ACCAP1-P3模拟题及解析(6)12586.pdf

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1、 财经网络教育领导品牌 _ 高顿网校 All Rights Reserved 版权所有 复制必究 1 ACCA P1-P3 模拟题及解析（6）1 Introduction 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 a

2、nd 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 soc

3、ial 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 b

4、y 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 m

5、ost 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

6、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

7、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 subs

8、tantial 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 facili

9、ties.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.财经网络教育领导品牌 _ 高顿网校 All Rights Reserved 版权所有 复制必究 2 SWO

10、T 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,f

11、or 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 companys information systems department.These systems not only concern

12、 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 su

13、rrounding 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 sh

14、op,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.Curre

15、nt 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 c

16、ompanys 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 t

17、heir 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 incr

18、easingly 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.财经网络教育领导品牌 _ 高顿网校 All Rights Reserved 版权所有 复制必究 3 These consumers also expect suppliers to be social

19、ly 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

20、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

21、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 redundan

22、cy 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 outsou

23、rcing 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 releas

24、e 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 teams alternative is for the company to upgrade its production faciliti

25、es to gain labour and energy efficiencies.The cost of this proposal is$375m.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.Howe

26、ver,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

27、 had a probability of 07.The alternative scenario(with a probability of 03)predicts a higher demand for Hammonds 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 futur

28、e cash flows.Financial information:The following financial information(see Figure 1)is also available for 财经网络教育领导品牌 _ 高顿网校 All Rights Reserved 版权所有 复制必究 4 selected recent years for Hammond Shoes manufacturing division.Figure 1:Extracts from the financial statements of Hammond Shoes(20072011)Extract

29、ed 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

30、 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

31、risen to 43 days and in 2011,the average time to pay a supplier invoice stood at 63 days.Required:(a)Analyse the financial position of Hammond Shoes and evaluate the proposed investment of$375 million in upgrading its production facilities.(14 marks)(b)Using an appropriate framework(or frameworks)ex

32、amine 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

33、 defining and communicating the strategy of Hammond Shoes.(12 marks)(50 marks)Section B TWO questions ONLY to be attempted 2 Introduction Flexipipe is a successful company supplying flexible pipes to a wide range of industries.Its success is based on a very innovative production process which allows

34、 the company to produce 财经网络教育领导品牌 _ 高顿网校 All Rights Reserved 版权所有 复制必究 5 relatively small batches of flexible pipes at very competitive prices.This has given Flexipipe a significant competitive edge over most of its competitors whose batch set-up costs are higher and whose lead times are longer.Fle

35、xipipes innovative process is partly automated and partly reliant on experienced managers and supervisors on the factory floor.These managers efficiently schedule jobs from different customers to achieve economies of scale and throughput times that profitably deliver high quality products and servic

36、e to Flexipipes customers.A year ago,the Chief Executive Officer(CEO)at Flexipipe decided that he wanted to extend the automated part of the production process by purchasing a software package that promised even further benefits,including the automation of some of the decision-making tasks currently

37、 undertaken by the factory managers and supervisors.He had seen this package at a software exhibition and was so impressed that he placed an order immediately.He stated that the package was ahead of its time,and I have seen nothing else like it on the market.This was the first time that the company

38、had bought a software package for something that was not to be used in a standard application,such as payroll or accounts.Most other software applications in the company,such as the automated part of the current production process,have been developed in-house by a small programming team.The CEO felt

39、 that there was,on this occasion,insufficient time and money to develop a bespoke in-house solution.He accepted that there was no formal process for software package procurement but perhaps we can put one in place as this project progresses.This relaxed approach to procurement is not unusual at Flex

40、ipipe,where many of the purchasing decisions are taken unilaterally by senior managers.There is a small procurement section with two full-time administrators,but they only become involved once purchasing decisions have been made.It is felt that they are not technically proficient enough to get invol

41、ved earlier in the purchasing lifecycle and,in any case,they are already very busy with purchase order administration and accounts payable.This approach to procurement has caused problems in the past.For example,the company had problems when a key supplier of raw materials unexpectedly went out of b

42、usiness.This caused short-term production problems,although the CEO has now found an acceptable alternative supplier.The automation project On returning to the company from the exhibition,the CEO commissioned a business analyst to investigate the current production process system so that the transit

43、ion from the current system to the new software package solution could be properly planned.The business analyst found that some of the decisions made in the current production process were difficult to define and it was often hard for managers to explain how they had taken effective action.They tend

44、ed to use their 财经网络教育领导品牌 _ 高顿网校 All Rights Reserved 版权所有 复制必究 6 experience,memory and judgement and were still innovating in their control of the process.One commented that what we do today,we might not do tomorrow;requirements are constantly evolving.When the software package was delivered there

45、were immediate difficulties in technically migrating some of the data from the current automated part of the production process software to the software package solution.However,after some difficulties,it was possible to hold trials with experienced users.The CEO was confident that these users did n

46、ot need training and would be able to learn the software as they went along.However,in reality,they found the software very difficult to use and they reported that certain key functions were missing.One of the supervisors commented that the monitoring process variance facility is missing completely.

47、Yet we had this in the old automated system.Despite these reservations,the software package solution was implemented,but results were disappointing.Overall,it was impossible to replicate the success of the old production process and early results showed that costs had increased and lead times had be

48、come longer.After struggling with the system for a few months,support from the software supplier began to become erratic.Eventually,the supplier notified Flexipipe that it had gone into administration and that it was withdrawing support for its product.Fortunately,Flexipipe were able to revert to th

49、e original production process software,but the ill-fated package selection exercise had cost it over$3m in costs and lost profits.The CEO commissioned a post-project review which showed that the supplier,prior to the purchase of the software package,had been very highly geared and had very poor liqu

50、idity.Also,contrary to the statement of the CEO,the post-project review team reported that there were at least three other packages currently available in the market that could have potentially fulfilled the requirements of the company.The CEO now accepts that using a software package to automate th