This issue

Papers P6
and P5
MABS
study
notes
and IM
Paper P2
MADM

GLOBAL student one2one

CONTACT
Details
n CIMA Contact
E: [Link]@
[Link]
Lisa Dowd,
T: +44 (0)20 8849 2251
F: +44 (0)20 8849 2450 finance graduate, Tube Lines
n Australia office
Level 3, The Plaza Building,
Australia Square, 95 Pitt
What’s the most interesting part of your job? thing is the fact that I’m given placements of three to six
Street, Sydney, NSW 2000
E: sydney@[Link] Every part of it is interesting. My company is responsible for months in a variety of departments, which means that I pick up
T: 1800 679 996 maintaining and improving three major sections of the London a lot of experience in different areas. The company also tries to
(toll-free within Australia)
or: +61 (0)2 9776 7982 Underground network: the Jubilee, Northern and Piccadilly lines. fit the placements in with the particular module you are
F: +61 (0)2 9262 5979 We’re investing £4.4bn over the first seven and a half years of studying, so that you gain relevant practical experience at the
n CIMA Botswana the 30-year contract. It’s part of the largest Tube improvement same time. There are 16 people studying for accounting
Physical: Plot 50676, programme that there has ever been. qualifications here, so there’s a really good support network.
Second Floor, Block B,
BIFM Building, Fairgrounds Recently we were taken out on a site visit so that we could
Office Park, Gaborone see how the money is being invested. Our engineers were What has been your biggest professional challenge so far?
Postal: PO Box 403475,
Gaborone, Botswana replacing sections of track. It’s really hot down there and they At the moment I’m working in the management accounting
E: gaborone@ can operate only at night, from about midnight until 4am, while department, which is certainly the biggest challenge I have
[Link]
T: +267 395 2362
the Tube services aren’t running. It made me realise how hard faced. The qualified management accountants here work really
F: +267 397 2982 they have to work. quickly, so I’ve had to be on my toes to keep up with them. But I
n CIMA China office
am enjoying it, because it’s stretching me. We’re reporting
Unit 1905, Westgate Tower, You relocated from Liverpool to London to join the company. results to cost-centre managers and I’m responsible for two of
1038 Nanjing Road (W),
It was quite a big step for me, because I didn’t know anybody the directorates.
Shanghai 200041
E: CIMA-China@ in the capital at all and I missed my family and friends. But
[Link] gradually everything has fallen into place. Our offices are up in Have you ever found your studies hard going?
T: +86 (0)21 5228 5119
F: +86 (0)21 5228 5120 Canary Wharf overlooking the Thames. My family thinks that Waiting for the exam results to come through is actually the
they’re really impressive. worst part of studying for me. There is nothing that you can do
n Hong Kong Division
Suites 1414-1415, about that but wait. Exam nerves are another thing, of course,
14th Floor, Jardine House, A big change in lifestyle from your Aegean odyssey. but I do kick-boxing classes, which I’ve found to be a really good
Central Hong Kong
E: [Link]@ I graduated with a degree in business studies at Liverpool stress‑buster. It’s amazing how quickly the time goes while
[Link] University and then spent a year travelling around the Greek you’re there and you walk out feeling really relaxed and ready to
T: +852 2511 2003
F: +852 2507 4701 islands, so I was ready for a new start when I returned to face the world again. I’d recommend it.
England. I wanted to develop my accountancy skills, so my
n India liaison office
DBS Corporate Centre
careers adviser referred me to the Tube Lines job. It looked really Do you have any study tips for other part-qualifieds?
Second Floor, Raheja good: it was offering the CIMA qualification and I thought that If you get stuck on something while you’re studying, don’t be
Chambers, 213 Nariman
Point Mumbai 400 021
this was a better option than an audit-based course because it afraid to ask. When I have a problem, I ask those of my
E: india@[Link] would give me much broader business experience. colleagues who do management accounting every day. It’s really
T: +91 (0) 22 5630 9200
useful, because they will put the theory into a practical situation
And you receive a lot of support during your studies. and make it much easier to understand. Sometimes I’ll ask my
Continued on page 43. Yes, the company, which was recently awarded CIMA Quality tutors, who are always on hand to help. The only other thing I
Training Partner status, really looks after us. I think the best can say is: keep practising those exam questions. FM

financial
Illustration: Patrick Morgan December/January 2005/06  management 41
 pAPER p6 (also relevant to paper p5)

