ACCA考试P1-P3模拟题及解析19

　　以下是高顿网校小编为学员整理的：ACCA P1-P3模拟题及解析。
 

　　Hammond Shoes was formed in 1895 by Richard and William Hammond, two brothers who owned and farmed land in Petatown, in the country of Arnland. At this time, Arnland was undergoing a period of rapid industrial growth and many companies were established that paid low wages and expected employees to work long hours in dangerous and dirty conditions. Workers lived in poor housing, were largely illiterate and had a life expectancy of less than forty years.

　　The Hammond brothers held a set of beliefs that stressed the social obligations of employers. Their beliefs guided their employment principles – education and housing for employees, secure jobs and good working conditions.

　　Hammond Shoes expanded quickly, but it still retained its principles. Today, the company is a private limited company whose shares are wholly owned by the Hammond family. Hammond Shoes still produce footwear in Petatown, but they now also own almost one hundred retail shops throughout Arnland selling their shoes and boots. The factory (and surrounding land) in Petatown is owned by the company and so are the shops, which is unusual in a country where most commercial properties are leased. In many respects this policy reflects the principles of the family. They are keen to promote ownership and are averse to risk and borrowing. They believe that all stakeholders should be treated fairly.

　　Reflecting this, the company aims to pay all suppliers within 30 days of the invoice date. These are the standard terms of supply in Arnland, although many companies do, in reality, take much longer to pay their creditors.

　　The current Hammond family are still passionate about the beliefs and principles that inspired the founders of the company.
 

　　Recent history

　　Although the Hammond family still own the company, it is now totally run by professional managers. The last Hammond to have operational responsibility was Jock Hammond, who commissioned and implemented the last upgrade of the production facilities in 1991. In the past five years the Hammond family has taken substantial dividends from the company, whilst leaving the running of the company to the professional managers that they had appointed. During this period the company has been under increased competitive pressure from overseas suppliers who have much lower labour rates and more efficient production facilities. The financial performance of the company has declined rapidly and as a result the Hammond family has recently commissioned a firm of business analysts to undertake a SWOT analysis to help them understand the strategic position of the company.

　　SWOT analysis: Here is the summary SWOT analysis from the business analysts’ report.
 

　　Strengths

　　Significant retail expertise: Hammond Shoes is recognised as a successful retailer with excellent supply systems,bright and welcoming shops and shop employees who are regularly recognised, in independent surveys, for their excellent customer care and extensive product knowledge.

　　Excellent computer systems/software expertise: Some of the success of Hammond Shoes as a retailer is due to its innovative computer systems developed in-house by the company’s information systems department. These systems not only concern the distribution of footwear, but also its design and development. Hammond is acknowledged, by the rest of the industry, as a leader in computer-aided footwear design and distribution.

　　Significant property portfolio: The factory in Petatown is owned by the company and so is a significant amount of the surrounding land. All the retail shops are owned by the company. The company also owns a disused factory in the north of Arnland. This was originally bought as a potential production site, but increasingly competitive imports made its development unviable. The Petatown factory site incorporates a retail shop, but none of the remaining retail shops are near to this factory, or indeed to the disused factory site in the north of the country.
 

　　Weaknesses

　　High production costs: Arnland is a high labour cost economy.

　　Out-dated production facilities: The actual production facilities were last updated in 1991. Current equipment is not efficient in its use of either labour, materials or energy.

　　Restricted internet site: Software development has focused on internal systems, rather than internet development.

　　The current website only provides information about Hammond Shoes; it is not possible to buy footwear from the company’s website.
 

　　Opportunities

　　Increased consumer spending and consumerism: Despite the decline of its manufacturing industries, Arnland remains a prosperous country with high consumer spending. Consumers generally have a high disposable income and are fashion conscious. Parents spend a lot of money on their children, with the aim of ‘making sure that they get a good start in life’.

　　Increased desire for safe family shopping environment: A recent trend is for consumers to prefer shopping in safe, car-free environments where they can visit a variety of shops and restaurants. These shopping villages are increasingly popular.

　　Growth of the green consumer: The numbers of ‘green consumers’ is increasing in Arnland. They are conscious of the energy used in the production and distribution of the products they buy. These consumers also expect suppliers to be socially responsible. A recent television programme on the use of cheap and exploited labour in Orietaria was greeted with a call for a boycott of goods from that country. One of the political parties in Arnland has emphasized environmentally responsible purchasing in its manifesto. It suggests that ‘shorter shipping distances reduce energy use and pollution. Purchasing locally supports communities and local jobs’.
 

