Suggested Solutions

SL4 – Strategic Management &

Leadership

June 2023
 SECTION 1
Question 01

Learning outcome/s: 3.2.4 and 4.2.3

Study text reference: Pages 175, 176 and 369

(a)

Schein’s organisational culture model is a framework for explaining how company culture
affects an organisation, with a focus on learning and group dynamics. Schein argued that
organisation culture is strong because it is regarded as something that helps the company to
succeed.

An organisation’s culture is a set of assumptions that a group of people working together

have invented or discovered by learning how to deal with problems that the organisation
faces. Schein’s organisational culture model is based on the belief that culture emerges over
time as employees apply basic assumptions to solve internal and external problems. If these
assumptions are proven to be correct, they are passed on to new employees. In other words,
if these assumptions work well enough to be considered valid, they are ‘taught’ to individuals
who join the organisation. New entrants therefore learn the culture of the organisation and
become a part of that culture.

According to Schein there are three levels of culture that members of an organisation
acquire.

1: Artifacts (Outer skin)

Artifacts refer to the visible and tangible elements of an organisation’s culture. These are the
superficial signs of the organisation’s culture, such as the work environment and the way
that people talk to each other. These can also include the physical layout of the workplace,
dress code, and symbols and language used by employees.

In the case of AALK, the dress code is a specific artifact that the company provides to all
employees, regardless of their position. This indicates that the company values uniformity
and consistency in its appearance to create a cohesive image.

Culture may also be expressed in superficial ethical statements such as stated values and
mission statements. AALK’s mission statement states that it aims to provide the best quality
service to its customers. Its vision is to empower Sri Lankans through the power of e-
commerce.

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2: Values (Inner skin)

Values are the beliefs and attitudes that guide an organisation’s actions and decision making.

At this level, the employees in a company share common views on specific issues. This layer
of culture can be seen in the ethical stance the company takes (e.g. all the employees are very
particular about deadlines and ensure products are delivered to customers within the
stipulated time frame).

AALK’s commitment to diversity and inclusion, as previously mentioned, is an example of a

value. Additionally, the company’s focus on empowering Sri Lankans through e-commerce
reflects a strong sense of social responsibility and community engagement. These values are
communicated through the company’s mission statement and are upheld by the
management team and employees. Additionally, the company’s commitment to diversity and
inclusion is another value, as it is publicly promoted and communicated to all employees.

3: Underlying assumptions (The Heart)

Underlying assumptions are the deeply ingrained beliefs and attitudes that influence an
organisation’s behaviour. This is the company’s paradigm. These are the shared assumptions
and attitudes about what really matters. They are taken for granted and are rarely discussed.
They make the core culture of the organisation.

In the case of AALK, it is likely that the company’s underlying assumptions include the belief
that all employees should be given equal opportunities for growth and development. This is
evidenced by the company’s commitment to empowering its employees and promoting
diversity and inclusion. Additionally, the company’s strong ethical stance is likely based on
the assumption that doing the right thing is always the best course of action, even if it may
be more difficult or costly in the short-term.

Overall, AALK’s organisational culture appears to be focused on promoting diversity and

inclusion, empowering its employees, and acting with social responsibility and ethical
integrity. The company’s dress code and commitment to these values and assumptions are
visible and communicated to all the employees, indicating a strong sense of consistency and
alignment throughout the organisation.

(10 marks)

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(b)

Outsourcing

Outsourcing is the process by which a company contracts out certain internal business
functions to a third party. As a result, outsourcing entails external providers taking on
activities that were previously performed in-house. Organisations frequently outsource
functions that are deemed non-critical. Outsourced business processes typically have a high
to low level of complexity and a low level of strategic importance. Outsourcing is frequently
motivated by anticipated cost savings and the liberation of management time.

Offshoring

Offshoring entails utilising external providers in various countries. According to Buchanan

and Huczynski (2010), offshoring is a type of outsourcing in which an external entity based
in a different country provides an organisation with a specific product or process that was
previously provided in-house.

Shared servicing

Shared servicing is an alternative approach in which shared service centers consolidate a

company’s transaction processing activities. Through the use of standardised technology
and processes, shared service centers aim to achieve significant cost savings while improving
service levels.
(3 marks)

(c)

The call center operation is one of the critical business operations of an e-commerce
company. Choosing the most appropriate call center arrangement for an e-commerce
company in Sri Lanka would depend on a number of factors, including the company’s size,
budget, and strategic objectives.

