Passing the CIMA E2 Exam!

CIMA E2 Culture Exam Tips

Passing the CIMA E2 Exam!

Passing my E2 exam first time was a welcome relief after my experiences with failing the F2 exam a couple of times earlier this year. The E2 exam itself felt easier than I expected but this could be down to the fact I was really well prepared coupled with fact I was pessimistic heading into the exam.
How to pass CIMA E2
Logging into MYCIMA account and seeing the pass mark of 121 (out of 150) was a massive boost to my confidence and will hopefully give me some much needed momentum heading into the final Management Objective Test P2.

CIMA E2 Lessons Learned

Anyhow, here are the lessons I learned while studying and taking the E2 exam.

Study plans DO work

I gave myself a realistic study plan with plenty of time for mock exams and revision. In total I studied E2 for around 13/14 weeks and, if anything, I felt I was ready to sit the exam after 12 weeks.Use the interactive study planners from CIMA to help keep you on track.

Don’t scrimp and save on the materials

Wth F2 I used the bare minimum materials and bought more as I got closer to exam. With E2 I used the full Astranti course and was committed from the outset. I also had the Kaplan E2 exam practice kit and this proved invaluable, there really is nothing like question practice to get yourself exam ready.

Study as often as you can

It may sound obvious but the little and often theory works well for me. I studied everyday for the last two weeks before exam. Even if it was only 30-45 minutes reading notes on the commute to work. Constantly refreshing your memory is the best way ( for me anyway) to study CIMA. Spending 8 hours a day studying at the last minute is not ideal!

Be organised

I had my study notes, question practice and revision notes all in the same (BIG) notepad. So I had all of materials and notes in one place. It’s a great way to keep on top of things as opposed to having several notepads, scraps of paper and printed out sheets.

Vary your techniques

I found a good mix of resources and study methods really helped me get over line. Watching CIMA videos and master classes before attempting mock exams worked well for me, then focusing on the areas I got wrong in the mock exam by going over the study text and making more notes on the subject.

Be smart with your time management

This advice from a fellow CIMA student on the approach to take in the CIMA objective tests is brilliant. However, I did find the time pressure in the E2 exam wasn’t as strong. I finished the exam in around 60 minutes and spent the next 20 minutes or so reviewing each question again while I had the time. Unlike the F2 exam where I was frantically working until the end.

My CIMA E2 Resources

E2 Objective Course from Astranti

Kaplan E2 Exam Practice Kit

CIMA E2 self-study guide

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CIMA E2: Company Culture

CIMA E2 Culture Exam Tips

Understanding company culture is part of the CIMA E2 syllabus and is an easy one for most people to relate (assuming you have some experience in the workplace).

Culture is described as a combination of beliefs, values and standards of behaviour that are inherent in an organisation.

Company Culture

For example, you might work in an office where, despite the normal working hours being 9am to 5pm, your colleagues all arrive early at 8am. This pattern of behaviour tends to influence others to arrive at the same time, likewise if no one is in the office until 9pm but stays late then this company culture would also influence others in the work place.

Charles Handy describes culture as “The way we do things around here”.

You may believe that management looks at company culture as a topic with low priority in the organisation but in reality it couldn’t be further from the truth.

Ensuring a companies culture is consistent with the organisations future direction and strategy is critical to strategical success!

Having a positive company culture such as being a Corporate Social Responsible employer will help attract and retain top performing staff.

Also when there are so many companies out there competing for the top talent, they need to stand out and offer more than just an attractive salary, so being renowned for having an excellent company culture that keeps employees happy and engaged will be key to the company achieving long term and sustainable success.

Charles Handys Cultural Model

Charles Handy suggests there are four over-riding types of culture inherent in an organisation. Let’s take a look at them.

POWER CULTURE

First up is what is known as the “power” culture where is typically one central source of power who makes all of the decisions and the employees have to follow. It’s commonly seen in smaller companies where the owner is the manager/director.

