ACCA paper SBL strategic business leader exam kit

LEADERSHIP 1 ACADEMIC RECYCLING COMPANY ARC Ten years ago Sully Truin formed the Academic Recycling Company ARC to offer a specialised waste recycling service to schools and colleges..

Professional Examinations

Paper SBL

Strategic Business Leader

EXAM KIT

P AP ER SB L : S TR A TE GI C BU SI N E S S LE A DE R

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Unit 2 The Business Centre

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ISBN: 978-1-78415-841-5

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The past ACCA examination questions are the copyright of the Association of Chartered Certified Accountants The original answers to the questions from June 1994 onwards were produced by the examiners themselves and have been adapted by Kaplan Publishing

We are grateful to the Chartered Institute of Management Accountants and the Institute of Chartered Accountants in England and Wales for permission to reproduce past examination questions The answers have been prepared by Kaplan Publishing

CONTENTS

Page

Section

5 Specimen 1 exam

6 Specimen 2 exam

Key features in this edition

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TECHNICAL PRACTICE QUESTIONS

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SKILLS ASPECTS AS WELL

LEADERSHIP

1 ACADEMIC RECYCLING COMPANY (ARC)

Ten years ago Sully Truin formed the Academic Recycling Company (ARC) to offer a specialised waste recycling service to schools and colleges The company has been very successful and has expanded rapidly To cope with this expansion, Sully has implemented a tight administrative process for operating and monitoring contracts This administrative procedure is undertaken by the Contracts Office, who track that collections have been made by the field recycling teams Sully has sole responsibility for obtaining and establishing recycling contracts, but he leaves the day-to-day responsibility for administering and monitoring the contracts to the Contracts Office He has closely defined what needs to be done for each contract and how this should be monitored ‘I needed to

do this’, he said, ‘because workers in this country are naturally lazy and lack initiative I have found that if you don’t tell them exactly what to do and how to do it, then it won’t get done properly.’ Most of the employees working in the Contracts Office like and respect Sully for his business success and ability to take instant decisions when they refer a problem

to him Some of ARC’s employees have complained about his autocratic style of leadership, but most of these have now left the company to work for other organisations

A few months ago, ARC was acquired by an international company Scat Scat intend to leave the management of ARC completely in Sully Truin’s hands but want to integrate its activities into complementary activities carried out by the Scat group

As part of Scat’s human resource strategy every manager must attend one of Scat’s internal leadership programmes Scat’s programmes actively advocate and promote a democratic style of management Sully Truin attended once such course programme as part of the conditions for him retaining his managing directorship of ARC

The course caused Sully to question his previous approach to leadership It was also the first time, for three years, that Sully had been out of the office during working hours for a prolonged period of time However, each night, while he was attending the course, he had

to deal with emails from the Contracts Office listing problems with contracts and asking him what action they should take He became exasperated by his employees’ inability to take actions to resolve these issues

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He discussed this problem with the leaders of Scat’s training programme They suggested

that his employees would be more effective and motivated if their jobs were enriched and

that they were empowered to make decisions themselves

On his return from the course, Sully called a staff meeting with the Contracts Office where

he announced that, from now on, employees would have responsibility for taking control

actions themselves, rather than referring the problem to him Sully, in turn, was to focus on

gaining more contracts and setting them up

However, problems with the new arrangements arose very quickly Fearful of making

mistakes and unsure about what they were doing led to employees discussing issues

amongst themselves at length before coming to a tentative decision The operational (field)

recycling teams were particularly critical of the new approach One commented that

‘before, we got a clear decision very quickly Now decisions can take several days and

appear to lack authority.’ The new approach also caused tensions and stress within the

Contracts Office and absenteeism increased

At the next staff meeting, employees in the Contracts Office asked Sully to return to his old

management style and job responsibilities ‘We prefer the old Sully Truin’, they said,

‘problems are again referred up to him However, he is unhappy with this return to the

previous way of working as he feels that this may upset the new company owners He is

also working long hours and is concerned about his health On top of this, he realises that

he has little time for obtaining and planning contracts and this is severely restricting the

capacity of the company to expand in order to integrate activities with other parts of the

Scat group

Scat performs a 100 day review of all newly acquired businesses This 100 day review

examines the impact of the acquisition after the first 100 days of Scat ownership A review

of ARC has determined that ARC has yet to achieve integration targets that were set as

objectives for the first 100 days post acquisition

The Scat human resource director is concerned that this may be caused by a poor

management style employed by Sully Truin or that perhaps Scat’s own internal training

programmes are not as effective as hoped She believes that the management training

course promotes the best approach to leadership, one that she herself employs across all of

Scat’s business units

Required:

You work as a member of the 100 day review team at Scat

Prepare a brief report for the Scat HR director to explain why the change of leadership

style at ARC was unsuccessful and whether this reflects a poor approach to Scat’s

management training programme (15 marks)

Professional skills marks will be awarded for demonstrating commercial acumen in

demonstrating awareness of the wider external factors that may have affected the success

2 ICOMPUTE

iCompute was founded twenty years ago by the technology entrepreneur, Ron Yeates

It initially specialised in building bespoke computer software for the financial services industry However, it has expanded into other specialised areas and it is currently the third largest software house in the country, employing 400 people

It still specialises in bespoke software, although 20% of its income now comes from the sales of a software package designed specifically for car insurance

The company has grown based on a ‘work hard, play hard work ethic’ and this still remains Employees are expected to work long hours and to take part in social activities after work Revenues have continued to increase over the last few years, but the firm has had difficulty

in recruiting and retaining staff Approximately one-third of all employees leave within their first year of employment at the company The company appears to experience particular difficulty in recruiting and retaining female staff, with 50% of female staff leaving within