Outsourcing

This involves contracting a third-party vendor to handle the company’s call center
operations. Outsourcing can be a cost-effective option for smaller companies that lack the
resources to build and manage their own call center. It can also allow a company to focus on
its core competencies while leaving the call center to a specialised vendor.

This option may be a cost-effective choice for AALK if they are a small to medium-sized
company with limited resources and a relatively low call volume. By outsourcing, it could
take advantage of the specialised expertise of a third-party vendor to handle its call center
operations, while also avoiding the high costs of setting up and managing its own call center.

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Advantages and disadvantages of outsourcing

Advantages Disadvantages

Less expensive Loss of collaboration and control

The outsourced call center will manage Since call center agents are not within AALK,
AALK’s call operations. So, outsourcing will call center outsourcing tends to hinder
help AALK to save money that could collaboration between the support team and
otherwise be used for its core business. other teams. Also, AALK would lack control
over those in charge of customer service
since the agency hires whomever they deem
fit.

Improves customer experience Lack of industry knowledge

Customers could enjoy getting their Outsourced call centers often attend to
queries answered and issues resolved various companies, so they may not
whenever they want. Since there is a specialise in the business of AALK. Also, since
dedicated team to serve customers 24/7 they do not work with AALK, they often have
throughout the year, customers would get limited knowledge about AALK’s values and
round-the-clock support, which local goals.
businesses can hardly handle on their own.

Offshoring

This involves setting up a call center in a different country, typically one with lower labour
costs. Offshoring can be a cost saving option for larger companies with a significant call
volume, but it can also involve cultural and language barriers that may impact the quality of
customer service.

This option could be beneficial for AALK if they have a high call volume and are looking to
reduce labour costs. Sri Lanka has a lower cost of living compared to many other countries,
making it a potentially attractive location for offshoring.

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Advantages and disadvantages associated with offshoring

Advantages Disadvantages
Cost savings Quality issues
Cost savings are often cited as the main Allowing third-party providers to act as the
motivation behind the decision to interface between AALK and its customers
offshore. increases the scope for quality issues to arise.

Focus on core activities Public perception

Managing non-core functions is often AALK may receive bad press if consumers in
regarded as a distraction, which can be the home market perceive moves to offshore
alleviated by offshoring. operations as leading to domestic jobs losses.
In the current context, losing domestic jobs is
very serious.

Shared servicing

This involves sharing call center resources amongst multiple departments or business units
within a company. This can be a cost-effective option for larger companies that have multiple
departments with different call center needs.

This option could be a good fit for AALK if they have multiple departments or business units
that require call center support. By sharing call center resources, AALK could achieve cost
savings and operational efficiencies.

Advantages Disadvantages

Reduced headcount due to economies of Risk of non-compliance

scale that result from bringing operations to
a single location.
Associated reduction in premises and other Lack of industry know-how
overhead costs.
Allows standard approaches to be adopted Lack of inter-departmental relationships
across the organisation, leading to more
consistent management of business data.

Ultimately, the most appropriate arrangement for AALK’s call center operations will depend
on a number of factors, including its size, budget, strategic objectives, and call volume. It
should carefully evaluate each option and consider the potential benefits and drawbacks of
each, as well as any potential cultural or language barriers that may arise with offshoring.

(12 marks)

(Total: 25 marks)

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Question 02

Learning outcome/s: 1.3.2, 2.2.3 and 4.5.2

Study text reference: Pages 51, 207 and 360

(a)

The knowledge generated within an organisation is much needed for its development and
decision making. Knowledge can be held in two forms: explicit and tacit.

Explicit: Knowledge that is recorded in documents or files, and available to everyone

Tacit: Information that is not recorded but is in people’s heads. It is not available to others
unless the individual shares it. However, the tacit knowledge of experienced employees is
very important in changing the organisational working culture towards a performing
culture.

Nonaka and Takeuchi describe four ways in which knowledge is transferred.

Socialisation

This is the informal process by which individuals share and transmit their tacit knowledge.

Individuals share experiences in conversation. Here in the case of CL, experienced people
like Kaldera can play the role of an advisor and a disseminator of knowledge to support
employees’ decision making. This will become more difficult if decision making is
decentralised in the organisation. So, Kaldera needs to develop a sharing culture within the
organisation by becoming the initiator of it. Having more discussions and analysing business
activities with the employees (without asking employees to do things and comment on the
reports) will help him to do this change. All the above can be put into the category of formal
conversations.

