MTP_Final_Syllabus 2012_June 2015_Set 2

PAPER – 17 - STRATEGIC PERFORMANCE

MANAGEMENT

Academics Department, The Institute of Cost Accountants of India (Statutory Body under an Act of Parliament)
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 MTP_Final_Syllabus 2012_June 2015_Set 2

The following table lists the learning objectives and the verbs that appear in the syllabus
learning aims and examination questions:

Learning objectives Verbs used Definition

KNOWLEDGE List Make a list of
State Express, fully or clearly, the details/facts
What you are expected to Define Give the exact meaning of
know
Describe Communicate the key features of
Distinguish Highlight the differences between
COMPREHENSION Explain Make clear or intelligible/ state the
meaning or purpose of
What you are expected to Identity Recognize, establish or select after
understand consideration
Illustrate Use an example to describe or explain
something
Apply Put to practical use
Calculate Ascertain or reckon mathematically
APPLICATION
Demonstrate Prove with certainty or exhibit by practical
means
How you are expected to
Prepare Make or get ready for use
apply
Reconcile Make or prove consistent/ compatible
your knowledge
Solve Find an answer to
Tabulate Arrange in a table
LEVEL C

Analyse Examine in detail the structure of

Categorise Place into a defined class or division
ANALYSIS
Compare Show the similarities and/or differences
and contrast between
How you are expected to
Construct Build up or compile
analyse the detail of what you
have learned Prioritise Place in order of priority or sequence for
action
Produce Create or bring into existence
SYNTHESIS Discuss Examine in detail by argument

How you are expected to

utilize the information Interpret Translate into intelligible or familiar terms
gathered to reach an
optimum
conclusion by a process of Decide To solve or conclude
reasoning
EVALUATION Advise Counsel, inform or notify

How you are expected to use Evaluate Appraise or asses the value of
your learning to evaluate,
make decisions or Recommend Propose a course of action
recommendations

Academics Department, The Institute of Cost Accountants of India (Statutory Body under an Act of Parliament)
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 MTP_Final_Syllabus 2012_June 2015_Set 2

Paper – 17 - Strategic Performance Management

This paper contains 10 questions, divide in three sections; Section A, Section B and
Section C. In total 7 questions are to be answered.
From Section A, Question No. 1 is compulsory and answer any two questions from
Section A (out of three questions – questions Nos. 2 to 4). From Section B, Answer any
two questions (i.e. out of Question nos. 5 to 7). From Section C, Answer any two
questions (i.e. out of question nos.8 to 10).
Students are requested to read the instructions against each individual question also.
All workings must form part of your answer. Assumptions, if any, must be clearly
indicated.

Section –A

[Question 1 is compulsory and answers any 2 from the rest. All questions carry equal marks]

1. Read the following case study and answer the following questions:
A Prominent Foreign Bank found itself in a precarious position: Its commercial loan volume
was static, but the unit's operating costs were increasing annually. Customer responsiveness
was adequate for the industry, but not the competitive advantage that the bank needed.
Managers wanted to engage employees in an ongoing, continuous improvement culture.

Bank facilitated a week-long session attended by senior management from each of the four
regional operations centers, as well as internal business partners from IT, HR, and Sales. The
team's goal was to use Voice of the Customer (VOC) analytics to see the business through
the eyes of their customers, eliminate process steps that added no value, and develop the
best future state for loan processing. At the end of the workshop, the group had a vision for
the future operations flow and an agreed-upon roadmap to get there.

Through a series of rapid improvement projects, groups of 8 to 12 employees worked to

scrutinize a particular segment of the lending process and find ways to eliminate waste and
improve the flow of work. Overall, six improvement projects were completed over a five
month period, engaging employees across three locations to create a new workflow that
would improve the experience for customers and employees — and lower costs for the bank.
A limited two-week pilot was launched to further refine and evaluate the new process.
Employees in one location set up the new process and then worked to iron out details in the
live customer environment. A week-long evaluation period followed, where the collected
data was analyzed and discussed.

The elimination of redundant and unnecessary steps in the lending process led to dramatic
increases in loan processing speed and capability. Analysis of the results from the pilot
showed that the target of 20 percent productivity improvement was met and exceeded by
an additional 10-15 percent gain. The lead time necessary to process a loan transaction also
decreased from 4-8 hours to 20-60 minutes. The bank validated those results with pilots at two
other sites. The project team and management team had the confidence to plan the full-
scale roll-out of the new process.

After full implementation of the new process, the bank was able to reduce:
 Process steps from 140+ to 70
 Decision points from 20 to 14
 Physical hand-offs from 46 to 11; and electronic hand-offs from 16 to 14
 Operating expenses from $10 to $8 million
 Delivery time from 4-8 hours to 20-60 minutes with fewer errors and rework

Academics Department, The Institute of Cost Accountants of India (Statutory Body under an Act of Parliament)
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 MTP_Final_Syllabus 2012_June 2015_Set 2

Required to:
(a) State the shortcomings faced by the foreign bank before developing the new process.
(b) Discuss the result achieved by the bank after implementing the new process.
(c) Describe the advantages achieved by the foreign bank after full implementation of the
new process.
(d) Describe the steps taken by the bank to face the challenge. [4+5+5+6]

2. (a) In a small town, there are only two stores that handle sundry goods – ABC and XYZ. The
total number of customers is equally divided between the two, because price and
quality of goods sold are equal. Both stores have good reputation in the community,
and they are render equally good customer service. Assume that a gain of customer
by ABC is a loss to XYZ and vice versa. Both stores plan to run annual pre Diwali sales
during the first week of November. Sales are advertised through a local newspaper,
radio and television media. With the aid of an advertising firm, store ABC constructed
the game matrix given below. (Figures in the matrix represent a gain or loss of
customers.)

