BBS005

UNIVERSITY OF BOLTON

BUSINESS SCHOOL

ACCOUNTANCY

SEMESTER 2 EXAMINATIONS 2016/17

CONTEMPORARY BUSINESS MANAGEMENT

MODULE NO: ACC5006 Date: Friday 19th May 2017 Time: 10:00am to 1:00pm INSTRUCTIONS TO CANDIDATES: There are 6 questions on this

paper. Answer ANY 4 questions. Each question is worth 25 marks. You may use hand written notes

relating to the issued case study (1 sheet of A4 using both sides), but no text books or class hand-outs.

Page 2 of 3 University of Bolton Business School BA (Hons) Accountancy Semester 2 Examination 2016/2017 Contemporary Business Management Module No. ACC5006

Question 1.

a. With reference to organisational structure, planning and teamwork identify the barriers facing the utilisation of Oakland’s framework for change management in effecting change at Southern.

15 marks

b. Having identified the barriers, what recommendations would you make to inform the development of a forward business plan to more fully achieve the vision and strategic priorities of the company?

10 marks Total 25 marks

Question 2.

a. Evaluate the extent to which Southern has achieved Govia’s vision “…to be a leading provider of high-quality, innovative, customer-focused passenger transport - delivering the needs of passengers and communities”.

15 marks

b. Having made this evaluation, explain which are the three most significant factors from the macro and micro external business environments which have impacted upon the performance of Southern.

10 marks Total 25 marks

Question 3. Identify how organisational objectives, functions and structures might be aligned to be appropriate to external environmental conditions. Illustrate your answer with appropriate diagrams and examples.

25 marks Question 4. Using Porter’s 5 Forces model, identify the specific forces in Southern’s micro business environment impacting on the company’s current situation. Put these specific forces in order of strategic importance to Southern and explain your reasoning.

25 marks

PLEASE TURN THE PAGE…

Page 3 of 3 University of Bolton Business School BA (Hons) Accountancy Semester 2 Examination 2016/2017 Contemporary Business Management Module No. ACC5006

Question 5. Consider Govia’s (and thereby Southern’s) strategy statements as expressed in Govia’s stated ‘Vision’ and ‘Strategic Priorities’. Evaluate the extent to which these strategy statements are fit for purpose.

25 marks Question 6. It can be argued that the long term perspective has shrunk for UK companies when it comes to planning strategy. In light of Southern’s current situation, devise three new strategic objectives for Southern for a period covering the next 12 months. Using relevant academic models, explain how you arrive at each objective.

25 marks

END OF QUESTIONS

BAM5006 Case study: Southern

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BA Accountancy

ACC5006 CONTEMPORARY BUSINESS MANAGEMENT

CASE STUDY SEMESTER 2

2016-17

SOUTHERN

BAM5006 Case study: Southern

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Contents page Contents page 1 1. About Southern 2 2. About Govia 2 3. Southern rail strike: What's it about?

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4. Rail punctuality slumps to lowest level in a decade... with Southern customers facing most chaos

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5. Further Southern rail strikes possible says Aslef

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6. Southern Rail strike: RMT union accuses train company of bullying staff as strike looms

