CIMA CIMAPRO19-CS3-1 Dumps - Pass the Strategic Case Study Exam in 2026 on Your First Attempt

You have received the following email from Marcus Svenson, Finance Director:

From: Marcus Svenson, Finance Director

To: Senior Finance Manager

Subject: Biomass proposal

Hi,

The Board has just heard a presentation by an engineering consultancy concerning a proposal to develop a biomass power station adjacent to our North Forest.

The Board has asked us to put together some thoughts about the merits of this proposal. We would proceed on the basis that we would build the power station and sell the resulting electricity to the national power generator which has a number of coal-fired power stations, each of which is nearing the end of its useful life and the coal has to be shipped in, so we should find it relatively easy to guarantee sales. The power generator has indicated that it would be possible to negotiate a three year contract in the first instance, with the expectation that this would be extended by subsequent three year contracts, subject to price and performance.

We would be responsible for building and operating the power plant and we would also have to pay for 50% of the cost of power lines for connecting to the national electricity grid, with the other 50% being funded by the national power generator.

Please draft a briefing paper that I can present to the Board on the following:

How can we predict whether the share price is likely to increase or decrease if we commit ourselves to this project? You should identify the challenges associated with answering that question and indicate how we might address them.

What are the long-term risks associated with future revenues from the sale of electricity? How might we manage these?

Marcus

Reference Material:

Show Answer Hide Answer

You have received the following email from Peter Sorchi, CEO:

From: Peter Sorchi, Chief Executive Officer

To: Senior Finance Manager

Fwd: Tax avoidance article

Hi,

I am forwarding you an email from a journalist. It came in via our press office, who passed it up the management chain and it ended up in my inbox.

Some of the basic facts stated in the draft article are correct:

We do have arrangements in place with leading tax advisers for referrals of potential clients. We pay a commission for all such referrals, which the tax adviser is required to disclose to the client.

Barry Crauder has been one of our largest clients for many years. He owns significant forested land and we manage that in return for our usual fee.

We do not offer tax advice, or promote forestry as a tax-efficient investment. We simply offer a forestry management service as a paid service.

I would like you to address the following issues and I need your reply as a matter of some urgency.

Could we be accused of behaving unethically with respect to this aspect of our forestry management service?

Please draft a response that we can submit to Sonia Jones. Please also give an explanation for the Board as to how you will address the fact that the draft newspaper article clearly makes us appear to be unethical. We will consider your draft and related comments at a meeting this afternoon, before submitting anything.

Peter

To: Press Office, Wodd

From: Sonia Jones, reporter, Daily Gazette

Re: Tax avoidance article

I am seeking a response from Wodd concerning the activities of the celebrity Barry Crauder. We have established that Mr Crauder has been investing heavily in forestry in order to avoid paying tax on the considerable wealth that he has amassed from his show business career.

We believe that a significant part of this story is the relationship between forestry companies such as Wodd and professional tax advisers. When researching this story I posed as a wealthy investor and approached several firms that specialise in offering tax avoidance advice to high net worth individuals. Four of the firms whom I approached recommended a forestry scheme and specifically recommended Wodd to manage it for me. I believe that Wodd has a close relationship with these firms and possibly others.

I have attached a draft of my story. I have sufficient evidence to support every fact stated. I am writing in order to give Wodd the opportunity to respond if it wishes to do so, although the story will run regardless. I will require your comment within 48 hours, otherwise, I will run the story as it stands.

Sonia Jones

Chief reporter, Daily Gazette

Show Answer Hide Answer

William Seaton, the Director of Finance stopped you in the corridor a week after the Head Geologist's announcement that reserves had been overstated:

''We informed the stock exchange that our reserves had been downgraded and our share price has taken a solid hit. We need to work towards making sure that this is never repeated.

The Board is actively considering some changes that we hope will improve our forecasting system. I am not convinced that the suggestions will work. Frankly, if we could predict the future with certainty then I would have us stop looking for oil and start selling forecasts.

I would like you to work through the proposals that have been put forward and to recommend on their adoption, with changes if you think it necessary. The issues that we are most seriously considering are:

A suggestion that Big Data could be used to monitor oil prices. Do you think this would be a sensible way to proceed?

A suggestion that we should update our reserves information on the company website in real time. Do you think that would be an effective communication strategy?

Finally, we have considered a number of issues surrounding the motivation and inspiration of our geologists. Two quite distinct schemes have been proposed. Firstly, some Board members believe that our geologists should be rewarded in relation to the accuracy of their forecasts. Bonuses will be paid on the basis of correct initial evaluation of wells. The bonus will increase if a well that was initially identified as commercially viable goes into production and will decrease if a well that was classified as viable is reclassified as unproductive.

Secondly, other members of the Board believe that there should be a greater degree of accountability on the part of geologists. The incorrect classification of a well's potential could be treated as a disciplinary matter. Please provide a detailed analysis of EACH of those suggestions.''

Show Answer Hide Answer

The following email has just arrived:

From: William Seaton, Director of Finance

To: Finance Manager

Subject: News article

Hi,

My Secretary has drawn my attention to the attached newspaper clipping. I have been reading comments like this since Fouce Oil acquired its interest in 2010. We briefed the press at the time and made it clear that we would not be commenting further on our relationship with it unless it changed materially. Nothing has happened since then to make us change our mind on that.

The Board has asked me to compile a report on the following:

How might the presence of Fouce Oil, as a 25% shareholder, affect our decision making as a Board of Directors? Perhaps, surprisingly, we have never had a formal discussion of this matter.

How will Fouce Oil's stake in Slide affect our share price?

I would like you to email me your thoughts on these points so that I can have as long as possible to think about what I will say to the Board.

Thanks

William

The newspaper clipping can be found by clicking on the Reference Materials button.

Show Answer Hide Answer

Three weeks have passed since you were informed that the relocation would definitely proceed.

You have received the following email from William Seaton, Director of Finance:

From: William Seaton, Director of Finance

To: Finance Manager

Subject: Detailed issues associated with the relocation

Hi,

Congratulations, you are now officially in charge of the transition team! I am confident that you will do an excellent job and that it will be an opportunity to enhance your career.

I realise that the transition team is expected to reduce the pressure on the Board, but I have been asked to keep an eye on things and to ensure that your team has everything that it needs. I won't interfere, but I will stay in touch.

There are a few matters that I think you should address as a matter of urgency.

Firstly, we need to have plans in place to ensure that our information systems are ready. What changes will we have to make in order to best align the information system with the company's needs? I am not asking about hardware issues or the physical relocation, but the changes to the information system itself.

Secondly, how might we make use of the data in our own records and external sources to ensure that the new Head Office is managed as efficiently as possible? Remember that the present Head Office is a large and complex operation in its own right and it costs a significant amount to run.

Thirdly, our relocation will create a number of challenges for our corporate treasury team. I need you to identify the key challenges and suggest how they might be dealt with.

Finally, I would like you to identify the criteria against which the success or failure of your team will be judged once the transition is complete. I need your recommendations to be relevant and measurable.

William

Show Answer Hide Answer