CIPS Exam Report for Learner Community:

Qualification: Professional diploma in procurement and supply

Unit: PD2 - Corporate and business stratergy
Exam series: January 2018

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

Question 1 – Learning Outcome 1 Mark

Discuss THREE major areas that an organisation will need to analyse when 25 marks
establishing its strategic position in order to make strategic decisions

Learning outcome addressed: 1.1

Command word explanation: Discuss – consider something by writing about it from different points of view

Examples of good content/good approaches in answers:

Good approaches in answers recognised that this question was about discussing three major areas with scope
and latitude which were taken into account when marking.

Definite major areas that candidates identified included:

The Environment:
Any organisation exists in the context of a complex political, social, technological, environmental and legal
world and for sure this is one of the more major areas that, requires to be properly assessed and evaluate
when determining strategic decisions.
It was possible here to be discursive in talking about THE STEEPLE FACTORS or it could be conducted by
undertaking a STEEPLE ANALYSIS itself linking it to where it might have an impact on strategic decisions being
made. Crucially though the response required to say how by conducting this analysis it was linked to the
analysis of the strategic position and subsequent strategic decisions.

Good answers emphasised that these changes that come through a STEEPLE ANALYSIS will be more complex
for some organisations than others and a way of doing this was to cite relevant examples.
Many of the variables will give rise to opportunities and others will exert threats on the organisation – again
for the better response these were discussed via relevant examples that reinforced the points being made.
Further choices are also available such as: Porters Five Forces Analysis and how conducting such an analysis
will impact on the strategic decision making process which looks at aspects of the market, competitors and
the nature of competition in the industry.

JANUARY 2018_PD2_EXAM REPORT_LEARNER COMMUNITY 1/8

Leading global excellence in procurement and supply

The Strategic Capability of the Organisation:
Here we are drilling down into the resources and competences available within the organisation. A good way
to approach this was to look at its strengths and weaknesses such as where the organisation might be at a
competitive advantage or disadvantage.
The aim here is to demonstrate and form a view of the internal influences and constraints on the strategic
choices for the future. Bringing out the fact that it is usually a combination of resources and high levels of
competence in certain activities which we know better as core competencies that provide advantages which
competitors find difficult to imitate.

Expectations & Purposes:

The major influences of expectations on an organisation’s purposes – the issue of corporate governance is
important. For many this aspect was covered but not as well as it could have been.
Here the question is: who should the organisation primarily serve and how should managers be held
responsible for this?
But the expectations of a variety of different stakeholders also affect purposes. Which stakeholders views
prevail will depend on which group has the greater power, and understanding this can be of great
importance.

Culture:
Cultural influences from within the organisation and from the world around it also influence the strategy an
organisation follows, not least because the environmental and resource influences on the organisation are
likely to be interpreted in terms of the assumptions inherent in that culture.

Examples of content for merit/distinction grade answers:

Following on from the points made above: The Environment - Candidates who went a stage further and
recognised that a problem that has often to be faced is that the range of variables is likely to be so great that
it may not be possible or indeed realistic to identify and truly understand each one. Therefore it is necessary
to distil out of this complexity a view of the key environmental impacts on the organisation. The Strategic
Capability of the Organisation – inserting credible examples from organisations added the necessary depth to
help secure these grades.
Expectations & Purposes – Where candidates expanded on what corporate governance is its scope and
impact pushed their response into these grading bands.
Culture - Candidates who introduced Stakeholder Mapping as well as inserting again credible examples raised
the bar on their response taking their answer into either a Merit or Distinction pass.

Examples of poorer content/ poorer approaches in answers:

Poorer answered lacked depth & scope and had an imbalance given to the content of each of the three major
areas identified. Some answers identified models hoping that this would answer the question as well as had a
lack of understanding in relation to the command word in the question.

JANUARY 2018_PD2_EXAM REPORT_LEARNER COMMUNITY 2/8

Leading global excellence in procurement and supply

Question 2 – Learning Outcome 2 Mark

Evaluate the impact of internationalisation upon the operations of a supply chain 25 marks
of your choice

Learning outcome addressed: 2.3

Command Word: Evaluate – calculate or judge the value of something

Examples of good content/good approaches in answers

Good content answers started the response with an overview of what internationalisation was positively
reinforced an understanding that then was able to be expanded upon.
An important point to be made here that any response that was going to at least pass had to be in the context
of a supply chain of their choice – this aspect was covered when an organisation or an industry sector was
used to help illustrate the points raised. Candidates here either did so by talking about an overall supply chain
management of an organisation, or to the supply chain for one specific product or service.
Recognising that the impacts of internationalisation on a chosen supply chain may be either positive and/or
negative, and through evaluation, candidates who went on to discuss these advantages and disadvantages of
the impacts selected displayed good exam technique by recognising the command word of this question.