Apart from formal discussions, informal conversations can also help develop this sharing
culture (e.g. sharing thoughts while having coffee or tea in the lunchroom, or having chats
with employees during organised dinner outs, or during ceremonies).

These kinds of activities will help Kaldera to share his knowledge with his employees which
will guarantee a proper transfer of tacit knowledge.

Externalisation

This is converting tacit knowledge into explicit knowledge. Unfortunately, this is a difficult
process to organise and control.

Even though the process is a bit of a difficult task, Kaldera can find some ways to convert his
tacit knowledge to explicit knowledge. For example, compiling documents with clear

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explanations using his tacit knowledge, developing process manuals using tacit knowledge
and using it for future training programmes and activities, and sharing his ideas and
knowledge with external parties in magazines, books, case studies, and media conferences.
By doing so, tacit knowledge can be shared amongst others and also with the organisation’s
stakeholders.

Internalisation

This is the learning process by which individuals acquire explicit knowledge and turn it into
their own tacit knowledge.

People like Kaldera can always be open to the business environment via business-related
news so that new knowledge regarding the economy, technology and trends can be
identified. This identified knowledge can then be applied to business activities by connecting
his tacit knowledge too. It will help to create new tacit knowledge within. Kaldera used to
participate in seminars and workshops to upgrade his knowledge on new technologies and
global trends. Therefore, he can internalise this knowledge to upgrade the skills of internal
staff.

Combination

This is bringing together separate elements of explicit knowledge into larger, more coherent
systems, such as computerised knowledge management systems and management reports.

Kaldera can introduce a proper computerised knowledge management system to the

organisation like an enterprise resource planning (ERP) system (e.g. SAP, ORACLE). Or else,
he can think of developing systems using their own business processes to reduce the
occurrence of human errors. This will enable the company to generate relevant reports to
help the decision making process easier.

(10 marks)

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(b)

The value chain explains two categories of activities when creating value for an organisation.
They are called primary activities and support activities. CL can improve its effectiveness
and efficiency by adding value to each of these activities.

Primary activities
Inbound logistics Inbound logistics involves receiving materials from suppliers,
handling and storing them, and distributing them to the production
department (inventory control).

CL can plan to receive materials from local suppliers using new

technology as it has enough retained profits to invest in this. The
process of obtaining raw materials locally can be easier than
procuring them from foreign markets. It will speed up the process
and can add value by giving a quick service to customers and allow
continuation of the production process without any disturbances.
However, a proper quality control system and handling, storing, and
distributing materials to the production department needs to be done
using a good inventory controlling system. CL notices that 12% of the
raw materials are wasted at the warehouse. Therefore, it can
introduce a material requirements planning (MRP) system or an
enterprise resource planning (ERP) system, or if it is local suppliers
it can think of just-in-time (JIT) purchasing too.

Operations Operations include manufacturing operations, converting raw

materials into the final product, inspection and testing of finished
goods (and for consumer goods, packaging pf the products)

Here CL can think of the finished goods by looking at the way they’re
presented to customers. New additions to its designs, fashion, and
new advanced technology in making the products durable will help it
to capture the market more. For this CL can automate and improve
tasks (e.g. include robots, process control, machine tool control,
computer-aided manufacturing (CAM), computer-integrated
manufacturing (CIM) and enterprise resource planning (ERP)).

If the financial resources are not sufficient to automate the processes

using technology, CL can think of looking at its existing manual
operations and converting them gradually to automated ones with
time. Or else, the manual processes can be re-examined to find ways
to minimise waste by increasing efficiency.

CL has reported some quality control issues during the past few
months in relation to its leather handbags and shoes. The company

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 caters to the high-end market and as such, quality is a must.
Therefore, inspection and quality control are important during
operations. CL should immediately fill the vacancy in the quality
control department.

Outbound This includes storing the finished products and distributing them to
logistics customers.

CL, as a leather manufacturer, can have a warehouse as these

products are durable goods. However, in the case of the unethical
business practices of middlemen, CL can think of having its own
outlets to sell the products. As it has enough money to invest, it can
at least think of having one outlet in each of the geographical areas it
has available for its products. Since many customers are loyal, CL can
easily use exclusive or selective distribution methods (exclusive
outlets or making the product available at a few outlets). This will
help them to find a solution to the unfair margins that the retailers
maintain while reducing prices to attract more customers, which will
add more value to the business.

