CIPS Exam Report for Learner Community:

Qualification: Professional diploma in procurement and supply

Unit: PD2 - Corporate and business stratergy
Exam series: November 2017

Each element of a question carries equal weighting unless otherwise stated.

Question 1 – Learning Outcome 1 Mark
Evaluate the main approaches or models for the development of strategy in 25 marks
organisations

Learning outcome addressed: 1.3

Command word explanation: Evaluate – calculate or judge the value of something

Examples of good content/good approaches in answers:

Good answers recognised that this question was contextualised within the area of developing strategy. Where
candidates reinforced this aspect from the outset of their response they went on to give a more clear and
precise answer.

This was a question that did offer a wide scope to candidates and those better responses took full advantage
of this.

The ensuing evaluation of this question was aided by recognising the following in particular but other
appropriate areas of evaluation that were equally relevant secured good marks:

1. An understanding of the difference between prescriptive or intended and emergent strategy

formulation and/or formulation processes – this was well done in those answers which had a good
approach and content;
2. The intended strategy approach (also known as the rational or design approach) argues that strategies
are developed intentionally as the result of strategic intent – this was mentioned by candidates who
secured a merit and upwards on this question;
3. The emergent strategy approach argues that strategies do not result from intentional planning by
management but tend to emerge over time as circumstances and experiences change – this gave
balance to the better responses;
4. Demonstrating an awareness of what a prescriptive or intended strategy formulation process might
entail – this was done with the stronger answers offered;

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 5. A good awareness of a spread of emergent models, typologies or descriptors in relation to emergent
strategy formulation including reference to a good cross section of the following: selected works of
Mintzberg e.g. 5 Ps for strategy elements, synopsis in Hill and Jones and others; inclusions of
particular aspects e.g. works of Kets de Vrie and Bhide on strategic leadership and entrepreneurship;
reference to the works to the works of Kenichi Ohmae;
6. Incorporating also the following into the answer demonstrated excellent depth & scope – Rational
Planning; Emergent Strategy and Logical Incrementalism.

Examples of content for merit/distinction grade answers:

Candidates who moved to the area of evaluation and included the following: different external environments
and their complexity and dynamism; different levels of risk and uncertainty; history, size, structure of the
organisation, its culture and management style; its key stakeholder mix and diversity; the availability of
information for forecasting and planning; scored higher marks further reinforced by making reference to more
contemporary material such as Whittington, Jarzabowski, Balogun and others on strategising.

Examples of poorer content/ poorer approaches in answers:

1. Lack of depth & scope

2. Demonstrating confusion between logical incrementalism and emergent approaches and talked about
types of change which would have been better suited to question 4.
3. Identifying models and hoping that they had answered the question – more often than not they
hadn’t.
4. The recurring issue of poor exam technique and lack of understanding in relation to the command
word in the question.

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Question 2 – Learning Outcome 2 Mark
(a) Appraise the “competitive environment” of an organisation of your 15 marks
choice, or of one its strategic business units (SBU), using Porter’s Five
Forces Framework
(b) Discuss TWO potential limitations of the Five Forces framework in 10 marks
analysing an organisation’s competitive environment.

Learning outcome addressed: 2.2

Command Word (Part a): Appraise: Evaluate or estimate the nature, ability, or quality of something
(Part b): Discuss: consider something by writing about it from different points of view

Examples of good content/good approaches in answers to Part (a):

Starting the response with an overview of the Porter’s Five Forces framework that could have looked like the
following:

Porter suggested that 'competition in an industry is rooted in its underlying economies' and that 'competitive
forces exist that go well beyond the established combatants in a particular industry'. Porter developed a
framework which argues that the extent of competition in an industry - and therefore its strategic
attractiveness or potential profitability to any given player within it - depends on the interaction of five forces
in the organisation's industry environment.

A statement like this sets the scene and allows the remainder of the response to reflect the issues discussed in
that opening overview.

In the case of the better responses this was as a result of good depth & scope being demonstrated which in
turn reinforced the candidates’ knowledge and understanding of this framework.

