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The purpose of the project is to provide candidates with an opportunity to investigate part of the syllabus in a fair degree of depth. The intention is to provide the scope for individual analysis within a defined boundary. By providing this kind of freedom (which is difficult to achieve when setting an exam) it is hoped that many candidates will use the opportunity to develop their thinking and submit imaginative arguments and conclusions.

Perhaps the most important aspect of the content of the supplement is that it sets the project in a clearly defined context. In this case, the context was Thorntons plc, using the company’s published accounts for the year to June 2002. This company was deliberately selected as the published accounts contained clear statements about the strategic objectives.

It is encouraging to note that the majority of candidates rose to the challenge and produced thoughtful, original, and in a number of cases, interesting analysis. These candidates were rewarded with high marks.

The key to achieving a good mark was to ensure that the discussion was clearly set in the context of the company’s stated strategic objectives. Such an approach was strongly encouraged by the wording of the questions. It is important to note that in future sittings, the project will continue to require candidates to consider the context which is provided. Invariably, where candidates did not achieve the pass mark this was because their answers considered measures of performance (mainly ratios in Question 1 and key success factors in Question 2). These could have been applied to any company, but were not obviously related to Thorntons. In extreme cases, one was left wondering if the Supplement Booklet had been used at all by candidates.

Many of the projects which did not meet the pass standard conveyed the impression that they had been completed in a short space of time. There is little doubt that the best submissions came from candidates who had developed their final version over a period of time. This approach allows time to reflect on the issues in the questions which are set, and to investigate the information provided in the Supplement Booklet thoroughly.

Overall, it is good to be able to report that virtually all candidates based their analysis on the information provided. Although background reading may be useful, candidates were not expected to undertake extensive additional research, or to contact the company. This will continue to be the case in future sittings.

Question 1

This question tested candidates’ understanding of how to use published financial statements to assess organisational performance. The question was broken down into three parts:

1. selecting and justifying a small number of measures
2. using these measures to assess performance
3. recognising the limitations of the information in the financial statements to assess performance.

As noted in the general comments, there were a number of very good answers. Where candidates did not obtain good marks, it was generally for the following reasons:

• The measures selected were not justified in the context of the company’s strategy. For example, there can be little doubt that Return on Capital Employed is an important measure for any quoted company. However, the question had specifically stated that the measures selected should be justified on the basis of the stated strategic objectives. Such a justification was necessary for marks to be awarded. Candidates who did not justify the measures they had selected rarely went on to assess performance in the context of strategic objectives in part (b). This meant that two opportunities to develop the answer, and the attendant marks, were missed.
• In assessing performance, a number of candidates considered results against an arbitrary standard. One such standard which was often quoted was that the quick assets ratio should be around 1:1. Such a comment totally ignores the context which is provided by the company’s strategic objectives. Ignoring the objectives led to answers which could have been drawn from any decent text, and could have referred to any company. What was sought by the question was an analysis of a specific company against specific objectives. In particular, a number of candidates applied standards for retailers when assessing Thorntons’ performance. This was despite the fact that the company is both a manufacturer and a retailer.
• When considering limitations, a disappointing number of candidates simply provided a list – again potentially lifted from a text. As previously noted, more marks will be awarded for analysis. In this case the need for such analysis meant that the limitations ought to have been considered in the context of Thorntons. This could easily be done by referring to how the limitations applied to the financial statements of Thorntons.

A final comment in connection with Question 1 is that despite the fact that part (a) clearly asked for the analysis to be based on six measures, a small number of candidates used more than six. This is not good practice, and will not lead to additional marks being awarded. Indeed, given that there is an upper limit on the number of words, it is a waste of a precious resource!

Question 2

The focus of this question was how an assessment of performance can be improved by moving beyond financial measures. In particular, by applying the balanced scorecard. Once again, many candidates included good analysis which was specific to Thorntons. Once again, those candidates who did not consider measures which were relevant to Thorntons’ objectives did not achieve many marks.

Some specific examples of how answers were under-developed and therefore did not gain marks are:

• Not providing a clear link between the measures included in the scorecard and Thorntons’ objectives. Few marks can be awarded for general measures which could be applied to any company.
• Developing a scorecard with too many objectives – and therefore losing focus, which renders the scorecard ineffective.
• Having a large number of measures in some perspectives and a small number of measures in other perspectives (therefore developing a scorecard, but not a balanced scorecard).
• Identifying objectives as measures in the balanced scorecard.
• Simply referring to the fact that the balanced scorecard seeks to link strategy with action, but not developing this to consider what measures could be relevant when assessing the success of the Thorntons management team in achieving their stated strategic objectives.
• In considering shareholder value, simply listing a number of possible measures, but not considering that such measures could be interrelated.

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