Calculator Allowed: Yes



Transcription of this question: 5.CMPCMP Offers financial accounting services to over 300 small businesses and is managed byCarl Mason. CMP employs three full-time accountants. The span Of control is narrow; Carl hasan autocratic leadership style. CMP has a productive working environment and a good reputationfor its accurate accounting service.In the current recession, 10 Of CAIPS small business customers are closing down each month.CMP is losing revenue. Following a marketing audit and to replace this lost revenue, Carl isconsidering expanding CMP’s services to include accounting software installation and support(Option 1). As work patterns Of an accounting business such as CMP fit poorly with thenew services, CMP would have to change to more flexible working practices. Also, to make themarket aware that CMP will Offer these new services, Carl believes that CMP must consider use Ofabove the line promotional methods, such as advertising in the business section Of a daily nationalnewspaper or having a billboard and a radio commercial. These promotional methods are expensive.An effective promotional strategy would probably cost at least USSIOOOO every six months.However, Carl knows that above the line promotional campaigns are not always successful.Another idea to replace lost revenue is to merge CMP with Accounting Solutions (AS), a companyalready operating in accounting software installation and support (Option 2). AS is a private limitedcompany wholly owned by Matt Auth. Ifthe merger went ahead, AS would operate out Of CAMP’scurrent Office space, reducing overheads Of the combined businesses. Also, the new (combined)business could sell traditional accounting services to AS’s existing customers and accountingsoftware installation and support services to CAMPS existing customers. AS already followsflexible work practices. Matt has a laissez-faire leadership style, to which his employees respondwell. Carl and Matt are discussing combining the two businesses. Carl would own 55% andMatt 45 % Of the new business.(a)(b)(c)(d)Outline what a marketing audit is.Explain two flexible working practices that would allow an accounting business,such as CMP, to Offer an increased range Of accounting services (Option 1Analyse the appropriateness Of an autocratic leadership style for CMP.Discuss the two options (Option I and Option 2) put forward by Carl to replacelost revenue.[2 marks][6 marks][5 marks][7 marks]

Leave a Reply