Page 14 - CIMA OCS August 2018 Day 1 Tasks

CIMA AUGUST 2018 – OPERATIONAL CASE STUDY

Organisational structure

Thomas Fine Teas has a functional structure, which can work well with a limited product range.
You may want to consider whether a divisional structure would be more appropriate, especially if
new products are developed.

You should also revise the issues related to span of control as Steve Gomez is currently
responsible for 70 members of staff.

Thomas Fine Teas buys all its tea form outside growers. However, we are told that it is possible to
grow tea in Deeland and that Butler Teas is doing it very successfully. Given this it is probable that
one variant of the exam will include a task to consider vertical integration and growing its own
tea. Make sure you revise the arguments for and against outsourcing and what transitional
aspects such a move would involve.

Human Resources
Thomas Fine Teas is highly reliant on the expertise and goodwill of its tea tasters and blenders, so
you should revise how best to ensure that tasters are kept motivated and satisfied and that
training is sufficient.
P1

The environment
The pre-seen makes it clear that customers are becoming increasingly concerned about
sustainability and the provenance and purity of the products they buy. Make sure you revise both
the E1 and P1 aspects of CSR and environmental accounting to discuss how Thomas Fine Teas
could measure and improve its green footprint. Also ensure you can discuss how to manage
suppliers should issues arise.
Quality

The company makes high quality products so an exam task could focus on assessing the costs of
quality (P1) and discussing whether TQM (E1 and P1) should be adopted.

Costing systems
In order to grow the business there is a need for new product development. This may necessitate
a change from the current approach of absorbing overheads towards ABC. Make sure you revise
the pros and cons of ABC verses traditional approaches (P1) and consider whether ABC would be
suitable for Thomas Fine Teas and any transitional problems if it were to change systems.

Decision making under constraints
The production process has a number of potential bottlenecks such as availability of skilled tasters
and blenders, blending machine time and tea bag production capacity. In particular we are told
that the green tea production line has limited capacity. Given this, you may have to discuss the
basis upon which decisions to allocate scarce resources are made (P1). Remember that you should
be using the idea of relevant costing and considering the benefit per unit of scarce resource,
either by focussing on contribution per labour hour or throughput per machine hour, say.

Decision making with uncertainty
Given the need for new products, it is likely that one of the exam variants will include a task
looking at multi-product breakeven analysis and margins of safety, possibly incorporating
breakeven graphs that you have to explain. Make sure you revise the details of such graphs and
can explain what the different lines and pints represent.

10 KAPLAN PUBLISHING