Global contact details

Management Accounting –
Business Strategy
continued from page 41.

n Malaysia Division
Lots 1.03b and 1.05,
Level 1, KPMG Tower,
First Avenue, Bandar
Is it wise to milk a cash cow to feed your problem child? Steph Edwards Nutton
Utama, 47800 Petaling
Jaya, Selangor Darul Ehsan
explains how to use the BCG matrix to analyse your company’s product portfolio.
E: kualalumpur@
[Link]
T: +60 (0)3 7723 0230
F: +60 (0)3 7723 0231
All businesses need to focus on those
n Republic of
Ireland Division
areas of activity that give them THE BCG MATRIX
45-47 Pembroke Road, competitive strength and the greatest
Ballsbridge, Dublin 4
opportunity for future growth. Portfolio Market growth
E: dublin@
[Link] management is an approach that requires
T: +353 (0)1 6430400 them to visualise their operations as a High growth, big share High growth, small share
F: +353 (0)1 6430401
collection of assets that create income.
n Singapore office This same principle applies whatever the Star Problem child
16 Raffles Quay, Unit 33-
03 B, Hong Leong Building, type of asset they are considering. For
Singapore 048581 example, risk and return can be used to
E: singapore@
[Link] assess an asset (investment) portfolio, a Market share
T: +65 6535 6822 product portfolio or a customer portfolio.
F: +65 6534 3992
Managers must, therefore, make choices Cash cow Dog
n CIMA South Africa on the shareholders’ behalf about their
Physical: Second Floor,
South Block, Thrupps
company’s portfolio that will provide both Low growth, big share Low growth, small share
Centre, 204 Oxford Road, a sustainable competitive advantage and
Illovo, Johannesburg
Postal: PO Box 745
a suitable financial contribution. The dotted lines indicate the movement of cash for reinvestment.
Northlands 2116 A sustainable competitive advantage
South Africa
creates a profit, which converts to cash
E: johannesburg@
[Link] flows as growth slows and the investment
T: +27 (0)11 268 2555 requirements diminish. This creates the high returns and high in better profits and cash flows. The conclusion is that market
or: 0861 CIMASA/
0861 246272 business valuations that the shareholders require, which in turn domination is essential for low costs and competitive success,
F: +27 (0)11 268 2556 make raising new capital easier and less expensive. The company so a high relative market share is sought within the BCG matrix.
n Sri Lanka Division then has the chance to repeat the process to reinvest in growth to It’s worth noting at this point that the model was developed at
356 Elvitigala Mawatha pursue a competitive advantage with a new business or product. about the same time as the concept of the learning curve when
Colombo 05
E: colombo@ It’s crucial that the company keeps its resources fully employed “big is beautiful” was the popular business strategy.
[Link] in those areas that create the highest yields – actual or potential. Most companies want fast-growing products in growing
T: + 94 (0)11 250 3880
F: + 94 (0)11 250 3881 It was the need to manage cash flow that provided the markets. But these kinds of products nearly always require heavy
impetus for the Boston Consulting Group (BCG) to design the investment. The matrix assumes, therefore, that a high growth
n CIMA Zambia
Physical: Plot 6053,
matrix in 1970 that has since become one of the most widely rate indicates extra demands on investment. Market growth is a
Sibweni Road, used portfolio analysis models. Companies use BCG analysis in good indicator of a market’s attractiveness and potential – and
Northmead, Lusaka
Postal: Box 30640
brand marketing, product management, portfolio and strategic of its attractiveness to future competitors.
Lusaka, Zambia management to help them develop their various businesses or Every company needs to have products that can generate
E: lusaka@[Link]
products. It involves rating products according to their relative cash and every company needs to have products that require
T: +260 (0)1 290 219
F: +260 (0)1 290 548 market share and market growth rate, and plotting them on cash in order to develop, grow and eventually become cash
these axes on a scatter graph. generators themselves. So it’s easy to understand why they
n CIMA Zimbabwe
Physical: Sixth Floor, The BCG matrix assumes that, as a result of economies of require a portfolio of products with different growth rates and
Michael House, 62 Nelson scale, a product’s earnings will grow faster the bigger its market market shares to maintain this cycle and remain successful. The
Mandela Avenue, Harare
Postal: PO Box 3831 share. This requires a comparison of your product’s market share low-growth products should be generating the cash needed to
Harare, Zimbabwe relative to that of its largest competitor. If your product has a sustain the development of higher-growth products.
E: harare@[Link]
T: +263 (0)4 708600 market share of 15 per cent and the largest competitor has a Products with a big share of a market with slow (or negative)
or: 250475 CIMA ZIM share of 45 per cent, the ratio would be 1:3, implying that your growth are called cash cows. Generally, they produce large
F: +263 (0)4 708600/
250475 product is in a relatively weak position. If the largest competitor amounts of cash that exceed the reinvestment required to keep
had a share of five per cent, the ratio would be 3:1 implying your the product’s market share steady. This excess should be invested
product’s relatively strong position, which may well be reflected elsewhere in the portfolio. You should safeguard your cash cows,

