Page 9 - CIMA MCS Workbook May 2019 - Day 2 Suggested Solutions

SUGGESTED SOLUTIONS

CHAPTER NINE

TASK 1‐ CRITICAL SUCCESS FACTORS

Suggested solution
Briefing note:

To: Finance Director
From: Finance Manager
Date: Today
Subject: Critical Success Factors

Critical success factors (CSFs) are the limited number of areas in which results, if they are
satisfactory, will ensure successful competitive performance for JORD. They are the vital areas
where ‘things must go right’ for the business to flourish.

CSFs are normally developed by analysing the target market, the demands of customers and the
activities of competitors. This should result in five or six key areas, usually customer‐driven, where
JORD must out‐perform competitors for the strategy to succeed. As such CSFs are crucial
elements of a firm’s strategic development.

Once CSFs have been identified, each one can be broken down into the key skills, processes and
activities needed to ensure success for that CSF. These are the underpinning resources and
competences that JORD must obtain and control. This is usually done through the use of detailed
targets or key performance indicators (KPIs).

For example, the CSF of customer service support can be translated into KPIs to measure average
and maximum response time, customer complaints re design, lead times for installation etc. Key
resources for JORD could include staff availability, training and up to date technology so
employees can deliver the highest quality of customer support throughout the whole process.

Core, or distinctive, competences underpin an organisation’s ability to outperform competition
over the longer term. They must be rare and costly to imitate for competitors, provide value to
customers and have to be integrated within the organisation. For example, JORD has a strong well
established and respected brand. In the last decade Jord has established itself as one of the most
exclusive prefabricated house manufacturing businesses in the world and has an unrivalled
reputation in high‐quality bespoke designed homes.

CSFs and core competences are thus closely related. In an ideal world JORD will have core
competences in areas that give a competitive advantage for the critical success factors identified.

The match between the market‐focused CSFs and the internal core competences is a vital part of
the resource approach to strategy.

The use of new technology in the design process will benefit from the match between CSF’s and
core competencies and the reputational synergies that this match will generate. It is likely that
additional customers and revenue may result as a consequence of positive feedback, testimonials,
marketing and “word of mouth” promotions.

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