CIMA paper e1 organizational management study text

 
 
CIMA 
 

Paper E1 
 

Organisational 
Management 
 

Study Text 
 


 
 
 
 
 
 
 
 
 

Published by: Kaplan Publishing UK 
Unit 2 The Business Centre, Molly Millars Lane, Wokingham, Berkshire RG41 2QZ 
Copyright © 2015 Kaplan Financial Limited. All rights reserved. 
No part of this publication may be reproduced, stored in a retrieval system or transmitted in any form 
or by any means electronic, mechanical, photocopying, recording or otherwise without the prior 

written permission of the publisher. 
Acknowledgements 
We are grateful to the CIMA for permission to reproduce past examination questions. The answers to 
CIMA Exams have been prepared by Kaplan Publishing, except in the case of the CIMA November 
2010 and subsequent CIMA Exam answers where the official CIMA answers have been reproduced. 
Notice 
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British Library Cataloguing in Publication Data 
A catalogue record for this book is available from the British Library. 
ISBN: 978­1­78415­296­3 
Printed and bound in Great Britain. 

ii


Contents
Page
Chapter 1

The different purposes of organisations

Chapter 2

Organisational structure

25

Chapter 3

Governance, regulation, ethics and corporate 
social responsibility

67

Chapter 4

The purpose of the finance function

Chapter 5

The contemporary transformation of the finance  143
function

Chapter 6

The purpose and management of the technology  159
and information function

Chapter 7

Emerging IS trends and their role in supporting 
organisational strategy and operations

207

Chapter 8

The purpose of the operations function

229

Chapter 9

Tools and techniques of operations management 261

Chapter 10

Introduction to marketing

Chapter 11

The market planning process and the marketing  331
mix

Chapter 12

Further aspects of marketing

389

Chapter 13

Introduction to human resource management

411

Chapter 14

Appraisal, training and development, motivation  455
and retention 

Chapter 15

Employment practices, HR roles and ethics

1

111

307

493

iii


iv


chapter
Intro
 

Introduction 

v


 

How to use the materials

These official CIMA 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 Objective Test Examination. 
The product range contains a number of features to help you in the study 
process. They include: 

•
•
•

a detailed explanation of all syllabus areas;
extensive ‘practical’ materials;
generous question practice, together with full solutions.

This Study Text has been designed with the needs of home study and 
distance learning candidates in mind. Such students require very full 
coverage of the syllabus topics, and also the facility to undertake extensive 
question practice. However, the Study Text is also ideal for fully taught 
courses. 
The main body of the text is divided into a number of chapters, each of 

which is organised on the following pattern: 

vi

•

Detailed learning outcomes. These describe the knowledge 
expected after your studies of the chapter are complete. You should 
assimilate these before beginning detailed work on the chapter, so that 
you can appreciate where your studies are leading.

•

Step­by­step topic coverage. This is the heart of each chapter, 
containing detailed explanatory text supported where appropriate by 
worked examples and exercises. You should work carefully through this 
section, ensuring that you understand the material being explained and 
can tackle the examples and exercises successfully. Remember that in 
many cases knowledge is cumulative: if you fail to digest earlier 
material thoroughly, you may struggle to understand later chapters.

•

Activities. Some chapters are illustrated by more practical elements, 
such as comments and questions designed to stimulate discussion.


•

•

Question practice. The text contains three styles of question: 
– Exam­style objective test questions (OTQs)
–

‘Integration’ questions – these test your ability to understand topics 
within a wider context. This is particularly important with 
calculations where OTQs may focus on just one element but an 
integration question tackles the full calculation, just as you would be 
expected to do in the workplace.

–

‘Case’ style questions – these test your ability to analyse and 
discuss issues in greater depth, particularly focusing on scenarios 
that are less clear cut than in the Objective Test Examination, and 
thus provide excellent practice for developing the skills needed for 
success in the Operational Level Case Study Examination.

