SBL study text 2018 kaplan

chapter Intro Paper Introduction v   How to Use the Materials These Kaplan Publishing learning materials have been carefully designed to make your learning experience as easy as possible and to give you the best chances of success in your examinations The product range contains a number of features to help you in the study process They include: (1) Detailed study guide and syllabus objectives (2) Description of the examination (3) Study skills and revision guidance (4) Study text (5) Question practice The sections on the study guide, the syllabus objectives, the examination and study skills should all be read before you commence your studies They are designed to familiarise you with the nature and content of the examination and give you tips on how to best to approach your learning The study text comprises the main learning materials and gives guidance as to the importance of topics and where other related resources can be found Each chapter includes: vi • The learning objectives 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chapter to show the important links between topics and the overall content of the paper These diagrams should be used to check that you have covered and understood the core topics before moving on • Question practice is provided at the back of each text Quality and accuracy are of the utmost importance to us so if you spot an error in any of our products, please send an email to mykaplanreporting@kaplan.com with full details, or follow the link to the feedback form in MyKaplan Our Quality Co-ordinator will work with our technical team to verify the error and take action to ensure it is corrected in future editions Icon Explanations Definition – Key definitions that you will need to learn from the core content Key Point – Identifies topics that are key to success and are often examined Illustration – Worked examples help you understand the core content better Test Your Understanding – Exercises for you to complete to ensure that you have understood the topics just learned Tricky topic – When reviewing these areas care should be taken and all illustrations and test your understanding exercises should be completed to ensure that the topic is understood Supplementary reading – These sections will help to provide a deeper understanding of core areas The supplementary reading is NOT optional reading It is vital to provide you with the breadth of knowledge you will need to address the wide range of topics within your syllabus that could feature in an exam question Reference to this text is vital when self studying On-line subscribers Our on-line resources are designed to increase the flexibility of your learning materials and provide you with immediate feedback on how your studies are progressing If you are subscribed to our on-line resources you will find: (1) On-line referenceware: reproduces your Study Text on-line, giving you anytime, anywhere access KAPLAN PUBLISHING vii (2) On-line testing: provides you with additional on-line objective testing so you can practice what you have learned further (3) On-line performance management: immediate access to your on-line testing results Review your performance by key topics and chart your achievement through the course relative to your peer group Ask your local customer services staff if you are not already a subscriber and wish to join Syllabus AIM To demonstrate organisational leadership and senior consultancy or advisory capabilities and relevant professional skills, through the context of an integrated case study MAIN CAPABILITIES On successful completion of this paper, candidates should be able to: viii A Apply excellent leadership and ethical skills to set the ‘tone from the top’ and promote a positive culture within the organisation, adopting a whole organisation perspective in managing performance and value creation B Evaluate the effectiveness of the governance and agency system of an organisation and recognise the responsibility of the board or other agents towards their stakeholders, including the organisation’s social responsibilities and the reporting implications C Evaluate the strategic position of the organisation against the external environment and the availability of internal resources, to identify feasible strategic options D Analyse the risk profile of the organisation and of any strategic options identified, within a culture of responsible risk management E Select and apply appropriate information technologies and data analytics, to analyse factors affecting the organisation’s value chain to identify strategic opportunities and implement strategic options within a framework of robust IT security controls F Evaluate management reporting and internal control and audit systems to ensure compliance and the achievement of organisation’s objectives and the safeguarding of organisational assets G Apply high level financial techniques from Skills exams in the planning, implementation and evaluation of strategic options and actions H Enable success through innovative thinking, applying best in class strategies and disruptive technologies in the management of change; initiating, leading and organising projects, while effectively managing talent and other business resources KAPLAN PUBLISHING I Apply a range of Professional Skills in addressing requirements within the Strategic Business Leader examination and in preparation for, or to support, current work experience DETAILED SYLLABUS AND STUDY GUIDE We have reproduced the ACCA’s syllabus below, showing where the objectives are explored within this book Within the chapters, we have broken down the extensive information found in the syllabus into easily digestible and relevant sections, called Content Objectives These correspond to the objectives at the beginning of each chapter Syllabus learning objective and Chapter references A  LEADERSHIP  Qualities of leadership (a) Explain the role of effective leadership and identify the key leadership traits effective in the successful formulation and implementation of strategy and change management.