Strategy of ABC Strategy of XYZ

Newspaper Radio Television
Newspaper 30 40 -80
Radio 0 15 -20
Television 90 20 50

(b) Describe the different perspectives of Balanced Scorecard.

(c) ―EVA is period-to-period computation, which can be used to monitor the process of
value creation and record historically the growth of the enterprise. The MVA can be
expressed as the present value of all EVAs.‖ - Discuss the statement. [10+5+5]

3.(a) Fruitolay has decided to increase the size of the store. It wants the information about
the probability of the individual product lines: Lemon, Grapes and Papaya. It provides
the following data for the year for each product line -
Particulars Lemon Grapes Papaya
Revenues `79,350 `2,10,060 `1,20,990
Cost of Goods sold `60,000 `1,50,000 `90,000
Cost of Bottles Returned `1,200.00 `0 `0
Number of Purchase Orders 36 84 36
Number of Deliveries received 30 219 66
Hours of Shelf Stocking Time 54 540 270
Items sold 12,600 1,10,400 30,660
Fruitolay also provides the following information for the year:

Activity Description of Activity Total costs Cost Allocation Basis

1. Bottle returns Returning of Empty Bottles to the 1,200 Direct tracing to
Store product line
2. Ordering Placing of orders of purchases 15,600 156 orders
3. Delivery Physical delivery & the receipt of 25,200 315 deliveries
merchandise
4. Shelf Stocking Stocking of merchandise on 17,280 964 hours of time
store and ongoing re-stocking
5. Customer Support Assistance provided to
customers including bagging 30,720 1,53,600 item sold
and check – out

Academics Department, The Institute of Cost Accountants of India (Statutory Body under an Act of Parliament)
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 MTP_Final_Syllabus 2012_June 2015_Set 2

(b) State the steps to be considered in strategies Bench Trending.

(c)―EVA is period-to-period computation, which can be used to monitor the process of value
creation and record historically the growth of the enterprise. The MVA can be expressed
as the present value of all EVAs.‖ - Discuss the statements.

(d) Describe the objectives of Performance Appraisal. [(3+4+3)+3+3+4]

4. (a) List the Objectives of pricing Policy.

(b) The cost function is C = 100+q, where the product is sold at ` 5 per unit. Determine
break even sales and profit when 125 units are sold.
(c) The total cost function of a firm C = 2x 3 - x 2 + 3x + 5 where C is total cost and the
Marginal Revenue = 8 – 3x, where x = output. Determine the most profitable output of
the firm.

(d) A radio manufacturer produces ‗x‘ sets per week at total cost of ` X2+ 78x + 2500. He is
(600 - P)
a monopolist and the demand function for his product is x = , when the price
8
is ‗p‘ per set. Show that maximum net revenue is obtained when 29 sets are
produced per week. What is the monopoly price?

(e) ―Methods of pricing policy can be classified into 5 broad categories. One of them on
that category is pricing Policies based on Market Conditions. There are 5 different
types of market in Economics and certainly there are different types of pricing
policies - Monopoly and Oligopoly is not different.‖ – Explain the above statement.
[2+4+4+4+6]

Section – B
[Answer any 2 questions from this section]

5 (a) List the Advantages of these Data Envelopment Analysis.

(b) “Data quality management incorporates a virtuous cycle in which continuous analysis,
observation, and improvement lead to overall improvement in the quality of
organizational information across the board. This virtuous cycle incorporates five
fundamental data quality management practices, which are ultimately implemented
using a combination of core data services.‖ – Discuss the five fundamentals. [5+5]

6. (a) Describe about the Long Short Term Memory of Recurrent Artificial Neural Networks
Topologies.
(b) Describe about the different types of On-Line Analytical Processing. [5+5]

7. (a) Discuss the potential impact of Computers and MIS on different levels of
management.
(b) Mention any six objectives of Management Information Systems. [7+3]

Academics Department, The Institute of Cost Accountants of India (Statutory Body under an Act of Parliament)
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 MTP_Final_Syllabus 2012_June 2015_Set 2

Section C
[Answer any 2 questions from this section]

8. (a) Discuss the needs for Implementation of ERM.

(b) State the objectives of Risk Management. [5+5]

9. Calculate Altman‘s Z score using multivariate analysis and assign the firm as failed or non-
failed firm.
Sales 10,00,000
Operating expenses 8,00,000
Interest 6,000
Depreciation 50,000
Tax 15,000
Balance sheet
Equity & Liabilities ` Assets `

Shareholders‘ Fund: Non Current Assets:

Share Capital at ` 10 each 1,00,000 Fixed Assets 1,50,000
Reserve and surplus from 50,000
retained earnings Current Assets:
Non Current Liabilities: Inventory 2,00,000
6% long term loan 1,00,000 Sundry debtors 1,10,000
Current Liabilities: Loans and Advances 40,000
Sundry creditors 2,00,000 Cash at Bank 50,000
Provision for tax 1,00,000
5,50,000 5,50,000
Market value per share is ` 8. [10]

10. (a) Describe about the Dr. L.C. Gupta‘s Sickness Prediction Model under the corporate
failure.
(b) Discuss the Total Loss Distribution [6+4]

Academics Department, The Institute of Cost Accountants of India (Statutory Body under an Act of Parliament)
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