Technology can also help to enhance the value of this activity (e.g.
warehouse management systems, RFID).

Marketing and Marketing and sales involve informing customers about the products
sales and persuading them to buy (through advertising, sales promotions,
direct selling, attractive pricing, and so on).

As mentioned in the above activity, CL can have its own outlets, which
will make it easier to handle its customers by having its own sales
personnel. So, the ability to convince customers will be very high.
Also, this will enable CL to maintain a good customer database which
will help to develop a good customer relationship management
(CRM) system. These CRM systems can then directly communicate
with customers about the latest additions to the product portfolio,
offerings, discounts, product availability etc.

Since the retailers have kept a 100% margin on the products, the
retail price has also gone up while affordability has gone down for
customers (per capita income). Therefore, having CL’s own outlets
will help to reduce prices and match the prices of the products to the
affordability of people.

According to the case of CL, there is a growing use of the Internet for
online marketing and selling. CL can also introduce a virtual market
by giving customers the opportunity to experience and visualise the
products. Also using user (customer) generated content (UGC), CL

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 can promote and increase customer loyalty. Further, Facebook,
YouTube and Instagram can be used to promote the products.

Service This includes services to customers after the delivery of the goods
(e.g. after-sales services, customer support, helplines, training
employees of customers on the use of a product).

Since CL currently delivers products through retailers, the level of

care for its buyers is minimal. The new strategy proposed above to
have its own outlets will help it to overcome these issues and deliver
a better service. After-sales services like repairing and complaint
handling are easy. Also, the sales staff can easily explain the quality
and use of the products, and customer complaints can be resolved
more efficiently.

Other than these activities, a proper database of customers will help

CL to maintain a sustainable service. A CRM system will support the
company for this purpose.

(10 marks)

(c)

The basic model of the balanced scorecard (BSC) was first introduced by Kaplan and Norton
in 1992. The BSC provides an approach to setting performance targets and measuring
performance, which many organisations have since used in some form or another. Therefore,
the BSC is a good approach to setting key performance indicators (KPIs) to measure the
performance of CL too, which will enable better control within the organisation.

The four perspectives of the BSC for CL are as follows.

Financial There should be targets for financial performance. These financial

perspective targets can be short-term or long-term. However, CL can have different
targets based on the value additions proposed for primary and support
activities in the value chain.
E.g.
• Increase the profit margin by 10% within a financial year
• Increase the sales volume by 5% within a year and 10% in the
next financial year.
• Reduce operational costs by 10% with the introduction of new
technology in operations

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 Customer There should be targets and measurements for/of customer attitudes
perspective towards the organisation. Since CL is in a challenging market as the
country’s economy is facing huge difficulties, it can think of changing
the mindset of customers through different marketing practices.
E.g.
• Reduce the MRP and change the attitude of customers. Let them
feel it is affordable
• Increase the loyalty level of customers through loyalty
programmes using the customer databases developed.
• Increase product availability and visibility in offline and online
channels (omnichannel)
• Reduce the number of customer complaints by 10% during the
year
• Increase the number of positive reviews on offline and online
channels about CL’s products
• Increase the number of Facebook, Instagram and YouTube follower
by 8% during the year
Operational There should be targets for improvements in business operations, such
perspective (or as greater efficiency in certain key aspects of operations. At CL,
business operational efficiency can be improved by introducing new
operations technology/systems.
perspective) E.g.
• Increase production of handbags by 3% during the year
• Reduce raw material wastage by 5% during the production of one
batch

Learning and There should be targets for improvement in the skills and knowledge
innovation (or of the workforce, and for the introduction of innovation or
learning and achievement of business growth.
growth) • CL can think of doing training programmes at least twice a year for
perspective its existing employees on improving operational efficiency and
reducing waste. This will enable them to learn and become experts
in their respective areas of work. Further, the top management can
share their experience in formal and informal gatherings.
• Organise an annual awards ceremony to recognise the most
innovative employees of the organisation who add value to its
operations.
• Introduce a news sharing platform and circulate news related to
new areas of the business and new developments in the market at
least once a month.