Again choices that could be discussed were plentiful but the following represents a good cross-section of the
more relevant ones provided:
 Increased volumes due to larger markets and homogenised products, leading to economies of scale;
on the other hand, products may need to be customised for local markets, requiring different
specifications and/or suppliers able to meet local requirements.
 Location of supplier capacity in lower cost countries may bring opportunities for cost reduction;
however the organisation may not have the experience of managing suppliers in other countries, and
may have to deal with issues relating to quality control, CSR (e.g. ethical trading), time zones,
language and different business customs; new supply chain management capabilities may thus be
required. The cost of doing business (e.g. in supplier appraisal and vendor management) may
increase.
 More extended supply chains may increase inventory in the supply pipeline, and the organisation may
have to introduce new transport and distribution arrangement.
 The coordination of international supply chains may require different management structures, for
example the setting up of international procurement offices, the use of agents, decentralised
procurement responsibilities in other countries, or integrated global procurement co-ordination with
lead buyers.
 The procurement function may need to develop new capabilities in international contracting and
contract management; issues may include different legal systems relating to contracts, payment

JANUARY 2018_PD2_EXAM REPORT_LEARNER COMMUNITY 3/8

Leading global excellence in procurement and supply

 terms and methods, the responsibilities of the buyer and seller (Incoterms), and dispute resolution.

Although not representing a comprehensive list and other credible examples cited were marked according
taking this sort of approaches allows the development of an answer.

Examples of content for merit/distinction grade answers:

More detailed and comprehensive responses that inserted credible examples to reinforce the points made.
Also reinforcing what some of the more notable commentators such as Boddy & Yip say on the
internationalisation demonstrated a good depth of knowledge and understanding.

Examples of poorer content/ poorer approaches in answers:

Weaker answers had poor knowledge and understanding of the term internationalisation ; were too tactical
and did not discussing the true strategic implications. There were also short responses (lacking depth &
scope), a lack of referring to an organisations supply chain and writing a generic answer that merely
described.

Question 3 – Learning Outcome 3 Mark

Explain the following concepts in the context of strategic change in supply chain
environments:
(i) Cultural Web 10 Marks
(ii) The tendency towards strategic drift 8 Marks
(iii) Path dependency 7 Marks

Learning outcome addressed: 3.3 & 3.4

Command word : Explain – give reasons or an account of something

Examples of good content/good approaches in answers:

Good content answer took proper account of the mark allocations and writing the right about for each in turn.
Candidates were able to give an explanation of the concepts and then show the supply chain application.

The Cultural Web

The Cultural Web, developed by Gerry Johnson and Kevan Scholes in 1992 provides an approach for looking at
and changing an organisational culture. Using it, a manager can expose cultural assumptions and practices,
and set to work aligning organisational elements with one another, and with an organisations strategy.
Candidates who went on to detail the elements of the Cultural Web securing the greater marks.
The Cultural Web identifies six interrelated elements that help to make up what Johnson and Scholes call the

JANUARY 2018_PD2_EXAM REPORT_LEARNER COMMUNITY 4/8

Leading global excellence in procurement and supply

"paradigm" - the pattern or model of the work environment.
By analysing the factors in each, the manager can begin to see the bigger picture of the culture
of and what is working, what isn't working, and what needs to be changed.

The six elements are:

Stories - The past events and people talked about inside and outside the company. Who and what the
company chooses to immortalise says a great deal about what it values, and perceives as great behaviour.
Rituals and Routines - The daily behaviour and actions of people that signal acceptable behaviour. This
determines what is expected to happen in given situations, and what is valued by management.
Symbols - The visual representations of the company including logos, how plush the offices are, and the
formal or informal dress codes.
Organisational Structure - This includes both the structure defined by the organisation chart, and the
unwritten lines of power and influence that indicate whose contributions are most valued.
Control systems - The ways that the organisation is controlled. These include: financial systems, quality
systems, and rewards (including the way they are measured and distributed within the organisation).
Power Structures - The pockets of real power in the company. This may involve one or two key senior
executives, a whole group of executives, or even a department. The key is that these people have the greatest
amount of influence on decisions, operations, and strategic direction.

Further, a company's history is a key element in the shaping of its culture. Change might threaten aspects of
this history, for example developing new ethos that is at variance with that of the company's founder.

The tendency towards Strategic Drift:

Good answers starting off with a definition; Strategic drift is the tendency for strategies to develop
incrementally on the basis of historical and cultural influences but fail to keep pace with a changing
environment (Johnson and Scholes).
The tendency towards strategic drift means that organisations become reluctant to disturb relationships with
customers, suppliers or the workforce even if they need to change. This can lead to lagged performance
effects - the financial performance of the organisation may hold up initially (e.g. due to loyal customers or
cost cutting) masking the need for change.
The tendency towards strategic drift means strategies fail to keep pace with environmental change (as per the
diagram) because they adopt conservative strategies with reluctance to accept that change requires moving
away from strategies that have been successful. Often managers will stick with what they know - a comfort
zone - uncertainty of change is met with a tendency to stick to the familiar. Capabilities that are taken for
granted and deeply ingrained in routines are difficult to change even when they are no longer suitable.
Candidates, as part of their discussion, could look at incremental change to avoid strategic drift, i.e. Gradual
change in alignment with environmental change, building on successful strategies used in the past (built
around core competencies), making changes based on experimentation around a theme (incremental change
built on a successful formula). This approach is called Logical Incrementalism.

