최신 CIMAPRO19-CS3-1 무료덤프 - CIMA Strategic Case Study
SIMULATION
A week later, Romuald Marek stops by your workspace and hands you a document.
The Board minute extract from Romuald can be viewed by clicking the Reference Material button above.
Reference Material
Board minutes extract: proposal to profit from ongoing strength of NS
Anna Obalowu Sole, Chief Operating Officer, reported that the strong NS was helping generate revenues from fuel sales. Discussion followed as to whether the strong N$ was likely to persist and whether a strong N$ benefits Arrfield overall.
Markus Jokel
a. Chief Executive Officer, stated that the Board should develop contingency plans that could be implemented if it seemed likely that the strong N$ would persist. In particular. Arrfield need not renew the contracts that permit aviation fuel suppliers to operate from its airports. Arrfield would then be free to create its own fuel sale business, buying fuel in bulk to replenish the storage tanks at each of its airports in Norland and then selling it directly to airlines He stated that this would almost certainly enhance Arrfield's share price Romuald Marek reminded the Board that four of Arrfield's six airports are located in Norland and that those airports charge for aeronautical and non-aeronautical services in N$.
A week later, Romuald Marek stops by your workspace and hands you a document.
The Board minute extract from Romuald can be viewed by clicking the Reference Material button above.
Reference Material
Board minutes extract: proposal to profit from ongoing strength of NS
Anna Obalowu Sole, Chief Operating Officer, reported that the strong NS was helping generate revenues from fuel sales. Discussion followed as to whether the strong N$ was likely to persist and whether a strong N$ benefits Arrfield overall.
Markus Jokel
a. Chief Executive Officer, stated that the Board should develop contingency plans that could be implemented if it seemed likely that the strong N$ would persist. In particular. Arrfield need not renew the contracts that permit aviation fuel suppliers to operate from its airports. Arrfield would then be free to create its own fuel sale business, buying fuel in bulk to replenish the storage tanks at each of its airports in Norland and then selling it directly to airlines He stated that this would almost certainly enhance Arrfield's share price Romuald Marek reminded the Board that four of Arrfield's six airports are located in Norland and that those airports charge for aeronautical and non-aeronautical services in N$.
정답:
See the answer below in explanation
Explanation:
Requirement : 1
A strong domestic currency in the Aviation business makes the business more profitable. It is evident form interest rate parity that the exchange rate of currency appreciate as the interest rate fall. The interest rate of the Norland is lower than other countries will make the N$ appreciated as compare to the other countries.
A strong domestic currency is not always good for the Aviation business. It intrinsically involves the use of foreign currency on regular basis. A strong NS may decrease the revenues of the Arrfield because it will become costly for the airlines from abroad. The airlines may find airport of other nearby countries with cheaper currency which will allow them cost savings with the use of cheaper currency.
Requirement : 2
By starting aviation fail business by the Arrfield could increase the share price.
Suitability:
The aviation fuel business suits to Arrfield because of three reasons. 1- It will be taken by the market as backward integration. This will reduce the risk of the Arrfield significantly. 2- The companies in Norland with a strong currency are able to import cheaper fuel and offering discount to airlines. This can be profitable business. 3- The criticism by the environmentalists may be managed by taking corrective actions i.e. selling fuel at full price.
The Airfield could club the fuel charges into the landing, take off and terminal usage fee, this could ease the process for the airlines could make the airports more popular. The Arrfield could also manage the fuel inventory as per requirements because they have the schedule of the flights.
Acceptability:
The shareholders of the Arrfield will accept the proposal as it seems profitable and it may increase the shar price of the Arrfield share because of the material information regarding starting a new business line will give positive feed sign. The reputation risk arise from article a week before regarding selling cheaper fuel may also be mitigated by taking over the business and corrective actions may be taken.
The matter will not be appreciated by the companies they would wish to continue with Arrfield. They must also be satisfied on termination of contract.
Feasibility:
Arrfield have 4 major airports (three hub and a spoke) in Norland. The hub airports are big and planes are fueled with the underground pipelines and workforce work in close connection with the fuel companies. The Arrfield have the infrastructure to start its business of aviation fuel.
Explanation:
Requirement : 1
A strong domestic currency in the Aviation business makes the business more profitable. It is evident form interest rate parity that the exchange rate of currency appreciate as the interest rate fall. The interest rate of the Norland is lower than other countries will make the N$ appreciated as compare to the other countries.