There are few procedures and rules as there are no need for them. The owner makes the decisions and that’s that!

The Power Culture can also be described as the web culture. For instance, the spider that made the web controls and dictates what happens – it’s one central source of power.

TASK CULTURE

The “task” culture focuses on getting the job done and can be associated with project management or complex matrix organisations. The employees are focused on getting their job done and not so concerned with their place within the company.

It requires good communication with a clear emphasis on getting the job done and going home for the day – as opposed to concentrating on the team spirit or relationships within the company.

ROLE CULTURE

Is found in workplaces like the government offices or large bureaucratic companies. Unlike the power culture, the role culture has lots of formal rules and procedures that must be followed by all employees.

There is a formal structure in place with every employee having a clear set of roles and responsibilities that must be followed. It’s clear that each role and position in the company has it’s part to play but employees must not cross the boundaries of their roles and responsibilities.

PERSON CULTURE

Finally the person culture exists to satisfy the individual rather than the team or the collective. It’s commonly found in sales organisations where the salesmen work independently and for their own benefits (commission on sales).

It can also be linked to legal work such as barristers and legal representatives who work for themselves.

In the person culture, each individual operates independently.

CIMA E2: Managing Change

Syllabus area D of the CIMA E2 paper revolves around managing change through projects. It’s covers 30% of the paper so you need to know enough detail to be able pass the E2 objective test.

CIMA E2 Resources

Lewins 3 step model of change

Our good friend Lewin is back with another model, this time it’s his theory on the 3 step approach to successful change management.

UNFREEZE

The first is based around unfreezing the current behaviour in the work place so when the change happens, it will be a smooth transition and successful project.

It also gets staff ready and motivated for the change, thus is crucial as if the staff do not buy in to the proposed changes, then chances are it will fail.

You need to remember the 3 C’s here.

Consultation: here management would actively involve their staff and get ideas from them on how to implement the change. Therefore, effectively getting everyone on board for the change.

Communication: the reasons why the change is happening needs to be communicated properly to all staff. Otherwise, morale will suffer and the execution of the change will not happen smoothly if no one understands why this is happening?

Counseling: finally, in the unfreeze stage, management need to deal with the issues raised from the staff about the proposed changes. Making sure people’s grievances are dealt with. The benefits of the change may need to be communicated again so everyone is happy with the direction that will be taken.

MOVE

This is when the change is actually happening and can be done in various forms – Lewin suggests change should be facilitated through;

Project Management: this will ensure the whole change process is managed effectively and the end targets are met.

Change Agents: these are specific people who are brought into the process to gain peoples buy in and they are responsible for the making the change successful.

New Procedures and Rules: once the change has taken place, the new procedures are rules will need to established and effectively communicated to the rest of the staff to ensure the change implemented will work long-term and staff are comfortable with the new rules.

REFREEZE

Once the new behaviours and approaches have been implemented, we then enter the RE-FREEZE stage. It’s key that staff and management do not fall back into the old ways, so the new approach must be “re-frozen” into the company culture and way of doing things.

This is usually done by:

Individual Rewards: by rewarding employees who are following the new changes, this will encourage others to follow suit and ensure the change implemented is successful.

Disciplinary: likewise, for those members of staff who are not following the way of working, they should be disciplined for failure of adopting the change.

Communication: this is key in all areas of the change management process and it also shouldn’t be forgotten in the final stage. By communicating the benefits of the change again, this will re-inforce the idea the change will benefit all involved.

Kotter’s 8 Step Change Process

Another model that could be tested in the CIMA E2 exam is Kotter’s 8 Steps in the Change Process. It maybe a challenge to memorise all of the models and theories that are in the E2 syllabus but you should approach them in a pragmatic.

For example: Kotters 8 Step Change Process and Lewin’s 3 Step Model of Change are on the same topic so you can relate them both together to get a better understanding.