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7. The story continues…

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References 8

BAM5006 Case study: Southern

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1. About Southern Owned by Govia, GTR (Govia Thameslink Railway) operates train service provider brands 'Thameslink', 'Southern’, 'Great Northern', and 'Gatwick Express'. Southern operates train services into London from the South Coast, through East and West Sussex, Surrey and parts of Kent and Hampshire. As part of its train satisfaction survey, published in January 2017, Which? Magazine asked thousands of passengers whether they had experienced a delay on their last journey. Southern came bottom of their survey - 35% of all Southern passengers said their train was delayed, rising to 46% of commuters on Southern. 2. About Govia (extract from Govia’s website) Govia is a joint venture between the Go-Ahead Group (65%) and Keolis (35%), two substantial and successful transport companies in our own right. Govia has extensive experience running complex and challenging rail operations, managing significant change programmes, and it has introduced more new train fleets in the UK than any other operator. Govia currently runs three major rail franchises: GTR (Govia Thameslink Railway), Southeastern and London Midland. Govia is the UK’s busiest rail operator, currently providing c.35% of all passenger journeys. Established in 1987, The Go-Ahead Group has its roots in the North East where it was formed following de-regulation of the bus industry. Ten years later, with rail privatisation, the company entered into partnership with Keolis and began running the Thameslink franchise as Govia. It has run Southern since 2001 (in 2015 this was integrated into the GTR franchise), Southeastern since 2006, London Midland since 2007, and GTR since 2014. Go-Ahead has a turnover of £3.21billion and some 26,000 employees. Govia’s vision Govia’s vision is to be a leading provider of high-quality, innovative, customer-focused passenger transport - delivering the needs of passengers and communities. Govia’s strategic priorities:

i. Society To run our franchises in a safe, socially and environmentally responsible way. Govia believes a sustainable public transport network is essential to the future of any society and as a leading provider of passenger transport services, sustainability is integral to the way we run our franchises. Ensuring the safety of passengers and our people is an absolute priority for them. We are also committed to making a contribution to the communities in which we operate and wider society.

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Reducing the environmental impact of our operations while providing a greener alternative to the private car contributes to the Government's environmental targets.

ii. Customers To provide high quality, locally focused passenger transport services. Meeting the needs of our customers is vital to our success. Providing reliable, value for money rail services encourages more passengers to use our services. Our decentralised structure ensures strong localised expertise, focuses on the needs of the local customer and has the ability to respond quickly to changing conditions in the local markets. Good customer service is at the heart of everything we do and we are committed to delivering high levels of customers satisfaction across the board.

iii. Our people To be a leading employer in the transport sector. Our people are our most valuable and important asset. Without them our trains cannot create value. It is our teams across Govia that keep the business moving and are the face of Govia. Investing in and developing our people enables them to fulfil our own potential and assists them in carrying out our jobs to the best of our ability, thereby improving the customer experience. Effective leadership development and succession planning are essential to sustainable success for Govia and a diverse workforce further enhances this. iv. Finance

To run our franchises with strong financial discipline to deliver sustainable value. Our companies are significant contributors to the UK's public transport infrastructure. Employing 12,000+ people across the country, c.35% of all passenger journeys on the rail network are taken on our services each year. Public transport is vital to building a strong and sustainable UK economy. Our services ensure that millions of people are able to get to work and can access key services and leisure activities. Train operators now generate more than four times as much for the Government to reinvest in rail services than 15 years ago. This money is helping to reduce public subsidies and sustain the biggest investment programme in rail in decades. We carry more commuters into London on our rail franchises than any other operator, accounting for over 40% of peak-time arrivals.

BAM5006 Case study: Southern

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3. Southern rail strike: What's it about? (online article by Richard Westcott, Transport correspondent, BBC News, 13 December 2016)

As Southern rail passengers prepare for yet another strike, many are asking: what's the dispute actually about? Well, it's about safety, it's about jobs and it's about politics. Let's take them one at a time. Safety It's a bit "he says, she says" but bear with me, because it's not straightforward. Southern wants to bring in something called driver-only-operated (DOO) trains where the driver, rather than the conductor, opens and closes the doors. A third of Britain's services already work that way, it's been around for 30 years and the rail safety regulator says it's safe. The whole London tube network is DOO. Unions disagree. They say the on-board conductor/guard has a much better view of the doors and can stop people getting trapped. I spoke to a driver about it and he told me that the view in the driver's cab on some of the older trains isn't great, especially at some stations. He's driven tube trains and says they're different because they have much better cameras, both on the train and at the end of the platform. Unions also see this as a long-term ploy to phase out a second person on services, which means no-one would be around to help out if the driver was ill or injured, or there's an emergency. Who'll escort people along the track after a crash? But Southern guarantees it'll keep two people on each service, they just won't have the same "safety-critical" role. Southern is only able to keep this promise for the length of its franchise, which runs out in 2021. Jobs The railway is very expensive to run. Taxpayers chip in about £4.8bn a year, and the vast majority of people don't even use trains. Few will say it out loud, but one obvious way to reduce costs is to cut staff. The unions are convinced that the spread of DOO is part of a wider plan to slash jobs. Southern has guaranteed that no-one will lose our job, or take a pay cut. The second person will now be free to help passengers, they say. Politics Southern's franchise isn't like any other. Normally, the government picks a company to run a line, and that company collects the money from fares. It also loses money if there are strikes or disruption. But this deal is different. Ministers are paying Southern's parent company, GTR, to run services, while the government collects the fare money. So the cost of all the strikes and disruption is picked up by the government, not the train firm. (GTR is taking a huge reputational hit though, which comes at a price.)

