MAC4863/2017

Questions for Assignment 3 for

2017
Enterprise Strategy
MAC 4863

Year Module

Department of Management Accounting

IMPORTANT INFORMATION:
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that you have regular access to the myUnisa module site.

Note: This is an online module and therefore it is available on myUnisa. However, in order to
support you in your learning process, you will also receive some study material in printed
format.

Define tomorrow
 CONTENTS

Dear Student

 Please make sure that your answer is properly structured, meaning it should at
least include an introduction, summary and bibliography.
 Please acknowledge your information sources. You can use Harvard referencing.
 Wikipedia is not an academic source.
 Your answer should be in business language, no SMS/WhatsApp language.
 You do not have to submit the declaration. (Plagiarism sheet) By submitting any
MAC4863 assignment, you automatically declare that you adhere to all the rules
and policies of Unisa.

Please note:
Do not rewrite the information in the study guide. Even if you acknowledge
your source, you still need to put the information in your own words. No marks
will be award if work is copied straight from the study text or any other source
as this is plagiarism and not your own work. On the Postgraduate level, you are
expected to use more sources than only the prescribed material. In order to obtain any
marks all questions must be answered!

 ASSIGNMENT 03: (COMPULSORY ASSIGNMENT FOR YEAR MARK) 

Due date: 17 July 2017

Unique Number: 893624

Total Marks: 75 marks

THIS ASSIGNMENT CONSISTS OF THREE QUESTIONS AND MUST BE SUBMITTED ON OR

BEFORE THE DUE DATE AS IT FORMS PART OF YOUR YEAR MARK. THIS ASSIGNMENT
COVERS PARTS C, D AND E OF THE SYLLABUS.

Question 1 (20 marks)

MULTIPLE CHOICE QUESTIONS

1. If the cost of goods sold is R18 000 and gross margin is R15 000 then revenue will be?

1 R 3 000
2 (R 3 000)
3 R 33 000
4 (R 33 000)
(1 mark)

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 MAC4863/2017

2. In investigating liquidity ratios, the primary emphasis is the organisation’s …

1 ability to effectively employ its resources.

2 overall debt position.
3 ability to pay short-term commitments on time.
4 ability to earn an adequate return. (1 mark)

3. Which of the following is considered a performance ratio?

1 Cash ratio
2 Debt to equity ratio
3 Price earnings ratio
4 Return on assets
(1 mark)

4. A company that has a debt to equity ratio of 1.7 compared with the industry average of 1.5,
means that the company …

1 will not experience any difficulty with its creditors.

2 has less liquidity than other companies in the industry.
3 will be viewed as having high creditworthiness.
4 has greater than average financial risk when compared to other companies in its
industry.
(1 mark)

5. Escape Travel is an online travel agency. Escape Travel has been approached by Jazz, a
car rental company that would like to sell their services through Escape Travel’s website.
If a customer clicks on Jazz’s link they will be redirected to Jazz’s website where they can
book a vehicle. In return, Escape Travel will receive a commission on all sales done via
their website.

Which one of the following applications of Web 2.0 would this be categorised as?

1 Advertising
2 Competence syndication
3 Mashups
4 Network effect
(1 mark)

6. In which of the four perspectives of the balanced scorecard is the objective “reduce staff
turnover” mostly likely to be in?

1 Customer
2 Financial
3 Internal processes
4 Learning and growth (1 mark)

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7. Which of the following are external triggers of change?

i. Changes in economic conditions such as a recession.

ii. The arrival of a new CEO joining the company.
iii. Changes in customer’s tastes and expectations.
iv. Relocation of a business unit to new premises.

1 i only
2 i and ii only
3 i, and iii only
4 i, iii and iv only (1 mark)

8. A company uses the Triple Bottom Line (TBL) reporting approach. Which one of the
following would most likely be included under the environmental quality heading on the
TBL report?

1 Annual water consumption figures.

2 BEE ratings.
3 Total amount donated to charities in the year.
4 Safety incident rate.
(1 mark)

9. Which category of benchmarking, involves multi-site comparison of processes and

performance?

1 Competitive
2 Functional
3 Internal
4 Process (1 mark)

10. Which of the following is not a customer-related performance measure?

1 Market Share
2 Customer volume
3 Customer satisfaction
4 New customers (1 mark)

11. The unfreezing step of the change process can be thought of as …

1 thawing the organisation loose from the current status to the new status.
2 making the move to the new organisational condition.
3 loosening the organisation from the old condition and moving it to the new condition.
4 preparing it for the needed change.
(1 mark)

12. Cultural change is most likely to take place when …

1 the organisation is old.

2 the organisation is large.
3 the culture is strong.
4 there is a leadership change.
(1 mark)

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13. The IS strategic tool that reviews the current and future importance of IS is called?