[3] Ch.10  (b) Apply the concepts of entrepreneurship and ‘intrapreuneurship’ to exploit strategic opportunities and to innovate successfully.[3] Ch 10 (c) Apply in the context of organisation governance and leadership qualities, the key ethical and professional values underpinning governance.[3] Ch.10 and 17   Leadership and organisational culture (a) Discuss the importance of leadership in defining and managing organisational culture.[3] Ch 24 (b) Advise on the style of leadership appropriate to manage strategic change.[2] Ch 24  (c) Analyse the culture of an organisation using the cultural web, to recommend suitable changes.[3] Ch 24 (d) Assess the impact of culture and ethics on organisational purpose and strategy.[3] Ch 17 and 24   Professionalism, ethical codes and the public interest (a) Evaluate organisational decisions using the Tucker question approach.[2] Ch.17 (b) Describe and critically evaluate the social responsibility of accountants acting in the public interest.[3] Ch.17  KAPLAN PUBLISHING ix (c) Assess management behaviour against the codes of ethics relevant to accounting professionals including the IESBA (IFAC) or professional body codes.[3] Ch.17 (d) Analyse the reasons for and resolve conflicts of interest and ethical conflicts in organisation.[3] Ch.17 (e) Assess the nature and impacts of different ethical threats and recommend appropriate safeguards to prevent or mitigate such threats.[3] Ch.17 (f) Recommend best practice for reducing and combating fraud, bribery and corruption to create greater public confidence and trust in organisations.[3] Ch.17 B  GOVERNANCE Agency (a) Discuss the nature of the principal- agent relationship in the context of governance.[3] Ch.7 (b) Analyse the issues connected with the separation of ownership and control over organisation activity.[3] Ch.7 Stakeholder analysis and social responsibility (a) Discuss and critically assess the concept of stakeholder power and interest using the Mendelow model and apply this to strategy and governance.[3] Ch.9 (b) Evaluate the stakeholders’ roles, claims and interests in an organisation and how they may conflict.[3] Ch.9 (c) Explain social responsibility and viewing the organisation as a ‘corporate citizen’ in the context of governance.[2] Ch.9 Governance scope and approaches (a) Analyse and discuss the role and influence of institutional investors in governance systems and structures, including the roles and influences of pension funds, insurance companies and mutual funds.[2] Ch.8 and 12 (b) Compare rules versus principles based approaches to governance and when they may be appropriate.[3] Ch.8 (c) Discuss different models of organisational ownership that influence different governance regimes (family firms versus joint stock companybased models) and how they work in practice.[2] Ch.8 (d) Describe the objectives, content and limitations of, governance codes intended to apply to multiple national jurisdictions.[2] Ch.8 x KAPLAN PUBLISHING (i) Organisation for economic cooperation and development (OECD) Report (2004) (ii) International corporate governance network (ICGN) Report (2005)  Reporting to stakeholders (a) Discuss the factors that determine organisational policies on reporting to stakeholders, including stakeholder power and interests.[3] Ch.9 and 12 (b) Assess the role and value of integrated reporting and evaluate the issues concerning accounting for sustainability.[2] Ch.12 (c) Advise on the guiding principles, the typical content elements and the six capitals of an integrated report, and discuss the usefulness of this information to stakeholders.[3] Ch.12 (d) Describe and assess the social and environmental impacts that economic activity can have (in terms of social and environmental ‘footprints’ and environmental reporting).[3] Ch.12 (e) Describe the main features of internal management systems for underpinning environmental and sustainability accounting including EMAS and ISO 14000.[2] Ch.12 (f) Examine how the audit of integrated reports can provide adequate assurance of the relevance and reliability of organisation reports to stakeholders.[2] Ch.12 The board of directors (a) Assess the major areas of organisational life affected by issues in governance.[2] Ch.11 (i) duties of directors and functions of the board (including setting a responsible ‘tone’ from the top and being accountable for the performance and impacts of the organisation) (ii) the composition and balance of the board (and board committees) (iii) relevance and reliability of organisation reporting and external auditing (iv) directors’ remuneration and rewards (v) responsibility of the board for risk management systems and internal control (vi) organisation social responsibility and ethics (b) Evaluate the cases for and against, unitary and two-tier board structures.