financial
December/January 2005/06  management 43
Paper p6 (also relevant to paper P5)

Products with a big share of a high-growth market are called

stars. They often generate a profit but may not always generate
sufficient cash to sustain themselves. If a product is able to stay
in this position, it should eventually become a cash cow when
growth slows down and investment requirements diminish.
because they Eventually, therefore, this product should create money to
are the firm’s main cash reinvest elsewhere in the portfolio. But a star must be invested in
generators. If protected, they throughout its growth phase in order to do achieve this.
will continue to fund their own The portfolio concept is simple to understand but less easy to
position in the market, pay for apply. It’s often based on the idea that supserior profits depend
dividends, fund R&D and largely on having a competitive advantage, and that growth can
subsidise higher-growth products. be achieved only if the market itself is growing. A superior
Products with a small share of market share often carries a competitive advantage, but this is
a market with slow (or negative) not always the case. A competitive advantage could be based on
growth are called dogs. They often advanced technology, quality, attention to specific customer
show an accounting profit, but all of requirements, location or speed of response – many factors that
this must be reinvested to maintain may or may not create overall market leadership. Companies
their place in the market, leaving no may even choose to gain a competitive advantage via “focused”
extra cash for reinvestment elsewhere. strategies that may involve contraction, not growth.
They do not, therefore, support the rest A further problem with the portfolio concept is its idea of
of the portfolio. The BCG recommends investing in market growth. The broad, large-scale market growth
that dogs are dropped, but the following of the sixties and seventies is now a somewhat elusive goal.
questions must be answered before such action is taken: Growth occurred then as a result of a general high demand as
n Does the product still make a positive contribution? consumers became more aware of what was on offer to them.
n What impact would dropping the dog have on the rest of the But today’s consumers are more sophisticated and growth is
portfolio? Does the product influence the overall image of now more likely to be stimulated by substitution, both of
the company? Does it attract customers to the business? products and of better ways of doing things.
n Are the dog’s competitors likely to leave its market? If they Creating and exploiting growth opportunities
do, its market share will grow by default and it will become a requires a lot of insight, market awareness and
cash cow. In the late nineties Reckitt & Colman disposed of risk-taking. In many cases, growth is where
its mustard division and acquired a number of manufacturers you make it – opportunities may in fact be
of industrial toiletries products – a market with low margins lying dormant in areas widely considered
and no growth. But these acquisitions allowed it to build a too mature to grow any further.
significant market share, so turning a dog into a cash cow. The BCG matrix ranks only market
Products with a small share of a high-growth market are share and market growth, implying
commonly known as problem children. They often require more that profitability is the purpose of any
cash to be invested in them than they themselves will return. enterprise. It overlooks other factors
If sufficient cash isn’t available, they often fail. The main feature of industry attractiveness and
of a problem child is that a lot of money must be invested for it competitive advantage. For
to gain a bigger market share. The risk is that this high- example, it’s possible that
investment product could become a liability if it doesn’t move particular products classed as
towards the cash cow position and become a market leader, so a dogs by the matrix can make a
company must decide between investing large sums in the profitable contribution without
product to build market share or dropping it before it absorbs requiring any extra cash from
unnecessary amounts of money that it won’t be able to repay. other products. Even though