(5 marks)
(Total: 25 marks)

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 SECTION 2
Question 03

Learning outcome/s: 3.3.6, 3.4.1, 5.1.1, 6.2.2 and 3.4.5

Study text reference: Pages 122, 288, 399, 447 and 449

(a)

As a value of the organisation, CSL ensures the well-being of all its stakeholders in line with
the company’s prudent commitment to preserving and creating sustainable value. This
should be looked at with the needs of the current market. As the market expects more than
typical hospitality activities, the move towards changing its target group (TG) is impressive.
Diversification should be done according to the customers’ requirements rather than hitting
on an alien business area. The move that any organisation should take is explained in the
Ansoff’s Matrix. The explanation of the matrix is as follows.

The case mentions, “the company has proactively identified that guests will become more
conscious about health and safety, sustainability, and value for money.” The argument built
here is that existing guest expectations are changing while a new customer base has also
formed who consider the above more than anything when they travel.

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Product development

Product development is the launch of new products to existing markets.

Here, the service needs to be changed. CSL has identified that guests will become more
conscious about health and safety, sustainability, and value for money. Thus, it has taken
some initiatives to promote Ayurvedic tourism by recruiting well-experienced doctors and
therapists and constructing an Ayurveda treatment center and a greenhouse for organic
agriculture.

Apart from that, plans are underway to promote sustainable tourism as many tour operators
have urged to accelerate climate friendly action in tourism globally. Therefore, a firm
operational strategy needs to be introduced to integrate all these activities to give a holistic
experience to guests visiting, and then use those activities as promotional activities to attract
new customers.

Market development

Market development is the process by which firms seeks new markets for its current
products.

At CSL, this can be done by penetrating new markets with the need for health and safety,
sustainability, and value for money. It can evaluate its past and present customers to find out
the countries they come from and their spending power so that a clear idea about the new
markets they need to approach can be identified carefully.

According to the pre-seen, the UK and Germany have been the major source markets in terms
of guest bookings for CSL since 2014; and later those source markets shifted to Russia,
Ukraine and Kazakhstan in the short-term with the stringent travel restrictions imposed by
major traditional markets. Therefore, it will be a good opportunity for CSL to continue with
these markets with extensive promotional activities. Further, promotional campaigns must
target countries that are yet to be captured and those seeking the above value propositions.

Market penetration

This is a low-risk strategy since it requires no capital investment. This is a good strategy for
a company trying to increase its market share by cutting prices. CSL changed its composition
of guest room income during the year, by carrying out extensive social media campaigns and
giving promotions to attract local guests. The local room rates were also reduced to face the
current market reality. As a result, CSL could attract more local customers by penetrating the
market. Apart from that, CSL received an offer from a leading Sri Lankan hospitality
enterprise to acquire the entire company. If the company decides to proceed with this
acquisition, CSL can penetrate the market and increase its market share in the future.

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Diversification

Diversification occurs when a company decides to make new products for a new market.

There is a proposal to establish a greenhouse for organic agriculture. The company’s long-
term plan is to use organic vegetables and fruits at the Ayurvedic treatment center.

Therefore in the long-term CSL can diversify its business from the hospitality sector to the
agricultural sector.
(10 marks)

(b)

Marketing strategies include segmentation, targeting and positioning of the products or

services. As CSL has been in the tourism industry for many years, hospitality services are the
organisation’s primary business. Therefore, CSL first needs to properly analyse the segments
that can be identified in the market. Due to the pandemic and many global changes, customer
expectations have changed. Thus, a proper analysis will help CSL to identify potential market
segments. As the case highlighted, the consciousness of health and safety, sustainability, and
value for money has become prominent in customers’ minds. Thus, many travelers seek
these factors when selecting a destination.

The new target segment can be identified as health and safety, sustainability, value for
money (VFM) conscious travel seekers. These people are more likely to spread the word if
the hospitality service providers deliver these facilities. However, they can be found in many
geographical areas. Therefore CSL needs to understand the capabilities and capacity of the
organisation to reach these segments to offer its services.

If the capability of reaching a particular group is possible, then that group can be identified
as the target group (TG). For example, out of the 27 EU countries, what countries can we
easily reach and promote our services and what countries are more likely to get these
services? After carefully selecting these countries, we can think of positioning our services
within them. So, the suggestion is to position our services more towards “a memorable stay
with ayurvedic treatments”.

The marketing mix (7Ps) can be used to explain the tactics for the operational level.

Product: Here, the hospitality services and physical products are equally important to
satisfy the customers. So primarily, the food and basic facilities provided at the hotel are very
important. For that, one initiative taken by CSL to source organic fruits and vegetables from
its own cultivation is impressive. Also, the sustainable tourism practices taken are critical.