[3] Ch.11 (c) Describe and assess the purposes, roles, responsibilities and performance of Non-Executive Directors (NEDs).[3] Ch.11 KAPLAN PUBLISHING xi (d) Describe and assess the importance and execution of, induction and continuing professional development of directors on boards of directors.[3] Ch.11 (e) Explain the meanings of diversity and critically evaluate issues of diversity on boards of directors.[3] Ch.11 (f) Assess the importance, roles purposes and accountabilities of the main committees within the effective governance.[3] Ch.11, 14 and 16 (g) Describe and assess the general principles of remunerating directors and how to modify directors behaviour to align with stakeholder interests.[3] Ch.11 (h) Explain and analyse the regulatory, strategic and labour market issues associated with determining directors’ remuneration.[3] Ch.11 Public sector governance (a) Compare and contrast public sector, private sector, charitable status and non-governmental (NGO and quasi- NGOs) forms of organisation, including agency relationships, stakeholders aims and objectives and performance criteria.[2]Ch.7 (b) Assess and evaluate the strategic objectives, leadership and governance arrangements specific to public sector organisations as contrasted with private sector.[3] Ch.7 (c) Explain democratic control, political influence and policy implementation in public sector organisations.[3] Ch.7 (d) Discuss obligations of the public sector organisations to meet the economy, effectiveness, efficiency (3 s) criteria and promote public value.[3] Ch.7 C  STRATEGY  Concepts of strategy (a) Recognise the fundamental nature of strategy and strategic decisions within different organisational contexts.[2] Ch (b) Explore the Johnson, Scholes and Whittington model for defining elements of strategic management – the strategic position, strategic choices and strategy into action.[3] Ch xii KAPLAN PUBLISHING  Environmental issues (a) Assess the macro-environment of an organisation using PESTEL.[3] Ch.3 (b) Assess the implications of strategic drift.[3] Ch (c) Evaluate the external key drivers of change likely to affect the structure of a sector or market [3] Ch.3 (d) Explore, using Porter’s Diamond, the influence of national competitiveness on the strategic position of an organisation.[3] Ch.3 (e) Prepare scenarios reflecting different assumptions about the future environment of an organisation.[2] Ch.3  Competitive forces (a) Evaluate the sources of competition in an industry or sector using Porter’s five forces framework.[3] Ch.3 (b) Analyse customers and markets including market segmentation.[2] Ch.21  (c) Apply Porter’s value chain to assist orgainsations to identify value adding activities in order to create and sustain competitive advantage [2] Ch (d) Advise on the role and influence of value networks.[3] Ch.3 (e) Evaluate the opportunities and threats posed by the environment of an organisation.[2] Ch.3  The internal resources, capabilities and competences of an organisation (a) Identify and evaluate an organisations strategic capability, threshold resources, threshold competences, unique resources and core competences.[3] Ch.3 (b) Discuss the capabilities required to sustain competitive advantage.[2] Ch.5  (c) Discuss the contribution of organisational knowledge to the strategic capability of an organisation.[2] Ch.3 and 5  (d) Identify and evaluate the strengths and weaknesses of an organisation and formulate an appropriate SWOT analysis.[2] Ch.3 KAPLAN PUBLISHING xiii  Strategic choices (a) Assess the suitability, feasibility and acceptability of different strategic options to an organisation.[3] Ch.5 (b) Assess the opportunities and potential problems of pursuing different organisation strategies of product/market diversification from a national, multinational and global perspective.[3] Ch.5 (c) Advise on how the ‘P’s, including price-based strategies, differentiation and lock-in can help an organisation sustain its competitive advantage.[3] Ch and 21 (d) Apply the Boston Consulting Group (BCG) and public sector matrix portfolio models to assist organisation in managing their organisational portfolios.[3] Ch.6 (e) Recommend generic development directions using the Ansoff matrix [2] Ch.5 (f) Assess how internal development, mergers, acquisitions, strategic alliances and franchising can be used as different methods of pursuing a chosen strategic direction.[3] Ch.6 D  RISK  Identification, assessment and measurement of risk (a) Discuss the relationship between organisational strategy and risk management strategy.[3] Ch.15 (b) Develop a framework for risk management and establish risk management systems.[2] Ch.15 (c) Identify and evaluate the key risks and their impact on organisations and projects.[3] Ch.15 (d) Distinguish between strategic and operational risks.[2] Ch.15 (e) Assess attitudes towards risk and risk appetite and how this can affect risk policy.[2] Ch.15 and 16 (f) Discuss the dynamic nature of risk and the ways in which risk varies in relation to the size, structure and development of an organisation [2] Ch.15 and 16 (g) Recognise and analyse the sector or industry specific nature of many organisation risks [2] Ch.15 (h) Assess the severity and probability of risk events using suitable models.