This of Lewin’s 3 steps as a high level view of what Kotter is saying with his 8 step change process. The diagram at the bottom of the article illustrates the point I am trying to make. But first, let’s look at the 8 steps that Kotter is talking about.

  • Establish a sense of urgency.
  • Create a guiding coalition.
  • Develop a change vision and strategy.
  • Communicate the vision and strategy.
  • Empower staff and remove any barriers.
  • Short-term wins.
  • Consolidate the gains.
  • Anchor in the culture.

By understanding the 8 steps in the order Kotter has mentioned above you can see they all fall into the same three categories Lewis mentioned: Un-Freeze, Move and Re-Freeze.

CIMA E2 Exam Tips

Lewin’s theory is illustrated with the 3 arrows on the left hand side of the above image, while Kotter’s 8 steps in the change process are illustrated by the text next to each arrow.

I got this idea to combine the two theories when watching the CIMA E2 astranti master class – having this additional resource works well for me as I am self studying the whole syllabus – so tutor advice is always welcome! So these masterclasses have been invaluable to me.

CIMA E2: Porters Five Forces

Porters Five Forces is a topic that came up in my recent CIMA E2 studies and it was a model I was not that familiar with. Maybe it came up in my E1 exam but that seems a long time ago now.

PESTEL analysis (Policital, Environmental, Social, Technology, Economical, Law) is used to understand the global business environment from an external point of view but to really get to grips with the position of a business we need to understand industry factors like;

  • Who are our competitors?
  • Do we have a diverse customer base?
  • Will our suppliers start charging more?
  • Are there lots of suppliers to choose from in our market?

This is where Porter’s Five Forces can be applied to analyse these industry factors and help the business make better business decisions.

Porters Five Forces: CIMA E2

This model has become one of the most important business strategy models ever developed so CIMA students need to know it inside out – especially with the E2 exam.

It’s used to understand how profitable an specific industry is, so companies who are considering entering the market will now whether or not it’s worth doing. Alternatively, it can be used for companies operating in a specific industry to understand if they need to adapt their business model to remain profitable or perhaps even consider leaving the market they are operating in.

If all of the factors are considered to be HIGH – then the market will be considered LESS profitable to enter OR the company will need to find additional ways to remain competitive in the current climate.

Here is a run through all five of the forces and what they mean.

Competitive Rivalry

This factor is considered high when they are lots of competitors out there currently on the market or there is little different between the products on offer – giving the customer more choice and more of a chance to shop around.

There also maybe exit barriers in the market meaning it’s not financially feasible for your competitors to leave the market. Likewise, you could be facing a competitors that has big financial backing and a strong reputation making it an unattractive proposition to enter the marker.

Threat of New Entrants

Is it easy for new businesses to enter the market?

i.e. There are no significant start up costs or highly technical skills required to produce the products or services. If this is the case, it’s likely that you will face a lot of competition in the market place and the prospect of new entrants entering the market on a frequent basis could affect your sales and profitability.

However, if you currently operate in a market that is difficult to enter then it’s wise to start thinking about how you can harness your current position and dominate the market without danger of new competition.

Buyer Power

Does the balance of power lie with the customer?

And can customers switch between the competition easily?

If so, then the market is considered less profitable and steps will need to be taken to address that if you already operate in the market – alternatively it is seen as negative point for businesses who want to enter the industry.

Supplier Power

Consideration has to be given to your supplier (or potential suppliers) also – if you are tied down to just one supplier for the raw materials or goods you require then you will be at the mercy of their pricing/delivery times.

The cost of changing suppliers might also be a complication and of additional cost of the business. If the supplier power is high then industry is seen to be less profitable.

Substitutes

If your product is easily replaces by an alternative then it’s a risky industry to enter or operate it. For example; your supplier may increase prices of materials which means your prices will also raise to remain profitable – but if the customer can easily replace your product with a substitute for a lower price than you are charging it will impact the profitability of the company.