Price: The price should be in an affordable range. A proper investigation of the price range
in Sri Lanka for the same services should be carried out; and if ayurvedic treatments are
offered at the hotel, the pricing can be set accordingly. However, people should feel that the

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price is worth paying for the offerings. In this case, a penetrative pricing strategy may be
suitable.

Place: Having one place to give this service might not enough as tourists travel within the
country. Therefore, in the long run CSL can think about investing in another hotel at a prime
tourist arrival place. In the meantime, opening Ayurvedic treatment centers using the same
name is also possible as a strategy to offer services.

Promotion: As tourists now use social media heavily, online promotion and social media
promotions are very important to reach CSL’s target group. Therefore, promotions targeting
local tourists and foreign tourists need to be done separately. Local tourists can be reached
through social media and sales promotions (off-season offers, discounted rates, loyalty
offers). Foreign tourists can be reached via social media, direct marketing (following up and
email campaigns for tourists who have visited the place before), using the contacts of the Sri
Lanka Tourism Development Authority (SLTDA) to reach foreign tourists, promotions via
embassies, and using magazine (tourism/airline) advertisements.

Process: Here CSL needs to look at all the processes used to provide services to its clients.
Starting from the booking process, arrival and welcome, in-house services, restaurant
services, food and beverage, laundry services, to greetings at the departure – these are all
different processes that need to be re-examined to remove any loopholes and increase the
value of the services provided.

Physical evidence: Physical evidence is very important in tourism as the experiences of

travelling can be easily recalled using them. Therefore, the ambience of the hotel needs to be
very attractive. CSL can revisit the interior and exterior of the hotel and make them more
memorable.

People: This is another crucial thing in services. The hotel staff need to make sure that the
clients are very happy with their services. A proper customer care/service training will help
employees to understand their role and the way in which they can contribute to making the
clients satisfied. Also, a proper recruitment plan is very important to absorb the right people
to CSL. Training, motivation, and a proper compensation package would help CSL to retain
good quality people.

Carrying out the above tactics will help CSL at the operational level to increase its margins
(revenue).

(14 marks)

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(c)

Technology is one of the main elements people have identified to increase the efficiency and
effectiveness of each activity in a supply chain. Therefore, SPL can think of each activity in its
supply chain (primary and secondary) and think of ways to incorporate technology into the
process.

Technology can add value in any of the following ways for SPL, CSL and PTL.

• Reduces costs
• Enhance operational capability and increase the organisation’s competences
• Improve communication (speed and efficiency) and information content (better
information adds to knowledge and improves decision making)
• Improve customer service and therefore add value for the customer
• Lead to product innovation
• Innovation can create a competitive advantage

However, based on the nature of the behaviour, the technology needed can vary. Therefore,
SPL and PTL can use the following suggested technologies, based on their investment
capacity.

SPL

According to the pre-seen, SPL plans to invest in technology as it will be key to enhancing
value creation and sustaining SPL’s competitiveness in the global marketplace. The
following technologies can be used to add value to SPL. Most of them are long-term
technology adoptions rather than short-term implementations.

1. Automate the tea leaves weighing and paying system

2. Material requirements planning (MRP)
3. Enterprise resource planning (ERP)
4. Warehouse management systems like RFID
5. Customer relationship management (CRM) system
6. IT application for staff planning and maintenance (including rewards)
7. Accounting applications (or all of the above can also be integrated using a proper ERP
system)

(Note: Candidates are required to discuss the application of the above technologies in relation
to SPL)

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PTL

Technology has become a crucial part in the travel and tourism industry when it comes to
modernising day-to-day operations.

1. Implementing a travel booking engine in 2014 is a good initiative, and thus PTL can think
of expanding the same for the travel mobile app (which is currently planned).
2. Use technology (social media and online) to stay connected to travelers and promote its
services.
3. Connect with online service providers such as Google Maps, Uber, and PickMe.
4. Introduce a proper CRM system to keep continuous contact with customers by updating
its new services.

The above technological changes will help SPL and PTL to overcome a lot of issues by
providing them the benefits mentioned above.

(10 marks)

(d)

The CAGE Framework (developed by Pankaj Ghemawat) identifies a range of issues that an
organisation needs to address when approaching the subject of international expansion into
a specific country, and it considers the differences (‘distances’) that may exist between our
home market and the target market under the following four headings.