[2] Ch.15 xiv KAPLAN PUBLISHING Managing strategic change • Power/coercion – involves the compulsory approach by management to implement change This method finds its roots from the formal authority that management possesses, together with legislative support • Facilitation and support – employees may need to be counselled to help them overcome their fears and anxieties about change Management may find it necessary to develop individual awareness of the need for change • Manipulation and co-optation – involves covert attempts to sidestep potential resistance The information that is disseminated is selective and distorted to only emphasise the benefits of the change Co-optation involves giving key people access to the decisionmaking process • Negotiation – is often practised in unionised companies Simply, the process of negotiation is exercised, enabling several parties with opposing interests to bargain This bargaining leads to a situation of compromise and agreement When to use each style Strategies: addressing resistance to change 856  Approach/  style Situations used Advantages Disadvantages Education + Communication Where there is a lack of or inaccurate information and analysis If persuaded, people will help with the implementation of change Can be time consuming if many people are involved Participation + Involvement Where initiators not have all information to design change, and where others have power to resist Participants are committed to implementing change including their relevant contribution Can be very time consuming with possibly inappropriate changes made Facilitation + Support Where resistance comes from adjustment problems Best approach for adjustment issues Can be time consuming, expensive and still fail Negotiation + Agreement Where one group will lose out and has power to resist Can be an easy Can be too way to avoid expensive if it major resistance leads to general compliance KAPLAN PUBLISHING chapter 24 Strategies: addressing resistance to change  Approach/  style Situations used Advantages Disadvantages Education + Communication Where there is a lack of or inaccurate information and analysis If persuaded, people will help with the implementation of change Can be time consuming if many people are involved Participation + Involvement Where initiators not have all information to design change, and where others have power to resist Participants are committed to implementing change including their relevant contribution Can be very time consuming with possibly inappropriate changes made Facilitation + Support Where resistance comes from adjustment problems Best approach for adjustment issues Can be time consuming, expensive and still fail Negotiation + Agreement Where one group will lose out and has power to resist Can be an easy Can be too way to avoid expensive if it major resistance leads to general compliance Manipulation + Co-optation Where other tactics won’t work or are too costly Can be a relatively quick and inexpensive solution to resistance Can lead to future problems if people feel they have been manipulated It is speedy and can overcome any kind of resistance Can be risky if it leaves people angry at the initiators Explicit + Implicit Where speed is Coercion essential, and the change initiators possess considerable power KAPLAN PUBLISHING 857 Managing strategic change Test your understanding A manager is in charge of a team that has been given the task of introducing a new management reporting system into regional offices There is considerable resistance to the changes from the office managers, and comments that you have heard include the following: • • • • • • I have more important work priorities to take up my time I’m used to the old system The new system is too complicated The new system will create more paperwork The new system will make me more accountable My job in the new system is not clear How would you try to deal with this resistance to change? 5 The context for change (Balogun and Hope Hailey) For change to be successful, implementation efforts need to fit the organisational context There is no simple ‘off the shelf’ approach that will work for all organisations Balogun and Hope Hailey suggest that there are a number of contextual features that should be considered before an implementation approach (for example a style of leadership) for the change is determined: • • • • • • • • 858 time scope preservation diversity capability capacity readiness power KAPLAN PUBLISHING chapter 24 Explanation of the model Contextual features can be seen as existing within an overall change kaleidoscope This was developed by Julia Balogun and Veronica Hope Hailey to help managers design such a ‘context sensitive’ approach to change The kaleidoscope has three rings: • • The outer ring relates to the wider strategic change context • The inner circle gives a menu of choices and interventions (‘design choices’) available to change agents The middle ring relates to specific contextual factors that need to be considered when formulating a change plan Contextual features • Time – is there time for longer term strategic development or does the firm have to react quickly to a crisis? • Scope – how much of the organisation will be affected? Is the change best described as realignment or transformation? • Preservation – which aspects of working, culture, competences and people need to be retained? KAPLAN PUBLISHING 859 Managing strategic change • Diversity – the need to recognise that different departments (e.g., marketing and R&D) may have different sub-cultures • Capability – whether abilities exist to