If this factor is HIGH the market is seen to be LESS profitable.

This makes Porters Five Forces an invaluable tool for evaluating the industry you are operating or wish to operate in. If you find most of the forces are LOW then it’s a perfect market that operate in.

However, even when you’ve done the full analysis of the industry in relation to Porters Five Forces, and the majority are HIGH, it still maybe a profitable market to enter if you can negate all of the risks that have been identified.

CIMA E2: Business Strategy

The official CIMA terminology for strategy is:

“A course of action, including the specification of resources required, to achieve  a specific objective”. 

For a more detailed definition, Johnson, Scholes and Whittingham define strategy as:

“The direction and scope of an organisation over the long term, which achieves advantage for the organisation through its configuration of resources within a changing environment, to meet the needs of the markets and to fulfil stakeholder expectations”

The importance of formulating a business strategy is key to the business achieving and/or maintaining their competitive advantage. It also provides a clear direction and allows the management to focus their decision making on the strategic objectives of the company.

A business strategy should co-ordinate all elements of the business in a structured planned approach and will build on key competencies to ensure the customers demands are met.

Approaches to Business Strategy

There are four main ways of approaching a business strategy and employing one will depend on the size of the company as well as the industry.

Planned Strategies (The Rational Planning Model)

The Rational Planning Model (pictured below) is a example of a planned strategy of a company that is put in place by the directors. It’s a detailed and (can be) complex process to put in place and can take many months – it consists of these four main areas.

  1. Strategic Analysis – can use PESTEL or Porters 5 forces to analyse the external environment whole SWOT analysis can be used for corporate appraisal.
  2. Strategic Choice – models like NPV, IRR and payback evaluation can be used to choose when strategic option to take.
  3. Strategic Implementation  – need to consider policies and strategies to implement for ALL areas of the business.
  4. Strategy Evaluation and Control – measuring the performance against the objectives.

Below is the flow and detailed steps that make up the rational planning model – it’s an alternative way of showing the four main areas of Planned Business Strategies.

 

capture

While there maybe plenty of added advantages by employing a planned strategy such as providing a clear framework and strategic direction for all areas of the business, it can also be criticised in some respects such as time commitment – large businesses will need a lot of time to complete all of the mentioned steps and could become obsolete by the time the planned strategy has been completed.

This also means the cost will be high – from staff time to using strategy consultants. Meanwhile, the company could end by being constrained by the planned strategy and not take new opportunities or adapt to changes in the business environment.

Emergent Strategies

Capture.PNG
image taken from stanford social innovation review

These strategies are more inclined to be used in dynamic fast paced industries like high technology where opportunities and threats arise quickly so the company needs to adapt.

Emergent strategies emerge during the course of normal business rather than being planned as mentioned above. Either due to opportunities that pop up (i.e. buying a competitor) or specific threats need to be addressed (i.e. a new innovative product is released by a competitor).

Emergent strategies can be combined with planned strategies – bring a planned and emergent strategy together is called “crafting”.

For example; a new innovative product was released by a competitor, so Company ABC decides to develop a similar product not to lose their competitive advantage. This development will be an emergent strategy that’s need to be crafted alongside their planned strategy and existing business operations (as it will share factors like production timings, marketing strategies and allocation of funds.

Incrementalism

Is a short term strategy based approach that is employed in smaller fast paced businesses who cannot realistically undertake the full strategic planning process.

This approach was taken on by lots of businesses during the economic downturn from 2009 as uncertainty made it harder to predict. The strategy is adjusted and developed constantly using a series of small scale changes to reach the overall strategic direction.

The public sector is an area where incrementalism is used as there are a wide range of stake holders to satisfy making it harder to take a longer approach used with planned strategies. Therefore, a shorter “middle ground” approach would suit all parties involved.

Opportunism

This approach is used in smaller companies who have an entrepreneurial leader who likes to take advantage of every opportunity that presents itself.