12 months of joining the company Only about 20% of the employees are female and they work mainly in marketing and human resources

The company is currently in dispute with two of its customers who claim that its bespoke software did not fit the agreed requirements iCompute currently outsources all its legal advice problems to a law firm that specialises in computer contracts and legislation However, the importance of legal advice has led to iCompute considering the establishment

of an internal legal team, responsible for advising on contracts, disputes and employment legislation

The support of bespoke solutions and the car insurance software package was also outsourced a year ago to a third party Although support had been traditionally handled in-house, it was unpopular with staff One of the senior managers responsible for the outsourcing decision claimed that support calls were ‘increasingly varied and complex, reflecting incompetent end users, too lazy to read user guides.’ However, the outsourcing

of support has not proved popular with iCompute’s customers and a number of significant complaints have been made about the service given to end users The company is currently reviewing whether the software support process should be brought back in-house

The company is still regarded as a technology leader in the market place, although the presence of so many technically gifted employees within the company often creates uncertainty about the most appropriate technology to adopt for a solution One manager commented that ‘we have often adopted, or are about to adopt, a technology or solution when one of our software developers will ask if we have considered some newly released technology We usually admit we haven’t and so we re-open the adoption process We seem to be in a state of constant technical paralysis.’

Although Ron Yeates retired five years ago, many of the software developers recruited by him are still with the company Some of these have become operational managers, employed to manage teams of software developers on internal and external projects Subba Kendo is one of the managers who originally joined the company as a trainee programmer ‘I moved into management because I needed to earn more money There is a limit to what you can earn here as a software developer However, I still keep up to date with programming though, and I am a goalkeeper for one of the company’s five-a-side football teams I am still one of the boys.’

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However, many of the software developers are sceptical about their managers One commented that ‘they are technologically years out of date Some will insist on writing programs and producing code, but we take it out again as soon as we can and replace it with something we have written Not only are they poor programmers, they are poor managers and don’t really know how to motivate us.’ Although revenues have increased, profits have fallen This is also blamed on the managers ‘There is always an element of ambiguity in specifying customers’ requirements In the past, Ron Yeates would debate responsibility for requirements changes with the customer However, we now seem to do all amendments for free The customer is right even when we know he isn’t No wonder margins are falling The managers are not firm enough with customers.’

The software developers are also angry that an in-house project has been initiated to produce a system for recording time spent on tasks and projects Some of the justification for this is that a few of the projects are on a ‘time and materials’ basis and a time recording system would permit accurate and prompt invoicing However, the other justification for the project is that it will improve the estimation of ‘fixed-price’ contracts It will provide statistical information derived from previous projects to assist account managers preparing estimates to produce quotes for bidding for new bespoke development contracts

Vikram Soleski, one of the current software developers, commented that ‘managers do not even have up-to-date mobile phones, probably because they don’t know how to use them

We (software developers) always have the latest gadgets long before they are acquired by managers But I like working here, we have a good social scene and after working long hours we socialise together, often playing computer games well into the early hours of the morning It’s a great life if you don’t weaken!’

Required:

In order to understand the failures within iCompute, analyse the company’s culture, and assess the implications of your analysis for the company’s future performance (13 marks)

Professional skills marks will be awarded for demonstrating analytical skills in considering

(Total: 15 marks)

3 THE NATIONAL MUSEUM Walk in the footsteps of a top tutor

Introduction

The National Museum (NM) was established in 1857 to house collections of art, textiles and metal ware for the nation It remains in its original building which is itself of architectural importance Unfortunately, the passage of time has meant that the condition of the building has deteriorated and so it requires continual repair and maintenance Alterations have also been made to ensure that the building complies with the disability access and health and safety laws of the country However, these alterations have been criticised as being unsympathetic and out of character with the rest of the building The building is in a previously affluent area of the capital city However, what were once large middle-class family houses have now become multi-occupied apartments and the socio-economic structure of the area has radically changed The area also suffers from an increasing crime rate A visitor to the museum was recently assaulted whilst waiting for a bus to take her home The assault was reported in both local and national newspapers

Thirty years ago, the government identified museums that held significant Heritage Collections These are collections that are deemed to be very significant to the country Three Heritage Collections were identified at the NM, a figure that has risen to seven in the intervening years as the museum has acquired new items

Government change

One year ago, a new national government was elected The newly appointed Minister for Culture implemented the government’s election manifesto commitment to make museums more self-funding The minister has declared that in five years’ time the museum must cover 60% of its own costs and only 40% will be directly funded by government This change

in funding will gradually be phased in over the next five years

The 40% government grant will be linked to the museum achieving specified targets for disability access, social inclusion and electronic commerce and access The government is committed to increasing museum attendance by lower socio-economic classes and younger people so that they are more aware of their heritage Furthermore, it also wishes to give increasing access to museum exhibits to disabled people who cannot physically visit the museum site The government have asked all museums to produce a strategy document showing how they intend to meet these financial, accessibility and technological objectives The government’s opposition has, since the election, also agreed that the reliance of museums on government funding should be reduced

Required:

(a) Analyse the macro-environment of the National Museum (20 marks) (b) The failure of the Director General’s strategy has been explained by one of the trustees as ‘a failure to understand our organisational culture; the way we do things around here’

Assess the underlying organisational cultural issues that would explain the failure

of the Director General’s strategy at the National Museum (20 marks)

Professional skills marks will be awarded for demonstrating commercial acumen in applying judgement and insight into the cultural issues of the organisation which

(Total: 42 marks)