cope with the change These can be on an individual, managerial or organisational level • Capacity – are resources (e.g money, managerial time) available to invest in the change process? • Readiness – are staff aware of the need for change and are they committed to that change? • Power – how much authority and autonomy change agents have to make proposed changes? Each of these factors can be assessed as positive, negative or neutral in the context of change Positive features facilitate change and negative ones restrict change Design choices Design choices represent the key features of a change management approach: • Change path – clarifying the types of change in terms of timescales, the extent of change and the desired outcomes • Change start point – where the change is initiated (e.g top-down or bottom up) • Change style – which management style should be adopted (e.g collaborative, participative, directive or coercive)? • Change interventions – which mechanisms should be deployed (e.g education, communication, cultural interventions)? • Change roles – assigning roles and responsibilities (e.g leadership, use of consultants, role of change action teams) 6 Changes to the business system For change to be implemented successfully it needs to be co-ordinated across the entire business system The POPIT (or four-view) model provides details of the key aspects that should be considered in managing changes within any business system: 860 KAPLAN PUBLISHING chapter 24 More details The business system’s success will depend upon: • People: staff need to have the right skills and motivation to carry out the tasks They need to understand tasks and their roles within the organisation Staff need to be developed to support business changes and resistance to change has to be managed and overcome This will involve understanding and sometimes shifting the organisational culture • Organisation: success must be organised Job roles need to be clearly defined and understood, lines of command and communication need to be effective, the organisational structure needs to support the organisational strategy, there needs to be flexibility in changing environments and bureaucracy needs to be kept to a minimum Organisational support will be an important link between the other elements of the business system • Processes: these must be well defined, efficient, documented and understood Those of high strategic importance and complexity should have undergone process improvement Opportunities for improvement in other areas must have been explored in order to maximise efficiency and support the organisational strategy • IT: IT needs to support the changes that are taking place within the system It needs to provide the relevant information at the point that it is needed IT can replace some manual tasks and improve the efficiency of others IT may facilitate organisational changes, process changes and staff development and it therefore binds all of the other elements together IT must be exploited in order to maximise business benefits KAPLAN PUBLISHING 861 Managing strategic change These elements must all be considered, planned and co-ordinated if business system changes (such as process redesigns) are to be successful A failure in one area will often restrict the success in other areas For example, organisations that are resistant to change and have bureaucratic structures often fail to make successes out of IT innovations and process redesigns For example, Kodak created digital photography but the senior management were reluctant to exploit it as they knew that it would destroy their film based business model 10 years before digital photography became widespread Kodak knew of the threat But the organisation and the people did not support the IT and processes that existed within Kodak to exploit this technology Ultimately this meant that digital photography was exploited by rivals and Kodak failed as a business, despite the fact that Kodak was the organisation who initially created the technology It will be important that all four elements work together and are considered in achieving successful business changes (change management is considered in more detail in the next chapter) An organisation’s capabilities are often derived from and driven from success in having these four elements working together successfully When to use the model The model can be used in a number of ways: • • • • Identifying weaknesses in systems • Ensuring that project managers not become too blinkered and ignore all organisational consequences For example, many project managers become overly focused on creating an excellent process (covered elsewhere in this text) but forget that the process will only be successful if the people in the organisation have the skills to use it properly Identifying opportunities for system improvements Identifying areas that are not working well together Ensuring that all aspects of business change are considered when making process redesigns In an examination, it may well be used in the review stage of a project to help identify problems that have occurred because not all consequences were considered 862 KAPLAN PUBLISHING chapter 24 Test your understanding An organisation has carried out an 18 month project to redesign the way in which it manages its upstream supply chain It has well established eprocurement systems that have been in place for over five years and which are well integrated