Areas that are relevant here include:

 An understanding of the competitive dynamics of an industry requires analysis of the structural

factors influencing each of these five forces of competition: The threat of new entrants coming into
the industry. The ability of new competitors to enter the industry will depend upon the existence of
barriers to entry – the higher they are, the less likely it is that new competitors will pose a threat.
These barriers to entry could come from factors such as large economies of scale, difficulty of access
to distribution channels, high capital investment requirements, strong existing brand names, and
scarce skills or resources.
 The threat of substitute products or services to those produced by the industry. This threat will be
high when customer needs can be met by alternative products or services to those produced within

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 the industry. The relative price-performance of substitutes, the extent of switching costs and the
propensity of buyers to use substitutes, will all affect the intensity of this threat.
 The bargaining power of suppliers affects the costs incurred by the industry. If it is hard to switch
suppliers because there are few of them or it is expensive to change, or the product supplied is a
relatively minor market for suppliers, then suppliers’ bargaining strength will be high and costs will be
passed on to the industry.
 The bargaining power of customers or buyers is the mirror image of that exerted by suppliers to an
industry. If there are relatively few buyers or they can switch easily between suppliers, then the
bargaining position of the industry will be weakened, with pressures to reduce prices or increase the
quality of products provided.
 The intensity of rivalry between existing competitors within the industry is determined by the number
and size of competitors, the rate of growth of the industry, the risks of creating over-capacity, the
similarity of products and services, and the ease with which competitors can leave the industry.

Examples of content for merit/distinction grade answers to Part (a):

More detailed and comprehensive responses that inserted credible examples to reinforce the points made.

Also reinforcing what Porter argued when he stated that an organisation can attempt to create competitive
advantage within an industry by changing its strategy so as to build upon or avoid these pressures.

Examples of poorer content/ poorer approaches in answers to Part (a):

 Poor knowledge and understanding of the Porter’s Five Forces framework ;

 Mis-reading the question and discussing STEEPLE; ANSOFF; BCG to name but three;
 Short responses;
 Not referring to an organisation or its SBU and writing a generic answer that merely described the
Porter’s Five Forces framework;
 Muddling up some of the Five Forces in particular failing to recognise correctly substitutes and instead
identified competition.

Examples of good content/good approaches in answers to Part (b):

There is a wide range of potential limitations giving a wide range of options to the well prepared candidate
including the following:
1. It only offers a static 'snapshot' of the competitive environment at a particular point in time. In a
highly dynamic environment, it may go out of date very quickly as the forces change (e.g. if legal and
political barriers to entry come down or a substitute product arises from technological innovation), or
as competitors make moves and counter-moves to overcome adverse forces. Pressures from one
force (e.g. new entrants being blocked by high barriers to entry) can trigger off changes in another
(e.g. new entrants creating substitute products or methods of selling direct to consumers, in order to

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 'by-pass' barriers).
2. It considers only five forces in the immediate competitive environment. This can create an
oversimplified picture, unless the connections between the competitive forces (which are not
independent of each other) and the influence of key drivers in the macro-environment (STEEPLE
factors) are also considered. The five forces on their own may not adequately capture the main
competitive variables in a particular industry: e.g. core competencies, the pace of technology or
intellectual property development, the length of product lifecycles (e.g. in industries subject to
consumer fashions and fads) and so on.
3. It typifies a 'positioning' approach to strategy development, which suggests that the source of an
organisation's competitive advantage is mainly in how it achieves strategic 'fit' with its external
environment. It has been argued that competitive advantage based on positioning is not sustainable
in the long term, because of the speed and unpredictability of change in the environment and the
ability of competitors to imitate strategies based on generic sources of advantage.
4. Whilst the Five Forces framework can be very helpful in understanding the competitive dynamics of
an industry, some caution is needed in its application. The analysis depends upon a clear definition of
the boundaries of the industry. Candidates may also recognise that, in spite of these critical
comments, Porter's model provides a very useful starting point in the analysis of the environment. It
has real merit because of the issues it raises in a logical and structured framework.

Examples of content for merit/distinction grade answers in Part (b):

Comprehensive coverage of TWO of the above or others considered relevant.

Examples of poorer content/ poorer approaches in answers (b):

1. Poor justification of points made in other words too superficial;

2. Not giving two limitations only one or in some cases none demonstrating poor understanding of the
framework

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Question 3 – Learning Outcome 3 Mark
Evaluate the strategic resources that are required to support the successful 25 marks
implementation of corporate strategy.

Learning outcome addressed: 3.2

Command word: Evaluate - calculate or judge the value of something

Examples of good content/good approaches in answers:

Resources available will be a vital part of shaping strategy as well as being vital in implementing it. What
follows is a broad summary but this is a very well published and popular area and many other areas could be
relevant.

The wording of the question relates to strategic resources and a good approach was to start with a definition
of what a resource is or alternatively why they are so important to managers. In addition a good start to the
answer would be to look first at the actual strategy implementation plan and the basic implementation
process (Lynch) of choice, objectives, specific plans, finance and budgeting and monitoring.