Solutions. Avoid the temptation merely to ‘audit’ the solutions 
provided. It is an illusion to think that this provides the same benefits as 
you would gain from a serious attempt of your own. However, if you are 
struggling to get started on a question you should read the introductory 
guidance provided at the beginning of the solution, where provided, and 
then make your own attempt before referring back to the full solution.

If you work conscientiously through this Official CIMA Study Text according 
to the guidelines above you will be giving yourself an excellent chance of 
success in your Objective Test Examination. Good luck with your studies! 
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 
 with full details, or follow the link to the 
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Our Quality Co­ordinator will work with our technical team to verify the error 
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Icon Explanations
Definition – These sections explain important areas of knowledge which 
must be understood and reproduced in an assessment environment.
Key point – Identifies topics which are key to success and are often 
examined. 
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 assessment question. Reference to this text is vital when self
studying.
Test your understanding – Following key points and definitions are 
exercises which give the opportunity to assess the understanding of these 
core areas.
vii


Illustration – To help develop an understanding of particular topics. The 
illustrative examples are useful in preparing for the Test your understanding 
exercises. 
Exclamation mark – This symbol signifies a topic which can be more 
difficult to understand. When reviewing these areas, care should be taken.
Study technique 
Passing exams is partly a matter of intellectual ability, but however 
accomplished you are in that respect you can improve your chances 

significantly by the use of appropriate study and revision techniques. In this 
section we briefly outline some tips for effective study during the earlier 
stages of your approach to the Objective Test Examination. We also 
mention some techniques that you will find useful at the revision stage. 
Planning 
To begin with, formal planning is essential to get the best return from the 
time you spend studying. Estimate how much time in total you are going to 
need for each subject you are studying. Remember that you need to allow 
time for revision as well as for initial study of the material. 
With your study material before you, decide which chapters you are going to 
study in each week, and which weeks you will devote to revision and final 
question practice. 
Prepare a written schedule summarising the above and stick to it! 
It is essential to know your syllabus. As your studies progress you will 
become more familiar with how long it takes to cover topics in sufficient 
depth. Your timetable may need to be adapted to allocate enough time for 
the whole syllabus. 
Students are advised to refer to the notice of examinable legislation 
published regularly in CIMA’s magazine (Financial Management), the 
students e­newsletter (Velocity) and on the CIMA website, to ensure they 
are up­to­date. 
The amount of space allocated to a topic in the Study Text is not a very 
good guide as to how long it will take you. The syllabus weighting is the 
better guide as to how long you should spend on a syllabus topic.  

viii


Tips for effective studying 
(1) Aim to find a quiet and undisturbed location for your study, and plan as 

far as possible to use the same period of time each day. Getting into a 
routine helps to avoid wasting time. Make sure that you have all the 
materials you need before you begin so as to minimise interruptions.
(2) Store all your materials in one place, so that you do not waste time 
searching for items every time you want to begin studying. If you have to 
pack everything away after each study period, keep your study 
materials in a box, or even a suitcase, which will not be disturbed until 
the next time.
(3) Limit distractions. To make the most effective use of your study periods 
you should be able to apply total concentration, so turn off all 
entertainment equipment, set your phones to message mode, and put 
up your ‘do not disturb’ sign.
(4) Your timetable will tell you which topic to study. However, before diving 
in and becoming engrossed in the finer points, make sure you have an 
overall picture of all the areas that need to be covered by the end of that 
session. After an hour, allow yourself a short break and move away from 
your Study Text. With experience, you will learn to assess the pace you 
need to work at. Each study session should focus on component 
learning outcomes – the basis for all questions.
(5) Work carefully through a chapter, making notes as you go. When you 
have covered a suitable amount of material, vary the pattern by 
attempting a practice question. When you have finished your attempt, 
make notes of any mistakes you made, or any areas that you failed to 
cover or covered more briefly. Be aware that all component learning 
outcomes will be tested in each examination.
(6) Make notes as you study, and discover the techniques that work best 
for you. Your notes may be in the form of lists, bullet points, diagrams, 
summaries, ‘mind maps’, or the written word, but remember that you will 
need to refer back to them at a later date, so they must be intelligible. If 
you are on a taught course, make sure you highlight any issues you 

would like to follow up with your lecturer.
(7) Organise your notes. Make sure that all your notes, calculations etc. can 
be effectively filed and easily retrieved later.

ix


Objective Test 
Objective Test questions require you to choose or provide a response to a 
question whose correct answer is predetermined. 
The most common types of Objective Test question you will see are: 

•

Multiple choice, where you have to choose the correct answer(s) from a 
list of possible answers. This could either be numbers or text.