　　Threats

　　Cheap imports: The lower production costs of overseas countries provide a constant threat. It is still much cheaper to make shoes in Orietaria, 4000 kilometres away, and transport the shoes by sea, road and train to shops in Arnland, where they can be offered at prices that are still significantly lower than the footwear produced by Hammond Shoes.

　　Legislation within Arnland: Arnland has comprehensive legislation on health and safety as well as a statutory minimum wage and generous redundancy rights and payments for employees. The government is likely to extend its employment legislation programme.
 

　　Recent strategies

　　Senior management at Hammond Shoes have recently suggested that the company should consider closing its Petatown production plant and move production overseas, perhaps outsourcing to established suppliers in Orietaria and elsewhere. This suggestion was immediately rejected by the Hammond family, who questioned the values of the senior management. The family issued a press release with the aim of re-affirming the core values which underpinned their business. The press release stated that ‘in our view, the day that Hammond Shoes ceases to be a Petatown company, is the day that it closes’. Consequently, the senior management team was asked to propose an alternative strategic direction.

　　The senior management team’s alternative is for the company to upgrade its production facilities to gain labour and energy efficiencies. The cost of this proposal is $37·5m. At a recent scenario planning workshop the management team developed what they considered to be two realistic scenarios. Both scenarios predict that demand for Hammond Shoes’ footwear would be low for the next three years. However, increased productivity and lower labour costs would bring net benefits of $5m in each of these years. After three years the two scenarios differ. The first scenario predicts a continued low demand for the next three years with net benefits still running at $5m per year. The team felt that this option had a probability of 0·7. The alternative scenario (with a probability of 0·3) predicts a higher demand for Hammond’s products due to changes in the external environment. This would lead to net benefits of $10m per year in years four, five and six. All estimated net benefits are based on the discounted future cash flows.

　　Financial information: The following financial information (see Figure 1) is also available for selected recent years for Hammond Shoes manufacturing division.

　　Figure 1: Extracts from the financial statements of Hammond Shoes (2007–2011)

　　Extracted from the income statements (all figures in $m) 2011 2009 2007

　　Revenue                                                  700   750  850

　　Cost of sales                                           (575) (600) (650)

　　Gross profit                                             125   150   200

　　Administration expenses                                  (95) (100) (110)

　　Other expenses                                           (10) (15) (20)

　　Finance costs                                            (15) (10) (5)

　　Profit before tax                                         5    25   65

　　Income tax expense                                        (3)  (7) (10)

　　Profit for the year                                        2   18 55

　　Extracted from statements of financial position (all figures in $m)

　　Trade receivables                                          70   80   90

　　Share capital                                              100  100  100

　　Retained earnings                                          140  160  170

　　Long term borrowings                                        70   50   20

　　In 2007, Hammond Shoes paid, on average, their supplier invoices 28 days after the date of invoice. In 2009 this had risen to 43 days and in 2011, the average time to pay a supplier invoice stood at 63 days.
 

　　(a) Analyse the financial position of Hammond Shoes and evaluate the proposed investment of $37·5 million in upgrading its production facilities. (14 marks)

　　(b) Using an appropriate framework (or frameworks) examine the alternative strategic options that Hammond Shoes could consider to secure its future position. (20 marks)

　　Professional marks will be awarded in part (b) for the clarity, structure and style of the answer. (4 marks)

　　(c) Advise the Hammond family on the importance of mission, values and objectives in defining and communicating the strategy of Hammond Shoes. (12 marks) (50 marks)
 

　　(a) The following financial analysis focuses on the profitability and gearing of Hammond Shoes manufacturing division.

　　Profitability: The effect of cheap imports appears to be reflected in the profitability of the company. Revenues and gross profit have both fallen significantly in the four years of data given in Figure 1. In 2007 the company reported a gross profit margin of 23·5% and a net profit margin of 8·2%. This has declined steadily over the period under consideration. The figures for 2009 were 20·0% and 4·7% and for 2011, 17·9% and 2·9% respectively. There has been a general failure to keep costs under control over this period. Sales have fallen by $150m in four years – almost an 18% decrease. In contrast the cost of sales has decreased by only $75m, a decrease of about 11·5%. This probably reflects the problem of reducing labour to react to lower demand, particularly in a country where generous redundancy payments are enforced by law and in an organization which sees the employment of local labour as one of its objectives. The Return on Capital Employed (ROCE) has dropped substantially, from 24·14% in 2007 to 6·45% in 2011.