1 Porters five force analysis

2 McFarlan’s strategic grid
3 Porters competitive strategies
4 Value chain analysis
(1 mark)

14. The set of processes developed in an organisation to create, gather, store, transfer, and
apply knowledge is best known as:

1 Business process engineering

2 Knowledge management
3 Big Data
4 Organisational memory (1 mark)

15. Match the following measures with the correct perspectives from the Balanced Scorecard

Measures:
1. Extend product range
2. Improved asset utilisation
3. Ideas from employees
4. Security of transactions and credit card handling

Balanced Scorecard perspectives:

A Financial
B Customer
C Internal business
D Learning and growth

Match the measure with the relevant perspective on the Balanced Scorecard

1
1=B 2= A 3=D 4=C

2
1=B 2=A 3=C 4 =D

3
1=D 2=C 3=B 4 =A

4
1=C 2=D 3=A 4=B

(2 marks)

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16. Rogz operates e-procurement as part of its approach to supply chain management. Its
strategy is to build partnerships with its suppliers.

Which three (3) of the following are the most likely benefits to Rogz of operating e-
procurement?

a) Reduction in the transaction costs of dealing with its suppliers.

b) It will enable Rogz to constantly shop around to purchase its supplies more cheaply.
c) Increased production and sales for Rogz as a result of suppliers responding more
quickly to demand, leading to fewer stock outs.
d) Reduction of operating risks due to a high reliance on technology.
e) Lower inventory holding costs due to more rapid supply of components by suppliers.

1 Statements a), c) and d)

2 Statements b), c) and d)
3 Statements c), d) and e)
4 Statements a), b) and c) (2 marks)

17. For each of the statements below select which ones are true only:

a) A major disadvantage of coercion is that it may be illegal.

b) Organisational change can be any alternations in people, structure, or technology.
c) According to McKinsey’s 7S model, strategy is considered a ‘soft’ element.
d) Parochial self-interest is a reason for staff to resist change.

Which statements are true from the list below:

1 Statements b) and d)
2 Statements b) and c)
3 Statements a), b) and c)
4 Statements a), b) and d) (2 marks)

(Total 20 marks)

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 MAC4863/2017

Question 2 (25 marks) (This question was in the Jan/Feb 2017 exam, not many students did
well in part c of this question, they knew what Porter’s five forces were, but could not answer
how IT could counter the five forces).

Agri Insurance (Agri) provides weather index insurance that covers crops and pasture losses
due to drought and excessive rainfall. It takes care of specific agricultural risks, allowing the
farmer peace of mind while focusing on farming. Farmers have called this insurance their most
important risk management tool. This type of insurance has become very popular and the
industry is very competitive.

The premium charged for providing this type of insurance is based on weather patterns in a
particular area. To obtain relevant information to assist in the calculation of risk premiums, Agri
employs information managers to monitor a wide variety of sources on the internet. This
information is summarised and forwarded to risk assessors who calculate the premium for
specific insurance requirements and then record these on a central database. The client is then
contacted by the risk assessor and a premium for the specific risk to be insured is agreed.

Agri employs over 3000 employees. Any employee that has a company owned computer has
access to the internet. The IT department has calculated that on average internet access
averages two hours per employee per day. There have been instances where important
external emails have been delayed and some business-critical information, such as access to
online news reporting services is failing because of higher than expected use of email and
internet access within the organisation.

REQUIRED:
(Students must refer to the scenario of Agri Insurance in their answers)

a) Discuss the risks that Agri Insurance could face from not having the proper controls in
place to regulate the use of the internet by its employees. (5 marks)

b) Explain the controls that can be implemented to ensure that the internet is used for
business purposes only.
(10 marks)

c) Discuss how using IS/IT can be used to counter Porter’s Five Forces model in the competitive
weather index insurance industry.
(10 marks)

[25 marks]

(CIMA – adapted)

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Question 3 (30 marks)

Coopers is one of the largest non-food retailers in South Africa. It has been in operation for
over 80 years and has over 1200 stores country wide. In 2007 the company was bought out by
Shirley’s an American company who wanted to tap into rising economic growth in Africa’s
second largest economy. The buyout was the country’s largest private equity buyout at
R25 billion.

And then the financial crisis hit and everything changed. Weak economic growth and job losses
reduced shopper’s ability to take on credit. The country also experienced frequent power cuts,
rising fuel prices and a failing currency. Before the National Credit Act was implemented in
2007, Coopers was giving out credit to customers like it was “going out of fashion”. This
resulted in the company having 2 million credit customers which meant that 70% of its sales
were on credit.
All of the above had a snow ball effect, sales decreased, customers started defaulting on their
debts, banks became cautious of giving loans to Coopers, rating downgrades followed, and
suppliers did not want to supply stock because of the credit risk.

About 35% of Coopers staff had to be reduced, and one section of the business had to be sold
off in-order to focus and restore the other brands.

In 2016, Coopers was taken over by its creditors in a R21 billion debt to equity swop, which
helped the ailing company shed a significant chunk of its debt. A new CEO has been
appointed, who has started restructuring the company by changing top management, and
introducing other efforts which include launching more product lines, improving space
productivity, introducing online shopping and managing costs.

Required:
(Students must refer to the scenario of Coopers in their answers)

a) Discuss the different types of change using Balogun, Hope Hailey’s module, and
recommend with reason which type of change would best suit Coopers current situation.
(You are not required to draw the model) (8 marks)

b) Discuss reasons why Coopers employees may resist the change in ownership.

(10 marks)

c) Discuss, how Coopers new management team should manage the change process in
order to ensure minimal resistance from Coopers employees. (Students may use any
change management model.)
(12 marks)

(Total 30 marks)