financial
44 management  December/January 2006/07 Photographs: iStockphoto
Paper p6 (also relevant to paper P5)

the market they are in may not be growing and allowing its competitors to see its intentions.
their share of it may not be big, dogs can still create Strategy is increasingly about making innovative
value in a portfolio, so it is not always a wise decision to moves and outwitting the competition, which is one of
shoot them. Also, many companies have entire portfolios the reasons why this particular model receives less and less
with no market leaders – ie, no cash cows or stars. In this coverage in strategy teaching.
case it would be most unwise to disinvest in products A further problem with the model is that it implies
that are profitable and require little support from that a balanced portfolio can be achieved only by
elsewhere in the portfolio. Criticisms about the having products in each of the four quadrants. The
simplicity of the BCG matrix have been addressed focus is upon divesting money from the cash cows to
to some extent by General Electric’s business fund the stars because sooner or later the cash cow
screen matrix, which assesses a range of factors along will become the dog. Similarly, trying to move a
the axes of business strength and industry attractiveness. problem child into a star position by once again using surplus
Another major pitfall of the BCG matrix is its suggestion cash cow funds demonstrates a need to ensure that the
that cash cows should be milked in order to fund other company has a number of products moving around the portfolio,
products in the portfolio. But research has shown that, of all the balancing it out continually. The reality for most organisations is
products to be defended, it is the brand leader that needs the that their cash cows are the most important products. All of the
most protection. It may be generating large cash flows, but it others play a supporting role. It would be risky for any company
should not be milked so extensively as to leave it vulnerable to to divest funds from a cash cow when those funds are needed to
attack by the competition. extend its own life. It is important to recognise a dog, but it
The only real link between products identified by the BCG would be foolish either to create one simply to balance the
matrix is that of the movement of cash. But other potential links portfolio or to shoot one when it’s actually making a positive
do exist. The sale of one product may generate sales for another contribution. Similarly, many organisations may panic if they
product via cross-selling (a simultaneous purchase) or sell- don’t have a star product, but a healthy cash cow, together with
through (a later purchase). Many products in a portfolio may a potential problem child, may well be sufficient.
share the same fixed costs, so shooting a dog might make other The BCG matrix is a useful way to analyse a
products uneconomic. Dropping one product may, therefore, product portfolio, but it is important to
have a negative impact upon the rest of the portfolio. The recognise its limitations and not to
concept of real portfolio analysis should recognise the group of follow its principles too rigidly.
products as a unit and the effects that they have on each other. Product portfolio management
One criticism of any prescriptive model, particularly the BCG requires a more detailed
matrix, is that the organisation using it becomes predictable, understanding of the market,
the competitive position of a
product and its place in the
P6 Recommended reading portfolio. Although it’s a
N Botten, Management Accounting – Business Strategy handy tool, BCG analysis
Study System (2006 edition), CIMA Publishing, 2005. should not be relied upon
R Kaplan and K Atkinson, Advanced Management when you’re making
Accounting (third edition), Prentice Hall, 1998. strategic decisions. FM
C Emmanuel and D Otley, Accounting for Management
Control (second edition), Chapman & Hall, 1999. Steph Edwards Nutton is
J Gohnson and K Scholes, Exploring Corporate Strategy a former CIMA examiner
(sixth edition), FT/Prentice Hall, 2002. and lead marker for
R Lynch, Corporate Strategy (third edition), Pearson P6 Management
Education, 2003. Accounting –
Business Strategy.

financial
46 management  December/January 2006/07 Photographs: iStockphoto
pAPER p2

Management Accounting
– Decision Management
In his article in November’s issue, Tim Thompson invited you to tackle a short-
term quality problem plaguing a fictional company. Here is his suggested solution.