•

Multiple choice with more choices and answers, for example, choosing 
two correct answers from a list of eight possible answers. This could 
either be numbers or text.

•

Single numeric entry, where you give your numeric answer, for example, 
profit is $10,000.

•
•

Multiple entry, where you give several numeric answers.

•

Matching pairs of text, for example, matching a technical term with the 
correct definition.

•

Other types could be matching text with graphs and labelling 
graphs/diagrams.

True/false questions, where you state whether a statement is true or 
false.

In every chapter of this Study Text we have introduced these types of 
questions, but obviously we have had to label answers A, B, C etc rather 
than using click boxes. For convenience we have retained quite a few 
questions where an initial scenario leads to a number of sub­questions. 
There will be questions of this type in the Objective Test Examination but 
they will rarely have more than three sub­questions. 
Guidance re CIMA on­screen calculator 
As part of the CIMA Objective Test software, candidates are now provided 
with a calculator. This calculator is on­screen and is available for the 
duration of the assessment. The calculator is available in each of the 
Objective Test Examinations and is accessed by clicking the calculator 
button in the top left hand corner of the screen at any time during the 
assessment. 
All candidates must complete a 15­minute tutorial before the assessment 

begins and will have the opportunity to familiarise themselves with the 
calculator and practise using it. 
Candidates may practise using the calculator by downloading and installing 
the practice exam at  />accessed from the fourth sample question (of 12). 

x


Please note that the practice exam and tutorial provided by Pearson VUE at 
/>range of question types the Pearson VUE software supports, some of which 
CIMA does not currently use. 
Fundamentals of Objective Tests 
The Objective Tests are 90­minute assessments comprising 60 compulsory 
questions, with one or more parts. There will be no choice and all questions 
should be attempted. 
Structure of subjects and learning outcomes  
Each subject within the syllabus is divided into a number of broad syllabus 
topics.  The topics contain one or more lead learning outcomes, related 
component learning outcomes and indicative knowledge content.  
A learning outcome has two main purposes:  
(a) To define the skill or ability that a well prepared candidate should be 
able to exhibit in the examination. 
(b) To demonstrate the approach likely to be taken in examination 
questions. 
The learning outcomes are part of a hierarchy of learning objectives. The 
verbs used at the beginning of each learning outcome relate to a specific 
learning objective, e.g.  
Calculate the break­even point, profit target, margin of safety and 
profit/volume ratio for a single product or service.  
The verb ‘calculate’ indicates a level three learning objective. The following 

tables list the verbs that appear in the syllabus learning outcomes and 
examination questions.  

xi


CIMA VERB HIERARCHY 
CIMA place great importance on the definition of verbs in structuring 
Objective Test Examinations. It is therefore crucial that you understand the 
verbs in order to appreciate the depth and breadth of a topic and the level of 
skill required. The Objective Tests will focus on levels one, two and three of 
the CIMA hierarchy of verbs. However they will also test levels four and five, 
especially at the management and strategic levels. You can therefore expect 
to be tested on knowledge, comprehension, application, analysis and 
evaluation in these examinations. 
Level 1: KNOWLEDGE 
What you are expected to know. 
VERBS
USED 

DEFINITION 

List 

Make a list of. 

State 

Express, fully or clearly, the details of/facts of. 

Define 

Give the exact meaning of. 

