CIMA Chartered Management Accounting Qualification 2010 Student Support Guide Paper E3 Enterprise Strategy

Introduction This guide outlines matters to be considered by those wishing to sit the examination for Paper E3 Enterprise Strategy of the CIMA 2010 qualification. The first part compares the syllabus of Paper E3 to that of the equivalent Paper P6 in the 2005 qualification and looks at issues relating to transition from the 2005 to the 2010 qualification. It should be noted that in the new 2010 syllabus learning outcomes are shown as overarching lead outcomes, with several component outcomes resulting from that lead. The syllabus comparison displays the learning outcomes from the previous syllabus with the component learning outcomes from the new syllabus. The remainder of the guide looks at issues that are likely to be relevant to all students planning to sit this examination and ends with a series of frequently asked questions.

Overview of syllabus changes Paper E3 has lost the section on assessing the competitive environment (20%) to the new Paper E2 and gained change management (20%) from the old Paper P4. Change management had a weighting of only 10% in P4 and has now been extended considerably. However the bulk of the paper remains the same with some specific syllabus inclusions not seen previously and a general update to reflect current developments. The skill levels were generally already at level 5 but there are a few individual changes. The direction of this paper reflects the increasing pace of change within organisations and the continuing need to consider and evaluate strategic alternatives.

Syllabus comparison Old syllabus Paper P6 P6 A Assessing the competitive environment 20% (i) identify relevant stakeholders in respect of an organisation; (ii) evaluate the impact of regulatory regimes on strategic planning and implementation; (iii) evaluate the nature of competitive environments, distinguishing between simple and complicated competitive environments; (iv) distinguish the difference between static and dynamic competitive environments; (v) evaluate strategies for response to competition. P6 B Interacting with the competitive environment 20% (i) evaluate the impact and influence of the external environment on an organisation and its strategy; (ii) recommend pro-active and reactive approaches to business/government relations and to relations with civil society; (iii) discuss how stakeholder groups work and how they affect the organisation; (iv) discuss how suppliers and customers influence the strategy process and recommend how to interact with them; (v) evaluate the impact of electronic commerce on the E3 A. Interacting with the competitive environment 20% 1 (a) evaluate the impact and influence of the external environment on an organisation and its strategy; 1 (b) recommend approaches to business/government relations and to relations with civil society; 1 (c) discuss the drivers of external demands for corporate social responsibility and the firms response; 1 (d) recommend how to manage relationships with stakeholders; 1 (e) recommend how to interact with suppliers and customers. 2 (a) evaluate the impact of the
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New syllabus Paper E3

Comments This material is now covered in Paper E2 Enterprise Management, in section E2 A, now entitled Strategic management and assessing the competitive environment (20%).

The syllabus weighting remains the same at 20%. The learning outcomes are largely unchanged but have been updated. For example: 1 (c) refers to the demands for corporate social responsibility and the organisations response where (iii) referred to the work of stakeholder groups. 2 (a) is concerned with the impact of the internet on an organisation where (v) mentioned electronic commerce. There are changes in skill levels: For example: 1 (d) asks for the ability to make recommendations

Old syllabus Paper P6 way business is conducted and recommend an appropriate strategy; (vi) evaluate the strategic and competitive benefits of IS/IT and advise on the development of appropriate strategies.

New syllabus Paper E3 internet on an organisation and its strategy; 2 (b) evaluate the strategic and competitive impact of information systems.

Comments on the management of stakeholder groups while (iii) required a discussion (from level 4 to 5) 1 (e) requires the ability to make recommendations on how to interact with suppliers and customers while (iv) asked for a discussion (from level 4 to 5). This material was previously in Paper P4 Organisational Management and Information Systems with a study weighting of 10%. Although the learning outcomes from Paper P4 have been moved into this section, they are extended with a higher skill level to reflect the increased study weighting. In particular: 1 (a) requires a discussion on the process of organisational development while (i) asked for an explanation; 1 (b) requires the ability to recommend techniques to manage resistance to change whereas (ii) asked for a discussion; 1 (d) specifically identifies the role of leadership in managing the change process; 2 (b) identifies ethical issues in the context of change.

E3 B. Change management 20% 1 (a) discuss the concept of organisational change; 1 (b) recommend techniques to manage resistance to change. 2 (a) evaluate approaches to managing change; 2 (b) compare and contrast continuous and discontinuous change; 2 (c) evaluate tools, techniques and strategies for managing the change process; 2 (d) evaluate the role of leadership in managing the change process. 3 (a) evaluate the role of change management in the context of strategy implementation; 3 (b) evaluate ethical issues and their resolution in the context of organisational change.

Old syllabus Paper P6 P6 C - Evaluation of Options, Planning and Appraisal 30%

New syllabus Paper E3

Comments

E3 C. Evaluation of Strategic The syllabus weighting Position and Strategic remains the same at 30%. Options 30% 1 (a) evaluate the process of strategy formulation; 1 (b) evaluate strategic options; 1 (c) evaluate different organisational structures; 1 (d) discuss the role and responsibilities of directors in the strategy development process. 2 (a) evaluate strategic analysis tools; 2 (b) recommend appropriate changes to the product portfolio of an organisation to support the organisations strategic goals; 2 (c) produce an organisations value chain; 2 (d) discuss both qualitative and quantitative techniques in the support of the strategic decision making function. This section has some specific inclusions that are not seen in the old Paper 6. These include the evaluation of the strategy formulation process, game theory, real options and organisation structure in the context of strategy. Benchmarking is now included under models of performance measurement in section E3 - D. 2 (c) asks for the ability to produce an organisations value chain where (iv) asked for an identification of an organisations value chain.