My previous article introduced you to a AGJ, a manufacturer of It’s expected that 0.5 per cent of the components will fail
water heaters for swimming pools. The firm was facing a serious anyway. Beyond this, we can expect that three per cent of the
quality problem resulting from a potentially faulty part remaining components supplied by HKP will also be faulty. Of
(component Y) in its products, which was compounded by the course, we don’t know for sure how many faulty components
collapse of HKP, one of its suppliers. We left the story just as the were supplied to AGJ. If we’re really lucky, all of the faulty
finance director was starting work on a paper to be considered components were supplied to HKP’s and PQR’s other
by a special board meeting the next day. Here is what he wrote: customers. If we’re really unlucky, all of their faulty components
came to us. The first thing to do is to calculate an expected
Draft notes value of the number of faulty components that have found
We do not currently know, for any one of our customers, their way into AGJ’s pool heaters. Once we have analysed this
whether the components were supplied by HKP or PQR. What “most likely” figure, we should also consider one optimistic
we do know is that for any one customer: scenario and one that’s pessimistic. Let’s use + _ 20 per cent for
n P(component Y was sourced from HKP) these two alternatives.
= 2,500 ÷ 4,000 = 0.625 = 62.5 per cent. We expect that 0.5 per cent of the components supplied by
n P(component Y was sourced from PQR) PQR will prove faulty. We originally thought that this would also
= 1,500 ÷ 4,000 = 0.375 = 37.5 per cent. be true for components supplied by HKP. But now we know that
We’re all familiar with the multiplication rule (also known as we should also expect three per cent of the remaining HKP
the “and” rule) in probability theory. This states that to calculate components to be faulty, too. So the probability that an HKP
the probability that two events will both occur, we multiply their component is faulty is: 0.5% + (99.5% x 3%) = 3.485%.
respective probabilities (assuming, of course, that the events are There are four possible circumstances for each installed
not mutually exclusive). With this theoretical insight, we can heater, which can be represented diagrammatically (see panel 1).
apply Bayes’s theorem to the component problem. Using Bayes’s theorem, we can ask the following question: if a
component is found to be faulty, how likely is it that it was
obtained from HKP and how likely is it that it was obtained from
The board of directors determined that the PQR? To answer this, we construct the diagram in panel 2.
This reverses the sequence from “supplier, then whether faulty”
best way to solve quality problems was to to “whether faulty, then supplier”. From this we can deduce
prevent them from happening in the first place that the probability that a faulty component has been fitted is:
0.021781 + 0.001875 = 0.023656 = 2.3656%. Furthermore, if
we find a faulty component, the probability that it was made
by HKP is: 0.021781 ÷ 0.023656 = 0.920739 = 92.0739%.
So, of the 4,000 components installed, we can estimate that
95 are faulty (4,000 x 0.023656 = 94.624). We can estimate that
87 of these were made by HKP (94.624 x 0.920739 = 87.124)
and the remaining eight were made by PQR.
The first of AGJ’s two possible courses of action is to wait for
component faults to arise and only then deal with them – ie, the
passive approach. Each fault in an HKP-supplied component will
result in the following costs, all of which cannot be recovered:
n Purchase replacement component: $100
n Service engineer’s time (three hours at $50): $150
n Cost of damage to customer’s premises: $500
n Total: = $750
Since we’re expecting 87 faulty components from HKP, this
would result in a total cost of $750 x 87 = $65,250. (Note that