For example you could be asked to make a list of the advantages of a 
particular information system by selecting all options that apply from a given 
set of possibilities. Or you could be required to define relationship 
marketing by selecting the most appropriate option from a list. 
Level 2: COMPREHENSION 
What you are expected to understand. 
VERBS
USED 

DEFINITION 

Describe 

Communicate the key features of. 

Distinguish 

Highlight the differences between. 

Explain 

Make clear or intelligible/state the meaning or purpose of. 

Identify 

Recognise, establish or select after consideration. 

Illustrate 

Use an example to describe or explain something. 

For example you may be asked to distinguish between different aspects of 
the global business environment by dragging external factors and dropping 
into a PEST analysis. 

xii


Level 3: APPLICATION 
How you are expected to apply your knowledge. 
VERBS
USED 

DEFINITION 

Apply 

Put to practical use. 

Calculate 

Ascertain or reckon mathematically. 

Demonstrate  Prove with certainty or exhibit by practical means. 
Prepare 

Make or get ready for use. 

Reconcile 

Make or prove consistent/compatible. 

Solve 

Find an answer to. 

Tabulate 

Arrange in a table. 

For example you may need to calculate the projected revenue or costs for a 
given set of circumstances. 
Level 4: ANALYSIS 
How you are expected to analyse the detail of what you have learned. 
VERBS
USED 

DEFINITION 

Analyse 

Examine in detail the structure of. 

Categorise 

Place into a defined class or division. 

Compare/  
contrast 

Show the similarities and/or differences between. 

Construct 

Build up or compile. 

Discuss 

Examine in detail by argument. 

Interpret 

Translate into intelligible or familiar terms. 

Prioritise 

Place in order of priority or sequence for action. 

Produce 

Create or bring into existence. 

For example you may be required to interpret an inventory ratio by selecting 
the most appropriate statement for a given set of circumstances and data. 

xiii

Level 5: EVALUATION 
How you are expected to use your learning to evaluate, make decisions or 
recommendations. 
VERBS
USED 

DEFINITION 

Advise 

Counsel, inform or notify. 

Evaluate 

Appraise or assess the value of. 

Recommend  Propose a course of action. 
For example you may be asked to recommend and select an appropriate 
course of action based on a short scenario. 

xiv


PRESENT VALUE TABLE

(

Present value of 1.00 unit of currency, that is 1+ r

periods until payment or receipt.

)−n where r = interest rate; n = number of

Periods
(n)
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20

1%
0.990
0.980

0.971
0.961
0.951
0.942
0.933
0.923
0.914
0.905
0.896
0.887
0.879
0.870
0.861
0.853
0.844
0.836
0.828
0.820

2%
0.980
0.961
0.942
0.924
0.906
0.888
0.871
0.853
0.837
0.820

0.804
0.788
0.773
0.758
0.743
0.728
0.714
0.700
0.686
0.673

3%
0.971
0.943
0.915
0.888
0.863
0.837
0.813
0.789
0.766
0.744
0.722
0.701
0.681
0.661
0.642
0.623
0.605
0.587

0.570
0.554

4%
0.962
0.925
0.889
0.855
0.822
0.790
0.760
0.731
0.703
0.676
0.650
0.625
0.601
0.577
0.555
0.534
0.513
0.494
0.475
0.456

Interest rates (r)
5%
6%
0.952
0.943

0.907
0.890
0.864
0.840
0.823
0.792
0.784
0.747
0.746
0.705
0.711
0.665
0.677
0.627
0.645
0.592
0.614
0.558
0.585
0.527
0.557
0.497
0.530
0.469
0.505
0.442
0.481
0.417
0.458
0.394

0.436
0.371
0.416
0.350
0.396
0.331
0.377
0.312

7%
0.935
0.873
0.816
0.763
0.713
0.666
0.623
0.582
0.544
0.508
0.475
0.444
0.415
0.388
0.362
0.339
0.317
0.296
0.277
0.258

8%
0.926
0.857
0.794
0.735
0.681
0.630
0.583
0.540
0.500
0.463
0.429
0.397
0.368
0.340
0.315
0.292
0.270
0.250
0.232
0.215