There are no formal strategies in place and this allows the business to take advantage of opportunities as they arise. There is little plan and direction in terms of the business strategy to be employed but this allows for a very dynamic and flexible business that can grow quickly by adapting to the market conditions around it without the constraint of a rigid business strategy.

Nevertheless, this “slap-dash” approach can also allow for a lack of focus on strategic decision making and the thinking and approach of the company may become inconsistent with it’s core values.

E2: The Project Management Life-cycle

Carrying on from last weeks post on the CIMA E2 subject “Project Management”, today I will be looking at the the four D’s that Maylor identified as the the project management life-cycle and what each stage means.

Maylor – The Four D’s

Well managed projects, as identified by Maylor, will plan to go through the four discreet stages mentioned below in their life cycle.

CaptureDefine

The beginning of the project is the most crucial as defining the scope and deliverable’s is the foundation of any successful project. Without a clear define stage the project team will effectively be working with their eyes closed.

There are several smaller steps or areas to consider:

  • Purpose: what is the purpose and goal of the project?
  • Project Team: the project team needs to be defined and organised.
  • Feasibility Study: the aim here to prevent unfeasible projects to get the green light. Key risks are identified and consideration is given as how to manage the associated risks. The BEST categories can be used for the feasibility study.
  1. Business – meets the business needs.
  2. Economic – costs v benefits of the project.
  3. Social – effects on people such as motivation.
  4. Technical – is the project technically possible to complete.
  • Business Case: once the feasibility test has been carried out the results are documented in the business case which is then given to the project sponsor or the project board for approval.

Design

The second stage of the project life-cycle is the design stage and will require more resources than the define stage and will also take longer time to complete. The idea behind the design stage is gather feedback and research the possible solutions and associated resources and materials required to complete the project.

Here are the different steps in the design stage of the project life-cycle.

  • Research: surveys and research are conducted to clarify the project details and to assess the potential problems.
  • Position Analysis: the SWOT (strengths, weaknesses, opportunities and threats) analysis can be used to  examine all areas of the project with a focus on the threats and risks of the project. For example, to develop the solution an expertise in IT programming might be required and the company has no experts in this area. So external contractors will need to be hired to address this problem.
  • Task Planning: by now there is a clear set of objectives but a set of detailed tasks need to be defined and planned. Now is the time to do that – tools like gant charts or network charts can be used to monitor the progress of the project tasks.
  • Options Generation/Evaluation: the possible approaches to achieving a successful project are generated and evaluated.

Deliver

I’ve highlighted the Deliver box in green above to illustrate the fact this will take the most time and require the most resources in the project life-cycle. It covers the end to end of process of putting the meat on the bones of the project – project start-up all the way to project hand-over.

  • Start-up: now the project team is assembled and objectives are clear with detailed tasks the work can now begin on the project.
  • Execute: quite simply, the project team will be executing the activities defined.
  • Monitor: the project manager will be responsible for monitoring the progress of the project and addressing any roadblocks or concerns raised by the project team.
  • Completion: this should involved finalising of all of the deliverable’s, closing the project down (project team appraisals, paying bills, returning resources etc.)
  • Hand-over: the outcome of the project should be handed over to the end customer.

Develop

Now the project has been handed over to the customer the final stage of “Develop” takes place. It’s a relatively short stage but very crucial to understand the lessons learnt.

  • Review: the project is reviewed and if all stakeholders were satisfied with the results and the delivering of the project.
  • Feedback: the lessons learned of the project should be formally documented and reported to the sponsor. They are also used for to improve the delivery and efficiency of future projects.

Successful Projects

To get a flavour of successful projects that have been carried out and how the fared through the project life-cycle, I have gathered a couple of examples below that make for interesting reading.

Automotive Industry: Company reduces HR expenses by 66% in seven months.

London 2012 Olympics: The construction programme for London 2012

E2: Project Management

What is Project Management?