A strong domestic currency is not always good for the Aviation business. It intrinsically involves the use of foreign currency on regular basis. A strong NS may decrease the revenues of the Arrfield because it will become costly for the airlines from abroad. The airlines may find airport of other nearby countries with cheaper currency which will allow them cost savings with the use of cheaper currency.
Requirement : 2
By starting aviation fail business by the Arrfield could increase the share price.
Suitability:
The aviation fuel business suits to Arrfield because of three reasons. 1- It will be taken by the market as backward integration. This will reduce the risk of the Arrfield significantly. 2- The companies in Norland with a strong currency are able to import cheaper fuel and offering discount to airlines. This can be profitable business. 3- The criticism by the environmentalists may be managed by taking corrective actions i.e. selling fuel at full price.
The Airfield could club the fuel charges into the landing, take off and terminal usage fee, this could ease the process for the airlines could make the airports more popular. The Arrfield could also manage the fuel inventory as per requirements because they have the schedule of the flights.
Acceptability:
The shareholders of the Arrfield will accept the proposal as it seems profitable and it may increase the shar price of the Arrfield share because of the material information regarding starting a new business line will give positive feed sign. The reputation risk arise from article a week before regarding selling cheaper fuel may also be mitigated by taking over the business and corrective actions may be taken.
The matter will not be appreciated by the companies they would wish to continue with Arrfield. They must also be satisfied on termination of contract.
Feasibility:
Arrfield have 4 major airports (three hub and a spoke) in Norland. The hub airports are big and planes are fueled with the underground pipelines and workforce work in close connection with the fuel companies. The Arrfield have the infrastructure to start its business of aviation fuel.
You are sitting in your office when you hear Marcus Svenson, the Finance Director, speaking on the telephone. You can hear only Marcus' side of the conversation:
"Hello, I would like to speak to Sally Walker please. It is Marcus Svenson here. (pause) Hi Sally, you contacted me six months ago to discuss a job opportunity that you thought I'd be suitable for. I said that I didn't wish to pursue it at that time because I was committed to Wodd. Things have changed since then and I would like to be considered for a finance directorship in another company. (pause) Yes, I'm still with Wodd. (pause) Yes, I realise that there was an unfortunate story in the business press about the problems that the weak USD is causing us, but there was very little that I could do to prevent that. (pause) I am sorry to hear that. I had hoped to move on." (sound of telephone hanging up and door opening) Marcus discovers that you are sitting at your desk and realises that you would have heard his side of the call.
"Please don't tell anybody what you heard. Would you regard it as unethical to respect my privacy?
I suspect that the CEO knows that I am thinking of leaving. He commented on the need for Board members to be loyal to Wodd at the last Board meeting. But don't you agree that the shareholders can better protect themselves against currency fluctuations than the directors?
The crazy thing is that I suspect that the Chairman will dismiss me next month. If that happens, I get a year's salary as a severance package. That will really annoy the shareholders. How can I justify accepting the severance package if I am effectively being dismissed for failing to manage Wodd's finances properly?
I need to explain at the next Board meeting why it would have been difficult to evaluate the risk of the USD weakening. According to an article I read, it has been picked up as a serious problem for us. How would you advise me to explain that?" Reference Material:
"Hello, I would like to speak to Sally Walker please. It is Marcus Svenson here. (pause) Hi Sally, you contacted me six months ago to discuss a job opportunity that you thought I'd be suitable for. I said that I didn't wish to pursue it at that time because I was committed to Wodd. Things have changed since then and I would like to be considered for a finance directorship in another company. (pause) Yes, I'm still with Wodd. (pause) Yes, I realise that there was an unfortunate story in the business press about the problems that the weak USD is causing us, but there was very little that I could do to prevent that. (pause) I am sorry to hear that. I had hoped to move on." (sound of telephone hanging up and door opening) Marcus discovers that you are sitting at your desk and realises that you would have heard his side of the call.
"Please don't tell anybody what you heard. Would you regard it as unethical to respect my privacy?
I suspect that the CEO knows that I am thinking of leaving. He commented on the need for Board members to be loyal to Wodd at the last Board meeting. But don't you agree that the shareholders can better protect themselves against currency fluctuations than the directors?
The crazy thing is that I suspect that the Chairman will dismiss me next month. If that happens, I get a year's salary as a severance package. That will really annoy the shareholders. How can I justify accepting the severance package if I am effectively being dismissed for failing to manage Wodd's finances properly?
I need to explain at the next Board meeting why it would have been difficult to evaluate the risk of the USD weakening. According to an article I read, it has been picked up as a serious problem for us. How would you advise me to explain that?" Reference Material:
정답:
Complete your answer and submit
A month has passed since you submitted the report requested by William Seaton, Director of Finance on the Board's proposals.