9%
0.917
0.842
0.772
0.708
0.650
0.596

0.547
0.502
0.460
0.422
0.388
0.356
0.326
0.299
0.275
0.252
0.231
0.212
0.194
0.178

10%
0.909
0.826
0.751
0.683
0.621
0.564
0.513
0.467
0.424
0.386
0.350
0.319
0.290
0.263

0.239
0.218
0.198
0.180
0.164
0.149

Periods
(n)
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20

11%
0.901
0.812
0.731
0.659
0.593
0.535
0.482
0.434
0.391
0.352
0.317
0.286
0.258
0.232
0.209
0.188
0.170
0.153
0.138
0.124

12%
0.893
0.797
0.712
0.636
0.567
0.507
0.452

0.404
0.361
0.322
0.287
0.257
0.229
0.205
0.183
0.163
0.146
0.130
0.116
0.104

13%
0.885
0.783
0.693
0.613
0.543
0.480
0.425
0.376
0.333
0.295
0.261
0.231
0.204
0.181
0.160

0.141
0.125
0.111
0.098
0.087

14%
0.877
0.769
0.675
0.592
0.519
0.456
0.400
0.351
0.308
0.270
0.237
0.208
0.182
0.160
0.140
0.123
0.108
0.095
0.083
0.073

Interest rates (r)
15%

16%
0.870
0.862
0.756
0.743
0.658
0.641
0.572
0.552
0.497
0.476
0.432
0.410
0.376
0.354
0.327
0.305
0.284
0.263
0.247
0.227
0.215
0.195
0.187
0.168
0.163
0.145
0.141
0.125
0.123

0.108
0.107
0.093
0.093
0.080
0.081
0.069
0.070
0.060
0.061
0.051

17%
0.855
0.731
0.624
0.534
0.456
0.390
0.333
0.285
0.243
0.208
0.178
0.152
0.130
0.111
0.095
0.081
0.069

0.059
0.051
0.043

18%
0.847
0.718
0.609
0.516
0.437
0.370
0.314
0.266
0.225
0.191
0.162
0.137
0.116
0.099
0.084
0.071
0.060
0.051
0.043
0.037

19%
0.840
0.706
0.593

0.499
0.419
0.352
0.296
0.249
0.209
0.176
0.148
0.124
0.104
0.088
0.079
0.062
0.052
0.044
0.037
0.031

20%
0.833
0.694
0.579
0.482
0.402
0.335
0.279
0.233
0.194
0.162
0.135

0.112
0.093
0.078
0.065
0.054
0.045
0.038
0.031
0.026

Please check the CIMA website for the latest version of the maths
tables and formulae sheets in advance of sitting your live assessment.


Cumulative present value of 1.00 unit of currency per annum, Receivable or Payable at the end of
each year for n years
Periods
(n)
1
2
3
4
5