financial
48 management  December/January 2006/07 Photograph: Ruth Prickett
 1 Mapping the probabilities for component Y 3 Potential costs of
the alternative solutions
 Combined probabilities
Faulty 0.375 x 0.005 = 0.001875 Passive Active
PQR 0.005 Scenario approach approach
0.375 Best case $52,200 $79,570
Not faulty 0.375 x 0.995 = 0.373125 Most likely case $65,250 $81,963
Component 0.995 Worst case $78,300 $84,356
supplied by
Faulty 0.625 x 0.03485 = 0.021781
HKP 0.03485
0.625 outcomes. As discussed earlier, let’s look at the consequences of
Not faulty 0.625 x 0.96515 = 0.603219 the number of failed components being 20 per cent higher and
0.96515 20 per cent lower. For the passive approach, the total costs
could be as low as $65,250 – 20% = $52,200, or as high as
 Check total: 1.000000 $65,250 + 20% = $78,300. For the active approach, only the
labour and material costs of replacing the faulty HKP components
and the labour costs testing the replacements are variable.
These costs total $2,175 +$8,700 +$1,088 = $11,963 and could,
2 Mapping the probabilities in reverse therefore, vary by +_ $2,393. So the total cost of this approach
could be as low as $79,570 or as high as $84,356 (see panel 3).
Supplied by Combined probabilities The FD presented all this information to the board members
HKP 0.625 x 0.03485 = 0.021781 when they reconvened the next morning. He pointed out that in
Yes all three scenarios the expected costs of the two alternative
Is the PQR 0.375 x 0.005 = 0.001875 courses of action clearly favoured the passive approach. Despite
component this, he recommended that the active approach should be taken
faulty? HKP 0.625 x 0.96515 = 0.603219 and the rest of the board eventually agreed with him. Why did
No they make this apparently more costly decision? And what
PQR 0.375 x 0.995 = 0.373125 further action did the board take in respect of quality at AGJ?
With both the passive and active approaches, the firm would
be reacting to a quality fault that was present in products that
had been made and sold. But there is a distinction between
this includes the “normal” failures – there is no way of recharging them. The passive approach represents a willingness to accept an
these costs and they are an integral part of our problem.) external failure whereby the customer is aware of the fault when
The eight expected faults in PQR-made components would it occurs. This type of problem is the most damaging to AGJ’s
also result in a cost of $750 per unit, but this would be recharged reputation. By comparison, the active approach can be classified
in full to PQR. So, ignoring the wider issue of damage to our as an appraisal. Although the pool heaters concerned had been
reputation, there will be no net additional costs here. sold and were installed at customers’ premises, the identification
The other course of action is to inspect all 4,000 components and correction of the problem products would – and, happily, did
during routine servicing visits and replace all of those that are – take place without a customer witnessing a failure.
found to be faulty – ie, the active approach. The costs of this The board debated this issue and decided that dealing with
alternative are as follows: the problem via appraisal would be better than letting it become
n One-off cost to buy the testing equipment $20,000 an external failure. The directors looked at the costs involved and
n Labour cost of testing each of the 4,000 decided that the extra short-term expenditure on the active
components during planned maintenance visits: approach was worthwhile. They preferred to accept this rather
0.25 hours x $50 per hour x 4,000 components  $50,000 than the long-term damage to AGJ’s reputation and profits that
n Labour cost of replacing faulty components would surely result if these failures were allowed to occur.
supplied by HKP: The board members continued to meet regularly about this
0.5 hours x $50 per hour x 87 components  $2,175 issue and made some significant decisions about quality within
n Purchase 87 new components at $100 each $8,700 the company. They decided to make the step up from simply
n Labour cost of testing these new components (assume, for having a “commitment to quality” to doing something about it.
simplicity’s sake, that none of these prove to be faulty): The directors agreed that any form of quality failure, whether
0.25 hours x $50 per hour x 87  $1,088 internal or external, was unacceptable. They did not want the
n Total: = $81,963 company to be involved with any costs of non-conformance and
The above calculations represent the most likely outcome, they determined that the best way to solve quality problems
but it is also useful to consider a range of other possible was to prevent them from happening in the first place. The next

financial
December/January 2006/07  management 49
Paper P2 Exam notice
Visit [Link]
regularly for updates.