It was then appropriate to go on to evaluate the strategic resources required to support the successful
implementation of corporate strategy namely people, finance, information, and technology (although
variations of some are acceptable).

Answers that acknowledged the command word of evaluate which requires more than a simple explanation
and included an assessment of the difficulties in marshalling resources to support the implementation of the
strategy, dealt with this question well.

As a broad guide the strategic resources to be evaluated are:

1. People as a strategic resource – choose relevant staff e.g. purchasing director, manager, buyers,
purchasing assistants, considering people as a cost to be controlled etc. In addition a look at the key
areas of employment life cycle, HR management, human behaviour and organisation and deployment
of human resources would all be relevant. Selecting a blend of people to manage that level of
expenditure. Advertising in the right place and following good practices in recruiting staff could all be
relevant. HRM is increasingly linked with soft dynamics such as leadership, culture creation and
commitment.
2. Finance as a strategic resource– to pay for all resources needed. Also forecasts of expenditure and
budgetary amounts coming into the business. The key areas here would be aspects of value creation,
funding of strategy development and implementation, sources of finance and other financial

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 considerations such as investment appraisal and cost reduction.
3. Information as a strategic resource – In terms of strategic capabilities information strategies can
develop core competencies. Information and new business models would all be key. E-procurement,
e-commerce and the cost of MI systems including database management systems, decision support
systems and management information systems could all be part of the response.
4. Technology as a strategic resource-. Information is often the most important strategic resource that
any organisation has to manage. Key to the collection, analysis, production and distribution of
information within an organisation is the quality of the IT Services provided to the business. It is
essential that candidates recognise that IT Services are crucial, strategic, organisational asset.

Examples of content for merit/distinction grade answers:

1. The work of Robert Grant was referenced here.

2. Depth of coverage for each resource cited along with good examples from the workplace
3. Incorporated into the response a summary reviewing resource planning & control

Good construct of the response which set the scene well; reinforced the importance of strategic HRM in the
effective development and implementation of strategies in organisations in supply chains.

Examples of poorer content/ poorer approaches in answers:

1. Lightweight touch to the written content for each resource or poor coverage of the range of resources
2. Citing inappropriate resources not justifying their inclusion
3. Poor recognition or not recognising the aspect of importance of resources in the successful
implementation of the strategy
4. Discussing the full strategic process and not just implementation called for in the question.

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Question 4 – Learning Outcome 4 Mark
25 marks
Compare the concepts of incremental and transformational change and examine
how each type of change could be successfully planned and achieved. Illustrate
your answer with appropriate examples from the supply chain function.

Learning outcome addressed: 4.2

Command word explanations: Compare: Examine one thing in relation to another thing so that points of
similarity or difference become evident
Examine: inspect something in detail to determine the nature or condition.

Examples of good content/good approaches in answers:

The aim of this question was three-fold. First compare incremental & transformational change; second how
does that fit in with what needs to be planned and achieved and thirdly illustrate credible examples to make
up the content of the response.

Candidates who recognised all three aspects to this question provided good responses.

A good way to start this answer was commence the comparison with acknowledging that the approach taken
when it comes to dealing with either incremental or transformational change is very different. Each approach
being taken in different sets of circumstances.

In the case of incremental change, which often is the way strategies do change, this enables organisations to
be adaptive to changes within the external environment, it facilitates the management of the learning process
and is compatible with the concept of continuous improvement. Equally the culture of the organisation is not
likely to be effected and the management only needs to ensure that an environment conducive to continuous
improvement is in place.

In reality incremental change may not keep pace with the external environment, leading to what is called
strategic drift.

Transformational change on the other hand, is good for times of crisis, but may be driven through quickly
which leads to heightened uncertainty and resistance. What is of vital importance here is that effective
change management principles must be adopted, such as robust communication, participation and
negotiation.

Top management commitment will also be required in order to overcome resistance and in some cases
coercion may be necessary. Existing behaviours must be broken down, and new practices reinforced once the

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changes have taken place. Appropriate structures, systems, processes and resources will also be required to
be put in place. The culture of the organisation will be greatly affected.

Examples of content for merit/distinction grade answers:

1. Developing the concept of strategic drift into the comparisons drawn;

2. Reinforcing with solid application in citing real-life examples;
3. Good examples of how planning and achieving is met given the scope of the supply chain being
introduced into the question.

Examples of poorer content/ poorer approaches in answers:

1. No justifications on points made; little or no examples cited. No contextualisation;

2. Not fully appreciating the three parts to this question.

Concluding comment: For the most part this question was answered well and indeed some candidates took
advantage of it to develop very powerful answers which were rewarded by merit and distinction grades.

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