1− (1+ r ) − n
r

1%
0.990
1.970

2.941
3.902
4.853

2%
0.980
1.942
2.884
3.808
4.713

3%
0.971
1.913
2.829
3.717
4.580

4%
0.962
1.886
2.775
3.630
4.452

Interest rates (r)
5%
6%
0.952
0.943

1.859
1.833
2.723
2.673
3.546
3.465
4.329
4.212

7%
0.935
1.808
2.624
3.387
4.100

8%
0.926
1.783
2.577
3.312
3.993

9%
0.917
1.759
2.531
3.240
3.890

10%
0.909
1.736
2.487
3.170
3.791

6
7
8
9
10

5.795
6.728
7.652
8.566
9.471

5.601
6.472
7.325
8.162
8.983

5.417
6.230
7.020
7.786
8.530

5.242
6.002
6.733
7.435
8.111

5.076
5.786
6.463
7.108
7.722

4.917
5.582
6.210
6.802
7.360

4.767
5.389
5.971
6.515
7.024

4.623
5.206
5.747
6.247
6.710

4.486
5.033
5.535
5.995
6.418

4.355
4.868
5.335
5.759
6.145

11
12
13
14
15

10.368
11.255
12.134
13.004
13.865

9.787
10.575
11.348
12.106
12.849

9.253
9.954
10.635
11.296
11.938

8.760
9.385
9.986
10.563
11.118

8.306
8.863
9.394
9.899
10.380

7.887
8.384
8.853
9.295
9.712

7.499
7.943
8.358
8.745
9.108

7.139
7.536
7.904
8.244
8.559

6.805
7.161
7.487
7.786
8.061

6.495
6.814
7.103
7.367
7.606

16
17
18
19
20

14.718
15.562
16.398
17.226
18.046

13.578
14.292
14.992
15.679
16.351

12.561
13.166
13.754
14.324
14.878

11.652
12.166
12.659
13.134
13.590

10.838
11.274
11.690
12.085
12.462

10.106
10.477
10.828
11.158
11.470

9.447
9.763
10.059
10.336
10.594

8.851
9.122
9.372
9.604
9.818

8.313
8.544
8.756
8.950
9.129

7.824
8.022
8.201
8.365
8.514

Periods
(n)
1
2
3

4
5

11%
0.901
1.713
2.444
3.102
3.696

12%
0.893
1.690
2.402
3.037
3.605

13%
0.885
1.668
2.361
2.974
3.517

14%
0.877
1.647
2.322
2.914
3.433

Interest rates (r)
15%
16%
0.870
0.862
1.626
1.605
2.283
2.246
2.855
2.798
3.352
3.274

17%
0.855
1.585
2.210
2.743
3.199

18%
0.847
1.566
2.174
2.690
3.127

19%

0.840
1.547
2.140
2.639
3.058

20%
0.833
1.528
2.106
2.589
2.991

6
7
8
9
10

4.231
4.712
5.146
5.537
5.889

4.111
4.564
4.968
5.328
5.650

3.998
4.423
4.799
5.132
5.426

3.889
4.288
4.639
4.946
5.216

3.784
4.160
4.487
4.772
5.019

3.685
4.039
4.344
4.607
4.833

3.589
3.922
4.207
4.451
4.659

3.498
3.812
4.078
4.303
4.494

3.410
3.706
3.954
4.163
4.339

3.326
3.605
3.837
4.031
4.192

11
12
13
14
15

6.207
6.492
6.750
6.982
7.191

5.938
6.194
6.424
6.628
6.811

5.687
5.918
6.122
6.302
6.462

5.453
5.660
5.842
6.002
6.142

5.234
5.421
5.583
5.724
5.847

5.029
5.197
5.342
5.468
5.575

4.836
4.988
5.118
5.229
5.324

4.656
4.793
4.910
5.008
5.092

4.486
4.611
4.715
4.802
4.876

4.327
4.439
4.533
4.611
4.675

16
17
18
19
20

7.379
7.549
7.702
7.839
7.963

6.974
7.120
7.250
7.366
7.469

6.604
6.729
6.840
6.938
7.025

6.265
6.373
6.467
6.550
6.623

5.954
6.047
6.128
6.198
6.259

5.668
5.749
5.818
5.877
5.929

5.405
5.475
5.534
5.584
5.628

5.162
5.222
5.273
5.316
5.353

4.938
4.990
5.033
5.070
5.101

4.730
4.775
4.812
4.843
4.870

E1
ORGANISATIONAL MANAGEMENT
Syllabus overview
E1 focuses on the structuring of organisations. It covers the structure and principles
underpinning the operational functions of the organisation, their efficient management and
effective interaction in enabling the organisation to achieve its strategic objectives. It lays the
foundation for gaining further insight into both the immediate operating environment and
long-term strategic future of organisations, which are covered in E2 and E3.
Summary of syllabus
Weight

Syllabus topic

25%

A. Introduction to organisations

15%

B. Managing the finance function

15%

C. Managing technology and information

15%

D. Operations management

15%

E. Marketing

15%

F. Managing human resources


(b) explain the different structures organisations
may adopt

Learning outcomes
On completion of their studies, students should be able to:
Lead
Component
1 discuss the different types of structure that an (a) discuss the different purposes of organisations
organisation may adopt.

