From P6 to E3
In May 2010 when CIMA’s new syllabus is examined for the first time the strategic level paper
‘Management Accounting-Business Strategy’ is replaced by ‘Enterprise Strategy’. In this article I will:
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explain the implications of this change for CIMA students and their tuition providers
delineate the similarities and differences between the two papers
describe my approach to examining Enterprise Strategy.
As a note of reassurance, candidates should recognise that although Enterprise Strategy is a new
paper there is a substantial inheritance from Business Strategy.
Enterprise Strategy-Syllabus overview
The obvious place to start an appreciation of the new paper is with CIMA’s published syllabus. The
overview states: ‘Paper E3 continues the integration of skills across functions, but concentrates on
developing the knowledge and skills used in designing and implementing strategy. Strategy is
developed in a context, and understanding how the organisation’s external environment and
stakeholders affect strategy development is important. Context and the internal capabilities of the
organisation shape the generation and evaluation of strategic options. Implementing strategy
involves tools and techniques associated with change management. Finally, the paper requires the
application of tools to assist in the evaluation of the performance implications of a given strategy’.
Qualification structure and syllabus: CIMA 2010, page 50.
CIMA provide the following categorisation of the syllabus:
Syllabus
Section
A
B
C
D

Title
Interacting with the competitive environment
Change management
Evaluation of strategic position and strategic options
Implementation of strategic plans and performance evaluation
Study weighting %
20
20
30
30
Changes and continuity
In overall terms, 80% of the E3 syllabus displays continuity with that of P6, as Sections A,
C and D were present in P6, albeit with some small changes in wording. The major
change is that the former syllabus section A ‘Assessing the competitive environment’
(20% study weighting) leaves E3 and ‘Change Management (20% study weighting) is
introduced.
One result of this change is that a number of important strategic models and topics no
longer appear in the syllabus for E3 but now appear in the syllabus for E2 ‘Enterprise
Management’.
These models and topics are:
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PEST analysis
Stakeholder mapping
Qualitative approaches to competitive analysis
Competitor analysis
Competitive strategies
Porter’s Five Forces
Porter’s Diamond
Approaches to strategy
However, it is very important not to assume that because an item is now in the E2
syllabus it will not appear on an E3 examination as ‘...it is implicit in each case that
material included in the syllabus for any of the papers at the management or operational
levels may also be relevant for the purposes of assessment.’ (syllabus preamble) – see
also Assessment strategy below).
In addition to the introduction of syllabus Section B, ‘Change management’, the E3
syllabus also contains a number of topics which were not present in P6. These are:
Syllabus
Section
Description
A
Discuss the drivers of external demands for
corporate social responsibility
Non-market strategy and forms of corporate
political activity
Contemporary developments in the commercial use
of the internet
Customer retention and loyalty
Business ethics in general and the CIMA Code of
Ethics
Evaluate the process of strategy formulation
Evaluate different organisational structures
Real options
Theories of control within organisations
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A
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B
C
C
C
D
Learning
outcome
Component
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Indicative syllabus
content
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In any examination some requirements will have similarities to those asked in previous papers. This
is due to the importance of some models and approaches which are central to any consideration of
strategy. CIMA’s Learning System, amongst others, makes reference to a number of aspects of the
work of two writers on Business Strategy, Johnson and Scholes (J&S). J&S have made a number of
contributions to the field of Business Strategy, for example, they have usefully constructed a model
which has been widely published in which they characterise the strategic management process as
consisting of three inter-related elements:
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strategic analysis: this can be understood as appreciating the strategic position of an
organisation. The organisation can be either profit-seeking or not for profit.
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strategic choice: when strategic options have been generated, then the organisation has to
choose which to implement
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strategic implementation: this consists of putting the choice into action.
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Source Johnson & Scholes
http://tutor2unet/business/strategy/what_is_strategy.htm
It should be noted that this model does not suggest that strategy is a linear process, that is, the three
stages do not necessarily follow each other in a straight line. Instead they are inter-related and
interactive. What an organisation learns when it implements a strategy may help it in its future
strategic choices and analysis. All the three parts of the model are of equal importance. This model
can be used to provide an overview of much of the requirements of the E3 syllabus and so this
material will regularly appear in E3 examinations.
However, by way of contrast, an examination paper may contain a requirement based on material
which has not previously been examined. This is likely to be the case with the new syllabus and its
introduction of new topics. Thus, as an example, the table above shows CIMA’s Code of Ethics as an
explicit part of the E3 syllabus. The Code is 81 pages long and it would be inappropriate to examine
a very detailed aspect of the Code the first time it made an appearance in the examination. However,
an examination of some of the principles of Part A ‘General application of the Code ‘, would be
suitable the first time it is examined. Subsequent examinations would then require further and more
detailed knowledge and application of the Code.
Assessment strategy
Paper structure
As with P6, the E3 paper will have a written three hour examination with an additional twenty minutes
reading time prior to the examination.