BAM5006 Case study: Southern

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That's why the unions have accused ministers of orchestrating this dispute behind the scenes; of pressuring GTR to stick to its guns and not compromise, to pave the way for similar staff arrangements across other franchises in future (see the next section, "the wider war"). When I met the Transport Secretary, Chris Grayling, last week he said that wasn't true. The unions are trying to turn it into a political battle, he says, because they want to make privatisation look bad, thus boosting the case for renationalising the railways. He did suggest on the Today programme last week that he'd meet the RMT union if it called off the strikes. By the way, the bill for compensation and lost fares so far is around £38m and counting, according to a letter sent from the DfT to the Transport Select Committee. Since then they've also set aside £15m to compensate season ticket holders. It's all being picked up by the taxpayer, although the government counters that it's also getting money in from fares. As ever with the railways, who's paying what isn't very clear. The wider war Southern has become the critical battleground in a war over how trains are staffed in future. Aslef and the RMT union joined forces in November 2015 to draw a line in the sand. No more DOO. Bear in mind, if these changes go through the RMT will have less power to stop trains if it calls strikes in future. Because services will be able to run without one of our conductors on board. Whatever happens here will be reflected in future franchises as they take delivery of new DOO trains. I believe Northern is next. No end in sight Right now, I really can't see how this dispute will end. No-one's budging on the critical issue. No-one's even talking. 4. Rail punctuality slumps to lowest level in a decade... with Southern

customers facing most chaos (online article by Mark Chandler, London Evening Standard, 16 February)

Punctuality on Britain's rail network has reached its lowest point in over a decade, with Southern passengers facing the most chaos. More than one in 10 trains (12.3 per cent) failed to reach their destinations on time last year, according to newly released figures from the Office of Rail and Road (ORR).

BAM5006 Case study: Southern

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This is the worst performance for a 12-month period since the year ending September 2006, when the figure reached 12.5 per cent. Lianna Etkind, of the Campaign for Better Transport, claimed the figures show that train firms are "still delivering a very lacklustre service" despite "sky-high prices". Passengers using Govia Thameslink Railway - which owns embattled operator Southern - suffered the most, with more than a quarter of services not arriving on time. Members of the Rail, Maritime and Transport union are embroiled in a bitter row with Southern over staffing and are set to stage a 24-hour strike on February 22. On Thursday, members of the Aslef drivers’ union also rejected a proposed deal to end their dispute with the operator. The rail industry counts trains as being on time if they arrive at their terminating stations within five minutes of their schedule for commuter services and within 10 minutes for long distance routes. Separate figures show 3.8 per cent of trains across Britain were cancelled or at least half an hour late last year, the highest moving annual average since September 2003. Ms Etkind said: "It's time that the Government got a grip of the situation and starts to give passengers what they want: an affordable and reliable rail service. 5. Further Southern rail strikes possible says Aslef (online article, unattributed,

BBC News, 17 February 2017) Further strike action by drivers on Southern rail remains a possibility after union members rejected a deal to end their dispute, Aslef has said. Assistant general secretary Simon Weller said it was hoping to reopen talks with managers, but the mandate for a strike ballot was still valid. "We could put strike dates on if we wish but it is not where we want to be. "I see no reason why we can't achieve a negotiated settlement that's acceptable to all our members," he told the BBC. Aslef has been in dispute with Southern's parent company, Govia Thameslink Railway (GTR), over driver-only operated (DOO) trains. The dispute centres on Southern's decision to turn guards into on-board supervisors. In this role they would no longer be responsible for opening and closing carriage doors - this duty would become the responsibility of the driver.