　　Gearing: The capital structure of the company has changed significantly in the last four years and this is probably of great concern to the family who are averse to risk and borrowing. Long-term borrowings have increased dramatically and retained earnings are falling, reflecting higher dividends being taken by the family. Traditionally, the company has been very low geared, reflecting the social values of the family. The gearing ratio was only 6·9% in 2007, but has risen to over 22·5% in 2011. During this period, retained profit has fallen and an increasing number of long-term loans have been taken out to finance activities. Overall, gearing may still appear quite low and indeed this is probably the view of the senior management of the company. However, the speed of these funding changes is a concern, particularly when trade receivables and trade payables are considered.

　　One of the values held by the family is the importance of paying suppliers on time. In Arnland, goods are normally supplied on 30 days credit. In 2007, Hammond Shoes, on average, exceeded this target, paying on 28 days. However by 2009 this value had risen to 43 days and by 2011 to 63 days. During the same period, trade receivables, from the selected data provided, appear to have come down slightly (from 38·65 days in 2007 to 36·50 days in 2011). It is difficult to escape the conclusion that Hammond Shoes is increasingly using suppliers as a source of free credit on top of the loans they have taken from the banks. Financing costs have risen significantly over the last four years, affecting profits and also causing the interest cover ratio to fall dramatically from 14 to 1·33.

　　The financial analysis essentially supports the descriptive analysis provided by the business analysts. Profits are falling, with the firm unable to cut costs sufficiently quickly. The company is increasingly dependent on external finance which is likely to cause disquiet amongst the owning family (on ethical grounds) and may concern suppliers.

　　Investment analysis:

　　The two scenarios developed by the senior managers also reflect the pessimism of the company. There seems to be universal acceptance that in the next three years the company will still experience low sales even after the company invests in the new production facilities. Beyond that, managers only see a 30% chance of higher sales resulting and this depends upon favourable changes in the business environment.

　　For both scenarios, the net benefits of the first three years are $5m per year, giving a total of $15m.

　　For the next three years, managers suggest that there is a 0·7 chance of continuing low demand, leading to net benefits staying at $5m per year, giving a further benefit of $15m total, with an expected value of $10·5 ($15m x 0·7). Higher demand would lead to net benefits of $10m per year, providing a total of $30m, but with an expected value of only $9m($30m x 0·3).

　　Thus the expected benefits of the project are only $34·5 ($15m + $10·5m + $9m), which is below the proposed investment of $37·5m. Only if the second scenario materialises after three years will the investment (in broad terms) have been justified.

　　This scenario would return $45m.

　　However, it has to be recognised that the projection only covers the first six years of the new production facilities. The factory was last updated twenty years ago and so it seems reasonable to expect net profits to continue for many years after the six years explicitly considered in the scenario, but it must be recognised that predicting net benefits beyond that horizon becomes increasingly unreliable and subjective.
 

　　(b) This question does not require the candidate to use a specific framework for generating strategic options. A number of possibilities exist. The TOWS matrix, the strategy clock and the Ansoff matrix all come to mind. Each of these frameworks has sufficient facets to generate the number of options or directions required to gain the marks on offer. For the purpose of this answer, the TOWS matrix is used, because it fits so well with the SWOT analysis produced by the consultants. However, the focus is on the options generated, not the framework itself and so other frameworks may be as appropriate.The TOWS matrix is a way of generating directions from an understanding of the organisation’s strategic position. It builds directly on the work of the SWOT with each quadrant identifying options that address a different combination of the internal factors (strengths and weaknesses) and external factors (opportunities and threats).

　　Internal factors

　　Strengths Weaknesses

　　Opportunities SO – options that use strengths to WO – options that take advantage

　　External take advantage of opportunities of opportunities by overcoming

　　factors weaknesses

　　Threats ST – options that use strengths to WT – options that minimise

　　avoid threats weaknesses and avoid threats

　　Taking each quadrant in turn:

　　SO – using strengths to take advantage of opportunities. A number of possible options might be considered here. Hammond Shoes’ retail expertise is an acknowledged strength of the company, and it may be possible to use it to take advantage of the opportunities provided by increased consumer spending and consumerism in Arnland. Two possible options come to mind.

　　Firstly, the company could consider selling competing products or complementary goods in its retail shops. This would give consumers a greater choice of products and allow Hammond Shoes to reap some of the profit margins enjoyed by its competitors. Given the company’s acknowledged retail expertise, this option should help preserve the long-term future of the shops.