You have received the following email:
From: William Seaton, Director of Finance
To: Finance Manager
Subject: Shale oil
Hi,
One of the geologists made a presentation to the Board, proposing that we investigate the extraction of shale oil deposits. I have attached the slides that were used as the basis for this presentation.
I need you to work on a response to this document:
* Firstly, what risks do you envisage in our entry to the shale oil business?
* Secondly, what do you regard as the key factors that we should consider when deciding on proceeding with this proposal? Please justify your selection.
* Thirdly, what factors should we take into account when deciding on which country or countries to commence this side of the business?
* Finally, what are the challenges in creating a team of technical staff to lead our efforts in this area?
William
The presentation slides can be found by clicking on the Reference Materials button.
You have received the following email:
From: William Seaton, Director of Finance
To: Finance Manager
Subject: Shale oil
Hi,
One of the geologists made a presentation to the Board, proposing that we investigate the extraction of shale oil deposits. I have attached the slides that were used as the basis for this presentation.
I need you to work on a response to this document:
* Firstly, what risks do you envisage in our entry to the shale oil business?
* Secondly, what do you regard as the key factors that we should consider when deciding on proceeding with this proposal? Please justify your selection.
* Thirdly, what factors should we take into account when deciding on which country or countries to commence this side of the business?
* Finally, what are the challenges in creating a team of technical staff to lead our efforts in this area?
William
The presentation slides can be found by clicking on the Reference Materials button.
정답:
Complete your answer and submit
You have just received the following email:
From: William Seaton, Director of Finance
To: Finance Manager
Subject: Oil reserves
Hi,
This email arrived from the Head Geologist earlier today. I am concerned that many of our colleagues understand very little other than rock formations and drilling reports. They certainly misunderstand accounting issues. I have already had some very confused discussions with the other members of the Board.
I need a very clear report from you that I can circulate to the other Board members. I am not particularly interested in the technical accounting rules. I do not think that you necessarily require an accounting standard to tell you that a particular disclosure is misleading.
I need your report to cover the following:
* Should we make a public announcement of this information? I would like a clear indication of the implications for our relationship with our various stakeholders AND the ethical issues that you feel are relevant.
* What are the implications for our share price? I would like your analysis to consider the factors that will indicate how our share price will change upon the announcement.
Thanks
William
The email referred to above can be found by clicking on the Reference Materials button.
From: William Seaton, Director of Finance
To: Finance Manager
Subject: Oil reserves
Hi,
This email arrived from the Head Geologist earlier today. I am concerned that many of our colleagues understand very little other than rock formations and drilling reports. They certainly misunderstand accounting issues. I have already had some very confused discussions with the other members of the Board.
I need a very clear report from you that I can circulate to the other Board members. I am not particularly interested in the technical accounting rules. I do not think that you necessarily require an accounting standard to tell you that a particular disclosure is misleading.
I need your report to cover the following:
* Should we make a public announcement of this information? I would like a clear indication of the implications for our relationship with our various stakeholders AND the ethical issues that you feel are relevant.
* What are the implications for our share price? I would like your analysis to consider the factors that will indicate how our share price will change upon the announcement.
Thanks
William
The email referred to above can be found by clicking on the Reference Materials button.
정답:
Complete your answer and submit
The following email has been forwarded to you by William Seaton, Director of Finance:
From: William Seaton, Director of Finance
To: Finance Manager
Subject: Email from CFO of Fouce Oil
Hi
This email arrived last night. I need you to help me to think through the various implications of doing what it suggests before I present it to the Board. I need you to focus on the following issues:
* Would this proposal make sense from a strategic point of view?
* If we did decide to go ahead, what would be the issues that we would have to consider with respect to informing the stock market?
Could you please email me your thoughts within the next hour? I have to brief the Board later today.
Thanks
William
The email referred to can be found by clicking on the Reference Materials button.
From: William Seaton, Director of Finance
To: Finance Manager
Subject: Email from CFO of Fouce Oil
Hi
This email arrived last night. I need you to help me to think through the various implications of doing what it suggests before I present it to the Board. I need you to focus on the following issues:
* Would this proposal make sense from a strategic point of view?
* If we did decide to go ahead, what would be the issues that we would have to consider with respect to informing the stock market?
Could you please email me your thoughts within the next hour? I have to brief the Board later today.
Thanks
William
The email referred to can be found by clicking on the Reference Materials button.
정답:
Complete your answer and submit