean management 107
3.7.1 Managing inventory 108
3.7.2 Managing operational capacity 109
3.7.3 Practices of continuous improvement 111
3.8 Planning quality programmes 113
3.8.1 Implementing TQM 114
3.9 Supplier relationships 115
3.9.1 Supply chain management 116
3.9.2 The lean supply chain 118
3.10 Summary 118
References and further reading 118
Revision Questions 121
Solutions to Revision Questions 125
4 Marketing 131
Learning Outcomes 133
4.1 The marketing concept 133
4.1.1 Differing business philosophies 134
4.2 The marketing environment 136
4.3 Marketing in a not-for-profi t context 137
4.3.1 Marketing for Charities 138
4.3.2 Marketing for non-governmental organisations 138
4.3.3 Marketing for the public sector 138
4.4 The social context of marketing behaviour 139
4.4.1 Social marketing 139
4.4.2 Corporate social responsibility in a marketing context 140
4.5 Consumer behaviour 142
ENTERPRISE OPERATIONS E1
vi
CONTENTS
4.5.1 Factors affecting buying decisions 142
4.5.2 The buying process 143
4.5.3 Buyer behaviour 144
4.5.4 Theories of consumer behaviour 144
4.6 Market research, segmentation, targeting and positioning 145
4.6.1 Market research 145
4.6.2 Market segmentation 147
4.6.3 Targeting and positioning 149
4.7 The marketing mix 150
4.7.1 The product mix 151
4.7.2 Place 152
4.7.3 Promotional tools and promotional mix 152
4.7.4 Price 157
4.7.5 Extending the marketing mix 158
4.8 Marketing contexts 159
4.8.1 Consumer marketing 159
4.8.2 Business-to-business marketing 160
4.8.3 Services marketing 161
4.8 4 Direct marketing and distribution channels 162
4.8.5 Interactive marketing 163
4.8.6 e-marketing, e-business and e-commerce 164
4.8.7 Internal marketing 164
4.9 The market planning process 166
4.9.1 Strategic marketing 166
4.9.2 Product development and the product life cycle 169
4.9.3 Investing in products 170
4.9.4 Pricing strategies 172
4.10 Branding 174
4.10.1 Brand equity 174
4.10.2 Experiential marketing 174
4.11 Summary 175
References and further reading 175
Revision Questions 177
Solutions to Revision Questions 181
5 Managing Human Capital 189
Learning Outcomes 191
5.1 Human resource management and organisational success 191
5.1.1 Human resource management, motivation and opportunity 194
5.1.2 The psychological contract and retention 197
5.1.3 Employees and the corporate dimension 198
5.2 Ethical behaviour 199
5.3 Developing the human resource 202
5.3.1 Recruitment 203
5.3.2 Selection 204
5.3.3 Induction 209
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ENTERPRISE OPERATIONS
CONTENTS
5.3.4 Appraisals 210
5.3.5 Development and training 213
5.3.6 Career planning 218
5.3.7 Employment practices 220
5.4 Motivation and incentives 222
5.4.1 Designing reward systems 223
5.5 Improving the opportunities for employees contribution 228
5.6 Line managers and human resource practices 230
5.7 HR planning 232
5.8 Summary 235
References and further reading 235
Revision Questions 237
Solutions to Revision Questions 241
6 Preparing for the Examination 251
Revision technique 253
Planning 253
Getting down to work 254
Tips for the fi nal revision phase 254
Format of the examination 255
Section A: compulsory objective test questions 255
Section B: compulsory short answer questions 256
Section C: a choice of questions 256
Examination-standard revision questions and solutions 256
A style revision questions 259
Solutions to A style revision questions 265
B style revision questions 271
Solutions to B style revision questions 275
C style revision questions 287
Solutions to C style revision questions 295
Exam Q & As 317
Index 319
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The CIMA
Learning System
Acknowledgements
Every effort has been made to contact the holders of copyright material, but if any here
have been inadvertently overlooked the publishers will be pleased to make the necessary
arrangements at the fi rst opportunity.
How to use your CIMA Learning System
This Enterprise Operations Learning System has been devised as a resource for students
attempting to pass their CIMA exams, and provides:
●
a detailed explanation of all syllabus areas,
●
extensive ‘practical’ materials, including readings from relevant journals,
●
generous question practice, together with full solutions,
●
an exam preparation section, complete with exam standard questions and solutions.
This Learning System has been designed with the needs of home-study and distance-learn-
ing candidates in mind. Such students require full coverage of the syllabus topics, and also
the facility to undertake extensive question practice. However, the Learning System is also
ideal for fully taught courses.
The main body of the text is divided into a number of chapters, each of which is organ-
ised on the following pattern:
●
Detailed learning outcomes expected after your studies of the chapter are complete. You
should assimilate these before beginning detailed work on the chapter, so that you can
appreciate where your studies are leading.
●
Step-by-step topic coverage. This is the heart of each chapter, containing detailed explana-
tory text supported where appropriate by worked examples and exercises. You should
work carefully through this section, ensuring that you understand the material being
explained and can tackle the examples and exercises successfully. Remember that in
many cases knowledge is cumulative: if you fail to digest earlier material thoroughly, you
may struggle to understand later chapters.
●
Readings and activities. Most chapters are illustrated by more practical elements, such
as relevant journal articles or other readings, together with comments and questions
designed to stimulate discussion.
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