　　Secondly, the increasing appetite of the public for safe, car-free shopping from a variety of shops might suggest the development of retail ‘villages’ on the land that Hammond Shoes have, both in Petatown and in the, now disused, factory in the north of the country. This option would combine the twin strengths of retail experience and the availability of land owned by the company, to provide consumers with an experience they increasingly seek and value. The fact that only two sites are available in towns where there are currently no Hammond Shoes retail shops means that there is no apparent reason why the creation of the retail villages should not be combined with the diversification of the products offered in the retail stores.

　　The software expertise of the company’s information systems department can also be used to fulfil consumer’s desire for increased purchases over the Internet. Up to now this software expertise has been mainly used to develop in-house production and retail systems which are acknowledged as being amongst the best in the industry. This expertise might be used to develop an innovative e-commerce site. This, of course, also opens up the possibility of sales outside Arnland, something that is unlikely at the moment, given that all the retail shops are within the country.

　　WO – options that take advantage of opportunities by overcoming weaknesses. To some extent this option contains the approach suggested by the Board, upgrading production machinery. This is addressing a known weakness (out-dated production facilities), simultaneously tackling another weakness, the cost of production. Here the approach is to reduce unit cost by improving productivity and reducing energy costs through the use of modern production equipment. The Board perceives that overcoming these weaknesses will allow the company to continue to compete in the market they are familiar with.

　　Reducing energy costs might also be used to appeal to the increasing number of green consumers of Arnland who take into account ethical issues when making purchasing decisions. The business analysts have identified these savings as an opportunity in their SWOT analysis. They should be attracted to a product that has been produced using an energy efficient process, and has not travelled thousands of kilometres (using energy consuming boats, road transport and trains). At the time of writing, there is an increased interest in measuring product miles or kilometres, a term used to assess the environmental impact of delivering a product from its point of production to its point of sale. Although the measures are controversial, this need not necessarily concern the messages put out by Hammond Shoes’ marketing department.

　　Hammond Shoes might also use the negative impact of television programmes showing the use of cheap and exploited labour in the production of goods in Orietaria as part of their marketing message. Although the consultants have suggested that the production of shoes in Arnland is a weakness (because of high costs) it could be turned into a strength if the country of origin becomes an important part of the buying decision for people who are willing to pay a premium for ethically sourced products.

　　This might be supported by political initiatives, for example, the support of one of the political parties in Arnland for environmentally responsible purchasing. Their manifesto suggests that ‘shorter shipping distances reduce energy use and pollution. Purchasing locally supports communities and local jobs’.

　　ST – options that use strengths to avoid threats. The company is an acknowledged leader in shoe design and distribution software. It also has significant retail competencies. The company might consider reviewing these to see whether innovative production and retail systems could not be combined and extended to provide economies of supply that partly compensate for the relative high cost of production. So, although production costs cannot easily be reduced, supply and storage costs might be.

　　The extensive property ownership of the organisation is also perceived as a significant strength. In the short term there may be an opportunity to buy time whilst the cost of producing overseas increases due to rising fuel costs and demands for better pay in the producing countries. Thus, cheaper competition might be seen as a short-term threat, which will eventually disappear. The property portfolio could be used to help finance Hammond Shoes through this period. It might do this by disposing of property, or perhaps more innovatively, by selling all of its property and leasing it back. This would provide liquidity which could be used to ease the company through the next few years.

　　WT – options that minimise weaknesses and avoid threats. The high cost of labour (weakness) and the continued provision of cheap imports (threat) may mean that Hammond Shoes should consider diversifying into areas of the footwear market where there is either less demand for raw materials or where a premium can be charged, either due to the quality of the product or due to appropriate branding. For example, focusing on shoes for children, which requires greater precision and less raw material, might be a possibility. The attraction of this is that it is a product which needs regular renewal (as feet grow) and because parents are conscious of getting exactly the right fit to avoid permanent damage to their children’s feet.

　　The acknowledged strengths of the retail experience, where employees have extensive product knowledge and excellent customer care, might also be harnessed to support this approach. Branding can reinforce the message, focusing on Hammond Shoes as primarily a supplier of children’s shoes. Adult shoes may be given a lower marketing profile, but are available for cross-selling when parents are visiting for measuring and fitting shoes for their children.

　　Other niche areas might include high quality fashion shoes and boots, where customers are willing to pay a premium for the product. This might demand a certain amount of exclusivity, reinforced through appropriate marketing. Again, one of the attractions of the fashion market is the relatively short shelf-life of the product. Many consumers wish to renew their shoes each season as a fashion statement, not due to any desire to keep their feet dry and clean.
 