JANUARY 2018_PD2_EXAM REPORT_LEARNER COMMUNITY 5/8

Leading global excellence in procurement and supply

As part of the response to this section candidates could also bring the four phases (as in a diagram) on the
timeline of the tendency toward strategic drift.

Further points which could have also been included:

 Strategic Drift may arise when supply chain strategy has developed incrementally and has failed to
keep pace with changes in the environment. This can be caused by complacency in supply chain
operations where the existence of systems and routines go unchallenged or there is a failure to take
advantage of supply chain innovations.
 Strategic drift may also occur where there is inadequate monitoring of the external environment
and/or a decrease in performance is experienced compared with others in the industry. Rectifying
strategic drift may involve incremental or transformational change, depending on the extent of drift
experienced.

Path Dependency
Because strategic drift, and its immediate effects, are not always highly visible in an organisation it is
important to proactively monitor and recognise the role of historical tendencies in strategic development, and
the way they become embedded in an organisation culture.
Path dependence is the idea that decisions we are faced with depend on past knowledge trajectory and
decisions made, and are thus limited by the current competence base, in other words, furrows in a road that
become deeper and deeper as more traffic goes along. Once this happens the traffic has no option but to go
along these furrows.
In other words, history matters for current strategic decision-making situations and has a strong influence on
strategic planning. Candidates could give an example similar to the one produced in the CIPS text; QWERTY
layout for typewriters. Despite the fact that different keyboard layouts in modern computer keyboards
might allow faster typing (for non-trained typists anyway) the QWERTY layout prevails.

Examples of content for merit/distinction grade answers:

Cultural Web:
Individual aspects of the Cultural Web can be directly related to change in supply chain environments. Some
examples are:
 The paradigm may include assumptions about customer satisfaction, risk, innovation, employee
development, etc., which may be prompted or even threatened by change.
 Stories can relate to past successes and also past errors as examples of poor implementation of
change that may lead to a decline in customer service.
 Change to rituals and routines, as well as to company structures may involve changes to working
practices that may be seen in both a positive move as well as a negative one. Changes to working
networks, for example, may be challenging to some. Changes to control systems and power structures
may disrupt working relationships and involve changes in status.

JANUARY 2018_PD2_EXAM REPORT_LEARNER COMMUNITY 6/8

Leading global excellence in procurement and supply

The tendency towards Strategic Drift:
The insertion of credible examples helped lift answers into either the merit or distinction band.

Path Dependency
Putting in some examples of path dependency in supply chain environments such as:
 Investment in significant capital outlay in the development of computer systems on a particular
platform that becomes difficult to change without incurring significant costs.
 Other forms of lock-in might be the use of particular suppliers or intermediaries where there is strong
personal contact involved or involvement in supplying to markets which are showing decreasing
returns but in which the company feels more comfortable.
Further, it is more likely that moving away from a path dependency situation will involve transformational
change as opposed to incremental change.

Examples of poorer content/poorer approaches in answers:

Poorer content answers were lightweight on the written content for each aspect of the question, often had an
imbalance of the answer aligned to the marks on offer and lacked in strategic knowledge and understanding.

Question 4 – Learning Outcome 4 Mark

Using appropriate change management theory, analyse how a strategic change 25 marks
could be managed and how commitment to it could be achieved

Learning outcome addressed: 4.2

Command word: Analyse – assess a topic with thoughts or judgements about it

Examples of good content/good approaches in answers:

The aim of this question was to test the candidate's knowledge of change management principles and to then
test the candidate’s ability to apply change management theories to a real life situation showing how
commitment to the change was made. This latter point was crucial in achieving good marks, candidates who
did this better scored really well.
This part of the syllabus allows application and the answer will obviously depend on the situation chosen, but
there are a number of different issues that could be discussed. These may include:
 the reasons for change;
 types of change (transformational or incremental, managed or imposed);
 restraining and facilitating forces;

JANUARY 2018_PD2_EXAM REPORT_LEARNER COMMUNITY 7/8

Leading global excellence in procurement and supply

  change management techniques (communication, education, collaboration, early involvement,
direction or coercion);
 change roles;
 change agents;
 cultural issues;
 timing and top management support;
 change processes (Kotter’s 8 steps or Lewin’s 3 steps);
 reinforcement, monitoring and review.

In so doing dealing comprehensively with the commitment issues

Examples of content for merit/distinction grade answers:

Higher scoring answers developed the above to where a clear understanding of what change management
means in the context of the supply chain was demonstrated really well. Answers were reinforced with solid
application in citing real-life examples and gave good weight to the commitment aspects.

Examples of poorer content/poorer approaches in answers:

Examples of poorer answers were limited in their responses and lacked justifications on points made, with
little or no examples cited. And no contextualisation.

JANUARY 2018_PD2_EXAM REPORT_LEARNER COMMUNITY 8/8

Leading global excellence in procurement and supply