Section A
Question 1 is extremely important for candidates, as it carries half of the available marks for the
examination; it is compulsory and carries 50 marks. The structure of Question 1 will reflect what has
been asked in previous Questions 1 in P6. . It will contain up to four section and possibly further subsections. Usually one section will require some numerical analysis which will relate to the strategic
issue being explored within the question. These calculations are likely to reflect themes examined
within previous P6 papers, for example, DCF, IRR, Ratios, Forecasts, Trends, and Appraisals. This
section of Question 1 is likely to carry 10 to 15 marks.
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Question 1 incorporates an innovation in that it will be related to a ‘pre-seen’ case study. This case
study will be common to all of the strategic level papers, namely, E3, P3 and F3. In addition to the
pre-seen material candidates will receive additional case material with the examination paper. This
material will be approximately two pages in length and will be specific to the examination which is
being sat at that time. Thus, a candidate sitting E3 will receive E3 unseen material and different
unseen material for both P3 and F3.
I mentioned the movement of some models and topics previously in the P6 syllabus to the E2
syllabus; this is not to say that these models and topics will not make an appearance in the E3
examinations. It would be difficult/unrealistic to construct an E3 examination paper without reference
to such important models, for example, as Porter’s Generic Competitive Strategies. However, the
emphasis in E3 will be on the candidate’s understanding of the model/topic and its application to the
situation under discussion. Thus, for example, a candidate might be asked to:
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employ a model as an analytical technique to help to arrive at a recommendation
use a model’s structure to satisfy a question’s requirement
evaluate one model’s applicability to a scenario
compare one model’s usefulness against that of another model
explore the impact of one model on another
assess a model’s strengths and weaknesses.
Very little, or no, credit will be available for a description of a model. This is illustrated in CIMA’s list of
verbs given on page 7 of the syllabus. There the verbs which will be used in the examinations are
categorised by level. E3 examinations will predominantly use verbs from levels 4 and 5, for example,
Analyse, Prioritise (Level 4) and Advise, Evaluate and Recommend, (Level 5). You are advised to
study this section of the syllabus as it defines what is meant by each of these verbs.
Allocation of marks
I have taken as an example a requirement from the November 2009 Business Strategy paper.
Question 1 (d)
‘Advise the partners of AA how they might best protect the strategic position of AA, using
Porter’s ‘five forces’ model as a structure for your advice.
Note: You are not required to draw or explain the model itself.’
10 marks
The examiner has made this requirement very explicit and has also stated what is not required. This
is good practice which I will continue.
If this requirement appeared on an E3 examination it could be marked in this style. As the model in
question has five forces and the available marks are 10 this suggests there are two marks per force.
Answer
AA must consider the bargaining
power of suppliers
In a knowledge based
business such as AA its
predominant supplier
is its ‘staff’.
Mark
Nil
Comment
Just description
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Related model to case
AA should improve its HRM practices and
consider introducing ‘restraint of trade’ clauses
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Gives examples of how AA might
protect its strategic position
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to staff contracts
The importance of application of knowledge cannot be emphasised too much. In the strategic level
papers, the candidate is often placed in the position of a Management Accountant being asked for
advice by people occupying a high level within their organisation, for example, a Board of Directors
who might wish to know how a proposed course of action affects their stakeholders. Thus, in the
November P6 paper 2009, requirement (a) for Question 5 was ‘Produce a stakeholder analysis for E
in country Y’.
In this situation the recipients of the advice would not appreciate an academic discussion of different
stakeholder models. They would appreciate being told who the relevant stakeholders are, how they
are categorised and the reasons for the categorisation.
Answer
Key players are very important stakeholders
Mark
Nil
The Government has a high degree of power as its legislation can
substantially affect E: for example, its requirement for E to find a
local partner.
The Government has a high degree of interest in E’s operations
because the Government is under pressure from its electorate to
be effective in its relationships with business due to the global
economic situation and the absence of economic growth.
The Government has both a high degree of power and a high
degree of interest in E and should be regarded as a ‘Key Player’
with respect to E.
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Comment
General statement, not
related to the scenario.
Relates scenario to
Mendelow’s stakeholder
mapping model.
Relates scenario to
Mendelow’s stakeholder
mapping model.
An appropriate
categorisation and
justification.
In each examination all of the Syllabus sections will be examined and the examination paper will
reflect, approximately, the study weightings as shown above. Any individual question may contain
requirements from more than one syllabus section. This is particularly likely in the case of Question 1
which carries 50 marks.
Section B
The main difference between the Sections B of E3 and its predecessor is the number of questions in
the section. E3 offers the candidate a choice of three questions and the requirement to do two of
these. The style of the questions will be similar to that of those in P6 and they will be based on a
short scenario. One minor change is that the requirements of the question will not necessarily all
follow the scenario and may be sectionalised, for example:
Question
Preamble/scenario
Requirement
(a)
Marks
12
Further scenario
Requirement
(b)
Marks
13
Total
25 marks
Conclusion
In addition to the matters discussed above candidates would profit from paying attention to the advice
given in the preamble to the CIMA Learning System about study techniques and effective studying.
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Good luck in May 2010!
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