BAM5006 Case study: Southern

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Union members rejected an agreement on Thursday, negotiated by their leaders with the help of the TUC, which would have enabled Southern to run trains without a guard or on-board supervisor under certain circumstances. Mr Weller said drivers were generally "very unhappy with the way that they felt this had been steam-rollered through". He conceded: "Obviously we got it wrong. We're a democratic organisation... and our members had a clear view on it. "We got it wrong and I don't see that as a big problem... we just have to get it right again." On Thursday, GTR said it was "saddened and hugely disappointed" with the ballot result and would be seeking to meet the union as soon as possible. The dispute began in April when conductors - who are members of the RMT union - first took industrial action. Aslef members then walked out over the plans in December, leading to the cancellation of all Southern services. The RMT held separate talks with Southern managers earlier this week, which broke down without an agreement after three hours. On Wednesday, it announced further industrial action, saying conductors would walk out for 24 hours next Wednesday. 6. Southern Rail strike: RMT union accuses train company of bullying staff as

strike looms (online article by Francesca Gillett, London Evening Standard, 20 February 2017)

Rail union leaders have accused Southern Rail of bullying and intimidating its staff ahead of another walkout this week. The Rail, Maritime and Transport union hit out at the company after a letter was sent to Southern workers urging them not to join in Wednesday’s looming strike. Union members plan to walk out for 24 hours on Wednesday – the 29th strike since the bitter dispute over the role of conductors started nearly a year ago. Angie Doll, Southern's passenger services director, said in the letter: "I am sorry to have to write to you again in these terms. I had hoped that we would have put the industrial action behind us." She said the strikes had caused "immeasurable damage" to passengers, staff, the regional economy and the rail industry. "We must bring this dispute to an end for everyone's sake," she wrote, adding that services had improved in recent weeks.

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7. The story continues… Southern said during the 29th walkout on 22nd February it had run 87 per cent of services with many staff defying the strike call and turning up for work. As of 1st March 2017 the RMT union has said that its members who are train guards – now called on-board supervisors – are set to stage their 30th walkout on Monday March 13th. Talks resumed on 1st March between Aslef, the train drivers’ union, and Southern. A previous deal between Aslef leaders and the rail company was narrowly thrown out by the membership. 8. References Chandler, Mark, Evening Standard (2017) Rail punctuality slumps to lowest level in a decade... with Southern customers facing most chaos [Online] Available from http://www.standard.co.uk/news/transport/rail-punctuality-slumps-to-lowest-level-in-a-decade-with-southern-customers-facing-most-chaos-a3468631.html [accessed 28th February 2017] Gillett, Francesca, Evening Standard (2017) Southern Rail strike: RMT union accuses train company of bullying staff as strike looms [Online] Available from http://www.standard.co.uk/news/transport/southern-rail-strike-rmt-union-accuses-train-company-of-bullying-staff-as-strike-looms-a3470596.html [accessed 28th February 2017] Govia website (2017) [Online] Available from https://www.govia.info/ [accessed 28th February 2017] Unattributed, BBC News (2016) Further Southern rail strikes possible says Aslef [Online] Available from http://www.bbc.co.uk/news/uk-england-39002185 [accessed 28th February 2017] Westcott, Richard, BBC News (2016) Southern rail strike: What's it about? [Online] Available from http://www.bbc.co.uk/news/business-38287571 [accessed 28th February 2017] Which ? Magazine Press Release (2017) Which? survey reveals passenger satisfaction has hit the buffers [Online] Available from http://press.which.co.uk/whichpressreleases/which-survey-reveals-passenger-satisfaction-has-hit-the-buffers/ [accessed 28th February 2017]