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Appendix 2

9 Z Co recently announced a shift in strategy relevant to each of its 7 divisions.
The change involved reducing prices charged to customers and becoming a
‘cost leader’. The new strategy had been driven by new entrants into Z’s
industry. These new entrants, from developing countries, were able to
manufacture and sell a product equivalent to Z’s for around 20% less than Z.

The new strategy involved purchasing raw material in bulk and simplifying the
finishing and packaging of Z’s products to keep costs low. Z also intended to
sell only to those customers who were able to order large quantities.

Unfortunately, the changes required in Z’s information systems had not been
completed in time for the new strategy to launch. Z’s standard costing,
purchasing, production schedules and sales were all integrated across the 7
divisions with the use of sophisticated information systems.

Which of the following are likely outcomes of launching the strategy
without updated information systems? Select all that apply.

A Customers may be charged prices which are too high.

B Management may be unaware of any problems with the new strategy.

C Incorrect raw materials may be purchased.

D Sales order levels may be too low to make a profit.

E Divisions following different approaches to strategy.

10 Roar is an online newspaper with headquarters in a capital city. Staff members
have total freedom in terms of where and when they work. All that the directors
of Roar ask is that employees post frequent, relevant news stories on the
website. Staff can choose to do this from home or work in the office. All staff
have password protected access to the live website and do not need to submit
work for approval before posting it. Roar has built its reputation on this
approach and what it refers to as ‘journalism without barriers’.

Roar’s management do not question the source of their employees’ information
as long as the stories attract readers and therefore the advertising revenue that
Roar depends on for income.

Roar is being sued by a celebrity who alleges that fabricated information about
his family was included in a recent article. The journalist who wrote the article
claims it must have been hacked into as she did not write the offending
sections. The article has since been removed from Roar’s website by the
journalist who has provided management with a copy which does not include
the sections under dispute.

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