　　(c) A mission statement defines the overriding direction and purpose of an organisation. Some organisations also have vision statements stating what the company aspires to. However, for the purpose of this answer, vision and mission are perceived as largely the same thing. Mission statements have their critics, with many believing that they are bland and too wide-ranging.

　　There may be some truth in this view; after all there are only a limited number of ways that the words customer, quality and leader can be re-arranged. However, most organisations appear to have settled into an approach where a short snappy slogan or strap line is supported by a much deeper description of what the organisation is about, its stakeholders and how it wishes to interact with those stakeholders. It defines how the organisation wants to do business. At the time of writing Virgin Atlantic has three elements to its mission statement, all expanded into specific objectives on its website. To grow a profitable airline,where people love to fly and where people love to work. Part of ACCA’s mission is to provide opportunity and access to people of ability around the world and to support our members throughout their careers in accounting, business and finance.

　　If there is substantial disagreement within the organisation about its overall mission then there may be significant problems in determining the strategic direction of the organisation. Defining a mission statement also provides an opportunity for the organisation to communicate its core corporate values. These may be explicitly defined within the mission itself or they may be in subsidiary statements, corporate reports or web resources. These values tell customers and suppliers how the organisation wishes to operate. They represent the core values and principles that guide the organisations’ actions. These could, for example, concern aspects of corporate social responsibility. The ACCA has core values of opportunity, diversity,innovation, accountability and integrity.

　　One of the problems at Hammond Shoes appears to be that the core values of the organisation are implied, but not explicitly stated. Originally, these were provided by the beliefs of the founding brothers – provision of education and housing for employees, secure jobs and good working conditions. Privately, the family still have these principles but they have largely failed to communicate and promote them. Commercial organisations with important core social values are increasingly rare.

　　The extent of this communication failure at Hammond Shoes even extends to the senior management of the company. Their promotion of the potential benefits of outsourcing of production indicated a failure to understand that this would effectively remove a significant part of the company’s reason for existence. Its core values include the provision of fair employment opportunities for the people of Petatown and the reaction of the family to removing this central mission illustrates that this value remains core to the continued existence of the company.

　　Thus the Hammond family should explicitly state their core values, perhaps as a detailed expansion of a short, clear mission statement. This would allow the family to articulate its beliefs and communicate these to customers, suppliers and employees.

　　A number of writers on organisations use a MOST analysis to help understand the internal environment of an organisation.

　　MOST stands for Mission, Objectives, Strategy and Tactics. The aim of this analysis is to see whether the four facets actually exist (checking for omission) and, if they do, whether they align. Objectives are statements of specific outcomes that the organisation wishes to achieve. They are often expressed in financial terms, such as profit levels, turnover or dividend distribution to shareholders. Marketing objectives are also very common; such as a target market share and customer service provision. Johnson, Scholes and Whittington also believe that general, unquantifiable objectives are acceptable. They recognise that objectives such as ‘being a leader in technology’ is important to state, but could be difficult to quantify and may indeed encourage spurious quantification. In the context of Hammond Shoes, the company does appear to have certain objectives, such as keeping production in Petatown and providing educational opportunities for employees. As Johnson,Scholes and Whittington point out, ‘there are times when specific objectives are required’. This is when urgent action is necessary, as at Hammond Shoes, when it becomes important for the management to focus on a limited number of quantified, priority requirements and not waste their energies pursuing vaguely stated ones.

　　Furthermore, the existence of such objectives provides an opportunity for managers and employees throughout the organisation to align their own work with stated objectives and so see how what they do contributes to objectives that, in turn, serve the corporate mission. The company clearly fails to cascade objectives down through the organisation and, again,at a period of crisis, this may be a significant weakness. For example, the core value of treating suppliers fairly could have been enshrined within an objective of paying all suppliers within 30 days. The absence of this specific objective and hence the impossibility of cascading it down to those responsible for cash flow management and payment has meant that this section has imposed its own objective of extending payment terms as much as possible. Evidence suggests that they now stand at over 60 days, so the company is failing to meet one of its core values – fairness to suppliers.

　　Hence, Hammond Shoes does not have a clearly defined mission or explicitly stated values. Its objectives are restricted and rarely quantified. Its strategy is now under review, although it has made certain tactical decisions such as resisting outsourcing and commissioning updated production facilities in Petatown. Thus in the MOST analysis, there are some elements omitted and hence alignment is impossible. This needs to be addressed.
 

　　高顿网校小编寄语：向着某一天终于要达到的那个终极目标迈步还不够，还要把每一步骤看成目标，使它作为步骤而起作用。

 　　　　　　

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