Project management is a topic that crops up in the E2 syllabus and the official definition from CIMA can be seen below:

“The integration of all aspects of a project, ensuring that the proper
knowledge and resources are available when and where needed, and above
all to ensure that the expected outcome is proceeded in a timely, cost-
effective manner” – CIMA Terminology

Project management is human activity that achieves a clear objective against an agreed timescale. The follow types of activity can be seen as “projects”:

  • A one off event.
  • A budget and set of resources to achieve a specific goal.
  • A project manager organising the project.
  • A clear objective with an agreed timescale.

The Project Management Institute (PMI)

Was setup in 1969 and is a non-profit professional organisation for project management and has around 500,000 members and counting.

They provide a framework and set of standards that project managers should adhere to. The PMI also offer a host of different courses and accreditation’s their members can take and they range from CAPM (Certified associate in project management) to the PMP (Project management professional).

For more information on the PMI you can visit their website here.

9 Key Areas of Project Management

The PMI have identified the 9 key areas of project management that need to be understood and managed correctly if projects are to be successful.

They are the core objectives of the project and they need to be met.

  • Scope: In order to provide clarity and ensure team members stay focused, a clear scope of what the project covers and doesn’t cover is crucial. Otherwise tasks can wonder off track and lead to non-value added time.
  • Time: Another key objective is time. The project should have a realistic time frame and act as a deadline for when activities need to be completed. It’s no use have an open ended project otherwise results will be never be achieved.
  • Cost: The project board and directors will be keen to keep costs under control too, otherwise the benefits gained in the project may not outweigh the expense occurred in delivering the results to the business.
  • Resources: The right resources and expertise should be allocated to the project otherwise the delivery will be in danger.
  • Quality: The end customer will want to receive the required quality they was set out in the deliverable’s. If the quality is not met then the project will deemed to be a failure.
  • Procurement: The materials purchases need to be kept under control and also the quality needs to the be maintained. A focus on procurement is crucial for the project manager.
  • Integration: The project should be well managed and integrated into the business at every possible stage. There needs to be sufficient control and well planned tasks.
  • Communication: Possibly the biggest point to consider, ALL stakeholders need to be well informed and communication to the end customer and business should be clear, concise and on a regular basis.
  • Risks: They need to be understood by the project manager and minimised at every opportunity.

Who are the Stakeholders?

The project manager is responsible for co-coordinating and communicating to the project stakeholders on a regular basis. But they also need to consider the importance of each one and act accordingly.

Here are a few of the stakeholders to be considered.

  • Project sponsor
  • Project board
  • End Customer
  • Board of directors
  • Project team
  • Suppliers

Stakeholders who hold little interest and power will require minimal effort and time invested into them, whereas the stakeholders with a lot of power should be at the forefront of the project managers mind.

Stakeholder Mapping

Mendelow’s Matrix is used to map the important of the stakeholder so the project manager can see what action he needs to take with each group.

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For example, the end customer would be considered to have HIGH power and HIGH interest so, according to Mendelows Matrix, should be Managed Closely.

Whereas the project team would have HIGH interest but LOW power so they will would fall under the Keep Informed category. This of course is dependent on the project itself and the dynamic of the company but you get the idea on how this works!

Project Success

In order to achieve the goal of a successful project all of the points above need to be considered and the appointment of the project manager and coordination of the project team members are crucial.

Project Manager – needs to have excellent communication skills and will need to inspire his team to achieve the results required. They will also need to be able to present and communicate to a range of different stakeholders.

The Project Team – will need to be well organised and familiar with the project management process. They will also need to be team players and be able to identify problems and risks and build solid working relationships with a range of different departments and areas of the business.

If projects are beginning to wonder off track then the project manager can go the project sponsor or board and look for further support. This could be in the form of more resources, expert advice or a change in scope or deliverable’s of the project if they are deemed to be unrealistic.

All in all, the project team will need to have the right blend of experience, skills and be able to create a good team spirit to achieve the results required.