with existing suppliers The project manager (formerly part of the procurement team) carried out a plan to introduce a wider variety of suppliers who were willing to provide more flexible order quantities and provide better pricing and inventory information The procurement process was redesigned to insure that activities were in place that forced procurers to consider these suppliers and their information when making procurement decisions All procurers were retrained and new ‘super-procurers’ were created as champions of the new process These super-procurers had strong links to strategic management and were seen as a vital element in implementing, facilitating and supporting the new process The presence of these superprocurers encouraged procurers to support the change and also gave a potential new level of employment for staff to aim at However, the new process has been in place for two months and has come under widespread criticism Procurers complain that it is difficult to accumulate and assimilate the necessary information from the new system Procurers suggest that this information is not provided via the current e-procurement system and the lack of links to these new suppliers means that the information often has to be obtained via email and subsequently becomes cumbersome and difficult to pull together Senior management have complained that procurement costs have increased and there appears to be little or no expectation of a payback from the organisation’s high initial investment Customers have complained about low inventory levels and delayed orders and some major customers are now threatening to take their business elsewhere It has subsequently been found that in the last few days procurement staff have reverted to the old procurement system Required: Use the POPIT model to briefly consider the element(s) of the business system that appear to have been responsible for the failure of this project Professional skill: Illustrate evaluation skills in assessing the problems within the business system KAPLAN PUBLISHING 863 Managing strategic change Talent management One aspect of the POPIT model is people There is growing evidence that people are a key determinant of organisational success An organisation's staff can help differentiate the organisation from rivals, can make an organisation more flexible, can help make strategic change quicker and more successful, and can ensure ongoing improvement within an organisation The key to making this a success is talent management Talent management is an organisation's commitment to identify, recruit, engage, retain, and develop the most talented and superior employees valued by the organisation Key elements of talent management are that: 864 • people are seen as a major source of competitive advantage, and their training and development is seen as an investment, not a cost • recruiting staff based on potential and cultural fit (rather than past experience or qualifications) • learning is seen as essential and embedded in the organisation as a means of coping with change and ensuring that strategic objectives are met • employees have the expectation that they will learn and change and retrain as necessary as strategy demands • the development and training of their staff is seen as a key part of a manager’s role • changes outside the organisation are reflected in changes to training, controls and rewards • human resource implications are considered as part of strategic planning • the sharing of information about talented employees and their potential career paths across the organisation This enables various departments to identify available talent when opportunities are made or arise • tracking the career paths of employees and managing available opportunities for talented employees KAPLAN PUBLISHING chapter 24 7 Chapter summary KAPLAN PUBLISHING 865 Managing strategic change Test your understanding answers Test your understanding • Adaptation is change that can be accommodated within the current paradigm (the current organisational beliefs and assumptions) and occurs incrementally This is the most common form of change in organisations • Reconstruction is the type of change that may be rapid and can involve a good deal of upheaval in an organisation, but which does not fundamentally change the paradigm • Evolution is a change in strategy that requires paradigm change, but over time • Revolution is change that requires rapid and major strategic and paradigm change, perhaps in circumstances where pressure for change is extreme, e.g if profit decline or a take-over threatens the continued existence of the firm Test your understanding Managers can increase resistance by: • • • • • • • • failing to be specific about a change failing to explain why change is needed not consulting keeping people in the dark creating excess work pressure expecting immediate results not dealing with fears and anxieties ignoring resistance Test your understanding Lewin’s model suggests that, in order to be successful, WW will need to follow three stages in the changeover to a new accounting package Unfreeze Staff need to be convinced of the need for the new accounting package This could be difficult within WW for several reasons: 866 KAPLAN PUBLISHING chapter 24 • WW’s six employees have used the current accounting system for many years This may mean that they are ‘stuck in their ways’ and unwilling to learn the new skills required for the new