E1 – A. INTRODUCTION TO ORGANISATIONS (25%)

•

•

dimensions, the effect of:
− technology
− environment
− culture.

Structural dimensions, influence of:
− size
− formalisation
− specialisation
− organisation type e.g. sole-trader, partnership,
company, multinational.
Structural organisation:
− functional
− divisional
− matrix
− geographical.

• Organisational configuration (Mintzberg):
− technical core
− technical support
− administrative support
− top and middle management.
• Organisational configuration, contextual

− efficient production of goods and services
− facilitating innovation.

achieve goals and outcomes

• Ownership:
− private sector, public sector.
• Motive:
− for-profit, non-profit.
• Mission and vision:
− shared values and beliefs.

• Creating value for stakeholders:
− control and coordination of resources to

Indicative syllabus content


2 discuss relationships between internal and
external sources of governance, regulation
and professional behaviour.
(a) discuss the purpose and principles of good
corporate governance, the ethical
responsibilities of the organisation and
individuals, and ways of achieving corporate
social responsibility.

Learning outcomes
On completion of their studies, students should be able to:
Lead
Component
(c) explain the various forms and functional
boundaries of the organisation including
externalisation, shared service centres (SSC)
and business process outsourcing (BPO).

•

•
•
•
•

•

•
•
•
•
•
•

Corporate governance, including expectations of
stakeholders and the role of government.
Creating an ethical organisation.
Principles of corporate social responsibility (CSR).
Developing business-government relations.
The impact of regulation on the organisation.
Role of institutions and governance in economic
growth.
Personal business ethics and the fundamental
principles (Part A) of the CIMA Code of Ethics for
Professional Accountants.

Closed and open systems.
Vertical and horizontal structures.
Outsourcing.
Alliances.
Virtual network structure.

Indicative syllabus content

(c) discuss the potential for conflict within the role of
the finance function.

(b) analyse the components of the finance function
(financial and management accounting, treasury,
company secretarial and internal audit)

Learning outcomes
On completion of their studies, students should be able to:
Lead
Component
1 discuss the purpose of the finance function
(a) demonstrate the contribution the finance function
and its relationships with other parts of the
makes to the sustainable delivery of the
organisation.
organisation’s strategies in a range of contexts

E1 – B. MANAGING THE FINANCE FUNCTION (15%)

• Potential conflicts:
− interdependence/independence.
− short-term/long-term.
− capital/revenue.

•
•

•

•

values, efficient working capital management,
statutory reporting.
Management accounting – operational reporting
(profit and loss) cost control, variance analysis.
Treasury management – sourcing finance,
currency management, effective taxation
administration.
Company secretarial.
Internal audit – ensuring compliance, fraud
detection and avoidance.

• Financial accounting – ensuring accurate asset

•

•

•

the organisation for external stakeholders
(including statutory requirements) and internal
management.
Collating and providing information to enable
efficient asset management and cost effective
operation of the organisation.
Comparing the current position with
forecast/budget expectations and indicating where
and how differences have occurred. Providing this

in a timely and accurate manner.
Assisting and interacting with other functions in
providing solutions to variances.

• Interpreting and reporting the financial position of

resources within the organisation.

• Stewardship and control of physical and financial

Indicative syllabus content


(b) explain the contemporary transformation of the
finance function.

Learning outcomes
On completion of their studies, students should be able to:
Lead
Component
2 explain how the finance function supports the
(a) explain the activities fundamental to the role of
organisation’s strategies and operations.
the finance function (accounting operations,
analysis, planning, decision making and control)
receivables, payables, cash.
Provision of analysis to support decisions.
Performance reporting, budget/actuals.
Cost reporting, product/process.
Ensuring systems in place to provide timely and

accurate control information.