• Cultural
• Administrative
• Geographic
• Economic

Looking at PTL’s decision to enter the Maldives market, each framework element can be
explained as follows.

• Cultural distance: The cultural difference between Sri Lanka and the Maldives is
minimal as these two countries are geographically close. Both are located in South Asia.
Since both countries focus on tourism and many who travel to Sri Lanka choose the
Maldives as their next destination, the decision made by PTL is good. Also, cultural
equality is high in terms of practices. The level of hospitality is also like Sri Lanka since
both countries are very famous tourist destinations. So the operational differences in
Sri Lanka and the Maldives will be minimal, making it easy for PTL to establish its
business in the Maldives.

• Administrative distance: Compared to other countries, the legal and political bond is
slightly higher as the majority of the two countries’ foreign earnings are from tourism.
Therefore, getting into other agreements with service providers for tourists in the
Maldives can be done quickly. As PTL operates its services with the Maldivian partners

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 throughout, the understanding of the Maldives market is high. This is also a plus point
for PTL. Since PTL gets 100% control over operations, the service quality can also be
assured and this can reduce the negative complaints from European clients who obtain
services from PTL.

• Geographic distance: Since these two countries are in South Asia, tourists from
Europe and others prefer to plan their tours by adding both together. Also, the time to
travel from Sri Lanka to the Maldives is very little, which makes it easier for tourists.
Tourists can experience the countryside views and locations in Sri Lanka and then go
to the Maldives for a better experience with the coastal side (beach). PTL can help its
clients plan their tours by connecting both countries easily.

• Economic distance: When comparing the pricing of tourism packages in the Maldives,
it is a bit similar to Sri Lankan prices. The reason for this is the similarities that both
economies have. Based on the service levels, the prices are set. So the services'
affordability (after converting tourists’ currency to Sri Lankan Rupees or Maldives
Rufiyaa) is quite similar. Acceptance of US dollars for transactions in the Maldives is
also a positive thing. Further, Maldivians are considered to be people who have wealth
and enjoy travelling too. PTL can get the advantage of that by connecting them to Sri
Lankan tours which they can easily do by integrating CSL’s operations with PTL’s
operations. Therefore, the economic factors are also favourable for the expansion.

(10 marks)
(e)

Retention of employees
When looking at the current situation in Sri Lanka, the brain drain has increased significantly
due to the terrible economic conditions, political instability, and drastic change in living
standards. Therefore, many companies in the country are facing difficulty in retaining their
experienced and top-quality human resources. This will become another big issue that SPL,
CSL and PTL might face. Therefore, the HR strategy needs to be focused on retaining
employees. Although the case highlights that employee turnover is less than other
companies, this may be due to having long-service employees. However, a proper
investigation should take place in all three companies to find out the intention of leaving the
country, or change the job role of the new tech-oriented young employees who will become
the bloodline of the companies.

Recruitment of a skilled labour force

CSL and PTL are service providing companies, which require well trained employees to cater
to their customers. Therefore, when recruiting staff they must consider their talent as well
as their attitude to work. According to the pre-seen a well experienced and talented senior
business development manager of the inbound tours unit resigned from his job. When
replacing this position PTL should be very careful to find a suitable candidate.

SL4 – Suggested Solutions June 2023 Page 19 of 21

Training and development
Companies should provide training and development programmes for employees to upgrade
their skill levels and retain with the organisation (e.g. job-related training, cross-functional
training, leadership training, on-the-job training, development planning, formal coaching,
high visibility assignments, job rotation)

Employee motivation
The leadership team as well as the facilities provided should motivate employees to stay and
work peacefully. Therefore, proper control over motivational and hygienic factors is
essential.

Pay and rewards systems

Due to social pressure and the change in living standards, pay and rewards are significant
for all employees. Therefore, evaluating pay and rewards is very important in retaining
employees.

(6 marks)
(Total: 50 marks)

SL4 – Suggested Solutions June 2023 Page 20 of 21

 Notice of Disclaimer

The answers given are entirely by the Institute of Chartered Accountants of Sri Lanka (CA Sri
Lanka) and you accept the answers on an "as is" basis.
They are not intended to be model answers, but rather suggested solutions or the best
possible answers. There can be other answers, which will need to be justified accordingly.
The answers given have two fundamental purposes, namely:
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understanding and appreciation of the subject.
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respect to the suggested solutions and as such there should be no reason for you to bring any
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SL4 – Suggested Solutions June 2023