system • In addition, currently management accounting information can only be produced after a time-consuming and complex process If a new system improves the efficiency of this process, employees may fear that they will become redundant • To help with this, WW need to convince them of the superiority of the new system For instance, it appears that it will make the production of management reports much faster, easing the workload for the employees • WW also needs to communicate well with its employees Resistance is often caused by a fear of the unknown Managers could discuss with staff about the level of training that they will be given on the new system and attempt to allay any fears they may have about potential redundancies • Finally, WW’s managers could also stress to staff members that it will benefit the business as a whole The current system may cause WW to be less competitive in the marketplace, which could threaten the business as a whole Change This involves actually moving staff onto the new accounting system This stage will involve training all members of the accounting department on how to use the new system Enough time must be allowed for employees to be reasonably comfortable with the new system before the changeover is made Communication is also vital here – employees must know when the new system will be installed and what will be expected from them For example, what new reports will the managers expect from the system and when they will need to be prepared Refreeze Finally, WW’s managers must ensure that employees not slip back into old habits and start using the old systems again Clearly, if the old accounting system is entirely replaced by the new one, it should be easy to ensure that staff members not continue to use the original accounting system However, employees may still continue preparing the management reports manually To avoid this, managers could refuse to accept reports in the old, manual format – instead requiring that they be produced from the new system Staff could be rewarded for using the new system and penalised if the old methods are still used KAPLAN PUBLISHING 867 Managing strategic change Test your understanding Change introduced through the use of power or manipulation is likely to add to anxiety Education and communication will rarely succeed on their own when introducing major change However, they are useful as a support for a negotiation or participation approach The negotiation approach requires the existence of organised representatives and a formal procedure that is suitable for some items such as change in employment terms but would be inadvisable for other items of changing procedures, organisational changes, decentralisation, etc In these cases, participation offers the best opportunity of allaying staff anxieties by involving them early in the change process and continuing that involvement through to completion Test your understanding In this project it would appear that people were well organised Procurers were retrained, the process was explained and there appeared to be a willingness for change The new job role of super-procurer appeared to provide a potential level of motivation to the staff The change also appeared well organised There was good communication as well as support from senior management The superprocurers would help to organise staff and the project manager would organise the process The fact that super-procurers had links to senior management would allow for any ad hoc changes required to be implemented when and if necessary The process was redesigned and there is no evidence in the scenario of any problems in this area It appears that the existing process was well understood (the project manager had formerly worked as a procurer) and strong investment objectives in terms of broadening the supplier base and procurement flexibility But it is in the area of information technology (IT) where the business system appears to have failed The project continued with a five year old system without any modifications for the new process No integration appears to have been made to the system for the new suppliers and instead procurement staff are left with two incompatible systems (an integrated e-procurement system for existing suppliers and an email system for new suppliers) The project manager has lost focus on a key element in the business systems and this appears to have been a key reason for the project failure 868 KAPLAN PUBLISHING chapter 24 Professional skill: Each element of the business system needs to be assessed for success or failure Your opinion as to whether it was a success or failure is largely irrelevant – what matters most is that you can justify your opinion based on evidence from the scenario KAPLAN PUBLISHING 869 Managing strategic change 870 KAPLAN PUBLISHING ... help you in the study process They include: (1) Detailed study guide and syllabus objectives (2) Description of the examination (3) Study skills and revision guidance (4) Study text (5) Question... give guidance on how to study for your ACCA exams and to give ideas on how to improve your existing study techniques Preparing to study Set your objectives Before starting to study decide what you... resources you will find: (1) On-line referenceware: reproduces your Study Text on-line, giving you anytime, anywhere access KAPLAN PUBLISHING vii (2) On-line testing: provides 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