(i) evaluate strategies for response to competition; (ii) evaluate the product portfolio of an organisation and recommend appropriate changes to support the organisations strategic goals; (iii) prepare a benchmarking exercise and evaluate the results; (iv) identify an organisations value chain; (v) evaluate the importance of process innovation and reengineering. (vi) discuss and apply both qualitative and quantitative techniques in the support of the strategic decision making function; (vii) discuss the role and responsibilities of directors in the strategy development process. P6 D - Implementation of Strategic Plans 30%

E3 D. Implementation of Strategic Plans and Performance Evaluation 30% 1 (a) recommend appropriate control measures; 1 (b) evaluate alternative models of performance measurement; 1 (c) recommend solutions to problems in performance measurement;
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The syllabus weighting remains the same at 30% . Paper E3 now specifically identifies performance evaluation in the title and includes a wider range of performance measurement models. The distinction between IT, IS and IM is removed.

(i) evaluate and recommend appropriate control measures; (ii) prepare and evaluate multidimensional models of performance measurement; (iii) identify problems in performance measurement and recommend solutions;

Old syllabus Paper P6 (iv) evaluate and advise managers on the development of strategies for knowledge management, IM, IS and IT that support the organisations strategic requirements; (v) identify and evaluate IS/IT systems appropriate to the organisations strategic requirements, and recommend changes where necessary; (vi) discuss the role of change management in a strategic context.

New syllabus Paper E3

Comments

1 (d) advise managers on the development of strategies for Information Systems knowledge management and content is updated. information systems that support the organisations strategic Old syllabus section D (vi) requirements; on change management has now been moved to 1 (e) recommend changes to new syllabus section E3 information systems appropriate B to the organisations strategic requirements. Skill levels generally remain unchanged.

Knowledge gaps If you have successfully completed Papers P4 and P5 on the 2005 syllabus and now have to sit Paper E3 on the 2010 syllabus, the following should be noted: (a) New Paper E1 contains a section on the global environment which students will not have covered on the 2005 syllabus. E3 will assume some knowledge in this area and students are recommended to review this before starting their studies for Paper E3. (b) New Paper E2 contains a section on assessing the competitive environment which students will not have covered on the 2005 syllabus. E3 will assume some knowledge in this area and students need to review this before starting their studies for Paper E3. (c) New Paper E3 contains a section on change management that was included in Paper P4 of the 2005 syllabus. However the skill level now required is higher, with the topic being placed at a Strategic level.

Assessment methodology There will be a written examination paper of three hours, plus 20 minutes of pre-examination question paper reading time. The examination paper will have the following sections: Section A 50 marks A maximum of four compulsory questions, totalling fifty marks, all relating to a pre-seen case study and further new un-seen case material provided within the examination. (Note: The pre-seen case study is common to all three of the Strategic level papers at each examination sitting i.e. Paper E3, P3 and F3). Section B 50 marks Two questions, from a choice of three, each worth twenty five marks. Short scenarios will be given, to which some or all questions relate

The Enterprise Strategy examination will primarily test the higher skills of application, analysis and evaluation, using verbs from levels 3 - 5 of the CIMA verb hierarchy. You will be expected to use all of your knowledge and skills, gained from your study of the Enterprise Strategy syllabus and earlier parts of the CIMA Professional qualification, to analyse complex situations and provide insight and advice. The scenarios used in this examination are based on real life, and also prepare you for the T4 Part B (Test of Professional Competence in Management Accounting) examination. Preparing for the exam At the Strategic Level, textbook learning is not sufficient. In order to develop the required skills of application, analysis and evaluation you need to use your knowledge to solve unstructured problems. This can best be done by means of simulations and case studies, and by practising examination-standard questions. You should also read articles in the business press, to become familiar with how the models and theories studied at the Strategic Level can (or cannot) be applied in the real world. FAQs Question I have passed the old Managerial level of the 2005 CIMA syllabus, and this is my first attempt at Paper E3. Have I missed anything that I need to catch up on? Answer Yes you should look at the material relating to assessing the competitive environment, which was previously contained in section A of the Paper P6 syllabus. This material has been moved to the new Paper E2, so you will not have studied it under the 2005 syllabus. Section A of Paper E3 syllabus assumes that you have studied that material. In three areas. 1. You need to concentrate on the new learning outcomes relating to change management, contained in section B of Paper E3 syllabus. While you may be familiar with some of the basic concepts (from your studies for Paper P4 in the 2005 CIMA syllabus) you will not have developed the skill levels required to pass this examination. 2. You need to look through the detail of the syllabus content, concentrating on those topics which are new (such as game theory and real options) or have changed (such as those relating to information systems). These topics will require (further) study, if you are to be fully prepared for the Paper E3 examination. 3. The assessment methodology for the strategic level has changed. There is now a case study, with pre-seen and unseen material. The pre-seen element of this case is common to the three strategic level examinations. You should look at (and attempt) the specimen paper for this examination (see below).
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I have failed old Paper P6. Where should I concentrate my efforts before doing my resit?

Question Where can I find the detailed syllabus for this paper? Will there be a specimen examination paper? What knowledge is assumed prior to studying this syllabus?

Answer On the CIMA website under the 2010 syllabus. Yes it will be available on the CIMA website at the end of October. It is assumed that you have passed (or been exempted from) all of the Operational and Management level papers. You should read the support guides for these subjects. You should look at the specimen examination paper for guidance (see above).

What will be the balance between calculations and discussions on this exam?

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