step, therefore, was to ensure that AGJ tested n November 2006 exam results n May 2007 exams
every component Y that it purchased from its The results will be sent out by first-class The next exams will take place on May 22,
suppliers. This increased the production post or airmail by the end of January. 23 and 24. Online entry for these exams
department’s labour costs, but there was no Log into your “My CIMA” account will be available at [Link]/
need to buy any more testing equipment – ([Link]/cimaonline) to examentry from February 1.
the devices that had been bought for the register to receive your results by e-mail. The standard closing date for entry is
service engineers were used here. All faulty Select “My personal details” and then March 14. If you enter after this date it
components detected at this inspection were “My communication preferences”. We will be accepted only as a late entry and
returned to the supplier, which sent a free cannot give out results on the telephone you will have to pay a late entry fee.
replacement by return. In this way the firm or to personal callers at any CIMA office. The deadline for late entries is March 21.
focused firmly on conformance rather than
on dealing with non-conformance. n Attendance slip receipts n Exam fees
But, as time went by, doubts began to You will have received an attendance slip You must pay your exam fees online when
emerge about whether this approach was for each exam you sat. You should keep you enter for them: £59 per paper,
truly the best way to manage quality. AGJ’s them for at least four months as proof. managerial level; £64 per paper, strategic
directors became increasingly irritated that a level; £85, TOPCIMA; £170, late entry fee.
0.5 per cent failure rate in these components n Exam question papers
was somehow perceived to be acceptable by Visit [Link]/studyresources n Computer-based assessments
the industry. They formed the view that the to download copies of the exam papers – For full information on entering for
only acceptable level of quality should be they will be available within one week of assessments at certificate level, visit
zero defects. The board determined that all the exam sittings. Choose your subjects [Link]/certificateentry.
supplies of component Y should be from the left-hand side of the web page. If you wish to sit managerial level
completely free of faults on delivery and that You can also buy the questions and exams in May you must have completed
AGJ’s own inspection of these incoming answers from [Link]. all of the certificate level by March 1.
components should be abolished.
The firm approached its two remaining n Post-exam guides n The new 2006 CIMA certificate in
suppliers of component Y to discuss this, Post-exam guides for each subject will be business accounting
indicating that it was prepared to pay a available three to four months after the Assessments based on the CIMA certificate
premium for this quality guarantee. In so exams. These are essential reading for in business accounting 2006 syllabus have
doing, AGJ recognised that true quality exists unsuccessful candidates and for those been available since October 2 at CIMA-
only when there is conformance throughout studying a new subject. They contain: approved assessment centres. Assessments
the supply chain. PQR, one of the company’s n The exam questions. based on the CIMA certificate in business
two component Y suppliers, agreed to the n The rationale for each question. accounting 2000 syllabus will be available
principle of zero-defect supply and, within six n Suggested approaches. until March 1, 2007. Assessments based
months, had achieved this. XYZ, the other n The outline marking scheme. on both syllabuses are, therefore, available
supplier, argued that it was achieving the n The examiners’ comments. concurrently until March 1.
industry benchmark failure rate of 0.5 per For more details on the 2006 CIMA
cent and that there was no need to discuss n Script review service certificate in business accounting, visit
any improvement on this. A script review service will be available for [Link]/certificate.
Only one of these two suppliers is still the three strategic level papers and
doing business with AGJ. FM TOPCIMA once the November results are n Queries
released. The service is available only to If you have any questions, please visit
Tim Thompson FCMA is a senior lecturer in candidates who scored between 40 and CIMA’s web site to see if they are answered
accountancy and finance at Lincoln Business 49 marks. Visit [Link]/ there, or get in touch with CIMA Contact
School, University of Lincoln. scriptreview for full details. (see page 41) or your local office. FM

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50 management  December/January 2006/07