• Reconfiguration:
− bureaucratic to market oriented.
• Shared services:
− outsourced market orientation.
• Business Process Re-engineering:
− roles of process working.
• Relocation:
− retained/near-shore/off-shore.
• Segregation of the finance function:
− transactional/transformational activities.
• Business partners:
− support involvement.

•
•
•
•

• Preparation of statutory reports.
• Preparation of plans, forecasts, budgets.
• Working capital reporting and control, inventories,

Indicative syllabus content


2 explain how information systems support the
organisation’s strategies and operations.

(b) explain the role of emerging technologies e.g.
Big Data, digitisation and their uses.

(a) explain the technical components and options
for information technology system design

(b) demonstrate ways of organising and managing
information systems in the context of the wider
organisation.

Learning outcomes
On completion of their studies, students should be able to:
Lead
Component
1 demonstrate the purpose of the technology
(a) demonstrate the value of information systems in
and information function and its relationships
organisations
with other parts of the organisation.

E1 – C. MANAGING TECHNOLOGY AND INFORMATION (15%)

systems.

Data and analytics:
− identifying business value
− relating to customer requirements
− developing organisational blueprint
− building capabilities on business priorities
− ensuring measurable outcomes.

• Privacy and security.
• Overview of systems architecture and data flows.
• Big Data information management:
− large volumes of data
− complexity and variety of data
− velocity, real time data.
• Enhancing decision making support using Big

technologies.

• The internet, intranet, wireless technology, cloud

• Evaluating costs and benefits of information

•

•

•

the emergence of new, more virtual forms of
organisation, technology infrastructure.
Geographically dispersed (virtual) teams; role of
information systems in virtual teams and
challenges for virtual collaboration.
Managing knowledge, enhancing internal and
external relationships.
Ethical and social issues associated with
information systems.

• Information technology – enabling transformation;

organisations. The networked enterprise,
organisational benefits, customer relationship
management systems.

• The role of information systems in organisations.
• Emerging information system trends in

Indicative syllabus content


Learning outcomes
On completion of their studies, students should be able to:
Lead
Component

•
•

•

•

•

management process; avoiding problems of nonusage and resistance.
System changeover methods (i.e. direct, parallel,
pilot and phased).

Information system outsourcing (different types of
sourcing strategies; client-vendor relationships).
E-commerce, digital markets, social media, digital
goods.
Remote working, hot desking.
Big Data and digitisation:
− addressing customer needs
− effective and speedy decisions.

• Information system implementation as a change

Indicative syllabus content


2 apply tools and techniques of operations
management.
(a) apply the tools and concepts of operations
management to deliver sustainable performance

(b) demonstrate how supply chains can be
established and managed.

Learning outcomes
On completion of their studies, students should be able to:
Lead
Component
1 demonstrate the purpose of the operations
(a) demonstrate the contribution of operations
function and its relationships with other parts
management to the efficient production and

of the organisation.
delivery of fit-for-purpose goods and services

E1 – D. OPERATIONS MANAGEMENT (15%)

chain management.

•
•

•
•
•
•
•
•

•

•

Process design.
Product and service design.
Supply network design.
Forecasting.
Layout and flow.
Process technology:
− CNC, Robots, AGV, FMS, CIM
− decision support systems
− expert systems.

Work study.
Capacity planning and control, inventory control.

of supply networks; demand networks as an
evolution of supply chains.
Design of products/services and processes and
how this relates to operations and supply.
The concept of CSR and sustainability in
operations management.

• Supply chains in competition with each other; role

including the use of supply portfolios.

• Development of relationships with suppliers,

• Procurement as a strategic process in supply

importance to the firm.

• Overview of operations strategy and its

Indicative syllabus content


Learning outcomes
On completion of their studies, students should be able to:
Lead
Component
(b) explain how relationships within the supply chain

can be managed.

management (TQM), Kaizen, Six Sigma, Lean
thinking
− reverse logistics.

• Supply chain planning and control:
− lean synchronisation
− contractual/relational approaches
− material requirement planning
− quality planning and control
− statistical process control
− operational improvement, total quality

Indicative syllabus content